International Business Festival 2018




Ben Willmott, head of public policy, CIPD
25 June 2018

A practical session at the International Business Festival will explore the benefits of good HR practice to your workforce - and the potential knock-on effects for your business.

One of the challenges in tackling the problem of the UK’s poor productivity growth is that that it is hugely complex, with many contributing factors being put forward to explain it. These range from low levels of investment in equipment and technology to cheap labour, poor levels of literacy and numeracy, and businesses being stuck in a ‘wait and see’ mode over issues like Brexit.

However, there is another dimension of productivity that is coming under increasing scrutiny and that is the quality of management practices in the UK, and people-management practices in particular. With SMEs accounting for 99.9% of UK businesses and generating 47% of turnover, unless small and medium-sized firms can raise their game in this area, the UK’s productivity puzzle will likely go unsolved.Generic image of two women talking over a laptop

Of course, this is easier said than done. Many small businesses are focused on survival and simply ‘getting the job done’. Those who own micro and small businesses often wear several hats too – CEO, accountant, facilities manager - the list is endless and they can struggle to address people-management in an effective way. They are also far less likely to have dedicated HR support than larger firms, being too small for a permanent, in-house role, and the provision of low or no-cost business support is all too often poorly signposted.

It’s against this backdrop that the CIPD, the professional body for HR and people development, supported by JPMorgan Chase Foundation, developed and piloted the People Skills initiative. The initiative provided HR support to more than 400 small firms in Stoke on Trent, Glasgow and Hackney, East London, from July 2015 to October 2016.

It was delivered through partners including chambers of commerce, Local Enterprise Partnerships (LEP), Growth Hub and councils and, on evaluation, provided some fascinating insights into the type of HR support that SMEs need, how much it is valued and its impact.

One of the evaluation's most significant findings was that the first step towards business improvement for many small businesses is getting the very basics of people-management in place. We consistently found that until the ‘fundamentals’ are in place, owner-managers typically don’t have the capability, interest or time to invest in or explore value-added activity such as training and development, which can really make a difference to a business’s productivity and potential.

Here are five key HR fundamentals that SMEs should explore:

  1. Seek professional advice: CIPD research suggests that firms typically only employ an HR professional when they have 80 to 100 employees, which means that many small businesses will be without dedicated resource to navigate employment law and sensitive workforce issues. On such specific matters, small firms should seek outside expertise. Our People Skills initiative found that bespoke face-to-face support makes a real difference, so speak to your local council, LEP, Growth Hub or chamber of commerce to find out what support may be available in your area.
  2. Get the basics right: Take the time to ensure you have a solid foundation to build people-management practices on. This starts with key fundamentals like establishing workers’ terms and conditions, job descriptions, contracts and legal compliance.
  3. Invest in your people: Once the fundamentals are in place, it’s time to think about how your business can move from compliance and transactional practices to more transformative activities. This can involve training, development, coaching, performance-management and personal development. By investing in your people, you are investing in your business’s potential and will inevitably see improvements to people’s confidence and abilities which should, in turn, boost productivity.
  4. Understand your culture: Many small businesses prefer to have a ‘family feel’ and be fairly relaxed. However, this can lead to a lack of clarity when it comes to expectations of employees in terms of their approach to work, behaviours and accountability.  This can be addressed through formalising policies and procedures in a staff handbook which spells out ‘this is who we are and this is how we do things’. This then needs to be backed up by how people-managers and owner-managers behave, and how they live and breathe the culture and values of the organisation. Training can help these individuals hone their people-management style, so it is appropriate to both them and the business.
  5. Review and refine: As your business and staff numbers grow, it may be that your policies and procedures need updating. Good businesses adhere to good principles of people-management rather than being bound by policies and red tape, but there are certain policies that you should regularly review, such as parental leave arrangements, to make sure they are keeping up with legal requirements.

For more advice on HR in small businesses visit:

* Building HR Capability/Skills in SMEs - Knowledge Hub, June 27. Ben Willmott and Warren Howlett, of CIPD, discuss how small UK businesses can build ambition and HR capability, including the benefits of getting HR basics right.

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