Human Resource Challenges faced by the Indian MSMEs

The Indian MSME today forms a strong foundation comprising of ancillaries and multi -
tiered supplier systems which provides a base for the huge multinationals whose brands we
recognize world over. An evolution from small cottage industries to MSMEs achieving
turnovers of more than 500 Crores, India has come a long way in its journey to be
recognized as a global power. This transformation from being the land of snake charmers
and poverty to the land of innumerable opportunities has been brought through the various
steps of the MSME ministry and the hard work of crores of MSME owners working
relentlessly to support the larger corporations whilst at the same time developing the
communities they work with.
Schools have taught us the history of industrial development and how he five year plans
have shaped policies and regulations nudging the growth of these MSMEs. What needs to
be addressed though; is how these MSMEs still struggle to stay afloat and what is the root of
their problems. The Chamber of Indian Micro Small & Medium Enterprises enumerates a
few of these challenges in an article on its website.
Mentioned in the article are challenges like
1. Absence of adequate and timely banking finance.
2. Limited Capital and Knowledge
3. Non – availability of suitable technology
4. Low production capacity
5. Ineffective marketing strategies
6. Constraints on modernization and expansions
7. Non – availability of skilled labour at affordable costs
8. Follow – up with various government agencies to resolve problems due to lack of
manpower and knowledge, etc.
Just like the CIMSME; there are numerous other agencies which address the above
mentioned issues. A lot of these challenges are interlinked and thus the MSME owner
usually finds himself or herself trying to solve problems or fire – fighting on a normal day.
Apart from the above problems, one crucial but often ignored challenge is the lack of
sustainable people practices in our MSMEs. Often in our consulting assignments, we come
across Entrepreneurs who define their problem statements in line with cash flows, ROIs,
Business plan implementation, review mechanisms and sometimes in terms of culture and
attitude of people. We often hear entrepreneurs listing down reasons of how people are
either not competent or have attitude problems or the attrition rates are high. We hear
them telling us how freshers are not ready to stay for long periods and how seniors are
neither ready to upgrade nor ready to move out or change their attitudes. Entrepreneurs
who are experts ar the technical aspects of their products and excellent negotiators in the
market, find themselves clueless and helpless at how to develop culture which brings or
attracts good talent and retains it too.
Why?

Well, this single question has a lot of answers. Let us look at the first generation of MSME
owners. When they started the business, the priorities were clearly defined. It was essential
that sales, production, dispatch and collection be given the attention to ensure that the
working capital remained in motion and the companies earn enough to gain BEP and
eventually move towards profits. Barring some percentage, a lot of MSMEs have been
established through financial aids like loans, mortgages etc. The MSMEs set up in the late
70s, 80s and 90s decades were setup in environments which weren’t necessarily conducive
to the business. The practices of business were not evolved and in addition not everyone
had the family and peer support. Majority entrepreneurs struggled with the availability of all
kinds of resources including finance. In this scenario, delivering a good quality product and
earning money to develop new products to sustain in the market too priority.
Secondly, it took a long time for the larger companies to train these MSMEs in people
practices. The trainings or grooming efforts taken by larger corporations on these MSMEs;
who were their suppliers/vendors were all focused on quality of products and processes. All
the training efforts be it from the large corporations or the government agencies, were
focused on vocational training, increasing the quality of products and processes and
improving the productivity. The people practices were completely missed at that point due
to priorities at hand.
While the MSME owners realized that people practices are important, by the time they
could find time to concentrate on bringing and organized effort to shape the culture, a
culture had already set in. The owners were torn between creation of new products and
markets & setting people practices. Surrounded by other challenges, naturally revenue
generation won.
Now, when the second and third generations are taking over the businesses, major
challenges are surfacing and although simple in nature, these people challenges have roots
set in the inception of the company and in the people who joined while its inception and
thus are difficult to deal with. So, what are we going to do about this? Well, we are going to
write about and propose practical solutions to these HR issues in this blog.
The objective of this blog is to provide solutions which are practicable and sustainable.
Through this blog we will be providing support to implement practical HR solutions along
with help in HR workflows and their implementation.
Any person looking for help for HR implementation can feel free to get in touch with us at
the given contact details and we will love to give you formats and workflows completely
free of cost. And keep following the blog for discussions on HR related challenges faced by
small businesses and MSMEs and ways to arrive at a solution for them.
Keep reading!!!