People resources – How critical are they for MSMEs?
One HR expert in MSME consulting said, “It’s time to set up a people strategy. It’s also important to professionalize the SME’s people resource management.”
People resources and talent management are the key improvement areas that echoed when we spoke to MSME and HR experts as part of our MSME connect.
There are many opportunities for SME business owners to grow at an accelerated speed. Also, the founders and CEOs believe people resource is critical for MSME growth. Indeed, there are ways to build a resilient organization.
It should be capable of tackling the potential challenges of the future. Also, it helps companies take advantage of various upcoming opportunities and grow faster.
India aims to become a five trillion-dollar economy. Thus, the government declared various schemes to enhance business in India. Some of them are the Make in India, PLI schemes, and Export support programs.
Talent Advisory and Solutions: How would SMEs build on this opportunity?
There’s recent research on the SME sector revealed an interesting trend. Some business owners are introducing their next generation to drive the business. Likewise, many MSME organizations are strengthening their management teams and hiring more professionals.
A new breed of promoters (new generation) will likely take over the SME business. They are from the promoter family members and hold higher education. Indeed, many have global education too.
So how do people as a resource translate on the ground for SMEs?
Several new ideas are surfacing among promoter management or their boards. These include discussions about future strategies. In addition, global education has given young entrepreneurs exposure to contemporary management education. Indeed, the new generation of promoters wants to apply these best practices.
Besides, several may have exposure to global corporates or friends too. Of course, those working in such corporations are happy to lend a helping hand. With such changing management dynamics, strategy is now a consideration.
Indeed, there are SME expert consultants involved in end-to-end business strategy development. They can help to maximize and leverage future opportunities.
How is this transition going to happen?
If an SME owner wants to grow and expand the business, focusing on people resources is a must. Even while setting up any new facilities, there’s a need for skilled people resources. Indeed, it’s a need for people with managerial and technical skills. Thus, improving the talent pool and making it robust is a must!
Earlier, the long-term promoters were family members or close associates. Indeed, they belong to the same community and have a stable set of people working with them.
In addition, they have got deep internal know-how supporting various businesses. But, SMEs need help attracting and retaining talent. But that’s the challenge they face in an industry with expanding opportunities.
Importance of People Resources: A used case example
Let’s take an example of a large distributor organization (SME). They need help keeping a trained sales force. Indeed, they find hiring and training a new sales team challenging. Another SME finds that they need someone at the next leadership level. In addition, they believe that young promoters need more bandwidth to manage their current business.
As a result, they need to focus on the strategic aspects of growing the company to the next level. Thus, SMEs need to drive the Quality, Cost, and Delivery metrics. Indeed, they can leverage the People, Process, Technology, and Interaction model.
Another research data says that SMEs realize the importance of digitalization. But, they need to learn how to implement a digital transformation model. It’s still under consideration for many small and mid-sized companies.
One prime reason is they need skilled people to manage the new system and process. So despite the industrial and technological advancement, the key to success is still People.
Some questions to ponder over are:
- Who is better than the new founders to understand this critical resource?
- Who will bring the thought process on strategy development and implementation?
- Whom you’ve identified will help select Technology and help it deploy and run?
- Who will ensure that processes are well-defined and integrated with Technology?
- Finally, who will develop the business and drive serving customers?
The answer to the above and many such questions is, Of course: PEOPLE.
The People and Talent element is no longer a “given” and “not so obvious” factor. Instead, it is a USP that many medium size companies have now understood and are leveraging.
One easy way for SMEs is to approach an expert mentor or strategic consulting company. Then, of course, they can help small and mid-sized businesses to grow faster.
Ten Best Fail-Proof Practices for SMEs to implement in the People space
Here are some best practices that successful SMEs have already implemented. Indeed, they have also started winning businesses and markets. So, let’s learn the strategies.
- Focus on People resources and people as a critical business strategy element. Develop HR metrics, policies, and processes to help the company achieve business goals. Otherwise, take help from mentoring companies offering HR-in-A-Box solutions.
- Have a dedicated Business Head to look at the people resources and requirements. Then put them in place. Thus, many SMEs consider virtual CHROs to develop fit-for-purpose HR teams. Generally, it’s with medium- and long-term HR plans.
- Have a talent strategy supported by well-defined processes and tools. It should consider all relevant aspects of the HR lifecycle and people resources. Like, as hiring talent, OKR setting, performance management, goal setting, and others. A robust HR-in-A-Box strategy also considers employee benefits, well-being, training, and development.
- If the SME is a corporate vendor, align policies and processes. Then, quickly put in place the best practices according to their expectations.
- Focus on talent acquisition and retention. But, again, it’s possible by empowering professional leaders with clear responsibility and accountability.
- Partnering with management and technical institutes to hire professionals trained in functional-specific competencies (sales, marketing, HR, technical, etc.). Attract and test such capabilities by offering paid internships during their curriculum.
- Have a Compensation strategy that rewards and recognizes performance. Indeed, it should link with company fortunes (e.g., ESOP).
- Professionally handle People’s issues with complete transparency.
- Have an HR framework to build deep relationships with professionals. It should be like one the founder or promoter implemented in the early days.
- Implementation of simple but integrated HR tools to automate HR processes.
Do you think it’s an overwhelming talk? Don’t worry!