SMB companies’ journey to next level: what should they focus on HR

SMB companies across the globe are major contributors to the national GDP, employment and often innovation. Most of them may be family led business where the culture, process and the directions the company takes depend upon the founders and the family. Unlike the large behemoths that employ employees to address strategy and efficiency or hire consultants to advice and implement the change, many of these companies adopt Do-it-Ourselves (DIO) approach.  Their organizational process may be mostly informal and largely centralized in few hands. The result, many SMB have lack an approach to build next level leaders, engage employees more gainfully, derive the insights of process and templates that allow them to discriminate the grain from others.

Our experience of consulting to the SMB, we believe the three levers the company must focus on HR front whenever they are adopt a major business model change or business transformation. Firstly, ensure formalization of process. Focus on formalizing the areas of hiring, performance measurement, training & development, rewards and celebrations. Process orientation on these areas helps the company to get a life-cycle window of insight on employees.   Formalization of these areas removes subjective assessments and their impact (sometimes irrevocably damaging and costly).  Supervisor bias, non-standard metrics for comparison and incomplete process effects can all be eliminated by focusing on these areas.

Another dimension SMB companies must focus is on decentralization and leadership management.  Decentralization not only helps in transferring of power to lower management levels where delegation of activities takes place, but more importantly unclogs the non-value added activities form key resources.  From an employee side this allows them to traverse the path of do-improve-innovate cycle so that their learning becomes meaningful and applied. Secondly, the leadership competencies develop from more structured areas to unstructured complex areas over time so that the employee can gainfully assimilate the learning and imbibe leadership capabilities. From an organization side, decentralization helps in senior management provided with time to invest on strategic affairs. While attempting decentralization, organizations must keep their eyes open for elimination of redundancy, multiple reporting structures that add more confusion and too long span of control with poor visibility on the last node. Finally as the adage goes, the attempt should be to keep HR grounded in reality and simplicity.

-Amrita Rao & Sheethal V.V

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