Why HR an underperformer in SME’s?

All companies realise “human talent” is the primary differentiator and driver of growth. Disadvantaged by their size and ability to attract and retain the right talent, SME face major challenges. Many SME find the “groom the fresher strategy” of recruiting newbies and training them does not augur them well as they end as training grounds for large companies hunting for talent. Many HR professionals in SME spend most of their time on Payroll and administration, and there is a considerable gap in what their management expects and what is delivered. CEOs are mostly disappointed to see the HR drowning itself with repetitive payroll activities by end of month and once pay is made address the employee concerns on deductions till mid of next month and then the cycle starts for the current month’s salary preparation. HR professionals are caught in only “transactional” activities and are unable to bring strategic value to their employers. In some companies due to high employee attrition the HR organization is mostly caught with recruitment only and has little time for anything else.

Another major challenge is the documentation of the complete HR process is weak. The HR process itself is not comprehensively integrated, some like employee engagement or training are farce and do not add any long term value. Employees are sent to training that has little relevance to their career growth or of any economic value to their company. Some SME spend what few rupees they have on fancy programs that have little direct impact on productivity or performance of the firm. Most HR managers are by training lean towards developing rules and procedures. They seldom strategize and execute creation of an organization culture within the limitations of resource and financial constraints of an SME.  Some HR managers attempt to replicate fancy programs practiced by large organizations without realizing their relevance and purpose for their organization. CEO’s are majorly disappointed in HR mangers as they lack in vision to create activities and process within the means of an SME. Their MBA education seldom prepares them to visualize happy ownership driven organization without much fancy fare.

The way forward is three fold: Focus, deliberation and liberty. To ensure the HR focus on value adding activities, SME owners must engage outside partners to complement their HR team on salary and other transactions. On the process front, Invest in right tools and technologies to optimize the selection, hiring, training and retaining of employees, so that documentation and analysis are possible.  Hire HR managers not for their prestigious alma mater but their individual ability and passion to create sustainable culture. Hire them for their passion and intensity of pushing through the activities. HR managers need a strong sense of deliberation to continue to weed out unwanted operations and keep focusing on the right stuff. Finally, SME owners must support HR managers to come out with appropriate HR activities. Given them the freedom and liberty to own and drive employee engagement, knowledge management and process improvement that can provide long term sustainable advantage to their employer. 

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