Exploring Recruitment Process Challenges in SME(s)

Small and Medium Enterprises (SMEs) play a significant role in economic development and can be considered the backbone of industrial development (SINGH, MONDAL and DAS, 2020). Recruiting suitable candidates is a challenging process faced by every organization, but SMEs may face additional challenges (Wapshott and Mallett, 2016). Recruitment and selection practices of SMEs are low compared to large organizations (Bhaumik, 2018).

Effective recruitment and selection practices determine the success and sustainability of any organization. However, some SMEs consider themselves unsuccessful because of not having proper human resource practices (Ofori and Aryeetey, 2011).

HR functionality will perform by the owner, their family member, or any other manager working in the company because, in most cases, a full-time HR professional is not available in small businesses (Singh, Panjwani, Doshi and Magdum, n.d.).

What is the recent behind a candidate choosing one company over another? 

According to Maslow (1954), there are five significant need categories any individual will consider in general. When the lower need is satisfied, their attention switches to the next highest need (Armstrong and Taylor, 2014).

Diagram 1.0 : Maslow’s Hierarchy of Needs to the Workplace.

Source: (Grant, O’Connor and Studholme, 2019)

Physiological needs:

This includes basic human needs such as food, air, water and shelter (Kaur, 2013). Organizations must provide employees with adequate wages, a comfortable working atmosphere and essential facilities such as transport, a cafeteria and proper sanitary facilities (Benson and Dundis, 2003).

The biggest challenge faced by SMEs is recruiting talented and qualified people. SMEs in rural areas face additional challenges in recruiting people because most skilled and experienced candidates prefer urban areas with more facilities (Bhaumik, 2018). It isn't easy to attract or retain skilled and experienced people because SMEs with less financial capabilities cannot provide the best market salary, benefits and compensation. Therefore, SMEs should maintain the best working environment and care to attract people. Benefits like gym memberships or standing desks show that the company highlights its employees' physical and mental well-being. (Singh, Panjwani, Doshi and Magdum, n.d.).

Safety needs: 

After the physiological needs are satisfied, the individual seeks safety on the job, including physical and mental security. EG:  Job security, company performance, formal employment contract, less anxiety and stress as well as benefits such as a pension scheme and medical insurance (Kaur, 2013). Training plays a vital part in the health and safety in the working environment. EG: A trained person with machinery feels more secure than one that has not (Benson and Dundis, 2003).

A significant difference in the SMEs is that most of the staff work on casual basis. Since the organization does not absorb workers into permanent service will push employees to leave the organization without prior notice and poor attendance (Priyanath, 2006). The next major factor is staff welfare. Studies show that many SMEs are not providing welfare to their employees and their families. Medical benefits or proper medical insurances were not at a satisfactory level among most SMEs (Priyanath, 2006).

Social needs:

Next level represents social needs in the workplace. Having close friends at work increases happiness and productivity, ultimately establishes a firm bond with the organization. The organization should have a clear corporate culture - common values and beliefs that attach various people together. This can be established by promoting group working across teams, departments and different levels (Benson and Dundis, 2003), as well as encouraging team building through social events like trips and get-togethers (Kaur, 2013).

Self-esteem:

At this level, employee considers the prestige of the organization, job title and how well the company recognizes their contributions and reward their achievements. Self-esteem can be achieved through an individual's successful performance appraisals, incentives, rewards, and recognitions. E.g., Performance base bonuses (Benson and Dundis, 2003).  

Some entrepreneurs are not knowledgeable enough to reward their employees and many SMEs do not have enough capacity to provide proper job roles to those who show skill and commitment. A limited number of SMEs motivate their workers by promoting them during their careers. Studies show that small organizations did not evaluate employees' performance because they did not like to increase their salaries (Priyanath, 2006) in addition to the unprofessional and informal structure of the organization (Singh, Panjwani, Doshi and Magdum, n.d.).

Self-actualization:

Finally, individuals move toward self-actualization; personal development plans, training, secondments, mentoring, and promotion opportunities enable staff to be the best they can be. Employees should feel good about coming to work daily (Benson and Dundis, 2003).

The market share of SMEs is minimal and most are unaware of how to protect and expand their businesses. Studies show that many entrepreneurs do not believe in advertising or cannot allocate high expenditure on advertising to expand their market share. Due to a lack of qualified or experienced staff, future finance plans are not visible in many SMEs, creating problems related to the organization's management.

Another noticeable weakness in SMEs is that they do not provide organized training for their staff because most lack sufficient knowledge of personal management and due to the increase in the cost of production (Priyanath, 2006).

Below research finding shows the reason behind low graduate retention in SMEs (Ofori and Aryeetey, 2011).

Source: (Ofori and Aryeetey, 2011).

'In this podcast we explore the ways in which SMEs can use innovative recruitment strategies and development techniques to create competitive employee propositions, cultivate a desirable employer brand and ensure that they are visible to the widest employee market' (Recruitment in SMEs | PODCAST | CIPD, 2015).

Source: CIPD · Podcast 102: Recruitment in SMEs

REFERENCES

Armstrong, M. and Taylor, S., 2014. Armstrong's handbook of human resource management practice. 13th ed. London: www.koganpage.com.

Benson, S. and Dundis, S., 2003. Understanding and motivating health care employees: integrating Maslow's hierarchy of needs, training and technology. Journal of Nursing Management, 11(5), pp.315-320.

Bhaumik, D., 2018. An Investigation on the Recruitment and Selection Practices within SMEs in Healthcare Sector in Dublin, Ireland. [online] Norma.ncirl.ie. Available at: <http://norma.ncirl.ie/3316/1/deblinabhaumik.pdf> [Accessed 22 August 2022].

Grant, A., O’Connor, S. and Studholme, I., 2019. Towards a Positive Psychology of Buildings and Workplace Community:the Positive Built Workplace Environment. International Journal of Applied Positive Psychology, 4(1-2), pp.67-89.

Kaur, A., 2013. Maslow’s Need Hierarchy Theory: Applications and Criticisms. Global Journal of Management and Business Studies, [online] 3(10), pp.1061-1064. Available at: <http://www.ripublication.com/gjmbs.htm> [Accessed 20 August 2022].

Ofori, D. and Aryeetey, M., 2011. Recruitment and Selection Practices in Small and Medium Enterprises: Perspectives from Ghana. International Journal of Business Administration, 2(3).

Podcast 102: Recruitment in SMEs. 2015. Recruitment in SMEs. [online] Available at: <https://soundcloud.com/cipd/podcast-102-recruitment-in-smes?utm_source=clipboard&utm_medium=text&utm_campaign=social_sharing> [Accessed 20 August 2022].

Priyanath, H., 2006. Managerial Deficiencies in the Small and Medium Enterprises (SMEs) in Sri Lanka: An Empirical Evidence of SMEs in the Ratnapura District. Sabaragamuwa University Journal, 6(1), pp.93-105.

Singh, G., Panjwani, J., Doshi, C. and Magdum, T., n.d. Impact of HRM on SMEs: A study on different HRM functions. [online] Available at: <http://srustimanagementreview.ac.in/paperfile/Research%20Paper.pdf> [Accessed 20 August 2022].

SINGH, L., MONDAL, S. and DAS, S., 2020. Human resource practices & their observed significance for Indian SMEs. Espacios, 41(07), p.15.

Wapshott, R. and Mallett, O., 2016. Managing human resources in small and medium-sized enterprises. 1st ed. Abingdon: Routledge.