HR Challenges in Small & Medium Sized Organizations

Posted on : December 13th, 2011
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HR activities in SMB become the prerogative of a few operation managers who concentrate only on the very administrative issues to ensure smooth operations. Mostly, hiring senior HR professionals is not a viable option as far as cost is concerned. Also sometimes, if not well thought of as a strategy, it can end up being a complete disaster in an SMB environment where there are no specialists and usually a very lean HR team. Complex HR issues cannot be dealt by a general manager who does not have the expertise in the field to take decisions which may require an expert human resource professional’s experience. On top of that, it also leads to loss of their productive time and soon they start losing interest in HR and concentrate only on the absolutely necessary personnel activities. Hence in SMBs, mostly HR ends up being a personnel function that manages leave register, sends payroll inputs to Finance, recruits talent and does some basic coordination work. Since HR is not a revenue generator, it is never given its due importance and hence people practices and innovative HR practices take a back seat.

For an SMB to grow and sustain that growth, it is imperative that it has healthy HR practices. It is only till a certain time that an organization can sustain without effective HR. Experienced HR personnel can bring immense strategic and cultural changes that are required to streamline and keep pace with rapid growth and sustain the growth rate year on year. Beyond a point, it is impossible to retain high quality employees without sound HR practices.

Cost is a major deterrent in introducing many HR practices that can hugely benefit the workplace and employees, most SMBs shun away from the thought. However, there are some amazing ways which, at minimal cost, can still act as catalysts to bring about a cultural and strategic change.

Recruitment is a major challenge because of the huge demand and competitive compensation packages in the industry, some innovative models to attract talent could be introducing partial work from home for homemakers, people pursuing higher education and retired people. Bringing such diversity in the workforce and targeting the non standard talent pool, will add a new dimension in terms of experience and knowledge and because such people may not be interested in pursuing a full time career, one would be able to attract them too.

Employee referral is another great way of attracting potential talent and be able to brand the organization through your own employees at the same time. While looking for references, your existing employee will act as your brand ambassador and say positive things about the organization in his social circle. Instead of searching through job sites and finding candidates who you would not really know firsthand, a well designed employee referral could do wonders and at considerably lower cost. One such instance is of ‘Mitr’, an employee referral scheme based on point system used in G-Cube. Mitr does not give monetary awards. Instead it gives the employee a chance to choose from a range of exciting gifts at each level. Levels are attained based on the number of points received by the employee. Even referring a candidate can earn the employee 5 points.

Learning & Development is usually not the hot topic amongst the top management because of non tangible ROIs. For this reason, it is seen as a sheer waste of resources and money and most SMBs do not focus on L&D activities. However, they do not realise that L&D is a huge motivator for employees who associate their individual growth with such programs. Hiring trainers from the market has a cost attached to it and may not be feasible. Because of such challenges, training is normally swept under the carpet and forgotten. However, if you are an HR person in an SMB, one way to tackle this would be to identify internal subject matter experts and groom them to take internal trainings. Train the trainer could be facilitated for these SMEs and few other potential trainers for soft skills and technical training and once certified, they could be imparting the training in house. This way your company could even give a Steven Covey or Edward De Bono certified leadership training through its certified in house experts.

Normally in SMBs, employee’s vertical growth is either extremely fast or it’s highly staggered depending on the growth rate of the company. Both scenarios are not very favourable for the employee who may be sitting in positions with little or no coaching and may be very confused. It is not a very favourable situation for the organization as well where most mid managers have little or no expertise to handle the roles being performed by them. It is important to show a steady career path to the employees and handhold and coach them to ensure that they are suitable and fit well into the next role and its responsibilities before pushing them there. One of the ways to do this is through Leadership development and Individual Development Plans. Plans can be created and discussed with each employee and their supervisors and senior management must guide and counsel as well as support them to reach their goals gradually supported with training and mentoring. All first time managers should be given mentors who can support them to settle them into their new found people management roles before they start independently handling these roles. An inexperienced people manager can lead to huge attritions and many more complex issues.

It is important to show to employees that the organization thinks about their growth and that can be achieved to a large extent through Internal Job Postings. By giving the internal employees a preference over external hiring, you would not only be helping them achieve their goals but also gain their trust and commitment.

Apart from these, HR should keep innovating to create a culture of camaraderie and teamwork.

Something as simple as a Thanks giving week where employees write to each other making them feel appreciated and liked by one another could go a long way in adding positivity in the environment. G-Cube has come up with Thank You cards which are distributed to employees by HR when they want to thank someone. While one part of the card is a note for someone they’d like to thank, the other part is perforated and given to HR with the name of the person who has been thanked. HR does a lucky draw of all these slips once a quarter and awards the winner. Apart from this, these Thank You cards adorn each workstation and make each employee feel proud of the good deeds he’d done for a colleague at work. As soon as you enter G-Cube office, you see multitude of these bright green post card size cards on everyone’s desk which makes one smile.

Another way of creating culture in the organization could be by creating screensavers and wallpapers of the organization’s values. Since the desktop/laptop is on everyone’s seat, same messages running on all of them just unify the entire workforce and soon it becomes a part of them. Motivational films or talks or skits can be held on organizational values where culture could be communicated to employees in a fun and interesting way.

To summarize, SMBs need to realise that their internal customers are as important as their external customers. HR practices in SMBs have to be designed using innovative thoughts and cost effective mechanisms. Overall, a well designed HR system and innovative people practices can benefit any organization in today’s competitive global environment especially if one is a small or medium sized company and needs to be known amogst competitors and talent as a good place to work.'

Barsha Chakraborty

Barsha is AVP- Human Resource at G-Cube Solutions. She is an HR generalist with close to a decade of multiple domain experience in IT, ITES/BPO/KPO and Media Groups.

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