Seeming luxury is actually a necessity.
Giving low priority to people management issues may not be high up the list of reasons why SMEs underperform, but in any firm's development, the employment of a personnel officer will eventually become a necessity rather than a luxury. The question is when?
The Institute for Personnel and Development (IPD) suggests that for a company with less than 100 employees, it's possible to manage without a personnel officer, but once numbers reach 150, the trouble begins. In a survey of 300 SMEs by the IPD, three-quarters failed to link personnel strategy to business strategy. Even for the sceptical owner-manager, this statistic should surely be a convincing argument against an ad hoc approach to HR.
A dedicated HR manager offers benefits that even the most hard-pressed, bottom-line loving manager will appreciate. He or she can systemise personnel procedures, including recruitment and appraisals, and implement company-wide training geared to improving performance. Even in companies too small to justify a personnel officer, senior managers can benefit from people management training. Alternatively, employing a personnel consultant on contract is a cheap way to inject expertise.
Of course, the introduction of a formal approach to personnel is not always welcomed by SME owners. Many fear cumbersome bureaucracy. Such fears, however, need not be justified. Properly used, personnel specialists can ensure line managers have more time to spend motivating their staff.
Ultimately, people do it all - so make the most of them.
Judith Oliver is a contributing editor for Management Today.