People Challenges
in SMME Organisations in 2007
Used
with permission of the author:
Author: Marion Stone
Director
Cornerstone Connections
marion@cornerstoneconnections.co.za
www.cornerstoneconnections.co.za
02
May 2007
Back to ... Workinfo.com Human Resources Magazine Volume 1 Issue
8, 2007
The SMME sector has
been actively promoted in South Africa in the last 20 years and the growth of this
sector is seen as an important contributor to employment and
economic productivity.
SMME organisations face many challenges in order to survive and remain competitive
– cash flow, regulatory requirements and effective marketing are all serious
considerations. In amongst all the day-to-day activities it can be
difficult to invest time on
strategic matters – particularly on those matters that impact
the very people that are
driving those day-to-day activities!
The aim of this survey1 was to establish what the main people related challenges
are for small businesses
as well as to make some recommendations on how to deal with these challenges. In
depth interviews were conducted with 8 SMME’s during Q4 2006 and Q1 2007.
The results do
reinforce some preconceptions about this sector, but they also
yield some surprises! Have a
look at the summary below and see how your organisation compares…
1. Survey Data at a
Glance
| Number of
organisations interviewed |
8 (between Q4 2006 and Q1 2007) |
| Sectors |
Wholesale
& Retail, Media, Services, Manufacturing, ICT |
| Location |
Pre-dominantly CT, some have links to Gauteng and KZN |
| Number of employees |
Range of 8 to 102
Average of 30 people
in an organisation |
| Percentage of
employees with a managerial role |
23% |
| Sectors |
Retail &
Wholesale, Manufacturing, ICT, Media, Services, NGO |
| Formal HR Support
available? |
3 out of 8 of organisations interviewed (Those
with higher no’s and
from manufacturing sector) |
2. Results
Biggest people
related challenges
Attracting and
retaining talented staff
Organisations reported
issues related to:
- Retention of staff (5
organisations)
- Lack of available
talented staff (2 organisations)
Paying more
attention to the strategic matters
Organisations reported
issues related to:
- Spending too much time
on operational activity (4 organisations)
- Effective use of
people resources - keeping the balance between having too many people and
spreading them too thin (1 organisation)
Motivation of staff
Organisations reported
issues related to:
- Create challenging and
interesting roles for staff (1 organisation)
- Motivating staff to
encourage proactive behaviour (1 organisation)
- Maintaining staff
morale when targets are challenging (1 organisation)
- Developing a sense of
security when relying on funding (1 organisation)
-
Labour relations
Organisations reported
issues related to:
- Conflict and
industrial relations (2 organisations)
HR practices
| HR PRACTICE |
NO OF
ORGANISATIONS THAT AGREE |
| Vision & strategy
exist and are clearly communicated to all
staff |
38%
50% have done some
work on this |
| Managers performance
is measured against targets |
63%
1 organisation
currently working on measures |
| Managers effectiveness
is measured through continuous
review (performance appraisals) |
38%
1 organisation
currently working on a process |
| There is planned
development for managers (training plans,
allocated budgets) |
25% |
The role of
managers
| Expectations of the
Manager role in SMME organisations include
the ability to: |
- Assess aptitudes
and match the right person to the right job (2 out
of 8)
- Work competently
in more than 1 area – multiskilled (3 out of 8)
- Provide creative
input – comes up with ideas, plans &
opportunities (3 out of 8)
- Define processes
and systems (2 out of 8)
|
3. Conclusions
-
From the survey
data above you will note that employees with management responsibilities
make
up almost a quarter of the total employees. The role of managers in small
business appears to be broader than in a corporate environment where
roles have more distinct boundaries. Managers are expected to be multi-skilled to an
extent where they can step in for other managers in their absence. There is also
an expectation that they will contribute to problem–solving in areas of the
business that may not be their direct responsibility.
-
Few small
organisations have dedicated HR support, as it is not always
feasible to do so. In some cases
the role forms part of the finance department (where the focus tends to be on
head count costs) or more typically it is part of an MD or CEO role (where it is a
challenge to fit it into their schedules).
-
A low number of
organisations have a clearly communicated vision and strategy. Increased
communication in this area would have a beneficial impact on motivation. On an
encouraging note, at least 2 organisations were working on this at the time of the
interview.
-
Most managers are
measured against some form of targets, but their overall performance is not
reviewed regularly through performance discussions and feedback. As a result
there is little planned development.
-
Almost every
organisation that was interviewed faced challenges in attracting
the right calibre of
employee or keeping them once they had signed them up. Those organisations that had
overcome this particular issue had a very strong identity that they communicated
to potential employees.
4. Recommendations
There are three main
recommendations that flow from the survey results:
Staff retention -
define your company brand
The biggest people
related challenge was the attraction and retention of talented
staff. For some small
organisations attracting the right people is a real concern. Often
less lucrative remuneration
packages and a perceived lack of career development make it hard to ‘sell’ the
organisation to potential recruits. Other organisations have less
of a problem recruiting and
more of a challenge retaining their talented staff. Again, the reasons for turnover
can often be linked back to career opportunities and remuneration.
Staff turnover is
expensive and in small businesses particularly the loss of one
person with a unique skills
set can be very detrimental to customer relations, the ability to
get work done and morale
in general. So, what to do when typically you are not always able to compete with
the big corporate organisations on salary and opportunities?
Firstly, salary is not
the only factor that influences people who are making choices around jobs and
careers. It is an important factor, but definitely not the only
one. Other considerations
that are taken into account include:
What does your
organisation offer in relation to these factors? It is important
to consider what image or
brand you are showing to existing and potential employees. We are not talking
about your product brand here, but your company brand - the values and culture of
your organisation that make it unique and desirable. Are you communicating your
brand to potential employees when you recruit? Do your existing employees know what
you ‘stand for’ and do they understand what benefits they are receiving? Perhaps you
have flexible working or offer a share ownership scheme? Maybe you provide
opportunities to develop a breadth of skills that wouldn’t be possible in a larger
company.
Understand what you
are offering and make sure that your company brand is clear to everyone. In the
absence of dedicated HR support, who is going to take a strategic look at the motivation
and retention of your employees?
|
In the survey, these
were some of the reasons why employees would seek out or remain in
the employment of a
smaller organisation (from most mentioned to least mentioned):
-
Scope for the
individual
They are involved and
feel like their work has impact
Family environment –
they count
Flexible working
-
Scope for impact
Flexible processes and
procedures so there is scope for initiative (more of an entrepreneurial
environment)
-
Scope for
passion
Employees have a
passion for what they do
Creative egos can be
accommodated
-
Scope to learn
Provide unique mix of
experience –sometimes too desirable!
|
(For more information
on this subject, read Take Two
– Managing the Careers
of Technical Specialists and 'Talent on
Tap'.)
Performance
management - focus on the right things
It is the
determination of the business founders that lead to success in the
first place, however if the MD is
still doggedly hanging on to tasks that should have been delegated a long time
ago, then there is a problem! The organic growth of small businesses means that
those who lead have a very good knowledge of all the jobs and tasks that need doing.
This is great for flexibility, but the temptation to do the operational stuff and
neglect the strategic will therefore always be strong. A good way of managing this and
making sure that you make the best use of the skills and talents of all your employees
is by having effective managers and a good performance management process.
Employees with
management responsibilities make up almost a quarter of the total employees and they
have an exceptionally important role to play as they influence retention, employee
motivation and performance. Unlike in corporate organisations where there are many
managers and a less effective one can be balanced out by a number of stronger
managers, every person counts in a small organisation and so they must be effective at
what they do.
In general, employees
want to do a good job and you are doing them a disservice if you are not telling
them what your expectations are within that job. In the absence of
articulated
expectations, people will do whatever comes across their desk. But
how do you know that what
comes across their desk is actually important and will help you achieve the business
objective? By not setting objectives, you are setting up your employees for failure
whereas a good performance management process will drive performance by making
sure employees (and managers) focus on the right things. Not one of those once a
year tick-in-the-box paperwork exercises, but where there is a clear vision and
strategy for the business, where individual objectives feed into
the business strategy and
where behaviours support the organisational culture.
If you want a
performance management process that makes a difference, it should include the following
elements:
(For more information
on this subject, read Six Steps to Effective Performance
Management.)
Know your employees
(so you can motivate them)
You must know your
employees in order to motivate them. One of the key roles of someone managing staff
is understanding what the strengths of their people are and making sure that they
are matching the right people to the right jobs. Now that is motivational! There is
nothing worse than a daily struggle with someone who is simply not suited to the work
that they have been given.
Another aspect of
motivation is that of reward. A chocolate bar might be of interest
to me as a treat whereas
it will give another person a migraine! Some people like public praise and
acknowledgement and others don’t. Everyone likes to be paid a
fair wage, but for some the money
is motivational (think sales team on incentive pay) and for others it isn’t.
Beware of making false assumptions when it comes to reward as it
can backfire badly!
A useful piece of HR
theory is called Hertzberg’s Two Factor Theory2 that separates
"motivational
factors" from "hygiene factors". Hygiene factors are the
foundational requirements for an
employee to feel valued e.g. salary, working conditions and status. If they are
absent or undermined, the foundations of motivation will be compromised however
typically they do not intrinsically motivate. Motivational factors
include opportunities
for personal growth, recognition for achievement and the freedom to make a
difference or leave a mark.
5. Final Comments
This survey shows that
good organisational practices are being implemented by small organisations however
not in a particularly consistent manner. For example, managers appear to be measured
regularly but don’t receive the development they need to improve. Also, there
are some outstanding examples of best practice in the small business arena that
completely dismiss the stereotype that organisational development is the preserve of
larger organisations.
The question is, which
one would you like to be . . . the stereotype or the best practice
organisation?
1 The organisations
interviewed were voluntary participants and their responses were accepted as correct.
2 http://www.valuebasedmanagement.net/methods_herzberg_two_factor_theory.html
13/9/06
Marion
Stone is an
experienced training and development consultant with over 10 years
of experience both nationally and internationally. Her
comprehensive understanding of training strategy and practice has
been acquired in various sectors including manufacturing, FMCG,
construction, media and travel. Her work has focused predominantly on middle managers although she has worked with
various levels within the business from the shop floor to senior
managers.
Marion
holds a first degree in chemistry (UCT) and an MSc in Strategic
Training and Development (
University
of
Surrey Roehampton
). She is accredited by the South African Board of Personnel
Practitioners as a Chartered HR Practitioner. Her diverse
background ensures a practical approach to development activities
that are joined up with organisational goals and processes.
She can be contacted at marion@cornerstoneconnections.co.za.
For regular
newsletters from Marion click on 'Subscribe to newsletter' on
www.cornerstoneconnections.co.za.
Cornerstone
Connections builds
connections between the organisation and it’s employees and
between managers and their teams. Consultancy and training are
offered in the areas of:
Short
description
This survey was done to establish what the main people related challenges
are for small businesses. Some preconceived ideas were confirmed,
while other results were surprising. It makes some recommendations on how to deal with these challenges.
Keywords
and related phrases
Development, labour relations, learning, management, motivation,
people resource, recruitment, retention, skills, SMME, strategy,
talent,
Back to ... Workinfo.com Human Resources Magazine Volume 1 Issue
8, 2007
|
Member
Content 
