In the most recent episode of the IBASA & EPI Webinar Series, most of the attendees indicated that that have a low level of involvement in the HR needs of their clients. With the fundamental impact of human resources in a business, this was a little surprising. The overall perspective seemed to be that this is a very specialised environment, better left to the experts. But, as we learnt from our panelists, there are some very important aspects of a good HR approach that all business advisors can help their small business clients with.
For this episode of the monthly CPD training event, we were fortunate to have the expertise of Cynthia Pillay, an HR consultant with experience with both corporate clients and small entrepreneurs. Also contributing was the inspirational Meshack Mulaudzi, founder and CEO of Kaelo Black Beauty, who designs, manufacture and distribute truly African fashionista Mahle and Captain Africa dolls to entrench positive self image and values in African children.
HR expert Cynthia Pillay
Cynthia was not at all surprised by the most common challenges faced by webinar attendees when assisting small business clients with integrating HR practices into their businesses. The polls conducted during the webinar showed that small business clients often face challenges such as:
- Employee numbers are too low for a good system,
- Difficulties experienced to create KPIs as everyone must do what is needed, and
- A perception that low and semi-skilled employment do not need formal HR processes.
She shared that she works with many start-ups and small firms who are improving the contributions made by their team members to the success of the business, but adopting healthy HR practices..
The HR Value Chain
From Cynthia’s approach, it was quickly clear that keeping it simple for small businesses doesn’t mean ignoring the basics of people management. The graphic of the “generic” HR Value Chain below, illustrates her approach well. She maintains that, irrespective of business size, it is best to integrate good HR practices into the business as soon as possible.
Cynthia emphasized the importance of a strategic approach to business. Entrepreneurs need to determine upfront what the company’s culture is going to be, including what makes them unique and their explicit values. This will allow them recruiting a diverse team with the needed skills, who are supportive of the firm’s values and culture.
She mentioned a very insightful tip, namely: “Recruit for diversity (of people), not a diversity of values”. People with the same values, who are working together will create a strong culture, where they keep each other accountable.
Recruitment, selection and on-boarding
Cynthia shared the illustration to the right to explain the recruitment process.
As any effective process, it starts with defining the requirements. As highlighted earlier in the polls, the challenge of being able to handle multiple tasks in a small business, makes a narrow job description more difficult, but still important. She says “you want employees that are going to be agile and adaptable, because a role in any startup or new business can change in a few months. So, be clear and specific about the activities and make it really as simple as possible”.
When attracting the envisaged applicants, it is important to note that there is much more important channels to use that the traditional ways of sourcing potential employees. You can advertise, not just through your traditional ways of advertising, but you can advertise on social media and use referrals too.
Cynthia advised using your networks. Ask the stars within your company for references, identify potential employees and head hunt them. Attend conferences, or host an interesting talk for technical hiring. University recruiting works well, she says, once you’re reasonably established.
Important though is to view candidate sourcing as a long-term investment. You may spend time now with someone that you don’t even talk to about a job for a year or more. Start-ups can also move beyond their own networks and use investors and their networks to find candidates.
Cynthia shared a few tips on how to select the best candidate…
- Have an elevator’s pitch.
- Practice transparency.
- Share what the challenges are, then the right people select in, others select out.
- Think long term… how do you see this role evolving in 6 months, one year, three years?
- Are they signing up for the goal? What are they signing up for?
One of the most important, but often most neglected steps for small businesses is proper on-boarding. She says that smaller firms will often argue that they don’t have the resources for on-boarding, but on-boarding does not need to happen immediately, you can do on-boarding as a process over six months.
She highlights a few basic things business advisors can guide your clients with…
- Ensure clarity of the role: Expected results and available resources.
- Set expectations around behaviours, values and policies.
- Build/design relationships with colleagues,
- Build/design the working relationship with the manager.
- Impart relevant knowledge and skills (in portions) over time.
- Ensure compliance (employee file; etc).
- Set objectives for the probation period (learning and performance goals).
Legislation and compliance
The Employment Equity Act regulates unfair discrimination in the working environment. Only businesses with 50 or more employees needs to report against it, but Cynthia indicated that it also allows clients to embrace the benefits of diversity and employ people on the basis of potential, by hiring people who are from designated groups. So, whether they have a disability or are female, or African, Indian, etc, you can progressively think around your business and employment of people.
The Basic Conditions of Employment Act prescribes certain minimum conditions of employment which must be applied. The purpose of the BCEA is not only to protect everyone in the workplace but to also promote economic development, fair labour practices, peace, democracy and social development. There are notable stipulations for small businesses, for instance in paying a minimum wage for the first 12 months that is below the specified rate.
The Labour Relations Act governs unfair discrimination, and employment processes and procedures, especially around conduct in the workplace.
Cynthia didn’t say it, but I often wonder about entrepreneur talking a lot about the ethics, honesty and loyalty they expect from their employees as values, which we all agree are good values, but as employers, do not comply with the very basic conditions of these Acts.
Record-keeping and HR systems
As adviser, you should ensure your clients have formal contracts with employees and implement the needed integrity checks. Cynthia advised that it is good practice to create an online file per employee. You can digitise all communication and keep them in one folder with relevant sub-folders. This will assist greatly in cases of disciplinary inquiry or performance review. You can have all your information in place to mitigate risks such as going to the CCMA.
She says it is important to look at what HR systems are available, especially online products. People often start off by using something like Excel, that is very limited in what is needed for an HR system but good enough to cater for the needs of the business.
“I would then look at what system is simple, practical, can be customized so that, just at a click of a button the entrepreneur can make relevant changes without having to contact an expert or outsource the system. It has to be cost-effective,” she said.
Regarding outsourcing, she stresses again it is all about analysing business needs. For instance, if you have a smaller number of employees and you want to make sure the processes and procedures are in place for governance and compliance, or have a case with an employee constantly off sick, for example, or how to implement a performance review system, you might need external, expert advice she said.
Comparing that to having an internal resource, she provided a few questions to consider. Is it affordable for my business? Do I need a full-time resource? Do I need a full-time resource who can manage all HR functions? If I outsource, what is considered as part of the standard package, and what is seen as an additional project? How much time am I spending working on systems and implementing processes procedures?
She acknowledged that both options have benefits. With an internal employee you have more consistency and with an external service provider you have more flexibility.
Ongoing needs assessments and realignment
In start-ups and smaller companies the employee roles are agile in the beginning. So, what you want to do is make sure you monitor, even when it comes to your culture. Important is to show that you’re monitoring what’s happening in your business on a monthly basis, Cynthia said.
Employees need to know that you know what is happening in all facets of your business, including the employee turnover figures and absenteeism.
Cynthia said that as much as entrepreneurs feel that they don’t want to become a manager or employ managers, as a business grow, management and leadership becomes particularly important. The question then is, how do you become a manager? This links back to the importance of having a learning culture. How are people learning, and are they growing?
“I always encourage founders to start thinking about the quality and the type of people they want to attract because ultimately they’re ambassadors for the business,” Cynthia concluded.
The inspiration behind Kaelo Black Beauty
Meshack shared how he always wanted to start a business, but Kaelo actually started as a project for his young daughter, because he could not find any African dolls on the market.
He designed and developed the Mahle (“beautiful” in Zulu) blank African dolls. He designed a range of dolls to inspire African children to love who they are and accept how they look in an effort to build self-esteem and develop self-confidence.
As Meshack says, “just to make sure that that part is covered, because when you grow up and move Into corporate life, you can do a whole lot of amazing things. But, if your self-esteem from childhood is not solid, that’s going to affect you, whether you like it or not. So, we’re trying to take care of that at an early stage”.
Sharing information from research he read, he highlighted the importance of good self-image and identity at a young age. “By the time the child is six years old, their personality is already established. So, everything that comes after that is pretty much just on autopilot. What they think of themselves between the age of three and six is quite important.”
Meshack said they also had inquiries about toys for boys, and created a character called Captain Africa through which they want to instill the values of the boys also being proud of who they are. Meshack explains: “Having the values to protect the ladies, you need to know what it is to be an African and to be a man of character in light of what we see In our country on violence, specifically gender based violence.”
As a qualified CA and with seven years of corporate experience, Meshack says he was aware of the important business mechanics like protecting IP, finding the right business partners, setting up distribution agreements, requirements ensuring safety etc. By starting small, the business was built on leveraging family and friends. This leads to informal arrangements.
The HR challenge of a growing SME
Once their first contract was signed with a big retail company, they needed to expand their team and have the right people to perform the required roles. This is where Cynthia was of great assistance, Meshack said.
Confirming the importance of culture, he shared that most of the important things may remain in your head. The challenge is how to translate them onto paper so that people can actually follow you and understand the organization and figure out what is going on.
Meshack warned that this transition from employing a family member to employing somebody you are not related to, is quite a tricky one for most entrepreneurs. This is where guidance from an expert like Cynthia was very helpful.
He confirmed that attracting the right kind of expertise does not always need to follow the traditional approach. “She (Cynthia) helped me understand that you sometimes don’t have the resources to pay them, so she guided us quite a lot that there’s more than you can offer than money.”
Most important of what worked for them in the engagement (of Cynthia) was the fact that she came, and first tried to understand his business vision, operation and needs.
Meshack shared: “I like that she actually gave me time to explain what we do and where we were trying to go. Pretty much she let me do what I should be doing with a new employees, explaining the culture of the business, the vision of the business, and how I see my business now, in a year and in ten years’ time.
Let’s start at the very beginning
To end off the event, webinar host Christoff Oosthuysen asked a practical question from a business adviser perspective. “I’m one of a lot of generalists in the room that are supporting entrepreneurs in various ways. If I find there is not time to seriously take a look at HR, what is the best way that I can, with my client, develop a brief that will allow an HR specialist to easily engage with it”?
Cynthia’s response is not too surprising: “Okay, so you want to start first with understanding the business needs and what they are from an HR perspective, and then from there you can unpack it. This is because HR starts literally from the time you start thinking, I need to expand and grow my business. What then, are my needs in terms of staffing needs? And then from there. What are the HR systems do I need to have in place? So I usually would encourage to start by having that conversation. Especially in terms of what is a strategy for their business. And how that is going to impact the people that they are bringing into the business. And then, depending on your needs, you can refer to an HR specialist.”
To view a recording of the full webinar, << CLICK HERE >>.
- The next IBASA & EPI Webinar, scheduled for 23 January 2020, will cover the important subject: How to assist you client develop and implement a growth plan
- << CLICK HERE >> to register for the next episode in the IBASA & EPI Webinar Series (to be updated before publishing).
Carel Venter is the producer of the IBASA & EPI Webinar Series.