Role of Human Resources in MSMEs in India

Dr Rajesh Mohan Rai

Dr Rajesh Mohan Rai

New Delhi/ 17th September 2020: MSMEs, substantial contributor to India’s GDP,   which employs 40% of country’s workforce, pay less attention to human resource management  and put more attention on day to day business operations.  On one hand, the rise of skill based economy increases the importance of human resource management function while on the other hand it is ignored by MSMEs.  HR is not core for these small firms however, as the size of firm increases human resources becomes important and to change the level of dimension it becomes necessary also.

The other side of the spectrum is that even if the MSMEs want to give due importance to the Human Resources, are unable to attract the right talent to manage the function who could lead the organization, on account of lack of BRAND PULL of the organization.  The adventurous HR Professionals are also not willing to join these MSMEs as they are not sure of two things one meddling by the owner  and level of empowerment to the  function.

MSMEs nowadays face the double challenge of resource constraints on one hand and the requirement of highly trained employees on the other. External uncertainty, the typical characteristic of MSMEs, adds up to the woes. This cumulates the need for effective HR practices in small firms. Small firms are also considered as less specialised than large and HR practices are still considered to be emergent rather than fully developed because relatively little focus has actually been placed on the HR Practices.

Human Resource Management (HRM) is best considered as range of policies which have strategic significance for any organisation. HRM is typically used to facilitate integration, Employee Engagement, flexibility, and quality of work life as well as meeting broader business goals like changing organisation values, productivity and delivery mechanism. Nowadays, irrespective of small or large organisation, as technology and capital has become commodity in the market, the only thing left really to distinguish firms are skills in managing human resources and that is on which an organisation can gain competitive advantage.

This competitive advantage gained can be taken benefit of  when the  business leader/owner accepts the significance of the Human Resources. The Business Owners in the MSME domain needs the help of an expert in the HR Function to prepare the entire organization for a LEAP to the next level.  The HR function is the custodian of the various strategic interventions required like the Leadership Alignment, Making the Organization Structure scalable, building and Establishing  and implementing a Performance driven culture, putting succession plan in place so that the organization is always ready to put the most suitable employees in key roles  and thus creating an engaged organization where employees are Contributing and Satisfied at the highest level.

HR is not anymore a nice to have function. It is not anymore a function that tries to keep employees somehow happy. It is not anymore payroll and attendance management. It is becoming strategic to get the best people to help company achieve its goal.

HR is strategic regardless of sector and segment of MSME.

The success mantra for any MSME is to attract the RIGHT Human Resources

The Author is HR Strategist, Business Coach & Facilitator

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