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Employment relations - Essay Example

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Small firms have a small market share in any given economy and individual firm’s actions cannot significantly impact the entire industry or economy. Therefore, individual firms cannot significantly influence national or regional prices or quality. …
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Download file to see previous pages Small firms have a small market share in any given economy and individual firm’s actions cannot significantly impact the entire industry or economy. Therefore, individual firms cannot significantly influence national or regional prices or quality. Most small firms are managed in a personalised way because owners are attached to them. Consequently, their personalised feelings attached to business make them active in all aspects of their business. According to Department for Business Innovation and Skills (2010), there are over 4,801,250 small business enterprises in the United Kingdom. Sections 382 and 465 of the United Kingdoms’ Company Act 2006 define small firms as business entities with zero to forty-nine employees, ?0-?6.5 million turnover and ?0-?3.26 million balance sheet total. Small businesses have their own challenges and benefits. According to The Times 100 (2011), two thirds of small business in the United Kingdom are owned and run by a single person (manager). This means that about two-thirds of the small firms in the United Kingdom are managed by owners. Furthermore, 90 percent of small firms employee six people and below. Managers may be owners or employees of an organisation and are responsible for overall performance of a firm. The key objective of a manager is to utilise assets, money, materials and human resources effectively and efficiently to achieve objectives (profit maximization) of a firm. This is achieved through well-coordinated human efforts. Therefore, he or she needs to set organizational goals and manage his or her staff well. To achieve firms’ objectives, managers apply different management styles as dictated by the nature of the business and personality. Some of the management styles applied by managers of small firms include autocratic, participative and situational management styles. Characteristics of small firms Every manager must understand the features of the firm he or she is managing to be in a position to positively influence its processes and outcome through application of appropriate management style. According to Moore (2008), small firms have distinctive features. First, managers are more of doers and less of managers. They work because they do not afford to employ more individuals to carry out certain duties on their behalf. Therefore, they are more action oriented and less analytical as compared to professional managers. Secondly, managers act as entrepreneurs. They scan the environment and take the risks of coming up with new ideas and implementing them. Thirdly, managers of small firms do not have adequate time allocated to planning. When they plan, plans are often postponed or neglected. Fourthly, small firms are made up of simple and highly informal organizational structure. This enables managers to make quick decisions. As a result, managers in small firms are more powerful and exert strong personal influence on firm’s operations and activities. The fifth characteristic of small firms is that most managers apply both autocratic and participative management approach. Sixth, small firms are vulnerable to failures caused by managerial inefficiencies because more power and authority are vested on one or few individuals. Seventh, small firms are more likely to face isolated financial and personnel constraints. The eighth characteristic is that small firms undergo growth and development phases. According to Storey (1994), inception, survival, growth, expansion and maturity phases are five phases of growth that small firms often undergo to grow to medium and to large firms. Each phase has its unique strengths, weaknesses, opportunities and threats. Most small firms are in the inception, survival and growth phases. Beyond, the three initial stages, firms may be classified as medium or small because they are likely to have more than fifty employees, over ?6.5 million turnover and more than ?3.26 million balance sheet total. Managing small firms: Is Small Beautiful? Appraisal of management styles in small firms Autocratic, partici ...Download file to see next pagesRead More
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