A look at the interior of European SMES (Reflections of 13 years adding experience)

In this article I intend to reflect on the management structure and way of working within my step within European SMEs.

For this purpose, to all our readers who are not in Europe, I would like to place them in the theoretical principles that define a SME in Europe in terms of size and volume of business. Concepts defined in Annex I of Commission Regulation (EU) No. 651/2014.

In this regulation the types of companies are defined and a method is established to calculate the financial limits and the number of employees. For this purpose, to belong to a category of SMEs must meet the limit of number of employees and not exceeds the volume of business volume or the balance sheet. Same as detailed below

Source: User’s guide on the definition of the concept of SME (European Commission) and Government of the Ministry of Economy, Industry and Trade and Competitiveness of the Government of Spain.

Once this is defined, let’s begin to relate my experience.

MANAGEMENT LEVELS

– I have collaborated in medium-sized companies mainly of family structure where they are already managed by the 2nd. or 3th. generation.

– On second generation’s and third generation family business, members who actively work within the company they are submitted to  the analysis of external consultants, to detect the skills of each member of the family, to position them in the specific departments where they will develop better those skills in favor of the growth of the company.

– These external consultants place each member of the family in the key positions to keep control of the company and where the family relationship does not negatively interfere in the daily development of the business activity

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– Qualitative and qualifications analyzes are carried out to determine which member of the family has the best ability to function as a General Manager, as well as determine the Responsible for Accounting; Purchasing Department; Sales department; Production department and so on, depending on the number of family members that collaborate within the company. The activities, functions and scope of each department are specifically defined so as not to interfere in the development of activities. Of course, since as a family company statutes are established and have, regular advisory meetings will be established important issues and joint decisions for the growth of the business, investments, etc. will be made. This practice on 2nd and 3rd generation companies look for not perish and that, on the contrary, growth a continue.

Note: In the cases that I have lived this practice and is well respected by each of the members of the family, makes the company to continue its operation in a professional manner that in general allows to continue with the company’s development.

– However, there are cases where not all members of 2a. and 3a. generation are able to occupy these directives positions and are not interested in collaborating within the company, for this reason, founding entrepreneurs decide to appoint a General Manager outside the family that allows continuity to the company over time.

EUROPEAN SMES AS EMPLOYERS

I must confess that the European SME in general is very interesting employers, so I would like to highlight the following:

– There is a high level of longevity in terms of its workers; European companies in general expect that their employees will stay in the company for several years and very possibly until retirement.

– Employees, like employers, enter with a clear objective of collaborate in the company for many years, and it is clear that employees seek economic and social well-being and stability over time as part of culture.

– The level of mobility of personnel in the European SME is low, (in fact, high mobility is not well regarded except in a few exceptions), the permanence within the company is well valued by employers. I want to clarify that my comment is making a comparison with other cultures such as United States, Latin America, where the mobility of employees is usually constant and in some cases even well seen.

– Usually in European SMEs there is high productivity, because in most cases, jobs are well defined and well interrelated. There may be exceptions, but in general there is a high level of labor productivity, it must be recognized that this is also largely fostered by the organized culture of society and the importance in the implementation and requirement of quality systems required as part of competitiveness for the sale of products, quality systems that have allowed internal evaluations to make efficient and professionalize their production processes.

ADVANTAGES IN EXPORT: These characteristics are positive when negotiating with many cultures, since at the moment of negotiating with countries such as: European countries, China, Japan, Singapore, there are countries that value very much that the company has transcended several generations and that employees are long-lived inside the organization.

Note: This has been changing little by little in the wake of the 2008 crisis, but still, it is still a region where labor welfare in my opinion is high compared to other cultures.

Note: This little by little has been changing mainly due to the 2008 crisis, but even so, it is still a region where labor welfare in my opinion is high compared to other cultures.