Chat and a coffee good HR strategy

Claire Massey

A cup of coffee and a chat works better than a performance review for small businesses owners.

And rather than feeling guilty about their lack of formal human resource practices, a Massey University report has overturned the notion such practices are second rate.

"It's the People that You Know: A Report on SMEs and Their Human Resource Practices" was presented at the symposium of the New Zealand Centre for SME Research in Wellington on Tuesday.

Centre director Claire Massey said large firm HR practices were not the thing for small to medium-sized businesses (SMEs) to aim for.

"We're getting a much better understanding that the difference in practices is actually a positive and they shouldn't be feeling guilty about not having formal performance appraisals."

Research for the report was gathered over three years from 150 small business owner managers in various industries.

It found performance management was regular but typically undocumented - usually part of a daily "chat" and often over coffee or a beer on Friday night.

Almost without exception, the SMEs had employment contracts.

Word of mouth was the most common way to finding staff and hiring was based on "gut feeling".

Young people tended to be overlooked in favour of those who were married and with mortgages.

The symposium is in its third year.

"Our aim is to get our research out to people who can use it so small business policy is better informed and the way in which banks deal with SMEs is better informed," said Massey.