The small and medium scale enterprises (SMEs) are highly volatile in nature and thus are at a higher risk value. As the work force tends to be leaner and weaker in these industries, the Human Resource (HR) department needs to be adept at handling the frequent issues which come up within the organization. However, the HR department might face certain issues as it would need to adhere to the policy norms in the SMEs.
A good workforce is considered to be the most important asset for any organization. Thus with the interest of any company irrespective of its structure or size, it must positively focus on human resource (HR) development & management. However, it is rather on the wrong side that the HR activities get ignored by many Indian SMEs. According to the analysis report of the survey conducted, around eighty percent of these small and middle-scale enterprises and approximately twenty percent of the medium enterprises showed having lack of any formalized HR department. The Indian economy is today the second rapidly growing economy in the world.
In a rapidly growth environment, the SMEs are initiating several efforts to make their mark felt and to transform their plans of rapid development into reality. Since last two decades, there are many areas wherein the SMEs have not shown any progress due to many determinants. SMEs have the big competitors like B2B or B2C business models. These mega players relish the economies to achieve controlled prices; the SMEs get to enjoy only the possibility of supplying the products to the market fastly. The factors like right personnel, strategy, and, funds are in high comparisons, we still spot several SMEs juggling to achieve the expected development.
While leading entrepreneurs are striving to find ways to shorten the inertia, HR and its different departments also play an important role in signifying the growth issues faced by the SMEs. The trade-offs, which is faced by every SME day in out are worth to explore greatly. Trade-offs can be treated as medium of growth with centralization or decentralization. They even include growth with partnerships or without partnerships. Emotional and Cognitive trade-offs include decisions like whether one should include more of owner’s family or whether that of professional employees on the respective Board and whether they should give more powers to professional employees or they should have the powers with owner’s nominees. The basic values reflected by the SMEs are cost, consciousness, trust, agility, efficient decision making, intuitively driving business, ability to take high risk and relationships. This can be considered the most important aspects which would restrict the growth of SMEs as there stands a great need for change in the organizational culture to match the major business challenges. Additional cultural hindrance faced by the SMEs is that the current employees are well suited to the traditional behavior and habits and thus build differences with the ones who are recruited from professionally driven companies.
Therefore, with the analysis of the above validations, it is imperative to have a strong HR department functional with every SME.