Lots of research has been done about developing a sustainable business strategy and the result of research carried out in 2012 by the Chartered Institute of Personnel and Development (CIPD) identifies four stages of SME transition as below:
• Entrepreneurial edge (the concept, the vision, the mission, the market, etc)
• Emerging enterprise (developing systems, procedures, terms etc)
• Consolidating enterprise (reviewing, consolidating what is done well)
• Established organisation (maintaining through experience)
These stages exist because evolution takes place within the environment (or society) and the needs of the employees change. If these are not addressed, the company’s performance – and therefore its very success and existence – comes under threat.
Inflection points between stages
Between each distinct stage of transition lies a point where it becomes clear that old HR and people management practices are no longer sufficient for the organisation’s present and future performance needs. This realisation may create hurdles, referred to as ‘inflection points’; implying a period of reflection where HR systems are regrouped, reordered and new ways of working are strategised and adopted. This is the point where it may be useful to enlist the help of our Alcumus HR consultants.
The entrepreneurial edge
This initial stage – the one which most start-ups find themselves in from the beginning – is normally characterised by intuitive, informal management practices, where the business strategy is emergent. The structures tend to be fluid and job roles are inclined to be flexible.
Here the management of the people is often handled by the owner or entrepreneur and it is usually the values of the owner and his or her vision that drives the management practice.
Rewards designed to cement staff engagement are often salary-based however these can carry a risk where they are ad-hoc with many different employee arrangements. At this point it may be useful to seek external support to help establish realistic expectations and benefits for the workforce and to reduce the risks of unwittingly overstepping the legal restrictions imposed on employers.
The first inflection point
When it becomes clear that the informal management style no longer enables effective people management, it’s time to formalise the procedures around people management and HR practices. It will depend on the company as to the approach taken – whether to employ someone specifically for HR processes at this stage, or whether it is more cost effective to engage the services of an experienced consultant to support the company going forward.
The emerging enterprise
By formalising the company’s structure – including team structures and job roles – it is possible to introduce HR processes that are intrinsic to the way in which the organisation operates, although there is still a strong element of flexibility across the board. Our consultants can support you through this and make the process so much less challenging.
HR itself is likely to be transactional in nature at this stage, dealing in a reactive way to straightforward but emergent issues ie. being able to recruit quickly and ensure consistent training for staff. If you choose to employ a consultant then they can be at the end of the phone or email to help deal with immediate challenges in a reassuring and positive way.
Staff engagement in terms of vision and values tends to be headed still by the owner, but championed by employees who have worked for the organisation from an early stage ie. people who are looked up to and respected and who are influencers of the wider staff pool.
A more formal reward structure is created, with set pay bands for consistency and benefits may be introduced, helping to maintain engagement through the long term. Retaining the people you have developed and rewarding them appropriately is another way to strengthen your organisation.
The second inflection point
As the organisation grows, more management layers are added and the reactive, short-term HR practices lose their practicality. It becomes necessary to formalise the vision and values of the company to engage and empower employees and managers to implement organisational values in a joined-up but independent way. If however the values of the organisation are well-embedded in the first place, less formalisation of processes is needed. This is where training and ongoing development needs to be a focus to keep the best employees and to ensure they are motivated. Our HR team can tailor bespoke training packages to meet the specific needs of your organisation if required.
The consolidating organisation
Business strategy and the HR processes are now more planned, rather than reactive and emergent. Practices should support the organisation’s achievements and be aligned with its strategic direction. Without those elements the performance of the organisation will suffer.
The integration of vision and values means that the people themselves, from managers to employees, are socialised into the organisation through effective induction and nurturing, with a strong focus on career development, and especially on management development.
Two-way communication – a formalised version of the type of communication that may have been present during the entrepreneurial stage – ensures that the organisation is still sending the right messages to employees and that the staff still feel that they are being heard by management.
Staff engagement also becomes more systematic and rewards aligned directly to the business objectives, for example profit-sharing, giving employees a sense of ownership.
The third inflection point
As the company transitions (it may however remain at the consolidating stage for a long time in some cases), it may grow in size or it may expand or change its context, rendering HR policies and procedures ineffective as the business strategy further evolves to accommodate the changes. Our HR consultants will help a company constantly review its terms and policies to ensure it continues to meet the needs of the business and retain the best skills.
Employee expectations change and their ‘locus of engagement’ may become more individual such as having an engaging manager, or receiving competitive reward packages in line with bigger organisations.
The established organisation
With this resultant phase of business and HR development, the culture and staff engagement come under even more focus.
Focusing on the internal progression opportunities of your team is important so management training becomes leadership training, talent development becomes succession planning and systems and processes are united to develop better knowledge-sharing between employees with cross function collaboration.
Reward strategy includes non-financial rewards as well as financial packages. The vision and values of the company are threaded through everything the organisation does, finally becoming a kind of internal ‘brand’ and reflected in all decisions made for the business.
Through knowing the business’ market, its business strategy and the strengths and weaknesses of the organisation – and with the right HR training – a pragmatic human resources consultant can help to make commercial decisions which drive short- and long-term performance while at the same time responding to external challenges and opportunities.
Let one of our consultants help you through the journey!