Managing people is often one of the hardest tasks for startups and small businesses. While it is essential for success, not everyone starts out knowing how. Still, founders must learn fast if they want to build strong teams and reach their bigger goals.
The State of Entrepreneurship Report 2024 revealed that female-led businesses perform better at employee retention, suggesting women may have a stronger grasp on people management. The report also noted that young entrepreneurs generally enjoy retention rates of up to 63.8 percent, an impressive figure considering the resource limitations many face.
People management
One of the core issues facing small businesses is the lack of structure. Barbara Kemigisha, the Human Resources (HR) lead at DHL Supply Chain International Uganda, notes that many startups operate without clear structures, policies, or human resource manuals.
She adds that the absence of structure is the biggest barrier to attracting and retaining good talent. ‘Most small businesses don’t have HR manuals or functional policies. Even where they exist, the owners tend to violate them,’ she says.
She adds that it is common to find the business owner doubling as the HR manager, supervisor, and even cleaner. ‘That makes them unattractive because reputation is everything,’ she laments.
Supporting this view, Abraham Ochieng Odoyo, programmes manager at StartUpAfrica, explains that unclear job roles remain one of the biggest weaknesses of young businesses.
‘Startups have small teams handling large volumes of work. This leads to overlapping responsibilities and makes accountability difficult,’ he says.
Misconception about size
According to Kemigisha, attracting and retaining talent by small businesses is not about size. She argues that poor HR practices are not simply brought by a small-sized operation.
‘It’s not about size, it’s about mindset,’ she asserts.
Kemigisha added that many small business owners think no one is watching.
‘Established companies take their policies seriously because their reputation is visible. But small businesses hide in the shadows; some are not even registered with the Federation of Ugandan Employers,’ she explains.
She believes this lack of accountability traps them in cycles of disorganisation and high turnover. ‘They remain unknown because they isolate themselves. You can’t attract good people if no one trusts your employer brand,’ she adds.
The best startups don’t just have good products or services; they also have smart, scalable people approaches, which have been built over time. Small businesses and startups can win the people management game by building on the following strategies:
Positive company culture
For Susan Wanjala, an HR practitioner, founder and lead mentor at TSW Mentorship Agency, employer reputation is everything. ‘Your current and former employees are your most credible ambassadors,’ she says. ‘What they say about your company determines the kind of talent you attract.’
According to Ochieng Odoyo, the programmes manager for StartUpAfrica, involving your employees early on in drafting company policies, goals, objectives, and guidelines goes a long way in creating a positive company culture for your business.
Grace Akatuha, the proprietor of Kikazi millet flour, emphasizes clear rules and guidelines for daily activities. She adds that she leads by example to ensure they are followed by everyone.
Invest in employee development
Employee development can be challenging as startups and small businesses often have limited budgets and a struggling cash flow, but the rewards outweigh its investments.
According to Wanjala, employee development is not only about making big budgets to facilitate training and other costly professional development initiatives.
She explains that informal approaches such as mentoring, job rotation, and peer learning can be introduced immediately and at little to no cost, while other formal, costly measures await.
‘Longer-term planning can then be done for more structured learning programmes that require financial outlay, such as professional courses, participation in conferences, workshops, and seminars,’ she advises.
Odoyo adds that simple practices like regular check-ins and casual team engagements foster collaboration and give employees a platform to share their challenges and ideas.
Open communication
Open communication, according to Wanjala, is the secret ingredient that keeps teams engaged and committed. She argues that this should be done through open and honest conversations regarding various aspects of the business.
Odoyo supports this, advising founders to encourage their teams to share thoughts, concerns, feedback, and develop shared recommendations for issues raised. He also adds that informal engagements go a long way in encouraging open communication.
Akatuha conducts regular meetings to determine strategies as a team and values feedback, which she notes has encouraged a culture of openness.
Feedback should be constructive
Feedback, when conveyed in an educative way, in the form of comments, advice, and suggestions, offers great importance towards employee development. Ochieng Odoyo advises that when giving feedback, focus should be on the work and not the individual.
Ochieng Odoyo also adds that one should be empathetic when giving feedback, and should be given timely, for example, at the end of a particular event, while still fresh. Ochieng Odoyo also recommends occasionally encouraging anonymous feedback which helps avoid direct confrontations and helps employees feel that feedback is general.
While a little fear may sometimes be good for you, micromanagement can be a drag down for startups. Kemigisha states that most small businesses violate human resource policies, which should streamline workflow and avoid micromanagement.
‘You find the structures are not there. If they have something in place, the managing director is the human resource, the cleaner, the supervisor, everything, and often violates the policies in place. So that makes them unattractive for good talent,’ she says.
Pay your team promptly
Small businesses and startups often do not have big budgets and large revenue to accommodate competitive industry-level salaries for employees, but ensuring that even modest salaries are paid promptly can have a profound impact on the overall mindset and contribution of your employees.
Kemigisha insists on having a good system in place first. She disagrees that many SMEs pay relatively well, sometimes even more than large firms, but still lose staff due to poor systems.
‘I have seen startups with money but no structure. Money is not the problem; it is how you manage people,’ she notes.
Wanjala emphasizes that beyond salary, personal appreciation matters most. ‘They may include simple personalised gestures like gift vouchers, professional development opportunities, secondment opportunities, or additional days of paid leave,’ she says.
Reward and recognition system
Odoyo underscores the importance of having reward systems for small businesses. He advocates for regular acknowledgment of employees’ contributions.
Wanjala agrees, saying non-monetary recognition like ‘Employee of the Month’ or public appreciation can inspire other employees.