SA SMEs urged to realise the cost of poor HR

By Anna Odendal, HR Advisory Principal Consultant at Mazars – 25 January 2018: Most micro, small and medium-sized enterprises (SMEs) in South Africa do not understand the importance of HR or realise the level of management and leadership required in HR to ensure sustainable business growth.

Anna Odendal, HR Advisory Principal Consultant at Mazars

Most SMEs only deal with the absolute basics of administration, disciplinary action and ensuring adherence to labour laws and view HR as an unnecessary expense.

Most of the management and leadership functions in SMEs are largely done by the business owner. As the business grows there comes a tipping point where one person cannot manage all the requirements anymore. The business owner is being pulled down into daily operations and has insufficient time to focus on the more important, longer term leadership work, for example the business strategy and the positioning of the company. 

These things are important but are not going to support the company with its growth. Most business owners know that the key to a successful business is having the right people on board, but do not understand the role and importance of HR in achieving business growth.

We often find that SMEs appoint young inexperienced and sometimes underqualified people to manage the HR function in the business. While these individuals often have great potential they only know how to deal with the admin side of HR and not with the strategic side.

It is essential for the business owner to talk to the HR manager about how to facilitate the changes required to sustainably grow the business. Some of these changes include clearly defining roles and getting the right person in the right role.  It is therefore important for the HR manager to understand the job profiles of the business in order to have a plan in place to ensure that the right people are employed in the right positions. 

Once the people are in place, the business needs to make sure these people do what they were appointed to do. It is important to know how these individuals will be rewarded for positive contribution and dealt with if they do not perform, because good performers will get demotivated if they see employees who do not perform are not dealt with.

HR is a strategic pillar of any business and should be part of the management team and business decision making structure. If you do not hold HR accountable for providing talent strategies to support the business, your investment will not provide optimal return. 

To achieve the above is no small task. It will take at least three years to embed the HR systems and skills required to make people a competitive advantage of the company. The leadership team has to look at the processes and systems required to ensure a sustainable talent management capability is in place.

This is where the advice of HR consultants can be extremely valuable to SMEs as the consultant will come in and assess the situation, design the appropriate plans and then train the current HR employees and leadership team on how to effectively manage it themselves. This includes elements such as identification of roles and responsibilities, performance assessments and rewards systems. This type of assistance creates a sustainable long term solution.

It is extremely important to look at a business from a people perspective. While HR cannot do the work of the managing leadership, it can make sure the line managers are effectively managing their employees to ultimately achieve the business objectives.

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