HR Gurus is your HR team on call.

Turning your people in to profits

Ask Emily Jaksch and Sarah Gibbins from HR Gurus anything about Human Resources and you can tell they are passionate about what they do. In business together for three years now, they apply 25 years’ combined industry experience to assist small to medium enterprises to make the right decisions about the people in their business.

At HR Gurus, we are all about making HR simple. And, put simply, HR is about managing your people to make profits.  Sounds good, right… but what does it actually mean?

When most people think of HR, they assume it means recruitment. But, that’s only partly right.  Recruitment is part of the HR process, but not the whole. We like to explain HR in 6 simple steps, or our 6 factors of HR:

  1. Recruitment – get the right people into your team and show them what to do
  2. Legal Stuff – know the laws and how to work them to your advantage
  3. Rewards – if you pay peanuts, you get monkeys
  4. Performance – people like to know what they’re doing right and wrong
  5. Training – it’s all about coaching
  6. Have fun – people perform better in a positive place.

So, how does this work for SMEs? Nearly every client or business that we meet has thought ‘I don’t need HR – I’m only a small business’. But this isn’t the case – HR is part of every manager’s job, whether your business has 5 employees or 500 because it’s about maximising the people resources you’ve got. So here’s our hot tips for SMEs in managing people effectively:

Remember that your people = profits

Too often, businesses forget what a valuable resource they have in the people they employ. You spend a lot of time and effort in attracting and recruiting people into your business, so why would you then forget about it once they are there? ‘Set and forget’ is like buying a brand new car then never servicing it – your people are the same. People need information, guidelines and ongoing communication to be able to do their jobs well and continue to perform, so don’t set and forget. Think of it this way – your people costs are the biggest outgoing for your business so why wouldn’t you want to maximise this investment?

Recruitment – get it right the first time

Did you know that the average cost of one person leaving your business is between 85% – 100% of their annual salary? Ouch. So, you want to get the right person in, the first time.  If you make the wrong decision about the people you employ, it can end up costing you in poor productivity, your time in managing the person and ultimately, the delivery to your customers. We know that as a small business, your margins are probably pretty tight so you can’t afford mistakes and additional costs. So, when it comes to recruitment:

1. Know what you want (have a job description and key skills you need in the role)

2. Have a structured approach and be consistent in your process (so you are comparing apples with apples)

3. Make your decision for the right reason (don’t hire anyone just because you need someone quickly)

4. Induct new employees (people need to know exactly what to do)

Show people what to do

This starts with induction. People need to know what their job is – otherwise, how can they do it properly? What this means is, provide a clear position description. Once you have this, the fastest way to set a positive path for performance is to outline clear objectives and goals for each position. This means you set expectations early, and have a benchmark from which to measure performance. Without the goals, how can you determine if someone is actually performing? And, conversely, how do people know what they are supposed to do, and how to do it with goals and feedback?  Once you have set this, have regular conversations with your people – they will want to know whether they are on track, and if not, how they can be. Conversations don’t need to be a huge deal, just keep it regular and in the format that works for you and your staff.

Be clear in the reporting structure

Many small businesses have a flat structure so reporting may seem easy. But many SMEs often have more than one owner or manager, and have their staff report to both. This is where a lot of confusion can start. Think about it this way – if you and your business partner have differing views on an issue and give different instructions, what is the employee supposed to do?  It’s a very tough position for an employee to be in. So, it’s critical to have a defined structure within the business. Employees need to be clear about who they’re accountable to; what they’re accountable for; and what they need to do on a day-to-day basis.

Communicate, communicate, communicate!

Business owners hold a lot of knowledge in their head. After all, this is why you started the business in the first place, and in terms of commerce, this is appropriate. However, you can’t do it all on your own, which is why you have staff. So, use your people! The best way to do this is to provide as much information as you can about what the business is about; where it is going; what’s happening day to day and how each employee fits into the plan. This gives people context to their work, and helps them see that they are an important part of the bigger picture. Giving this context also means that people are able to make better decisions within their role, because they can see the impacts on other parts of the business.

The other huge benefit of ongoing communication is that it motivates people.  You are passionate and driven and motivated because it’s your business, but how do you get everyone else on the same levels on enthusiasm? Communication is the key. Once people feel they are part of something, and valued, it has an amazing impact.

One simple way to open the communication channels is to hold regular sessions with employees. Take the time to sit down and talk to your people, let them know what’s happening. And remember that communication is a 2 way street – so have your ears open, listen to their input, ask them to put forward their ideas.

Micro management doesn’t work

Business owners can also get so bogged down with day-to-day matters they often end up micro managing their staff and don’t take the time to let their people do things for themselves. We know it often seems easier to just do it yourself, but empowering people to make decisions and treating them like the smart, capable adults they are gets the best results.  This will also free up your time to do the million other things on your list!

You don’t know everything

Your employees are the best way to find out what’s really happening in your business – they are the eyes and ears of your business. Who else is speaking with suppliers, customers, peers and colleagues on a day to day basis? So, work it. Go to your employees and ask them “what can we do better and how can we do it better? What are people saying about us and how can we use that to improve?” Remember, ten heads are better than one, so don’t assume you have all the answers because no one person ever does. Great managers realise their own strengths and weaknesses and surrounds themselves with people who fill those gaps.

Happy employees mean better productivity = happy customers

If your people are enthusiastic about your business and enjoy coming to work, your customers will know. They’ll provide better service, which engages your customers even more! This is the ultimate outcome of turning your people into profits.

Remember, your competitors can copy your products, your services, your marketing strategy – almost anything. But your people and the culture your create is uniquely yours and the one thing they can’t copy. So, think of your people as your Unique Selling Proposition (USP) and treat them like the investment that they are.

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