Will better access to HR support improve management at SMEs?

A new initiative from the CIPD aims to push HR consulting and advice as high up the agenda for small businesses as their accountant. But what are the key issues that these “micro-employers” face, and how can their needs be served?

According to the Federation of Small Businesses, small businesses accounted for more than 99% of private-sector businesses at the start of 2015, and it is estimated that small companies (those that have fewer than 250 staff) make up 60% of private-sector employment.

In terms of HR support, however, these organisations have so far benefited from few of the opportunities open to larger employers, whether through lack of awareness or simply lack of budget.

Many rely on multitasking managers who handle employee issues as one aspect of a whole host of responsibilities, while others pay for external consultants on an ad-hoc basis or outsource tasks such as payroll management or drafting contracts.

The CIPD is currently piloting an initiative aimed at righting this imbalance as part of its mission to “champion better work and working lives”. Known as People Skills, the pilot will offer HR support to businesses with between five and 50 staff in Hackney, Stoke-on-Trent and Glasgow. This will range from access to free online support to one-to-one advice, depending on the nature of the issues raised.

“One of our long-term aspirations is to ensure that more small business owner-managers see a relationship with a local CIPD-qualified HR consultant as being as critical to their business success as their relationship with their accountant,” explains Ben Willmott, senior public policy adviser.

Improving leadership

The programme is being funded by the charitable arm of JPMorgan and is aimed at getting a better understanding of the HR needs of small businesses and highlighting to national policy makers the importance of boosting people management skills at this level.

Wilmott adds: “One of the key challenges we face is how we improve leadership, management and HR capability in the SME population. There is a mismatch in terms of the skills coming out of our education system and the skills local businesses need. There’s also a mismatch around how skills are being used in the workplace, which is often down to management – how do these companies identify and use talent, and is this done in the right way?”

A report last year from the Chartered Management Institute found that a lack of management skills was responsible for 56% of small business failures, yet just one in three businesses with between five and 24 employees have provided management training in the last 12 months.

Local consultants will deliver the services in each area (most, but not all, are CIPD members) and it is hoped that the initiative will whet businesses’ appetite for more investment in HR support. When often the sole focus for a small company is growing the business and meeting customers’ needs, it is perhaps not surprising that managers are unaware of the support on offer and the potential value of this investment.

For consultants operating in these areas, however, the CIPD’s entry to the market has ruffled some feathers. One consultant suggested on a LinkedIn discussion about the pilot that the CIPD “might actually ask [local consultants] first how, where and when it is done before parking a tank on their lawn”.

The CIPD has hit back with a claim that only 4% of the companies targeted have ever used an equivalent service in the past; the intention was never to cannibalise local HR consultants’ business.

Firefighting

There have also been other schemes aimed at providing strategic advice to small businesses, such as the Government’s Growth Vouchers scheme, which ran for just over a year in 2014. In this case, only 7,000 of the companies targeted by the Department for Business, Innovation and Skills accessed the vouchers and advice available, so it was met with limited success.

Jacqueline Mitchell, the founder of Cambridgeshire-based GrantaHR, says that, when it comes to people management issues, small companies tend to be so focused on reacting to what is happening immediately in their business that it is rare they take a step back to consider the more high-level business issues, let alone draft in a consultant to help with them.

“[Small companies] hire someone like me because they have a problem, or perhaps they’ve read about something they need to prepare for such as shared parental leave. They don’t tend to be as focused on the forward-looking, strategic stuff,” she says.

But this does not mean these companies don’t value getting more strategic input. London-based architects Waugh Thistleton, one of the companies to use the Hackney People Skills pilot, has had access to management training it might not otherwise have budgeted for.

Jane Collier, who looks after marketing, finance and HR for the 30-person company, says: “In a small company you often don’t get formal management training, and the price puts people off.”

Waugh Thistleton’s People Skills consultant has also been working with the company on projects such as reviewing and streamlining its performance management system and building a competency framework.

Collier adds: “As we are growing quickly as a company and our architects are our most valuable asset, it’s important they get a vision of how their career might pan out.” Collier is also involved in the “deep dive” research being carried out by Manchester Metropolitan University, which will evaluate the impact of how businesses access the HR services offered by the CIPD’s pilot.

One of the team

When they do seek out advice, smaller businesses tend to prefer to work with companies of a similar size, too. So while it is possible to outsource certain aspects of HR or subscribe to a telephone support service provided by a big-name consultancy, many owner managers prefer to deal with small outfits like themselves.

Helen Straw, director of the Personnel Partnership, certainly finds this to be the case. “Smaller consultancies can provide that personal touch, be on site readily and react to issues,” she says. “We can get to know the workforce, we act as the HR director of any one of our clients. I am often invited to clients’ events, parties and the like. I am thought of as one of the team – not an outside consultant.”

Access to more strategic HR support clearly has some benefit for small companies, despite few of them seriously investing in it. When the CIPD produces the results of its pilot later this year, we’ll get a better idea of just how high HR consulting is on their agenda.