HR Management in Small and Medium Enterprises


Developing and managing people is the most crucial role of leadership and management in business. Besides, these are the most challenging task that leaders have to carry out in their individual roles in leadership. From a business perspective, an organization cannot achieve its corporate vision if it fails to manage the human resource in a way that everybody’s objectives conform to the corporate mission. Most successful organizations attract the best human capital because they have effective plans in place for managing and developing people and their performance.

Therefore, small and medium enterprises (SMEs) ought to capitalize on the implementation of measures and policies that are effective in developing people and their performance. The aim of implementing those policies is to ensure that an organization becomes a working environment that is conducive to its people to tap the benefits of their best performances. According to the contemporary business and organizational structures, the role of developing people and their performance falls under the docket of human resource management.

Human Resource Development (HRD) Practices in SMEs

SMEs are often defined as businesses with a maximum number of employees not exceeding 500. However, in some instances, businesses with as high as 1500 employees are referred to as SMEs if they have not reached a certain revenue limit. As aforementioned, HRD is the process of organizing, developing, and managing human capital in an organization. It is the most complex form of management in the business because its future cannot be predicted as it depends on the nature of policies and their acceptance by the human resource. Hence, it is arguably the sole determinant of an organization’s ability to attract, retain, and develop competent talents.

The nature of policies governing the human resource management in SMEs is similar to the ones applied in large organizations, albeit differences in the number of employees being managed (Cooper, De Cieri, & Sheehan 2015). Therefore, there are no major differences in practice between SMEs and established corporations. The most common difference in practice is in the hiring process. The SMEs have an upper limit of qualified candidates due to the high cost attributed to hiring and retaining overqualified candidates (Cassell et al. 2002). The major themes of HRD in SMEs attribute to three primary roles that are addressed in this paper.

Roles of Human Resource Management in SMEs

The human resource manager is the head of the department. S/he is tasked with developing policies, organizing, and managing activities of the human resource management in an organization. However, three main theories of HRD in SMEs determine the roles and practices of HRD in an enterprise. They include strategic, normative, and descriptive theories. The strategic theory depicts external factors that affect business practices, and they are taken into account in the development of policies that govern HRD practices.

The normative theory depicts that HRD practices are in line with the highest goals of a business. Therefore, HRD aims at enhancing the employees’ commitment to delivering high performance in the business. Lastly, the descriptive theory depicts that HRD policies and practices produce the desired outcomes, which include commitment, competence, congruence, and cost-effectiveness. I think that the normative theory fits SMEs. However, these three theories are closely related and thus essential for determining the role and practices of HRD in SMEs.

In the contemporary world, universal practices by human resource managers have grown whereby they are hired after meeting standardized requirements. Besides, they practice under a standardized code of practice. This aspect has been made possible due to the vast growth of globalization in the world of business. Additionally, technological developments have also contributed to the evolution of business practices whereby many large organizations have opened subsidiaries in different markets and regions that are managed at a central location.

Additionally, the practices in business environments have changed greatly due to powerful control measures that govern world trade organizations. Some of those measures are the mode of employee and human resource management in organizations, which management has to meet to qualify as a member of the world trade organizations (Wolf & Jenkins 2006). Most importantly, these requirements are in line with the aforementioned theories of HRD practices since the objective of governing bodies is to streamline the growth of world business by harmonizing the modes of practices(Sayce, Weststar, & Verma 2012). Therefore, successful organizations must hire qualified persons as human resource managers for them to achieve the desired growth in the competitive world of business.

Some of the most notable roles of human resource management include selection and recruitment, controlling wages, enhancing productivity, and dismissing. However, numerous roles are entangled in each of the roles mentioned above that fall under the HRD’s docket (Khilji, Tarique, & Schuler 2015). On the first role of human resource management, the department handles the selection and recruitment of employees. It is important to note that human resource management is the department that links other departments to the top management. Therefore, HR understands what other departments need to maximize the full potential in their performance.

Therefore, human resource management handles the selection and recruitment of employees after identifying a need for the increase in the human resource capital in an organization. Selection and recruitment are two different activities, which are very crucial for the success of an organization (Cassell et al. 2002). Selection takes place after receiving applications from successful candidates. On the other side, recruitment takes place after successful candidates have been selected. The selection process is the most tedious procedure in the contemporary world, regardless of whether an organization is an SME or a corporation. The selection process has evolved into a technological process whereby the qualified candidates are asked to carry out online interviews through video conferencing. This process, at times, it involves doing online amplitude tests, which many fail (Dries & Pepermans 2012).

However, the mode of selection depends on the type of talent that an organization is looking for and the wages that the successful candidates will be getting. Hence, the SMEs opt to go for the traditional way of the selection process, which is less costly. However, this process does not go for the best talents, which are expensive to retain. Interestingly, SMEs set up both the lower limit and the upper limit of qualifications that they need to ensure that they get good talents for costs within the wage limits.

After a successful selection, the qualified candidates go through recruitment processes that acquaint them with their respective duties. The human resource manager and the respective departmental managers assign supervisors to the selected candidates who take them through the recruitment process (Lewis & Heckman 2006). In the contemporary world, globalization has led to the introduction of new recruitment processes whereby the selected candidates go through the process as training without receiving full payment.

In the worst-case scenario, the candidates are not paid, but they are made aware of the program during the selection process. The training program goes for at most six months upon which the candidates get formal contracts. Employers have been complaining that they do not get qualified candidates to carry out practical assignments from universities and colleges. This aspect has been the major reason for the introduction of training programs at half pay or no pay once a fresh graduate is selected for employment.

Secondly, the human resource department is tasked with enhancing the employees’ productivity in an organization. One of the various ways of enhancing productivity includes controlling wages (Jones, Kalmi, & Kauhanen, 2010). In a business organization, the employees’ wages are determined by job groups. Job groups are determined by the roles of employees in an organization and their individual level of qualification. The human resource manager works closely with the finance and accounting department to determine the reasonable wages that should be paid to the different employees while ensuring that business operations run smoothly.

Besides, human resource management ensures that the working condition complies with the set standards by the international industrial relation regulations as well as labor unions. The industrial relation policies that are governed by labor unions require employees to work in safe environments. Additionally, the management should ensure clear communications protocols through which grievances should be aired. Failure to meet these requirements makes a working condition inhibitive for employees, thus hampering their productivity. Hence, the human resource manager should ensure that an organization has complied to maximize the employees’ productivity.

Moreover, human resource management implements and monitors the performance contracts, which form the base of merit to the well-performing employees. Employees are promoted, and their wages increased to enhance productivity. Apparently, employees feel valued when their talents are rewarded. Therefore, failure to reward them results in reluctance in giving their best. Consequently, employees compete against each other while working, which then results in exponential growth of business and its operations.

The human resource manager monitors the performance of employees by considering a few factors (McDonnell, Gunnigle, & Lavelle 2010). These factors include punctuality, the response of an employee when called for business matters, and the relationship between an employee and others. Others include the ability to influence others into doing things that are essential for the business, quality of work done, and the employee’s career objectives.

Additionally, human resource manager organizes for team building activities, which are essential for enhancing good working relations amongst employees, managers, and their colleagues. Team building activities aim at enhancing personal relations, whereby employees, managers, and business owners come together in informal settings. These activities are carried out in environments that allow individuals to talk freely without fear of their personalities, sabotaging their work relations. These forums are the most important setups for human resource managers to learn the employees’ individual abilities to deliver the desired results in situations that demand teamwork and other social skills.

Moreover, the human resource manager organizes training and development programs, which are essential for enhancing the employees’ performance (Phillips & Gully 2015). These programs aim at adding value to the employees’ skills and, in some cases, teaching them the updated methods of carrying out their duties in the business activities. Kaufman (2010) warns that workplace dynamics are evolving, and thus new knowledge is being discovered every day. Therefore, it is necessary for the training programs to be carried out regularly to ensure that employees are equipped with the right knowledge and skills at every given period (Cassell et al. 2002).

In the worst-case scenario, the human resource manager dismisses employees, but there are policies that govern the dismissal procedures. However, labor laws protect employees from unjustified dismissal, but they have adverse effects on the business environment (Gruman & Saks 2011). Hence, organizations opted to introduce the contract-based form of employment, which gives the human resource management department the power to the procedural dismissal of underperforming employees. Therefore, to ensure that dismissal is done fairly, the human resource manager informs the affected employees in advance about the unmet requirements before proceeding to report the matter to the top management (Curran & Walsworth 2014). Therefore, if the contract is not renewed, the employee is psychologically prepared.

Measures and Evaluations of Success of Human Resource Management in SMEs

The growth of a business is attributed to the success of human resource management in an organization, regardless of whether it is an SME or a corporation. Another element for measuring the success of SME is the productivity of employees. As aforementioned, employees are most productive when in an environment that allows their career growth and development through promotions and reward methods (Tegraskis et al. 2010). Hence, the increase in the productivity of employees is attributed to the success of human resource management.


The ability to select the required candidates in the hiring process and developing talent in conjunction with the application of the strategic, normative, and descriptive theories is important in determining the success and efficiency of human resource management in SMEs. Most importantly, a successful business organization hires the required talent, develops, and retains it, which can only be possible when a business has effective HRD policies. Bayo-Mariones and Galdon-Sanchez (2010) argue that good talent is hard to retain because it is costly. Therefore, human resource management sets policies to govern the retaining of developed talents, which could be done through promotions and awards. Consequently, the business grows from the success of human resource management.

Reference List

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