Thursday, November 15, 2007
The Organisation and Performance of Minority Firms
The minority firms sector contributes about £32 billion per year to the UK economy. This figure has been used repeatedly by public, private and independent sources to measure economic performance, although there is no reliable information and data to suggest how this sector is organised and how various sectors and segments perform across the 12 Regions, more so their impact on the regional economy in the UK as a whole.
Since early 2007, RDAs were mandated to take control of Business Link, the `one-stop type shop’ set up by the Tory administration in the 1990s, following on the heels of the Training and Enterprise Councils (TECs) which were subsequently replaced by the Learning Skills Councils (LSCs) in 2000 by the Labour government. Merely changing the guard or sentry without transforming the system is a lesson in tinkering management, to say the least. The fact that little is known by the public about the overall organisation and performance of minority firms in the UK in the 21st century is an indictment on a system that boasts loudly about its democratic credentials such as fairness, equality, tolerance and so forth.
Since the 1971 ground-breaking Bolton Report on small firms, there have been a plethora of reviews and enquiries on problems and issues affecting the UK’s SME sector. From the early 1980s when there was civil unrest in English inner-cities because of unemployment, deprivation and exclusion affecting sections of the black community, to the present, a proliferation of studies has been done on minority firms within the context framework of immigration, race and discrimination. Very little formal evidence has been produced to show firstly, where key firm sectors are located and the segments therein; secondly, the differences between firms in London, the Southeast and other parts of England and Wales; and thirdly, very little has been done, until recently, on the contribution social enterprises make to the economy. Again too, a bit of statistics exist in this respect, with little by way of case studies. The reason given, social enterprise is a relatively new area of study, yet this trend has evolved since the early part of the last century in Britain and Europe.
The organisation of firms is of particular interest to society, since consumers especially, can make informed choices as to the type of firms they ought to engage with in terms of products and services. If the information is unavailable, it is difficult for consumers to make the right choice. While company advertisements can help in this process, the fact that large companies receive unfettered media coverage, it is only fair that SMEs should also be granted similar concessions. This of course is an area of controversy, bordering on commercial necessity versus size and composition.
On a broader level, policy-makers can make a better `quality’ judgement on resource efficiency in terms of budgetary allocation to key districts and regions where there is evidence of underperforming firms or those at risk of closure. The organisation of firms includes existing management and staffing levels, the structure of the organisation and the relationship with industry alliances, consumers, public institutions and other agencies involved in the distribution and supply chain process.
Evaluating the organisation of SMEs is also critical towards understanding their` case histories’ and being able to diagnose problems-areas more effectively. The desire to stereotype or create `myths’ about firms on the basis of colour, ethnicity and or/diversity, therefore becomes less of an issue. This approach is even more applicable when authorities are trying to raise the profile of minorities in the eyes of cynics, some of whom consider settler-communities as either a `negative’ competition or a drain on the public purse even in light of migrants’ contribution to the British economy.
The performance of minority firms is critical to local and regional economic planning. In almost every region, there are pockets of businesses that remain unsupported even though statutory agencies located in these areas to render technical assistance and enterprise support. A survey conducted by this author, supported by a Midlands Counties’ university, showed that more than 60% of all minority businesses had no access to mainstream support. Many were managing businesses on their own, with piecemeal support from accountants, solicitors, family and friends. For example, Caribbean businesses have a market share performance of approximately 11% per annum and only a small fraction of owners have accessed genuine support to enhance growth and expansion.
For the past five or so years, the Small Business Service has been carrying out an annual survey of the SMEs. The information contained in these reviews is limited to the number of firms, selected segments (with no segments included), estimated turnover and other basis data. It is often difficult to know the number of firms in each of the 12 UK Regions. There are no performance ratios in relation to industry sector markets, purchasing power of consumers and generally measurements (qualitative and quantitative) showing the effect of minority firms on regional economies in the country.
In addition, there are usually no case studies to support the evidence presented. The survey appears to be a simplified version of number-crunching rather than a rigorous attempt to examine and analyse the organisation and performance of minority firms on a sector-by-sector basis. The survey excludes the estimated total value of each minority firm by ethnic origin. This information is essential because it enables public institutions in particular, to have a balanced picture on the state of minority firms (at any given time). Moreover, it helps greatly, medium and long-term planning, thereby preventing politicians making uninformed disclosures, or worst making empty promises.
The time is right for intensifying the evaluation of all sectors of the SME in the UK. In recent years, Britain has slipped from fourth to nearly the 12th position in the OECD Group of Countries. To regain its competitive advantage, the country will have to not only to place wealth creation as a priority, but monitor the players involved in this process. All three political parties have excluded definitively, the importance of evaluating the organisation and performance of minority firms which make –up a substantial portion of the GDP, let alone employment, new technology and innovation, along with stability and prosperous neighbourhoods.
· Every region should develop a proper database of firms operating in wards and districts;
· Existing Intelligence Observatories should be updated to reflect current population indices and performing outputs across cultural and ethnic diversity;
· Adopting a sector-based approach is vital since this can trap information that may appear to be problematic;
· The use of community expertise is also important – the training of lay researchers is a useful way of supplementing untrained staff;
· Co-ordinating research activities with central government, universities and other documentation centres are crucial; and
· Annual evaluation and study sessions with sections of the minority community are also appropriate means to obtain best results.
The consultation process must be fair and open
Since the last century, there has been much discussion around the term `consultation’ – it is used to process ideas, generate information and data, as well as obtain agreement on projects that are aimed at benefiting residents in neighbourhoods, villages, towns, districts, regions and countries. It has become part of the political process of ensuring that governments appear to offer citizens a chance to `vote’ for initiatives that will in the end, benefit them in some way. So whether it is the construction of a bridge, a road, a housing scheme, a railway line or a supermarket, citizens have a right to decide. So why is consultation often problematic in terms of the process involved?
In today’s fast-moving environment, governments don’t often have the time to consult on anything and everything; instead, they seek consensus from citizens particularly if certain schemes are vote-winning ones such as houses for hospital employees and others who work with the emergency services. In most instances, the authorities are accused of making up their mind to carry out a particular project prior to citizens knowing about it. This is described as a form of `imposition control’ and it is here that respondents feel their views don’t really count, since the authorities have already decided on behalf of them – what is best.
Still, consultation is a complex but valuable process of securing confidence, trust and support from various stakeholders who also include the citizenry. The views of children, adults and various interest groups should be taken into account, if the process is to work effectively and achieve the desired results. Consultation involves at least three main parties – the informer or transmitter of the facts in the case, the channel or intermediary used to pass on the information and the receiver or recipient; that is, the person or persons mostly affected by the action to be taken. The success of the consultation process rests on the honesty of the authorities in relaying accurate information and data on important projects that may affect communities. A billion-pound community centre that is likely to benefit diverse communities in an inner-city district for instance, require careful thought and so even before the consultation process begins, there are other matters to be considered.
Firstly, careful thought must be given to the project at hand – questions. Which area is suitable for the project? Will it inconvenience residents in the area? Will it impact on existing facilities, private, public and community? What are the cost implications? Is it really a feasible initiative? What benefit is it to residents and surrounding neighbourhoods? Who and where are the parties to be consulted in this affair? How should the process be conducted and what channels should be used to create the desired effect(s)? These and more questions need to be answered at the beginning to determine the pros and cons of the consultation process.
Secondly, once a decision has been made after addressing challenging issues, the next step is to begin having pre-arranged discussions with the likely consultees (beneficiaries). Meeting a selected group of representatives from the consulting group is a useful starting point. This allows the project initiators to gauge a variety of opinions – positive and negative – about the proposed project. In this way, the consultation process could be less controversial or problematic at the conception through to the implementation stage.
Thirdly, having secured a degree of confidence and the agreement of the selected grouping, it is important that the project initiators formulate a process that is fair, objectives and open. This element will ensure that the right questions are asked, the relevant number and type of residents are consulted, the timing of the exercise is agreeable and the results are carefully communicated to the consultees. Consultation can therefore take a number of forms according to the following: -
· Questionnaires can be used to secure primary information and data;
· Telephone interviews with key representatives in communities;
· Local meetings to discuss the advantages and disadvantages of projects;
· Door-to-door leafleting to ensure information is passed on;
· Newspaper advertisements can be used to enlist residents support;
· A dedicated website can be set up to facilitate this process; and
· A series of seminar-workshops can be organised to discuss in-depth issues.
It is expected that the authorities will have competent and experienced personnel involved in the consultation process. Care must be taken to consider the sensitivities around culture, ethnicity and other persuasions. The general content, presentation and style of any consultation documents must be clear, simple, but intelligent. It must be gently persuasive rather than argumentative and imposing. The idea of this process, is to sell a product with its features intact, whilst winning the confidence and securing the endorsement of citizens at the same time.
After the consultation process is complete depending on the time that was originally allocated for responses, another week or two should be extended for additional feedback. This again helps to reinforce the concept of openness and the desire for as many citizens as possible to contribute to the process, some for the first time. Once this time has expired, an evaluation should be carried out to determine the results and where future consultations could be improved and so forth.
So that while consultation is deemed as one of the vital ingredients of participative democracy, it could also prove counter-productive if the process is inherently flawed. If the authorities take for granted the consultees, if incompetent personnel are selected to monitor the process, if the information is ambiguous, vague and confusing, if the process is cumbersome and not open to different interest groups, then the likelihood of success will be far from achievable.
Nevertheless, the best thought-out consultations can be problematic as well. When residents are probably frustrated with the authorities over a lack of foresight and vision regarding local initiatives to develop a particular area. When the electorate is fed- up with schemes that have proven unworkable in the past and present. When there is uncertainty about a project’s viability in relation to sufficient investment. When regeneration projects are done and there are not clear benefits for ordinary citizens, but only the elite that seem to benefit. When citizens feel that their taxes are being squandered by `white elephant’ projects and when they are led to believe that their views are being ignored by authorities.
Generally, the process of consultation should be clearly defined, with the aims and objectives clear. The milestones agreed upon by all parties concerned and the implementation of it water-tight. A set of monitoring control procedures should be put in place to assess and evaluate systemic problems. Everyone’s views should be respected even if such views are at variance with the status quo. A different opinion might be one that reflects the greater concerns of beneficiaries, and one that may have been ignored originally by the authorities. The success therefore of consultation is the ability and the willingness of the consultants to ensure that the consultees buy-in to the `product’ and its various features or unique selling points. Remember even this civic principle is a reflection of today’s buyers and sellers market that compete for high stakes all the time.