Human Relations

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Family businesses face different challenges from other business, mostly related to their human resources. The biggest challenge faced by small family owned business is succession. Planning is very scarce in these types of businesses, and because of this succession, when it is not planned, it can lead to dissolution of the firm. Owners-managers of small family business do not normally possess any formal HR skills; instead they rely on their personalities for their industrial relations.

The human capital marketplace remains highly competitive and is poised for enormous growth in the next 10 years, since companies around the world are investing heavily in their human resources infrastructure. A company should outsource all non-mission critical aspects of its business. The Placement Consultant Agencies, popularly known as the Professional Employer Organisation (PEO) has sprung up and became well-equipped to take on the entire scope of human resource activity.

Most PEO clients are small to medium sized companies that sign up with a PEO obtaining better deals on the purchase of benefits as a group rather than as a single small entity. By contracting with a PEO, small firms can afford to give employees a range of benefits comparable to those offered by larger companies. This helps level the playing field for small companies who are competing with large firms hiring top candidates. Recruitment and Retention The correct application of recruitment and retention strategies and methodologies could save a great deal of unnecessary strife and hassle.

When a company needs more people than it currently has employed, the next step is to attract qualified job applicants to fill necessary positions. Frankly speaking, the higher and more important the position is, the more elaborate your recruiting and selection process will be. Too many types of businesses have enough “walk-in” applications that come in on their own top fill vacancies and new positions as needed. Even the small business owner should check local requirements for posting open positions with the state employment agency (ETC) to be sure of compliance with the law.

Picking the best employee from several job applicants involves matching qualifications and job requirements. This stage is one of the stages where small business owners frequently make mistakes. The person making the selection decision should have a clear understanding of exactly what performance results are expected from the job holder and the qualifications that appear to predict success in accomplishing these results. One of the techniques being used increasingly by small companies is the aptitude and personality tests (called psychometric tests).

This technique helps small companies to improve selection for new employees and help to improve for self-development by owner-managers themselves. In the interview that was conducted to Joseph Demajo by Vanessa Macdonald was stated that one of the biggest problems that M. Demajo Group faces is that, they do not have the same skills. They try to raise the lows to the highest level the employees can get, but if the employees do not make it, the Demajo Group will still consider them to be members of the family who deserve equal opportunities.

Although the company is one of the oldest family companies in Malta, Joseph Demajo stated that this concept was what kept the family together. In the interview Joseph Demajo stated also that he believes that good people make good companies. This makes him a better person and he will become a better businessman. An important thing that Mr Demajo stated is that although they are a family company, it is acknowledged that they consider their employees to be their extended family.

For many small business owners the decision to get out of business one way or another is the most difficult. It should be no surprise that “letting go” can be seen as a very traumatic event by many entrepreneurs who have made a venture that they have created the focal point of their life. Health, old age, and financial problems are some of the situations that may dictate the end of an entrepreneur’s involvement with his or her business. A large number of small businesses are family owned and managed.

So it is appropriate to begin by considering the common situation of a business owner approaching retirement age who looks at his or her children’s interest and capabilities to see whether one or more can be expected to take over. If no viable candidate is available from within the family, they will promote a long term employee or hiring an outside professional manager. Cranfield Survey This survey was carried out in winter of 1989. It was found that 82. 7% of owner managers ranked “employing key staff” as either their number 1 or number 2 business problems. The table below gives some demographic information on the people surveyed.

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