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

The ‘Heart of Indian Industrial Sector’ MSME (Micro, Small and Medium Enterprises) – hires over 40% of the country’s workforce. After agriculture, this sector is the key employer for low-skilled workers in the country. . Apart from uplifting rural areas via industrialization, MSMEs also empowers country in reducing regional imbalances by assuring equitable distribution of national income and wealth.

MSME contribute over 8% of the country’s GDP, 45% of the manufacturing output and 40% of total industrial export. One of the highly vibrant and dynamic sectors of India, MSME is contributing enormously to the socio-economic development of the country.

The key to sustainable development in India, MSMEs are more focused to day-to-day business operations and find less time to manage the HR process, which is also considered a non-priority task by this industry. As Indian business domain changes its course prioritizing human resource management as a critical factor for business development, could negligence to the same cause alarming risk for MSMEs?

Most of the time, HR practices are considered unresponsive, time-consuming and a non-priority task by the MSMEs. However to enhance overall performance, MSMEs need to enhance competitiveness via better human resource management practices of recruitment, selection, training and compensation.

In this blog, let’s focus on ‘how MSMEs can improve different HR functions’ and enhance their human capital return by embedding a strategic HR process.

HR Challenges of Indian MSMEs
The Growing Challenge for MSMEs
  1. Recruitment
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In today’s flourishing global economy, the secret of an organization’s success is directly proportional to employee’s integral growth. With MSME’s struggling to fill the talent gap, identify right talent, find skilled workforce and retain their key talent, talent crunch is becoming a big challenge for this sector.

How to Improve Hiring in MSMEs – Focus Points

  • Decide on required skill, knowledge and experience that business needs to fill a specific job role.
  • Always create a job description and specification outlining skills and experienced required for the job.
  • Do not restrict anyone from applying on the basis of belief, gender, sexual orientation, age or disability.
  • Avoid ‘Word of Mouth’ recruitment process. Focus more on other advertising methods such as online job portals, national/local community center/newspaper, schools, colleges etc.
  • Restrict your personal values, attitude and belief, while hiring.
  1. Retention

As per the Wall Street Journal (2012), “MSME must recruit and select the best talent where they have openings and upgrade the talent in areas where it will advantage the business. It is necessary for the MSME to take a step back and evaluate workforce plans, as well as talent acquisition processes and enabling technology and determine a strategy that works for the organization in the retention process.”

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Retention is a major challenge faced by Indian MSMEs, currently. Competitive salary package, lack of infrastructure & technology, less compensation, etc. maximize existing retention issues.

How to Improve Retention in MSMEs – Focus Points

  • Develop a competitive benefits package that satisfies employee needs and expectations.
  • Motivate and reward employees through contests and incentives.
  • Create a trustable two-way communication street amongst employees and management.
  • Foster employee development programs and help them visualize a clear career path.
  • Develop a regular skilling, feedback session for employees.
  • Focus on conducting exit interviews to pinpoint pain areas and create policies to amend them without hampering organizational goals.
  1. Motivation

Lack of motivated workforce is a major management deficiency and also one of the prime factors that affect the growth of an organization. Keeping employees satisfied with the job is another major task of the human resource management professionals in the MSMEs.

Since, financial benefits of Micro, Small and Medium Enterprises are not as competitive as larger firms, heart of motivation for MSMEs lies in a smooth and harmonious working and personal relationship among employees. HRs in MSMEs must focus on mentoring, encouraging and fostering a good working relationship among peers to keep them motivated throughout.

  1. Job Security

Employees always want to have a ‘Secure Job’. Providing ‘Job Security’ automatically reduces retention rate of an organization. Making people love their job and providing them the required psychological ratification is another challenge for an HR.

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How to Improve ‘Job Security’ in MSMEs – Focus Points

  • Create a work environment which provides every employee an opportunity to deliver their 100%.
  • Think of innovative ways to make the job interesting.
  • Recognize employee’s true passion and align them with organizational goals.
  • Reward best performances.
  • Enlist individual accomplishments and use them to train/advise the rest of the workforce.

We will talk about remaining 6 HR Challenges of the in the coming series: Click Here to Read More

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

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