It’s not often that Nita Clarke, co-chair of the Government’s Employee Engagement Taskforce, is on the back foot. But even Clarke, in spite of all the plaudits that she and David MacLeod have received for their influential 2009 report, Engaging for Success: Enhancing Performance through Employee Engagement, can’t escape one obvious fact: hugely disappointing levels of sign-up from SMEs. This is the group that accounts for 99% of all private sector businesses, and 47% of private sector employment, according to the Federation of Small Businesses.
"Firms get to a certain size and they can no longer take staff down the pub and think that's it," opines Clarke. But browse the Engage for Success portal, and it features a veritable Who's Who of large company signatories, from BT to Boots, Serco, Lloyds Banking Group and M&S. "Our message is that having a strong story and telling people where they fit in is just as important in SMEs as in any size of company."
Clarke suspects that it's lack of time, rather than buy-in per se that is the problem. "I think it's a capacity issue," she states. "In SMEs that don't have a communications or HR department, the pressures of daily work are too great."
But other observers suggest engagement is something many SMEs neither understand nor feel they actually need. "Many probably do engagement without calling it as such, but it certainly doesn't help convey engagement as something that SMEs need when the Taskforce parades big names around," says Emily Perry, head of commercial development at engagement consultancy Learnpurple, which acts as an outsourced HR for SMEs.
"That makes it be seen as fluffy, and the preserve of big-company initiatives, when actually SMEs are facing similar people issues around aspiration and development." Kay Heald, an HR consultant who works with SMEs in the Shropshire region, says: "Most small firms probably ought to focus on engagement more, but they either see it as abstract, or reject it as something they don't need. They're often run by entrepreneurs or families, and SME-CEOs often lack people skills. There is an assumption that having fewer staff means processes can be informal, but this can leave many issues to go under the radar."
With recent Bank of England data showing that productivity in the private sector dropped 4% in the year to October 2012 to its lowest level since 2005, perhaps Heald's assessment is correct. Meanwhile, look at any engagement survey and see how engagement is always presented as an end in itself to strive for. So are SMEs really that unaware of it?
"It's a concept that's there in the HR department, at least," says Nicki Davies-Jones, head of HR at 150-strong fair-trade organisation Traidcraft. "But we certainly don't say 'staff engagement this, or that'. I know that we avoid engagement at our peril - because not everyone has the strong belief system that draws people here. We run staff surveys, and have a staff association where we encourage staff to challenge us on what we do. We don't label it as engagement, but we don't forget it."
As a larger SME, with its own HR team, Traidcraft could be expected to pursue an engagement strategy no matter how subtle it is kept. But Derek Bishop of SME engagement specialist Culture Consultancy believes engagement comes more from a company's growth curve than its headcount. "It's when a firm needs to double in size that it just can't be the same anymore," he says.
For some SMEs size alone is not what dictates the presence of HR or the need for engagement strategies. "We're now 600 people," says Mike Sunley, CEO of catering firm Lexington, which has been in the Sunday Times Best Companies to Work For list in both the under-250 employees and over- 250 employees categories. "But even as we've grown I feel we've kept the same values. Every year since we hit 100 staff, we've asked whether we'll need HR. But even if we do, it certainly won't be for engagement. It will be used for pensions and processes.
"The energy we have still comes from the top," he adds. "Our employees are spread out on different people's sites, but we always make sure staff see a Lexington face at least twice a week."
It all sounds almost anti-engagement. "Does the Government really think it needs to tell businesses how to engage their people? I just don't get it," says Sunley about Engage for Success.
Certainly, when things are going well, engagement seems to be less of a concern for SMEs. On the other hand, plastics manufacturer Nampak, the only notable SME involved in Engage for Success, has a rather different story. It was in a pretty bad state back in 2007 and something had to change. "There was no real commitment; only 19% of staff said they'd recommend us. I just thought there had to be something to be gained from having a debate about our culture," says Nampak MD Eric Collins, who over the last four years has transformed leadership and line manager training around behaviours.
In that time, short-term absence has fallen to 1% or 2% and total absence is now 2.9%. Collins remarks that staff are his best brand ambassadors. However, he still doesn't have an HR function (a temporary one was brought in during the improvement period, but they didn't call this an engagement project). "This was us, as a management team, taking control and creating a clear narrative about where we were going and how our people could come with us."
According to Collins, SMEs that don't have an HR resource simply have to "do it for themselves and lead from the top." But even he admits one of the problems for SMEs is their desire for instant wins. "We didn't notice any difference for the first 18 months," he says. "Only gradually did things start to be believed, and this is something that all small businesses need to take account of."
The real problem, says Perry at Learnpurple, is that "engagement is something you can't just command from staff; it has to be instilled." That automatically makes it a long-term project.
So will SMEs really take on the engagement mantle? It's likely many already are, but not calling it by its name. But it's also likely many assume it's not for them. There seems to be some way to go in persuading all SMEs to take engagement seriously.
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