Small firms build for long term

The Herald Business - - Straight Talking - IAN MCCON­NELL

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

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