For the average SME, it is important to manage both these burdens correctly, particularly in recessionary times, when money and resources are at a premium.
In such times of commercial challenges, it is tempting for SMEs to cut back on areas perceived as non-essential; Human Resources (HR) systems and ‘manpower’ can be top of the list. Yet all too often this very short sighted approach can lead to damaging repercussions for the business. Considering the implications before the event (BTE) is always the preferred approach, as after the event (ATE) can be all too little, all too late.
The key issues can be broken down into dos and don’ts in terms of retention of staff vs recruitment. Get your recruitment processes right first time, and the next steps become simple – to work at motivating and retaining the good staff you have, rather than face the headache of having to start the costly and time consuming recruitment process.
1. Review Costs
The temptation is always to cut costs for a quick financial win. This can involve cutting staff, technology or both, but in the long run this is a decision that could cost you more money than you save. Making staff redundant just to discover they are the very people you need to cover that big unexpected order could be the difference between business success and failure. In some sectors, recruiting new staff could cost you more, not to mention any training they may need or the extra cost of recruiting people who can ‘hit the ground running’.
Knee-jerk reactions are almost always a mistake in business. If you need to cut costs – conduct a proper review based on long term strategy rather than short term gain. Having the right HR software in place can help you do this effectively. The threat of redundancy is also not the best way to motivate your staff and even if you decide against it, the hint of the process could lead to retention issues as the rats seek to exit what they now perceive as a sinking ship.
2. Balance Risk
This leads us onto the need to effectively balance risk. Relying on ATE, rather than good systems of control is a very high risk strategy and undermines the long term prognosis for any business. Cost effective software, incorporating BTE systems are a far better approach and add real value to your business.
When times are tight an ‘elastic’ HR department can be a more cost-effective approach to HR for SMEs. With the right software and systems in place, an HR department can be designed to grow with you when business is booming and contract in calmer waters. Working this way means your costs are directly proportional to how much you use the services. In this regard, the UK can learn a lot from other countries when it comes to staff relations and communications. A pay as you go approach to software and services is well known in the US and is now starting to find its way across the pond.
4. Don’t Cut Corners
No matter what anyone says, if your HR processes and recruitment policies are sound, then retention is always the better (and cheaper) option than recruitment. Small businesses taking their first tentative steps into recruitment will know all about this. Even if you recruit part time workers, you face the same legal and financial considerations and that’s before you have undertaken your first interviews. If you have the right staff and are happy with their work and the value they bring to your business, then retention and ensuring they stay put is always a more cost-effective option
Communication is key and the right HR software can help, particularly those who may be good at their business, but not perhaps born communicators. Get it right and internal communication delivers loyal, contented and more importantly, committed employees that can make all the difference between a successful business and one that needs to be salvaged. Get it wrong, and you’re in trouble. When employees feel they have a voice, they are easier to keep on-side in hard times. The more information you can get in a crisis the better, and who better to tell it like it is than those employees who are ‘working at the coalface’ of your business?
You should never stop talking to your staff about changes, challenges and opportunities. They can never be fully on side unless they are informed and motivated and feel part of the team. There are few things worse than discovering on the office grapevine that you might be about to lose your job, rather than hearing the facts for your employer first hand. Conversely, even a small group, if fully informed and on-message can work wonders.
Employee relations are especially vital during times of economic downturn, as the workforce fear for their jobs, while employers correspondingly fear losing their top talent as a consequence. This chain of events can quickly transform a struggle into a shutdown. Yet most businesses will be surprised how a workforce is more often than not more than willing to help in a tight spot – if they feel appreciated. One easy and cost-effective way to keep the internal communication channels open is with smart technology and HR software has a big role to play in this.
In HR terms, what we are talking about is internal communications and despite us all knowing that it is ‘good to talk’, many companies seem to find themselves mute and failing to act when action is called for. Yet, for large or small companies, it doesn’t have to be this way.
Cloud based, smart technology solutions are now available to help organisations keep staff informed and take the hassle out of internal communications. These solutions do not cost the earth and there is no excuse anymore for companies not properly communicating news to staff in a timely way.
Modern intuitive HR software is about far more than just monitoring holidays and sick leave. The latest generation technology includes secure staff intranet services, fully integrated and ready to go from day one, while an electronic office ‘notice board’ is a great way to share the latest news, job vacancies, training opportunities, key contacts and company polices.
Invest a few pounds in your people by adopting the latest HR technology, and you will reap far reaching benefits for years to come. What is best for one business will not suit another, but an integrated approach to HR with communication at its heart is a great place for everyone to start.
Bridget Stidworthy, Customer Services Director, Chorus HR