Small and mid-sized enterprises (SMEs) are the backbone of India’s economy. They drive employment, innovation, and regional growth. Yet, as businesses scale, one challenge appears consistently across industries – aligning people decisions with business outcomes.

This is where strategic HR plays a crucial role.

In many SMEs, HR begins as an administrative necessity. Over time, it becomes a powerful lever that influences growth, profitability, and retention. when aligned correctly with business strategy.

Insights from the Saarthi HR workshop, facilitated by Anupama Sultania, highlighted how SMEs can move HR from administration to acceleration without adding unnecessary complexity.

From Administrative HR to Strategic HR

Administrative HR focuses on essential operations:

  • Hiring
  • Payroll
  • Compliance
  • Attendance

Strategic HR, on the other hand, connects people strategy with business goals. It helps organizations:

  • Plan workforce needs proactively
  • Improve productivity
  • Build leadership capability
  • Create sustainable engagement

This shift does not require large teams or complex systems. It requires clarity, structure, and intent.

How HR Supports Faster Business Growth

Growth becomes smoother when HR supports business planning instead of reacting to gaps.

Strategic HR contributes to growth by:

  • Linking workforce planning with sales and production pipelines
  • Enabling agile hiring and structured onboarding
  • Building internal learning capabilities using models like 70–20–10
  • Creating leadership pipelines to support future scale

When people plan aligns with business direction, teams are better prepared, and growth becomes more predictable.

Improving Margins Through Workforce Productivity

Profitability is not only about increasing revenue. It is also about optimising existing resources.

HR can directly influence margins by:

  • Measuring revenue per employee
  • Improving workforce mix and role clarity
  • Linking variable pay to output and performance
  • Digitising HR processes to reduce administrative effort

Case Insight: A ₹2-Crore Turnaround

A manufacturing SME implemented two focused HR initiatives:

  • Automated attendance tracking
  • Introduced output-linked variable pay

The results included:

  • Reduced absenteeism
  • Improved productivity
  • Stronger operating margins

The key takeaway was clear: small, well-designed HR interventions can deliver significant business impact.

Retention Improves When Employees See Growth and Belonging

Retention challenges are common during growth phases. Employees are more likely to stay when they experience:

  • Career and skill development opportunities
  • Fair and transparent compensation
  • Recognition for contribution
  • A sense of belonging and connection

Frameworks such as the 4C model (Career, Compensation, Care, and Connect) help SMEs approach retention in a structured, practical way.

Low-cost initiatives like regular recognition, transparent goals, and leadership accessibility often have a stronger impact than expensive engagement programs.

HR Data as Business Intelligence

Modern HR is increasingly data-driven. Metrics such as:

  • Attrition trends
  • Productivity ratios
  • Engagement feedback
  • Skill gaps

Help leaders make informed decisions that support both people and performance.

When HR insights are used alongside business data, leadership gains greater visibility and control over growth challenges.

Building an HR Roadmap for Sustainable Impact

One practical takeaway from the Saarthi workshop was the value of a 30-60-90 day HR impact plan:

  • 30 days: Define KPIs and role clarity
  • 60 days: Automate attendance or basic HR processes
  • 90 days: Launch engagement or feedback mechanisms

This phased approach helps SMEs strengthen HR systems without disruption.

Why This Matters for Growing SMEs

Strategic HR enables:

  • Faster execution
  • Better cost control
  • Stronger employee engagement
  • Sustainable growth

When HR moves beyond administration, it becomes a business enabler rather than a support function.

As emphasised during the Saarthi HR session facilitated by Anupama Sultania, aligning HR actions with business objectives often becomes the turning point between intent and execution.

Start the Right Conversation

At Stratefix, we work with SME leaders to help them connect HR strategy, systems, and culture with measurable business outcomes.

If your organisation is growing and looking to strengthen productivity, retention, or leadership capability, reviewing how HR supports your business journey is a valuable starting point.

Because when HR becomes strategic, business performance follows.

Let’s start that conversation.