Challenges Faced by SMEs and Contrivance of HR policies

What is HR policy?

HR policies are the company’s guidelines that stipulate a strategy for developing, communicating, and enforcing a set of practices that ensures the company’s standards. HR policies are drafted in accordance with the company’s objectives as well as the business ethics complying with all local government protocols for.

Following are list of important HR policies and procedures that need to be followed by companies in India-

Anti-discrimination policy
Child Labour policy
Code of ethics policy
Company leave policy
Company new hire or onboarding policy
Company overtime policy
Conflict of interest policy
Consequence management guidelines
Corporate social responsibility policy
Domestic travel policy
Employee benefits and perks policy
Employee code of conduct policy
Employee compensation and development policy
Employee confidentiality guidelines
Employee exit interview policy
Employee relationships in the workplace
Employee resignation and termination policy
Employee training and development policy
Employee welfare policy
Employee wellness program policy
Equal opportunity employer policy
Grievance procedure company policy
Healthy canteen policy
Moonlighting policy
Occupational / workplace health and safety policy
Payroll management guidelines
Sexual harassment of women at workplace policy
Time & attendance guidelines
Working hours, paid time off and vacation policy
Workplace health & safety policy,
So on…

Common HR Challenges faced by SMEs

SME (Small-Medium Enterprise) sector has been playing a significant role in strengthening country’s economic progress and international standing. The sector has been instrumental in generating millions of jobs, promoting industrial development in rural areas, production of diverse range of products. Hence, SMEs are required to work on their internal structure, processes and practices to continue their journey of growth. But SMEs are still grappling with some of the inherent challenges related to people and culture which must be essentially addressed by the HR leaders. Enlisting some such challenges are-

Lack of HR Department in SMEs

Research says that many of SMEs have no HR departments. This is surprising as without a proper functioning HR department, implementing various people-related processes and policies would be difficult. There can be many reasons for the absence or lack of HR departments in SMEs.

SMEs are mostly work on a constricted budget and focus more on the growth only. So, having a fully functioning HR department can be apparent as a costly activity to be carried out for a small enterprise. Secondly,
Many SME founders think that their teams are currently too small for an intricate HR system and most of the HR activities can be managed like that. However, it is desirable to build an HR system right from the start so that various people related practices like talent management, engagement, policies related to compensation and benefits can be arranged. Well-arranged HR practices help in removing various uncertainties related to individual job and role in the organization and thus help in improving employees’ motivation and control attrition rates.

Managing Talent

Managing talent in SMEs is another vast challenge for them because-

Recruiting the right talent has appeared as one of the top HR challenges which has to face in daily operations. Aggressive competition, limited pool of qualified candidates and at times inability to offer a competitive salary are some of the top recruitment constraints.
To succeed in current scenario, organizations need to have a pool of skilled labour. Large organizations are making concerted efforts to assess and upskill their talent by fastening in expert external vendors to assess and deliver various training programs. However, for SMEs, relying on external vendors is not always possible mainly due to budget constraints. Therefore, they are mostly conducting on-the-job or in-house training programs which might or might not be that effective.

Performance appraisals System

Performance appraisals are often not very structured in SMEs mainly because other structures like competency framework, values, job description for different roles are not that well defined. Besides, managers are mostly occupied and are not trained to manage difficult performance conversations. Since SMEs are mostly focused towards growth and scale, the process of appraisal somehow gets neglected. This comes as an immense challenge and frustration for HR managers who are considered as the process owners of such systems that don’t have requisite resources and manage out.

Retention

In SMEs, retaining employees are also becoming a challenge. Mostly of the employees associated with functional parts such as technical & the field sales people. This class is highly wandering and change jobs frequently and may even leave without a prior notice. It becomes a big challenge for the HR to fill vacant positions at a short notice. Instead, at senior and middle levels, where attrition is relatively low, HR needs to mainly focus on keeping employees engaged. Undistinguishable role definitions, lack of career path or any perceived unfairness in the system can generate thoughts of attrition among these employees. As an HR manager, one has to be really aware of employees’ engagement levels and their retention drivers.

Raising the Outline of HR

SME founders often overlook the strategic side of the HR and mostly view it as another managerial- admin function bearing no direct impact on the business. In such scenarios, it becomes increasingly challenging for the HR to propose or initiate any organization-wide change. It has become imperative for the HR managers to break this mould and raise their profile to become more of a strategic partner who is able to demonstrate the direct worth of HR initiatives on the business. In this era of technological interruption, there are adequate of opportunities available to the HR managers, for an instance, they can influence on rich people-related data which the business can use to observe various trends i.e. tracking attrition, increasing engagement etc.

Sustaining the spirit of entrepreneurial culture

Full with ambitions, expectations and immense potential, SMEs in their initial days usually carry a culture which is enjoyable, energetic, fast-moving and entrepreneurial in nature. It is mostly comprised of new team members who work very closely with each other and interact with seniors and founders more frequently. But once the business starts growing and becomes mature, it inclines to lose its original entrepreneurial spirit. For such scenarios extant the possibilities of people feeling less valued and less rooted in the system, concrete way for disenchantment and eventual attrition. Here, HR can play a significant role and maintain the culture by keeping everyone informed, involved and engaged. HR can influence on social platform to communicate about the critical developments in the organization, share success stories, and even listen to employees’ grievances. Such efforts will help keep everyone connected, especially during the trial times when employees feel disengaged.

Line up Values

Another important challenge which HR managers face in SMEs is to ensure that the values of the founders are united with that of all employee group. Misalignment habitually happens when people from outside and bring different set of values. This will stand in direct conflict with that of founders and both the parties are rigid enough to unlearn and embrace what is best for the enterprise. In such challenging situation, HR needs to play a serious role by creating awareness amongst decision makers about the need for change. Transparent communication between both the parties can bond the gap.

HR Solution

As HR solutions, firstly, outsourcing HR through a professional employer organization like Novark Services can help small businesses to save time and money, while allowing to focus on growing business areas. Novark Services provides comprehensive HR services, including payroll administration, risk management, employee benefit, and many more supports. Additionally, Novark Services can perform HR audits to help business improve HR functions in a turnaround time. Secondly, find India’s best HR Toolkit provided by Novark Services for getting ready to use a guide & templates to give an appropriate form. It is the best in class item that sets things accurate. This toolkit is the large compilation of all the compulsory HR management documents, worksheets, HR policies and more. It has been created and designed by the highly experienced professional HRs of various domains as well as experiences statutory practitioners. Novark’s HR Policies can be used by any small, medium or large business owner who employ people in their business. Using these HR policies helps SMEs to establish a strong structure and basic rules that helps to comply legal obligation.