Smart Scaling HR Strategies for SMEs: Balancing Automation and the Human Touch
The world of HR in SMEs is evolving rapidly. While growth is a priority, scaling HR operations efficiently remains a significant challenge. How can small and medium enterprises optimise recruitment, streamline HR processes, and ensure compliance—all while preserving the human touch?
These pressing questions were front and centre in a compelling conversation featuring Balaji K. S., a global HR and operations head, and Rashmi Agarwal, co-founder and COO of HRStop. Hosted by People Matters in partnership with HRStop, the session explored what it truly takes to scale HR functions intelligently, combining tech-driven efficiency with cultural depth.
The dialogue unpacked common hurdles faced by SMEs, from compliance bottlenecks and employee retention struggles to burnout risks driven by manual processes. Balaji and Rashmi examined how a shift in mindset, coupled with the right technology, can enable HR teams to work smarter, not harder.
Mindset shift: Embracing automation for growth
A critical barrier for SMEs is the hesitation to adopt automation. Balaji noted that automation is not just about software or platforms; it begins with rethinking priorities and building a culture that values efficiency and growth. Without this internal shift, even the best tools fail to deliver long-term value.
Rashmi Agarwal, drawing on her experience building HRStop as a platform that simplifies and humanises HR workflows, illustrated this mindset shift with a sharp, memorable analogy:
“Technology empowers, not replaces. If you want to stay relevant with respect to how the world is changing, we cannot be thinking of using bullock carts anymore.”
She added that automation should be intuitive, not intimidating. When thoughtfully implemented, it can free HR professionals from repetitive tasks and allow them to focus on more meaningful, people-first interactions. She shared a case study from a hospitality company in the Middle East that digitised its onboarding and payroll systems using HRStop, cutting down over 1,000 manual hours to under two per month, freeing HR professionals to focus on strategic, people-centric tasks.
Leveraging technology to navigate SME challenges
Technology is no longer a luxury for SMEs; it is foundational. From navigating regulatory complexities to meeting the expectations of a multi-generational workforce, HR leaders are under pressure to do more with less. Balaji pointed out that AI-powered tools can simplify compliance, speed up onboarding, and ensure administrative consistency.
However, he cautioned that tech adoption should not be reactive. "Start with the problem, not the product," he emphasised, encouraging SMEs to align tech investments with their most urgent pain points.
Rashmi elaborated on the importance of prioritising automation, delegation, and optimisation in HR playbooks. By automating repetitive tasks, delegating responsibilities effectively, and optimising processes, SMEs can mitigate burnout and create a more agile workforce.
The human element: Ensuring technology enhances, not replaces
While technology has revolutionised HR, its real power lies in enabling, rather than replacing, human connection. Balaji stressed this point, grounding it in a broader organisational truth: “If customer experience is going to be the buzzword, then people experience is equally important. If you have the right people and they are happy, they are going to make your customers invariably happy.”
This sentiment hits home for many SMEs, where culture is often built informally, through relationships and proximity. As remote and hybrid models grow, HR leaders face a new challenge: how to maintain a strong sense of belonging and engagement in increasingly distributed teams.
For Balaji, the answer lies in intentional, in-person conversations and spontaneous check-ins that go beyond performance metrics. These foster psychological safety, deepen trust, and make employees feel truly seen—something no algorithm can replicate.
Rashmi summed it up perfectly: “Good tech gives you insights – like spotting early signs of burnout or disengagement. Great tech gives you time – time to listen, support, and lead with empathy.”
This isn’t just about productivity. It’s about freeing up emotional bandwidth. When the admin load is reduced, HR teams can focus on what matters most – being present for people, guiding first-time managers, or simply checking in when someone needs it.
By adopting intuitive tools and avoiding over-automation, SMEs can ensure technology amplifies the human side of work, not replaces it.
Tackling toxicity with empathy, structure and leadership
Workplace toxicity rarely appears overnight. It simmers under the surface, fuelled by miscommunication, micromanagement, and unchecked stress. Balaji identified a lack of transparency and overly rigid leadership as common triggers, saying, “You should be an enabler. You should ensure that your team is comfortable asking you any questions, understanding the objective, and discussing it openly.”
Rashmi built on this by breaking down three core drivers of toxic environments: unstructured processes, poor mindset, and lack of the right tools. She argued that leaders must take responsibility for cultivating a culture of feedback and empathy.
Her approach at HRStop has been to build systems that offer structure without rigidity, tools that prompt meaningful feedback, encourage reflection, and equip managers to lead with insight.
Proactive tools like regular one-on-ones, employee sentiment trackers, and manager capability-building programs can create early visibility into issues before they fester. But tech alone isn’t the solution; it’s the commitment to listen, understand, and act that truly turns culture around.
The future of SME HR lies in balance
The conversation concluded with a unifying message: for SMEs, sustainable HR growth lies in balance. Tools like AI and automation can improve precision and scale, but without empathy, intention, and cultural alignment, their impact is short-lived.
By cultivating the right mindset, adopting intuitive technologies, and never losing sight of the human experience, SMEs can build future-ready HR functions that empower both people and performance.