The government to invest £13 million a year to provide HR support to small businesses says the CIPD. The call has come from the CIPD as new research shows that such a move could be a key part of efforts to unlock the UK’s productivity puzzle.
The CIPD are basing this idea on the evaluation of year-long ‘People Skills’ pilots providing HR support for SMEs in Hackney, Stoke-on-Trent and Glasgow. People Skills was developed by the CIPD with support from J.P. Morgan through the JPMorgan Chase Foundation. It provided up to two days’ worth of free HR support to small firms, including face-to-face advice, a telephone helpline, online information and templates, as well as group training events.
The evaluation report found that, while much of the support provided by the People Skills initiative was fairly basic, such as establishing workers’ terms and conditions or job descriptions, there was evidence that this provided a foundation for boosting workplace productivity.
“People Skills shows the potential benefits of targeted investment to improve small firms’ capability around the management of people through co-ordinated high-quality, locally-delivered business support via channels such as Local Enterprise Partnerships, chambers of commerce and local authorities,” said Ben Willmott, CIPD head of public policy. According to the CIPD the service helped more than 400 small businesses employing between 5 and 50 employees across the three areas and was regarded as so successful in Glasgow that the city council continued to fund the programme once the research grant ran out.
In the evaluation report, owner managers were more likely to report their organisation was better or much better than similar firms in their sector on measures of workplace relations, labour productivity and financial performance after using the People Skills service than they were prior to using it. These benefits also came through in the in-depth qualitative interviews with owner managers that participated in the People Skills initiative.
Willmott continued: “If policy makers are serious about addressing the UK’s long-standing productivity deficit – particularly among the nearly 1.3 million small businesses that employ between 1 and 50 people - then they have to start seriously thinking about how to improve management quality, which the Bank of England’s chief economist Andy Haldane has identified as a key area for focus. People Skills provides a template of how to actually do this on the ground among small businesses.
“We calculate that about £40 million from the government’s National Productivity Investment Fund would support the £13 million annual cost of running a People Skills-type service across all 38 Local Enterprise Partnerships in England for three years and could revolutionise the quality of business support for small firms.”
Hang Ho, EMEA Head of the JPMorgan Chase Foundation, said: “Small business success is an essential element of the UK economy and a critical component in creating thriving local communities. Today’s report shines a light on the importance of basic HR practices to the success of small businesses, whether that is improving productivity, boosting the effectiveness of the management team or handling crises.
“While we hope the People Skills pilot will benefit participating companies in the long term, the findings clearly also demonstrate to policy makers a real need for HR support amongst SMEs.”