Human Resource Management And The Small Business

Introduction
Small businesses are increasingly becoming common in many countries. Such commercial practice (microbusiness) purports on low risks and low costs, mainly the reason why many households, neighborhoods and storefronts are converging. Investments are not a major consideration since grants, financial aids and supports are conveniently provided by the government and large industries. The relative smallness of the operation makes it easy to maintain. Aside from this, assets and liabilities management are reasonably gullible.

However, running a small business disadvents owners or sole proprietors regarding tremendous marketing and planning specifically financial planning. Lack of authenticity makes it also hard for the business to earn trust from large industries because of vulnerability to risks. Bad debts, in addition, can permanently damage the reputation of the business as well as its owners’ and proprietors’. In lieu, proprietorial efforts of weighing the risks and benefits of a competent HR must be prioritized because of the fact that the life of the small businesses greatly depends on HR. The HR itself may either contribute and/or jeopardize the company’s growth if not handled effectively. Further, current HR trends and practices in small businesses are directly lineated to employee satisfaction, total quality management (TQM) and the company’s performance despite of the changes daunting the HR departments in small businesses.

HRM Practices in Small Business (Pros and Cons)

Though, small businesses does not require much from its HR as large firms do, still practices and 
implementation of HR programs can be as complicated since both demands needs that only competent HR can provide. A reliable HR provides a formal and legal professional system within the company. However,  noted that “most small business employers have no formal training purporting on hiring decisions (1996). Though systems may be provided, adverse conditions forced the owners themselves to act as HR managers. Thus, individual responsibilities seem blurring in small businesses affecting the company’s productivity. Simply, the business would likely to experience operational disorders and lack of management.

           
An HR also served as an instrument for achieving corporate objectives and strategic plans (, 1999) through comprehensive, customized policies and procedures. However factors that may hinder the company’s efforts such as new technologies and keeping up with fierce competition. With a small number of employees, the company might find it hard to find and take advantage of productivity enhancements through technology ( and , ). In effect, small companies which cannot afford such technologies will be left behind and struggle.   

           
HR finds, secures, guides and develops employees with talents and desires aligned to the operational needs and future goals of the business (, 1999;  and , 2002). However, chief challenge would be finding and keeping talent. Small businesses must provide wages and benefits commensurate to those of the large businesses.  Poignantly, small businesses had difficulties competing with big businesses ( and ). Other aspects such as assessing the capabilities of the company and aligning talents with company’s needs suffer because of financial incapability of small businesses.

           
In addition, HR continuously shapes corporate culture while encouraging a company-wide integration and cooperation (, 1999).  shares that a corporate culture can be a tool for employee retention. The HR’s role in coordinating corporate objectives in preserving the culture enables the small business to meet its commitment to the staff as well as the customers (2004, ). In contrast, management issues hinder and influence relationships within the organization. The failure to identify and empathize with the employees will result a dull, boring and malfunctioned workforce.   

           
Employee management and consultancy and building public relations (Small Business Bible) falls under the responsibilities of the HR, too. The HR department assists in developing systematic plan of creating and establishing a professional work team. Further, the HR answers queries, settles employee needs and problems and settle disputes and grievances in a professional manner. HR also aids the business and commerce in building public trust and creating a steady referral system. This initiative harness collaboration and association with other businesses and the industry (). Point of failure, however, may be placed on biases of the HR personnel. Bias decisions favor a certain person or activity at the expense of the whole organization. It can also compels disputes between the employees and the management, invokes stress as employees indulge in biases issues, create complexities which subsequently lead to ineffectual workforce and decisions will be often regarded as products of inhumane justification (Small Business Bible).

           
The HR department also ensures employee engagement and maintains employees’ rights (). More importantly, employee participation envisions decision-making as a provider of sense of ownership and belongingness. Common mistakes of small businesses are evident in hyperflexibility, separating HR as a corporate and business unit, isolation and disintegration (, 2005, ). Flexibility may hurt the company instead of doing it good if diversity of the business operation does not match strategies. Further, HR must be placed at the middle with provided access on all departments and lines within the company while staff must not distance themselves from the people who can provide them individual professional growth ().

           
Development of official documentation, workplace ethics/codes of conduct, employee handbooks, award/reward programs and community connections () are other evident benefits of an HR. These materials serve as proof of policies- and regulation- compliances and as orderly statements about the company ( and , 2006, ). Record-keeping and management are as important as managing remunerations. However, small businesses tend to overlook the importance of this aspect business-wise. Failure to document can be considered as business malpractice which can be costly.

           
Other benefits of having an HR are based on its ability to initiate and recommend policy changes. The HR has the power to update and develop internal policies whenever necessary. Arguably, if mangers fail to formalize procedures and systems as employee population increase, employee-related problems will also increase. As an integral aspect of growth, control and indeterminacy is critical for owner-managers. While they are not ready to give-up personal control over most HR activities, HR policies will continue to depend on the attitude, belief and preference of the owner-managers instead of the appropriate HR authority (,  and , 2004, )

           
Moreover, HR strategies are also employee-centered. An attribution approach that proves HR had a direct relation to performance. The organizational setting embedded on several HR policies and practices gain response from the employees within the control of the management. On the other hand, employee’s perception and experiences about control impacts employee behaviour. Whether internal or external, attributions will affect their responses to HR initiatives. Negative attributions may likely affect employee satisfaction and retention and positive attributions favourably affect commitment, satisfaction and involvement ( and , 2006, ).

The HR also aligns core business strategies with HR strategies. To wit, total quality management (TQM) is a management method that ensures and quantifies productivity. It is also a continuum that requires application in integrating all function, processes and elements of the business. However, TQM has an actual cost. Quality suffers when dissatisfied customers grow, decline in loyal customers and increased in complaints as inputs and outputs are lessened. Hence, quality is also correlational to productivity. The productivity ratio can be enhanced through increasing the output and/or reducing the input. In general, productivity improvement focuses on technology and capital and as the subject to obtain more production. Placing viable and potent HR constitutes new trends regarding quality and productivity ( and , 2004, ).

Conclusion

           
Converting HR dilemmas into competitive advantage can be taskful and costly. But small business has to gamble since a functional HR solidifies the business mechanism. Though there are no universally-acceptable HR practices and principles and that HR practices vary from organization to organization, the basis is that productivity and performance will dictate of how experienced and competent the owner and/ or managers are. There are ways to do so: 1) as a holistic process – efficiency, systems, standards and processes must     be communicated at all levels, company-wide, ensuring that all people are speaking the same language of achieving corporate goals while investing on individual enhancement; 2) clarification of roles – owners may act as managers provided that they have competencies to act as such the way the role demands; a clear understanding of the job requirements inclines for a conducive workforce; 3) education – as it combats common mistakes in small business ventures, it can also narrow the gap between the perceived/desired versus the actual results; 4) invest on needed resources – new technologies are readily obtainable and it facilitate faster operation, what the businesses must do is to prioritized good debts; 5) be particular in details – every step in HR are critical that is why small organizations must diminish overlooking a process more particularly on documents, legalities and record-keeping; 6) effort on providential workforce environment – small firms should eliminate negative attributions while enhancing qualities and performance in particular; and 7) maintain a sense of purpose – the company and the employees must sustain the company’s interest, belief, strengths and accomplishments.

Source:Thinking Made Easy