It is important to understand as a start-up, it is critical to have like-minded people join you and give their valuable contribution towards growth and targets. However, if the HR side of the story is not properly thought out, it becomes a hurdle and comes in the way of employees giving their optimum performance. Thus, a well-oiled HR function is not limited to big corporates and conglomerates. It is equally important for SMEs and start-ups. 

First, let us understand what difference HR function can make to your start-up or the SME you run: 

  • HRM helps to keep a check on the right number of employees to analyze customer demand and run the business effectively. 
  • HRM analyzes the business environment changes and the need for new skill sets required with regards to exploring new markets, competitive pressure, or adapting to economic changes. 

It is a very common observation that quite a few start-ups and SMEs do not focus on HR and hence are not able to train the employees properly, not able to compensate & reward employees for their appreciable performance, and create a culture that assimilates various talents under one roof. 

Especially with work from home culture becoming the acceptable norm, it is necessary to monitor the performance and efficiencies of the employees closely. Getting the employees to stay motivated always is also critical. 

However, there are a few simple HR processes by which SMEs and start-ups can keep their staff motivated and encourage them to put in their 100%. Through these effective processes, the start-ups do have an opportunity to create a work-friendly, easy-going atmosphere and an open culture where the employees can remain focused and productive.  

Here are some of the key HR objectives applicable to start-ups and SMEs: 


  • Hire the right people for the right job – The key focus here is to write a proper job description, create a competency model for each department, and benchmark roles for similar jobs in the industry. 


  • Define organizational goals & hierarchies – It is always good to know the organizational goals and align them with the right HR policies and talent. Set hierarchies and chain of command to reach the goals effectively. This exercise gives a well-rounded picture of what the organization would look like. 


  • Define mission, vision, and values – Mission helps businesses to understand why they exist; vision helps to understand what the business will achieve; values define the beliefs that drive the operations of the business. These three put together help in understanding the type and number of resources required to meet the organizational goals. 


  • Do workforce analysis – Doing this analysis helps the organization in determining the current situation of the culture, people & systems, and where they want to be in the years to come. Thus, this gap analysis enables HR to come up with specific objectives. 


  • Evaluate strategy – Strategy evaluation always guides on critical factors like employee turnover, number of vacant positions, employee grievances, and customer complaints, thus providing an opportunity for timely course correction. 

Here are some critical tips for building HR strategies for start-ups and SMEs:

  • OrganizeAs discussed previously, most start-ups and SMEs widely neglect the HR function. However, it is wise to invest money in people who will take the business to the top & their co-workers who will aid these key people in achieving the desired goals. It is always good to have an employee HR handbook that needs to have the following key points covered: 
  • Code of conduct 
  • Policies & protocols related to communications & technology 
  • Employee benefits 
  • Appraisals and disciplinary procedures 
  • Termination and retirement policies 


Be precise and judicious with the choice of words while drafting a handbook. Nothing should be left to the imagination of the employees. Every policy and process need to be clearly worded. Remember to maintain past employee’s records whether terminated, retired, or left the company on their own. 


  • Motivate – Keeping key resources stay and work in the company for long is a daunting task. It is always the tiny little things which make a large impact on the employees. Here are some suggestions to keep the resources motivated: 
  • Recognize contributions 
  • Acknowledge your team members as unique having great set of skills and talent 
  • Remember their birthdays, anniversaries; send them small gifts. If employees fall sick, send them a ‘get well soon’ message etc. 
  • Get employee feedback from time to time  
  • Seek suggestions from employees on business challenges 
  • Make the work environment warm, pleasing, and appealing 


  • RetainCreate employee-friendly strategies to retain talent like ‘pet-friendly Fridays,’ ‘work from home Tuesdays,’ etc. It might be a good idea to get employee feedback to get ideas that would go well with them and stay motivated. Remember, creating strategies with inputs from the team and implemented over time through mutual respect and appreciation goes a long way in retaining talented employees. 

Now, we touch upon some good HR strategies for SMEs and start-ups: 


  • Improve employee satisfaction – To run the business smoothly and effectively, it is always critical that the employee is motivated and always satisfied. Several tried and tested tangible and intangible benefits aligned with the organization’s financial situation have a positive impact on increasing employee satisfaction. 


  • Create fair compensation policies – Always aim at creating policies that are commensurate to the industry standards and according to the pay grade to ensure all employees are compensated equally. 


  • Create training and development opportunities – To promote employee retention and growth within the company, it is important to create effective training and development programs that resonate with their ambitions. Also, a standard employee orientation program is critical for new employees to inculcate a sense of commitment. Another area could be a mentor-ship program designed for mid-senior to senior-level employees for future leadership roles.  


  • Implement legal employment practices – Always ensure that the hiring practices are in line with the legal employment rules. All employees should understand the employment laws so that they know which line not to cross. Get an expert HR professional to draft an employee handbook covering all such legal frameworks. 


  • Choose between reactive & proactive HRM – A reactive HR might prove to be a cost-effective solution for start-ups and SMEs as they plan and implement as and when the need arises. On the other hand, a proactive HR identifies the functional areas beforehand and strategizes accordingly with proper training and staffing, anticipating issues in staffing and employee motivation programs. 


Thus, with the above guidelines and a bit of proactiveness on behalf of the organizations, a start-up or an SME can include HR practices right from the business’s inception. Also, the article clearly outlines the need for HR function even for a start-up, as certain key aspects regarding staffing, resource planning, employee productivity, and satisfaction are well taken care of. 

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