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Good Personnel Management Means Better Profits

Tuesday, August 03, 2010   By Mike Reddy


As a business coach, I know that most small businesses operate a tight ship.  They manage overhead expenses and watch cost of sales to stay on the credit side of the ledger. But when you’ve reached a point where you cannot see any further ways to reduce costs, there could still be an opportunity to increase your profits through increasing productivity. Probably the most important way managers can increase productivity is in the way they manage their people. There are a number of practical steps you can take that revolve around your people management systems.

  • Select the right person for the job
  • Give them clear directions and clear systems to direct their work processes
  • Manage the differences between your team members to get the best out of each person
  • Don’t ever think that they will put in the same effort that you, as the owner, will
  • Document clear performance indicators so everyone understands just what’s expected of them

Select the right person for the job

Granted it’s always tough to really be sure in an interview, but it’s still the best tool you have. Consider questions such as whether the applicant fits in with your current team (Shape Your Business clients refer to it as "culture"); are they the sort of personality you want to work with; do they seem to have a good work ethic; do they have enough experience and if not will they train up easily; do they have a history of useful contribution in their previous workplaces? Also prepare your interview questions carefully - it is quite legal to include technical questions and even practical exercises to assess skill level or capability. Ask questions about what they might do in a situation where a certain kind of problem arises. You’ll be able to assess better whether they’re a fit for your business. Settling for someone you’re not sure about can be costly on your time and money, not to mention on team morale, if they don’t work out.

Give them clear directions, and clear systems to work with

Most people will try to achieve what they think is expected of them. The biggest problem is in making sure your instructions and systems are not open to misinterpretation. Take time to fully induct your new team member in the way you expect things to be done.  Systemise your processes so they run smoothly and try to get them written down in procedure guides so employees can check on the correct way to do things, without wasting your time, if need be.

Manage the differences between your team members

Try to understand how each person ticks, what makes them feel motivated at work, and then deal with them on that basis. Some people are competitive - they want goals and targets and the autonomy to achieve them; others need plenty of close supervision; others thrive on praise and recognition. There are useful tools around that help you understand personality types and help you adjust your management style to get the best out of each person.

Accept that they won’t have your drive

Your team members have a life outside work. For a salary, they are prepared to allot you some of their most precious commodity – their time.  But your business is not theirs and its success won’t have the same impact for them as it does for you.  Don’t expect them to perform as you do. Don’t overburden them or you’ll end up with reduced productivity and high turnover.

Document work related key performance indicators (KPIs)

KPIs have been around for a while now. And that’s because they’ve been shown to work. They work because you set clear activities that are needed to achieve measurable targets, and that makes it easy for you and your team to see what’s working and what isn’t. 

As a manager, give people encouragement and praise, provide them with constructive feedback and you’ll see productivity and profits increase.

What do you think?

Mike Reddy is a Chartered Accountant, business coach and advisor helping businesses in Sydney, Melbourne, Brisbane and Gold Coast to easily increase their profits and cash flow. He is currently President of the North Sydney Chamber of Commerce, a Regional Councillor for Sydney North East and a member of the Institute of Chartered Accountants Sydney leadership team. As well as advising businesses, Mike presents business development seminars and webinars and is regularly contacted by the media to comment on small business matters. You can connect with him on Facebook, Twitter and Google+.