Sustainability and the Small and Medium Enterprise (Sme): Becoming More Professional

By Michael J Sheehan

SMEs need to become more sustainable. To reach such a goal they also need to become more professional in their outlook and approach. In this way they may be able to deal with the instability, complexity, ambiguity and uncertainty of change; and to cope with the ever increasing pressures brought by change.

After outlining what is meant by sustainability and professionalism, some strategies for how SME owner/managers might become more professional by focussing on the development of their own, and their employees, so called soft skills are offered. The author draws from a range of theories to support the argument.

• Language: English
• Publisher: Xlibris AU
• Release date: Feb 16, 2013
• ISBN: 9781479762408

Michael J Sheehan

Michael Sheehan is a researcher and author. After 15 years as an academic in Australia and the UK he now runs his own small business, Workplace Behaviours 4 Sustainable Organisations. Michael’s parents were small business owners for most of their working lives. He was raised with an ethos of service to the customer and a philosophy of the customer is always right. He was also raised to value add. While most of his adult life has been spent working in large public and private sector organisations, he has for a long time been fascinated by the workings of small business.

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Copyright © 2013 by Michael J Sheehan.

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Contents

Preface

Acknowledgements

Chapter 1. Introduction

Introduction

Setting the scene

Economic drivers

Global financial crisis

Australasian region

Prospects for SMEs

Reasons for the focus on staff skills and performance

Economic recovery

Environment

Chapter 2. Sustainability

Introduction

Sustainability and sustainable development

Creating a sustainable future

Key characteristics of sustainability

Strategy for sustainability

A role for the SME

Encouraging sustainability in an SME

Engaging employees in building a sustainable SME

Minimum requirements for SMEs

Cost

Quality

Time

Absence of customer complaints

One further requirement

Chapter 3. The Small and Medium Enterprise (SME)

Introduction

Background

The small and medium business (SME)

SME Defined

Social Entity

Strategy

Structure

Culture

An SME owner/manager defined

The SME as a learning organisation

Mental models

Personal mastery

Shared vision

Team learning

Systems thinking

Chapter 4. Mental Models

Introduction

Mental models

Complex adaptive systems (CASs)

1. Relationship creation and networking

2. Responsibility and empowerment

3. Agility

4. Equality and diversity

5. Sensemaking

6. Embrace learning

7. Improvising

8. Emergent thinking

Chapter 5. Professionalism

Introduction

About professions

About professionalism

Principles of professionalism

Consequences of professionalism

Values

Attitudes

Behaviour

Summary

Chapter 6. Qualities for Professionalism in SMEs

Introduction

A set of qualities for professionalism in SMEs

Commitment to excellence

Honesty

Integrity

Respect for others

Compassion

Transparency

Fairness

Professional responsibility

Social responsibility

Altruism

A set of requirements for being a professional

Summary

Chapter 7. Self-Awareness

Introduction

Becoming professional

Recognising a lack of self-awareness

The ‘know it all’

The ‘whinger’

The ‘egotist’

The ‘manipulator’

The ‘chopper’

The ‘criticiser’

The ‘irrationalist’

The ‘bullocky’

The ‘despot’

Becoming self-aware

The self

The importance of self-awareness

Johari window

Johari quadrant 1—open/free area

Johari quadrant 2—blind area

Johari quadrant 3—hidden area

Johari quadrant 4—unknown area

Johari window example—increasing open area through feedback solicitation and disclosure

Transactional analysis

The script

Ego states

Parent

Adult

Child

Contracting

Contemporary transactional analysis theory

Parent

Adult

Child

Effective modes

Ineffective modes

Summary

Chapter 8. Mindfulness

Introduction

Mindfulness

Development and use of the concept within a Western framework

Becoming mindful

Inhibitors of mindfulness

Different from self-awareness

Recognising mindfulness

The ‘self-assured’

The ‘acceptor’

The ‘individualist’

The ‘inspirationalist’

The ‘valuer’

The ‘supporter’

The ‘rationalist’

The ‘humanitarian’

The ‘democrat’

What being mindful will do

Using mindfulness in the workplace

Summary

Chapter 9. Adult Learning

Introduction

Learning

Context for learning and continuous improvement

The Importance of considering change as a learning process

How those notions inform adult learning in the transition to a professional SME

Approaches to learning in organisations

Definition of learning

The scientific approach to learning in organisations

1. Behaviourist theories

2. Cognitive theories

3. Social learning theory

Progressive-humanist approaches to learning in organisations

1. John Dewey, Carl Rogers, Paulo Freire, and Malcolm Knowles

2. Jack Mezirow

3. Stephen Brookfield

4. Reg Revans

5. David Kolb

6. Peter Honey and Alan Mumford

Definition of reflection and critical reflection

The Importance of critical reflection as a tool for understanding

Chapter 10. Leadership

Introduction

General understanding of leadership

Overview of major leadership theories

Trait theories

Contingency or situational theories

Transactional leadership theories

Transformational leadership theories

Authentic leadership theory

Developing leaders and leadership

What I mean by leadership development

Summary

Chapter 11. Team Learning

Introduction

What team learning entails

Meaningful conversations

How to hold a meaningful conversation

Roles for team learning

Roles for SME team learning

Identifying that team learning is occurring

Summary

Chapter 12. Systems Thinking

Introduction

Systems thinking explained

How you will know systems thinking is occurring

Summary

Chapter 13. SME Change and Its Consequences

Introduction

Theories of organisational change (and their application for SMEs)

Organisational change assumptions

The importance of considering change as a learning process

The centrality of the conceptualisation of the learning experience

The difficulty of reconstructing relationships

The experience of unfulfilled expectations

The importance of a heightened tolerance of others

A heightened understanding of self

Conclusion

References

Further Reading

Preface

The early years of the twenty-first century appear to be perplexing to many of us who can recall the good old days. There were, of course, no such days. Life is relative to our spatial and temporal experiences. Nonetheless, working in some contemporary organisations, and in small and medium enterprises (SMEs) in particular, is turning out to be an almost daily struggle to survive. Some of the confusion inherent in that struggle may be attributed to a perceived lack of government support for SMEs and the need to adapt rapidly in the face of ever-emerging uncertainty. Such uncertainty also may partly be attributed to factors such as globalisation and its consequences, an ever-changing social, economic, and environmental climate, institutional failures, and to acts or threats of acts of terrorism. An ever-changing labour market and increasing customer and supplier expectations may be added to the mix.

There is, therefore, a broad realisation that we need to create a sustainable future. Such a future means the creation of sustainable societies and SMEs within an environment that is resilient. We need innovative products and ideas, the creation of new markets, resolution of age-old business problems, and improved public understanding and strengthening of sustainable Australian brands worldwide. There needs to be a combined effort from business, governments, and non-government organisations to do so more holistically than currently is the case.

SMEs are faced with the seemingly impossible task of responding to inescapable changes as a result of the aforementioned factors. The result for some SMEs has been loss of business and/or bankruptcy and closure. As SMEs attempt to cope with the changing conditions in an effort to become sustainable, they also face attitudinal and behavioural shifts by their employees. Concepts such as loyalty, commitment, and service have morphed over time such that there appears to be a growing mistrust of management and their motives and increased employee anxiety. Customers tend to experience the outcomes of these changes as poor goods or service.

Now is not the time to resist; rather, it is the time for change. To keep pace with the demands of change, SMEs have to develop new ways of thinking about, and dealing with, their customers, suppliers, stakeholders, and employees. Such development requires a great deal of introspection. The use of new technology, such as the Internet, iPads, and iPhones, serves as a laudable beginning, but technology can only go so far. There are other ways in which SMEs might continuously improve so that they become more sustainable. One way is for SME owners and managers to become more professional in all that they do, which may require self-development and the development of their employees.

I am a small business owner. But I also have worked as a staff development consultant and a human resource consultant in a large public sector organisation, followed by almost twenty years as a tertiary academic (but do not hold that against me). In that part of my life, I have been exposed to a number of personal development programmes in groups of various sizes. I also have worked as a consultant, mainly in a learning and development capacity, to many small, medium, and large public and private sector organisations in Australia and the United Kingdom. I have attended many conferences and other fora as a keynote speaker, a presenter of papers, a workshop convenor, an advisor, a consultant, or in some similar capacity. I also have been involved in the establishment and development of two associations and a research centre relating to inappropriate workplace behaviours.

In those fora, I have participated in discussions with many clients, client groups, colleagues, and students in which the problems and dilemmas that people surfaced during the discussions raised my curiosity about the challenges that they faced, particularly from a SME perspective. Initially I began to satisfy my curiosity by reading and watching media reports about SMEs. I then turned to social media sites for further insight before engaging with the academic literature. The information so gleaned germinated the ideas and focus for this book.

Some curiosity was aroused, for example, by a number of Australian surveys seeming to suggest that SMEs, while initially optimistic, have become increasingly pessimistic about Australia’s economic recovery and lacking in confidence for their future. The October 2012 Consumer Price Index shows price increases across a number of commodities. Fears about the implications of the carbon tax and mining taxes often are expressed. Natural disasters, such as those seen throughout the eastern states of Australia, particularly in Queensland in 2010 and 2011, also impact SMEs. Together, these factors suggest that SME concerns are well grounded.

Interestingly, the main reasons SMEs give for the drop in confidence are that people are not spending, there is a general decrease in business, and they have concerns with the general economic outlook and, in particular, the impact of the carbon tax. By contrast, those who remain confident do so because they feel that they are established businesses, experienced in their business relations, and have good customer relations.

Moreover, many of the respondents to the surveys are dissatisfied with the federal government and feel that government shows a lack of respect. The reasons proffered for such thinking include lack of incentives for small businesses, unhelpful government policies, the level of bureaucracy, and the cost of doing business.

While generally supportive of what small business is saying, I also think that it is too easy to blame others. Some level of responsibility has to be accepted, particularly when there is ample evidence to suggest that SMEs are not meeting customer expectations and that they need to become more sustainable. This thinking led me to explore the literature in an attempt to conceptualise and further understand some of the problems facing SMEs and I drew a conclusion that to become more sustainable, SMEs need to become more professional. To become more professional, more investment in learning and development is required. Thus my focus in this book is on a staff development and performance approach for three reasons.

First, issues such as economic recovery and the environment are in many ways beyond the scope of an SME owner/manager in their daily routines. They are constrained in what they can do in the short term as they struggle for survival in a rapidly changing world. Second, issues such as accounting and economics are beyond my expertise, other than in a general sense. Third, it is a fundamental belief that if people working in SMEs have the knowledge, skills, and abilities to do their job, from a human relations and personal development perspective, or from a soft skills approach, then the more technical aspects of their roles will be more easily achieved. Those roles will be enhanced because people have a better understanding of themselves and others as they go about their day-to-day tasks. People do make it possible.

Learning soft skills is an important way for people to grow and develop. It allows people to discover meaning and to express themselves within the cultural and social context of their SME. It allows them to develop intimate and meaningful relationships with their colleagues, customers, suppliers, and other stakeholders. These relationships can only be beneficial for the SME and for the individual.

The aim of this book, therefore, is to help SMEs become sustainable and more professional through the development of all staff working in the SME. Some strategies for how they might do so are offered.

The reader of course must be the final arbiter of this book. What you as the reader choose to accept, and perhaps even utilise from this book, will reflect your own philosophy of doing business. At this stage, therefore, it is appropriate for me to state my philosophy and how that philosophy has helped me conceptualise and develop my professional practice.

Essentially, I believe that people in organisations, and here the particular focus is on SMEs, have a right to be treated with respect, dignity, and honesty, requiring me as a researcher, author, and facilitator of learning to take an ethical stance in terms of my professional practice. One way for me to do so is to be open about why I wrote this book and what I hope it will achieve.

The learning from my research, and the situations offered to me as a result of the research process, have helped me to understand the dilemmas and uncertainties with which many SMEs are faced. I do not pretend to know it all. Rather, I have sought to understand the problems from the distinct perspective of the individual as evidenced in secondary research and by talking to SME colleagues. The strength to be drawn from that experience comes from an understanding of the realities SMEs face as they attempt to cope with change. I relay in this book my challenge to SME owners, managers, and employees.

I have endeavoured to preserve the story of my journey for future generations. I would like to do so collaboratively and co-operatively with you, the reader. I welcome your feedback.

Acknowledgements

My parents were small business owners for a good part of their working lives. They owned a small menswear business and later were licensees of small hotels. They raised me with an ethos of service to the customer and a philosophy of the customer is always right. I was also raised to value add. When my father owned the menswear store, I was seconded after school and on Saturdays to help out. I was taught that if a customer came in to buy a piece of clothing, then I should also attempt to sell the customer something extra. So if an adult male came in to buy a pair of trousers, he should leave with a matching shirt, belt, socks, and tie. This approach well and truly predated the ‘Would you like fries with that?’ request from fast-food chain staff that emerged many years later. My first acknowledgement, therefore, is to my late parents, Brian and Ann.

Although most of my adult life has been spent working in large public and private sector organisations, a few places would fit the definition of a small and medium enterprise. I also had a career as an academic before moving into my own small business. I have been fascinated by the workings of small business, for what seems a lifetime, and so I acknowledge the people I have met and worked with on that journey.

My academic career has helped me to understand the fascinations and machinations of working with people and to those researchers and writers from whom I have drawn inspiration in this book, I say thank you.

I have been encouraged and supported in the production of this book by the team at Xlibris. I give particular thanks to Lloyd Griffith, Peter Lewis, Vincent Morre, and Yanie Cortes. Thanks also to all staff behind the scenes who worked so hard to bring my work to fruition.

My final thanks go to my extended family, and in particular, my wife Rosie, and my sons, Adam and Timothy, for all your love, support, and inspiration.

Chapter 1

Introduction

Introduction

Small and medium enterprises (SMEs) play a vital role in the Australian economy. It is a role that seemingly often goes unrecognised and unrewarded by the government. In part, the lack of recognition may be attributed to the nature and size of SMEs in that they do not have the political clout or lobbying ability of larger enterprises. Being unrewarded may similarly be ascribed.

But SMEs also need to shoulder some of the responsibilities for their own performance. It is not enough to blame the government, economic conditions, environmental uncertainty, rapid technological change, labour supply, education systems, or the weather for their ability to perform to the expectations placed upon them by customers, suppliers, and significant others. It is time to turn inward and to consider ways in which SMEs may improve their performance and become more sustainable. Approaches by which they might do so are offered in this book.

This chapter commences by setting the scene for the arguments to follow. It is shown that there are many drivers of change impacting SMEs and that customer expectations form a key factor for change. Economic drivers, and in particular, the global financial crisis of 2008-2009, and continuing global financial uncertainty, also are outlined as key factors. Then follows contextual information relating to the Australasian region, including a positive prognosis for the region and a discussion of a changing outlook as further evidence emerges.

Some of the reasons for the focus on staff skills and performance that are offered in the book are then outlined. The chapter concludes with further contextual information relating to economic recovery and the environment.

Setting the scene

There are many drivers for change impacting contemporary SMEs. They include increased competition locally, nationally, and for some, internationally. Increasing trade between nations, particularly in the Asia-Pacific rim, has been enabled by reduced tariffs and trade barriers. Improved financial flows between nations, the growth of foreign direct investment, and the increase in daily foreign exchange turnover in many nation-states adds pressure to demands led by increasing customer expectations, technological change, and environmental concerns (Sheehan, 2010).

Customer expectations can have a massive impact on SME performance and viability. If a customer’s expectations are not met, the availability of online feedback sites soon means that those unfilled expectations are made known to a wide public. The Australian economy has shifted from the one based traditionally on agriculture and manufacturing to a more contemporary alignment with mining and a service economy. But the concept of a service economy may be found wanting because we seem to have lost sight of what we mean by service. Horror stories abound.

A recent American Express survey (The American Express Global Customer Service Barometer, 2012) sounds a chilling warning. The online random sample survey was conducted during February and March 2012 with consumers aged eighteen and over, and across ten countries, including one thousand respondents in Australia.

The survey found that, compared to the other nine countries in the survey, 36% of the Australian respondents considered that in the present economy, companies were ‘paying less attention to customer service’ (p. 3). While they found companies helpful, 42% of Australian respondents believed that companies did not make any extra effort to retain their business and 25% believed that companies took their business for granted. By contrast, 72% of Australian respondents said that they would spend more with a company that provided good customer service and that they would be willing to pay up to an average of 12% more. While the survey appeared to target all businesses, there nonetheless is a warning here for small businesses and that warning is, ignore your customers at your peril.

Customers do relate their stories about the service they have received to others. The same American Express survey indicated that 48% tell others about their good customer service experiences all the time and 47% share their experience sometimes. By contrast, 64% tell others about their poor customer service experiences