The Human Factor

The Human Factor

HR is on slippery grounds in micro, small and medium-sized enterprises, and that is a shame!

Businesses tend to move on from labour-intensive processes to knowledge-intensive activities. Even in traditional industries – where physical labour, manufacturing or factory assembly takes precedence – we have witnessed a gradual but sure migration towards distillation of the key knowledge involved in the procedures, and converting them through appropriate use of technology to processes that could be operated by anyone trained to exploit that knowledge-base. To put it more bluntly, industries have been ceaselessly moving from blue-collar manoeuvres to white-collar processes, in a way.

As knowledge takes the centre-stage, organisations need to re-evaluate their relationship with their employees. While at the beginning of the Industrial Era employer-employee relationships were viewed in a purely give-and-take linear hierarchy, an emerging knowledge economy compelled a new and more complex dynamics. It was no longer possible to simply compensate the workers with money and buy their work in return. True, that still remains the crux of any business relationship, but now the nuances involved are diverse; it has been increasingly accepted at all levels of society that money is not all, and neither can it buy everything.

Standing at this crucial juncture, the role of Human Resource managers assumes wider significance. Resourcing, now, does not end with onboarding the ablest talent at a competitive compensation package. Evaluate the resume, conduct interviews, test the candidate, negotiate a price, and close the deal – these were the time-honoured responsibilities that HR managers were expected to perform. Irrespective of the industry, or the vision-mission-values of the organisation involved, HR worldwide used this templatized approach to deal with prospective employees.

And once recruitment was over, the role of HR generally remained confined to performance evaluation, dispensing carrots or sticks based on that evaluation, and handle disciplinary issues if any. This led to HR being viewed as a mechanical Juggernaut that rolled on its own steam irrespective of external considerations – making it the butt of several jokes and sarcastic anecdotes globally. Most people, including industry leaders, agreed – either in public or in private – that what was missing in HR was the Human factor.

With knowledge, skill and talent taking sway, enterprises have began looking at HR managers as key contributors in shaping organisational vision – and help achieve it through right staffing. In a new-world economy, possessing the right technical capabilities is not the only quality that is sought from a prospective employee. That is there, of course, but an equal – if not more – emphasis is now laid on how well the candidate is aligned to the organisational values, or at least whether the candidate is open to such alignment through appropriate training.

Teamwork, collaboration, networking, empathy, and ownership are the keywords in a knowledge economy. Here, any employee is as much a part of the executing team as of the leadership team – because unless each and every worker is aligned to the leadership vision, the organisation cannot operate at its optimum. In this new approach, everyone is a collaborator and a stakeholder in the success of the organisation. Naturally, then, HR has to perform a more multidimensional role in acquiring the right candidates. And even after onboarding, HR has to nurture them with an eye to efficiency and retention. Only when this entire machinery runs in sync, can an organisation operating in a knowledge-based economy flourish.

While developed countries could afford to theorise on an expanded HR horizon based on the knowledge economy, not-so-fortunate developing nations struggled with their own set of HR expectations. A sizeable chunk of economy in such nations is controlled by micro, small and medium-sized enterprises – collectively abbreviated as MSME. To put things into perspective, over 40% of India’s total working population is employed by MSMEs. It is thus obvious that apart from being a substantial contributor to the national GDP, MSMEs deal with a huge talent-pool in running their regular operations. The question is, with such a large share of human resource at its disposal, how much importance do MSMEs bestow on HR functions?

Sadly enough, experts are unanimous in their opinion that the HR scenario in the Indian MSME context is quite bleak. While large organisations act in line with global models, and hence their HR approach is now evolved, small and medium enterprises are still caught in a time warp. Incisive soul-searching reveals several pitfalls that are responsible for this void:

  • Small enterprises are, well, small! This means, they do not think of (and often cannot) sparing either funds or energy in HR functions. Hiring and firing are usually the only two tasks they entrust to the lone HR manager they recruit – if any at all.
  • Such enterprises lack the vision to consider HR as key in running a business, since it is not a “core” function – or so they think. Mostly family-owned or run by sole proprietors, it is the social norms that dictate their vision, not entrepreneurial theories.
  • For both the above reasons, even when such enterprises retain HR functions, they usually hold the HR manager directly accountable for productivity – and productivity alone. That compels HR to assuming a whip-wielding role, and that helps nobody in the system.
  • Career prospects in such organisations are usually bleak for support and non-core functions. Hence, they naturally cannot draw quality HR talent. This means, no one to bring in innovative and modern HR ideas to improve and reform.

It is, in fact, a vicious circle. MSMEs will continue to hold a large share of Indian workforce in the days to come. But who will care for and nurture this wealth of Human Resource? As yet, there is no answer.


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