Is HR being grossly devalued in small and medium sized Entrepreneur and family driven firms ?


Having worked now closely over the last 6 years as a Mentor and Coach with over 30 such organisations at different stages of evolution and from a variety of industries, one has seen from close quarters, the huge price these organisations often pay, by not having a good or senior enough In house HR Manager or head.


I have found this huge gap in so many organisations, family run or more professionally driven by younger entrepreneurs or funded firms. While they are quite liberal with headcount and the facilities, they often settle for a junior HR resource, maybe an HR officer or Asst Manager level. Nothing wrong with that per se, except that one cannot expect these very junior resource to play any kind of a strategic role or drive key HR initiatives.


So while typical areas like payroll, recruitment, joining formalities, statutory compliances etc can get taken care of by outsourcing and are fine that way, some of the more critical areas get severely compromised .


Have listed 10 compromises that chew the top and bottom lines of these organisations, yet…


    1. Poor quality job descriptions or KRA or competency definitions or positioning of the organisation to potential candidates. Often because the junior resource does not understand the role. This affects the Performance Appraisal process too which often is another weak link. And often people take cover under the – I was not clear about my role excuse !
    2. Poor quality of selection, lack of rigor in the interviewing process, poor reference checking for shortlisted candidates. Costly mistakes and wrong hires often repeated.
    3. Lack of a structured Induction and familiarisation process for new candidates to ensure no ambiguity on the expectations.
    4. Lack of a structured training and certification process to ensure clear understanding and positioning by the new employees. HR here depends on the line managers who are too busy fighting their own fires.
    5. Inadequate and regular communication by the leadership to the ground level staff, leaving plenty of scope for gossip, speculation and activities that dilute the motivation on the floor.
    6. Inadequate reward and recognition programs that instill a sense of pride and competition among employees, teams, business units or locations and drive up performance.
    7. No clear organisation structuring that defines heirarchies, levels, career growth options. Sudden business exigencies lead to sudden changes in structures and leave jobs redundant. HR then does the post master job of managing the forced or unforced exits.
    8. No clear measures or metrics for HR performance eg attrition overall by function, manager, time spent by employees before attriting. Not surprisingly when we dig, we find in many cases more than 50 % of the attrition happens within 3 -6 months of joining ! But rarely is it a red flag in the organisation. Even for HR.
    9. No measures of productivity loss – So they keep hiring, firing, hiring ,training and the wheels keep moving. Who is calculating the loss in productivity due to the gap in hiring and having at least 20 – 30 % less employees than required who are fully productive. Or the cost of hiring again and again. And management time spent on this. No guesses how many $ or lakhs are lost without a trace every year.
    10. Leadership development – a luxury .And finally, the realisation that more often than not, the leaders across senior and mid level themselves,sometimes maybe the CEO’s themselves are the bottleneck to growth and team motivation, since not enough focus has gone into their development as leaders through exposure to leadership interventions.

These to me are the 10 top of the mind key areas that struck as we went about helping organisations prepare and gear up for 2 X growth.


Some core HR functions like the ones below or above just have to be in inhouse.




So while outsourcing  some of the core HR and admin functions is fine, we feel the organisations will be stronger if these 10 programs are focused on week after week by a strong in house person or team depending on the complexity and size of the business and the teams.


CEO’s and founders who have compromised on having a strong HR Manager who is also a strategic leader and who is not a yes man, have through these  points most certainly lost a lot more talent, money, goodwill and employee loyalty than they thought they were saving.

Happy to get your thoughts, comments or shares.