This is a follow on from the first part of our 2 part series on “Top 10 HR Mistakes by SMEs – Part 1”
6. Tendency to carry passengers
A consequence of all of the above is that businesses often tolerate poor performance, meaning they end up “carrying passengers”, who are adding no value. For example, some managers may be reluctant to reject substandard work if their primary concern is to be liked! Meanwhile, lack of management training may mean managers feel ill-equipped to deliver the constructive feedback essential for driving performance.
Effective recruitment; management by objectives; regular, honest feedback and willingness to dismiss underperformers are key to increasing productivity. The link between performance and reward – be it financial or more intrinsic such as greater responsibility or promotion, should also not be under-estimated.
7. Inefficient allocation of resources
When small businesses take the step of establishing a new business function, they often appoint an experienced manager to run the new department on a stand-alone basis. The result is that these organisations then end up paying a premium for an over-qualified administrator, who has little time to deliver value-added projects. However, the smart money will identify all the tasks that need to be completed, their volume and the level of skill and experience needed to deliver them. More often than not, the same budget could then provide for a full time administrator in addition to a senior manager who can be engaged on a part-time basis.
Similarly, recent developments in cloud based technology mean that integrated HR and payroll databases are now an affordable option for smaller businesses. As well as payroll, these include automated workflows for holiday and sickness reporting; performance appraisals and employee self-service, freeing up administrative resources for other tasks. As result, SMEs can now use technology to harness the same state-of-the-art performance efficiencies enjoyed by larger organisations.
8. Lack of autonomy
Sub-par recruitment may mean that it is necessary for small businesses to create levels of authorisation within their organisation. However, if you recruit the best staff, with the right attitudes and behaviours you may be able to devolve some decision making to lower levels, especially for administrative tasks. In an environment where speed of response is essential, this can help gain advantage over competitors. Furthermore, autonomy can have an added benefit of increasing the intrinsic job satisfaction of work, leading also to higher levels of employee engagement.
9. Low engagement
There is compelling evidence to demonstrate that organisations whose employees report high levels of engagement outperform the competition on income, shareholder returns and operating margins. However, the preceding HR errors made by SMEs often detract from the level of engagement felt by employees. All the more reason to “get your HR-house in order!”
10. A multitude of other sins!
This article could go on, at length, to discuss a multitude of other HR mistakes that SMEs tend to make – including senior management failing to “walk the talk”; compliance howlers and lack of forums for upward feedback, to name a few! Watch this space for further insights into how SMEs can make use of advancements in technology and cutting-edge HR insight to boost employee morale, increase performance and raise business productivity!
Karen Hill is Director of Nickshot Ltd, a consultancy which offers high performance human resources and payroll solutions to SMEs. A postgraduate of the LSE and Fellow of the Chartered Institute of Personnel and Development, Karen has worked in HR for 19 years, 15 years’ of which in senior management within an SME environment. If you are interested in finding out more about Nickshot’s offering, you can contact Karen on karen@nickshot.co.uk or 07956 213119.”
