HRM IN SME’S

Agenda
 Meaning Of SME
 Importance of SMEs
 SSI contribution
 Sectoral distribution
 HRM definition
 View points of various authors
 Need for HRM in SSIs
 Crucial Problems with regards to HRM
Meaning Of SME??

SMEs, both in size and shape, are not uniform across the globe.

Indian definition of SSI is investment specific.

World Definition of SSI is dependant on:

• Employment
• Assets
• Sales
• Combination of the above
CLASSIFICATION BY MICRO, SMALL AND MEDIUM
ENTERPRISES DEVELOPMENT ACT, 2006

Classification Investment in Plant &

Machinery

 Micro Not Exceeding Rs. 25 lakhs

 Small Rs. 25 lakhs but not exceeding
Rs. 5 crores
 Medium Rs. 5 crores but not exceeding
Rs. 10 crores
Classification Investment in Enterprises

Micro Does no exceed Rs.10 lakhs

Small Rs.10 lakhs but not exceeding
Rs.2 crore
Medium Rs.2 crore but not exceeding
Rs.5 crore
 Importance of SMEs
 SMEs are the Engine of Growth
 SMEs are Essential for a Competitive and
Efficient Market
 SMEs are Critical for Poverty Reduction
 SMEs Play a Particularly Important Role in
Developing Countries
SSI Contribution
Makes significant contribution towards:

• National income
• Employment
• Export
• Innovation
• Developmental activities.
• Social and economic development
objectives
• Labour absorption
• Income distribution
• Rural development
• Promotion of entrepreneurship
SSI Sector wise contribution:
Contribution by various sectors

Industrial units Industrial Output

Employment Value Added by
Manufacturing Sector
Exports NDP
 HRM Definition:

According to Schemerhom,HRM has been

defined as the "Process of attracting,
developing, and maintaining a talented and
energetic workforce to support organisational
mission, objectives and strategies"
Different aurthors view points with
regards to role of HRM:

According to Deshpande and Golhar,

HRM may be a leading cause of business failures.
Inadequate and ineffecient HRM in SME s may
result in low productivity and high dissatisfaction
and turnover among staff.
According To Gilbert and Jones, HRM
Practices are:

• Informal
• Ad hoc
• Oppurtunistic
• Qualitatively and quantitaively
different from those of large scale
organisations.
According to Thurik,

HRM practices are becoming important in

the “new knowledge based” economy.
Due to which companies face double
challenge of:
• Need for more highly trained
employees.
• Shortage of qualified labour.
Need for HRM in SSIs:

To face increasing competition

Compete with larger firms
Better effeciency
Better motivation ensuring better
productivity
Adapt to technological change
Ensure timely training and development
HR in SME’s
 Entrepreneur = often HR Manager
 No background
 Extra responsibility of entrepreneur
 No bifurcation of portfolios so no division of
work.
Crucial Problems with
regards to HRM in SMEs:
Talent Management
Hiring And Selection
Talent Retention
Performance, Training and Reward
Management
Main tasks within traditional HR

 Pay-roll administration
 Recruitment
 Managing people
 New HR

 Management of strategic human resources

◦ Coupling HR to business strategy

 Management of transformation and change

◦ Creating a new organisation

 Management of the human resources

◦ Listen en react to employees

 Management of an administration
◦ Rethinking administration-processes
References
 www.smeworld.org
 www.google.com