5 Reasons Why Every SME Should Have An HR In Its Setup


We all know, that Small & Medium Enterprises are playing an instrumental role in strengthening our country’s economic figures. According to the estimates of the Ministry of SMEs, the sector creates more job opportunities both in rural and urban parts of the country. Our experience indicates that this sector is heavily grappling with inherent challenges related to people and culture. There is a huge disparity in job and skill matching which leads to wrong hiring and ultimately drains the pricey resources i.e. “FUNDS”.

The irony is that a recent survey of Confederation of Indian Industries has found out that 20% of Medium and 80% of small-sized business have no HR Department. One reason for this is that a full-time resource would be perceived as costly or unproductive.


Here are 5 main reasons which will help you understand how this Department or an HR person could be an asset and not a liability for the organization:


  • Setting the right Organisation Culture


HR creates a platform which will give an opportunity for employees to learn and use their full potential to create the most positive and performance-oriented culture. A culture of safety, integrity, and recognition is always valued by the employees and helps the Organisation in achieving its goals.


  • Selecting the ‘Right Fit’ (talent) for the organization


HR works on processes like Job Description, KRA and KPIs to ensure correct hiring. This will support the organization to get the right talent, right skill, and right knowledge to support the financial growth of the Organization


  • Working as a Business Partner


HR supports Senior Management to manage and retain talent, manage organizational change transition, support in making strong decisions in deciding on various business operating models and create ‘a great place to work in’.


  • Ensuring Statutory Compliance across the Organisation


HR manages statutory compliance for the Company on for full time/contract employees, wage & salary Administration, Temporary appointment/appointment for fixed period, managed contract workers union matter, meeting with State / Central government authorities, managing Annual returns under the various actors, Online Challan Submission pertaining to PF, ESI etc.


  • Conducting a robust Employee Engagement and retention program for motivation


HR formulates a personalized reward and engagement program which will help the organization to retain employees and motivate employees for better productivity.


It is high time for Small and Medium Enterprises in India to realize that they are no more an enterprise, but an ‘organization’ which cares for its employees and also take the lead to set the HR department and understand its value which will help with better hiring, increase in productivity and drive the overall success of the organization.

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