What can SMEs learn from changing HR practices during Covid?

In light of their recent research into the topic, Huadong Yang and Mariella Miraglia discuss how SMEs have adapted their people policies throughout the pandemic

Many human resource management (HRM) policies and practices had to be changed during the pandemic to ensure businesses were able to operate as effectively as possible while protecting their staff. This set a huge challenge for managing or HR directors in small or medium-sized enterprises (SMEs), where often limited HR expertise is available for assistance. 

A pilot study conducted by the University of Liverpool Management School in collaboration with Knowsley Chamber of Commerce tried to respond to this challenge and discussed some key issues around adjusting HRM in SMEs during turbulent times.

Pilot project

The study started during the first Covid-19 lockdown in England and involved a series of interviews with six SME HR managers or managing directors to map the changes to HRM practices they made in response to the Covid-19 pandemic. The interviews aimed to understand the decision-making and communication processes accompanying such changes. 

Moreover, the project sought to explore the employees’ experience and understanding of these HRM changes and how these could have affected their wellbeing. Employees of the six SMEs were asked to fill in a questionnaire assessing how they made sense of the HRM changes implemented and some indicators of their wellbeing, including satisfaction with life, mental health, work engagement, and attendance behaviours.

What did the study find?

All participating SMEs made significant changes to their HRM policies and practices during the pandemic, including arranging flexible working conditions, furloughing employees, providing training on virtual meetings (Teams or Zoom), and freezing recruitment and moving to e-recruitment. When talking about these changes, all interviewees stressed the importance of putting employees first and agreed that all these HR changes in nature were about people. 

Flexible working has been vital. In order to operate during Covid-19, all participating SMEs adopted patterns of flexible working to abide by the government’s guidelines to work from home if you can and keep their business running. 

SMEs realised the feasibility of implementing place and time-related flexibility, allowing employees to work remotely and, in some cases, at different times than the usual ones to enhance their work-life balance and wellbeing. However, all participating SMEs also realised the importance of employee-management trust to make flexible working possible and effective, and reported needing more guidance and advice in implementing flexible working arrangements.

Employee sense-making matters. Employees attributed the HRM changes employed during the pandemic to multiple intentions, such as to keep the business running; to take care of their wellbeing, or to abide by the government guidelines. The research found that the way employees made sense of these changes influenced their wellbeing. Specifically, when staff perceived the HRM changes were made by their employer to favour their wellbeing, they reported being more satisfied with life and were less likely to call in sick. 

In addition, if employees attributed the HR changes to their needs to abide by government guidelines, they tended to experience higher satisfaction with life and better mental health, including decreased anxiety and depressive symptoms.

What lessons can be learnt from this pilot study?

Firstly, HRM matters for SMEs during the pandemic. Investing time and resources to make suitable HR changes will pay off with more engaged and satisfied employees. When designing HRM changes, SMEs need to take account of employee HR attributions to make sure HRM changes are well communicated and understood. Having clear and honest communication about policy changes seems to be the key to ensuring happy staff. 

Secondly, adopting and managing flexibility is crucial, especially in the aftermath of Covid-19. Although flexible working arrangements may not have been previously considered by many SMEs before Covid-19, it has now become a reality. Flexible working offers a win-win solution to keep business running meanwhile maximally protecting employee safety during uncertain times. On this point, SMEs’ managers need to take time to get themselves fully equipped on how to implement flexible working. Guidance on how to implement flexible working can be found on the CIPD’s website.

In summary, this pilot study shows that SMEs made significant changes on HR policies and regulations to respond to the pandemic crisis. It also highlights the importance of communication and sensemaking processes on these changes. Finally, it predicts that flexible working will become a reality for SMEs after Covid-19.  

We are currently recruiting new SMEs to take part in our project. If you would like to take part, please email huadong.yang@liverpool.ac.uk 

Dr Mariella Miraglia and Dr Huadong Yang are senior lecturers at the University of Liverpool Management School. They would like to thank research assistants Marianna Zajac, Zihan Liu for their help on this project