By Sean Taggart, Owner and Chief Executive of The Albatross Group
You can’t run your business without them. They can take up all your time. They incur huge costs on your bottom line but you don’t know how much value they add to your company. And every single business in the UK has them.
What are we talking about? You guessed, it, it’s your employees. Your staff. Your workforce. Those people who make everything happen in your business.
For an SME, managing your people can be both easy and incredibly difficult. On one hand it’s likely that you know everyone who works for you. You tend to work as a tightly-knit team and you instinctively know the contribution that each person adds to the business as a whole.
On the other hand, your HR practices are not likely to be that sophisticated because you probably haven’t needed them to be. HR activity can tend to be reactive rather than proactive, managing the here and now rather than planning ahead.
All of this is manageable, in fact, it has to be, as there are often too many other calls on your time! The problem comes when your company grows to a point when manageable becomes distinctly unmanageable. For many this is when you hit a tipping point such as where the number of employees grows beyond the point where everyone knows everyone’s name.
For us, it started when we hit 60 employees. That was the point that HR formally went off my desk elsewhere.
When you’re an SME owner manager you start off as a jack of all trades – covering finance, sales, marketing and HR. They all fit together when you’re starting out, but once you start to grow, it’s time to focus on your strengths and, more importantly, recognise your weaknesses. Even as a ‘people person’ I realised that I needed to spend more time on the business strategy for growth and the transactional time spent managing people processes back at base was overtaking that. In other words I wasn’t being as effective as I needed to be. I had to let go.
I also realised that the trade off between the costs of investing in HR staff versus the potential benefits of having better individuals and processes managing our growing workforce combined with less reliance on expensive external legal advice was actually stacked in our favour.
The time had arrived to hand the reins to a colleague with more than just a passing responsibility for people in the business.
But with opening up our company to more focused, pro-active and established HR practices, we also opened ourselves up to a very important question. How exactly can we know that we are getting a return on our investment in HR?
Certainly we could look at increases to the bottom line or to our customer base, but they are very immediate short term effects. An investment is not just about immediate returns, it’s about a long term impact and our people generally represent the biggest investments that we ever make.
SMEs should seriously consider how being able to value their talent will enable them to grow and develop themselves as organisations
The concept of being able to calculate the value of your people has been around for a long time, but without much success. For many it is seen as something that only large corporates can benefit from, but I believe that SMEs, that section of industry that employs a third of all employees in the UK, should seriously consider how being able to value their talent will enable them to grow and develop themselves as organisations.
This is a key question that is being addressed by the Valuing your Talent initiative, an RSA Premium which is being funded by the UK Commission for Employment and Skills (UKCES) where I am a Commissioner.
Sean Taggart is Owner and Chief Executive of The Albatross Group
Visit Valuing your Talent to join the community of HR practitioners, business owners, finance executives and designers collaborating through open innovation to help SMEs understand and invest in the value of their people.