12 March 2020
What HR professionals need to deliver in SMEs
There’s a real entrepreneurial spirit within SMEs that larger organisations seek to replicate by recruiting people they believe can deliver this, delivering training courses to foster this behaviour, or trying to shape a culture.
There may be some short-term benefits but the fact is that many LMEs have passed the point of responsiveness and willingness to move quickly to seize an opportunity. As an HR professional in a growing SME, you can directly affect the future of a business and support the commercial achievements of each department……don’t let anyone tell you anything different!
Where should you start?
To support a growing SME, there are several key areas you will need to focus on. These are not just about keeping your head above water but also starting to grow the HR & Payroll offering so you can deliver greater benefit to your people. This will form part of your recruitment and retention strategies but can also affect your reputation on review sites such as Glassdoor. Increasingly, it’s not just potential candidates who are reading reviews but prospective customers. Where you may have grown through word of mouth, today’s digital society will require a completely different approach. As an HR professional, you can positively contribute to the reputation and viability of the business by exploring the areas below.
Understanding the flow of money
Money is the lifeblood of our society both at home and at work. If money doesn’t arrive in your bank account in time for your bills or mortgage to be paid, there is a problem. At work, cash flow enables this to happen. Commercial awareness is often lacking in HR professionals and it’s not good enough to say ‘I don’t understand finance’. This is a mantra I have heard throughout my HR career at all levels. For some, it’s a badge of honour and it’s wrong. In many businesses the people costs will be over 50% of the cost base and HR leaders have a responsibility to understand finances in depth.
Make sure payroll works for your organisation
As a HR professional in an SME you wear many hats, including finalising the payroll, and this is where you will spend one week per month ensuring it’s correct. We understand that growing from a small business where the payroll was delivered by an accountant or an off-the-shelf package to a mainstream business with a few hundred people requires a more professional approach. Most businesses in growth mode will review all options including offshoring, buying in a new software platform, recruiting a payroll team or a hybrid approach of HR platform with a UK managed service. Whatever approach you select, concentrate on the following during your selection:
- Do you provide a UK compliant payroll that includes automated SSP calculations?
- What experience do you have in my sector and can I speak to an existing customer?
- What is the process for submitting changes to our standard payroll (T&E, bonus payments, PILON etc) and what are the additional charges for these items?
- How do I review the payroll submission before it is released to employees via a payslip?
- What time period do I need to commit to the payroll run each month?
- Who do I contact if there is an error with a payslip and what is the SLA for resolving any issues?
Future options for you also include the provision of P11Ds. These may not be widely used across your business, but this is another value adding activity that you should discuss with any provider.
Policies but not policing
Have you ever wondered what caused Google to write its first staff policy? Starting off in a bedroom at Stanford University in California, Larry Page and Sergey Bryn could not have believed that one day, they would need a raft of policies. Often, we see that many start-ups have little or no formal documentation, including Terms of Employment. This is the starting point for many but it rapidly leads onto your absence policy. The next question is what is the pro-rata policy for part-time staff? This isn’t a standard answer as every day I have different discussion with clients over their approach.
Take a few minutes to consider what policies you already have in place; formal or informal. A policy doesn’t have to be written down to be considered a company policy as it has become a recognised practice or procedure. Let’s not get carried away though. Many businesses don’t want to create a policy industry, instead relying on managers applying fairness and judgement throughout the day. (When this approach fails, it’s often the catalyst for a business to provide a range of policies.) If you wish to create an environment where HR is just there to police your policies without the manager having any responsibility for this, you have missed the opportunity to empower and trust your managers.
As SMEs, you probably still rely on the UK statutory entitlements for sickness, maternity, paternity and adoption. Other absence types such as bereavement leave may be treated differently and rather than just unpaid leave, you may wish to make this paid. Absence is a constantly changing arena and one forthcoming change is for the new parental bereavement leave on 6 April 2020 which resulted from Jack’s Law. In this case, a bereaved parent can take up to two weeks of paid leave subject to 26 weeks’ service for children less than 18 years old. It’s important that at these times of crisis, you act compassionately and with confidence that the business has a plan in place to support people.
There are so many online platforms and recruitment agencies to use for every type of business. Over the initial years of growth, you will have used some sources of talent more than others. Which worked for you and why? I work with a client who is in a niche industry and they have used the same recruitment agency for many years with only a few attempts at online adverts. Clearly, this works for them, but it may not be the right answer for everyone.
This is an area to focus on and understand how you can use a range of people to supplement your workforce. Sourcing talent isn’t just about appointing people into permanent jobs. There may be short term contracts, consultants or agencies that you wish to draw from throughout the year. You also have the opportunity to make the most of social media by making this the first place for people to find your jobs. If you can encourage your people to like, share and comment on your posts, you will gain a greater coverage and attract more diverse candidates.
You can get prepared by meeting some of the providers, exploring options for software/apps and speaking to others in your industry. Importantly, make sure that you have a referral scheme in place to incentivise existing employees to recommend others. Your existing workforce should be the greatest advocate of your company to both clients and candidates, but if they aren’t you will need to find out why.
Making feedback the norm
There will be a point where you begin to tip from the beauty of everyone knowing what others are doing and how they fit into those plans. At this point, businesses frequently make the mistake of implementing a complex annual appraisal system that seldom delivers the benefits they aspire to, instead delivering a time-consuming process that both managers and employees hate.
I work with businesses who have very different approaches to feedback. Some still stick to an annual appraisal, others have opted for an appraisal but with frequent check-ins and others have taken the brave step to rely on regular check-ins. When you are pressed to implement an annual appraisal and then report to the board on completion rates, please be strong and say ‘no’. There is so much research about why appraisals don’t work.
Your business should have regular check-ins between a manager and employee that forms part of a transparent discussion regarding the employee’s goals, achievements, career progression, providing support, celebrating success and any development needs. The frequency differs for every employee, but you may wish to include some guidance around a minimum of one per quarter. Also, there is nothing wrong with including a salary review as part of a check-in as they can be requested by a manager or an employee. Embedding check-ins during your growth phase will ensure this is becomes an established business practice without the pain of moving from an annual appraisal at a later date.
As a HR professional working in an SME, you can have a long-lasting effect on both the business and the people within it. Were you aware that in 2019, SMEs in the UK employed 16.6 million people or that SMEs accounted for a £2.2 trillion turnover? We recognise the efforts you expend to make sure your business stays on track and we acknowledge the many jobs you will do today – coach, counsellor, dispute mediator, investigative officer, out of hours contact and at some point, HR professional.