21 December 2018
SMEs play a fundamental role in the UK economy. Employing around 60% of our workforce and contributing around 50% of GDP, it’s clear that SMEs have the potential to boost UK productivity levels and aid economic recovery.
Since the financial crisis, the UK has suffered a shortfall in labour productivity, estimated to be around 16% overall, but particularly weak amongst SMEs. With the uncertainty of Brexit and concerns around the future of the UK economy, research into the economic power of SMEs and how to unleash it is particularly important.
Our in-house Business Psychologist and Consultant, Fliss Yates, undertook a research project this year uncovering some thought-provoking themes.
One of the biggest challenges for SMEs can be attributed to their people resources which led Fliss to explore the impact of organisational growth on job satisfaction and employee motivation. It is widely acknowledged, both in research and practice, that job satisfaction and motivation are positively related to performance. Importantly, evidence suggests that this is not only on an individual level, but at a business level too. Employee job satisfaction and motivation are therefore critical success factors to any growing organisation and their influence on business performance should not be underestimated.
Whilst many SMEs claim to be people-focused, one of the findings from this research project stated that there aren’t enough businesses investing sufficient time or money in their people. Improving the organisational capability of your workforce can be challenging, and seemingly impossible, but it is the key to gaining competitive edge during business growth.
Typically, small businesses will not make it a priority to establish internal structures and organisational processes with regards to their people. Yet, this can limit their ability to strategically adapt to the ever-changing marketplace and their potential to scale.
The key themes from this research project are listed below and are worth reflecting on, particularly if you’re working in a small business or growing start-up.
• Some SMEs are not aware of the impact organisational growth has on their employees, and in situations where there is a negative impact on motivation, there is consequently a negative impact on overall performance
• Some SMEs do not acknowledge the impact of their people on the success of their business, giving more focus to other USPs such as technology (for example)
• Some SMEs do not evolve their people processes as they grow, nor do they prioritise it and therefore suffer the consequences
One of our biggest pieces of advice would be – don’t leave it too late to think about the impact of your people on the success of your business. Retaining talent, and nurturing your team is essential for organisational growth. Ultimately, we believe that when SMEs get it right with their people, they will see a return on investment in the performance of their business, whilst making a positive contribution to labour productivity levels across the UK.
• Realise the potential and importance of your people
• Identify your key talent and keep them engaged
• Evolve your people processes as you scale
• Check in with your employees regularly to establish how their performance might be affected as you undergo organisational change and growth