Small Business Management MGMT5601 Topic 7: …...Job Design Motivation Hygiene Factors Motivator Factors Job Description Job title Job Purpose Description of work Key duties & responsibilities

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Small Business Management MGMT5601

Topic 7: Small Firms and Human ResourcesProfessor Tim Mazzarol – UWA Business School

UWA Business School MBA Program [email protected] MGMT5601



• Compare human resource management (HRM) in small and large firms.

• Understand the importance of delegation and team building.

• Consider case studies of team building in small firms.

• Understand the importance of coaching and how to apply a coaching model.

• Develop human resource management systems for a small firm.

• Understand the general legislative environment surrounding small business employment.

Learning outcomes


In this topic you should learn how to:


Managing business growth



HRM in small firms

• Rapid growth is associated with HR problems

• Owners must deal with HR issues personally• HRM in small firm is informal• HRM is family owned firms can be difficult• As employee size grows HR becomes

complex and formality must increase• Legal environments have HR traps for SMEs• Formal HRM becomes necessary over 100

staff with appointment of HR Manager• HR planning is linked to successful growth

but imposing formal HR systems requires care

• Higher levels of group culture strengthen a firm’s ability to adopt HRM practices and help enhance labour productivity

Sources: Storey et.al. (2010); Patel & Cardon, 2010


HRM in large and small firms

• Small firms have less formal HR practices including recruitment & selection, OH&S guidelines and performance management

– employee personal characteristics more important to small firms

– job tryouts more common in small firms• Small firms just as likely to use TQM

systems and view HRM and culture as important

– Small firms are less unionized (88% non-unionized in Australia)

– Small firms less likely to use HRM for strategic edge

• Strategic HRM practices– Large firms more likely to use formal

selection tests– Small firms use career development,

training and rewards to encourage innovation

Sources: Desphande & Golhar (1994)(1997); Marlow & Patton (1993), Wagar (1998); Matthews (2002); Bartram (2005)


Employer’s obligations

• Small business owners are generally required by law to:

– Pay correct wages.– Reimburse employees for any work-related

expenses.– Ensure a safe working environment.– Not act in a way that would seriously damage an

employee’s reputation or cause mental distress or humiliation.

– Not act in a way that damages trust and confidence necessary for an effective working relationship.

– Not provide false or misleading references– Forward any PAYE tax installments to the Taxation

Office.– Make appropriate superannuation guarantee

payments.

(Source: www.business.gov.au)


National Employment Standards - Australia

Source: FairWork 2016

Entitlement Area EntitlementsMaximum weekly hours of work 38 hours plus reasonable overtime.

Request for flexible working arrangements

Allows for parents or carer’s of children to seek flexible hours for caring.

Parental leave and related entitlements

Up to 12 months unpaid leave for every employee, plus 12 months unpaid leave and other related leave.

Annual leave 4 weeks paid leave per year, plus additional week for some shift workers.

Personal / Carer’s leave and compassionate leave

10 days paid personal / carer’s leave, 2 days unpaid carer’s leave as required, 2 days compassionate leave (unpaid for casuals) as required.

Community service leave Unpaid leave for voluntary emergency activities and jury service, plus up to 10 days paid leave for jury service.

Long service leave Uniform national long service leave standards.

Public holidays A paid day off on a public holiday, except where reasonably requested to work.

Notice of termination and redundancy pay

Up to 5 weeks notice of termination (5 weeks if aged over 45 years with minimum 2 years service), plus 16 weeks redundancy pay.

Provision of a Fair Work Information Statement

Employers must provide this NES statement to all new employees.


Providing a fair workplace

• Employers must comply with minimum entitlements:– Minimum wages & conditions– Leave provisions– Superannuation– Workplace health & safety

• Employers must take all steps to address:– Workplace bullying– Discrimination– General protections– Termination & redundancy

Source: www.fairwork.gov.au

Example: Hospitality Industry (General) Award 2010)


Employer obligations and rights

• Employers must keep records for each employee containing:

– The firm’s • Registered business name• Australian Business Number

(ABN)– The name of the employee– Whether employment is:

• Full or part time• Permanent, temporary or casual

– The date employment commenced.

• Employer must provide employees with pay slips

– Must comply with the Fair Work Regulations 2009.



Unfair dismissal laws



• Unfair Dismissal Laws– Commenced 1 July 2009

• Applies to firms with <15 employees

An employer can dismiss any employee without notice or warning if they believe that the employee has engaged in serious misconduct. Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures.

In other cases, the employer must give the employee a warning explaining why they are at risk of being dismissed. The reason the employee is at risk of dismissal must be based on a problem with their conduct or capacity to do their job, and the employee must be given a chance to fix the problem.

Employers cannot dismiss employee in circumstances that are “harsh, unjust or unreasonable”.Assessed case by case, reasons for dismissal must be given and employee must have right to respond.

The small business employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee's response. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer's job expectations.


Leading and coaching teams



Developing the E-Team

Entrepreneur• Initiator• Leader• Motivator• Risk Taker

E-Team• Implementers• Consolidators• Managers• Loyal support

network

Source: Mazzarol (2001)

As the business grows the entrepreneur must learn to step back and let go to the E-Team.


Building the “Awesome Organization”

• Hire people who are smarter, better and more efficient than you.• Ask questions first rather than jump in with solutions.• Constantly measure the downsides of your decisions.• Recognize the problems of being the ‘expert’ in the business.• Get a mentor or coach of your own.• Change your management structure as you grow.

Source: Kauffman Centre (1998)

Discussions with business owners who had successfully grown their companies from start-up suggested the following key suggestions for success:

Owner-ManagerCharacteristics

• Management style• Management education• Management Experience• Personality style

External MarketConditions

• Market growth/decline• Political forces• Customer-supplier power• Competitor actions• Technological change

Growth HR ManagementNegative-------------Positive

Employee turnover Employee productivityEmployee commitment

Nature of WorkEnvironment

• Hi----Lo specialization• Hi----Lo worker autonomy • Routine----Unique process• Hi----Lo worker skill

Company Structure• Ownership (e.g. family)• Single or multi site• Hi----Lo complexity• Hi----Lo change

HRM Policy & PracticeRecruitment & selection (informal-----formal)• Delegation of authority (Lo------Hi)• Team building (Lo-----Hi)• Appointment of managers (Lo-----Hi)• Remuneration policy (informal----formal)• Incentives & rewards (informal----formal) • Discipline & de-selection (informal----formal)

Owner Manager

partnering

Owner-ManagerCommitmentTo employee

partnering

Source: Mazzarol, 2003

A Model of Small Business HR Growth Management


HR practices in small firms


Paternalism Fraternalism

Sweating Benevolent Autocracy

Source: Kinnie & Purcell 1999); Goss (1991)

Egalitarian

Authoritarian

Concern for Employee Development HighLow

Man

agem

ent S

tyle

M

anag

emen

t Sty

le


Learning to lead the business


Delegation and team building


• Owner-manager must learn to ‘step back and let go’• Must learn to develop a ‘blue print’ for how the business will

self-manage• Longitudinal study of 576 start-up firms (Ardichvili, 1998)

– Formal HR policy did not emerge until T/O exceeds US$10 million (manufacturers) or US$3 million (service firms)

– Delegation commenced with Accounting and then production and IT systems

– Delegation of HRM did not take place until much later– Training was required early – Owner-manager continued to retain planning function

• If owner cannot learn to delegate they risk becoming over extended

• Team building requires clear objectives and willingness to work together


How avoid the micro-management trap


• Flexibility• Establish SMARTER goals

– Specific– Measurable– Attainable– Realistic– Timely– Easily Remembered

• Being results oriented• Being a player/coach

Source: Wright (2000)


Six stages of delegation


1. Select the appropriate task – which can be delegated

2. Choose the right people – who can undertake the task

3. Briefing in detail – set clear objectives and standards

4. Coaching and training– offer the right level of support

5. Controlling the process– seek feedback and reporting times

6. Evaluation of the process– were the goals achieved and

benchmarks met?

Source: Snaith & Walker (1998)


Recruitment and selection

Considerations at Interview

– Previous experience of applicant?

– Why are they seeking the position?

– Are they already employed & if so why change?

– What are applicant’s long term goals?

– How does applicant work with others?

– Evidence of performance?

Interviewing mistakes

– Make judgments based on emotion

– Poor preparation prior to interview

– Failure to check referees & references

– Have preconceived ideas– Wandering onto non-

essential issues– Ignoring ‘must haves’ as

other skills were strong


Key elements of job design

Job DesignMotivation

Hygiene Factors

Motivator Factors

Job Description

Job title

Job Purpose

Description of work

Key duties & responsibilities

Lines of reporting & interaction

Job Design Elements

Skill Variety Task Identity

Task Significance Autonomy Feedback

In designing a job consideration must be given to key job design elements and their ability to motivate the employee.


The performance development cycle

HR Performance Development Cycle

Performance & Development

PlanningPerformance

Review

Continuous Review & Feedback


The performance review process


• Stage 1 – Identify key result areas

• Stage 2 – Set performance standards for each key result area

• Stage 3 – Identify who is affected by the key result area

• Stage 4 – Subordinate briefs colleagues

• Stage 5 – Monthly review on performance standards

• Stage 6 – Quarterly appraisal of performance during the period

Source: Snaith & Walker (1998)


Developing team work


Vision and goals

Team selectionand formation

Training and skillsdevelopment

Resource commitment, team

empowerment

Supporting cultureand management

systems

High Energy Team

Work Group

Team

Potential Team

Key Enabling Factors

Source: Drew & Coulson-Thomas (1996)


Learning to coach


Coaching MeddlingAbdication

Delegate the task but:Give no guidanceGive no supportGive no trainingDon’t be surprised if things don’t work as planned

Delegate the task but:Look over their shoulderConstantly interfereTell them how to do it

Delegate the task but:Provide leadershipProvide trainingMotivateCounsel & FacilitateRole ModelSet expectations benchmarks


The nature of coaching


• Coaching is unlocking a person’s potential to increase their performance

• Coaching is helping a person to learn rather than teaching them


Coaching Dynamics


Coaches

Discusses

Mutual Control

Negotiates

Boss has control

Tells

Sells

Leaves alone

Worker has

control


A coaching process


• Set both specific goals and long-term aims for the coaching process.

• Explore the current predicament in terms of personal reactions, problems and possibilities.

• Identify the options through which a realistic goal can be achieved.

• Commit to a timed action plan through which the goal can be accomplished.


GROW model of coaching


• GOAL – What do you want?

• REALITY – What is happening?

• OPTIONS – what could you do?

• WHERE, WHEN, HOW WHY – what will you do?


Social styles and how to deal with them


AMIABLE• Cooperative• Loyal• Supportive• Diplomatic• Patient• Easygoing• Respectful

EXPRESSIVE• Imaginative• Friendly• Enthusiastic• Outgoing• Excitable• Persuasive• Spontaneous

ANALYTICAL• Logical• Thorough• Serious• Systematic• Critical • Precise • Prudent

DRIVER• Independent• Candid• Decisive• Pragmatic• Determined• Efficient• Objective

High

Low

Assertiveness HighLow

Res

pons

iven

ess

to

o

ther

s op

inio

ns

Source: Merrill and Reid (1981)

• Allow time for small talk• Discover their dreams, ideas• Focus on the “big picture”• Keep them “on track”• Summarize any agreements

• Be on time and energetic• Use time efficiently • Deal with facts• Outline limited options• Seek a direct decision

• Be relaxed and personal• Seek conversation• Communicate patiently• Reach mutual agreement• Maintain personal contact

• Be on time and formal• Be direct, avoid small talk• State pros & cons of ideas• Allow them time to consider• Follow up in writing


The motivation equation


Effo

rt Expectancy• Person feels

their efforts will result in positive outcomes

Perfo

rman

ce Instrumentality• Person feels

performance will result in outcomes

Out

com

es Valence• How desired are

outcomes from the task

Source: Vroom (1960)

Expectancy theory says that people will be motivated if they believe their efforts will be rewarded, that favourable performance will be recognised and that the rewards are worth the effort.


Applying expectancy theory


High Motivation

High Expectancy• Person knows that

if they try they can perform

High Instrumentality• Person knows that

high performance leads to outcomes

High Valence• Person wants the

outcome from the high performance

Source: Vroom (1960)


Two factor theory of motivation


Intrinsic Forces (Motivator Factors)• Skill variety• Task identity• Task significance• Autonomy• Feedback

Extrinsic Forces (Hygiene Factors)• Salary, wages and financial benefits• Work conditions• Job security• Perks (e.g. car, large office)

Source: Herzberg (1968); Hackman & Oldham (1976)


Leadership theories


Relationship-Oriented(concerned with well-being

of team members)

Task-Oriented(concerned with getting

the job done)

Fiedler’s Contingency Model

SET CLEAR GOALS

House’s Path Goal Model

REWARD HIGHPERFORMANCE

CLARIFY PATHSTO SUCCESS

Transactional(focus on process, reward &

punishment)

Transformational(set vision, make followersfeel important & motivated)

Sources: Fiedler (1967); House (1971); Burns (1978)


Theory of self-determination


Human beings are either: Proactive and engaged, or Passive and alienated

Autonomy

Relatedness

Competence

Key drivers:• Autonomy – allow people freedom to

self-organise, have choice and control. • Relatedness – connect them within a

community of common interest and practice that shares common goals and offers mutual support.

• Competence – enable them to develop their skills and knowledge and mastery of a subject.

Source; Deci and Ryan 2001


A checklist for managers


Richard Ryan and Edward Deci

Encouraging Self-Determination amongst Employees

Key drivers:1. Share decision making – where possible

allow people to decide how they will fulfil goals and even to set their own goals.

2. Explain the reasons for goals and rules – tell people why a rule exists or how a task fits into the bigger picture. Help them to see the role they play in the system.

3. Adopt the other’s perspective – look at the world from the employee’s perspective and get them to see the world from yours. Look for common ground and shared aims.

4. Foster an alliance – managers are not responsible for employees’ mistakes, but you are responsible for their final product. Share work and behavioural goals and build a mutually reciprocal alliance aimed at achieving the common goals of the business.

Source; McCally 2002


Situational leadership


HIGHTASK DEFINITION

REL

ATIO

NSH

IP B

EHAV

IOU

RS

HIG

HParticipation

Style

(S-3)

Directing Style

(S-1)

Coaching Style

(S-2)

Delegating Style

(S-4)

Source: House (1971)


Self-directed teams vs. traditional work groups


Traditional Work Groups

• Take directions• Seek individual rewards• Focus on blame• Compete• Stop at present goals• Demand more resources• React to emergencies• Spend money to improve

quality

Self-Directed Teams

• Take initiative• Focus on team contributions• Concentrate on solutions• Co-operate• Continually improve and

innovate• Work with what they have• Take steps to prevent

emergencies• Save money by improving

quality

Source: Elmuti, 1997


Leading versus managing



Principles of holistic ethical management


• Hire the right people• Set standards more than

rules• Don’t become isolated• Set an example for others

to follow

Source: Kuratko and Hodgetts (1998)


Business vales


Key Criteria for Decision Making– Clear set of business values that

guide decision making– Actions consistent with values– Staff values consistent with top

management values– Employees understand

entrepreneur’s values– Values considered when making

decisions– Business behaves with integrity

The owner-manager should develop a clear set of formal values for their business that can be used to guide decision making and shape organisational culture.


Case study: Kitsol Pty Ltd


• Identify the key weaknesses in their existing approach to human resource management.

• What are the key things that the owners of KITSOL should consider if they wish to develop an effective approach to human resources management in their company, and create team-based operations?

End of Presentation

Documents

Small Business Management MGMT5601 Topic 7: …...Job Design Motivation Hygiene Factors Motivator Factors Job Description Job title Job Purpose Description of work Key duties & responsibilities