Human resource management practices in small business success

¶ … Human Resource Management as the Foundation for a Successful Small Business

The success of any businesses, large or small, largely depends on how effective the business is in the management of its human resources. Employees are regarded the most critical resource in any organization. Unfortunately, given the small number of employees they employ, many small business owners do not fully appreciate the significance of human resource management especially when it comes to the enhancement of the success of their businesses. This text revisits human resource management in the context of small businesses. In so doing, the text will amongst other things highlight the relevance of human resource management as the foundation for a successful small enterprise.

Human Resource Managements: A Concise Definition

In basic terms, human resource management does not have an assigned meaning. In that regard, many variations of HRM definitions have been offered over time by different authors and management experts.

Human resource management in the opinion of Werner and DeSimone (2008, 8) "can be defined as the effective selection and utilization of employees to best achieve the goals and strategies of the organization, as well as the goals and needs of employees." This is the definition of human resource management that will be adopted in this text. Based on the definition given by Werner and DeSimone above, the relevance of human resource management cannot be overstated when it comes to success of business enterprises, both large and small. In a way, the extent to which employees contribute towards the accomplishment of the goals and objectives of a business enterprise largely depends on how well they are motivated and managed. Thus a business that is keen on remaining relevant in a competitive marketplace must not only attract but also retain and properly motivate its workforce.

Human Resource Management as the Foundation for a Successful Small Business

Just like is the case with big businesses, small businesses also have to attract, retain as well as manage an able cast of employees. Poor human resource management policies and practices can interfere with the overall performance of an entity going forward. Employees of a small business that embraces effective human resource management practices are likely to be talented, motivated and high performing. Given that employees are a key resource for any business, effective human resource management is seen as the key determinant of the success of any given firm.

As Gitman and McDaniel (2008, 24) point out, determining the jobs to be filled remains one of the main important aspects of human resource management. However, in addition to determining the jobs to be filled, small and medium enterprises must attract and ultimately select employees who can make relevant contributions towards the accomplishment of the entity's goals and obligations. For this reason, "human resource planners must know what skills different jobs require" (Gitman and McDaniel 2008, 24). Human resource management does help a business in streamlining the hiring process so as to minimize the chances of hiring unwanted staff. Further, the human resource management function in this case would also come in handy in enhancing adherence to employment laws, reference checking, etc. Hiring the wrong workers could have a negative impact on a small business both in the short-term and in the long-term. With that in mind, an unskilled small business owner should consider bringing in individuals with the prerequisite human resource management skills and knowhow to handle the hiring process.

Secondly, it should be noted that the success of a small business is not dependent on attracting quality employees only. As Mathis and Jackson (2010, 163) point out, the issue of employee retention has gained much prominence in HRM circles with many business entities being forced to study not only why employees leave but also why they stay. To achieve its goals, a small business should in addition to attracting and employing quality employees also develop ways of retaining the said employees. Employee retention is not an easy undertaking. Given the number of employees a small business employs, such a business has to maintain a healthy balance between keeping good employees, managing those with a potential to be better, and getting rid of those who are irredeemably poor. Human resource management plays a key role when it comes to employee retention. Towards that end, a small business ought to have in place a retention strategy detailing the key components of the retention approach including but not limited to rewards, motivation, regular appraisals, etc. According to Mathis and Jackson (2010, 164), one of the secrets to retaining high performing employees is designing a work environment that encourages employees to stay and grow. Creating such a work environment requires the involvement of people skilled in human resource management. Still on employee retention, it is important to note that motivated employees are likely to stay with a particular employer for longer than unmotivated employees. Towards that end, a small business owner should explore various approaches to motivation including but not limited to giving constructive feedbacks, etc. It should be noted that unlike in large organizations, those charged with overseeing the human resource management function in small businesses can effortlessly maintain close relations with employees. In such a case, it becomes relatively easy to manage employee retention through motivation.

Next, having an effective human resources management department or function ensures that the business is on the safe side when it comes to compliance with the relevant rules, regulations and declarations. In most cases, employee-employer relations including but not limited to hiring, safety and termination of employment are governed by laid down rules and infringement of either of these rules could put the business on a collision course with the law.

Human resource management also comes in handy in the everyday management of staff. In addition to acting as an important tool of guidance, human resource management also offers the much needed support to both small business owners and their employees. It is important to note that in a workplace scenario, questions regarding how to handle harassment, entitlements, etc. are largely inevitable. With a human resource function in place, employees can be kept up-to-date with the relevant policies and legislation. Monitoring of employee performance is yet another key role which can be integrated into the human resource management function. Monitoring of employee performance according to Mathis and Jackson (2010, 520) helps in the enforcement of company rules, measurement of performance, etc. In a small business scenario, this need not be a costly undertaking as employees can be kept informed using the relevant handbooks prepared periodically by the business. Other issues that can effectively be handled with a dedicated human resource management function include employee disagreements, discrimination issues, resignations, etc.

It should also be noted that in comparison to large businesses, the challenges encountered by small businesses are often unique. Some of the challenges mostly faced by small and medium enterprise startups and which could benefit from good HRM practices according to Cooper and Burke (2011, 17) include: employee motivation, recruitment as well as selection, safety and healthy concerns, utilization of work teams, etc. When it comes to stability and growth, challenges encountered by small and medium enterprises include but they are not limited to hiring of skilled manpower, etc. (Cooper and Burke 2011, 17). In my opinion, all these are challenges can be handled effectively by a human resource management department.

Yet another critical or important role that human resource management plays has got to do with employee training and development. In the opinion of Bohlander and Snell (2007, 143), training needs can easily be identified by observing the "discrepancies between the knowledge, skills, and abilities...demonstrated by the jobholder and the requirement contained in the description and specification for the job." Most small business owners regard employee training and development as a preserve of larger businesses. Worse still, some small businesses choose to allocate this important role to other unskilled individuals within the business. Employee training and development is critical to the success of any small business. Indeed, in the opinion of Gitman and McDaniel (2008, 211), most businesses train their employees (both new and existing) so as to ensure that the said employees have the prerequisite skills and knowledge required to perform optimally. This is more so the case when it comes to cross-training members of staff so as to equip them with the skills required to handle several job functions.

Recommendations and other Considerations

It is important to note that for some small businesses, the cost of hiring a fulltime human resource manager may seem too prohibitive. Indeed, as Heneman and Greenberger (2002, 61) point out, based on their limited size, many small businesses do not find it reasonable to hire full-time human resource management professionals. Some small businesses try to circumvent this by allocating the human resource management function to existing employees who are in most cases unskilled when it comes to the management of people. Although most small businesses do indeed make some cost savings by adopting this approach, the consequences of such an approach to human resource management could be disastrous and more costly in the long-run.

Those businesses that find themselves without adequate resources to support a fully fledged human resource management department should consider other alternatives or approaches to this issue. One such alternative is outsourcing. In the words of Heneman and Greenberger (2002, 61), "in areas where a firm's internal HR staff is deficient, HR outsourcing provides an opportunity to acquire specialized expertise and expert knowledge." This cost effective approach to human resource management allows an enterprise to seek and engage an external human resource management support service. With an external human resource manager, a small business has at its disposal an individual skilled enough on the subject at hand to help manage staff recruitment and retention, disciplinary issues as well as efficiency and productivity. According to Heneman and Greenberger (2002, 61), outsourcing of the HR function could even enhance an entity's competitive advantage. Small businesses should also view outsourcing of the HR function as a cost cutting measure. As Heneman and Greenberger (2002, 61) further point out, cost savings in this case could result from both shared risk and efficient access to technology. With an external human resource manager, a business can concentrate on its other core activities so as to further enhance its performance.

Conclusion

In conclusion, it is important to note that when it comes to the continued success of a small business, the relevance of human resource management cannot be overstated. The success of many small businesses is often anchored on their human capital. The only way to ensure that this human capital contributes effectively to the overall success of the entity is to manage it effectively.