Author: Indah Hanika
There’s probably not a company in the world that doesn’t want to be as well-run and efficient as possible. Yet when it comes to deciding whether to take on professional management, many firms shy away from investing, stating budgetary concerns as their excuse.
If you own a small business and you’ve ever found yourself pondering this question, it might be time to rethink the way you’re approaching management and hiring. Here are some key considerations.
Cost-benefit analysis
You might have heard an argument along the following lines: “hire a $1 million man if they can either earn you or save you $10 million.” The idea is that employees are an investment. They should either net you or save you more than it costs to hire and train them — basically, as long as the costs outweigh the benefits, go ahead and make the hire.
But is this really the right way to think about employment? Yes and no.
It’s true that, just because you’re spending money on something, it doesn’t make it a cost that you should try to minimize. Opting for a less skilled manager you can pay a lower salary or a cheap yet mediocre software subscription might feel good in the short run since you’re spending less money, but it’s likely to cost you more over time.
You get what you pay for.
Yet, in reality, it’s impossible to quantify precisely how much revenue a particular manager is going to bring in — so how can you carry out an accurate cost-benefit analysis? You can’t.
However, you can stretch your budget to afford the best manager you can get — and make sure you implement processes to help everyone in your team do their job as effectively as possible
Segregation of duties
What kinds of processes, you ask? When you’re a small business, one of the most important strategies you can employ is the segregation of duties. This is all about ensuring everyone in the company has a fixed role they can stick to instead of everyone trying to do everything.
To ensure segregation, put the following strategies into practice:
- Leave tasks related to sensitive information to more senior employees
- Make sure nobody performs every stage of banking processes or has access to every password
- Get everyone in the company used to safeguarding processes and regular checks
- Request reports from critical areas (e.g., payroll and budget)
- Don’t sign anything off before verifying it first
This is also a key way of avoiding bookkeeping complications — did you know that businesses with 100 employees or less are more likely to experience fraud? The fewer people have access to sensitive information, the better.
Need some help with your management?
Theories like cost-benefit analysis and segregation of duties are useful places to start, but to finetune your organization, it might be time to bring on professional help with your management.
Plus, this is often a practical alternative for those who feel that hiring a professional manager as a full-time employee is outside of their budget — consulting is more flexible and therefore affordable. If this sounds like something you might be interested in, contact us at Gema Consult to find out more.
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Author
Former Inland Tax Revenue Authority, Bringing a Fresh Creative Approach to Finance
The department of finance can often be very cut and dry. Indah Hanika, however, brings a fresh approach to this, which comes from her passion for helping to grow businesses and an understanding of its creative side, which allows her to communicate across departments and create spectacular financial systems.
Providing a logical approach to day-to-day business is how Indah keeps Gema functioning as smoothly as it does. Understanding the more creative aspects of the consulting firm is what makes her so effective as a collaborator—being able to pass on that expertise to her clients? That is what makes her someone you truly want on your side.