Small firms build for long term
IN recent weeks, I have had t he pleasure of sitting on judging panels for The Herald’s inaugural Scottish Family Business Awards and the Entrepreneuri al Exchange’s annual awards. These sessions proved something of a tonic given the general economic gloom, with many big companies continuing to axe large numbers of jobs.
Amid the corporate cost-cutting frenzy, it was refreshing to hear from businesses in Scotland which were adding to, or at least maintaining, staff numbers and investing for the future.
Many of the entrants were at pains to emphasise the importance and loyalty of their workforces. In many cases, they highlighted their efforts to get to know them as people.
And many had invested boldly over the years, at considerable personal financial risk, to build what they have today.
While it is perhaps easier for smaller businesses to pay true attention to their workforce, some big companies could learn a thing or two from these firms, rather than paying lip-service to staff development through the implementation of onesize-fits-all human resources policies which sometimes appear to have been dreamed up by consultants with little knowledge of the business.
One message which came through loud and clear, especially from the family businesses which featured in both The Herald’s awards and in the Exchange’s Entrepreneur of the Year and Emerging Entrepreneur of the Year awards, was the importance of focusing on the long term.
Big, publicly-quoted companies continue to highlight their duty to perform for shareholders, but all too often seem to view this on short time horizons. This may be the fault of the shareholders themselves, or arise from the lack of ability of financial market players in general to concentrate on the longer term, or both.
Whatever the cause, this shorttermism is all too often detrimental. We see too many big companies lurch one way, and then the other, sometimes getting the moves and timing wrong in both directions. Often in such situations, the workforce suffers.
Many of the family businesses, and also some non-family firms in the Entrepreneurial Exchange awards, brought a refreshingly long-term approach to the table.
Some highlighted the loyalty of their workforces, and the long service of their employees. All too often in some of our big corporates, such long service is seen as a negative, either in terms of these people being on higher salaries or the general appetite for change for change’s sake.
Of course that is not to say there is no case for new blood – or for change – but there is always a balance to be struck. And it often takes mere common sense, rather than teams of consultants, to calculate the long-term benefits of a staff-focused approach.
Auchrannie, the Arran hotel and leisure complex which enjoyed success in the Scottish Family Business Awards, keeps on a core staff of more than 100 during its quieter winter period. It acknowledges this is probably more people than it strictly needs to run the operations during this time. But it certainly highlights the benefits of retaining staff who are familiar with the business and its operations, and the fact that this avoids it having to train up lots of new recruits at the start of the season when things are busy. The customer service benefits are obvious.
In the corporate sphere, change is too often used as shorthand for another unimaginative cost-cutting process. Sometimes, businesses need to cut cost, but a lot of the time these exercises just look like an easy way of boosting profits in the short term, too often to the detriment of the longterm future of the enterprise. Businesses can achieve real and lasting success through change which does not involve cost-cutting, but is rather aimed at laying down the foundations for long-term growth.
A heartening number of the Entrepreneurial Exchange finalists and those in the Scottish Family Business Awards, operating in many different sectors, had achieved impressive results by implementing changes aimed at ensuring long-term prosperity, developing new products, services, and/or sales channels, and going into new markets.
This diverse band included Linn Products, the East Renfrewshirebased high-tech music systems developer and manufacturer, and Kelso-based outfitter A Hume.
Meanwhile M&K MacLeod, a Lochgilphead- based family - owned construction business, has enjoyed growth in the toughest of sectors, no doubt helped by a long-term view and recognition of the importance of its workforce.
While the big corporates are operating on a different scale, which creates its own challenges, they should take a look at what the best of their smaller peers are doing. It’s often common sense.
But, as we see time and again, common sense cannot be taken for granted.
Small and family businesses can teach the big corporates some lessons about focusing on staff