I have just conducted an informal survey – asking SME owners what percentage of their business problems relate to people, as opposed to regulation, tax, cash flow, product issues etc. It didn’t surprise me that the average response was 84%.
Obviously the rating was higher in labour intensive industries, such as our own, but even capital intensive businesses were rating people problems at around 80%.
In discussion, I also asked the business owners about their major people issues.
Some of these issues were generation based. How do you motivate Generation Y? Why do the members of other generations employed in the business seem to have an inalienable right to work-life balance except the poor baby boomer who pays the wages?
Some were a function of the gender mix in the modern workforce; particularly how do you deal with key female staff going on maternity leave? Keeping a key position open for 12 months is very difficult for an SME – do you find a replacement and worry about the possibility of having a person you don’t need when, and if, the new mum returns to work? Or do you try to cover the role using other staff and, quite often, yourself?
Here are a few of their other experiences.
You prepare an organisation chart and position description to try to ensure that everyone knows what their role is, and who they report to, but they still keep going around their manager to come straight to you.
You prepare KPIs to try to engender performance in the areas that are most important to achieving the organisation’s strategic goals. But quite often those KPIs manage to create performances that are actually counter-productive; the sales staff who achieve the target gross profit on their sales of new equipment but inflate the trade-in allowance; the account managers who fight each other over who gets the credit for new business – creating an organisation of self-serving silos rather than a team working together for the good of the business.
You mentor, train, develop and empower staff and find that has made them irresistible to your competitors, and perfectly capable of setting themselves up in competition with you.
Hiring staff is often an expensive, time consuming gamble. For SMEs, without sophisticated screening techniques, a couple of interviews and a reference check with the referee nominated by the applicant (who is never going to tell you not to hire the person) is often little protection against hiring Attila the Hun. And having got Attila on board, you then have the issue of removing him. Assuming Attila is smart and gets through his probationary period, you then have to contend with the Fair Work Act, (or is it Work Choice? – whatever this week’s regulations happen to be) to make sure that he doesn’t have an action against you when you have to dismiss him for trying to strangle his manager during a performance review. And who is going to be brave enough to dismiss Attila? It wouldn’t be the first business to retain an employee with an unhealthy interest in mass murder simply because of what he might do to the person who dismisses him.
Then there are the office romances. You try to ignore it for as long as you can but you know that someone will have to go – and it’s always the one you most want to keep. Or they break up and they both go. Either way it’s a big price to pay for being generous with the champagne at the Christmas Party. [That was before it became too onerous to serve alcohol at the Christmas Party, or have a Christmas Party at all.]
If you thought HR issues were difficult for SMEs in general, spare a thought for family businesses. Here are a few of their stories.
Auntie Ruth has been doing the books for 40 years. She’s a technophobe – Kalamazoo is the ultimate accounting system to her – but she’s had a brief encounter with some MYOB training and now produces incomprehensible figures that takes your external accountant $20,000 worth of time to fix each year. Your bank is refusing to give you a new facility because you don’t produce monthly figures or budgets, but your Dad is Auntie Ruth’s brother and won’t hurt her feelings by sacking her.
Your brother’s just taken 10 weeks off to ‘find himself’ in Nepal, leaving you with four major projects behind time, and four major irate customers refusing to pay their progress payments. You can’t sack him because he owns half the business.
Your Dad is 85 and still owns all the shares in the business, even though you’ve been running it for 20 years. He thinks the business should be run in the same way it was in 1964 and still treats you as a child in front of customers and staff. You’re very close to committing patricide.
All of these issues underline the importance of having professional HR policies, employment contracts, shareholders agreements and family business constitutions, which provide the business with some protection against the vagaries of human nature.
Yet despite all their problems, most of the SME owners I spoke to value their staff highly and rate building a strong culture and a happy, cohesive team as one of the most satisfying aspects of owing a business.