As business grows or expands, more people get into the system – more hands in the production, distribution and other areas of the business. When are they necessary and what is their important contribution, if any? This may sound a no brainer but there are deeper reasons and truth about it.
In the first part of this Talk with the Consultant who reads Management, we tackled the business owners as the first set of people to know and understand in business. They are the foremost people who provide goods and services. It is safe to say that they are basically noble minded people who get into business – creating value to meet and satisfy the need, expectations, wants and specifications of a market.
In the second part, we gave attention to the market and customers. They are the second set of people in business to know and understand. They are regarded as king that could keep or take out the business-owners in business.
In the simplest and barest form of business, only the business-owner and the customer/s are essential. They form a dyadic mutually beneficial relationship. We come now to another group of people who get involve in the business equation.
3) The employees
A third set of people, the employees, of the business expands business. Through them, the bigger concerns of the business, such as more volume in the production among other things, get addressed. Further, the employees eventually get divided into two groups – the management, and the rank and file. And since they are people, then relationships also exist between them and the owners, and some of them (the marketing and support teams, if there are) build relationships or interact with the market and the customers. And there are also relationships among them as colleagues, teammates or superiors and subordinates. They all take roles appropriately and interact with each other accordingly on the basis of these roles. (This point deserves a separate discussion later on.)
Employees in simple service businesses
Businesses usually begin with very few people involved and as the business grows, more people come in. More people are needed when operations require it. Operations need more people when demand for the service increases. Let us look at how this takes place by going back to our simple business model in service providing. I offer this one as it embodies the barest of all systems there can be in doing business. Production of tangible output, that is anything physical, is excluded and thus operation, in broad sense, is very simple, which is the delivery of the service alone. When do more people come in?
Professional Service Providers, Assistants and Bookkeepers
Professionals such as accountants, lawyers and medical practitioners may do business alone at the onset and not requiring other people to deliver their services. In my case, as a technical writer and editor, I do not need anybody else to deliver my service. This is how it is generally speaking. At some point though service providers need to hire at least an assistant. One of my clients was a technical specialist and safety consultant who needed a research assistant, and that was me. I did both data gathering and editing for her work and eventually administrative concerns while she served as a Consultant to her clients. An assistant can do wonder because many of her other things to do get done already giving her time to do other things.
Another important and necessary person usually included in the operation of every business is the bookkeeper. My client had an accountant who took care of her book and government compliances. The bookkeeper keeps her accounting concerns in order.
Further, a third person may be added in the team and the person would be a fellow professional acting as a reliever. The same client of mine eventually had a technical assistant, a chemical engineering graduate, who does almost the same thing she does. She was fellow professional with the same skills and rendering similar service as the lead professional service provider. She is necessary, as a reliever, to free some more time for the lead Consultant, when the client base or work load keeps increasing. An assistant unloads her with tasks she need not do herself and so forth.
When are employees necessary in a simple service business?
From one person delivering a service, other service providing people may join the business. This is necessary to complete all the tasks involved in a growing buiness, as loads of work add up, or to enable the professional get more breathing space. Thus, a simple business may have at first just one person doing everything but at some point goes to hire or seek the service of other service providers, that is, an assistant, or two, and then a bookkeeper and so forth.
Manufacturing businesses and family members
The simple business model for manufacturing also has minimal people involved. Unlike in service providing, more often than not family members are usually informally employed in micro-scale or startups manufacturing business ventures. Selling farm products, the most common in Asian countries, usually involve practically every member of the family in the production up to the selling of the farm produce. I, myself, have been employed several times in family businesses of my relatives and my own family. My parents used to sell figurines. My father was skilled in the production and my mother assisted him both in the finishing stage of the production and in marketing and selling. Me and my siblings, being still very young, do little tasks in the production, including the moving of small non-fragile items. We were informal employees of our parents.
Small business growth and neighbors
As demands increase, production requires more hands. As the business grows, non-family members may start joining. Neighbors as helpers may also join the workforce as informal workers. In Laguna, I met Mang Ernie. I learned from him that he helps in the farm and gets paid with a small share of the harvest. Cottage industries and start ups similarly do the same thing. My friend whose family is in a small scale candle manufacturing industry employs both family members, and neighbors and an accounting service professional.
Why employ the neighbors?
The answer to this question is not easy and simple. A practical answer would be availability and cost. It is easier to find available neighbors to join the workforce of a small business. Another reason is cost. Other people might demand higher payment for the employment but the Filipino neighbor usually do not demand particular salary rate. The most important reason though is trust. (I will talk more on this in another content of my talks with the Consultant who reads management).
The simple organization and the employee contribution to the business
These group of people, the employees together with the business-owner, form the simple internal organization of the business. They work together to meet the growth requirement of the business.
In other words, employees are crucial to the business in the sense that they extend the capacity of the business owner to meet the NEWS of the market. Once the demand, and production are up, take the employees away and a gap in sustaining the relationship between the business owner and the market would show up. Once this gap widens then the relationship between the owner and the market might be broken and the business would ultimately fail. Employees are expected to fill up the potential gap.