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Developing HR for SME 20th June 2015 SME Department, Yangon Professor U Aye Kyaw Principal (MHR) Program Director (CSIS) Honorary Fellow (ABE, UK) Fellow (Chartered Management Institute, UK) Fellow (Cambridge Academy of Management, UK) Chairman, Myanmar Tourism HRD Association(MTHRDA) I. IMPORTANCE OF SME Professor U Aye Kyaw (Principal, MHR) In The World • • • • 99% of the world’s economic enterprises are SMEs SMEs account for 55-95% of country GDP More than 50% of the world’s labor force is employed by SMEs Alleviation of Poverty, creating lots of employment In US: • 80+% employment is by SMEs with less than 20 employees In UK: • 99% of private sector businesses, 59.3% of private sector employment In Europe: • 99% of all enterprises in Europe • Contribute more than two thirds of the European GDP • SMEs provide 75 million jobs in the private sector I. IMPORTANCE OF SME Professor U Aye Kyaw (Principal, MHR) In Asia Pacific region: • • SMEs are 90% of all enterprises 48% employment is by SMEs In China: • • • • • • 9.7million SMEs 60% of GDP Taxes: 50% Exports: 78% Innovations (e.g. patent): 66% Employment: 80% In India: • 3.5 million SMEs (80% of total enterprise) • 50% of Private Enterprise Employment • 34% of total exports • About 8000 products II. TYPES OF RESOURCE Professor U Aye Kyaw (Principal, MHR) RESOURCES Tangible (Hardware) 1. 2. 3. Human Resource (People) Financial Resources Physical Resources Intangible (Software) 1. Human Resource (People) 2. Information 3. Time III. IMPORTANCE OF HR Professor U Aye Kyaw (Principal, MHR) Helps the company achieve its objective Attracting employees, and maintaining employees effectively Facilitates professional growth Fosters better relations between union and management Helps an individual to work in a team or group Identifies persons for the future Allocates the right person for the right job Improves the economy through people Main strength of any organization lies in the quality of its PEOPLE • Nothing works without people. • Facilities, technology, and services can easily be copied by competitors, but NOT PEOPLE (HUMAN RESOURCE). • Creativity, decision-making skills, analyzing skills are not ‘owned’ by an organization but BY INDIVIDUAL EMPLOYEES (HR). • • • • • • • • • IV. GENERAL CHALLENGES IN SME Professor U Aye Kyaw (Principal, MHR) ACCESS ISSUES • • • • • • Finance Technology Markets Training and Development Human Resources Information BURDEN OF PAPERWORK • • • • Ease of Doing Business Bureaucracy Transparency Accessibility VULNERABILITY • • • • • Economic conditions Political environment Financial policies Remote locations Weather and disasters GROWTH • • • • • Cash flow Market access Economies of scale Competition Conversion from informal to formal V. CHALLENGES, PROBLEMS, ISSUES OF HR IN SME Professor U Aye Kyaw (Principal, MHR) Hiring qualified people/difficulties filling key-employee positions Cost savings in HR Problems retaining qualified people Developing managers and employees with high potential Control total wage bill (total payroll costs) Improve labor conditions Creating a performance driven culture Meeting development needs of workers Apply/dealing with (new) laws/regulations/legal obligations Managing work-life balance Managing demographics: impending retirement of key workers Managing change and cultural transformation Gaps in leadership pipeline/improving leadership development Transforming HR into a strategic partner Managing globalization Downsizing our workforce V. CHALLENGES, PROBLEMS, ISSUES OF HR IN SME Professor U Aye Kyaw (Principal, MHR) • The founder or owner has large impact • Poor in recruitment, selection, & retention • Weak in training and development • No or few expatriate management • Limited HR department, HR practices, and specialized HR expertise • Not adequately addressing potential workplace litigation • Not fully complying with compensation regulations V. CHALLENGES, PROBLEMS, ISSUES OF HR IN SME Professor U Aye Kyaw (Principal, MHR) Top 10 barriers to international markets by SMEs 1. Shortage of working capital to finance exports. 2. Identifying foreign business opportunities. 3. Limited information to locate or analyze markets. 4. Inability to contact potential overseas customers. 5. Obtaining reliable foreign representation. 6. Lack of managerial time to deal with internationalization. 7. Inadequate or untrained personnel for internationalization. 8. Difficulty in managing competitor’s prices. 9. Lack of home government assistance and incentives. 10. Excessive transportation and insurance costs. VI. SOLUTIONS OF HR (HRM) Professor U Aye Kyaw (Principal, MHR) VI. SOLUTIONS OF HR (HRD) Professor U Aye Kyaw (Principal, MHR) Competency in people Culture in Commitment in organization people VII. SOLUTIONS BY GOVERNMENT Professor U Aye Kyaw (Principal, MHR) Points For The Government To Consider • Enhance Education & Training Resources • Need Assessment Survey to identify major SME needs • Establishment of Institutes of Small and Medium Enterprise • Entrepreneurship Development in select business schools. • Capacity building and up-gradation (curriculum redesign, provision of equipment, teachers training/train the trainers, etc.) of selected sector specific technical training institutes • Encouraging use of the technical training infrastructure by the private sector • Incentives for investment in setting up SME training facilities • Induction of genuine SME representatives in private sector boards of the technical training institutes. VIII. HOW TO DEVELOP HR IN SME Professor U Aye Kyaw (Principal, MHR) Create a learning environment for SMEs. Create mechanisms to bring the informal training into the for mal training, coaching, and mentoring. Develop an entrepreneurial culture including education. HRD policies (mostly geared towards large businesses) must be focused more on development, benefits, and success of SMEs. VIII. HOW TO DEVELOP HR IN SME Professor U Aye Kyaw (Principal, MHR) Overall Scores for Promotion of Entrepreneurial Education VIII. HOW TO DEVELOP HR IN SME Professor U Aye Kyaw (Principal, MHR) Indian Institute of Foreign Trade IX. CONCLUSION Professor U Aye Kyaw (Principal, MHR) We have been trying to push the economy from the top. But to move the economy faster, we also need to push from the base. [email protected] www.facebook.com/uakmhr www.facebook.com/myanmarleadershipandmanagement