Before we start, let us applaud those entrepreneurs who have started to work towards their dreams or have already achieved it and are living it.
Entrepreneurship is like walking on a tightrope tied high up on two skyscrapers. It’s risky. Your profit-induced good times of today does not guarantee a better tomorrow. And the challenge intensifies when you are a new entrepreneur in the land of big fishes.
The SME Industry in India and Why Startups are suffering
For the Indian market, there is good news and bad news:
The good news is that there is significant growth in the market valuation of Indian startups and SMEs.
The bad news: according to a four-year long study, Entrepreneur India, conducted by the IBM Institute for Business Value and Oxford Economics 90 percent of startups in India fail within the first five years.
The study blames lack of new technologies and unique business models, finance, poor business ethics and unskilled workforce for such frustrating conditions. So, even though the SME (small and medium enterprises) industry is growing in India, it is unable to achieve stability.
But think about it, who maintains a harmonious equilibrium between all these facets of the organization? It is the human resource management system.
While interacting with numerous organizations, it has been observed that small and medium organizations pay negligible attention to the development of their human resource management (HRM) and concentrate more on product development, finance and sales.
The sole reason for this is the significant ignorance and disregard for the role of HRM in the organization and how HRM has evolved throughout the years.
Yes, it is obvious that product development, sales, and finance contribute to the growth of a business. But to establish an organized flow amongst all these departments and maintain a talented team, you need a management system that only Human Resource Management can provide you.
A Quick Tip: Before starting your entrepreneurial journey, conduct research on the targeted industry and the management mechanisms that are going to hold your organization together.
Managing budget strategies: As a startup, you would want more profits with the least expenditure. By conducting proper market research, human resource management provides with easy strategies that save a hole in your pocket during recruitment as well as other investments.
Effective Recruitment: A skilled workforce is necessary for the growth of the organization from the very scratch. It is the primary role of the HRM to attract most relevant workforce and find talent that benefits your startup and/or SME.
Skill Development: Human resource management identifies weaknesses and/or potential in employees and conducts training sessions accordingly to foster increased productivity and industry awareness.
Employee Retention: In business, you not only compete for products/services but also employees. To retain employees, the HRM provides a dedicated design of compensation and benefits.
Office Culture: As you build up a team, it is important to establish a certain work culture and code of conduct to instill harmony amongst employees and a free flow of work. The human resource management does just that giving your company a unique color.
To gain stability in the growth of individual startups and SMEs, prospective leaders should take a look at their own organizations. Human resource management system plays the role of a strategist, advisor, and mentor and assists you in plugging the loopholes and reconstructing your organization.