Small and Medium Businesses (SMBs), designated by an upper limit of 250 employees, have their unique characterization when it comes to HR and HR-related policies and practices. Often underpinning their smaller size and nimbleness are an organizational orientation to grow rapidly, despite capital and resource constraints. Human capital is at the front and center of their differentiation strategy to come up with disruptive innovation that sets them apart from large enterprises, enhances their competitiveness and helps them achieve economies of scale and scope, without sacrificing their agility.

SMBs are often characterized by centralized decision-making by people at the helm, fewer organizational boundaries or silos and a relatively seamless communication flow. Due to their growth stage, any human resource(s) not directly linked to revenue-generation are often considered wasteful. Organizational development decisions are implemented on-the-fly, without the need for well-defined systems and processes. Since everyone's performance is often transparent and appraised through the year, typical performance appraisal and management systems are either not in place or considered redundant. While hiring the best employees, training them well and retaining them is indeed considered an organizational imperative, the balance often shifts from strategic HR management to tactical HR management to drive the day-to-day operations of the company. You'd typically see a 'HR generalist' instead of an 'HR specialist' in such organizations and even that person is likely to be a multiple-hatter juggling many balls.

The Role of Technology in Meeting SMBs HR Needs

Technology can play a pivotal role in supporting the aforesaid tactical HR management needs of SMBs. A typical tactical HR technology platform will encapsulate SMBs' needs to process payroll timely and accurately, include core HR capabilities for employee lifecycle management, support leave and attendance management tuned to the practices followed in the firm and factor in additional capabilities for reimbursements and claims processing for business sustenance. Any additional analytics capabilities to glean actionable insights that propel the business forward are an icing on the cake.

In the present realm of technology, it can be argued that such a HR and Payroll platform is invariably cloud-based. SMBs are often starved of capital and they'd rather plough what they have into growing the business than tying it up into anything that's not revenue-impacting. The pay-as-you-go business model offered by applications hosted on the cloud turn a fixed-cost framework into a variable-cost model favoured by the SMBs. This also obviates the need to invest in capital-intensive IT compute infrastructure that often needs specialized resources lacked by the SMBs. The security, backup, archival and disaster recovery offered by major cloud providers can often not be matched without substantial on-premise investment that SMBs typically can't afford.

The lack of specialized HR resources in SMBs also highlight the growing importance of implementation and business operations support. SMBs should be careful in choosing their HR and Payroll provider with a reputation for dependable and proven support that can stand by them in their hour of need. All this means SMBs can now stick to their core competence instead of spreading themselves thin; something that exposes them to needless vulnerabilities.

The Criticality of Adhering to Statutory Compliance as Part of Technology Solution

A very critical factor is the role played for statutory compliance by such a technology platform provider. In the face of an audit or government investigation, SMBs can't cite their size or business constraints as an excuse for non-compliance. Furthermore, the penalties for non-compliance can be stiff enough to impede the operations of the company. In India, companies have to comply with a gamut of statutory framework such as the ones related to Income Tax, Provident Fund, Professional Tax, Employee State Insurance, Labour Welfare Fund, and many others, irrespective of their smaller size. This underscores the importance of choosing a HR and Payroll technology solution that can provide comprehensive and fail-safe support for adhering to the statutory guidelines.

Such a vendor or technology provider will also preclude the need to either hire or have access to specialized people with such knowledge, thereby cutting costs. A seamless, automated tactical HR and Payroll management technology platform can thus be the bedrock of HR management in an SMB. Such a platform cuts expensive errors, manual work and paperwork administration in favour of automated number-crunching, report-generation and workflows.

The Future of Employee Management is Employee Engagement

Engaged employees are empowered employees. Numerous studies have proven that engaged employees deliver superior business value to their peers, customers and stakeholders. Empowered employees prefer to serve themselves instead of the organization attending to them. The employee self-service capabilities offered by their HR and Payroll provider can pave the way for employee empowerment and engagement. Furthermore, the workforce in India is incredibly young, with a majority being the digital natives who grew up in the post-internet era. Mobile applications that foster such engagement can be a further fillip in driving employee engagement. Technology solution providers can go a step further by incorporating a 'social' aspect into their applications that promotes peer engagement and social proof. Remember, happy employees mean happy customers and a better business.