Research Shows That Small Companies Need To Invest More In Their People

Small and medium sized enterprises (SMEs) claim that staff are their most important asset but this is not reflected in their actions, according to a new research report to be launched on May 16, 2001 by businesshr, a specialist human resources advisory service for SMEs.

83% of SMEs claim that staff are vital to their organisations' success, with 63% regarding the attraction and retention of staff equally as important as providing good customer service. However, when it comes to policies that support the welfare of staff, only 29% have formal procedures on bullying, 45% on sexual harassment and 51% on substance abuse. Also, only 75% have training and development plans and 62% a formal appraisal system.

The report, People Management in Growing Companies, highlights the lack of awareness of many owners/directors of SMEs when it comes to employment law. 43% of respondents admit that keeping up-to-date with employment legislation is too difficult to achieve.

"Ignorance of the law is no defence and can lead to devastating consequences for small business," says Ian Stobie, Managing Director of businesshr. "For example, a recent successful industrial tribunal claim for stress exceeded 163200,000, and Health and Safety non-compliance can result in the immediate closure of the business and unlimited fines."

MORI was commissioned by businesshr to undertake the first ever study of human resources issues in SMEs. The research shows that SME directors think that salary and benefits are still the main motivators for attracting and retaining staff (86% citing this). This is mentioned three times as often as providing good staff training and development opportunities (28%), or being in a company which puts home life on a par with work life (25%). The findings contradict current thinking and other MORI research amongst large companies indicating that financial incentives are rarely key drivers of staff satisfaction and retention.

"Skills shortages and the rising costs of recruiting staff mean that it is vital for SMEs to retain key staff if companies wish to grow. Throwing money at someone who is bored will not buy their commitment or ensure consistent, outstanding performance. SMEs must get out of the mindset that money is the main attraction for employees and put HR practices in place to retain staff," continues Ian Stobie.

Other key findings include:

• Only around one third (36%) of SMEs have policies on Internet and email abuse
• Approximately one-fifth of SME directors' time is spent on HR matters
• On average 1635,000 is spent per year on professional HR advice as compared to 16322,000 on legal advice and around 16316,000 on accountancy support.

For copies of the People Management in Growing Companies report please contact:

Jan Floyd-Douglass businesshr t: 01730-816 600 e: [email protected]

or

Judith Hunt/Nickie Farrington Communications Management t: 01727-850 761 e: [email protected]

Technical details

Five hundred telephone interviews were conducted by MORI Telephone Surveys. Fieldwork took place between 8 January and 5 February 2001.

Editors note:

businesshr is a specialist human resources advisory service for small and medium sized enterprises. It works with other business advisors (such as accountants) to help SMEs implement or update their human resources policies and practices such as recruitment, health and safety, training people management and employment law. The service is offered via access to a team of CIPD qualified HR advisors and its website(www.businesshr.net) which allows subscribers to download hundreds of HR related documents free.

MORI is the UK's leading independent provider of human resource research, and conducts studies for organisations of all sizes, including SMEs, where MORI's clients include the DTI. MORI conducts numerous research studies among human resource professionals and corporate decision makers across all sectors. MORI's work within the human resources field focuses on the role of employees in generating customer satisfaction and contributing to business success. MORI's human resources research covers a wide range of topical issues, from recruitment, retention, job satisfaction and motivation, to culture, innovation and change management.