Not that bigger companies don’t suffer these or other challenges, but the owner managed SME sector, some would say the backbone of the UK’s economic engine, appears to have a specific set of hurdles to overcome.
Many of these challenges can be traced back to things like rapid growth, owner manager control and lack of succession, a passion for the business but not necessarily a fit for the role, a lack of formality and strategy for key areas like retention and attraction of people. One that I find crops up all too often is a real lack of internal discipline around processes and the way things are done. On this latter point, ‘stuff’ is often kept in people’s heads, not properly documented and the internal engine is often sacrificed for the benefit of servicing the customer.
This list is illustrative and by no means exhaustive. But, if you have spent any time talking to owner managers of SMEs as my colleagues and I have over many years, you will almost certainly recognise some of even all of the above. For the purpose of this article, I am going to pick on just one of them, the last one around internal discipline. This also has a big connection with the one before it as well, all around how the business manages, retains and attracts the right people.
Lack of discipline on people information
Many small businesses lack discipline and formality in a whole host of areas. Examples are business planning, measuring company and individual performances, and documenting their core processes to name but a few.
One of the key areas that is almost certain to be lacking is the way they store and manage their people information and activities. In other words, their HR information. Even in the modern day, with technology as it is, we see all too many businesses that are managing most of all of their people information and activities on the business equivalent of ‘the back of a fag packet’.
This manifests itself in things like incomplete people records, and even if they are complete, stored on paper in filing cabinets and/or spreadsheets, where either anyone or no one seems to be able to get access. Central documents (some of which are required by law) such as employment contracts, an employee handbook, key policies such as health and safety, diversity, data protection etc either don’t exist or are just not easily accessible by staff.
Even the above starter for ten has the propensity to create chaos, stress and uncertainty, quite apart from wasting time and even maybe being on the wrong side of the law.
Asset racking & sensitive document management
Companies are also often losing money because they have no proper way of tracking assets that have theoretically been assigned to specific individuals such as phones, laptops, samples cases or whatever.
There will undoubtedly be some sensitive documents that not everyone is entitled to see. So unless the business has a proper server system with mapped drives that have specific authority levels, many business are left with sticking paperwork in a locked draw, or running on spreadsheets where there is a risk of the information getting into the wrong hands.
Keeping track of holidays & absence
Another major area that creates issues is the management of holidays and other absence such as sickness. Most SMEs would not know for sure if they had an employee absence problem or not, because they don’t track it properly and therefore have no management information to show them any patterns. And if this information was ever needed in a people disciplinary situation, big holes could almost certainly be shot right through it, because it is often not robust enough.
Holiday management is often still done on paper forms, or emails, or even just word of mouth. No proper way to track who has had what holiday, and no easy way for managers to authorise holiday for their team members and know for sure that they have sufficient cover from others before they authorise it.
How about we round off with another of the biggest issues, that of managing the tasks and performance of the workforce. Most businesses would accept that people need to know certain stuff if they have any hope of being a good performer. Clarity on the core accountabilities of their role, their targets and objectives, how they will be measured and what is expected of them behaviourally is key, but is so often lacking.
They then need of know how they are doing against these things, so proper measurement and feedback, and then help in identifying their gaps and support in improving what they do.
Of course, these things can be done well without too much formality, and they are indeed very behavioural by nature. Achieving great people performance is very much about the right people sitting down and investing time. This can ensure clarity of direction for team members, and feelings of competence, confidence and motivation within them, rather than having a good ‘form’ to fill in.
However, a key part of getting great performance is that word again, discipline, and some formality of processes and tools are needed to complete the loop. People need to have a basic idea of what the company is trying to achieve, where it’s going, and how they fit in. Individual job roles needs to be documented and accessible, and they need to show the right information.
Objectives, feedback and appraisals
Objectives, targets and standards must also be documented, congruent and accessible. And a big bugbear of ours, FEEDBACK, in almost every company we work with needs to be more frequent and better, much better, but also it needs documenting and formalising a little.
We then come to the dreaded…..annual appraisal. The vast majority of businesses we work with recognise some sort of review is required, or they are already doing it. But very few are doing it well, and very few are providing structure, discipline and appropriate formality as part of their process.
There are so many impacts to not doing the above well, but the most blatant and powerful one is frankly, “it’s costing us money”. In some cases a lot of money, to compensate for the gaps that some business have in the way they manage performance. This comes as wasted productivity or inefficiency, people not achieving their potential, or just simply people getting fed up and leaving when they should have been retained.
So ok, a pretty bleak picture in some ways? Yes, but it’s based on fact…and it’s what we see all too often.
So what’s the solution? Well there are many, and it is a complex area. Much of it stems back to the roots of company culture, often the behaviour of the owners and the senior team and what they value/don’t value. This will have permeated though the business over time, and formed the culture. This though and many of its manifestations where they are unhelpful” can be changed, but it takes time.
One simple ‘fix’ to many of the issues painted above is to move all your company people information and activities onto a simple online application. These days, they are very good, very easy, and very inexpensive.
If you take a typical business, let’s say 60 people, £3m to £5m turnover per annum, with a board of directors and shareholders, some senior management and a team of people across several departments to ‘do the job’. This is exactly the type of business that we find is experiencing many of the issues mentioned above.
For probably no more than the monthly coffee, tea and milk bill, a company like this could have almost instantly the latest web based application as a solution to so many of the issues we have referred to.
This would put all your people information in one place, allow easy & secure access to documents and information by those who need it, to the level you want them to see it. Furthermore, it would remove the need for paper holiday forms and spreadsheets to track absence, holidays, assets, and appraisals, and so much more.
There’s also that ‘small’ of subject of GDPR coming down the track as well. All data must be kept secure and rigorously managed and projected, and so many SMEs are just not set up either in terms of mindset or with a suitable practical solution to do that. So, it may be time to bin all that paper, create some space by moving out a few filing cabinets, trim down those spreadsheets and tap into the huge and cost effective benefits that is on line HR and Performance software.
There are probably around 10 good or great systems on the market, which all do similar things. Most will give you a free trial so you can set it up instantly and ‘try before you buy’, so have a look and I am confident once you have switched, you’ll look back and wonder how you ever managed without the discipline you will now have.
Of all the systems, of course we would recommend our own, PDW HR, so do take a look. As far as we can see, it’s the best value for money HR & Performance software available.