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According to ‘Business Radar Report by Pitcher Partners. Gavin Debono, a partner in the firm’s private and family practice, explains why.
For the purposes of this report, a cross-section of 400 business owners were interviewed about their experiences of running medium-sized Australian businesses. Independent research gathered both quantitative and qualitative data to understand the challenges mid-sized business owners face and their approach to managing their success.
Managers of Australia’s medium-sized businesses, which typically employ 20 to 200 people, are usually aware that they are responsible for the livelihoods of their employees – and given their small workforces, they know their people well. The gravity of employing so many people while managing job satisfaction, KPIs and complicated employment laws and compensation structures can weigh heavily on executives.
Seeing high employee turnover is such a widespread problem that many business owners just give up on it. Despite feeling that their destiny is in their hands when it comes to their success, the business leaders we spoke with admitted that they had trouble imagining a future without staffing issues.
Some business owners have taken a bullish stance and a thick skin when it comes to their employees. One CEO of a growing company told researchers, “People come and go, but I stay.”
However, the rise of “people and culture” titles, especially in highly successful companies, shows the importance of getting the balance right. Human resource management requires specialized knowledge that is often outside the expertise of medium-sized business owners.
Creating the right mix of people and culture is increasingly recognized as a key way to ensure company success. A 2018 feature in the Harvard Business Review stated that strategy and culture are the two main levers available to a manager.
HR basics
For start-up or growth-stage businesses, it’s crucial to get the HR function right before hiring the right people for other parts of their business. Without this foundation, employers could see dire consequences, especially when it comes to labor law compliance and regulatory changes.
Mid-market businesses know they should adopt a workforce plan to increase capabilities and ensure their best people stay with the company. Despite the difficulty of defeating a consistent corporate culture, the lack of focus in this area is one of the key reasons why employees are disaffected and looking for greener pastures.
Human resource management was cited in a Business Radar report as one of the top issues keeping business owners up at night. Respondents across almost all sectors identified “access to a suitably skilled workforce” and “human resource management” as the main challenges they will face in the near future and over the next five years.
Despite this, only 28% of businesses have sought HRM-related advice in the past five years, and fewer than 26% said they would consider seeking advice on the topic in the future. This shows that there is a key gap between acknowledging the existence of a problem and taking the necessary steps to solve it.
People and culture in the time of the coronavirus
We are seeing HR teams and people and culture being tested now as businesses have to make decisions about headcount and profit margins in the face of the coronavirus pandemic.
Business owners also easily panic about the impact of subsequent economic shocks on the future of the business. Business operators face an almost impossible trade-off between proactively cutting costs and maintaining workforce morale and confidence.
One of the key takeaways from the report was the perception that problems are sometimes also opportunities, given that business leaders are able to step back, look at things objectively and ask the right questions. While the emphasis during this period is, and rightly so, on a measured and dry approach to decisions such as cutting or stopping segments of your workforce, there are emotional and cultural aspects to think about as well.
For family businesses, this is another impetus to manage and address the dynamics between family and non-family employees. In any case, it is essential to maintain communication with your people, from managers to your youngest employees.
By letting your people know that you understand their concerns and that you do what you said you would do, you will maintain the level of trust necessary to motivate employees and build long-term loyalty in your business. Business owners interested in attracting talent in the future will need to consider that the experience of working during a global pandemic will be a topic of discussion among current and future employees for years to come.
Savvy business owners let their employees know they support their transition to working from home and are “in the same boat.” When tough decisions have to be made, they are handled with care.
Once this foundation of trust is built during a crisis, it allows business owners to begin taking proactive measures to protect their employees from future crises. Many of my clients are now thinking about proactively upskilling and cross-skilling key members of their workforce to allow them greater flexibility.
By focusing on enhancing capabilities during times of uncertainty, business leaders can ensure they have a competitive edge and can bounce back stronger when the worst is over.
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