All organisations have various stakeholders. For a company, the stakeholders will include investors who provide the seed and risk capital required to commence and grow the business at various stages; the employees who run the daily affairs of the company; the communities in which the company operates; creditors such as bankers that provide various types of funding; the government regulators such as NNRA and NAFDAC that have to provide some authorisations to a business operation, use of certain equipment or sell of products; the customers that buy your products; suppliers of your equipment, raw materials and other consumables, etc.
All stakeholders play various and important roles in the operations of a business and the entrepreneur that will have any reasonable chance of succeeding must understand the roles, rights and responsibilities of each stakeholder group and how to manage those relationships.
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Stakeholders such as investors and creditors may provide funds that are needed for the operations of a company; other stakeholders such as suppliers might supply raw materials of the right quality; customers may buy the products of a business, thereby providing required revenues to cover costs of operations and generate profit. But central to all these dynamics are the employees of the business who interface with the financiers, suppliers, customers, regulators, etc.
Employee competence is necessary for success: It is employees that operate the machinery which produces the goods that the company sells. Any carelessness in machinery settings and your raw materials will be wasted, costs will increase, and quality standards might not be met. Now, even if the manufacturing staff produce the right quality goods, it will take a motivated set of other personnel to market and sell the products to the customers. After sales are made, credit control, accounts and audit officers will need to keep proper and accurate records that will provide management with relevant information for effective decision-making. Any weakness, at any point along the chain, will likely be multiplied and the compound effect will undermine chances of success.
Employee motivation determines their commitment and loyalty levels: The most successful companies in the world such as Google, L’Oreal and Hilton are known to have a highly motivated workforce. The level of motivation of these employees enhances their creativity levels thereby making it very easy for them to come up with solutions to otherwise daunting challenges.
It is employees that deploy and use all other resources: As mentioned earlier, investors, creditors, governments etc. can all provide resources such as finances, Enterprise Resource Planning applications, grants, concessions and licenses, but it will be your employees that can use those assets to deliver tangible results by adding value which customers will profitably pay for. Without competent and highly motivated employees, your company cannot deliver optimum and desired results regardless of all other resources committed to it.
The significance of employees in the success of a business is particularly critical in a developing economy like Nigeria’s for at least a few more reasons:
High costs of operations: High costs of input such as imported raw materials as well as energy and logistics are generally exorbitant in Nigeria. Other difficult-to-predict-or-plan-for costs such as unofficial levies and charges within cities and on our highways, all add to the already punitive costs of operations in our country. Incompetent and fraudulent staff increase these costs through more wastes and collusion, thereby making your business utterly uncompetitive.
Wieldy and business-unfriendly government regulations: Small, medium and large businesses in Nigeria have to navigate a lot of less-than-friendly government regulations. From cumbersome registration procedures to the need for permits, signages, tax and pension payments, the Nigerian entrepreneur must have competent people that can ensure effective navigation and compliance of the maze at minimum costs.
Access to capital and credit: At various points in the life cycle of the business, the entrepreneur will need to access more capital and credit for different purposes. There are now various vehicles and options of raising funds for a business. To succeed, the entrepreneur and their employees will need to understand the complexities of each option and also be able to meet the procedural, technical and behavioural requirements of raising money.
Poor staff attitude to work: One of the biggest challenges that Nigerian entrepreneurs face is poor attitude to work by staff. Yes, whilst there is a percentage of hardworking, competent and trustworthy staff, there is, sadly, quite another large percentage of staff that isn’t diligent, do not apply themselves and can be less-than-honest at the expense of the business. An entrepreneur must set the right standards in employing the right people, motivating and keeping them.
Risk assessment and management competences: We have discussed elsewhere in the past about the need for the entrepreneur to understand the risks that their business is exposed to and to mitigate the same. Small and medium enterprises in Nigeria are exposed to risks on exchange rates, goods-in-transit, theft and pilferages, fire and natural hazards, etc. Having the right and competent people will help understand the risks the business assumes at various points and times and to also take appropriate actions to manage those risks.
Succeeding in business is about doing several things right. It is about avoiding many wrong things. It takes the right people with the right knowledge, skills, energy and attitude to succeed. This week we have just tried to bring to fore the importance of your employees in the scheme of your business and the reality that no matter how good your business proposition may be, competent, motivated and happy employees are a necessary condition for the ultimate survival, profitability and growth of your business. Next week, we will look at the specific factors you should consider in recruiting employees for your budding business.
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