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Why do so many SMEs fall short when taking on new employees?

In the next in our series of August business ideas to ponder at leisure we’re looking at recruitment, induction and staff loyalty.
Generally, employers hope to recruit employees who are already trained, qualified or competent for a position on the grounds that they will become productive more quickly once they start.
However, for some time there has also been complaint from employers that they find new recruits, including graduates, to be weak in basic literacy and numeracy, or people skills, and over time that they are not as loyal or committed as expected.
While recruiting experienced staff is viewed as ideal, most companies want to pay as little as possible and end up employing inexperienced staff.

Training, induction and loyalty

In our view the inexperience of staff is linked to whether or not they are valued. There are however solutions.
Firstly, why not consider taking on people who are younger and less set in their attitudes and investing in training them, not only in skills but also in the business’ ethos and work culture?
Secondly, leaving aside the skills problem for a moment, how much of the loyalty problem is due to an inadequate and often far too short induction process? Often SMEs pay little attention to these essential underpinnings.
Perhaps they do not really value their employees, nor do they value the time and investment needed to make employees feel truly valued.
This is often characterised by a failure to induct new recruits or even to provide proper support to existing employees. All too often staff feel they are competing with colleagues rather than collaborating with them for their collective benefit.
Arguably paying attention to welcoming, training and helping newcomers to the workforce to settle in will help to make them feel valued and encourage a level of loyalty to the company that has shown an interest in their development and given them a chance.
Lastly, on the subject of loyalty, employers often complain that after they have invested money in training staff who then leave for a better opportunity. In our view seeing this as money wasted is a too narrow viewpoint, particularly post Brexit. The goodwill generally endures.
If, as seems likely, recruitment from overseas post Brexit becomes severely limited and bureaucratic it has already been said that for the UK to be competitive it needs to upskill its workforce. The lack of home grown skills has been an issue in the UK for some time and the situation will only become more urgent, so investing in the workforce is something every business and employer should consider contributing to for everyone’s eventual benefit sooner rather than later.

Do SMEs need an employee handbook?

Many SME owners ask why they need the formality of an employee handbook for their staff.
There are several reasons, in our view. A handbook provides clarity about the company’s expectations and details of additional terms and conditions that form part of the contract of employment but which might need to change from time to time.
It helps cut down on misunderstandings and could provide some legal protection for the company in the event of a dispute with an employee.
When demands on management time are considerable, as they often are in a SME, a handbook saves time and provides clarity about what is expected from new recruits during their induction, when there is a lot of information to digest. It also acts as a useful reference for everyone in the company especially when dealing with employee- related issues.
Well written, in clear and simple English it can offer a welcome and sense of belonging to the nervous new recruit.
Equally importantly it helps a company define what it stands for and can be used to communicate company aims and values.
So what information should be included? The basics are general company policies, rules and regulations (dress code; how people interact with customers; harassment; safety regulations; use of phones and IT for personal purposes), info on reclaiming expenses, booking holidays, sick leave, salary and performance reviews, company benefits etc. Although statutory it is useful to set out the steps for disciplinary and redundancy procedures which can also be used as a checklist by both managers and employees.
An employee handbook does not need to be expensively produced and most of the contents are standard and freely available. It is more important that it contains accurate, correct and easy to understand information.
It is, however, a good idea to have the handbook checked either by an HR or legal professional to ensure everything it contains is clear, accurate and complies with any employment legislation.