Special HR challenges in SMEs

Not maintaining an active database of potential hires adverts are placed each time there is a vacancy without harnessing past database effectively Not implementing comprehensive hiring channels such as referral, graduate recruitment, internal transfers etc., Lack of detailed job analysis which leads to ineffective recruitment (i.e. often it is not known what are the key criteria for hiring the personnel and key success factors on the job), Weak or no employer branding candidates do not have a good knowledge of the overall organization OR do not have a good experience during the recruitment exercise Not able to offer higher than average starting salaries and having standard benefits/rewards

Hiring and Selection Building a strong workforce can be a challenge. The following factors contribute towards that challenge:

Top talent command premium: Well, after weeks of hunting and rounds of interviews, you found the right guy. But his pay expectations are way beyond your estimates. This is a typical scenario in many companies today. Talented people dont come cheap. Mind you, talent comes at a price. Talented folks command premium. If you are willing to pay more you get the right guy. Else, you lose him. Wide Job opportunities: Continuing with the pay expectations topic, if you arent willing to pay a premium, someone else will. Just think for a moment who is the loser? Not the candidate! And you lost the guy just for a few more dollars! (perhaps a few hundred!) Currently, the market place is marked by war for talent and talent-focused corporates would go to any length to get the right guy. The world is not just flat but wide too! The marketplace is flooded with new age companies (read IT & ITeS companies) ready to offer more not only in terms of lucrative compensation but also challenging job profile, crossfunctional exposure levels, onsite job opportunities, higher responsibilities, plush work ambience and overall corporate culture not to speak of world-class brand image that would lend prestige to people who opt to work for them.

Other factors that affect the hiring in SMEs are: Employer Branding

The biggest question here is- Why should anyone work for my company? Corporate branding is a very important aspect for a job seeker to come onboard. Remember, today we are in an employee-driven job market and as such candidates have the luxury to choose whom to work for. Because, the candidate is entrusting his career in your hands for the next, say few years or so. Hence, it is understandable that he is choosy about his prospective employer. Talent shortage Talent shortage is the familiar refrain for long and in the times to come it is going to get acute than ever before. Too many job openings but too few candidates available. Its a classic case of too many chasing too few to fill in the jobs. While it is the general scenario prevalent across all industry sectors, this would be more pronounced if you are looking for folks in new technology platforms in the IT sector. Ineffective HR sourcing If talent doesnt come to you, youll have to go to it. Gone are the days when candidates used to hang around for jobs. Todays candidates are in a strong wicket to consciously choose their employers and if you stay where you are refusing to budge in your quest for talent, you will lose. SMEs need to take a hard look at their current HR sourcing strategies. Talent Retention

Lack of a comprehensive orientation program or induction training Lack of clear career path development for individual staff Lack of communication of corporate goals/vision Lack of job-rotation: often SMEs lose talents as they are not able to provide new learning opportunities within the organization by redesigning jobs etc. Minimum investment in training & development

Talent Management Issues: SMEs face the same fundamental talent issues that large firms do. They need to attract, select, motivate, deploy, develop and retain talent. However, SMEs face some particular constraints; constraints that are more pronounced the smaller the firm. These constraints are: Lack of Specialized Expertise- Large firms will have experts in specialized areas of talent management. For example, they may have experts in assessment methodologies, diversity or instructional design. Smaller firms may know that sourcing is important, for example, but not have much specialized expertise in the subject. Fewer Economies of Scale- Large firms can afford to invest in researching what psychometric tests are best or which talent-management software is most reliable. Smaller firms often cannot afford to do the kind of in-depth assessment of talent management tools they would like.This matters because not all tools are appropriate

and/or good for every company. Criticality of Each Hire- A firm with 1,000 call center reps will not be much affected by a very bad or very good hire. However, if you only have five reps then each individual is touching 20 per cent of your customer base. Criticality of Turnover- The smaller the firm the more of a continuity problem it faces when there is turnover in key jobs. For example, the loss of one marketing person may mean losing the relationship with the ad agency, the history of what worked, andthe location of the relevant files. Interestingly, the reverse problem can also occur. Ann Bartelstein, who spent many years in HR in SMEs, says lack of turnover can mean the firm is stuck with the wrong people. WHAT SHOULD SMEs DO? Outsource Outsourcing non-core activities is increasingly becoming popular even for SMEs. Instead of incurring huge fixed costs in manpower to manage recruitment / retention issues with sophisticated IT software, SMEs can reap the following benefits by outsourcing such functions to the experts in the field

Cost savings Focus on strategic functions Access to world-class recruitment/retention strategies Create employer branding Quality of Hire

Employer Branding Having mentioned outsourcing as one of the strategies in managing talents, the responsibility on employer branding still remains with the organization. Companies need to brand themselves as choiced employers just like how they brand their products and services. There are some distinct advantages of being an SME which need to be communicated to job seekers and existing staff. Being small can be an asset in many instances. Having a staff strength of less than 300 makes an organization a lot more nimble, fast and flexible compared to larger MNCs which often wait for global initiatives before implementing changes in their HR policies and practices. The following are some tips for SMEs: Talent Attraction

focus on key strengths such as innovative, fast-growing regional exposure Provide flexible and innovative benefits/rewards that cater to individual needs Measure the current hiring effectiveness indices such as cost per hire, days to fill a job, effectiveness of hiring channels, candidate experience are critical so that SMEs can track where there are bottlenecks and where the hiring process can be improved.

Plan career path for individuals More growth opportunities, regionalization which is attractive to the younger workforce

Talent Retention

Shift from being family-oriented to more performance-based Communicating the corporate goals, vision, direction (for a more engaged workforce) HR can afford to give personalized attention to individuals needs in terms of benefits, rewards, career goals, training & development needs Invest in meaningful training & development that leads to job expansion for staff. Once the SME has established themselves as a choice employer with attractive and innovative HR policies, retention strategies and career advancement opportunities, it is only a matter of time that happy employees spread the word. There is nothing more powerful for an organization than happy staffs who become their ambassadors wherever they go! This inevitably does wonders for enhanced employer branding and attracting better talents over the years.