How to improve employee productivity in SMEs?

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Hi myself Dilip Sharma and I am a Human resource professional. I have worked for more than 10k above companies for their employee solution. As founder and director of This article will surely help you to improve employee productivity in your business. I, with my whole team of EXPERGRAPH will surely available to implement the idea in your organization to achieve your business goals.

How to improve employee productivity in SMEs?

Employee productivity is very important for any organization. It has a direct impact on production, sales, revenue, profits, and client satisfaction. In this article, we will try to understand the major reasons behind this problem and its solutions.

First, we have to understand that in business how employee productivity impacts. So that we can understand its importance.

The direct meaning of employee productivity is the output produced by an employee’s action that finally reflects in revenue and profits.

According to researches, a fully productive employee group can produce 500% better than average employees in a year. Indirect profits can be 10 to 15 times higher. How big it is, when we see in India’s employee performance in small enterprises is less than 50% then their average capabilities.

it is always very important to focus on the productivity of human resources.

Major reasons behind this.

1.Everything is based on the owner.

Maximum small businesses SME, MSME run on the name and presence of owner or promoter instead of system, product, or policy. For every single operation, owner involvement becomes compulsory. Due to that all things action, decision, client coordination centralized around the owner. All the decisions kept pending till their approval by management. Due to this employee just follows instead orders and not able to act independently.

we have to understand that a business is not just an owner it is either a product, service, or system. We should always highlight the product, system, or services above the individual identity. Our team should know all benchmarks and processes and everyone has decision power accordingly. So employees can do their work till the end process

2. Unavailability of written SOP and KRA-

A written policy and operational document are highly essential if we want to make things standardized. An SOP (Standard Operating procedure) is a very important document for any organization. Without it, things can change in every next cycle and will be lost the effect. And this is the most important problem with maximum SME, MSME, and Small businesses, where routing work acts on verbal instruction and experience of the owner. And process changes as per the condition. Due to this employees can’t perform as per that and due to regular changes and uncertain processes they take too much time to execute things.  Maytime’s everything stopped till owners confirmation.

On the same ground, there is an unavailability of key Responsible areas (KRA) for employees. That, what are the main responsibilities and accountabilities. Due to this tasks were delayed or unperformed, every time for instructions of management.

To improve employee productivity first organization should focus on the writing of clear SOP for the organization process and KRA for Employee work. No issue if it needs to change, company management can update it from time to time as per requirement. We just need to ensure that every change must be shared and instructed with all employees timely.   

3.Individual performance formats instead of Team performance

An organization is a bunch of people, machines, materials, processes, and brands. The result comes out with an equal performance of all. If sales and marketing making full efforts but product quality is not as per benchmark firm can’t achieve the targets. On the same ground, everything is interconnected. And if anyone thing performs bed, whole efforts can waste. So in every organization working as a team attitude is very important.   Promoter or management should regularly do training programs and activities for team building and coordination.

Dr. Garima Mathur the renowned trainer says, “Regular training in employees for team spirit helps to improve the employee productivity by 5 to 10 times even in small size companies”.

4.Sales and expenses balance sheet based on year-end instead of proposed.

Maximum small companies running on availability of the fund generated by the arrangement or by sales revenue. Fund availability is generally based on the re-cycle system. This is a very wrong system which gives an uncertainty of future planning and execution.  It may be ok for a startup. But if any company is in the system for 3-4 years, it must have its finalized balance sheet, income, expenditure heads. And on that basis of these, the organization should Plan for pre- budgeting as per required growth, expansion, coasting plans and manage the year as per that. It will give clear business understand planning to employees and ensure the performance. 

Renowned Tax and Audit practitioner CA Rakesh Porwal Says-

As we all learn with past performance and plan for future the same thing happens in business. The best criteria to evaluate the performance of any business that the comparison analysis with industry standards. We can achieve it only with the help of pre-budget planning of a day-to-day business. When we compare our budget plan with actual on day to day basis then only we can achieve our goal. How to analyze any business? By Gross Profit or Net profit or Turnover or expenditure or investment in plant and machinery? To analyze any business, we should check all the ratios like Net Profit Ratio Debt Equity Ratio, etc., and compare with industry benchmark.

5.Vacuum of tools training and infra.

We know that we can increase the capabilities of any mechanism or men by training and tools. Maximum SME projects to achieve certain goals but do not know how to achieve these goals. what is the exact infrastructure they required? Due to this employee performance mismatch with expectation. If we are working in the digital era and expecting to achieve our presence in the Digital market. The company not only has to hire the best-qualified employees for Digital marketing and IT but also needs to arrange competitive IT configuration and software licenses.  Or doing a lot of advertisement but we are not appointing right persons to handle customer inquiries not only all leads generated by advertisement will be wasted even it will create a negative image. So we must continuously work on the improvement of the best combination of tools training and infrastructure to improve employee productivity

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Dilip Sharma
Mr. Dilip Sharma

Mr. Dilip Sharma
He is a renowned recruiter and founder of the leading job portal –

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