Keep the team right and ready

Pay attention to human resources this year, there are plenty of traps ahead.

The record rises in the stockmarket, record low unemployment and continued high levels of business confidence means SMEs must pay particular attention to policies of recruitment and retention of good managers, professional staff, sales and customer contact personnel.

At the same time, they must find ways to become a candidate for a merger or acquisition to consolidate a year of very profitable operations.

Now is the time to review each of the elements of the business and marketing plans that rely up on the contribution of key staff members to ensure that the growth of the firm is balanced against the need to engage everyone in the planning process, increase flexibility, encourage innovation, creativity and entrepreneurship.

First, staff recruitment. Consider targeting successful small-business managers, professionals working from home and the thousands of employees who feel their current employers do not offer them sufficient challenge or career prospects.

They represent an untapped labour pool that should be considered as part of an effective human resources strategy to cope with these issues of retirement, succession and skills deficits in the small business sector

Trap one

But watch out: here is the first trap smart companies face this year. The directors and the advisory board should pay particular attention to compensation and benefits to make sure professional management costs do not escalate at the expense of other staff members and members of the family business who have been the hidden keys to success in earlier times.

Investment of time and effort into individual career plans, job enrichment and formal training for future growth requirements offer a platform for sustained performance in the hot-house environment we face in the next year.

Trap two

Owners should be extremely careful to ensure they retain the direction and control of the wider human resource development functions, especially when there is a high level of labour market mobility and larger firms are prepared to offer substantial incentives to attract key staff rather than invest in internal training and longer-term human capital investment.

There is a natural tendency for firms that have begun to address these issues, especially those that have taken up global contracts and used the internet for initial profitable expansion, to consider the appointment of a human resource manager to take on hiring, firing and form-filling duties.

Often this step represents a major change in the culture of the company and can lead to a gap between the small-business owners and the professional managers. The human resource manager is often given the task of filling vacancies, handling disputes and managing the administrative part of the personnel management functions but is not directly engaged in the achievement of sustainable prosperity.

The human resources department function must be kept directly in the hands of the owners and managers who are close to the customers and have a direct understanding of the key success factors for the enterprise.

Over a five-year period it is likely that half of the smart companies will face offers of takeovers, mergers and offshore growth opportunities as older small-business owners cash out of the business.

This means careful attention to the role and contribution of current employees and the recruitment of new staff members will play a vital role in the continuity of the business.

It also means that another half of the businesses will be faced with critical human resource development issues as they find themselves being regarded as a source of skilled personnel who want to play a more significant role and develop their own careers.

So watch out: Australia has a relatively poor record in human capital investment and is relying increasingly on intakes of overseas workers on limited visas and loose control of visas for students in the place of a comprehensive industrial and SME training program. There will be growing tendencies for firms with more than 10 employees to attract workers from the smaller business operators.