Why Startups and SMEs Neglect HR and Recruitment

Role of HRHave you seen an HR department in a startup? Noticed a formal procedure for recruitment, employee retaining, retrenchment or any kind of HR management in SMEs? If you answered ‘no’ to any of these questions, don’t be surprised. According to data from the Confederation of Indian Industries (CII), 80% SMEs and startups have no formal HR department.

Just in case you come across an HR department in an SME or a startup, you’ll notice that most HR practitioners working lack professional training as many companies do not see the need for their HR personnel to possess related qualifications. Another surprising fact is that in 91% of companies there is no empowerment in this function. HR role in an SME has traditionally been administrative in nature. This is perceived as career limiting by many professionally-qualified HR professionals, who rather prefer working for a huge company or at top executive search firms. Anyways, below are three reasons why SMEs and startups neglect HR and recruitment:

1. Focus on Core Business: Being a startup that offers recruitment solutions for startups, we realized early on that we can’t afford to neglect HRM (human resource management). However, a lot of companies ignore HRM because they are too busy understanding and managing their core business resources. But if they can make an effort to manage their HR, they would be more effective as their human capital would deliver better results. For executive search services, they can surely approach placement agencies, which will ease their hiring burden.

2. Unable to Let Go: Small business owners often find it difficult to let go off functions that they have been performing. Human resource management is seen as a secondary function and often owners think this is something they can handle themselves. This can turn out to be a huge hindrance, especially for recruitment when it comes to CXO hiring.

3. Mind Blocks: Small companies and startups feel that they don’t need an HR department as they can be easily managed by someone who is already working with them. They have a tendency to have a mind block that an HR professional can be hired, once they reach a considerable size.

These are the three main important reasons why SMEs and startups neglect HR and recruitment. As companies grow, it is important that they prepare and manage themselves in a more professional manner. Growth will also mean in terms of human capital and proper human resource planning. Having a department that focuses on HR management will become all the more important if they want to have a sustained growth.

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