From Seedling to Sequoia: Nurturing Your SME Through Strategic HR Practices

Nigeria’s entrepreneurial landscape hums with the energy of ambitious SMEs primed for explosive growth. But scaling isn’t simply about soaring profits and sprawling office spaces. It’s about a hidden fuel propelling you upwards – your workforce.

And this workforce is the very foundation of Nigeria’s economic success. SMEs here contribute a remarkable 48% of our national GDP, and even more crucially, provide 84% of our employment. So basically, no thriving SME, no thriving economy.

Ignoring this critical element is akin to building a rocket with faulty fuel. As your SME transforms from a nimble startup into a corporate titan, growing pains inevitably emerge — skills gaps widen, vibrant cultures fray, and leadership blind spots become glaring. Without proactive intervention, these challenges escalate, jeopardizing your long-term ascent.

Yet, amidst these potential pitfalls, beacons of hope shine brightly — think Interswitch, Flutterwave, and Paystack. Their phenomenal success hinges on one fundamental truth: prioritizing people unlocks the true potential of ambitious SMEs.

This article explores practical steps to nurture your SME’s human capital from a promising sapling to a towering industry leader.

Surmounting Roadblocks Threatening Nigerian SME Ascent

While Nigerian SMEs possess immense potential to drive economic growth and job creation, they navigate a complex landscape rife with talent and culture challenges threatening their ascent. Here, we break down four key hurdles:

#1. The War for Talent

A study within OECD countries shows that small to medium-sized enterprises (SMEs) participate 50% less in training activities than larger firms. This skills gap both inhibits innovation and triggers retention struggles.

• Recruiting prime candidates amidst constraints: With limited budgets and reach, SMEs struggle to attract top talent, especially in niche skills, competing against resource-rich large firms.
• Cultivating specialized skills: Developing customized upskilling roadmaps catered to each employee’s strengths and weaknesses
• Stemming high attrition: Competition from larger organizations and international opportunities can lure away top talent, leaving SMEs with limited resources to compete.

#2. Building Leadership Bandwidth

Founders often lack access to leadership development. An SME survey showed that no management training was given at two in five SMEs. This manifests in challenges with team oversight, goal setting, and adapting to growth.

• Transitioning founders into skilled executives: Coaching for essential skills like change management, communication, and strategic planning
• Lack of access to mentorship and training: Many SME owners lack formal training and experience in leadership and management, leading to challenges in decision-making, delegation, and team motivation.
• Succession planning gaps: Many SMEs lack a clear plan for leadership succession, leading to uncertainty and instability when founders or key leaders step down.
• Difficulty in scaling operations: As SMEs grow, their leadership and management needs evolve, requiring adaptation and the ability to delegate effectively.

#3. Realigning Fraying Culture & Change Resilience

Rapid expansion erodes organizational identity and change resilience:

• Undefined values & missions: Without clearly articulated organizational purposes, SMEs struggle to attract talent that aligns culturally, building client trust and making decisions tied to vision and principles.
• Communication & information silos: As SMEs scale, keeping communication open and collaborative culture intact becomes increasingly difficult, impacting innovation and engagement.
• Limited opportunities for growth and development: Without clear career paths and opportunities for advancement, employees may become disengaged and seek opportunities elsewhere.

#4. The Engagement & Empowerment Deficit

With limited budgets, SMEs also grapple with intrinsically motivating employees beyond compensation:

• Benefits & pay shortfalls: Smaller paychecks and benefits packages make competing with large firms difficult. This lack of extrinsic incentives challenges satisfaction and retention efforts.
• Lack of recognition and appreciation: Employees need to feel valued and appreciated for their contributions, but this can be overlooked in the fast-paced environment of an SME.
• Unmet psychological needs: When employees feel undervalued and lack autonomy or opportunities for development, motivation and performance decline. Micromanagement especially stifles initiative.

Key HR Focus Areas for SME Growth: Turning Challenges into Triumphs

In navigating these obstacles, targeted human capital strategies provide the fuel for sustainable ascent. Here are 5 key areas for Nigerian SMEs to ignite exponential growth:

1. Mastering the Talent Game:

• Recruit smart: Recruit smart: Go beyond resumes and job boards. Utilize networking events, employee referrals, and social media to find diverse talent that fits your culture and values. Leverage talent assessment tools to identify potential and skills beyond qualifications. These can be achieved by partnering with a reputable HR Management Consulting firm in Nigeria.
• Invest in onboarding: Design a structured onboarding program that helps new hires integrate quickly, understand company culture, and feel valued. This lays the foundation for long-term engagement and productivity. You can also use Learning Management Systems (LMS) to house your onboarding and compliance-related training programmes.
• Invest in development: Customize training programmes based on individual strengths and weaknesses to build capabilities in high-value skills, both technical and soft skills capabilities.
• Retention matters: Don’t wait for employees to leave. Conduct regular engagement surveys, provide opportunities for growth and development, and offer competitive benefits and performance-based rewards to keep your top talent on board.

2. Building Leaders, not just Bosses:

• Founder & manager coaching: Equip your founders and managers with the skills they need to lead effectively. Coaching in delegation, communication, and performance management can transform how they motivate and inspire their teams.
• Develop leaders for tomorrow: Identify high-potential employees and invest in leadership development programmes. This ensures a pipeline of future leaders who understand your company’s vision and can guide it through growth.
• Sharpen essential skills: Train your managers and team members in crucial areas like communication, goal-setting, and time management. This creates a more efficient and collaborative work environment where everyone thrives.

3. Culture as the Cornerstone:

• Values in action: Clearly define your company’s core values and ensure they are not just words on a wall. Integrate them into the hiring process, performance evaluations, and everyday interactions to build a strong and consistent culture.
• Embrace change, but manage it wisely: Growth often involves change. Involve employees in the decision-making process, communicate transparently, and provide support throughout the transition. This minimizes resistance and fosters a culture of adaptability.

4. Performance: The Measuring Stick:

• Goals aligned with vision: Set clear and achievable goals for individuals and teams that align with your company’s overall vision. Regular performance reviews and feedback sessions ensure everyone is on track and contributing effectively.
• Feedback, not fault-finding: Regular feedback, delivered constructively and with a focus on development, helps employees improve their performance and reach their full potential.

5. More Than Just a Paycheck:

• Market-competitive compensation: Conduct regular pay benchmarking to ensure your compensation package is competitive and attracts top talent. Remember, fair pay builds trust and fosters employee loyalty.
• Beyond money, motivation: Recognize and reward outstanding performance through merit-based bonuses, incentive programmes, and public recognition. This goes a long way in boosting employee morale and motivation.

The Heart of the Matter

Progressive SMEs choose to compete by cultivating their workforce. The nimbleness of smaller organizations allows them to be more targeted and creative in their human capital strategies compared to larger firms. By tapping into the full potential of their people and overcoming roadblocks as a united front, SMEs can unleash talent that truly sets them apart.