Most MSME founders think they don’t need HR.
“We’re too small.”
“We can’t afford an HR manager.”
“Our people are fine. We’re like family.”
Until reality hits.
- The first key employee resigns.
- A compliance notice arrives.
- Office politics eats up productivity.
- Or worse → the founder burns out doing everything themselves.
The truth?
HR in MSMEs isn’t optional.
It’s survival.
In my two decades of consulting 700+ businesses, I’ve seen the same mistakes repeat themselves. They’re predictable, avoidable, and extremely costly.
Here are the 5 HR mistakes that silently bleed MSMEs—and what you can do about them.
❌ Mistake #1: Hiring in Panic Mode
Most MSMEs don’t plan headcount. They wait until someone resigns—or business grows suddenly—and then scramble to fill the gap.
Result?
- Wrong hires.
- Overpaid hires.
- Culture misfits who leave in 3 months.
The Fix: Workforce Planning.
Even a 10-person company can forecast hiring needs 3–6 months ahead.
Plan roles, not reactions.
❌ Mistake #2: WhatsApp as Your HR System
If your hiring, feedback, payroll, and compliance all happen on WhatsApp, you don’t have HR. You have chaos disguised as convenience.
Why it fails:
- No documentation → no accountability.
- No systems → founder bottleneck.
- No consistency → confusion everywhere.
The Fix: Basic HR Tech.
You don’t need expensive software. Start with simple digital tools (even spreadsheets done right). But document. Track. Systemize.
❌ Mistake #3: Annual Appraisals = Feedback
Waiting 12 months to tell employees what they did right or wrong is like doing archaeology. By the time you dig it up, the damage is already done.
Impact:
- Good employees feel invisible.
- Struggling employees get no guidance.
- Everyone coasts on “survival mode.”
The Fix: Real-Time Feedback.
Weekly check-ins. Monthly performance discussions. Immediate course corrections.
Feedback is oxygen—your people can’t wait a year for air.
❌ Mistake #4: Thinking “We’re Like Family” Works
Many founders proudly say: “We don’t need HR policies. We’re like family here.”
Translation:
- Unclear rules.
- Unfair decisions.
- Favouritism and frustration.
And when someone resigns, the “family” ghost them instantly.
The Fix: Professional Culture.
Culture is clarity, fairness, and consistency—not birthday cakes and slogans.
Build a workplace where respect is policy, not personality-driven.
❌ Mistake #5: Ignoring Compliance (Until It’s Too Late)
“No one’s complained yet” ≠ compliance.
Ignorance won’t protect you in court or audits.
Impact:
- Legal penalties.
- Loss of credibility.
- Distraction from core business.
The Fix: Basic Compliance Hygiene.
Contracts. Offer letters. Attendance. Payroll slips. Statutory filings.
Get it right once → sleep peacefully forever.
The Way Forward: From Chaos to Clarity
These 5 mistakes may look small—but they add up fast.
They cost MSMEs:
- Higher attrition.
- Slower growth.
- Founder burnout.
But here’s the good news → they’re fixable.
That’s why I created the PRISM–HR Playbook.
- 4 HR functions.
- 21 levers.
- A step-by-step system to turn MSME people chaos into business clarity.
It’s not corporate theory.
It’s practical survival for MSMEs who want to grow without losing their sanity.
⚡ Final Thought
Your people can be your biggest growth driver—or your biggest hidden cost.
The difference?
How you manage HR.
If you’re ready to stop firefighting and start building clarity—watch this space.
The PRISM–HR Playbook – Launching Soon.
