HR Insights which is an online HR forum  recently asked me if I wanted to write a piece on Strategic HR, I thought “That should be easy. I have discussed strategic HR principles with hundreds of small business owners over the past 15 years, so this shouldn’t be a problem.”  Then I thought about it further “What could I write that hasn’t already been written millions of times?”

That is how I landed on the topic of this piece; “Why small businesses struggle to implement strategic HR initiatives.”

This question is really at the heart of the issue because I don’t believe that there is a shortage of great ideas around strategic HR initiatives.  Most people agree that if an organization attracts, retains and trains the best talent, then it has a better chance to succeed.  Most people would also agree that if an organization breeds a culture of constant open communication, endless improvement and achieving business goals, then results would improve. Unfortunately I would guess that only about 5%-20% of all small businesses open their doors, utilizing strategic HR principles as the foundation of their business. These businesses are generally extremely successful and grow to be the Googles and Apples of the world.

But what about the other 80%-95% of companies that haven’t build a foundation based on these principles? This is where the problem lies: How do you implement strategic HR principles when your business isn’t currently utilizing them?

In my experience there are 4 main obstacles to overcome in implementing these changes:

1)      Fear of change – Small business owners generally agree that improving talent levels will improve their organization.  However, it’s scary to mess with their business in a substantial way because, while they would love to be more successful, they are more concerned with losing what they already have.

2)      Lack of resources – All small businesses regardless of size, industry or geography have one common problem: They only have a limited amount of resources. Those resources are generally already wearing multiple hats within the organization and do not have the capacity to take on a new project like this.

3)      Lack of understanding – The reason that small business owners didn’t open their doors utilizing strategic HR principles is because they didn’t actually know how to engrain them in their business – If they had known they probably would have.

4)      Perceived cost to implement – If a business owner views HR and employees as a cost center and not a potential for revenue growth, then he or she is going to struggle to view money that is spent on attracting, training or retaining employees as an investment.

Now that we have identified the obstacles we can start to address how to implement change:

1)      Determine the organization’s goals, values & culture – The direction and attitude of a small business is always determined by the business owner.  There can’t be a laid back work environment if the business owner is tense and uptight.  The business owner has to live, breathe and sleep the culture that he or she wants for the organization.  The owner needs to be quick to recognize employees that live the culture and be equally as quick to squash employees that act contrary to the culture.  If the owner does this all day, every day for 30-60 days, there will be a noticeable change in the direction of the organization.

2)      Make goals, values & culture known to everyone – For example, if an organization’s goals are to double revenue, provide the best client experience in the industry and have a workforce that is provided opportunities to grow and succeed, then it must make these goals public to everyone within and outside the organization – post the message all over the office, on the website, in press releases and on job posts and then follow up the message by living it, as mentioned above.

3)      Build a team of people around effort & attitude – In my experience there are two things that you can’t teach employees; effort and attitude. If an employee works hard and has a good attitude, there is nothing remaining that can’t be taught.  The next step can be emotional and gut wrenching for business owners but is a must. He or she must look at every current employee and determine which employees have both characteristics and which do not.  If employees don’t have both, then the business owner must start the process of replacing them immediately with employees that do.  When looking for new employees, business owners must make sure that the potential employees have the skills that are needed, but need not worry as much about industry experience because it’s overrated.  If a person has effort and attitude, it actually doesn’t take that long to learn a new industry. The business owner needs to develop a 6-12 month game plan to replace employees that need to be replaced and start with those that have the worst combination of effort and attitude regardless of position within the company. And if the organization is filled with top effort and attitude employees that aren’t producing then you have a leadership problem not an employee problem.

4)      Create regular forums to discuss improvement initiatives – To create a culture of constant organizational improvement, a business owner has to realize that the employees have ideas as to where the organization can improve because they ask themselves every day “Why do we do it this way?” when performing their daily tasks.  The owner should hold a companywide meeting and announce a new program in which the workforce is going to be engaged to identify opportunities for improvement.  Then he or she should host bi-monthly team meetings to discuss employee ideas for improvement.  In the meetings, there is no tolerance for negative comments about ideas.  It is important for the business owner to recognize that all ideas are good ideas even if he or she doesn’t agree with or understand them.  If an idea doesn’t seem like a good one, ask for more thought and detail behind it so that it can be discussed further at the next meeting.  Out of the gate, the owner should find some ideas that can be implemented quickly with minimal effort because if employees see their ideas implemented, then the organization wins. 

5)      Incentivize all employees for generating revenue growth – I am a strong believer in implementing an aggressive companywide new business incentive plan.  Why should only sales people be aggressively compensated for bringing new business to the table?  I don’t know any salesperson that wouldn’t give up 25% of his or her commission to another employee if the employee makes an introduction that leads to a sale.  If an employee that makes $30,000 a year has an opportunity to make another $1,000, $5,000 or $10,000 a year by leveraging an introduction to someone that he or she knows, then that employee is going to be looking for those opportunities.  It is important to make sure that all employees know what they should be looking for in terms of a lead (i.e. a VP of HR for a business with 100+ employees).  The owner should then recognize anyone who has given a lead, and how much money has been earned, on a weekly, monthly and quarterly basis. 

This article began with an initial introduction to some of the primary obstacles that I have observed that inhibit organizational change. I then offered up solutions to help business owners implement strategic HR principles. Let’s see how my suggestions address the obstacles.

1)      Fear of change – All that I’ve asked is for a business owner to live the culture that he or she wants to breed. Replace any employees that have a poor attitude and weak work ethic with new employees that have a good attitude and strong work ethic. That doesn’t seem like it’s very scary or that it could lead to a negative impact on the organization’s business.

2)      Lack of resources – Other than holding a company meeting, there isn’t a whole lot of time required to implement the new strategies.  In addition, an engaged workforce actually will work for the organization even when they aren’t at the office. This will actually increase the time capacity of the organization.

3)      Lack of Understanding – A blueprint for implementing strategic HR principles is outlined in the 5 steps above.  Business owners should determine and publicize the organization’s goals, values and culture, build a team of people around effort and attitude, create regular forums to encourage employee input for improvement and create a companywide incentive program to accelerate revenue growth.  Understanding and implementing these strategies is what drives successful organizational change.   

4)      Perceived cost to implement – The only true costs are having the organization’s goals, vision and culture added to the website and printed on a couple of posters around the office. This will probably cost about $500 – $1,000 total. All other ‘costs’ would be additional commissions paid for new revenue to the organization which any business owner would love to pay on a daily basis. 

As you can see, implementing strategic HR principles really isn’t that hard or scary.  I hope that business owners will take the road map that I’ve laid out to implement change in their organizations.

Imagine the possibilities if most small businesses had employees that understood that they can have a positive impact on their company and are rewarded to do so – what a world that would be!

If you are a business owner and still can’t see the path then let me know because I’d be happy to help you find it.