HR Compliance: Small & Mid-Sized Firms Have Super-Sized Challenges


The HR department of a small and mid-sized firm (from 10 to 500 employees) has a lot to manage within limited resources, costs and time. Thus, it can have mammoth challenges to deal with. One of the most critical and extensive ones is HR compliance. Managing HR compliance brings some very specific challenges to the table. So, let’s look at four of the most crucial ones.

4 Most Common HR Compliance Challenges Small and Mid-Sized Firms Face

From documentation of HR problems to inconsistent HR policies, small and mid-sized firms must address these four common challenges to avoid reputational and financial damages resulting from non-compliance.

  • Centralized Storage of Personnel Records

One of the most common issues for SME HRs is the lack of uniformity and centralized storage of personnel documents. Some documents that require consistent treatment and proper storage include disciplinary records, employee benefit forms, achievement records, new recruitment forms, training records, etc.

Often, SMEs handle these documents manually. Manual handling can lead to errors. This could become a reason for dissatisfaction and a downbeat vibe among employees. A single instance of an unpleasant experience could spread faster than fire and worsen the HR’s impression among employees.

  • HR Compliance-Related Litigation

This is another critical area and challenge many SME HRs confront. Many small and mid-sized firms either ignore or do not pay as much attention as issues like harassment or discrimination deserve. Very few companies invest time, money, and effort in training their employees in these areas. In addition, ignoring areas like workplace ethics, code of conduct, etc., also requires equal and just attention.

  • Inconsistent Human Resource Policies

A very common problem observed in many SMEs across India is the inconsistent or complete absence of documented HR policies. 

With very few employees working in the company, many SME business owners often question the need for an HR policy. Or, they simply keep it aside to look at it later, in the wake of prioritizing business growth.

But as the business grows, so do the number of employees and the complexity of HR functions. Undocumented HR policies can lead to inconsistent HR operations and disorganization. SMEs who pay little or no attention to this area get hassled when inefficiencies surface and dissatisfaction among employees starts growing. 

Such problems blowing out of proportion could negatively affect the company’s reputation and business in its entirety!

Thus, companies must have well-written HR policies, procedure manuals, and employee handbooks from the beginning. Additionally, a well-coordinated HR focus on training, employee communications, benefits, and payroll is imperative.

  • Extensive Paperwork Resulting in Errors 

India is a country where paperwork still has a prominent place. Especially when it comes to HR, the dependence on paperwork is considerable. Every new hire in the company results in a pile of papers on the HR’s desk. But dealing with paperwork could not only prove frustrating but result in errors. Let alone the time it could take to organize as many papers.

One of the most significant reasons for it is that many SMEs do not have the budget to set up online systems, precisely the cloud that helps store everything digitally. But little do such companies realize the cost and time they lose in handling papers for every employee. Handling papers for ten to 12 employees may not matter as much. But imagine doing so for as many as 100 people!

Paperwork and manual processing can result in errors. Besides, one cannot discount the chance of papers being misplaced. In addition, when there are changes to the status or position of an employee, HRs have to alter almost every record. It can add to their already hectic schedule.

How do SMEs Deal with HR Compliance Effectively?

Compliance is critical. But it isn’t something companies can escape. But how do companies perform the ropewalk balancing compliance on the one side and costs on the other? That’s a good question, and we are happy to have a valid and sensible answer to it. The answer is our statutory compliance services.

Our services help SMEs deal with various aspects like compliance, statutory payments, forms, data upload, generating challans, return filing, registrations, renewals, etc. Our HR compliance experts also suggest workflow improvements to ensure operational efficacy and substantial cost savings in the long run.

Email us at to know more.