FIEO GlobalLinker
FIEO GlobalLinker

SMEs struggle with people management

SMEs struggle with people management

Employment & HR

Shweta Ojha

Shweta Ojha

8 Aug 2018, 11:47 — 5 min read

According to the estimates, the MSME sector provides employment to more than 40% of India’s total workforce but contributes to less than 30% of the GDP. This is due to the many constraints faced by this segment and a prominent one is, the lack of HR infrastructure that can help measure and enhance productivity.


A survey conducted by CII says, 20% of medium and 80% of small-sized businesses have no HR departments. This is shocking as without a proper functioning HR department, implementing various people-related processes and policies would be difficult.


Not undermining their incredible growth so far, SMEs are still grappling with some of the inherent people and culture related challenges such as -

  • Aligning Values of the founders with that of the employees.
  • Maintaining the spirit of entrepreneurial culture by keeping the communication on.
  • Raising the position of HR from an administrative function to a more proactive strategic role.
  • Recruiting and retaining right talent by offering them diverse roles and responsibilities with a good benefits package.
  • Ensuring role clarity through well-defined job descriptions
  • Making performance appraisals more structured with defined outcome and results.
  • Scaling up the organisation capability through focussed skill development programs.

It is always advisable to create HR system right from the start so that people and processes are aligned to the business goals. Well laid out HR practices help in removing various ambiguities related to one’s job and role in the organisation and thus help in improving overall motivation and controlling attrition.


Below-mentioned are few warning signs would let you know that it is high time for you to have a structured HR in your organization

  • Spending non-productive time on people related issues and not being able to focus on business growth.
  • Professional culture and bringing discipline among the employees is a challenge.
  • No common shared vision amongst all employees.
  • Running risk of non-compliance.
  • Lack of well-designed and well-implemented performance management system aligned with the company goals.
  • Communication is not channelized in right direction.
  • Absence of reporting or learning and sharing among teams.
  • Compensation plans not based on the competence factors.
  • Second line of leadership is not ready.


Today forget developing engaging initiatives with your employees, mundane day-to-day tasks of administration and compliance issues eats up all of promoter’s time. This one itself is a great reason to consider outsourcing human resource function.


Outsourcing HR Function

SME enterprises can outsource the entire HR function where the consultant acts as your internal HR department OR you can outsource a part such as designing policies, designing Performance Management System to get expert support.

However like everything else in business especially people management, a one size fits all doesn’t work. The key is to develop a strategy and solution that works for you and your organization.


Few benefits Of HR Outsourcing:

  • It gives the edge of a cross-industry expert and best practice familiarity.
  • Ensures process consistency along with high level of objectivity and transparency.
  • Eliminates operational burden of HR activities.
  • Allows organisation to focus on core activities.
  • Working across industries allows us to provide fresh insights for your industry.
  • Continuity in HR function.
  • Increasing effectiveness of HR delivery well customized to the required business needs.
  • Brings in professional expertise during implementation.


Underestimation of HR role for the growth of business is the bane amongst SMEs. Profitable business being the only the focus, HR had most often been brushed aside as cost centre. But now there is visible focus shift happening to realise this emerging need in shaping the culture of the company and identifying and retaining right talent to drive the business. HR presence for SMEs significantly helps to minimise promoter's involvement in non-productive people related issues.


While SMEs continue their growth trajectory, the need is to recognise and address these challenges so that both SMEs and HR can work together to implement various desirable changes in the enterprise.


To explore business opportunities, link with me by clicking on the 'Invite' button on my eBiz Card.


Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views, official policy or position of GlobalLinker. 

Posted by

Shweta Ojha

I am an adventure seeker, evolving into a career women from being a Homemaker. Academically, I am a Banking and Business Finance Professional, with PGDCA qualifications, and...

Recommended articles for you

Join a growing community of 300,000+ SMEs. Create your account now.

Already a member?

Log in

Join a growing community of 300,000+ SMEs. Create your account now.

Already a member?

Log in

Other articles written by Shweta Ojha


Visit mobile site