Why and how should SMBs infuse professionalism?

Most small to medium enterprises (SMEs) are closely-held or family-owned businesses that are run in informal ways -- almost how a joint-family is run in India. In other words, the culture of such companies derives from the owners and so is the professionalism. We will start the discussion by asking the following questions about events that happen in the practical world.

What differentiates a company when you award a deal to one of the two companies whose bids have the same criteria? Do you experience differently while dealing with multiple organisations within the same sector? Do you go back to some companies as a customer or hate to deal with some? Do you, as a prospective employee, love to join some companies but will join some others only in desperate situations?

How do you rate the customer service of a company? The varying feelings that you get from these situations are probably because some companies are professional and some are not. 

What does professionalism mean in an organisation?

Professionalism is one of the top keys to running a business that aims to grow, be successful, and maintain an appealing image. However, many entrepreneurs - startup founders and SMB owners - are not keen on bringing professionalism to their organisations, at least in the initial stages. 

If the business owner is a dynamic visionary who looks beyond today, he/she would know what it takes for their business to become professional. How you must inculcate the professional culture in your company depends on the sector, size, the goals, and the profile of the stakeholders, including the employees, among others. 

The interactions and relationships of the company, through its employees and leaders, with various stakeholders such as customers, suppliers, creditors, and investors are of vital importance to ensure that company goals and objectives are met. We will go over few factors that define professionalism for a company - SMEs and conglomerates - from internal and external perspectives.

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Internal perspectives

1. Work environment

Manpower resources, often called human capital, is arguably the most indispensable element for the development of any organisation, small and big, even when some functions are being automated. 

Many prospective employees, particularly the millennials, place great importance on the work environment and culture over monetary benefits. The employee policies related to dress code, work flexibility, appraisal system, leave policies, training and development, upskilling, gender equality, complaint redressal mechanism, etc., contribute towards making the work environment professional. 

In addition to the above, there are certain elements implied as professional methods, which come from the attitude and background of the owners. Small business owners must devote quality time and effort with their HR team or consultant to design and implement policies that would help the company attract and retain the best talents. Getting employees from other professionally-managed companies help bring professional methods and culture with them to the new company.

2. Internal communication

Communication - internal and external - is a very important element in running a company. Having well-defined norms concerning communication between employees within the same department or with those in other departments is highly important. A broader outline of what mode to be used and in what context, the tone of communication in different situations, when to escalate, etc., will help reduce conflicts and confusion and smoothen the workflows in operations. This will improve decision-making and problem-solving processes and also reflect in the communication with the relevant external stakeholders.

3. Conducting team meetings

The structure of internal meetings with details on factors such as who should participate in which meetings, the frequency of each meeting, the follow-up process of such meetings, etc., if in place, transforms the way the company conducts its business. This has become more critical during the ongoing pandemic when most meetings are conducted remotely because of work-from-home mode. The organised way they are conducted, the discipline with which the members participate, and how the objectives of meetings are met, influence the way the organisation is run.

4. Corporate governance

Corporate governance in India is a set of internal controls, policy, and procedures, which form the framework of a company’s operations and its dealings with various stakeholders such as customers, vendors, investors, lenders, management, employees, government and industry bodies. The objective of corporate governance is to uphold the principles of transparency, integrity, ethics, and honesty. 

The Ministry of Corporate Affairs (MCA) and The Securities and Exchange Board of India (SEBI) have framed rules to make sure compliance with corporate governance, which is a statutory requirement for certain companies like publicly listed companies. 

However, some well-meaning companies, though not statutorily mandated, implement corporate governance to infuse professionalism into their company. Such companies command a great amount of respect and reputation among the stakeholders who deal with the company.

5. Teamwork

It is important to have a team for each function that comprises good talents and managers. More important is the need for a team culture where all the team members will work together towards the goal of a project and the company. Healthy competition is good for the betterment of employees and the company, but unhealthy politics can be detrimental to both. The company and management should discourage the unhealthy corporate and office politics among peers and in the hierarchy, which will affect the morale of the employees, the work environment, and resultantly the reputation and business of the company. 

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External perspectives

1. Brand and Image

Branding creates awareness and an image of the company in the public space.  Marketing strategies, sales processes, well-designed website, presence on social media platforms, and participation in CSR (corporate social responsibility) and ESG (economic, social, corporate governance) activities, though not legally obligatory for SMBs, will present a professional image of the company to the outside world and its employees. The vision and mission of a company also influence the culture and professional attitude of the company.

The growth and profitability of companies of all sizes depend, to a great extent, on the trend of customer acquisition, retention, and churn. A professional company does half of its marketing and selling through its image and reputation.

2. Technology and digital transformation

Digital transformation has become a necessity for companies to survive and grow, rather than a choice. That apart, a company that lags in the adoption of technology is considered backward and unprofessional by those who deal with the company, whether from inside and outside. Digitalisation improves the productivity and efficiency of the operations of the company creating an image as a professionally managed company.

The adoption of digital technologies also improves the way the company works and deals with its stakeholders. For example, timely invoicing, automated follow-ups, CRM system to maintain relations with customers from the prospecting stage to customer onboarding and beyond, make a company easy and comfortable for its customers to deal with.

3. Compliance

Though timely compliance with laws and regulations is obligatory for companies, it also elevates the reputation of the company. The regulators and government agencies rate lowly the companies that default in the compliance requirements consistently. A professionally run organisation makes sure they comply with the required statutory requirements without the need for follow-ups and enforcements by the authorities. 

For example, not paying and filing TDS of employees and vendors, or not filing GST returns so that your customers cannot avail input credit, or not paying and filing contribution to PF, etc., create a negative image of your company for customers, vendors, and employees. This is not expected of a professionally managed company. 

4. Customer relations

Well-conceived and implemented processes, systems, technology tools, teams, the communication protocols, among others, enable healthy relations with customers. Most customers find it painful to deal with companies that lack good methods and processes. Customers of such companies are likely to leave them for more professionally managed companies.

The experience that customers gain during lead creation, customer acquisition and onboarding, sales operation, post-sales services, all make an impression for the customers. If the experience is positive, it is most probably because of the touch of professionalism prevalent in the company. 

5. Partnership with creditors 

Creditors include your suppliers and lenders. In the same way, a company maintains good relations with its customers, all the required ingredients must be in place to ensure better relationships, rather a partnership, with suppliers so that your supply chain is not affected and you have the required supply of funds when needed. A professional company creates confidence in the minds of suppliers and lenders who have their money at stake so that your supply chain and cash flow is not disrupted.

6. Investor relations

Investors are important for SMBs, especially in their pre-IPO stage. While debt finance is expensive and difficult to avail for small to medium companies, investors are their best source of funds to drive the growth of your business, before you go public through IPO. In addition to the financial health and wealth of the company, investors consider the professional attitudes, systems, processes of the company when they put their money into your business.

In a nutshell

Corporate culture, professionalism, corporate governance, etc., overlap and are complementary to each other. Professionalism in a small to medium company derives from the owners or founders and the management team they form, the vision and mission that they have visualised, the policies and processes the company implements, and the type of stakeholders the company deals with. 

Professionalism facilitates garnering all the elements required for a company to scale - finance, customers, employees, suppliers, and investors, because it enhances their confidence and trust in the company.