Practical HR and managing people for SMEs

Managing your people – the most important “soft” leadership skill of the small business owner?

Your team is one of the biggest assets you have – and one of the largest investments you’ll make. They’re the beating heart your business. And people management is the most important “soft” leadership skills you need to master for your business to succeed.

Recruiting for any role is a significant investment of your time and money. But finding the right recruit is only the start. You need them to grow, develop and contribute to the business. And you don’t want to lose them. The key to getting the best from your team is effective people management.

But many small business owners have limited people management experience. They don’t think they’ve the time to take on this “extra” role. But if you have employees, you’re managing people. And if you aren’t doing it proactively, you’re doing it badly. Can your business afford to waste the potential of the team you worked hard to build?

And if you’re thinking people management is a skill that leaders are born with you’d be wrong. With just a few, practical people management strategies in place, you can transform your relationship with your team.

And managing people is about the relationship between you and your employees. And like any good relationship, it needs a solid base. Then it needs work to flourish and be successful. People management is not an extra task, but a central part of running your business day to day.

There are 4 key areas to effective people management

  • The framework for the employment relationship
  • How you and your team communicate
  • Evaluation and development of your team
  • When things go wrong – and they will – how you deal with it


The framework for the employment relationship

Contract of employment Minutehr

The foundation of the employment relationship framework is the contract of employment. Other contributors to the framework might include company policies and procedures and the employee handbook.



The contract of employment is a legal document setting out the terms and conditions relating to the job. It should be clearly laid out and written in plain English. No jargon or irrelevant clauses.

Certain terms are legal requirements (e.g .date employment started, place of work, details of pay, hours of work, details of holiday and holiday pay)

But you may need to include specific terms that are relevant to your business. For example, a current driving licence would be required for an employee who drives as part of their work.

It’s best to give a new employee their contract when or before they start work. But you must issue a contract of employment within 8 weeks of the recruit starting (and the legal penalty for not issuing a written contract can be up to 4 weeks’ pay).


Policies and procedures

Policies and procedures let your employees know the day to day rules of your business and how you deal with various situations.

You could have a raft of policies and procedures. But don’t go mad and try to have a policy for every eventuality. They’ll just gather dust and go out of date. Identify the critical policies and procedures that will help you to manage your people and save you time.

3 policies that make a good starting point for most small businesses are

  • Disciplinary
  • Grievance
  • Sickness & Absence

Then think about the specific policies relevant to your business that’ll help you to manage your team.



A company handbook can be a useful tool to communicate the culture of your business to your team. As well as having the company policy and procedures in one place it can include the expected standards of employee behaviour.

It’s important to regularly review the handbook keep it relevant and up to date.


How you and your team communicate

team communication MinuteHR

Communication is an essential part of any relationship and that includes the business employee relationship. Good communication allows the relationship to continue, grow and remain successful.

With fewer layers of bureaucracy, internal communication is often easier in a small business. Perhaps you already have a regular informal dialogue with your employees. But as your business grows this can become more difficult. You may have to adapt your lines of communication to prevent confusing or mixed messages.

If you’re considering changing how you communicate with your team, gather their views. You want them to engage, so ask them for ideas for the best ways to communicate. And think about what will work best in your workplace. Will a 5-minute briefing each day work? Can social media play a part? How about team meetings or company presentations? Think about what will work for your business. What will engage and inspire your teams to achieve success?

5 top tips for effective communication:

  • Tell people your vision for the company future
  • Be clear and transparent
  • Encourage feedback
  • Be willing to listen and act on what you hear
  • Talk about business performance and news


How you evaluate and develop your team

Performance management allows the employer/employee relationship to develop. Practical tools to help you do this are appraisals, training and development plans and succession planning.



Appraisals have the reputation for perpetual meetings and endless form filling. But you don’t need an all singing all dancing performance appraisal system. Just a clear way to evaluate performance to help you manage and develop individuals. An effective appraisal system will help achieve your company’s goals and objectives.

In small business, things can change quickly and you need flexibility. An appraisal system that’s ridged and over structured probably won’t work for you. Think about managing performance as a continuous process and make it part of your day to day management. Set objectives and goals, monitor progress and have regular, shorter reviews. This gives you a more fluid approach than traditional annual appraisal systems. If you have a flexible workforce this approach will be more suited to your business.


Training & development plans

As your business grows, look at how to develop people to meet the changing needs. The information collected managing your team’s performance will help you create training and development plans. Consider the skills and strengths individuals have and how they could contribute to your evolving business.

Don’t think that all training and development involves costly training courses. Be creative about how to develop skills. Is there any free training offered locally? Are there people who can mentor others? Can people from different areas trade skills? Encourage your people to come up with innovative cost-effective ways to train and develop themselves. This is a potential development opportunity itself and can save management time. Promoting training and development as a two-way process in your company help to motivate and retain staff. But also creates the more skilled workforce needed as the business grows and develops. Win, win.


Succession planning

Rapid growth is frequently part of a small business life. Identifying team members who can take on more responsibility can give you a pool of talent for the future. Coaching and developing these future stars helps you prepare for future expansion. But don’t limit yourself to your existing team. Keep a lookout for new talent, especially if there’s an existing skills gap. Develop your network of contacts for the future.


When things go wrong – how you deal with it


No relationship is perfect. Things go wrong. When it happens, you need strategies to prevent the breakdown of the relationship.

Having clear policies and procedures and good lines of communication will help. They provide a clear and structured way of dealing with issues. Clarity makes difficulty easier, less time consuming and less stressful, for you and the employee.

The most common areas managers find difficult are disciplinary, grievance and sickness. With all three, the key principles to remember are to treat people fairly, professionally and in a timely way.



Your company standards of work and behaviour let your team know what is expected of them. And if they don’t achieve these standards you need a way of dealing with it.

Addressing less serious issues informally straight away will often resolve the problem without resorting to a more formal process. But if not, your disciplinary procedure provides you with a structured way of managing more difficult or serious issues. The clear structure makes manage potentially difficult situations easier and helps you avoid legal action. Employment tribunal claims can be time-consuming and costly. If the correct procedures haven’t been followed, compensation payments can increase by 25%.

As well as benefiting the relationship in difficulty, dealing with issues in a timely and fair way reassures other employees. It demonstrates that you resolve problems in a proper and professional manner.


  • Deal with issues in a timely way
  • Have a clear policy and ensure employees are aware of it
  • Follow company procedure
  • Treat with people with respect and fairly


  • Ignore issues and hope they go away – they won’t
  • Inconsistency dealing with problems
  • Let emotions get in the way of fairness and objectivity



Your employees need a way to raise problems or concerns they have. Mention “grievance” and most managers panic and have visions of costly and time-consuming legal proceedings. But often, all your employee wants is to be heard. To have their concerns taken seriously. By listening and dealing with their concerns informally you’ll resolve most issues quickly and effectively. More serious grievances may require a more formal approach and your procedure should reflect this.

Don’t delay when issues are raised. Small concerns can quickly grow into larger complex issues when left unresolved. It will cost you more time and money to resolve and will have a negative impact on the rest of your team.

A structured grievance procedure helps you to deal with issues in a clear way. It benefits you and reassures employees, even if they never have cause to use it.


Sickness and absence

In 2017 employees took an average of 4.1 sick days. Sickness can have a huge impact on a small business. With lean team structures, being one person down can significantly affect the workload of others. A clear sickness management process can help you save time and money.

Top tips for managing sickness:

  • Sickness policy – setting out expected standards, reporting procedure and sickness management procedure
  • Records – keep records of sickness for your employees and monitor this
  • Contact – when employees are off sick keep in contact and updated about their sickness
  • Reasonable adjustment – when returning to work after sickness think about any reasonable adjustments that may be needed, for example, flexible working
  • Return to work interview – talk to employees when they return to monitor and manage sickness
  • Impact on others – monitor the impact on others, as they may have to pick up extra work and responsibilities


Key features of effective management of people:

Team success MinuteHR

Your team is fundamental to the success of your business and by effective people management, you ensure their development and contribution to your ongoing success.

The key to this:

  • Clear and relevant contract of employment and policies and procedures
  • Effective communication
  • Manage and develop performance – for the present and the future
  • Deal with problems in a fair and professional way

Share this post

Share on facebook
Share on google
Share on twitter
Share on linkedin
Share on pinterest
Share on print
Share on email