Managing people in small enterprises-1

Small enterprises do not have huge human resource departments to undertake the six "R"s of recruiting (hiring), retooling (training), retaining (keeping), reviewing (appraiasing), rewarding (compensating), and recycling (upgrading, reassigning or outpacing) people.

There are no formal screening tests, no rigorous interviews, no exhaustive background checks. Employees’ performances are not periodically assessed nor are there regular feedback sessions. Training is often done on the job and as one goes along. People leave or stay, depending on their personal relationship with the owners or management. Bonuses rely on the largesse of the boss and may come once a year in red envelopes, the merit criteria for which is not made clear to all. Promotions may be long in coming because there is not much upward movement in the enterprise ladder. Family members of the owners may hog all the critical positions of responsibility, leaving little room for outsiders.

So how does a small enterprise set up a simple, yet functional, human resource management system? Rather than using the six "R"s of formalized HRMS, we will adopt a more common sense approach. There are the five "M"s of managing people–mobilizing people, mixing and matching people, mentoring people, motivating people, and measuring people. For now, we will only discuss the art of mobilizing people.

Before a small organization enterprise mobilizes people, three basic questions must be answered by the entrepreneur and the recruiting officer.

• What is to be done? –It is necessary to break down an organization’s strategies into well-laid out programs, which, in turn, must be translated to group activities and, finally, to individual tasks. If this is done methodically, then the organization would have spelled out the knowledge, skills, and competencies required to accomplish those programs, activities, and tasks.

• Who will do it?–Obviously, it is the people who have the knowledge, skills, and competencies who will accomplish the job. But beyond the technical and managerial aspects of the work, the organization must choose people who have the right attitudes and personal values. Possessing the knowledge and skills is one thing; having the disposition to push one’s self to do an excellent job is another. An organization needs people who have great initiative, enjoy their work, get along well with others, and give their very best.

• How will it be done?–This can be best answered by designing and installing responsive organizational structures, efficient operating systems, and sound managerial processes.Structure follows strategy, or so many management gurus say. But strategy also follows objective. The choice of organizational structure depends on the objective of the organization. If the organization wants to have wide market coverage as an objective, the strategist will endeavor to conquer this vast empire through area structures. The battle field will be divided into territories, territories into zones, and zones into districts. Organizations with fairly standardized products might opt for functional structures by creating organizational silos such as marketing, production, finance, and general administration. Each silo specializes in its own expertise for better efficiency, economy, and effectiveness. If the organization has technically challenging products aimed at sophisticated customers, then a focused product-based structure might be best (e.g. cardiovascular and anti-infective drugs for a pharmaceutical firm). If the driving force is the different types or segments of customers, then the organization can be structured according to customer specialization (e.g. wholesale versus retail customers or adult versus children markets). As the organization or its market becomes bigger, the organization tends to use structural combinations. An area organization can be combined with product-based or customer-differentiated structure. An area manager may have product structures under him or her. A product manager may have area commands underneath.Complex organizations dabble in matrix structures where the seats of power are dispersed and people report to different bosses for different purposes. For example, an organization might have functional divisions overlapping with product divisions. Systems spell out the operating procedures of the organization where its activities and tasks are arranged in a sequential, logical, step-by-step manner to ensure efficiency and to gain greater control. Systems define the boundaries and scope of management intervention. Managerial processes are methods of accomplishing desired objectives such as planning, organizing, directing, evaluating, controlling, budgeting, and rewarding. Management processes connect all the units of an organization together through a prescribed or accepted way of getting things done.

After the three questions have been answered well, then and only then should the organization start mobilizing people. A final caveat must be heeded by the entrepreneurs. Most resumes and references submitted by applicants are exaggerated. A good background check in the applicant’s neighborhood is always worth the extra effort.

(Eduardo A. Morato, Jr. is on the faculty of the W. SyCip Graduate School of Business of the Asian Institute of Management. For comments and inquiries, you may contact him at: [email protected]. Published "Entrepreneur’s Helpline" columns can be viewed on the AIM website at www.aim.edu.ph).