Some time ago we wrote an article, Are SME Managers Neglected? We further explored the notion in, The Importance of Training and Development, where we asked, do we owe it to ourselves to be more adamant about our training and development needs? More recently we explored the quandary that despite economic improvement there seems to be an underlying fear amongst managers that the economy will once again falter in Are Managers too Pessimistic in the Face of Economic Recovery? Whilst these articles are independent of each other, there is an overlap with their underlying concepts and themes, which in turn relates to Small and Medium Enterprises (SMEs).
The United Kingdom is dependent upon SME’s as they employ around 14 million of the 24 million employed throughout the country, and have a combined turnover of approximately £1,600 billion. In no uncertain terms SME’s are critical for economic success, as around 60% of education leavers will inevitably end up working for one. You may ask, why is this cause for concern? Simply put, many SME’s are entrepreneur-led; the individual leading the company is generally gifted in the specialism of the business, but often does not have the wider experience and skills needed to be a leader of people, therein is the problem!
SME’s generally struggle in their early years, it is estimated that as many as one-in-three businesses fail in the first three years of opening operations. 20% of businesses fail within the first year of operating. In the next three years, 50% of those left will also fail. There are many reasons why a business may fold, but, for the purpose of this article we will be exploring the area of entrepreneur-led micromanagement, covering:
- Poor management;
- Poor business planning;
- Lack of clear objectives;
- Poor human resource relations.
Many SME’s face difficulty and fail despite having employed managers with ability, skills and experience. The problem occurs when the entrepreneur, of said business, attempts to micromanage all elements of operations without the necessary knowledge and experience, creating a chasm of operations practice and an unhealthy working environment. Furthermore, the SME will inevitably fail to prioritise the development of their managers, exclusively focussing on marketing and selling their products and/or services. All of which creates a business that is unable to plan, focus and forecast, leaving the company vulnerable.
If we further extrapolate, due to the focus on marketing and sales, there will, unsurprisingly, be other areas which are neglected and/or need further developing. There will probably also be higher level of stress placed upon staff, policies and procedures will either be non-existent or underdeveloped, and the staff team will not be able to cohesively develop. Furthermore, as the entrepreneur insists on controlling every aspect of operations, the manager(s) become an unused commodity, which leads to a lack of motivation, good will and loyalty. All of which, in terms of the business lifecycle, can lead to failure of the company in the short to medium term.
The vast majority of businesses rely on people, people want to feel needed, valued, listened to, and to know that they play a part in the bigger picture. Employees often stay with businesses because of their managers, and the fundamental value base which they bring to the organisation. Time and money must be invested into the development of managers, coaching them through their failures to see how they could do things differently, and celebrating their successes. Highlighting the learning points from both situations is fundamental. The SME must also learn that a good manager is an invaluable part of the team, someone who can be relied upon to do their job, and offer insightful opinions on given situations/topics. It is pointless hiring a manager if you are not going to allow them to actually manage.
A good manager will exude confidence, motivation and performance within the workforce. They will also be a form of consistency to clients, in terms of a focal point to advise them and oversee service/product needs. There is a proven link between staff and customer tenure. To make certain that customers stay with your business, ensure that your staff want to stay with you. Invest in your team, and show them that you trust in their ability.