Why SMEs need to focus on the ‘three Rs’
In a highly competitive working environment, businesses who wish to find success must focus their attentions on three main areas: recruiting, rewarding and retaining their staff.
The ‘three Rs’ as they can be known form the basis of any long term strategy and many employers will recognise that all three can be more difficult to achieve when competition is high.
With unemployment at its lowest level for seven years and with the number of people in work at an all-time high, the race for the best staff is certainly intensifying on a daily basis.
Add to that boosted levels of pay noted in the past year and that these rises have outstripped inflation for seven consecutive months, and competitiveness increases yet further.
For small businesses therefore, the three Rs form a vital part of their plans to ensure that they are not left behind should they lose their most qualified staff.
Most businesses already recognise the importance of such strategies and there is a growing trend of using employee share incentives to keep the workforce contented and productivity high.
Not only can this be highly efficient in terms of tax payments, but it is also likely to motivate employees to work harder and identify with the firm’s targets.
Such schemes can reward staff in the form of cash bonuses, shares or alternative options that appeal to them.
Some of these targets can even be related to specific staff, giving them goals which should encourage working standards to remain high.
The importance of the recruiting, rewarding and retaining staff is highlighted by the potential impacts that can be noted on the bottom line of a business.
Recruiting can cost considerable sums of money to replace staff that have left a business, as can training new people for their roles.
In instances where small businesses do not have access to large sums of finance this can be an issue, as replacing staff can require too much expenditure.
Alternatively, these firms may wish to consider business restructuring to free up funds from elsewhere by streamlining their activity.
This helps to improve the financial management within an organisation and provides funding to enhance other aspects of a firm such as sales, marketing and research activities.
By Phil Smith