Smaller firms five times more likely to grow workforce than larger firms
As hiring intentions pick up for all employers, CIPD research has shown that small and medium sized firms are five times more likely to grow their headcount than larger organisations.
However, the CIPD also warned that SMEs need to protect their culture and values as they grow during their recruitment drive.
The CIPD’s Labour Market Outlook (LMO) revealed that the proportion of smaller employers who expect to increase staff levels compared to those who expect to cut headcount is +52, compared with +11 for large employers for the second quarter of 2014.
This highly positive net employment balance for SMEs points to a hiring spree, however, figures published at the CIPD’s annual HR in SMEs conference in London show that having a clear purpose and values is key to the success.
Organisational culture affects employee satisfaction and retention, ultimately steering a business towards achieving its goals. But with rapid expansion SMEs risk losing their purpose and values, which can be diluted or disappear, the CIPD said.
More than three quarters of small business decision makers surveyed (77 per cent) agreed that their business success hinges on them staying true to their vision and values and said that this is something they will need to actively focus on as they grow (79 per cent). However, 17 per cent believed their colleagues would struggle to explain what their company’s vision and values actually are.
CIPD adviser Dr Jill Miller said: “Both internal and external events can derail your culture, so when implementing change it is important to think carefully about how that change can be used as an opportunity to reinforce your values, rather than undermine them. For example, when introducing a new reward approach, think about whether it will encourage the desired attitudes and behaviour from employees. Or when opening a new office or production site, think about how you will encourage the same cultural principles to be upheld in that site.
“Keeping hold of ‘what you’re all about’ over time requires constant attention as culture, purpose and values will affect the standard and style of customer service delivered, the satisfaction, engagement and retention of your people and ultimately your organisation’s performance.”
The CIPD has published a guide to help SMEs understand how their culture contributes to their success called ‘Keeping culture, purpose and values at the heart of your SME’. It features case studies from 16 organisations across a range of sectors, including firms such as Naked Wines, Secret Escapes, UKFast and Choccywoccydoodah, as they balanced growing a successful business with the challenges of engaging a larger workforce.
This guide one of a series of studies looking at people management issues in SMEs. The next report, ‘Leadership in SMEs’, will be released to coincide with CIPD HR in SMEs conference in Sheffield on 20 May.