Businesses require human and physical resources for effective production. Both the resources need planning to ensure that at any one point, they are neither excess nor insufficient. Human resource management department of a company assisted by line managers and teams themselves undertakes the role of managing human resources.
They set internal rules governing human resources relation and put on measures to comply with national and international labour laws. A well managed human resource lead to a company that enjoy intellectual and knowledge assets in human beings. Whether a business is a multinational, large scale, state corporation, micro or small-scale enterprise (SMEs), human resources management cannot be over-looked (Garengo , Stefan, and Umit 25-34). This paper looks into human resource management in small organisations (SMEs).
Small Scale enterprises (SMEs)
According to European Union (EU), a small-scale business is any business that has a minimum of 10 employees and a maximum of 250. In Germany, an SME is a business with employees ranging from 10 to 300 while in United States; it has separated small scale and medium scale. Small-scale businesses have 10 to 100 employees while medium has 100 to five hundred employees. It does not matter the number of employees but for an effective and efficient business, management should ensure that they manage their employees well.
Special characteristic of SMEs human resources
In most cases, SMEs are family business; family members with some entrepreneurial characters/attributes form them. This makes the leaders not to be highly trained in management more so human and personnel management. They may be specialists in a certain field that does not guarantee that they can manage their human resources effectively.
In some micro and small-scale businesses, there are not separate department that looks into human resource issues; the management/entrepreneur doubles as the overall leader and the human resource manager.
Secondly, these organizations lack a long-term vision and thus defining their employee’s career path is a problem. With the uncertainty, employees are constantly looking for better offers. This reduces motivation among the employees.
In most case, SMEs management are impatient in development of talents especially if they take a long period to emerge. They focus on immediate results from people who are highly innovative and creative. To tap this intellectual asset, there is need to manage human resources effectively (Garengo , Stefan, and Umit 25-34).
Human resource management theories assume that SMEs are a “scale down” of large organisation and thus HRM strategies applicable in large institutions are applicable in SMEs. This is not the case. The following are the strategies that SMEs can use to manage their employees effectively:
Planning of human resources
The decision to employ, deploy, train or fire employees should not be a decision from intuition thinking of the entrepreneur. The owner or manager should consult other line managers on the best move to take. He should not be the sole owner of information and decision-making.
In case there is a human resources department, the department should collaborate with all departments, when developing a human resource team. Well planned human resources means that the company will get experts and professionals in different areas; they will have adequate number of employees for an effective production at the right cost.
Planning takes an interpolation of current need, future needs and the supply of human resources in the economy. Knowing the number of employees who are likely to retire in a statutory manner (for example because of age) is important to plan a replacement strategy. Some areas require an in-house experience developed in new entrants, in such case new entrants should be employed early enough to have them develop the required experience before they are left to work alone.
Hiring
After the management has recognised, the experience, education level and gender required, hiring follows. The required number of employees and terms of employments should be clear before the process starts. When looking for the right employee, there are different ways. It may be internal through promotions and transfers or it may be from external market. The trend that SMEs have been using is employing people that they know; this method is outdated.
They should create equal chances and the qualified applicant wins. Adverts should be take place in areas that people qualified in the required section could be found. The media is a good method of advertising for positions especially if the required employees are professional. Minimum qualification and basic information on the post advertise should be well elaborated in the adverts. After applicants have applied, they should be shortlisted. Those who qualify are contacted for an interview and them who do not are sent regrets letters.
Depending with the post and organisational culture, there are different interviewing methods. Some companies take one on one interviews, some have aptitude tests while other have an on job practical interview.
Others use a combination of those methods. Whichever the method used, it should have high level of integrity and transparency. After the successful candidate has been recognised, there should be a probation period. Once again the period depends with a company, country and task involved. It is a period that the new entrants should be oriented in the organisational culture of the SME.
Outsourcing is another method for hiring employees. Some services do not directly contribute to the core business of a company. These include cleaning, security and catering. They can be outsourced to assist the company concentrate on its main core of business. Taking care is important to ensure that reliable outsourcing companies are contracted (Tocher, and Matthew 455-479)
Training, appraisal and motivation
Employees need regular training to sharpen and improve their skills. Training should be on current market changes to make them relevant and more productive. Though training should be a continuous process, there are areas, which may call for immediate training.
For example in case new machinery has been bought to replace the old one that has broken down, there is need for training the operators although the training may not have been planned initially. Certain departments, individuals and teams may be having a certain weak point that can be addressed through training.
Other than training of skills, employees need to be aware of rule governing them in the organisation. These are both international and national laws. Human resources should conduct numerous seminars to inform and remind human resources laws in the company. These include policies on promotion, code of conducts among others. It is at these meeting that grievances from employees should be addressed (Hill, and Stewart 105).
Appraisal is another role played by human resource management departments. In case an SME does not operate a separate, HRD, then managers responsible should undertake this task regularly without favour, prejudice and bias.
Appraisal helps management to recognise performers and reward them according as well recognising better employees blending for improved results. Scientific methods of appraisal involves appraising employees one on one, guide day certain parameters an example is the use of balanced score card method of appraisal.
Employee motivation is a continuous process where management ensure that they have good relations with their employees. There is different method of motivation and each company have its own style responsive to its employees. Human resource should devise the method to use for this purpose. Motivated employees remain in an organisation for a long period and are willing to innovate and create better ways of doing business.
Employees retaining and knowledge management
To retain employees is a deliberate move by management. Employees always need to be assured of continuity in their careers and want to know that the organisation they are working in has a future for them. To retain employees, the company should have good compensation, good and efficient career development mechanisms in the company.
There are numerous advantages a company gains from retained employees; they include a pool of knowledge developed through experience that can be use to make decisions for competitive advantage. Over and above information in the industry, experienced people offer insight thoughts that can result to better organisation decisions (Raymond , Hollenbeck, Gerhart, and Wright 34).
Conclusion
Small-scale enterprises suffer inefficient human resource management. Entrepreneurs have played the role of both company’s leaders and human resources managers, which has lead to inefficiency. To manage human resources effectively, the process should start by planning, then hiring, training, appraisal and finally have mechanisms for retaining employees. An SME with well-managed human resource will grow to a large enterprise faster.
Works Cited
Garengo, Patricia, Stefano Biazzo, and Umit S. Bititci. “Performance measurement systems in SMEs: A review for a research agenda.” International Journal of Management Reviews 7.1 (2005): 25-47. Business Source Complete. EBSCO. Web.
Hill, Rosemary and Stewart, Jim. “Human resource development in small organizations. ” Journal of European Industrial Training 24.2/3/4 (2000): 105. ABI/INFORM Global, ProQuest. Web. 10 Dec. 2010.
Raymond A., Hollenbeck, John R., Gerhart, Barry and Wright, Patrick M., (2009) Human Resource Management, 3rd ed. Boston: McGraw-Hill/Irwin.
Tocher, Neil, and Matthew W. Rutherford. “Perceived Acute Human Resource Management Problems in Small and Medium Firms: An Empirical Examination.” Entrepreneurship: Theory & Practice 33.2 (2009): 455-479. Business Source Complete. EBSCO. Web.