Summary of article:
The article titled ‘Finding Employees and Keeping Them: Predicting Loyalty in the Small Business’ accounts for various factors that determine employee loyalty in small businesses.
The authors assert that employees in small businesses are expected to be more versatile and dynamic. This makes hiring the right people a little challenging. In larger businesses, each employee is a specialist in a particular facet of business. To this extent, job descriptions can be sharply defined and employees hired in numbers. (Dyer and Reda 2010)
Indeed, as the study identifies, small businesses which adopt a formalized hiring process tend to perform better than their less structured counterparts. For example, parameters such as financial performance, revenue growth, as well as owners’ success perception, all point to this correlation. More importantly, selection of personnel inadequately skilled for the role has a detrimental effect on retention. Not only do such employees let the performance of the business slip, but they themselves feel dissatisfied at work and are likely to quit. Herein is a key insight – professionalism and mastery over skills is a win-win situation for the recruiter and the employee.
The findings of the research point out that employees’ perception of owner commitment is vital to their loyalty toward the business. Likewise, usage of formal recruitment processes increases credibility in the eyes of the employee. These factors have a bearing on how long and with how much involvement employees deliver their duties for the business. On account of limited need for personnel, small firm owners are also inexperienced in using robust selection processes. Even otherwise, conventional recruitment practices are not very effective for small firms. (Dyer and Reda 2010)
Often potential candidates fear the possibility of exploitation by proprietors. They believe, not without reason, that the limited finances of the company would necessitate maximal usage of hired personnel. Due to modest financial resources of the business, candidates are also doubtful of receiving employment benefits, including health insurance, incentives, paid leaves, etc. This has a detrimental effect on loyalty, especially when during the course of employment, some of these promises are not met.
A Précis of Big Bytes case study:
The Big Bytes case study identifies many drawbacks with the computer equipment vendor’s management. Big Bytes is a relatively small firm with 20 stores spread across various shopping centers in the city. Stagnating sales, growth of competitors and poor employee morale are the major issues facing the store-chain. This is best illustrated by the example of the Mega Mall store, where frequent absenteeism, lax manager attitude and poorly-trained staff have all led to decreasing sales. If the problem has to be encapsulated into a single term, it would be ‘lack of formal structures’. This is pervasive across all stores and not surprising given owner Brian’s laissez-faire attitude to management. Even when he hired Samantha, she was only given vague outlines of her role in the company. Now that the manager of Pine View shopping center branch is taking a long leave, the company is faced with a key recruitment decision. If Brian would resort to his old ways, he might simply pick an experienced staff from the Mega Mall store for the vacancy. But Samantha had seen the problems blighting the company’s culture. If she would have her way, she would bring a well-qualified outsider to fill the post. Moreover, she would only pick the candidate after a rigorous selection process.
Identification of Main Issue with Big Bytes and its resolution:
The challenge for small firms like Big Bytes is in inducing a feeling of trust and dependability during the recruitment process. Prospective candidates have a general negative bias against small businesses on account of its limited resources and poor organizational structures. (Williamson 2000) This is the area that Big Bytes should work to turn to their advantage. It can do this by presenting the positive side of these perceived drawbacks. For example, the company can show how a loose structure can provide opportunities for quick promotions and greater responsibilities. Likewise it can project proximity to the business owner as a mark of privilege rather than a burden. (Living Wage Idea Is a Key to Fairness 2013) In the case study we already saw examples of how a graduate in Political Science, who sought the job for a short time, eventually, spent 4 years with the company and got promoted as manager of the Mega Mall store. Big Bytes can highlight such examples to candidates being interviewed. Yet, the major problem for Big Bytes remains its unstructured hiring policies – a concern rightly raised by Samantha. Toward rectifying this situation, Samantha should tell Brian to leave HR activities completely under her charge. She can then advertise on the broader labor market and hire the best talent available. Brian’s idea of promoting an existing staff to the newly vacated position is a little regressive, especially when we consider the declining revenues of some stores.
The dynamics of employee retention in small firms is very different to that of large enterprises. (Walker 2011) Small firms, like Big Bytes, by virtue of their limited resources as well as limited operations, try to maximize the value of each employee. This means that the roles and responsibilities donned by each employee are larger than that assigned in larger firms. So, the skill set expected of employees differs in these two categories. (Customer Service and Experience 2013) Given these heightened expectations, Samantha’s wish to implement thorough screening of employees is the right course.
As the Reda and Dyer identified in their research article on employee loyalty, embracing formal hiring practices leads to feelings of greater security and trust with the owner. By extension, these feel good factors have an impact on the loyalty of the employee. The research team also unravels two key personality traits of recruiters which have an effect on performance outcomes. These are conscientiousness and openness. These observations are attested by research by other scholars as well. (Dearth of Skilled Workers Biggest Threat to Growth 2013)
As for the economic viability of an elaborate hiring process, Brian will have to keep in mind that the minor monetary gain is no compensation for the huge price that attrition incurs.
The survey of literature carried out for the issues thrown up by Big Bytes, though only intended to be a chronicle of the HR practices of small businesses, have also been instructive. By identifying the nature of various existing practices and evaluating their effect on performance outcomes, these studies and analyses have occasioned several insights. HR managers of small firms will do well to be cognizant of these insights. For example, the two essential personality traits found in successful recruiters (openness to experience and conscientiousness) have an immediate effect on outcomes. (Tocher et. al. 2007) The logic is that conscientiousness leads to formality of processes. In contrast, while owner’s openness may be detrimental to formal practices, they compensate through the variety of methods used. (Larkin 2001) The top management team of Big Bytes, especially Brian and Samantha, will do well to heed to this wisdom.
References
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Williamson, Ian O. 2000. “Employer Legitimacy and Recruitment Success in Small Businesses.” Entrepreneurship: Theory and Practice 25: 1. Questia Online Library.
Linda Dyer & Barbara Reda, 2010. Finding Employees and Keeping Them: Predicting Loyalty in the Small Business, Journal of Small Business and Entrepreneurship, 23:3, pp. 445-460.