Small and Medium Enterprises (SMEs) play a vital role for the growth of Indian economy by contributing 45% of industrial output and 40% of exports, employing 60 million people, creating 1.3 million jobs every year and producing more than 8,000 quality products for the Indian and international markets. The contribution of SMEs to the Gross Domestic Product (GDP) in 2011 was 17% and increased to 22% by 2012. There are approximately 30 million MSME units in India and 12 million persons are expected to join the workforce by 2015. "With the evolution of electronic commerce, globalization, consolidations, and intricate strategic alliances, companies will be challenged to do their work well". The competitive environment both domestically and overseas is pressing human resource (HR) professionals to bring adequately talented workers on board, while they themselves need to be competent at strategizing and partnering with a clear understanding of the organizational business. Managing HR presents significant challenges to any firm, but SMEs face unique challenges that stem largely from their size, with regard to the attraction and retention of employees which is clearly linked with the ability to offer a competitive benefits package. Research shows that managers of small firms lack training in formal personnel management practices and they do not consider the use of generally accepted HRM practices as essential for improving productivity. It was found in previous research that most of the medium scale enterprises have no formal HR department or exclusive person for this function. Therefore, the thrust of the research is to identify a group of HR practices adopted by few small and medium scale enterprises that reflect management innovation which aimed at improving organizational efficiency and productivity.