HR Interventions and Profitability in Small Businesses
Focus on simple building blocks.
A six month study carried out by Warwick Business School and Royal Mail (published in 2010) on small and medium sized businesses identified Human Resource Planning as one of the six key factors that contribute to the success of the businesses.
All firms, irrespective of their size, have to manage staff and deal with changes in UK employment law.
All firms, irrespective of their size, have to manage staff and deal with changes in UK employment law. This includes hours of work, leave and pay along with adhering to laws such as Data Protection, Equality Act, etc. In reality small firms are unaware of the implications of their actions or inactions when dealing with their staff. For example, according to a survey carried out by Sage of over 1,100 small firms, 36% of these businesses were unaware about HMRC’s plans to initiate Real Time Information from April 2013. This problem is only compounded by the limited resources available to the owner / manager of such firms and the absence of a qualified and experienced HR person.
While most small businesses have written HR policies and procedures, the implementation of such policies is limited due to lack of clear guidance that is both practical and which takes into consideration operational needs of the firm.
According to a research commissioned by ACAS in 2008, resolution of staff issues in small firms are heavily influenced by the owner's background, previous employment tribunal claims if any, nature of the industry, labour market and the maturity of the business. While most small businesses have written HR policies and procedures, the implementation of such policies is limited due to lack of clear guidance that is both practical and which takes into consideration operational needs of the firm.
Competing for talent in a market place where large businesses provide attractive HR practices is an enormous challenge for smaller firms. In the absence of an HR department, most small firms buy ‘off the shelf’ staff handbooks as a one-stop solution to their HR challenges. While it may be a quick fix, it may not be effective long-term and we suggest employers initially focus on the following building blocks;
- Creating job descriptions for each job role.
- Providing employment contracts specifying hours of work, pay, leave, sickness and other terms of employment.
- Putting in place policies and procedures that are relevant and those which represent the ethos of the business.
- Look to solve employee issues through informal channels initially and being consistent in their dealings with staff.
- Be open to offer flexible working options to help staff with work-life balance while staying long-term with the company.
The red tape of employment law can be especially daunting to small firms already struggling to get their business going. But through transparent and consistent practices when dealing with staff, employers can be a good starting point in ensuring a happier workplace which will translate into a more successful business.
Nitya Balaji – HR Advisor
To find out more, contact us on 020 8506 0582