Government must invest in HR for small businesses, says CIPD

WestEnd61/REX/Shutterstock
WestEnd61/REX/Shutterstock

An investment of £13 million per year could provide small businesses with the HR support they need, according to a research exercise by the CIPD and JP Morgan.

The CIPD believes that if the Government invested this sum to support small businesses, it could help to unlock lagging productivity in the UK.

Its findings follow a year-long ‘People Skills’ pilot, which provided people management support to small employers in Hackney, Stoke-on-Trent and Glasgow.

It found that, although much of the support was with basic activities such as establishing terms and conditions or drawing up job descriptions, this enabled business managers to get on with their core work and boosted productivity.

The pilot provided up to two days’ worth of free HR support, including face-to-face advice, a telephone helpline, document templates and group training events.

Ben Willmott, CIPD’s head of public policy, said that targeted investment could “improve small firms’ capability around the management of people”, through channels such as Local Enterprise Partnerships, chambers of commerce and local authorities.

People Skills reached out to more than 400 small businesses during the pilot, employing between five and 50 employees, across the three areas.

It was so successful in Glasgow that the city council continued to fund the programme once the research grant ran out.

Owner-managers were more likely to report their organisation was better or much better than similar firms in their sector on measures of workplace relations, labour productivity and financial performance after using the People Skills service than they were prior to using it, the CIPD said.

“We calculate that about £40 million from the Government’s National Productivity Investment Fund would support the £13 million annual cost of running a People Skills-type service across all 38 Local Enterprise Partnerships in England for three years and could revolutionise the quality of business support for small firms,” added Willmott.

Hang Ho, EMEA head of the JPMorgan Chase Foundation, which supported the programme, said: “Small business success is an essential element of the UK economy and a critical component in creating thriving local communities.

“Today’s report shines a light on the importance of basic HR practices to the success of small businesses, whether that is improving productivity, boosting the effectiveness of the management team or handling crises.”

The CIPD’s evaluation report also found that online business support was often inadequate, unless supplemented by personalised advice and support. Face-to-face advice was particularly valued by small business managers.

It revealed that much support was fragmented and duplicated at local level, creating confusion among small businesses.

The CIPD also recommended that policy makers re-focus a proportion of government skills funding to provide HR support for small businesses, to “give more small businesses the capability and confidence to engage in programmes supporting young people into work in the future”.

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