Small is beautiful

State-of-the-art HR practices may transform the volatile SME sector radically, says Uday Vaidya.

Last Updated: Nov 20, 2013, 16:11 PM IST

State-of-the-art HR practices may transform the volatile SME sector radically, says Uday Vaidya.

HR function is the backbone of every organization, small or big. When designed strategically, it adds lot of value to the business.

Majority of organizations realized the value of the HR function after globalization. Many MNCs imported their global HR practices in India. Taking cue from this, large Indian Companies too developed their HR departments to suit the business needs.

However, the same was not true with Small and Medium Enterprise sector. They took time to recognise that HR is one of the most important elements for the organisational success. Though, some of the SMEs did realise the need to be HR focused, majority of them did not have the adequate expertise and exposure in HR.

In India, SMEs are generally family owned businesses. The top management or owners understands their core business very well but many times fail to understand people issues. This is because the business owners are not formally trained into HR neither they have the relevant exposure.

Many feel that HR means hiring people, monitoring attendance, making salaries, handling statutory compliances and terminating people. But HR is all this and much more. When the organisation is small, the owner can control every aspect of the business and the organisation apparently seems working smoothly. But as the organisation starts growing people issues start popping up and the owner gets into a dilemma whether to focus on the core business activity or people.

We need to appreciate that the basic HR needs of SMEs are vastly different than large organisations. To understand this, we need to look into the basic characteristics of SMEs. SMEs are strongly owner driven. They do not have well defined structures and processes. They are more people dependent rather than process dependent, and are more flexible. They can realign themselves quickly. SMEs normally work under lot of constraints. All these factors are required to be addressed while designing the HR Strategies for SMEs.

What are the challenges of HR in SMEs?

1. Hiring competent and committed talent

2. Assimilating them into the organisation

3. Motivating and developing them

4. Retaining them and creating a career path for them

5. Building a strong team

6. Getting the quality work done through inadequately qualified & skilled manpower

SMEs normally find it difficult to hire a senior HR professional for their HR needs. They outsource HR experts. Whether it outsources HR services or not the business has its owner playing the role of a HR manager. It is always advisable to have a HR expert as a consultant who could guide the owner in strategizing.

In a SMEs, the 2nd line employees are the most important link between owners and the rest of the team. Trustworthy and appropriately competent persons are required at this level. On the part of owner, he needs to develop a relationship with 2nd line on the strong platform of TRUST.

The owner should take keen interest in development of this very important resource and should adequately empower them to take care of routine business issues. The organisation will benefit if this aspect is taken care of. Very importantly, it will greatly reduce the burden on the owner, both physical and mental. The owner may then concentrate on the growth of the business.

The business process will be faster if the decision making is decentralized. Morally, the 2nd line employees would be motivated and feel confident. This will have a positive work culture in the organization, which will send the right kind of message across the organizational fabric.

-The author is a Human Resource consultant and a corporate trainer