Research from the CIPD has shown that HR has a vital role to play in driving long-term performance in SMEs, whatever stage of growth the organisation is at, and whether or not it has a dedicated HR function.
The research report (Sustainable organisation performance through HR in SMEs published in 2013) identifies six key insights which can help HR managers – or those responsible for HR – anticipate and respond to the people-related challenges that will inevitably arise as the business grows.
Read on to see if these resonate in your business.
- Anticipation is key: HR needs to have a clear understanding of where the business is headed. They need to be deeply familiar with the strategy, vision and values, so that they can anticipate key stages of growth and transition and plan for any necessary shifts in the way HR challenges and processes are managed.
- Values and purpose should be the bedrock of the business. One of the biggest challenges facing SMEs is how to retain the heady excitement and ‘family’ feel of the early days. HR has an important role to play in preserving the vision of the founder or leader and embedding it in all aspects of people management. Are people engaged with the overall purpose of the business and clear about how they fit into the bigger picture, for example? If innovation and creativity are valued in the business, are there mechanisms in place to reward employees demonstrating these behaviours? Make sure HR processes are set up to reflect the way the business wants people to work on a day-to-day basis and are not time consuming or complicated.
- HR and business strategies need to be aligned. In the early days, it can be difficult for HR to make itself heard in an SME. Owner/managers often see it as something they ‘have to do’ rather than a strategic tool they can use to support business growth. HR needs to work hard to demonstrate that well-thought out people processes can play an important part in building the high performance the business needs if it is to sustain long term growth. Having up-to-the-minute information about everything from head count to available skill sets is a good way to build credibility and get your voice heard.
- Keep processes simple. As an SME grows, it inevitably needs to move to a more structured approach and to introduce more formal people processes. It’s important, however, to find the right balance between structure and fluidity so that agility and entrepreneurial spirit are not stifled or undermined by bureaucracy. Many Office Managers given HR responsibility will implement inefficient and out of date practices due to lack of training or the desire to create a job for themselves. Many processes should become automated.
The latest HR software allows employees to access and update their own data – and makes it much easier for line managers to manage processes such as holidays and absence. It cuts down on the paperwork, ensures consistency and makes HR processes simpler and more transparent.
- Strike the balance between preservation and evolution. As the business grows, it’s important not to be sentimental about what has always been, and to let go of processes or aspects of the business culture that no longer support its vision or priorities. In today’s environment, for example, highly formal team meetings are often giving way to more immediate and engaging forms of communication. Likewise annual appraisal processes are increasingly being replaced with a constant feedback loop and a greater focus on career development. SMART objectives are now seen as a bit silly.
- Lay the foundations for the future. In a busy SME, it can sometimes be difficult to see beyond the immediate operational issues. HR people in small businesses often find themselves caught up in a relentless cycle of recruitment as the company grows, and barely have time to lift their heads to look at what strategies they should be putting in place to prepare for the future. Make sure you are not getting so caught up in short term solutions that you are missing golden opportunities to support longer term goals. Sow now what you later want to reap.
The way forward
What HR strategies are you employing to support growth in your SME? How do you manage to make time for the strategic issues? How scalable are your current practices if you continue to grow at the rate you have?
If you are planning a lot of recruitment when did you last review your recruitment and attraction practices, your employee benefits package, how you manage talent? No point in putting lots of effort into recruitment if you have a revolving door straight back out to your competitors. Both expensive and a waste of your time.
Whilst your business may not need a full-time senior HR practitioner, working with someone flexibly to help set the direction internally and pin down your strategy for how you handle the people side of the business just makes good business sense.