How to drive performance and productivity in your SME

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The important role that SMEs have to play in driving economic growth is increasingly being recognised – and as a result there’s been a noticeable rise in HR circles of efforts to help small businesses manage their people more effectively.

As the employers of over 14 million people in the UK, it is important that SMEs get their HR management right.

It’s this very issue that has driven publication this month by HR Magazine of a new guide ‘Everything SMEs need to know about HR’. While the title may be a little ambitious, the report does raise some interesting debates about what is – and isn’t – typically prioritised within SMEs and how by paying more attention to some key HR initiatives, they could significantly raise both productivity and performance.

So how does your business shape up on the ‘hot topics’ identified in the report – and what could you do to improve your knowledge and practice in these important areas?

Employee Engagement

There’s been a real buzz about engagement in big business circles – but it’s a topic that seems to leave many SMEs cold. It’s not a term that resonates with hard-pressed managers who feel they already have more than enough to do without spending time on the ‘soft fluffy’ stuff. This is a real shame. Research has shown that employees who are engaged with their business (whatever its size) are more productive, innovative and customer-focused. They are likely to stay with the business longer and to be off sick less. Ironically, building engagement is often easier in a smaller business where managers have more day-to-day contact with employees – and therefore more opportunity to get them excited and inspired about their work. Listening to people and getting them involved, providing constructive feedback (both positive and negative), talking about career progression and giving people plenty of opportunity to grow and develop are just a few of the steps that will help increase engagement. Of course the best managers in SMEs are often intuitively doing this already – they just don’t describe it in those terms.

Managing and GrowingTalent

Any business is only ever as good as its people – but SMEs are often not particularly strategic about the way they bring new people into the business or develop their skills going forward. Recruitment is often a ‘distress’ process (someone’s left unexpectedly and the gap needs to be filled) and when budgets are tight, training and development takes a back seat. Bringing young talent into the business via an apprenticeship can be a great way to get fresh perspectives and to develop people in the company ‘mould’. It appears that this is an option many SMEs dismiss as being too complicated and bureaucratic – but as the HR Magazine report demonstrates, it is a viable option and can bring enormous benefits to those prepared to give it a go. More mature workers often have a great deal of knowledge and experience to bring to a growing business too, and are likely to playan increasingly important role in the workforce since changes to rules around retirement. SMEs who are willing to be flexible about the way jobs are designed to accommodate older workers stand to gain a wealth of experience – much of which can be passed on to their younger recruits through mentoring and coaching (one of the best and lowest cost development interventions a business can get!)

Exploiting Technology

Thanks to advances in technology, there’s now a wealth of ‘social’ collaboration tools out there to help businesses manage their people more effectively. SMEs are well positioned to take advantage of these as they are generally more agile and innovative than their larger counterparts. The latest generation of social collaboration tools are intuitive and easy to use. They encourage employees to communicate across silos, share information and collaborate. Some (like the social platform available in Cezanne OnDemand) are available at no extra charge as part of an HR software solution. They make it easy for people to work together on projects or initiatives, where ever they are located, and provide a great tool for generating excitement and enthusiasm for new projects. These social tools also make it much easier for companies to get input and feedback on initiatives they may be planning to introduce – such as a new employee benefits package for example. SMEs who embrace this technology, rather than shying away from it, will be the ones to stay ahead of the game.

Managing Performance

It’s probably fair to say that the majority of SMEs struggle with performance management. Processes (if they exist) are often unwieldy and time-consuming, and as a result performance conversations either don’t happen or are not followed up on. Poor performance is left to fester, causing resentment among other employees, and development that’s been promised doesn’t take place. Now of course technology can never replace regular, good quality conversations between managers and their people, but sophisticated software is now available to help streamline the process and nudge managers when appraisals are due. Information can be centrally recorded and made accessible to both parties and the whole process becomes much more transparent and consistent. The ability to make performance management even more ‘of the moment’ is also just around the corner. Some of the latest technology being developed will pave the way for immediate feedback and on-going development dialogues between managers and their teams. Employees will get instant recognition for a job well done and managers can provide ‘on the spot’ coaching when a development issue arises, rather than having to wait for the next scheduled review. These latest advances may sound like rocket science to SMEs who are still battling to nail the basic processes, but once again, those who are prepared to embrace the technology that’s out there will reap the dividends in terms of time saved as well as improved levels of performance.

Keeping up-to-date with legislation

Keeping on top of changes to employment legislation is an on-going issue for SMEs. Although the Government is making efforts to cut red tape, it is still a bit of a minefield for businesses who have no expert HR support, and SMEs do need to make sure they are aware of their legal obligations towards staff and are complying with all the necessary legislation.

Pensions auto-enrolment is an issue identified in the HR Magazine report as a time-bomb in waiting for many SMEs. Legislation now requires employers to provide access to a workplace pension scheme for most workers. They must either automatically enrol employees in their own pension scheme or in the new state-sponsored National Employment Savings Trust (NEST). The legislation is gradually being rolled out in stages, starting with larger organisations, with everyone required to be on board by 2017 . However, auto enrolment is only one of a raft of people-related changes that have been introduced – or will be introduced – that small businesses need to be able to be familiar with.(the removal of the default retirement age and no fault dismissal proposals for example) The good news is that there are plenty of organisations – like some of the companies that partner with Cezanne – that will take on part of this burden; often providing an element of free advice alongside their paid-for services.

What’s the biggest HR challenge in your business? What initiatives have you put in place to manage your people more effectively?

Which government or industry-led initiatives have you found helpful and would recommend to others?

We look forward to hearing your views.

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