Post COVID-19: Creative Human Capital Strategies for SME’s.

Post COVID-19: Creative Human Capital Strategies for Small and Medium Scale Enterprises (SME’s). Human Resources as a Strategic Business Partner.

Introduction: Not in our wildest imagination, that one day, in our lifetime we will witness such worrisome uncertainty while fighting an unseen enemy that affecting only human beings, not animals, not plants or any other live creatures from land and sea. Owners and leaders leading SME’s finding themselves in such situation, where they are already in 3rd or 2nd or even just 1st year since founded, but you know what? they must not be caught off guards. Why?

 Being highly volatile by taking a high amount of risk. It is, therefore, commanding for them to address the uncertainty through reliable and loyal workforce which can shoulder them in good and bad times. Human Resource has the challenge of attracting talent on role dimension and then retaining that talent by providing a professionally driven organization culture. Human resource professionals need to be mindful that professionalism without the loss of alertness and responsiveness is the right revolutionary route for any SME’s success

 Is very well known that Small and Medium Enterprises (SMEs) are impacting on national and regional economies throughout the world. They have been accepted in both developed and developing countries as an effective business mechanism for creating employment opportunities with a small amount of capital investment. Surprisingly, the Human Resources strategy of small scale business units is one of the least researched areas (Mankelow, 2008).

 Whenever we think about an HR business partner or HR manager, we think only about large organizations. But SME’s also need HR managers. Performance and effective HR management empower entrepreneurs to improve their quality outputs. Hence, the strong business strategies that involve HR become inevitable for the SME sector. While SME’s leaders are willing to explore ways to minimize expenses, HR and its different aspects play an important role to address the growth issues that SMEs face. So it’s not about savings only.

 Quality trends of SME Culture: They all have the same cultural traits that's make SME face a unique challenge in managing Human Capital.

While larger markets permit organizations to employ a team of specialists to address the difficulties involved in managing HR programs, unfortunately, this is always not a true option for many SME’s. However, only a little to no attention paid to the role of strategic HR management practices of SMEs in bringing about the continuous of the business.

Most of the SMEs failed to achieve their objectives due to the lack of human resources and organization capabilities (Chee, 1986; Hashim and Oman, 2003).

More often than not, the values of the owner of small businesses are the expected values or culture of the organization. Consequently, the owners play a more critical role in the development of their business than owners of larger businesses (Shuman and Seeger 1986; O?Farrell and Hitchens 1988; Wiklund 1998a, 1998b), prompting Storey (1994, p. 10) to argue a small business is ?not simply a scaled-down version of a large firm?.

The fundamental policy for most SME’s will like to reduce on the training and development expenses. So the role of Human Resources professional increases as the company is not providing the training and development program, they (HR ) needs to recruit the candidates with varied talents preferably who can do multitasking.  

The SME sector as a whole is promoter-driven – One man show. The problem of SMEs is that the promoter reflects values which are different from the values that the employees reflect and that’s the problem for the business growth process. This is where there is a need for HR strategic business partner to understand the need for change and plays an important two roles:

• to continuously influence the owner on the need for organization culture change
• to manage the process for organization culture change.

At the same time, Human Resources faces the challenge of attracting talent and retaining them providing a professional working environment driven by strong organizational culture.  Another common trend is that SMEs are unable to offer competitive packages, which affect the attraction and retention of the talent pool.

HR as a Strategic Partner in innovation: Importance of HR programs

Most of the SMEs failed to achieve their objectives due to the lack of human resources and organization capabilities (Chee, 1986; Hashim and Oman, 2003).

……. lack of skilled or know-how workers, traditional methods of operation, cash flow and difficulties in obtaining financial support from financial institutions or the government, lack of human resources development, high level of international competition; lack of willingness to spend on technology facilities, lack Innovative of skills and knowledge, dependency on the domestic market (Saleh & Ndubisi, 2006).

Some of the innovative HR strategies to tackle turbulent situations very specific to the SME?s are mentioned below:

• Knowledge up-keeping: From organizational design to processes, structures, and technologies

”an emerging set of organizational design and operational principles, processes, organizational structures, applications and technologies that help knowledge workers dramatically leverage their creativity and ability to deliver business value? (Gurteen, 1998).

The organization approach towards knowledge management adoption in SME’s as we all know the sector is very basic. Below are important three factors that SMEs should practice are:

• Support from senior management and leadership,
• A knowledge-friendly and sharing culture
• A clear strategy for managing knowledge

• Motivation:

The motivation of employees is one of the key factors that affect the progress of any business. In SMEs, motivation is a major management deficiency. An important task for human resource activity is to ensure that its employees remain satisfied with the job.

Ensuring and maintaining a smooth, harmonious working environment and personal relationships among its employees. Mentoring adds up in the strengthening of organization culture and harmony. This will results in less conflict and stress at work which leads to work motivation, improves output, productivity and higher retention rate.

• Job security; how HR programs can secure talents

The SME’s must always try to ensure the job security for their employees to reduce the retention rates. This makes people work hard and love their jobs with psychological satisfaction.

• Empowerment: Delegation of Authority

 Empowered employees feel they have the ability to make decisions, put them into action, and sense of ownership rather than just employees.

•  Employee Engagement: Turn “Just a workplace” into a great one, turn an employee into a “Passionate” employees.

 In SME sector, to build a great workplace and increase employee engagement, there are a few innovative practices which can be adopted to leverage the advantage of the companies as explained in the figure below (Caccamese, 2012).

Image source: https://www.custominsight.com/employee-engagement-survey/employee-survey-features.asp

•  Workforce diversity:  Innovation, new ideas and concrete interactions happened among people from a diverse background. 

 People no longer live and work in an insular marketplace; they are now part of a worldwide economy with competition coming from nearly every continent (Byrne, 2011). Cultural diversity training programs must also be encouraged for all the employees and managers or supervisors concerned.

•  Promote Sense of Belonging in the Organization: 

 As defined by Organ (1988), Organization Citizenship Behavior represents ?individual behaviour that is discretionary, not directly or explicitly recognized by the formal reward system, and that in the aggregate promotes the effective functioning of the organization?.

 HR Strategy can lead to promoting these 4 categories :

1.       Reliable Employee

Conscientiousness is defined as ‘behaviours on the part of the employee that goes well beyond the minimum role requirements of the organization, in the areas of attendance, obeying rules and regulations and taking breaks’ (Podsakoff et al, 1990). Thus SME needs to recognize and value the employees who are hardworking and trustworthy.

 2.       Sportsmanship

Sportsmanship is defined as the ‘willingness of employees to tolerate less than ideal circumstances without complaining’ (Podsakoff et al., 1990). Sportsmanship behaviour of employees set an example for others which will reduce complaining, increase satisfaction and enhance employee retention (Podsakoff et al., 2000).

 3.       Courtesy

Courtesy is defined as ?discretionary behaviour on the part of an individual, which involves helping others by minimizing work-related problems to occur? (Podsakoff et al., 1990). Behaving courteously will allow employees to gel well among themselves which in turn prevent conflicts.

 4. Selflessness:

 Selflessness or Altruism is defined as ?all discretionary behaviour that has the effect of helping others with an organizationally relevant task and/or problem? (Podsakoff et al., 1990). Especially in SME?s with a limited workforce and a ?learning-on-the-job? environment, it is important that employees help each other out.

  Conclusion:

•  SMEs must push hard on the accelerator on HR professionals to prove the worth of its programs and activities for the success of the organization.
• SMEs must understand the difference between the traditional and the conventional approach of Talent Attraction to execute the much-required change for effective hiring.
• It is believed that financial conditions of SMEs are difficult,  but this is an opportunity for HR renovation that will successfully lead, impact employees to perform well and develop the organization.
• While the organization planning to follow a successful route, there is a need for both HR and the owners or top management to appreciate and agree on change management in organization culture.
• It is easier for HR to implement change management programs in close collaboration with top management in SMEs. The mutual relation will transform Human Resource to be an effective business partner.

Thank you for your valuable time in reading this article.

References and further readings:

Baruah, R. K. (2000): Financing Small Scale Industries, Omsons Publications, Delhi.

Berle, A., and Means, G. (1932), The Modern Corporation and Private Property, New York: Macmillan.

Birley, S., and Westhead, P. (1994), ?A Taxonomy of Business Start-Up Reasons and their Impact on Firm Growth and Size,? Journal of Business Venturing, 9, 7 –31

Kaplan, N.J. and J. Hurd. 2002. “Realizing the Promise of Partnerships,” Journal of Business Strategy, 23(3), 38-42

Katz, D. (1964), The motivational basis of organizational behaviour, Behavioral Science, vol. 9, no. 2, pp. 131-146

SME.com (2012), Motivating your Employees, (retrieved from https://philippines.smetoolkit.org/philippine/en/content/en/6461/Motivating-your-Employees, accessed on 17 July, 2012)

Storey, D. (1994), Understanding the Small Business Sector, London: Routledge.