What you are about to read is a shocker! According to a survey, 20% of medium and 80% of small-sized businesses have no HR departments. Yes, you read that right. It is not possible to implement people-related processes and policies without an HR function. There are two most important reasons for the lack of an HR department in SME’s/Startups.
First, SME’s/Startups are more growth-oriented. When the companies are at the startup stage, all their objective is how to grow first to be sustainable and reach a bigger scale of business. So, human resource is not a priority.
Secondly, SME’s/Startups operate under budget constraint and perceive having a proper HR department as an expensive burden on their company’s budget. As many SME’s/Startups have smaller teams, promoters end up managing the HR functions themselves to save cost, rather creating more HR issues. So, the promoter’s culture, value system etc. become SME’s/Startups culture and when the organizations grow with culture-related issues and no one there to handle these. This leads to a lot of politics as when people do not know where to bring their grievances, they start talking to each other. The recruitments, the appraisals, and promotions, exits etc. are very subjective.
SME’s/Startups that think HR is just another administrative function, need to correct their perspective. Organizations must include an HR system right in the planning stage and build various people related practices like talent management, engagement, policies related to compensation and benefits. A proper HR function with manual sets standards that help SME’S/STARTUPS to take objective decisions related to people’s recruitment, job responsibilities, remuneration, promotion, attrition, company’s stand in case of difficult situations.
SME’s/Startups Organizations should consider human talent more as a long-term investment and not immediate ROI. It takes time for a plant to grow into a fruitful tree. There is no other alternative than to have a pool of skilled employees. It is better to employ one employee with good skill sets at industry competitive salary than to have 2 -3 employees with lower skill sets.
SME’s/Startups need to articulate long-term organizational HR objective for achieving the desired culture and should have a structured plan to get there. HR, in turn, can play a significant role to keep the culture by laying the standards and keeping everyone informed, engaged, and involved. HR can run several initiatives to connect everyone through various platforms – Outdoor sports & picnics, Intra office blogging, social media campaign, coffee mornings where people can share their stories of gratitude towards the organization and fellow employees. In fact, many SME’s/Startups are working towards growing bonding among employees and making the employees feel like the part of a family.
SME’s/Startups should couple their equitable pay grade for employees with other intangible factors for retaining their employees. The consistent compensation package, job security, employee growth progression plan, employee care and bonding, workplace comfort, inclusive growth are some of the important factors why employees stick to the same organization for long. In addition to this, how the company behaves with the exiting employees cast an impression on those still inside. SME’s/Startups need to have a more professional approach towards those who choose to leave and treat them with equal respect. This will build a culture of mutual respect within the organization too.
More founders need to recognize these challenges that HR and their SME’s/Startups can work in tandem to solve and create HR healthy enterprises.