In Crunch, Small Businesses Focus on Their Work Force

Small-business owners are rewriting job descriptions so their senior executives perform multiple functions, getting more serious about performance appraisals of their staff and crafting compensation packages with a nod toward productivity bonuses, says Marie McNeice, a principal at the Summit offices of Boyden, a Hawthorne, N.Y.-based executive search firm.

“Small businesses are shifting their focus from product to market, and from commodity to value-added solutions,” says McNeice, whose firm represents companies in the chemicals, foods and financial services industries, among others. Small businesses represent about a third of her firm’s business, and this year she expects to find about 25 executives for her clients.

Many small-business owners want their executives to “maximize resources and leverage what is already there,” McNeice says. The same approach holds when these business owners ask their top management executives to simultaneously handle tasks across marketing, supply chain, finance and other functions, she adds.

McNeice also says she notices many small business startups offer compensation packages that provide less base pay, but include productivity-linked bonuses and other incentives. Larger firms that have graduated to attract private equity are more open to hire seasoned professionals on contract for a couple of years, she says.

The informality in work processes that characterizes small firms is giving way to more formal structures, says Edward Kurocka, owner of OnSight Advisors, a human resources management consultation firm in Yardley, Pa., that works actively with New Jersey Small Business Development Centers and Mercer County firms.

“Even among the smallest of businesses, the trend is to formalize functions through the use of job descriptions, and having those job descriptions be general enough where associates can wear more than one hat,” he says.

Kurocka says he is seeing more formal performance evaluation practices, “even among small firms with revenue of $1 million to $5 million and 10 or fewer employees.”

The NJSBDC are helping firms stay afloat with a “recession-proofing campaign,” says Deb Smarth, associate state director. “We’re telling our customers to look at their human resources chain to see how they can do things differently to enhance productivity and efficiency,” she says. “Sometimes they may include hard choices,” like cutting jobs, she adds.

Still, even as they face fiscal challenges, small businesses tend to eschew layoffs, says Jack Wellman, president of Joule Staffing Services Inc. in Edison, which has placed about 2,000 people at firms across nine states.

“Small businesses are trying to get more with what they have and be more productive; they are not necessarily releasing staff,” he says. “In a small business, the connection between people is a lot tighter than at larger firms.”

And few small businesses are putting off hiring, especially at senior management levels or to fill core functions, says Cindi Crepea, president of Haley Stuart LLC, an executive search firm in Montvale. “When a lawyer or a partner at a firm needs a paralegal or a secretary, they are going to hire that person,” she says.

However, small firms “are getting more nervous” in hiring support staff, says Crepea, a former president of the New Jersey Staffing Alliance in Kinnelon, an association of recruitment and placement firms. She says owners prefer to hire part-timers for clerical functions, but don’t necessarily try to replace full-timers in support functions with part-timers, since “with a temporary person, you have to train or retrain them,” negating any savings in resources.

Small businesses need to extract efficiencies across other parts of their operations, too, Smarth says. One effort in NJSBDC’s recession-proofing campaign is to get business owners to diversify their markets and stabilize their customer bases, she says. In the same vein, NJSBDC encourages small businesses to take a second look at their pricing strategies and rebrand their products to emphasize any special value they may have.

Smarth says small business must also focus on selling products and services that are need-based, not discretionary. “People aren’t going to go out and buy products that are not necessary” in the current economic climate, she says.

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