Contributed by Sonam Saigal, Knowledge Buddy
When big organizations go on a rampage, small ones have to think smart. This is the wisdom for India’s small and medium enterprises (SMEs) that fail to keep pace with the growth juggernaut. Amidst lot of competition within SMEs, it becomes very important for the SMEs to benchmark various processes in order to remain competitive within the marketplace and ensure they can benefit from what their competitors are doing to stay one step ahead of the game.
Human resources are one of the most essential growth indicators for these organizations. Growth-hungry large companies are scouring the market for human resources (HR), leaving only crumbs for SMEs who can never outpay the big ones when it comes to salaries.
Moreover, typical about micro firms is the predominantly horizontal structure that one wants to preserve. The employees that surround the entrepreneur are mostly a tight group that communicates informally. That is why the challenge an entrepreneur is faced with in this phase is directly linked to maintaining the climate of participation unique in a micro firm. When the organization grows, it becomes more difficult to involve all employees equally in operational decisions. Moreover, with an ever growing team it becomes extremely difficult for the entrepreneur to keep the close partnership with every employee. The creative, intuitive approach that was fruitful in the start-up phase appears to become an obstacle for a number of employees. There is a lack of formalization, structure and clarity when thinking of performance, training or reward management. More specifically, employees report a need for a transparent training and compensation policy and a standardized introduction procedure for new employees. Employees miss a uniform strategy and functional organizational structure.
The lack of “in place and streamlined” HR functions in these organizations come as a weakness when all the efforts invested in building a team become fruitless because of high attrition rates. There can be several reasons to this such as dissatisfaction with pay, HR policies and practices, lack of hygiene factors, employee loyalty issues, and the like. Some HR Issues in SMEs are discussed below in the article:
Talent Attraction, Hiring and Retention Issues
Talent Attraction
Certain issues faced by SMEs in attracting talent can be:
