Breaking The Code: Why Some SME HR Managers Achieve Phenomenol Success, When others Simply Struggle!

As creators of SME HRMS, we closely work with HR managers in startups and SME organisations. In our interaction with them, we have seen 2 kinds of approaches.

1. Some HR People Feel Constrained In An SME Ecosystem.

They are hard-working, and come up with good ideas. But the shortage of funds strangles their vision. The HR team itself is small. From recruitment to onboarding and payroll generation, everything is their responsibility.

Sitting together in a café and consoling each other is understandable.

Such HR people either leave for some bigger organisations, or suffer burnout.

But there is also another breed of HR managers.

2. Street Smart HR Managers Flourish In SME Business Organisations.

They enjoy the freedom and responsibilities that they get in smaller companies. They grab the chance to create policies from scratch. Love the experience of implementing HR tech and automation in the company. And cherish their interaction with business owners!

No wonder, they too work under financial constraints. But somehow they know how to work through these shortages. They find solutions.

We asked ourselves: What makes these human resources managers different? What are their unique leadership skills?

What can we cull out from them and share with other HR people?

The result of this quest is this report. A list of the most important competencies that we found in successful HR managers.

  • If you are a business owner, it will help you in selecting your HR team.
  • And if you are an HR manager, use it as your roadmap for self-growth.

First let us discuss competencies that apply to all HR managers, whether in larger organisations or in the SME sector–

To be effective in their role, HR managers should focus on developing the following competencies:

1. HR Managers need good communication skills.

Effective communication is one of the most important soft skills for an HR manager. They need to communicate clearly and effectively with employees, management, and other stakeholders.

Strong communication skills help in resolving conflicts, conducting interviews, giving feedback, and fostering a healthy work environment. It is also an important quality for keeping the team morale high.

2. Emotional Intelligence makes a difference

HR managers deal with various emotions and personalities in the workplace. High emotional intelligence enables them to understand and manage their own emotions and those of others.

This skill is crucial in building strong relationships, resolving conflicts, and creating a positive work environment.

Every HR manager must have the knack of feeling the workplace energy.

3. Ethical Practices win the trust of employees

Integrity is a key competency for HR managers. Upholding ethical practices, maintaining confidentiality, and ensuring fairness in all decisions are essential for building trust and credibility within the organisation.

If employees don’t trust HR, it leads to problems for the organisation.

4. Problem-solving abilities are a must.

HR managers often face complex challenges that require quick and effective solutions. Strong problem-solving skills help in implementing change initiatives and improving overall organisational performance.

To hone your problem-solving skills, study various case studies. Also, get trained in creative problem-solving methods.

5. Strategic Thinking is a competitive advantage

The ability to align HR initiatives with the overall business strategy is key for an HR manager. Strategic thinking involves understanding the long-term goals of the organisation and developing HR strategies that support and contribute to achieving those goals.

Put this ability high on your professional development roadmap. It will become your competitive advantage. Because most HR people get embroiled in day-to-day operations. And when the time comes for a bigger role they are found lacking in strategic vision.

So, work on this aspect from early in your career.

6. Adaptability. HR must be ready for the change.

The business landscape is constantly evolving with changes in technology, regulations, and workforce dynamics.

It’s the role of HR managers to bring and adopt new policies, points of view, and progressive initiatives into their organisations.

But to do it, they themselves must be adaptable and open to change.

So be ready to study new trends, understand the implications of changing technology, and be proactive in implementing it in your organisation.

7. Continuous Learning for career growth

To stay relevant and effective in their role, HR managers must continuously learn and develop themselves. They must keep up to date with industry trends, the best HR practices, and successful HR initiatives of competitive firms.

But it’s not just HR, they need to interact with professionals from all walks of life. They must know what a salesman does in the field, what psychological factors influence IT people working in a constrained physical environment, and in what way a small decision can snowball into a big cost for the CFO.

So continuous learning is a must for success in HR.

Now let’s turn our attention to the question that kicked-started this report:

What Makes Some HR Managers Flourish In Smaller Organisations In Spite Of Financial And Other Constraints?

In small and medium-sized enterprises (SMEs), HR managers play a critical role. Let us add, that often business owners don’t realize how significant an HR manager is in their company.

In SME companies an HR manager isn’t just managing day-to-day operations, he or she is also designing and building the work culture of the organisation. He is putting the foundation for the future!

In addition to the core competencies required for all HR managers, here are some extra competencies that are particularly valuable in the context of SME businesses:

1.Resourcefulness: Winning in spite of constraints

Resourcefulness is the ability to find quick and clever ways to overcome challenges or obstacles using the available resources effectively. It involves being creative, adaptable, and proactive in finding solutions to problems.

HR managers in SMEs need to be resourceful in finding creative solutions to HR challenges, such as recruitment, training, and employee engagement, within these constraints.

SMEs often have limited resources and budget constraints. Successful HR managers in SME organisations deal with it maturely. They don’t crib about it.

They take it as a fundamental reality and work through it. This often helps them in finding creative solutions to challenges. And they get a kick out of it.

Here are some examples of how SME HRMS managers show their competency in resourcefulness.

Recruitment on a Limited Budget:

One of the primary challenges faced by HR managers in SMEs is attracting top talent without breaking the bank. To overcome this hurdle, they employ several cost-effective strategies:

1. They build strong employer brands: By regularly organizing employee engagement activities and posting about them on social media platforms.

They also create professional documents, job descriptions, and email templates to impress potential candidates. .

2. They leverage social media: Platforms like LinkedIn, Twitter, and Facebook provide cost-effective methods for promoting job openings and connecting with potential candidates directly.

(Here is a list of Low Budget Employee Engagement Events for SME organisations)

3. Training on a limited budget: They utilize internal expertise. Some employees are good at using Excel sheets, and some are at AI. When they are asked to train others, they feel motivated and recognized.

Smart HR managers also embrace technology. Online learning platforms and virtual training sessions offer cost-effective alternatives to traditional classroom-based training programs.

Smart HR managers utilize online certifications and training courses to the fullest. They enroll the employees in such courses. And then ask these employees to share their knowledge with others.

They also utilize their network and invite senior professionals to give expert talks. It motivates the employees and keeps the morale high.

They understand that SaaS-based cloud platforms are cost-effective for SME organisations. They convince business owners to implement these HR automation platforms.

2. Multitasking: The art of juggling many hats!

Multitasking means handling multiple tasks or projects at the same time. It involves switching between different tasks efficiently to get things done effectively and meet deadlines.

In SMEs, HR managers juggle multiple responsibilities and wear many hats. They are expected to recruit good talent, and also to generate payroll. When the compliance inquiries come, they are the people to frontend the inspectors. And how can we forget employee engagement and conflict resolution?

Everyone has questions for them, and they are expected to know all the answers. It’s a great experience to watch an HR manager tackle a wide range of work efficiently.

The ability to multitask effectively, and manage time efficiently is crucial for success in small businesses.

Here are some of the strategies we see HR managers use to handle multiple responsibilities-

They understand that while everyone wants their work to be done quickly, not everything is equally important or urgent.

So they prioritize. And negotiate with business owners, employees, and other parties to set the expectations right.

They are good at time management and block realistic time frames for every task.

And they make good use of calendars, schedulers, and alerts. They plan beyond the urgent day-to-day work demands. They are always aware and plan for recurring activities. Like compliance reporting, monthly town hall meetings, and payroll generation.

So they begin to work towards these goals even before the task is impending. And they deliver well, in spite of low bandwidth.

Here is one trick that they all use: In small businesses, a business owner’s approval is needed for almost everything. So smart HR managers ‘synchronize’ their own calendars with the business owner’s availability.

Learn about the top HR practices that fuel rapid SME expansion

3.Business Acumen: Talking about the business owner’s language.

Business acumen refers to the ability to make quick and smart business decisions. It’s the ability to understand how a business operates and to foresee potential opportunities or risks. It involves having a deep understanding of the industry, market trends, and financial implications of our decisions and choices.

Successful HR managers don’t just talk about policies. They understand that every initiative needs resources.

When they propose a new initiative they also talk numbers. Business owners love this. Because contrary to common perception, business owners are often ready to invest money in new initiatives. If we can show them that the investment is beneficial for the business and will save them significant money in the long run. Or will increase productivity.

They just want to know the ROI of a new job role or a new technology. If they can envision the results, they even raise money from the market and go for new solutions!

Smart HR managers avoid using soft terms like ’employee morale.’ In their proposal, they focus more on cost saving, the creation of a professional culture, and productivity enhancements.

They also give evidence, like the example of some close competitor who is deploying the new solutions.

They also know the ‘investment threshold’ of their organisation. And only propose solutions that are affordable and useful for the organisation.

In fact, when their suggested solutions show good results, their future suggestions are accepted more readily.

Understanding the business context and financial implications of HR decisions is not just essential for HR managers in SMEs-

This might be the most important competency for shining in an SME organisation.

4. Networking Skills: Widening the nets, catching the best!

Networking in a business scenario involves building and maintaining relationships with other professionals, clients, and potential customers. It helps in the exchange of information and insights, contacts, and opportunities.

Effective networking expands a person’s circle of influence and creates better business opportunities through connections and referrals.

Successful SME HR managers are great networkers

Rather, they love networking. They not only attend HR events but are part of the organizing team.

Networking helps them understand the new trends and buzz going around the industry. As they are in direct touch with some of the industry’s thought leaders, they have an edge over others.

They recruit good talent through their network without engaging the recruitment agencies. It saves the organisation money. These managers also get a thorough checkup on the candidates through their network.

These HR managers often organize industry events and give a good platform to thought leaders and entertainers. Due to this relationship, many experts readily accept the invitation to visit the SME organisation at a ‘friendly fee.’

These kinds of events also help the business owner to get to know these experts one-on-one. This relationship often converts into cost-effective consulting engagements. And helps the organisation to grow at a rapid pace.

The SME HR managers are often young and need mentoring. The network is an empowering resource for them. When they need to create new policies or to start a new initiative, help and expertise are only a call away.

That’s why we recommend that all business owners must make sure their HR managers are part of HR communities.


It needs some special competencies to succeed in SME organisations as HR manager. Competencies in resourcefulness, multitasking, business acumen, and networking make a huge difference.

All HR managers in SME organisations must work on improving these competencies.

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