Hiring in SME- a Catch22 situation?
Tuesday, July 14th, 2009Author : Achyut Menon
The SME sector is perhaps the true reflection of the entrepreneurial spirit of India. Unsung heroes, I term them as !! Collectively, I am sure they must be the single largest provider of jobs- much higher than the Public sector, or the MNCs-and that too despite all the treatment being meted out to them!
As a recruiter for over 16yrs now-I have had the opportunity to work across industries and across functions/levels/locations in India. SMEs typically are always short strapped in resources. Be it access to finance/working capital, or attracting the best from the talent pool.
And hence it is imperative to make every single person count-and every rupee stretch.
The plus -is that most often the experience of working closely with the promoter/founders-is very enlightening-as the passion is unbeatable.
The HR challenges
Most often the promoter/founder is a technocrat or a specialist. The qualities to run a firm successfully calls for a lot of complementary skills- which come at a premium. The SME is then forced to find short cuts-which has an impact on the systems required for a scaleable enterprise. Catch 22 situation, right?
The limited working capital-forces the organisation to take freshers and teach them-rather than pick up ready made talent from the market. Ironically, while these employees take a fair amount of time to become productive- very soon- they look at greener pastures! And so, a SME is typically a training ground -and a stepping stone for those -who dont make it into the MNCs/topnotch companies from campus!
In a vibrant economy- the SMEs have to constantly defer gratification- to plough back the gains-and grow organically-and struggle balancing between the top line and the bottom line.
The Indian society too has a mindset-that encourages youngsters to join large companies and do ‘less value added’ jobs- a call centre agent in GE or Satyam – is more glamorous than an ‘intern’ in Nanakram Bhagwandas Pvt Ltd!!
The placement cells in educational institutes too pamper ‘management trainees’ in branded MNCs than encouraging entrepreneurship and summer projects in SMEs.:-)!
Resources/tools available
While there are Chambers of commerce that do set the guidelines, of late, the online community of entrepreneurs-and service industry-have become repositories of knowledge sharing and benchmarks. Banks and financial institutions are becoming aware of the segment-and are investing in these segments.
The emergence of PE and High Networth individuals-also have contributed to some ‘mentorship’ and ‘angel funding’ in a small way.
It is suggested that SMEs create an eco-system that fosters collaboration and leveraging on the combined strengths! Stay tuned !!
About Achyut Menon
Achyut Menon is Founder, CEO of Options Executive Search Pvt Ltd, specialising in hiring "returning Indians’ for senior management positions in India.
July 14th, 2009 at 5:59 am
Interesting article on the recuirting issues in the SMBs which is true across the world. In India the ingrained preference for bigger compaines and its resultant affect on lack of good talent joining smaller companies keep them at a disadvantage to SMBs say in US and Isreal.
Also the SMB management needs to change as it needs to become more meritocrarcy driven.
Good article which covers all these issues
July 20th, 2009 at 5:02 am
I would like to reinforce that hiring a fresher to cut costs is not a practical solution. The experience personnel will be more productive to justify the higher salary. Moreover, if the experience personnel has come from a corporate, the chances are that he is growth oriented and will stick better and longer.
July 26th, 2009 at 7:46 am
Thank you Ra2212 and Ravi Chamria for the inputs.
I think the time has come for employers too-to look for innovative hiring solutions-to keep up with the times. Already, one sees the shift from ‘life time employment ‘ in the 70s and 80s to the present tendency of people working 2-3yrs with an organisation. Now, isnt it a misnomer to think of such a tenure as a ‘permanent’ job??
Any ideas?
July 29th, 2009 at 2:39 pm
One of key factors going forward will be SMEs using technology to hire more temps. Success of companies like Teamlease in India has shown that temps work and now the key is if SMEs can use them in a productive way.
Also can SMEs use web platforms to hire temps not just in India but remotely also saying in ares like marketing and design . If a company is trying to expand in China for export if it can hire a local person to design marketing collateral etc it can help them a lot.
You can even write an article on this topic also down the line!!