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SMEs will have hiring spree but need to protect their culture and values through growth, CIPD says

The proportion of smaller employers who expect to increase staff levels over those who expect to decrease staff levels in the second quarter of 2014 is 52, compared with 11 for large employers.

But growth needs to be handled carefully, according to the CIPD. Other new figures released today at the CIPD’s annual HR in SMEs conference in London show that having a clear purpose and values is key to the success of SMEs[2]. They guide how work gets done, influence the satisfaction and retention of an organisation’s people and ultimately steer a business towards achieving its goals. However, with workforce growth there is a risk that the organisation’s purpose and values can become diluted and even disappear over time. Small businesses need to do more to articulate these business fundamentals and maintain them through growth.

More than three quarters of small business decision makers surveyed (77%) agree that their business success hinges on them staying true to their vision and values and say that this is something they will need to actively focus on as they grow (79%). However, almost a fifth (17%) believe their colleagues would struggle to articulate what their company’s vision and values actually are.

The figures suggest that growth has an impact on how in tune people feel with the company they work for. People working for very small (nine or less employees) or large organisations (more than 100 employees) feel a very strong connection with their organisation and its raison d’&ecirctre.  However, the survey shows this connection can become weaker and requires earlier attention in the interval stages of workforce growth.  

To help SMEs understand the importance of their culture to business success and how to articulate and maintain employees’ connection with their purpose and values over time, the CIPD is publishing Keeping culture, purpose and values at the heart of your SME.  Featuring case studies of 16 organisations from a range of sectors, this report shares the practical experiences and insight of firms such as Naked Wines, Secret Escapes, UKFast and Choccywoccydoodah, as they balance growing a successful business with the challenges of engaging a larger workforce.

Top tips for retaining your culture, values and purpose over time include:

1.           Look out for subtle signs that your employees are becoming less engaged with your business as you grow. This might manifest itself as employees lacking the passion they once had for the business and being less willing to go the extra mile. However, many SME owners say they just have an instinctive feeling that things are not quite right, which signals the need to re-engage the workforce with the founding purpose and values of the organisation.

2.           Articulate your purpose and values in a way that reflects your founding principles but also in a way that your people can identify with. It is important to communicate your values in words that really mean something to your employees.  Use focus groups to get employee feedback and discuss what your values actually mean in practice in terms of attitudes and behaviours.

3.           Tell your story. Ensure that your employees understand the back-story of your business as well as their role in building its future to increase their engagement and sense of ownership. For example, devise training or an induction for new starters that includes a section on the company’s journey.

4.           Consider how introducing new formal processes and procedures will affect your business culture. Try to avoid introducing processes which get in the way of efficiency and flexibility, like cumbersome forms or lengthy sign-off processes which complicate simple tasks and impact on customer service standards.

5.           Your values and purpose need to be the golden thread through all your people practices, especially your recruitment processes. When hiring new staff, think beyond technical capabilities and look for people who fit with your culture and whose personal values and ways of working match those of the organisation. Cultural fit is something that can’t be learnt.

Within the report the case study examples are used to bring each of these top tips alive.

Dr Jill Miller, at CIPD, comments:

“We know that having a clearly articulated purpose and values is vital for business success, and our research among SMEs shows that they wholeheartedly agree. However, there is a danger that if these values are not a living part of daily operations, they can become diluted or even disappear as the business changes and the workforce grows.

“Both internal and external events can derail your culture, so when implementing change it is important to think carefully about how that change can be used as an opportunity to reinforce your values, rather than undermine them. For example, when introducing a new reward approach, think about whether it will encourage the desired attitudes and behaviour from employees.  Or when opening a new office or production site, think about how you will encourage the same cultural principles to be upheld in that site.

“Keeping hold of & lsquo;what you’re all about’ over time requires constant attention as culture, purpose and values will affect the standard and style of customer service delivered, the satisfaction, engagement and retention of your people and ultimately your organisation’s performance.”  

This is one of a series of reports from the CIPD looking at people management issues in SMEs. The next report, & lsquo;Leadership in SMEs’ will be released to coincide with CIPD HR in SMEs conference in Sheffield on 20 May.


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