India's MSME sector has been the engine of economic growth for several decades. The MSMEs' success depends on their ability to attract, retain, and develop talent, but they face many obstacles when it comes to people management because of lack of resources, and deficient HR management.
Adding to the challenge is the fact that over 93% of MSME (micro, small and medium enterprises) entrepreneurs have a limited or zero knowledge of even the very role of human resources (HR) in their successful functioning, reveals a study by business consulting firm Stratefix Consulting, which helps MSMEs strategise solutions for growth and scale.
The survey of over 1,000 entrepreneurs/leaders of MSME companies was conducted to gauge what MSME enterprises understand about the HR department’s role in an organisation and how they perceive its role in company growth.
A deeper analysis of the responses of MSME leaders and entrepreneurs revealed that 67 % of respondents think that HR is only responsible for recruiting employees.
Over half 54% of respondents opined that staff training is the second most important role of HR while 34% of business owners believe HR's primary role is to increase employee efficiency.
In 20% of cases, business people were not clear about the exact role of HR.
According to only 15%, HR has two "important" roles - resolving employee grievances and handling benefits, says the study.
Furthermore, nearly 71% of MSME business owners believe HR departments are more about employees' interests and less inclined towards the company and 58% of company owners say the HR department does not need information on the company's financial statistics.
The goal of setting up an HR department is only realised by 33% of business people and a very small percentage of the respondents believe that HR contributes to the success or failure of their company, whether in good times or bad times.
“Until recently, HR was considered a peripheral function to most small business owners. They were ignorant of this function and its necessity as most of them had completed their education before HR became mainstream, leaving them unaware of its importance.
Aside from the salary, employees are attracted to the facilities available, the culture of having fun at work, and their favourite roles in the organisation. Employees' expectations from a company have also changed over the past few years. Furthermore, employees rely heavily on growth not only in the present, but also in the future. HR plays an important role in managing all of this,” said Chirag Patel, co-founder of Stratefix Consulting.