This is the fifth article in a series about powering your small business through 12 areas of internal management.
Regardless of the industry you operate in—food service to occupational therapy to tech—there is one commonality every business shares: people. The people you employ contribute to your company culture, represent your brand and product to your customers, and share the workload. To say that people are important is an understatement, which is why this is a key area of internal management for powering your small business.
The real competitive advantage in any business is one word only, which is “people.” —Kamil Toume
But managing people effectively can be tricky. Because you work with your team so closely each day, it may seem like this area of internal management is a no-brainer. But strategic management of this valuable resource takes more than good team dynamics. And sometimes, good dynamics can mask internal weaknesses that would help your business thrive.
Over the years, corporate speak related to this field has shifted from terms like labor management to human resources to personnel management. I like the term people management, as it frames the category in a more warm, personal way, which reminds me that my team isn’t just capital to plug into one space or another. The Officeheads team is made up of individual people with a complex array of professional and personal abilities and responsibilities. My relationships with each one is unique; a good strategy will take into consideration the whole person who shows up to work each day on behalf of the company.
People management is the strategic approach you take to effectively manage your people. Starting with the team itself, this includes your recruiting processes, hiring and onboarding practices, and termination procedures. It’s possible that your current people management strategy is attracting the wrong caliber of talent; it’s also possible it isn’t keeping the right caliber! If you see patterns of turnover or difficulties getting the right people in the right role, you’ll want to do a strategic overhaul on your people management. According to some studies, it’s predicted “that every time a business replaces a salaried employee, it costs 6 to 9 months’ salary on average. For a manager making $60,000 a year, that’s $30,000 to $45,000 in recruiting and training expenses.” Most small businesses would find that sort of expense crippling.
Another people management factor in need of review is your approach to payroll and benefits. Traditional companies have both full-time and part-time employees who are paid either a flat salary or an hourly rate. But as mentioned earlier in this series, many traditional business structures have shifted in 2020, and people management has not been immune. Many small businesses are considering new approaches to building their staff. Maybe your business can thrive with an employee working remotely from another city or state or country. Maybe your clients can be better served with a team of expert freelancers. These non-traditional approaches will take a bit of research to calculate the structure that provides your small business with the best financial return. For example, freelance team members will be contracted and paid using 1099 forms rather than W-2 forms; it’s not necessarily complicated, but if it’s new to you, there will be a learning curve. These strategic people management decisions need to be assessed in full to power your business for greater growth and success.
Strategic people management holds plenty of positive financial returns for your small business. Like the other areas of internal management, this one works best with regular review. Your approach to people management can not only boost your bottom line, it can make your business one that employees and customers are loyal to for the long run.
Are you ready to bring this area of internal management into line with your financial management goals? Officeheads is ready to help! We give entrepreneurs and creatives the financial tools, processes, and team needed to move their business ahead of the competition and onto solid financial footing. Reach out today to learn how we can get started.