HR Challenges for MSMEs

Swati Chaudhary has spent over 4 years in the Digital Marketing Industry and has written numerous content pieces, covering domains such as technology/software, education, entertainment & news. Currently working with CareerBuilder India, she now helps job aspirants solve their career-related issues. Connect with her on Twitter: @iSwatiChaudhary

In the previous part of this series ‘10 HR Challenges Faced by the Indian MSMEs’ – Part 1, we came across the vital role of MSME domain in the Indian economy and how it had empowered India with sustainable industrial growth.

We also discussed negligible presence of HR processes in the Micro, Small and Medium Enterprise domain and highlighted why it should be a key area of focus for the same.

HR Challenges for MSMEs
The Growing Challenge for MSMEs

In order to improve the overall productivity, workforce management abilities, employee performance, etc. MSMEs need to focus on the following HR issues that we already discussed in the previous part.

  • Recruitment
  • Retention
  • Employee Motivation
  • Job Security

Now let’s begin with the remaining 6 HR challenges faced by Indian MSMEs, currently.

  1. Empowerment

Empowerment enables employees with decision-making ability at a micro level, authority and enables them to align their work with organizational goals. Empowered employees have the ability and freedom to take certain decisions and act upon them to get the work done.

Creating empowered atmosphere within the organization that creates a cohesive framework for organization and enable them to think about organizational benefit is the key challenge for most of the employers.

How to Empower an Employee in MSMEs – Focus Points

  • Communicate values, goals and mission of the company clearly and enable employees with a clear vision of their future with the firm.
  • Help employees in upgrading relevant skills.
  • Support your employees in their decision-making and appreciate their efforts.
  • Provide a regular, constructive feedback by creating a communication street amongst management and workers.
  1. Employee Engagement
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Factors such as resource scarcity, intense competition, demanding customers cause a severe effect on productivity and functions of MSMEs. In this challenging era, it has become important for MSMEs to have a workforce which is emotionally engaged and passionate.

How to Improve Employee Engagement in MSMEs – Innovative Practices in Focus

  • Employee Recognition and Rewards
  • Celebrations
  • Open Door Policies
  • Recreational Facilities
  • Fringe Benefits
  • Suggestion Box
  1. Workforce Diversity

In today’s globalized era, everything is a part of the worldwide economy and so is the interaction among people. With increased cultural exchange among corporates worldwide, HR team has come across a new responsibility – development of a cohesive environment that uplifts cultural diversity within the organization.

With increased diversity, human resource professionals needs to deal effectively with issues such as communication, adaptability and change. Working together with global workforce is another challenge faced by the organizations today.

How to Create a Cohesive Work Ecosystem in MSMEs – Focus Points

  • Organize frequent cultural diversity training programs.
  • Team building seminars and workshops to uplift cultural diversity at work.
  • Educate existing workforce the benefits of having a multi-cultural work environment.
  1. Performance Management

Gone are the days of annual employee performance evaluation programs. Today, companies are revamping their performance management strategies keeping employee satisfaction as their major goal. Annual performance reviews are one of the major reasons for disengaged employees in a firm. 21st-century performance management is all about engaging employees with one-to-one performance conversation and feedbacks.

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How to Enhance Performance Management in MSMEs – Focus Points

  • One-to-One performance conversations & regular feedback policies.
  • Creating and evaluating near-term objectives.
  • Regular update, recognition and rewards over goal fulfillment.
  • More focus on skill development.
  • Creating an online system for performance evaluation process.
  1. Training & Development

As per several market surveys, it’s evident that only 32% companies offer on and off job training to their employees, especially for technical jobs. Unskilled employees are biggest threat to organizational productivity and increases overall HR cost on the whole.

With changing consumer need and market trends, training and skill development should be the prime focus for companies. Employee development programs are pivotal for organization’s growth and major element for employee engagement.

How to Enhance Training & Development in MSMEs – Focus Points

  • Provide support for skill development.
  • Conduct regular training sessions and personality development programs.
  • Align employee’s interest/skills with companies need for maximum benefit.
  1. Compensation & Benefits

It is learned that around 66% of the companies do not follow any kind of manpower planning or a transparent incentive scheme/program.

A clear employee benefits program administrated via a permanent and transparent evaluation system develops a trustable relationship among management and employees. Incentives are great motivators for employees and creating a transparent system for the same creates trustable relation among workers and management.

Today, MSME sector constitutes over 40% industrial share, formalization of human resource management is a major challenge. While MNCs have a structured HR systems and processes in place, the situation is contradicting in the Micro, Small and Medium enterprise sector. In this rapidly changing business world, it has now become important for MSMEs to understand the importance of an organized HR system, recruiting technologies and adapt them systematically. A systematic HR function empowers organization with productive employees, profits and competitive edge in the market.

Hope you enjoyed reading the blog, to share your valuable feedback, connect with me at@iSwatiChaudhary

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