Entrepreneurship and Human Resources

Entrepreneurship and Human Resources

Through many years of working with entrepreneurs, the thing most likely to bring success to a sudden stop is the lack of attention to the area of human resources. Despite the fact that people costs of the growing business are the biggest single expense, very little attention is paid to this area until the entrepreneurial train hits the buffers.

Whilst I can see why this happens, it is still an inexcusable error by the would-be entrepreneur. When the business first starts there are usually only a small number of people involved and they are usually highly committed to the new venture and interact on a daily, and often hourly, basis. However, as the business grows so does the number of people. Moreover, newer employees are more likely to join because they want the job rather than because they have the evangelistic zeal of the entrepreneur. Add to that the increasing difficulty of communicating with a larger group and human resources is now a time-bomb waiting to explode in the entrepreneur's face.

Unfortunately, by the time the entrepreneur is aware of the problem, the cost in money and time of correcting this big hole in the master plan will be far more than had it been included in the beginning. Entrepreneurs understand clearly the need for a business plan, a marketing plan and a financial plan and yet most do not have a good human resource plan.

Some of my experiences of this have been truly astounding. In 2009 as part of a consultancy to implement good human resource practices in a 150 person company in Turkey I facilitated the first formal managers meeting with a clear agenda for forty years. Until then all communications had been carried out either in the dining room or when people passed each other in the factory. As a consequence miss-communication was costing the company more money than the size of their bank loan.

In a second company in Turkey, although there was a wonderful organisation chart in a desk drawer, in reality everyone reported to the chief executive resulting in him wasting most of his day with silly little queries.

Worst of all was a business in the UK that only admitted that they had a human resource problem the day that they received a formal notification of proceedings through an industrial tribunal for bad human resource practices. This was not because they were a bad employer but because they did not give human resources the correct attention.

So, in order to try and keep others from a similar fate, here are my top tips for managing human resources.

Make sure that, parallel to your business plan, you produce a human resource plan to support it. Before you employ anyone make sure you have a documented job description and person description. The first of these will tell you what you want the person to do and the second will tell you what type of person you require. Always consider whether you really need the person long term or whether there are other ways of getting the work done. Too many companies deal with a crisis by hiring and then when the crisis is over they find themselves paying for someone with nothing to do. When hiring, if you don't get the right person first time around, go around the loop again. Don't take second best. When drawing up an organisation chart make sure that titles also have responsibilities associated with them. A person cannot be called a manager if they do not have the responsibility and accountability to manage those beneath them. When hiring people, make sure that you pick people that believe in your product or service. That remains true from the top to the bottom of the organisation. A telephonist that does not believe in the product or service is capable of damaging your business. Make sure that you hire people that are smarter than you. If you hire people less smart than you then they will do the same. Soon the company will be full of the least able people! Make sure that you employ people that want to be developed. One organisation in the UK, called Talent, believes that we are all like icebergs with most of our potential not showing. This company will offer any job to the first person that walks in the door provided they commit to a development programme. Once you have your employees make sure you have policies and practices to manage, develop and appraise them. Getting the right person is a hard job so it is worth putting in the effort to keep them. Remember that people are a key resource and not an ego trip. Businesses are measured in terms of profitability, not in terms of the number of employees. One business I know has had a workforce that has fluctuated constantly between 2 and 25 employees. Strangely the profitability, or lack of it, has never altered! This last tip is here for a very good reason. It is to remind you no subject has exactly ten top tips! Don't think that following these tips will solve all of your problems but they will give you a good start.

Roger is an international business consultant who specialises in working with SMEs and SME support organisations. He has particular skills in Entrepreneurship, business incubation and business centres. He is an outstanding speaker and media perasonality.

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