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Why SMEs and Start-ups do not have a People/HR Strategy...???

In the rampant growing industry of SMEs and Startups that demands process orientation and streamlining of its people strategy, why is it the least discussed topic among the founders? Let's find out..........

Thursday July 13, 2017,

5 min Read

When asked about the top priorities and challenges from a Founder of an SME or a Start-up, it is undoubted that HR will be among the last. Well, it has always intrigued me to find out more about the reasons as to “Why most SMEs and Start-ups do not have a People/HR Strategy...?” What goes in the mind of the founder and the founding team wherein they tend to refute this important piece of their business plan?



As a Business HR Consultant, my personal experience of having worked with SMEs for 10 years, my secondary research through knowledge gathering and primary research through my interactions with some start-up founders has been a great contributor in working on this study. Let’s dive into the reasons: 

1. It’s simple I can manage it on my own: Anybody can do HR, it’s generic, it’s the business and operations that require technicalities. If a business, its finances, customers and such complex metrices can be handled by me, HR is no rocket science.  

2. Lack of awareness: Most of the founders are techies or finance guys and this is their primary strength and skill set. For most of them HR is limited to hiring and salary disbursement only. If these *basics are covered, it is assumed that HR as a function is well established and pretty much in place. 

3. HR is fancy frill, my product is important: Pulling the string from the aforementioned point, anything beyond the *basics in HR becomes fancy. For the founders, the primary focus is to build their product/service and get it out in the market. To build the product line, everyone in the team is endowed with the right knowledge and abilities (that’s why they are their). For everything else, we still have time.

4. People know they are joining an SME/ Start-up they have to be self-motivated: When people are hired for an SME/Start-up they are very well aware of what they are getting into. It is expected to be an unstructured environment. Pace, agility and adaptation are the surviving key words in the world of an SME/Start-up. People need to be self-motivated, why do we need strategy, structure, processes for them? 

5. It’s people, right? They know how to co-exist: This one is direct from the psychological stance. People have always been known to form and co-exist in the communities. This is the USP of an SME/Start-up, people get to work with freedom and openness. People form their own relationships, cultural practices and they like it that way. There is no need to bind them unnecessarily.  

6. I know everyone by name, if they have a problem they will come to me: Most of the founders will stand for this “My employees are too close to me, they consider me as the go to person for any problem they have. I don’t need an outsider to tell me what my people want.” Knowing employees by their names is found to be a great confirmation and confidence booster that people are being taken care of. 

7. HR is a “huge” cost: HR is just a support function, it does not have a direct business impact. Rather it dents the revenue and outflow by incurring huge cost. Why do I have to implant an HR person throughout the month when the actionable I expect of them is very sporadic? 

8. It’s all about business first: If there is no business why will people be required in the first place. The most imperative is to first establish the business operations. Planning the business operations is the key. People are a part of the plan as they are the ones who execute it. 

9. SMEs and Start-ups are lean, HR is broad and spread: When the business operations are aiming at becoming leaner by the hour, HR is difficult to find its place. HR is slow, it is broad. Somewhere it is counterintuitive to basic premise of SMEs and Start-ups.

10. Technology can do all of my HR work: An HRMS system is considered to be the problem solver here. If an HRMS system is installed it will take up almost all the transactional work that an HR is supposed to do. I just need someone to administer it, even that can be done by an operations person. 

Did you find any coinciding points? Well the list can be increased to any number but I have chosen the prominent ones.I am leaving you with lot of questions here. The most obvious ones are “What should be done?” and “How it should be done?”. Well, I will not leave it to your imagination.

This write-up is a part of my tri-writeup series, shortly you will find my next writing on “How not having a people strategy is hurting the SME & Start-up Industry?” and thereafter will follow “What SMEs and Start-ups should do for a great people strategy?Thanks for reading and liking my work, I appreciate your time.

#Start-up  #SME  #HR  #Strategy  #People