HR Management in the Small Business - Essay Example

?HR Management in Small Businesses Insert Insert Insert Introduction HR management is an essential component of big and small businesses alike. Although there have been a lot of studies made on the area of HR management and others of small business management, none or very little has been done to link this two concepts, hence, the need for this study. In this study, we shall try to understand how HR management is done in small businesses, why it is done that way, the benefits obtained, challenges they face and the disadvantages that come as a result. According to Mathis and Jackson (2011), HR management includes administrative roles, operational and employees’ advocate role as well as strategic role. In both small and large businesses, the major functions of HR management are recruitment, selection, training, and compensation of employees (Longenecker et al., 2011). However, not all-small businesses are able to have a full functioning HR management system that can handle the above-mentioned activities in formal and efficient ways. As a result, small businesses are forced to choose to either run these activities informally or outsource them to another organization. The small businesses due to their size and level of income are in most cases not able to adapt new technologies that have been developing to improve efficiency in managing human resources. One of such technologies is the Human Resource Management System that can provide information necessary for effective decision-making (Mathis & Jackson, 2011). As a result, small business is forced to employ the outdated method of decision making which can be inefficient in our current era. Another reason that makes small business not to use such technologies is that they do not prioritize the management of human resources. Majorities of the small businesses are not able to maintain an HR department with fully qualified HR professionals necessary for effective and formal HR management. In such organizations, the owner of the business or a clerical employee who is employed to do so carries out the HR roles. Moreover, in case of new employees who are hired, the supervisors and managers do the recruiting, selecting and training (Mathis & Jackson, 2011). Due to the limitation in the HR knowledge of the people tasked with HR management mandate in small businesses, it is always found out that in most cases they fail to meet standards required. Some of these HR activities are time consuming and, thus, they largely reduce the time the people assigned to undertake them have to focus on their main role in the business. Most of these small businesses decide to outsource most of their HR activities to another organization. The outsourcing process means that a business contracts or hires another business or organization to undertake certain activities in the business on its behalf (Mathis & Jackson, 2011). The outsourced activities might be recruiting, selecting and training of employees as well as managing its HR records and employees compensations. In such a case, this helps the people involved in running the business to focus mainly on their area of specialization and, thus, makes them to be more efficient in their roles. Furthermore, it enables the business to acquire services of HR specialist in undertaking its HR activities that can result in more efficiency despite their size. The major reason why most of the small business chooses not to have an HR department to handle HR activities and issues is the relatively low interest in human resource management in their different stages of operation (Cornelius, 2001). In most cases, it is very difficult to convince a manager or owner about the fundamental contributions of an HR department in the success of their business. This makes them not to prioritize it and most of them only plan to introduce them when their businesses grow to become large corporate. However, these individuals should be convinced about the role that properly managed human resources can play in resolving their day-to-day operational problem and, hence, be encouraged to implement them. Another reason why most of the small businesses do not have an HR department to hand HR issues and activities is that it is somehow very expensive to maintain and run this department. Moreover, in its capacity it might fail to attract qualified HR professionals to run this department. In most cases, these small businesses feel that if they introduce an HR department they will be introducing addition operational costs that might lower their profits. Some also feel that due to their inability to attract qualified HR personnel they might end up with quacks who will only worsen their operations. Using crude ways of managing human resources in the small businesses binds them to be inefficient though they increase the benefits obtained. One of the benefits that small businesses obtain from these is that they are able to lower their cost of operation. By not having a full functioning human resource department means having less employees and, hence, a low operational cost. Moreover, by having no HR department means that some of the HR issues and activities will not be undertaken. This might lower the cost of operation of the organization but, on the other hand, have a very bad effect to the business. Moreover, by avoiding having the HR department, the small businesses are able to reduce the complexity of business operations and, thus, making the owners or managers who might be less qualified to manage them to be able to do so. By forgoing the human resource activities means that the manager or the owner will not be required to have human resource skill. Furthermore, by not having the human resource department means that the manager or owner will not need to have skills necessary to integrate this department with other departments for effective business operations. There are various challenges that small businesses face due them not having an effective HR management system. These challenges can be broadly categorized into three categories which are start up challenges, stability and growth challenges and personal challenges. Businesses start-up challenges are strategic planning and legal issues. Sometimes these small businesses find it very difficult to comply with the legal issues required for their business if they do not have a proper functioning HR management system. Another group of start-up challenges comes in trying to incorporate the latest technologies in their business and when dealing with safety and health concerns of their businesses. Moreover, small businesses find it very challenging to recruit, select, retain and motivate employees especially when they are starting-up and ensuring teamwork among their employees. The major sustainability and growth challenges are maintaining growth and succession planning. The personal challenges that small businesses have due to lacking effective HR management system are maintaining working hours and work intensity within reasonable bounds, stress management and recovery among employees and maintaining focus (Cooper & Burke, 2011). Due to their crude human resource management system, the small businesses encounter many disadvantages in how they operation. One of the disadvantages is lack of necessary policies, procedures, and strategies for effective operation and growth. Another disadvantage is that they sometimes lack effective succession process, thus their growth is limited. Besides, they are unable to build good reputation necessary for the success of the business and, thus, they generally have a very limited growth. Furthermore, these small businesses incur many difficulties in recruiting and retaining qualified staffs and in addition, they are unable to motivate their employees to improve their performances. They are also unable to control the focus they put to both employees and customers (Cooper & Burke, 2011). Most of these small businesses are claimed to be more profits oriented and, thus, not caring about the conditions of their employees. Conclusion The small businesses practice an informal and a somehow crude way of HR management. In their practices, they are able to evade some of the complexity of managing a business and somehow lower some costs of operation. However, they sacrifice some of the benefits of an effective human resource management like having motivated employees and being able to attract and retain best talents. Moreover, they lower their productivity resulting in low revenues and reduce their competitive advantage especially due to lack of HR policies, procedures, and strategies. Due to this, they do not enjoy the benefit of lowering their costs of production. We proposed an initiative to inform the owners and managers of small business about the importance of an efficient and effective HR management in solving their day-to-day problems. References Longenecker, J. G. et al. (2011). Small Business Management: Launching and Growing Entrepreneurial Ventures. Mason, CA: Cengage Learning. Cooper, C. L., & Burke, R. J. (2011). Human Resource Management in Small Business: Achieving a Peak Performance. Cheltenham: Edward Elgar Publishing Ltd. Cornelius, N. (2001). Human Resource Management: A Managerial Perspective. Mason, CA: Cengage Learning. Mathis, R. L., & Jackson, J. H. (2011). Human Resource Management: Essential Perspective. Mason, CA: Cengage Learning. Read More