HR tips for Small and Medium Enterprises

Human Resource Management (HRM) is essential for the Small and Medium Enterprises (SMEs). But, what is the right path for the HRM systems in an organisation? Due to lack of awareness and expertise, SMEs tend to make a lot of avoidable mistakes related to HRM.

One of the major challenges face by an SME is a lack of a dedicated HR manager. An SME may have less than 10 employees on its rolls in its initial stages and it doesn’t make financial sense to hire a full time HR manager. In this scenario, one of the founders or partners is forced to don the hat of a HR manager though s/he may not be a qualified in Human Resource Management. There are no clearly written HR policies for a company in its nascent stages of growth.

As the company grows, more number of people are recruited and when it becomes difficult for the founder or part time HR manager to handle the activities, the company considers bringing in a full-time HR manager. The new HR manager faces a huge task of creating HR policies for the company from scratch which may or may not be acceptable to employees who are used to working without any set guidelines.

Therefore, it is very important for an SME or start-up to ensure that there HR policies are properly laid down from the beginning.

Here are a few tips to manage HR better:

Focus on the employees: The most important asset for any organisation is its employees. If the organisation is able to hire, develop and retain the talent through its HR policies, then the business is bound to be a success. The first step is to attract the best candidates to join the organisation and hire the right kind of talent. For a small company or a start-up, it may be difficult to convince prospective employees of the stability of the company and its ability to pay salaries. Many companies offer stock options to attract talent and also ensure loyalty, because the new employees know that they stand to benefit if the company succeeds and will work harder and take ownership of the tasks assigned to them.

Setting of milestones and targets: At the time of joining, the employees should be imparted a proper understanding of the nature of business and working style of organisation along with the job description, expectations and key milestones. The performance of employees should be evaluated on periodic basis in a fair and transparent manner. To retain the employees, engagement methods should be deployed like personalized incentives or rewards for milestones or varying roles, etc. It is also important to constantly impart training and help in upgrading the skills of employees. It not only helps the employees, but also the company in moving forward on the path of success. An SME can benefit a lot from using a cloud based tool like SAP Jam for its on-boarding and employee collaboration, which will require very less initial expenditure and also help in scaling up as the company grows.

Identify, document and comply with all HR related laws:
There are a plethora of rules and regulations that apply to the employees, and are mandatory for the employer to comply with. In case of non-compliance, it may lead to huge fines and penalties in terms of lawsuit costs and even punishments. It is imperative to first check that what are the laws (rules, regulations, notifications, state laws, amendments, etc.), which are applicable to the particular business and territory that must be complied with in respect of employees. Once identified, necessary action should be taken to analyse, understand and comply with the requirements. The taxation related essentials like PF and income tax. should be documented and recorded properly.

Employee data management:
It is crucial that all the records of employees are maintained in organised, accurate and confidential manner. Ideally, the organisation should create a master personnel file of all employees and all confidential data, which should be marked appropriately, stored and backed up securely. The details of the employee files should be properly documented so that they can be recovered in case of any data loss and also ensures smooth transition between payroll personnel.

Create and circulate corporate policies:
It is a good idea to formulate and employee handbook and corporate policies on subject matters related to employees like, leaves, rewards, appraisal system, career planning, loans, etc. This helps in imparting clarity and training to the employees. It is also a good step towards maintaining good employee relations and will help in attracting new candidates and retaining the current employees. Such initiative will help in creating an employee-friendly culture in the organisation.


Ex-IT professional who has also worked as a search engine evaluator and a social media evaluator. Have a certification in Digital marketing from NMIMS and am working as a freelance consultant in SEO, content management and online marketing

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