The aim of workforce planning is to align your people strategy with short-term changes and long-term goals.
As dedicated small business accountants in London working with entrepreneurs from various sectors, we have the privilege of meeting driven small business owners to exchange ideas and share knowledge. One of the topics that crop up regularly in discussions is human resources. Specifically, how does an entrepreneur know when it is the right time to hire and how to go about planning and managing employees effectively.
Successful small business owners, we find, tend to have a workforce that can meet two objectives. Firstly, the workforce is efficiently managed to meet short-term changes which may be related to growth (hiring more staff as you get more clients), decline (having less staff as clients leave), or when there is an increase in competition (having versatile staff who can achieve more with less), to name but a few.
Secondly, smart small business owners also have a long-term plan with specific goals. The plan tells them when they need the right people with the right skills at the right time.
In essence, we view workforce planning as a systematic way to identify what skills are needed, how to find the right people for the right job, and what alternatives are available to address gaps or skill mismatches. As this is a highly fascinating subject, we look to explore it more in this article and see how workforce planning can benefit us all.
When it is time to hire
Should you hire someone because you have just received a new contract? The answer depends on the situation you are in. In general, you know it is time to hire someone when:
- Your current workforce cannot cope with the workload or does not have the necessary skills to cope.
- You can generate more money if you hire someone.
- You have calculated the costs and you are certain that your business can afford it.
- The people you hire can support your long-term business goals.
In other words, before hiring, you must understand your current workforce capacity, you are aware of any skills gap in your company, you know how to get the most out of your (current and future) employees, your decisions are guided by financial data, and most importantly, you never lose sight of your future goals.
Labour cost is an area that is worth mentioning. In the UK, employers are required to pay salaries, National Insurance and pension contributions. In addition, business owners also need to spend time and money training the person, as well as offering staff benefits like paid holidays, sick pay and gym membership, to name but a few.
Finding the right people for the right job
Every small business owner is keenly aware that hiring the right people is vital for the success of your business but finding the right people can be challenging. Here are a few good tips that may resonate with some small business owners:
Look for a team player
In many small businesses, employees are required to work cohesively on a project or several projects at once. In this case, look for a team player who is genuine, committed and supportive.
Job-hopping may be on the rise but it doesn’t mean that companies like it – because turnover is disruptive and it costs money. Look for traits of commitment, particularly if the new hire is vital to your future workforce needs.
Test the candidate to make sure they have the ability to perform the tasks required. You can test both technical and soft skills. Technical skills are related to a particular occupation. Soft skills, on the other hand, cover a wide spectrum of traits that shows how one interacts with others.
Getting the best out of your employees
Small business owners know that working longer hours does not necessarily mean more productive or increased efficiency. To get the best out of your employees, a few useful tips include:
- Make it clear what you and the business want from them.
- Encourage them to take responsibility for their actions; show them how their efforts are tied into the bigger picture or the overall goals of the business.
- Create a culture that promotes honesty and strong work ethics.
- Incentivise them when a milestone is achieved. This can be something small like taking them out for a meal or something substantial like cash bonuses.
- Train and develop people who are keen to contribute. Show them how they can achieve career progression within your organisation.
- Provide mentorship, particularly to young workers. Mentorship involves one-to-one discussions that focus on transferring knowledge and connecting at a deeper level.
Alternatives to address skills gaps
It is highly common for small business owners to hire new employees to address skills gaps, but alternatives such as hiring contractors and upskilling current employees should be considered too.
Hiring contractors or freelancers is definitely something that can benefit small business owners as the advantages are obvious:
- It is usually (but not always) cheaper to hire a contractor as you don’t have to pay National Insurance, pension, and benefits.
- Areas of expertise such as database management and cybersecurity are best left to specialists who know what they are doing (unless your business is based around these disciplines).
- You can respond to market changes quicker by hiring or letting go of contractors with short notices.
- Contractors have their own insurance to cover for all eventualities.
For more information, follow the link to the article Hiring specialist contractors can reduce SME costs.
Another effective way to address skills gaps is to train your existing staff. Research has shown that upskilling can improve employee job satisfaction and engagement. There are various methods to develop skills, including:
- On-the-job training
- Accredited or non-accredited training
- Attending special industry events
- Mentoring and coaching
Don’t forget payroll and benefits
Although studies have shown that employees may not be necessarily motivated by money, every employee still expects to be paid fairly, satisfactory and on time. They also look for benefits like paid holidays, gym memberships and other goodies.
While it is essential to make the pay package attractive to your employees, you also need a robust payroll team in place to calculate individual payslip and deduct PAYE, National Insurance, pension and other items like student loans, along with handling ad-hoc items like bonuses and commissions. But having an in-house payroll team is expensive – fortunately, this is where the outsourced payroll services from Tax Agility can help.
Our complete payroll services are designed for small businesses, helping small business owners like you to manage the payroll function and compliance. We can take over the entire payroll process, help with ad-hoc payroll exercises, manage TRONC Scheme Management for restaurants, bars and hotels, as well as keeping you informed of any changes to the payroll regulations.
Tax Agility promotes small businesses
At Tax Agility, we are chartered accountants specialising in small businesses across London. We’ve helped many entrepreneurs grow from a one-person business to a successful enterprise with dedicated teams in place.
Our services to small businesses in London, Putney and Richmond-upon-Thames include:
Management consultancy is an area worth mentioning if you are looking to grow your business substantially in the near future. At its core, management consultancy is about analysing the financial data of your company and allowing you to use the data to make informed decisions that spur growth.
If you would like to know more about what we can do to help your business – be it to support your bookkeeping, provide tax advice, manage your payroll services, or work with you to grow your business – get in touch by calling 020 8108 0090.
Alternatively, you can use the contact us form to get in touch.
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This blog is a general summary. It should not replace professional advice tailored to your specific circumstance.