Role of Human Resource Management in Micro, Small and. Medium Enterprises (MSME) in India

Transcription

1 Role of Human Resource Management in Micro, Small and Medium Enterprises (MSME) in India Gurulal Singh Virk Ph.D Scholar (Management) ( ) Kalinga University, Raipur, C.G. Enrollment No (KU002MMXIV ) Abstract Today, Human Resource Management (HRM) functions, practices and procedures are increasingly becoming important, considering the growth of the knowledge based economy. Human resources in any enterprise, whether small or medium constitute an important area of study. Careful human resources management creates good opportunities to ensure efficiency in the production process of goods and services that guarantee a satisfactory level of living in society. If managed effectively and efficiently, human resources can play as an import ant role in realizing the objectives of the enterprise as an integral source. HRM studies fulfill the need of a businessman to understand the economy, market, organization or any other related area. 1. Introduction Neha Bhatia (2012) had mentioned in her article that in a smaller set up there is greater proximit y among employees. In fact management and employees share a closer relationship. And it has several advantages too, 26

2 as Rajiv Oza, director HR, Dr Reddy's Laboratories says, "HR will play an important role in attracting and retaining talent to work in SMEs. For those who would like to fold their sleeves and manage dynamics very near to the market will enjoy their career in SMEs. HR plays multiple role in SME sector. In my view the role has more canvas which covers multiple functions like HR, personnel, IR, Corp Communication, PR and so on. Most of the SME operate in an environment of cut throat competition wit h limited resources. The core role of HR is to be a thought partner to the Promoters and Business leaders; manage growth or stagnancy with limited resources; balance growing needs of employees with that of the organizations ability to provide them." But as the organization expands it become difficult to maintain this kind of relationship. The paper makes an attempt to study the management and efficient use o f human resources in SMEs in India during the period of economic reforms in the country, respectively, making these reforms which enabled major changes in the structure of the economy, where S MEs operate as an important pillar. By illustrating a position followed by many economists for a sense of competition and globalization trends, the paper will illustrate human resource management and the dynamics of its development as a key strategy in bus iness development. One such comprehensive reform has made SMEs to face challenges in their functioning, such as the procedure of human resources management (HRM). Such a step, however, has created a good basis to build mechanisms for the functioning of mar ket economy in Macedonia, this necessity, is imposed to managing and using human resources efficiently. 2. Objectives and Research Methodology Objectives of study are as given below 27

3 i. To find out the Human Resource Management System in MSME organisations ii. To find out the Role for HRM in MSME organisations iii. To evaluate Functions of HRM in MSME. Research Methodology Research methods can be classified in different ways, the most commo n distinction is between the quantitative and the qualitative approaches (Myers, ). Quantitative approaches were originally used while studying natural sciences like: laboratory experiments, survey methods and numerical methods. A qualitative study is used when the researcher wants to get a deeper understanding on a specific top ic or situation. Myers (2007) 2 stated that the qualitative approach was developed in social sciences in order to support the researcher in studies including cultural and social phenomena. Sources included in the qualitative approach are interviews, questio nnaires, observations, documents and the researcher s impression and reactions. The chosen approach is qualitative. This study typically takes the form study of secondary data available on Human Resource Management system in Micro Small and Medium organisations. The reports on the study topic have also been collected to understand and conclude the effectiveness of the HRM process. 3. The Role of Human Resources in Small and Medium Enterprises HRM is concerned with all aspects of emplo yment and management of people in organizations. HRM covers the following activities: strategic human resource management, human capital management, corporate social 1 Myers, M. D. (2007), Qualitative Research in Information Systems, MIS Quarterly, vol. 21 No. 2, pp Ibid 28

4 responsibility, knowledge management, organizational development, securing resources (human resource planning, recruit ment and selection, and talent management), management performance, learning and development, compensation management, employee relations, employee welfare, health and safety and the provision of services for employees. HRM practice has a strong conceptual basis borrowed and based on the science of organizational behavior and strategic management, human capital and theories of industrial relations. This database was built with the help of a large number of research projects by different researchers in the field of management. The purpose of this paper is to give a general introduction to the practice and concepts of HRM. The paper defines HRM objectives, theories, characteristics, components of HRM systems, development of HRM as a method for managing people, the views expressed in relation to key performers, the context in which it works HRM and ethical dimensions that affect the human resource policy and practice. Among others the author Ronald R.Sims says "The key to a continued survival and successful organization is not rational or quantitative approaches, but differs significantly in activities of emplo yees and managers that are based on the support and mutual lo yalty. The success of the organization today and tomorrow is being seen more and mo re dependent on the effectiveness of human resource management" (Sims, 2002, p.1). Human resource management (HRM) in contemporary economics is linked to a company s success measured through numerous organizational measures (profitability, productivit y, rate of innovation, market share, environmental performances, etc.). The role of HRM in large enterprises is relatively known, especially when the competitiveness and sustainable 29

5 development are in question. On the other hand, small entrepreneurial and medium sized (SME) companies have not been greatly studied in relation to the HRM in the past. Although there is a lack of literature and empirical research in this area, several studies in the past decade and recent years emphasized the importance of the HRM for the survival and success of the SMEs. The reason why more and more authors today are arguing about the success of the SMEs is the perceived advantages of SMEs in a turbulent and unpredictable business environment. This study identifies various manageme nt implications as Firms should prioritize investment in HRM practices. SMEs can enhance the operational performance by using operational strategies like Just in Time (JIT), Advance Manufacturing Technology (AMT) and (TQM) Total 4. Functions of HRM As firms grow, there is a need to administer the HR function. HRM department is considered responsible for executing all HR function in best interest of the firm. Human resource functions can be defined as the way all tasks and responsibilities regarding HRM are organized within organizations. HR-functions include all roles, tasks and responsibilities from the staffing process, to the training and development via the performance planning and appraisal to remuneration and other rewards to finally the termination o f employment. The HR-function does not only involve managers in general or at HR departments, but also line management and even the employees themselves. Various organizational contextual factors determine the need for some specific HRM practices causing HR function (as principal task of HRM department) to play their role effectively. However, HR functions depend on some other factors, as Hendry and Pettigrew (1992) explain that while changes in human resource practice 30

6 can be conceived as a response to bus iness strategy, the scope of the HRM function to respond effectively is therefore limited by its role and resource. It is the job of HRM manager and/or department within any organization to define their HR function through need analysis survey for helping business operations and gaining sustained competitive advantage. These may comprise of Fom brun et al (1984) generic HRM functions: for example; i. HRM policies: developing policies relating to personnel management of the firm; ii. Employment: defining recruit ment and selection procedures for staffing needs; iii. Development: developing strategies for training and development of employees; iv. Performance: developing performance appraisal programs; v. Compensation: Designing reward systems for the emplo yees. These HR funct ions are actually performed via different HRM practices in organizations. From above discussion, these generic HRM practices are explained below with the help of available literature for exploring the level of HRM sophistication in selected SMEs to investigate its association with firm performance. 5. Future Prospects of HRM in SMEs Until recent past, it was only the big firms investing in HRM but with time even the SMEs are considering HR functions seriously. The need for organized HR practices is well rea lized by most SMEs today and they are even ready to implement HRM into their organizations. But the proble m they face relates to shortage of funds and expertise required to implement HRM. The solution can take any of the two forms: either outsource the HRM function for a short span till required expertise is gained, or to 31

7 manage from the available resources for implementing HRM. If HRM is outsourced, though it requires investment in money, the entrepreneurs get enough time to concentrate on strategic issues rather looking after routine HR systems. But if the firm cannot adopt this option, the SMEs can do the following: i. Recognize the right talent for the organization; may not be the best but which suits the needs of the job and organization. ii. Follow employee engagement practices so that employee retention improves. iii. Re-employment of retired employees who are ready to join at low salary. iv. Developing a culture of accepting challenges and offering career growth in the organization. v. Minimize the hierarchy so that emp loyees feel a part of the organization. vi. Design practices like flexible working hours and work from home to facilitate work-life balance. 6. Conclusions Research has shown that the strategic use of human resource management (HRM) is likely to be one of the most important determinants of organizational performance. The success of SMEs largely depends upon the enthusiasm, competency, resources and commitment of a single person (owner) around whom the enterprise revolves. Since the owners often involve themselves in doing manual work and taking responsibility for employment matters including the determination of pay, people issues are often taken for granted and managed informally. The role of human resources in enhancing firm efficiency and effectiveness is well established. According to the resource based view of management also (Barney, 1992), 32

8 irrespective of the firm size, employees are a strategically important, indispensable resource to achieving an organization's objective. 7. References 1. Bose, S. (September 18, 2007). Systematic HR practices ensure the success of SMEs. The Economic Times. Retrieved from: 8/news/ _1_indian-smes-hr-activities-job-satisfaction. 2. Neha Bhatia (2012), The role of human resource management assumes an important position as hiring right talent and retaining it becomes crucial to the growth of SMEs, Economics Times, Aldrich, H., & Von Glinow, M. A. (1991). Business starts -ups: The HRM imperative. In Cardon, M. S. & 4. Stevens, C. E. (Eds.), Managing human resources in small organizations: What do we know? (pp , Vol , No. 3, 2004). Human Resource Management Review. 6. Bacon, N., Ackers, P., Storey, J., & Coates, D. (1996). It s a Small World: Managing Human Resources in Small 7. Businesses. The International Journal of Human Resource Management, 7(1), Brand M.J., & E.H. Bax. (2002, December). Strategic HRM for SMEs: implications for firms and policies. 10. Education and Training Journal, 44(8), Cardon, M. S., & Stevens, C. E. (2004). Managing human resources in small organizations: What do we know? 12. Human Resource Management Review, 14(3), Flanagan D.S., & S.P. Despande. (1996). Top management s perceptions of changes in HRM practices after union elections 33

9 in small firms. Journal of Small Business Management, 34(4), Fombrun, C, Tichy, N. M., & Devanna, M. A. (1984). Strategic Human Resource Management. New York: 15. Wiley. Hendy, C., & Pettigrew, A. (1992). Patterns of Strategic Change in the Development of Human Resource Management. British Journal of Management, 3(3),