Taking The Stress Out of Business

Building businesses and being entrepreneurial is no mean feat.

There can certainly be lifestyle and financial benefits to running a business, but along with this there are also issues of responsibility and stress that business owners have to cope with.  This article will assess how the recent economic climate has added to the stress of running a business, and how businesses can employ HR tactics to cope more efficiently with their situations.

Haines Watts recently undertook an in-depth survey of the owner-managed business (OMB) sector in the UK, looking at the highs and lows of business ownership.  Results from the survey showed that most owner managers (68%) felt they have a work/life balance they are happy with, and that 84% of business owners would "recommend running your own business to others".

Recent times have been less than kind to the OMB sector and competition has undeniably become much tougher. Half of the businesses we surveyed have experienced destructive cost cutting from competitors during the recession, and with cash flow being much tougher to manage, 45% of businesses have made a claim through the courts for unpaid bills. Profit has become more a luxury than a necessity and 22% have had to pitch for work on a "zero profit basis".

What you need to know;

As well as these financial issues, there are other softer but no less important issues that are affecting many businesses. It's not difficult to imagine how stress levels of business owners may peak in these challenging times, caused by any combination of tough changes they must adopt purely for business survival. There are also stressed employees to consider, as the threat of redundancy or reduced hours is enough to change anyone's work/life balance.

The International Stress Management Association UK, a leading authority on the subject defines stress as "The adverse reaction people have to excessive pressures or other types of demand placed on them."

Stress not only affects individual employees, but also managers, friends, family and colleagues, with the fight or flight reaction to stress easily leading to reactions that may appear to be a little more extreme than normal, or even completely out of character. For the business owner manager who is already struggling with a crippling economy, the management of stress may very easily be a challenge too far; particularly if they are feeling the effects themselves.

What should employers do?

There is no simple answer, but below are a few areas that a business owner should focus on:

• Communication: group meetings, one-to-ones and appraisals with staff can help to motivate. Giving valued employees the opportunity to make their own recommendations and feeling like they are being heard makes quite a significant difference to their outlook, and may ultimately help to improve the business.
• Performance management: this is another route which can help to motivate employees, and can be used to protect the business if necessary. Highlighting good work and making sure that people understand when they've done well, and why, is another key technique for encouraging and motivating staff. 
• Training: is crucial in boosting employee morale as people feel a sense of personal growth and achievement by learning something new. There is also the underlying reassurance that the business is investing time and resource in the employee.

Staff welfare is of primary concern to many employers. However, HR is not a function that often has a great deal of resource in a small businesses, with 36.49% relying on external HR professionals and a further 33.45% relying on their own reading and understanding to keep up to date with employment legislation. The time and costs associated with HR are likely to have been high on the list of costs that were cut as the economy plunged. The result, however, is also a drop in employee morale and motivation.

However, it is not just staff that benefit from greater use of HR functions within the business. 54% of business owners surveyed were over 50, and as such may need to consider their exit strategies to protect their business interests and their employees' futures. It will become much more important for these business owners to use performance management to retain employees and prepare their businesses for sale.

In short, for owner managed businesses, HR is one area that cannot be ignored. As we begin to exit the downturn, the job market will become more fluid and businesses will need to rely on solid HR practices more than ever to retain key staff, and in turn, keep their business profitable.

David Fort is a partner at accountancy firm Haines Watts in Manchester. David can be contacted on: 0161 832 6413 or by email: dfort@hwca.com