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Contents

* Summary
* Problems and issues
* Background of the issues
* About the client
* How we arrived at the solution
* Conclusion

Summary

The grail of business being very volatile in nature is always exposed to a high degree of risk. It is therefore imperative for businesses to address the uncertainty in their environment with the help of the workforce around them. When there’s a leaner work force structure, it is easier for the HR to implement change management programs in the company. However, the HR faces a challenge to adhere to the agreed policy norms in companies. HR also faces the problems to synchronize the goals of the promoter and the individual employee goals. This study analyses the various issues faced by businesses and various strategies which would help them to be more resilient.

OBJECTIVE OF THE STUDY

• To conceptualize HR issues in general in Business enterprises
• To highlight challenges related to HR in SMEs
• Critical analysis of HR Issues in SMEs in India

What really is HRM?

Human Resource Management (HRM) describes the systems devised for the management of human capital within an organization. HR responsibilities are generally divided into three major areas of management : staffing, employee compensation, and defining/designing work.

Essentially, the purpose of HRM is to maximize the productivity of a company by optimizing the effectiveness of its employees. This mandate is unlikely to change in any fundamental way, despite the ever-increasing pace of change in business.

“The basic mission of human resources will always be to acquire, develop, and retain talent; align the workforce with the business; and be an excellent contributor to the business. Those three challenges will never change.”
– Edward L. Gubman

The key issues for enterprises now –

1. Sadly the full spectrum of HR activities are often neglected by many Indian companies, which is only detrimental and unfair.

2. In the last two decades, there have been certain spaces where many businesses have not grown either by choice or by challenges in capabilities to transform their business. Where on one hand big corporates enjoy economies of scale to control prices, SMEs enjoy agility in bringing the product faster to the market on the other. Assuming that other factors such as strategy, funds and right personnel are comparable, we still find many SMEs struggling to achieve expected growth.

3. With growth in scale of the organization, there is a substantial increase in decision making also. And if change in the process of decision making is not addressed, the organization will be in a grid lock.

4. A constant dilemma faced by SMEs is that the existing employees who are well adjusted to the conventional culture generally develop differences with the employees who are recruited from professionally driven big companies.

5. Some companies have more recently been moving in the direction of Human Resource Accounting (HRA), emphasizing the cost perspective on their human resources, and thereby having mainly a short term oriented perspective.

6. Growing small businesses need to develop their HRM practices, as increasing size inevitably brings increased complexity, necessitating a more professional approach towards managing the personnel.

7. In the new “knowledge-based” economy, as companies face the challenge of the need for more highly trained employees coupled with a shortage of qualified labour.

8. A non transparent appraisal system and subjective appraisal system drives talented employees out of an organisation depending upon the job market situation. Firms thus need to ensure objectivity and fairness in performance appraisal system to check rising attrition among their high skilled personnel.

9. One of the greatest conceptual challenges is that on one hand, businesses compete fiercely with each other within the nation and beyond, and on the other hand at the same time they would be forced to collaborate and work together than ever before to safeguard their own mutual interests to survive.

Quick Fact : Around 80% from the small enterprises and about 20% of the medium enterprises respondents indicated having no formal HR department.

– as per a survey conducted by the Confederation of Indian Industries (CII)

Critical Analysis

Most research and theory-building in HRM is associated with studies of large organizations. However, most firms in the major and developing economies employ 50 people or less. In order to analyse the nature and role of HRM in SMEs, it is necessary to analyse SMEs and their similarities as well as differences with large organizations. Some argue that small firms do not face any particular HR issues compared to large firms, but need HR to help them grow. HRD is often then translated into formal ‘enterprise training’, involving systematic instruction in business, managerial and functional skills.

However, evidence suggests that ‘enterprise training’ have often not had the impact on performance as anticipated. There is little evidence that small business-owners are particularly attracted to such training, either for themselves or their staff, and many commentators have argued that such training has often not been cost-effective, nor has it had the impacts desired. This may be due to the lack of higher education, inward looking orientation and lack of perspective of many owner managers, stress on personal independence and desire for control of entrepreneurs. Such factors may all contribute to the rejection of outside training provision.

Background of the issue

Business consultants note that modern human resource management is guided by several overriding principles. Perhaps the chief principle is a simple recognition that human resources are the most important assets of an organization; a business cannot be successful without effectively managing this resource. Another important principle, is that business success is most likely to be achieved if the personnel policies and procedures of the enterprise are closely linked with, and make a major contribution to the achievement of corporate objectives and strategic plans.

A third guiding principle, holds that it is HR’s responsibility to find, secure, guide, and develop employees whose talents and desires are compatible with the operating needs and future goals of the company. HRM is a strategic approach to the acquisition, motivation, development and management of the organization’s human resources. It is devoted to shaping an appropriate corporate culture, and introducing programs which reflect and support the core values of the enterprise and ensure its success.

Background of the solution

For whom – a multinational Life Sciences, Diagnostics & Applied Markets Enterprise (“The Enterprise”, hereon)

Total Human Capital (Global/India) – 15000+/2600+

Geographic presence (India) – 9 centers, Corporate Office at Delhi NCR

Opportunities

The Enterprise being in a challenging sector, brought us a fresh plethora of challenges. With a huge human capital comes the responsibility of micro managing each and every individuals back support. It was imperative for us to come up with a sustainable solution, to engage resources in the best manner while maintaining a fail-safe growth rate.

We set up and mobilised a Centralized and Standardized HR Shared Service Center (SSC) to scrutinize following areas :

* Recruitment Services
* Onboarding
* Helpdesk
* L&A??????
* Payroll
* Compliances

Since the role of technical analysis cannot be overlooked today, so with the aid of digital technology we arrived at a complete solution. And when it comes to analysing problems with strict accuracy, we are effectively supported by –

Client Recruitment ERP (Taleo) | Cleint ERP (PeopleSoft) | MYND HRM | MYND ESS

Our Solutions Approach

Participants in the project –

RPO Process Flow (how we solved the issue) –

Digital has given us extensive access to mediums which enabled us to research thoroughly and pick key insights vital to the growth of The Enterprise.

Website | Referrals | Social Network | Alumni Group | Head Hunting | Database Mining |Emails, to name a few.

On top of that, we made it a mandate to prepare status reports in three tiers – Weekly, Monthly and Quarterly. We could analyse opportunities and problems in a more detailed method.

We positioned HRM at The Enterprise in a way which was adaptable to changes and behaving accordingly to bring out the best result. Human resource management functions are ideally positioned near the center of the organization, with access to all areas of the business. Since the HRM department or manager is charged with managing the productivity and development of workers at all levels, human resource personnel were given unlimited access to key decision makers. In addition, the HRM department at The Enterprise was situated in such a way that it is able to effectively communicate with all areas of the company.

Conclusion

The stakes are very high in the world of business when it comes to employee recruitment and management. Before hiring a new employee, the business owner should weigh several considerations. The first step the business owner should take when pondering an expansion of employee payroll is to honestly assess the status of the organization itself. Are current employees being utilized appropriately? Are current production methods effective? Can the needs of business be met through an arrangement with an outside contractor or some other means? Are you, as the owner, spending your time appropriately?

Small business consultants strongly urge even the most modest of business enterprises to implement and document policies regarding human resource issues. To hold problems to a minimum, specific personnel policies should be established as early as possible. These become useful guides in all areas: recruitment and selection, compensation plan and employee benefits, training, promotions and terminations, and the like. In any case, a carefully considered employee handbook or personnel manual can be an invaluable tool in ensuring that the small business owner and his or her employees are on the same page.

Finally, a business owner needs to establish and maintain a productive working atmosphere for his or her work force. Employees are far more likely to be productive assets to your company if they feel that they are being treated fairly. The small business owner who clearly communicates personal expectations and company goals, provides adequate compensation, offers meaningful opportunities for career advancement, anticipates work force training and developmental needs, and provides meaningful feedback to his or her employees is far more likely to be successful than the owner who is neglectful in any of these areas.