Better people make better businesses, says the package for small companies from Investors in People.  The new scheme has been put together with help from Scottish Enterprise, the CBI and the Federation of Small Businesses to make it practical, and allows businesses to gauge how well they are doing compared with similar enterprises. 

The new package has £500,000 government backing for projects by Training and Enterprise Councils.  "My department is committed to making Investors in People the general standard across all UK organisations but penetration is very low among companies with 10 to 50 employees.  This is the group that "Building a Better Business" is designed to reach" says the Minister. 

Investors in People was established in 1990 and has been gaining backing from business, according to Mary Chapman, chief executive of IIP (UK) Ltd, because it reduces staff turnover and absenteeism and increases productivity. 

IIP focuses staff on profit and how to maximise it, and adds that motivated people try to improve performance and satisfy customers.  W H Smith claims to have cut staff turnover by 40pc, British Gas (North Eastern) to have reduced sickness and absenteeism by 16pc. 

Even its backers have reservations about whether such effects, if they exist, are caused by the system or merely a symptom of open-minded and ambitious management.  Many suggest that making the effort encourages employees - the so-called Hawthorne effect. 

Small outfits of around ten people have tended to ignore the scheme.  One reason is a feeling it could take their minds of managing and lead to conflicts within the business. 

So the new package is aimed directly at the bottom end of the size scale.  There are eight portions to the new small business programme. 

BUSINESS DIRECTION 

As the brochure puts it, this is merely a generalised waffle about what the business is for, called a mission statement by consultants.  An example provided is a residential care home vowing to provide high quality and individual service from skilled staff who know the relevant law.  This version however adds measurable targets, such as achieving £200,000 turnover by the end of next year, or a 15pc profit margin, or having 20 products, or increasing market share. 

Employees should discuss these targets and company values at open sessions and once the results are agreed they are displayed somewhere in the company.  Finally, check at least twice a year whether performance is in line with ambition.  And if not, consider if people should try harder or adopt new targets. 

According to the brochure this process not only weeds out silly procedures and finds new opportunities but helps people feel involved. 
 
KEY RESULTS 

These are the tactical stepping stones to strategic objectives described in the previous portion of the system.  These are again specific, measurable, ambitions in terms of profit, turnover, or other business targets. 

Each target should meet the Smart test - an acronym from the five criteria: Specific, Measurable, Attainable, Resourced and Timed. 

PLAN FOR THE BUSINESS 

This is wasted if prepared merely to justify an overdraft.  It can provide a useful guide to the right direction, though it will need regular updating.  Get advice from experts, especially on the financial side, but keep it short and straightforward, says the leaflet. 

There are dozens of books on how to create your own company or raise capital and almost every one has a substantial section on how to prepare a business plan.  The Investors in People leaflet has a four-page summary of what needs to be included.  It is sensible to let the staff know what is in the plan.  At the very least they will know what the company is aiming to do, and at best they may be able to suggest improvements. 

YOUR PEOPLE 

Deals with what used to be called the personnel function.  So it covers finding, selecting and hiring new employees, working procedures, benefits and rights, discrimination and pay. 

EMPLOYEES IN NEW JOBS 

This is a separate section warning against installing staff in jobs without saying what they are supposed to be doing.  That can leave employees "feeling isolated and confused". 

No great manual is needed, just a short list of things the person needs to know - ask the previous incumbent.  That can range from a chart of the company organisation to showing where the canteen is, from car parking to listing the top ten customers with phone numbers and contacts. 

The leaflet provides a set of other factors to consider about internal systems, communications, courtesies and policies. 

MANAGING PERFORMANCE 

This is actually another name for managing people.  The section in the package is mainly concerned with performance appraisals of employees and management. 

EXTERNAL REVIEW 

Is the unique selling point of the scheme.  With all the other aspects completed an independent outsider comes to check whether the system has been installed properly and conscientiously and to encourage employees to speak their minds about the organisation.