Small, so the saying goes, is beautiful; and while small businesses might miss all the refinery, process and systems of larger ones, neither do they carry all the trappings that some say cause them to slide inexorably into large company ways (read inefficient, taking employees for granted). So what do the small firms have that larger ones could most definitely learn from? As the Sunday Times this month reveals its 2014 best 100 small companies to work for, we ask some of the SMEs that have made it on to this list and others in the past: what do they feel large firms have let slip by the wayside?
1. Banishing meetings
At Kingston-based serviced apartments company Silverdoor, it’s not the pool table and darts board, the company-funded football and netball teams or even a spectacular ‘punctuality bonus’ (where staff earn an extra £150 a month, £1,800 a year, for a 100% blemish-free lateness record) that executive commercial director Chris Gee says large firms should note.
“We don’t cut people off from talking to other people, but we’ve banished meetings,” he says. “I previously worked at large firms, where you had to sit through two hours of tedium just to contribute for maybe a few minutes. I once asked if I could be called in for just the bit I felt I was needed for, and it went down badly. At Silverdoor, though, I have been determined not to recreate this horrid meetings culture.”
He adds: “Large companies seem to turn people into nothing but meetings monkeys. It’s my view that lots of people eventually end up liking meetings because they’re easy to hide in and they deflect time. But they seldom create any real value.”
Instead of meetings, Silverdoor is open-door. “Anyone can bowl up to anyone, and be talked to straight away,” says Gee. “It’s faster, more agile, and people only seek out people they need.” He admits the size of the business does make ad-hoc conversation easier, but as the business grows he says meetings-creep is not something that has to become inevitable. “Companies get obsessed by processes, but it’s not something we want to allow to happen. Because you don’t need to be a rocket scientist to do what we do. We value attitude rather than experience, and this encourages open and informal working practices.”
He adds: “No meetings make better teams – people actually have to talk to each other. Another thing I can’t stand is how big companies also thrust people together on forced get-togethers. It’s just like thrusting people into meetings. It doesn’t work. We have staff drinks, but for people who want them. Nothing is forced.”
2. Find your values - then live by them
“We’re very conscious we’re at risk of becoming a big company,” confides Simon la Fosse, CEO of recruitment firm La Fosse Associates, fourth on the Sunday Times’ list of the Best 100 Small Companies to Work For in 2013. “It really does keep me awake.”
He ought not worry, though. He believes the answer lies in cement-like values that protect the company from slipping into big company mistakes. “It has many nuances. First, I believe in employee ownership – and not just giving away a paltry few per cent,” he says. “Around 40% of the company will eventually be employee-owned, and I feel this gives us the grounding we need to express who we are.”
Central to this is its “outrageous ambition” – a pledge that by 2025 the firm will have revolutionised the way recruitment companies deal with people. “This is centred on ‘giving something more’,” says La Fosse. “So aligned to this is the fact that much of our training is deliberately internal because we feel it’s warmer, and that it creates role models for people to look up to. Here staff see people in the company giving something back.”
Tied into this is eschewing the celebration of the big billers (“like other larger firms might”, says La Fosse), but showcasing all the smaller things that represent the company’s values. He says: “It’s easy for companies to get cynical when they grow, and it starts when you cease maintaining emotional contact with staff. I make a point of being a mentor to younger people in the business, and staying in contact with the floor so that I’m connecting rather than just being in transmitting mode. I don’t think it’s hard for bosses in larger firms to do this; but they often think it’s not important anymore.”
He concludes: “Larger organisations need to find opportunities to stay connected. My view is that if you took away our values there wouldn’t be much left – we’d just be another recruitment company. If you become a CEO who doesn’t care about people, then you can forget it. You can’t ever get disconnected from people and values.”
3. Allow for some grey around the edges
PR firms feature heavily in most lists of the best small companies to work for – perhaps it’s because of their young average age and a desire for creativity that means music in the office and ‘dressing-down’ being a daily rather than weekly occurrence.
But according to Mike Morgan, boss of London’s Soho-based Red Consultancy, which runs a Friday afternoon free bar, bigger firms could learn from something more subtle.
“We fight rigidity and formality, because that’s what happens when you get big,” he says. “What I mean about this is that we’re absolutely uptight about the things that matter, but we’re relaxed about the things that don’t. I think big firms tend to get uptight about everything. They shouldn’t. They should learn what doesn’t need to be so hard and dry – what I call giving back some grey around the edges.”
So, this summer, when other bosses might be worrying about whether staff will be bunking off to watch the World Cup, Red will fix up TVs in the office for staff to watch.
“We’re the company that says it’s ok to watch the footie because a lot of people won’t watch it anyway. We tend to find that giving people the option is what matters; give flexibility and people will decide for themselves whether they’ve got the time.”
Morgan says his disregard for rigidity stems from working at other organisations when he was younger. “I just remember it not being positive,” he says. “That was back then; today organisations need to be even more flexible.” He accepts that workplaces have to be “places of toil”, but argues they have a tendency of taking away “the things that matter to staff”.
He adds: “Workplaces still need to be places of experience, where people feel they’ve learned something or made an impact. If we’ve gone a month where we haven’t done something as a company together – either some CSR work or something else, I’ll ask the team what we can do.”
4. Actively destroying politics
Talent consultancy Impact International might have an unfair advantage – it goes into others’ businesses to advise them where they’re going wrong. But according to David Williams, its founder and CEO, there’s nothing simple about business. “Some small companies are good at what they do, some small ones are terrible; some are autocratic; some are more team-based.”
But what he does is stick to principles he knows works – one of these being to give staff the autonomy to stick by the decisions they make. “Small companies like us respect the fact that people fail,” he says. “All we require is people learn from it. We actively destroy politics and, in allowing people to learn from their mistakes, we feel it empowers them, and empowers them to work in the best interests of the company.”
Williams argues his policy of hiring for potential cements the sense of empowerment. “Larger companies want regimented recruitment,” he says. “They define a role and recruit into that because they’re too scared someone will make mistakes. They do this rather than define the sort of person that could develop into a role. What these large companies fear is mistakes. But the way they hire creates staff with portfolio careers – people who hop from job to job. I’d rather hire someone who can learn and grow, and I think more companies should follow this mantra.”
Some people do fail in this, but most develop as Williams predicted. “Doing things my way also creates another benefit: people in my organisation are pleased to see others come in and overtake them,” he says. “Our head of UK started 20 years as a part-time secretary. That’s the point. The politics and factions in large companies won’t let this same feeling exist.”
5. Transparency - and forget the ‘cost’
“Once companies get to a certain size they seem to stop looking at what matters,” says Matthew Sanders, CEO of de Poel, provider of temporary staff to clients including Sainsbury’s, Carlsberg and British Sugar. But the boss argues that what matters most is transparency.
“Clear, regular communication is a vital plank of the company,” he says. “We make sure people know how the company is doing, and this includes having a shut-down twice a year to go through our strategy.
“People spend a lot of time at work, so it’s important that they enjoy it, and know where they are going. For us, this never stops. We have events every few months where people can go out socially, and every year. On the anniversary of the company’s formation, we do something extra special on top of this. This has previously included taking everyone to Barcelona.”
With fewer than 100 staff, sceptics might argue it’s easy to take the entire company out for time together, but this is impractical for larger organisations.
Sanders counters: “When you build something like this into your cost structure, it’s something that’s eminently scalable. Say it costs us £50k to take the whole company away. That’s £500 a head.
“But say you kept all of these people for another year, and didn’t have to pay recruitment fees, and had them more engaged and productive, and didn’t need to wait for new hires being profitable, then is this really a cost? When put like this, the expense isn’t an expense at all; it’s an investment, and it mitigates a whole load of other costs.”
Validation of this policy is that attrition is only 2% and, for those who choose to leave, it’s more like 1%, Sanders adds.
6. Democracies - whatever the pressure
Lots of small (and large) firms claim to be flat, where hierarchies are nowhere to be seen and employee consensus rules. But less than a dozen in the UK are accredited to this standard. One of these is 12 staff, Brighton-based digital agency NixonMcInnes – one of the few British companies to carry WorldBlu ‘Democratic Workplace’ status.
Employees vote on what everyone else should be paid (even what the bosses should earn), and staff collectively sit in on interviews and decide as a team who will best fit in. One of its most outrageous events is its ‘Church of Fail’ – where employees can confess to each other what they think they’ve failed on, but how they believe they’ve learned from it.
“When firms start, they are all, by default, non-hierarchical,” says founder Tom Nixon. “But when companies grow they suddenly become more ‘them-and-us’, and employees accept it because they just assume that’s what being an employee entails.”
At NixonMcInnes, though, this inevitability is (and will be) prevented. “Everyone here has access to all our documents – our accounts, balance sheet, projections, the lot,” Nixon says. “There’s no reason larger companies can’t do this, but they have to be more explicit about it in their culture. They have to make a commitment to staff to be a democracy, and then stick with it.”
The process has not been smooth. “A few years ago we did have to let a couple of people go,” Nixon recalls. “We hit a crossroads because employment law demands this had to be done with great secrecy.” But, rather than break its values and risk no-one believing them again, Nixon decided being collective was the only option and, as a team, the situation was explained that some people (it hadn’t yet been decided) would have to go. “Those who did leave did so with good grace,” he says.
While this particular example might not be something all larger companies would be advised to follow, he says openness and involvement needn’t be a small-company trait.