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HR can make or break your small business
Congratulations! You’ve taken the plunge, set up your business and you’ve been working hard! Now you are ready to take the next step and grow your business, so you need to hire new staff and add more capacity. When growing your business, looking after your people (human capital) is often overlooked while you focus on cashflow, profit and your overheads.
Small, micro, and medium enterprises (SMMEs) often wait for something to go wrong before they consult an HR specialist. HR lessons are expensive to fix and usually have negative consequences. It’s risky to hire staff without knowing your responsibilities to them. Putting a few basic policies and procedures in place from the outset could save you both time and anxiety. Don’t wait until it’s too late!
Some of the benefits HR will bring to your business
- Boundaries – Formal employee contracts and job descriptions set a good foundation for healthy boundaries between employer and employee. It’s all too easy to treat employees like family members or friends (especially if they are!) but be warned – once you’ve crossed this line it’s difficult to step back when things go wrong. When everyone stays within their clear boundaries at work there is no confusion.
- Expectations – Basic psychology holds that much unhappiness is caused by unmet expectations. Good HR practices would be to clarify expectations and implement regular feedback and communication sessions (this helps with building loyalty and retention). Young, first-time workers who don’t know what you expect can easily make all sorts of assumptions and misunderstand the requirements of the job. Equally, a new business owner may expect a first-timer to deliver more than they can.
- Respect and role modelling – If you treat your employees casually by not putting all the formalities in place, don’t expect them to treat you any differently. Show them the respect of taking their employment seriously and they are more likely to do the same. Lead by example and walk your own talk as a business owner/leader. Consistency is also key so ensure that you treat all your employees consistently and fairly.
- Building trust and loyalty from the start – Start as you mean to go on. Welcoming new staff with an HR pack (e.g., welcome letter, signed contract, job description, basic HR manual, etc.) and ensuring they have a workspace; immediately puts them on notice that, despite being a small business, you do things properly, and expect the same of them.
Practical benefits of formal HR practices
Ambiguity is the enemy of good people management, and nothing removes ambiguity like good HR practices. They help you manage your employees and keep them motivated, increase business efficiency, build trust and engagement, and reduce attrition.
- Identify staffing requirements – This enables you to plan ahead, budget and recruit carefully rather than in a rush.
- Identify development needs – Employee roles could grow with your company provided you supply the right training and/or mentoring.
- Base promotions on skills, not length of service – In a small business people are often promoted just because they’ve been there from the start. This creates all sorts of problems for other staff and for you, as you may be pushing them into work they’re not ready or trained for.
- Document goals and measure performance – Staff will be much happier and respect you more if they have clear goals and know how they are expected to perform.
- Stay legal – No business can afford to fall foul of the CCMA – for any size company it can affect their reputation, waste valuable time and can cost money. Every employer should also adhere to the Basic Conditions of Employment Act. There are lots of details you can’t be casual about, such as the fact that employment contracts are a legal requirement (and clear guidelines need to be followed), as is ensuring that legal procedures are followed and documented when employees need to be disciplined or dismissed.
- Create a fair environment – Employees need to feel that they’re working in a culture where their complaints are heard and treated fairly and seriously.
- Lay a solid foundation – The level of HR support you need depends on the size of your company, but if you develop basic HR guidelines and practices when you’re a micro business of fewer than five employees, you’ll have laid a solid foundation for growing your business.
Our gift to you
Harambee has been placing entry-level employees in the SME sector for four years now. From the beginning we recognised the recruitment challenges small companies face; we know it’s a delicate balance between what both parties need. This is why we provide a great deal of guidance, including a free HR Toolkit for SME employers.
It may seem overwhelming at first but take one policy at a time and adapt it to your business, starting with some of the requirements outlined in the Basic Conditions of Employment Act.
Our aim is to power economic growth by helping SMEs to unlock the potential of small business to absorb young talent. Contact us on firstname.lastname@example.org or 011 593 0505 for more information.
The content in this article was provided by Alexandra Hadfield, Harambee SME Sector Lead.
Harambee Youth Employment Accelerator is a not-for-profit social enterprise that builds solutions to tackle youth unemployment. The organisation partners with businesses to match their entry-level requirements to their network of high-potential work-seekers who have been locked out of the formal economy, typically because they have no networks and come from social grant dependent households. Through scientifically rigorous matching tools and behavioural readiness programmes, Harambee reduces hiring risk and enables new job creation by focusing on churn, skills scarcity and retention, supported by change management with employers. Harambee’s model for change also builds solutions to address system-wide challenges through research, innovation and public-private partnerships.
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