Small businesses often overlook how good HR practice could support their growth

Small businesses have a people management “blind spot”, often overlooking how stronger HR practice could support their growth, the Chartered Institute of Personnel and Development (CIPD)’s head of public policy told MPs earlier this month.

Speaking to the business, energy and industrial strategy committee, Ben Willmott said many small business owners failed to recognise the challenges they faced as people management issues that could be corrected through HR.

“A lot of small business owner-managers don’t know what they don’t know,” he said. “So, when you start to talk to someone around people management issues, they start thinking: ‘Actually, that’s an obstacle to my business growth. I need to address that and what’s the people management solution?’”

Paula Whitehouse, associate dean for enterprise at Aston Business School, who was also giving evidence to the MPs, added that small businesses were often “not aware” of their own productivity. “I think they’re aware that the UK has a productivity problem but translating that to their own situation is difficult,” she said.

Willmott noted that while management and leadership training received a lot of attention, the CIPD’s experience suggested that most small businesses wanted help with basic people management tasks, such as devising job descriptions, performing appraisals and upholding employment terms and conditions.

“We know that, actually, if you help them get their house in order around the basics, that provides a foundation for growth,” he said. “So you’re building on sand if you’re just talking about the higher-level activity.”

However, speaking on an evidence panel after Willmott’s, Tony Danker, chief executive of Be the Business, argued that leadership training was critical for small business productivity. He said more investment and technology would improve productivity and “the biggest barrier to both those things is leadership”.

“It’s the leadership of the firm that gives you the confidence and understanding that those things matter and it’s worth taking those risks,” he added.

Willmott said encouraging small business owners to look at fundamental HR issues could give them a base to think about bigger picture issues. “By looking at terms and conditions of employment and job descriptions, you start to think more formally about your people,” he said.

David Willett, director of corporate sales at The Open University, told the politicians that small businesses faced problems finding people with the “right skills in the right place in the right time”.

“There’s going to be a continuing need for small businesses to upskill and reskill their workforce, particularly in the age of digital,” he said.

The committee announced its inquiry into small businesses and productivity in January. In written evidence submitted to it earlier, the CIPD called for a national roll-out of its 2015 People Skills programme, which gave small businesses access to HR support and advice.

The UK’s poor productivity, which lags most of its G7 counterparts, has proved a puzzle for some time. The Department for Business, Energy and Industrial Strategy is examining what can be done to tackle flagging business productivity, launching an inquiry into the matter last month. The consultation call for evidence papers suggested that organisations may be able to improve their productivity if they automated some of their processes, including some of their HR tasks.

In May, the Office for National Statistics’ flash productivity estimate revealed that the UK’s productivity had dropped 0.5 per cent in the first quarter of 2018.

If you would like an initial discussion around good people management practice for your SME and would like support in getting the HR basics right, please do get in touch with us at Turnstone HR.

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