Men of the moment
2 Jul, 2007, 0320 hrs IST, Shreya Biswas, TNN

For Net4Nuts’ Chirag Patel, the CEO or chief nut as he is known within his company, the only concern is not coming up with innovative products, but to keep happy those behind them. For a less-than-Rs 5-crore company which is growing at 50-60% a year, he is grappling with how to manage his people resources - the key for an IT services firm like his.

A part-time help for managing HR was not all he wanted to address employee concerns. And, so the solution: A dedicated team to look after his people. He hired a full-time HR person 15 months back.It’s a vicious circle for them. Riding on huge growth, the SME sector is now caught in the dilemma to align its people practices with organisational goals.

In the middle of a transition, they need people to manage the huge scale they are gaining. At the same time, being small, they are finding it hard to convince people to get on board. Nonetheless, they have started taking small steps towards setting up separate HR departments, putting in place a fresh HR policy, retention and career management policy, approaching B-schools for customised courses, opting for HR outsourcing, and so on. This, they think, will give direction to their future growth.

Sample this: Starting as a two-people entity in 2001, Net4Nuts is today a 35-people firm, working in MVAS (mobile value-added services) space. With bigger companies poaching its talent, and entry level attrition touching a sharp 50%, it needed a proper HR policy to counter the external forces. Professional help on a part-time basis couldn’t understand the internal environment well enough to suggest corrective measures.

“At the starting-up phase in a company, people are more involved, deciding on everything right from fixing the computer to deciding the growth strategy. While in the evolving stage, you need to put in place processes and identify people to take care of these. It’s a journey from people to process organisation,” says Mr Patel. That’s finding ground with most companies in the SME space. They are now putting in place HR policies covering every aspect of people issues, retention strategies, performance management systems and career planning policies, among others. This has become imperative to sustain the progress they have made till now.

The auto component sector, for instance, has been losing trained employees at random. A senior executive of a Delhi-based engine parts maker says that his biggest challenge today is to train people quickly so that the lack of skills arising out of massive attrition (engineers leaving for the IT sector) does not affect productivity. He has therefore hired HR personnel who focus on training. “ A similar trend is being noticed in the pharmaceutical sector, where there is a huge movement of sales people to call centres. So, companies are increasingly training these employees to upskill.

“Businesses are trying to scale up and get professional. This has resulted in the need for quality training,”explains Jitendra K Das, Dean, IIM-Lucknow (Noida campus). Das regularly gets inquiries from small companies for training employees via short-term courses.

Training helps them build house-skilled workers, who are flexible enough. Vijay Kumar Ghai, managing director, Priknit Apparels, says, “We have people with practical experience who do not mind doing menial jobs when needed and are equally good at handling people.” These employees do not have ego issues. These are people who started with small packages like Rs 5,000 a month. Today, they are getting between Rs 50,000 and Rs 75,000,” he adds.

The Ahmedabad-based Doshion grew phenominally in the last one-and-a-half years. Its revenues vaulted from Rs 90 crore to Rs 210 crore in that period. And it went on a hiring spree, recruiting as many as 700 people. Says Doshion’s vice-president Bhavesh Upadhyay, who himself was brought on board last year: “In the last 12 months or so, we created a separate HR section.We have put in place a recruitment cell, employee care cell, training and career planning cell. It was imperative to sustain growth.”

This just justifies their increasing training spend for skill enhancement of employees. In fact, some like Doshion spend close to Rs 80 lakh a year while for Net4Nuts, the bill has increased by 50% year on year.

Retention is also an important issue which the companies are trying to address. As employment is more contractual and flexible in nature in SMEs, shifting of loyalties of employees from one unit to other is rampant. Besides, in the current growth scenario, employee poaching adds further challenge to this. “As a retention strategy, most of these small units extend compensation in kind for the families of the employees, provide housing, education and also off-season alternative employment,”says K Rangarajan, director, SME centre and head, IIFT Kolkata.

Companies are also approaching HR consultancy firms. Increasing demand from them led Right Management, to set up a division, Right Grow Talent, focussed on SME needs, three months back. “We have serviced three clients since launch. This includes a 140 employee-strong Bangalore-based logistics entity and a Mumbai-based manufacturing firm,” says Right Grow Talent COO Arunav Bannerjee.

These SMEs can’t afford the high fees charged by consultancy or search firms, but approach them for customised solutions. Adds Anil Sachdev, CEO, Right Management: “Since they had a monetary constraint, we couldn’t work with them directly, but asked our retired senior people to help or asked our junior executives to take up the task. Gradually, the demand went up considerably.”