Soapbox: People are the path to profit at all times

SMEs are facing a tough and uncertain future. To survive, they need to maximise every resource they have to hand.

It's an obvious point, and we've heard it many times before, yet we still fail to grasp just how much people matter. Finding, retaining and motivating the right people can seem like an impossibly onerous task for owner-managers, who tend to lack time and resources. Yet those who get it wrong do so at their peril.

As an entrepreneur and non-executive chairman, I have first-hand experience indicating that at the root of most problems I have experienced is people. There are frequent occasions where senior management don't communicate or relate to the people who work for them and where staff aren't given sufficient leadership and incentive to care about what they do, or how they are contributing, to make a profit.

For SMEs, there are five key people-related factors that are vital to get right. First and second are finding and keeping key people; third is ensuring they have a voice and know how to question; fourth is making sure they are encouraged to say “no” and mean it; while the fifth is encouraging them to be action-focused, so that they get on and do it now.

By far the easiest, fastest, and least expensive way to find the right people is through personal networks. These are people you have come across, whom you know, or who are known by others whom you know; people who come recommended by contacts and acquaintances you trust; people who know you and who understand what you are trying to create; friends from the past, school, university, earlier work environments.

True, if your company expands you may need more structured resourcing policies and you may need to reach outside for professional support, but social networking can run far and deep. Become a user of Twitter, Linked In or Facebook; turn up at seminars and talks; cultivate relationships that put you in the path of others in your industry; get to know your rivals. Who knows? Tomorrow they might be your employee, or if they decide to buy out the competition, your boss!

The days of slavery are over. Retention is not about tying people in, but about creating the environment in which they wish to remain. The environment itself involves the job, the colleagues, the compensation, the future growth potential, the challenges and the leader’s vision.

It's also about creating buy-in: why not follow in the footsteps of companies like Google, where imaginative staff are given the space to develop ideas? Say thank you when your sales team hits the target - don't hike the targets straight up again when they do, let them enjoy success and deliberately celebrate success frequently. Make your people proud to be part of your business. Motivated staff feel that they are part of the business and for them it is not just a ‘9-5’ job. They need to feel they are in an environment where they are encouraged to ask “why?” and to say "no".

Leadership is about creating a clear vision for the future, with the road map, and the right team. Without asking “why”, getting clarity of vision can be difficult; choosing the right route may be complicated and getting the right crew on board may be impossible.

Similarly, allowing staff to disagree is key to their own personal sense of worth within the business and in a positive sense being able to say “no” is a valuable management skill. Knowing when one has to pull the plug on projects that have gone bad, when haemorrhaging cash flow cannot be sustained any longer, when a business plan is unacceptable, when to say “no” to new business that has no relevance to your long-term strategy or chance of being profitable, and mean it, is critical. Being able to say “no”, “you do not have a future with this company”, is tough but at the same time important.

Entrepreneurship is about taking the initiative. Time is totally perishable. It can never ever be renewed. Train people to think and do. Procrastination wastes huge amounts of time. Reward action-orientated behaviour and lead by example. Encourage people to be proactive, not reactive. Get your most proactive people to mentor those who struggle or who aren't quite up to speed. These are the people who are to be rewarded, promoted, and given the opportunity to lead.

Carpe Diem! People are your biggest and most valuable asset. Seize the day, do it, do it now!

John A. Dembitz is author of the recent book It’s the People (LID Publishing).

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