One of the major challenges facing business owners is that of motivating their employees. The majority of workers are earning wages below the poverty datum line. In such a scenario it is difficult for workers to increase productivity and because of this, most SMEs have failed to attract qualified personnel who demand high remuneration packages. The results of this has been inefficiency, incompetence, maladministration and lack of professionalism in the majority of SMEs.

The major area of concern then becomes that of how an employer can remunerate workers fairly without increasing costs to the business and also the understanding of whether SMEs in Zimbabwe today have the capacity to employ qualified personnel.

Though we shall look at this in detail in latter lectures, it must be pointed out now that SMEs should at most try to tally their wages with productivity. Where possible, incentives should be given to those who exceed production targets – increased revenue should be rewarded. Sometimes it is better to employ professionals who will add value to the business development, as long as their earnings can be justified by their input in terms of development strategy.

Most companies have lost millions of dollars because of not giving their employees inflation adjusted earnings. Lets look at a situation where a worker is netting $200 000 per month and that he/she uses $250 000 per month for transport. Any reasonable employer should ask himself or herself just how the worker is supposed to be coming to work.

The following scenarios may be prevailing
1. The employee may be using company resources like phones and Internet for personal advantage
2. The employee may be diverting company sales or customers for commission elsewhere
3. Or the employee may not be fully committed; people normally work according to what they are given.

Hence in one way or the other your business is paying for underpaying its staff.

The best strategy against this is the tallying of revenue with wages such that workers know that their efforts are rewarded according to their productivity. After all there is no benefit in underpaying workers.

The next function we shall look at is finance and in particular working capital management. In an inflationary environment poor working capital management will result in the death of a business – think of ;
1. cash – if this resource is not managed properly the business will realise that its cash resources can no longer fund the operations of the business – even if the business is profitable, without cash it would be crippled.
2. Debtors – the moment you give goods on credit you are creating a disaster for your business. It is likely that you will receive that money when it would have lost value.
3. Stocks – high levels of stock may tie money but it may be a good way of hedging as this will increase in value.

From the above analysis, one can see that these four elements of business need proper management. SMEs face a dilemma on how they can reduce debtors without reducing sales, how to reconcile high and low stock levels and what they should do to cash resources.

All these will be expanded more in future articles as we will look at the strategies in the Human Resources, Finances, Marketing functions which may be used by SMEs to enable them to sustain their growth.