Making 'non-essential' staff redundant is toxic to long-term success

Great leaders treat employees as stakeholders, not a line on a P&L, argues small business campaigner Michelle Ovens.

by Michelle Ovens
Last Updated: 09 Aug 2019

The latest government-backed small business scheme, which looks to regenerate empty shop spaces and turn them into community centres, is a positive step forward for the ever-changing face of the UK high street.

Focusing on ‘experience’ can be a real differentiator and experiential businesses are noticeably on the rise – the likes of coffee shops, hair and beauty salons, market halls, and even escape rooms are sparking an unprecedented level of regeneration on many high streets.

The initiative also acknowledges a consistent attribute of small businesses – their ability to engage with communities and bring them together.

Small businesses are historically known for forging close relationships with their customers, and more broadly, their local communities, because of the more personalised customer service they can provide. In turn, consumers are loyal to their local businesses and want to help them succeed, because they feel personally connected to their local stores.

But it goes deeper than this. Loyalty is at the very heart of small businesses’ raison d’être. The most successful small businesses put customer and staff loyalty at the core of their business, understanding that people are the critical factor in making a business work.

According to peak b’s Small Business Community Impact Report, almost three-quarters of small businesses have kept on, or would keep on staff, beyond the economic needs of the firm. The natural reaction is that this is counter-productive – an unnecessary expense. I say that it’s great leadership. Good business leaders put their people first.

The long tail of small business is frequently viewed as being part of the UK’s productivity problem. Yet the way this sector approaches staff retention, flexible working and training could actually be part of the solution to boosting the nations’ productivity.

Keeping institutional memory within a business is priceless for many growing businesses and can save on recruitment and training costs for the future. A report by Robert Half declared it takes five months to train new employees to do their job, and a survey by go2HR indicates 40% of employees who receive poor training leave their positions within the first year.

Although traditional productivity thinking would have the over-staffing of small businesses as a bad thing, there is much more to be gained from cultivating staff loyalty. Bill Richards, UK managing director of Indeed, explains in the Small Business Community Impact Report that most employment comes through small businesses, making them integral to a healthy and thriving economy.

Keeping employees on when they are not necessarily needed is seen as a strong vote of confidence in them, and an indicator that the business puts its people first. This can instil staff loyalty that will help a business through both good times and bad, and has a positive effect on a community’s view of a business, with consumers appreciating a business that puts its people first. 

Good and trusted employees are hard to find and hard to replace. In turn, good leaders are those that invest in staff for the long term, and are willing to keep their best employees on in the face of testing economic times.

When businesses that are struggling make firing people their very last resort, they are ensuring job security and financial stability for members of their communities. This produces a cyclical effect: if members of a community have jobs, they will have more money to put back into the economy and keep it moving.

A loss of jobs from one business is far more likely to have a domino effect and impact the wider economy than holding onto unnecessary staff would. On a much larger scale, look at the impact the collapse of Lehman Brothers had at the height of the economic crash in 2008. In the UK its sudden closure not only affected its staff, but businesses in Canary Wharf and the communities in which employees lived: lunch venues, dry cleaners, hairdressers all lost daily business overnight.

In order to keep supply chains flowing and economies moving, it is vital that businesses take an approach that not only protects its employees, but the commercial ecosystem around it.

Good business leadership should look not just at the bottom line but at long-term people development, the cultivation of a supportive supply chain, growing and maintaining a loyal customer base and recognition that often your greatest asset as a business is your staff. When we look at leadership this way, it seems that the small business approach makes a lot of sense. Perhaps there is even room for big businesses to learn from this too. 

Michelle Ovens MBE is Founder of small business campaigning firm peak b and Director of Small Business Saturday

Image credit: Marcus Spiske/Pexels

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