HR Changes Impact Small Business
Statistics shows that the small business sector makes a huge contribution to the Australian economy. About 1.23 million small businesses make up about 97% of the businesses in the Private sector. The agricultural and fisheries sector has another 111,200 small businesses in operation. It is estimated that 3.6 million people work in the private sector in non agricultural firms and 30% are owner managers and 70% are employees.
However, informal and adhoc Human resources management is the characteristic of the small business sector. This is also the significant reason why these small firms find it extremely difficult to acquire and retain good staff. It is also the reason why small changes in HR make a huge impact on this sector!
The crux of the problem is that Small businesses are run by people. Large businesses are run by systems.
One interesting comparison likens the large business to a train operation. People get in and out of the train, but the train speeds on to its destination unfazed by the personalities who board or leave the train. It just runs on the tracks and the drivers just keep the engine and the bogies on the track. Small businesses on the other hand do not have well laid down tracks to follow. They are still finding their route and the personalities who join or leave the business have a say in the direction of travel.
It implies that large firms are able to attract, select and retain employees while ensuring that they have the appropriate skills and qualifications for the job they have to do, because they have well defined HR systems in place. They are able to fit their manpower into the system and that enables them to make a contribution to the economic growth.
Small firms on the other hand, have immense difficulty in finding the right kind of staff, mostly because they do not have well defined systems in place. The HR systems in place are informal and policies vary with the personality at the helm of affairs. Studies conducted on this sector indicate that the communication of policies is largely verbal and inconsistent and is done through daily management walk around. They have a low HR formality and most of the advice sought was from family, peers, friends and fellow business owners. This made for informal planning and a non strategic approach to HRM. A change in the supervisory management or the induction of aggressively independent workers could change the entire HR environment and policy!
It is also estimated that about 30% of the Australian labor in the small business sector are underemployed. Underemployment generates dissatisfaction and that in turn causes attrition and greater movement of labour from one business unit to another. The end result of this constant movement of labour is that small businesses begin to flounder as new personalities manning the show bring change the direction of growth and leave the scene halfway for greener pastures.
It follows that small business sectors need to formalize their HR policies and insulate against small changes that have a large impact on their business. They must put in place clear guidelines on acquisition, retention and deployment of labor in their business in accordance with the laws in vogue. They need to ensure that they have systems that enable communication up and down the operative hierarchy and that everyone works within the framework of the system that keeps the business on track even when the personality at the helm of affairs changes or new laws are introduced.
We are happy to announce we have brought on board a highly qualified and experienced HR Consultant, Kate Hughes of Latitude Consulting. For more information go to our Specialists page.
The Bean Countess
