09-11-2012, 02:02 PM
HR Issues in MSMEs
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Abstract
MSMEs (Micro, Small and Medium Enterprises) are the backbone of Indian economy and this sector plays a vital role in the growth of the country, contributing significantly to GDP and export. In addition, this sector mobilizes local capital and skills, provides jobs to millions of people, and thereby provides the impetus for growth and development, particularly in rural areas and small towns. Most previous studies have identified or examined different types of problems based on the size, age, and/or growth rate of the firm. In which “people” or “human resource” (HR) problems facing firms in various stages that we intend to examine. The human resource “department” for a small business is usually not more than one person–and often only one person who wear many hats. While general people/HRM problems have been identified few studies have focused on specific MSMEs HRM problems or issues Consequently, Firms of different sizes do apparently have different HRM problems and practices but five specific HRM areas must be examined: job analysis/job description, recruiting/ selection compensation/benefits, training, and performance appraisal. It is therefore important that not only the customers and suppliers, MSMEs today also need to collaborate closely with their own employees, in order to increase the organizational efficiencies. In this article we have studied about to finding solution a wide range of HRM issues that can help a firm to put the right people on a right job, develop their skills, retain talent, reward to top performers. This means reduced cost, healthy work environment and more importantly, increased profit.
Introduction
MSMEs (Micro, Small and Medium Enterprises) are the backbone of Indian economy and this sector plays a vital role in the growth of the country, contributing significantly to GDP and export. In addition, this sector mobilizes local capital and skills, provides jobs to millions of people, and thereby provides the impetus for growth and development, particularly in rural areas and small towns. Most previous studies have identified or examined different types of problems based on the size, age, and/or growth rate of the firm. In which ―people‖ or ―human resource‖ (HR) problems facing firms in various stages that we intend to examine. Firms of different sizes do apparently have different HRM problems and practices but five specific HRM areas must be examined: job analysis/job description, recruiting/ selection compensation/benefits, training, and performance appraisal. Human resource (or personnel) management, in the sense of getting things done through people. It's an essential part of every manager's responsibilities, but many organizations find it advantageous to establish a specialist division to provide an expert service dedicated to ensuring that the human resource function is performed efficiently.
MSME’s SCENARIO
World over, the Micro Small and Medium Enterprises or MSMEs have been recognized as engines of economic growth. In India, MSMEs are the second largest source of employment after agriculture. They account for almost 40 per cent of industrial production, 95 per cent of the industrial units, 34 percent of the exports and manufacture over 6000 products. It is estimated that to create one job in the MSME sector, only Rs 72,000 is required as against Rs 5.5 lakh required in the large organized sector. In the present scenario of global recession, where several large industries are on the verge of collapse, the role of MSMEs assumes significance. It is estimated that to achieve the target of 10 per cent growth by 2011, the MSME sector needs to grow at 12%. However if we compare the growth of MSMEs in India with those in the neighboring countries in South East Asia like Thailand, Malaysia, Japan, China, etc. it is found that we lag far behind. There are some major hurdles which do not allow this sector to flourish well. The first major hurdle is that the credit availability is low for this sector. It is estimated that the unorganized sector comprises 95% of the total industrial units, employing more than 65 million people. Yet only 8% of the total bank credit finds its way into this sector. Though credit to MSMEs fall under the category of priority sector lending, but with the expansion of the priority sector lending to accommodate fast growing areas such as home loans, education loan, the percentage share of credit to MSMEs is falling. According to the Third All-India SSI Census (2001–02), only 14.2% of the registered and 3.09% of the unregistered MSMEs availed finance from bank.
Conclusion
Our results provide guidance regarding human resource management issues over the life cycle of the MSME. As firms achieve increasing levels of growth, HR issues seem to shift from attracting to retaining, and finally to training. As a result we would recommend that MSME owner/managers prepare themselves for these changes if and when growth occurs. On the other hand, if an MSME is consistently achieving very low levels of growth, the owner/manager should focus on improving his or her recruiting and selection skills.