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Flexible work and small businesses

Formal and informal practices

Being too busy to develop new working practices is a problem that affects smaller businesses in particular. Using staff and time resources more effectively requires an initial investment of the staff and time resources you haven't got. Its a "Catch 22" situation.

The extent to which smaller businesses (SMEs, in the jargon - small and medium-sized enterprises) are adopting flexible work has been examined in the study SMEs and Flexible Working Arrangements. The report forms a companion volume to another work published by the Joseph Rowntree Foundation on Family-friendly Working Practices, which looks primarily at large organisations.

The study found that flexible working arrangements, practised informally, are far more common in small organisations than is often thought. In many cases, organisations who said initially that they did not have flexible working arrangements revealed that they did allow some individuals to work flexibly when site interviews took place.

The researchers divide types of employer into 3 groups in terms of their adoption of flexible work: holistic, selective, and resistant - in other words, those who go for it, those who do a bit, and those who don't.

Some differences in the workforce profiles are note in the different types of organisation. Those with a holistic approach tend to have a majority of female workers, while those which are resistant have a majority of "prime age" (25-40) or younger  male employees. These alpha males also tended to be high earners, and their households, where they were not single, were less likely to be heavily reliant on two incomes. Married women in holistic organisations, on the other hand, tended to be on lower or middle incomes and were contributing a higher proportion of household income.

Drivers for flexibility in smaller businesses

The main drivers for providing flexibility were:

  • employee requests
  • personal experiences of employers and senior managers (but not particularly linked to one gender)
  • external or published evidence of improved profits from staff retention and productivity gains
  • face-to-face recommendations through workshops or seminars.

These are pretty much the same kind of drivers as are found in larger organisations - though one would expect that the first two points would be of greater significance in organisations where there is not the time or the managerial/HR resource to research and attend workshops.

It is worth reflecting on the category "SME", which covers organisations of up to 500 employees. Excluding sole traders (who can of course determine their own working arrangements), this sector accounts for 48% of employees in the UK. But there is a big difference in the task of managing employees as an organisation grows. With 10 or 20 employees, ad hoc and informal arrangements may be fine; but at 50 or more there are good reasons to become more formal with policies. And an employer is by then also more likely to be in need of a dedicated HR resource, and be more willing to invest in systems to manage and track disparate working patterns.

Barriers to flexible work

The employers questioned expressed a number of fears about introducing flexible work, including:

  • the additional work and red-tape which came from changes in the law
  • the loss of clients
  • employee productivity falling
  • their inability to substitute for certain skills if certain employees were absent
  • management finding it difficult to manage or administer the flexibility.

Concern was also felt that the government, in introducing new workers rights (e.g. to parental leave, etc) failed to understand the concerns of small business. There was, however, no evidence from the companies where flexible working had been introduced that they had added to managers' workloads in the longer term.

To overcome these barriers, organisations need:

  • a change of mind set
  • management systems based on trust
  • being open to different ways of organising work and to using new technology
  • better communication between employers, or between managers and employees.

Policy implications

The study highlights the idea that employers should have a right to present a "business case" to their employer for having flexible work arrangements. The government is currently looking a right for parents to have a request for flexible working considered by their employer.

In our view this kind of request-driven process is only part of the story. It puts a considerable burden of informed awareness on the employee both of the practicable options and the business priorities of the employer.

Equally important is that owners and managers in SMEs should have a high awareness of the business benefits of the various forms of flexible working. These are not currently being mediated successfully by the small business support agencies, despite a few examples of good practice. These kind of agencies tend only to reach a minority of their target group, and their advisors may not have the range of necessary skills to give effective advice on flexible working.

This is an area where the government and local agencies could be doing more to support smaller organisations in developing effective policies and practices - in particular by helping them with the time and resource investment needed to change the way people work, and to develop coherent and comprehensive policies.

The report SMEs and Flexible Working Arrangements, by Shirley Dex and Fiona Scheibl, of the Judge Institute of Management, Cambridge, is published by The Joseph Rowntree Foundation, ISBN 1-86134-432-5.

A summary of the report is available on the Joseph Rowntree Foundation website, in their Findings section.

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