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HR Strategy for Small Businesses

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The small business owner is usually her own Chief Human Resources Officer, she has to plan to the tiniest detail how to attract, develop and retain her employees. This task is daunting as the small business is the last place most people will look to for work.

The SME owner therefore needs to have strategies in place for recruitment, compensation, training, succession and when it comes to exit of employees. She needs to have her eyes firmly on the HR Metrics to ensure that the cost involved in the HR process is kept at optimal levels. The cost of hiring, compensation, benefits and all other cost incurred to keep an employee does not eat too deeply into the profit of the business.

  1. Recruitment Strategy

A small business owner despite the wish to hire the best (or the next best) will most times have to settle for the available. The small business owner should start the recruitment process with the end in mind. What is the Company’s vision, mission? She needs to know where the business is and where she wants it to be in the short, medium and long term. Why would anyone come to work for her? What makes her Company different from other SMEs?  She also needs to determine what is most important, experience, qualification, attitude or knowledge amongst several attributes.

The small business owner then needs to do a job analysis. A job analysis is the process used to collect information about the duties, responsibilities, necessary skills, outcomes, and work environment of a particular job. It is a detailed examination of the

}   tasks (performance elements) that make up a job (employee role),

}   conditions under which they are performed, and

}   what the job requires in terms of aptitudes (potential for achievement), attitudes (behavior characteristics), knowledge, skills, and the physical condition of the employee.

 Its objectives include

(a) determination of the most efficient methods of doing a job

(b) enhancement of the employee's job satisfaction

(c) improvement in training methods

(d) development of performance measurement systems

(e) matching of job-specifications with the person-specifications in employee selection

A job Analysis entails:

}  Reviewing the job responsibilities of current employees

}  Analyzing the work duties, tasks, and responsibilities that need to be accomplished by the employee filling the position and

}  Articulation of the most important outcomes or contributions needed from the position.

Here she needs to know what the worker does, how and why the worker will do the job and the qualification of the person to do the job.

After this, the job description has to be articulated. This is a list of the general tasks, or functions, and responsibilities of a position. Typically, it includes to whom the position reports, specifications such as the qualifications needed by the person in the job. A job description is usually developed from the job analysis. The objective of a job description is to have a clear outline of duties and responsibilities to make the screening process as direct and focused as possible.

When all these are properly articulated, then she would have to think of where the right candidates will come from. Typically, there is a tendency to ask friends and family members to help find people to fill in the vacancy. This is a major mistake. These people do not know your business as well as you and would only send people who have harassed them for work or people they feel sorry for. They most times would not think of best fit. However, small business owners can find good staff from the most unlikely places. That Manager at your hairdressing salon who greets every customer like they are the most valuable assets the salon has, who goes out of her way to ensure that all aspects of the business works and from time to time ensures that the salon staff are discharging their duties effectively and efficiently may just be the Admin Manager your business needs.

If there is a need to advertise, there are free job posting internet sites like Jobberman, Naijahotjobs, these are useful tools for the business owner who has limited resources to spread around.

When the resumes and credential of candidates who have the qualities the entrepreneur wants are all assembled then there is the issue of interview. The interview process will determine the quality of hire. The Entrepreneur has to come with interview questions that will bring out the skills and attitude of the right candidate.

Before the interview, have a checklist

v  Have questions prepared and a form for noting down the candidates’ response

v  Think through sitting arrangement.

v  Ensure that you have the resumes/profiles of all shortlisted candidates to be interviewed that day

v  Make sure atmosphere is comfortable for everyone involved in the interviewing process

v  Don’t pick your calls unless it is an emergency. Don’t keep going out to supervise subordinates or keep candidates waiting endlessly.

Interview questions should involve those that will not only showcase the candidates’ qualification but his attitude and values also.

When conducting interviews, the entrepreneur should keep quiet 80% of the time and ask open ended questions to allow the candidate express himself. She should also pay special attention to non-verbal language which more often than not says more than words. The efficiency and effectiveness of the recruitment process will determine if the right candidate is hired otherwise the entrepreneur should look forward to going through the process again a few months down the line.

2.   Compensation and Benefit Strategy

The small business owner has to think of innovative ways to be competitive when it comes to paying salaries and other benefits. As paying premium is not going to happen, things like paying for health insurance, running a car pool, crèche, reduction of work hours, payment of commission, addition of certification as an incentive and telecommuting can be introduced. Pension is statutory and compulsory if the organisation has more than five staff irrespective of their employment status, so is employee compensation for companies with staff who do high risk jobs.

3.  Training Strategy

Small businesses have limited funds, and high staff turnover, but there is still the need for staff training. Small business owners have to look for inexpensive but effective ways of training their staff. One of this is to ask friends who have experience in different areas to come train your staff pro bono. Another is to give your service in exchange for training. You can also train yourself and pass this knowledge on to your staff.

4.  Retention Strategy

Because there is tendency for high staff turnover, SME owners have to be sure that the people working for them know that their work is valued and they have a stake and a future in the business. There should be a succession plan in place, the business owner should run the business transparently, be all inclusive.

5.  HR Metrics Strategy

Measurements used to determine the value and effectiveness of HR strategies. “Typically includes such items as cost per hire, turnover rates/costs, training and human capital ROI, labor /productivity rates and costs, benefit costs per employee. Keep an eye on the bottom-line. Know the labor cost per employee calculator”(Wikipedia). This tells the Management of an organisation how much it spends on each employee from the moment the position is advertised to the day the employee leaves. It takes into consideration, not only the tangible cost such as how much the recruitment firm was paid for the hiring employee, the cost of training, salary, health insurance, leave allowance etc but the intangible such as the cost to the Company when an employee takes medical, maternity, compassionate leave, is absent from work for any other reason, spends the Company’s time on social media etc

By calculating the HR metrics, the small business owner will know the cost of hiring, retaining and if it comes to it terminating the appointment of an employee.

All in all small business owners have to articulate short, mid and long term human resources plans that can be updated and improved on as their Companies evolve.

 

The Author, Feyikemi Odunuga is the Principal Consultant of HT-Limited, an HR consulting outfit. She is also an SME Toolkit certified trainer

HT-Limited

 

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