As South Africa recognises Workers’ Day, it's imperative for SMEs to reassess their growth strategies and ensure that workforce planning is not an afterthought, but rather a foundational element of sustainable success.
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With South Africa about to celebrate Workers’ Day, a timely reminder has emerged from SME services provider, Lula, highlighting the critical need for small and medium-sized enterprises to shift their focus from solely financial metrics to comprehensively planning for their workforce.
Experts caution that neglecting the 'people side' of business growth could have costly repercussions not only for the organisations but also for their employees.
The prevailing mindset within many SMEs is to approach expansion primarily through operational lenses, acquiring more inventory, investing in larger premises, or increasing customer outreach.
But as Lizanne du Toit, Head of People at Lula, noted, this narrow focus can jeopardise the sustainability of growth.
“When SMEs plan for growth, they often focus on visible and immediate needs, while underestimating the people side of the equation. Growth only becomes sustainable when a business has the right capacity, capabilities, and culture in place to support where it is trying to go,” she said.
The repercussions of poor workforce planning can manifest quickly. An insufficient headcount leaves existing employees bearing excessive workloads, which can lead to fatigue, disengagement, and, in severe cases, burnout.
Conversely, over-hiring in anticipation of unfulfilled growth projections can result in financial strain, low morale, and even retrenchments.
“The trust employees place in an employer is significant,” du Toit added.
“They trust that their salary, benefits, and working conditions will be honoured, but also that the business will provide a respectful environment and opportunities for growth. This trust is tested when expansion is poorly planned.”
In its assessment, Lula identifies a frequent misstep among SMEs: reactive hiring.
According to Dylan Weimann, Head of Credit Underwriting at Lula, businesses often respond to immediate staffing needs without adequately considering whether new hires possess the skills or attitudes required to support long-term objectives.
“One of the biggest risks is hiring the wrong person, whether that’s someone with the wrong skills or the wrong attitude,” he stated.
This oversight not only increases the chances of misalignment but also impacts financial forecasting. Weimann emphasises that growth planning must encompass more than just salary costs.
“You need to account for onboarding, training, and the time it takes for a new employee to reach full productivity,” he explained, underscoring that businesses often fail to account for the associated costs of ramping up new employees.
Moreover, he notes, financial considerations should intertwine closely with people planning.
“For many SMEs, salaries are among the largest items on the income statement. If you are not planning carefully around that, you are taking a risk with one of your biggest expenses,” he added.
The most successful SMEs are those that align hiring strategies with realistic cash flow expectations rather than overly optimistic growth assumptions.
As Workers’ Day serves as a rallying point for recognising the contributions of SMEs to job creation and economic resilience, Lula urged business owners to prioritize practical measures when preparing for growth.
This includes:
Moreover, awareness of potential warning signs of overextension is crucial.
These signs may include payroll becoming a source of stress, tightening profitability due to salary pressure, and a decline in service delivery or customer satisfaction.
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