Having an HR strategy is essential for SME growth


A Gakenke District juice producer talks to clients about her products at an exhibition in this 2013 photo. SMEs need to have solid HR strategies, too. (File)

Joy S. Rwamwenge

At the core of every enterprise is profit maximisation and cost reduction, yet almost one-half of small-and-medium enterprises (SMEs) collapse within a year or two. Those that make it through to the next stage often struggle with employee retention largely because of lack of a clear HR strategy

From a macro-economic perspective, SMEs provide many people, including unskilled labour, with employment opportunities, thereby distributing income and, ultimately, alleviating poverty. On the contrary, most SMEs are owner-operated and their HR practices are informal with few possessing the skills to draft medium to long-term human resource strategies. This always has adverse impact on performance outcomes.

SMEs seem to focus their HR efforts more on selecting, managing and motivating employees by creating and supporting family–like cultures to which workers become emotionally attached, thus compromising the actual meaning of HR strategy. HR strategy is a system of human resources practices for a particular job or collection of jobs aimed at the best employee performance possible to meet the company’s ultimate goals that involves recruitment, selection, training, development, performance management, rewards and communication.

The dilemma most SME owners face is whether to invest or not to invest in the capacity building of employees; one of the biggest challenges that affect the growth of SMEs in most developing economies.

Considering the dynamism of the business environment, it is essential to upgrade skills of employees so that they are able to deal with the intense economic changes. This helps both the enterprise owner and employees not to be caught up in “greener pastures” syndrome. Often, some SME owners think that their employees might not stay for long, while a number of employees are also always on the lookout for a better pay and conducive work environment elsewhere.

Given the high mobility in the SME labour market and the expenses involved in attracting and retaining top talent, the small businesses never design or implement human resource strategy, yet it is critical for all types of enterprises, small or big. Therefore, the question should never be about whether designing an HR strategy benefits you as an SME, it is a must-have for any business.

This is because putting in place an HR strategy, irrespective of the size of your enterprise, is critical for the growth of your company as it gives direction on how to maximise employee performance. It also increases employee retention and helps firms to attract top-level employees that provide innovation, which is key for a company’s growth, and can be leveraged to have an edge on the competition.

Remember, a lot of time and effort is involved in every decision made regarding human resource for your enterprise. That’s why it is important for firms to know the type of workers they need at each specific stage of their lifecycle. Identify key people, develop and implement an HR strategy to ensure you have the right people with the right skills in the right roles for your business strategy to be successful.

It is crucial to understand that the infancy stage of your business is unstable, and you are practically dealing with the highest levels of uncertainty. Therefore, you may have to hire people who are highly resourceful and can multi –task, as well as those that have experience developing new products and businesses.

As the business progresses you may consider hiring workers, who can grow your business at a fast pace, and ensure sustainable growth. By adding scalability and structure to your company’s systems, innovative and detail-oriented workers drive growth and stability and also deliver exceptional customer service.

As an SME owner, you should be able to predict the business needs way ahead to be able to identify talented employees for future needs. It is always important to offer them an opportunity to observe the business to know it better. One can also hire qualified managers who have a proven track-record as far as delivering on tasks is concerned, and those that observe best practices as they pursue their growth strategies.

The need to hire specialised employees cannot be over emphasised as the company grows bigger for business diversification. For example, public relations and social media specialists are also great additions to your business as they can help develop the company’s brand and image through a variety of platforms.

Crucial to building a strong HR strategy is taking into account the company culture, nature of business, as well as the mission and vision of your enterprise. You might also consider doing a workforce analysis of the current situation of company, identifying gaps, and investing time and money in building the capacities of your employees.

Always remember that an HR strategy is not a one-size-fits-all. To reach the maximum level of profitability and success, every enterprise should have strategic goals, align each employee’s work with its strategic goals, bearing in mind the fact that to grow your venture is not a one man’s journey; it demands the participation of all your employees.

Employees are the enterprise’s greatest assets; therefore, having an HR strategy is of great importance to any SME seeking to grow.

The writer is an SME development expert.