Pace HR, a London-based HR consultancy, analysed data from Companies House to find the number of new HR companies that were incorporated between January 2018 and December 2023 and compared that to the number that have gone into administration, liquidation, or are now dissolved.
In the last 5 years, 37.69% of new HR companies have closed, with 6,416 out of the 17,019 that opened either going into administration, liquidation or are now dissolved.
The study highlighted that Leicester is the city with the least successful new companies, with 79% of the new human resources companies closing. New firms in Hull (56%), Swansea (52.2%), Norwich (52.1%) and Oxford (51.5%) also struggle to keep their doors open.
On the opposite end of the scale, the research revealed that Mansfield and Sunderland are the UK cities with the most successful new firms, with only 14.3 % closing in the last 5 years. Ipswich takes the second spot at 27%, with only 11 out of 41 new firms closing. At 28%, Crawley is the third-best city to open an HR company. Preston follows closely behind at 29.5%, with Newport rounding off the top 5 at 30.34%.
Charlotte Anderson, Director of Pace HR says: “Of course, authenticity is key in any industry and we always ensure that our clients have strong company cultures and values that their employees and customers identify with. But it can be easy for a lot of consultancies to forget to look internally and make sure they have these boxes ticked themselves. By overlooking these aspects, many consultancies risk their products and services coming across as inauthentic and out of touch with the prevailing climate.”
“When starting out, it can be challenging for new HR consultancies to establish a strong culture and core values. But business leaders today want to partner with HR consultants who align with their company’s vision and contribute to growth. If you are just offering generalist, off-the-shelf services and solutions, your clients will struggle to see the value in partnering with you.”
Featured Photo by Nastuh Abootalebi on Unsplash.