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Human resources issues that SMEs need to take note off

Editorial Team
30/11/2017 10:37 AM

Small to Medium Enterprises like large organisations face a number of human resources challenges that need to be tackled for the organisation to work efficiently. Unlike large organisations, small to medium enterprises normally take human resources issues for granted. They normally start taking action when things are already out of control. Small to medium enterprises need to adopt best practice human resources procedures to ensure that they achieve their business objectives. This does not require huge amounts of money as long as the right processes are put in place at the right time.

The process starts with recruitment. Remember the quality of people you employ will determine your success in the long term. Normally, small to medium enterprises start by employing relatives and people they know or people related to the shareholders. There is nothing wrong with employing people you know as long as these people are employed on merit. We normally prefer friends and relatives because they are easy to deal with and under pay. The downside of this practice is that employing relatives or friends who do not have the requisite skills, can cost you money in the long run. In a family run business, it can have its advantages, especially on succession and business continuity.

Reward and remuneration is another key aspect that SMEs need to deal with effectively. You need a transparent and defensible way of setting salaries for your staff. In cases where the positions are not enough to warrant carrying out a job evaluation exercise, always base your salaries on performance rather than what the market is paying. This is a tricky assignment, but with a bit of insight and professionalism it can be done effectively. If you are an owner of an SME, remember that employing people is a tricky business. You will have to live with the fact that by hiring a new employee, nothing of value may come out of the new relationship. This can cost you money if the person turns out to be a non-performer. Always set your salaries for new employees on the lower side to guard against putting yourself in a high cost structure. Besides basic salary always try to reward employees based on performance. In SMEs it’s easy for employees to see the connection between their rewards and company performance, so utilize this advantage.

If you employ non-managerial staff covered by the NEC, you should always try by all means to implement NEC mandated increases unless you cannot afford these. If so, there are procedures you can follow when seeking exemption. If you decide to give NEC increases, make sure you also review the salaries for your managerial staff as well so that they don’t lag behind the non-managerial staff.

The other area that SMEs need to focus on is performance management. Set goals for all your staff linked to the overall business goals. Managing performance can help you build a performance culture early in the development of your business. This is not costly at all especially if you start early in the life cycle of your business. Instilling a performance culture early in your business ensures that all your members of staff are focused.

Also, ensure that your employees are aware of their conditions of service. A summary of all conditions and expectations must be outlined in a staff handbook. The latter does not have to be detailed as in the case of big organisations. What needs to be done is to explain all the conditions of service to employees. This should be supported by formal letters of appointment. SMEs normally do not give their employees letters of appointment or take long to issue them. This should not be allowed to happen as it can create industrial relations problems for your company. It should be a priority to always ensure that all new employees are issued with letters of appointment.

Management also needs to keep the lines of communication with staff members open. The communication channel should not be used to communicate bad news only but to inform staff on how the business is doing.

Memory Nguwi is an Occupational Psychologist, Data Scientist, Speaker, & Managing Consultant- Industrial Psychology Consultants (Pvt) Ltd a management and human resources consulting firm. https://www.linkedin.com/in/memorynguwi/ Phone 481946-48/481950/2900276/2900966 or email: mnguwi@ipcconsultants.com or visit our website at www.ipcconsultants.com

Editorial Team

This article was written by one of the consultants at IPC

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