Analysing The Goals Of Small And Medium Enterprises Business Essay

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Small and medium enterprises (SME) are defined in different ways by various peoples and associations in different context. Some people have defined SME in terms of employees in an organization and some has defined it in the context of annual turn over of an organization or firm. According to the EU (2003) SME are defined as enterprises which have at most 250 employees and an annual turnover not exceeding 50 million Euros. Although there is no uniform definition of SME, the notion that SME play an important economic and social role seems to be well accepted (OECD, 1982), This is supported by a surveys which state that 70% of all labor relations and over 80% of apprenticeship training positions in the German non public sector provided by SME, the same source also supporting the long term success of SME by saying that SME do not change their managers as often as big enterprises and thus can concentrate on long term strategies.

Bolton J.E. (1971) has defined SME in his famous report in the following way:

One that has relatively small market share.

One that is managed by its owners or part owners in a personalized way, not by an organizational managerial structure.

One that is independent with the owners/managers having control of the activities of the business. They should only be limited by outside elements in matters if financial obligation.

SME,s has a very important and key role in the economical development of most of the countries. For example we can take the example of United Kingdom. According to The Bank of England report 2004, SME,s form a major part of the United Kingdom economy in term of business 99%, in term of private sector turnover37% and in term of employement 44%.

A paper published by United Nation in 2004 has explained the reasons for strategic importance of SME in countries:

1) SMEs contribute to employment growth at a higher rate than larger firms and they may well, in the longterm, provide a very significant share of overall employment;

2) SMEs can help in the restructuring and streamlining of large state-owned enterprises by enabling them to abandon and/or sell off non-core production activities and by absorbing redundant employees;

3) SMEs provide economies with greater flexibility in the provision of services and the manufacture of a variety of consumer goods;

4) SMEs increase the competitiveness of the market place and curb the monopolistic positions of large enterprises; and SMEs can act as the seed-bed for the development of entrepreneurial skills and innovation; they play an important part in the provision of services in the community; and they can make an important contribution to regional development programmes.

MSE,s have a basic role in the economy but still got less attention from writers, and less response from managers in the context of HRM. Cassel, Nadin, Gray and Clegg (2002) have pointed out two reasons for this '' First reason is that SME,s are less important than large firms, and the second reason is that SME,s should learn from large firms'', but on the other hand Hughes (1989) has pointed out that HRM practice is very important in SME,s to maximise the competitive edge.

Many people has defined HRM in different ways but most of them are agree on the following definition that human resource management is a set of activities that are use by an organization to enhance its organizational performance and mainly the following activities, recruitment, selection, training, performance appraisal effective planning and utilisation of available human resources and to make them ready for the future challenges.

The above mentioned points shows the importance of HRM in SME,s, lack of attention to HRM in SME,s and HRM strategies and practices in SME,s. In the light of above points we can say that research in SME,s in limited and need further investigation. These points motivated the author to conduct this study. This study explores the integration of HR and business/organizational strategy in SME,s. All the above points are about the background of HRM, SHRM and business strategies and their integration in SME,s.


What are the factors which persuade business managers/owners to integrate HR and business strategies in SME.


The study explores the integration of Human Resources and business/organizational strategies in SME,s. The main objective of my research is as follow:

1) To investigate the association of business and organizational strategies with Human Resource strategies and to study the integration of Human Resources and business/organizational strategies across the selected medium size SMEs.

2) To find out the factors which can help in investigation of HR and business strategies in SME,s.


The particular type of research is chosen because of its great importance in economies of the countries and also because of more importance of its simple nature of business type. SME are self employment businesses and any one can start it from a small scale. The success of SME is mainly depending on the expertise and techniques of the manager or owner.

As earlier said in the background study, that SME,s have an important role in world economy and particularly in United Kingdom economy. It has a great importance but still got less attention with HR perspective. My research is covering an important area, HR and business strategies integration in SME,s.

SME,s have many characteristics published in the SME,s annual report in New Zealand in 2004. The most important characteristic is about the skills, experience and knowledge of the owner/manager, so my interest in this area because of my personal experience as a manager in small pharmaceutical company for about three years where also the management used to ignore HR values in their business. I will try to complete my research on selective SME,s in Liverpool rather than the rest of the country if it became possible for me.


The purpose of this research is to highlight the importance of HR, business strategies and their integration is SME,s. The main discussion area in this research will be HRM, SHRM and their integration with business strategies in SME,s.

Human Resource Management:

Human Resource Management or HRM has replaced the personnel department of an organization with many new set of activities along with traditional personnel management duties. Human Resources Management, according to Ferris, Rosen and Burnam (1995) is "the science and the practice that deals with the nature of the employment, relationship and all of the decisions, actions and issues that relates to that relationship. In practice it involves an organization's acquisition, development and utilization of employees, as well as the employee's relationship to an organization and its performance". This definition depicts the surrounding area that general Human Resource Management covers. As mentioned it is science as well as practice of decision making, taking actions and all issues that are related to the three main stake holder of any organization that are Employee, Employer and Organization by it self.

Many writers believes that the people of an organization are most valuable asset, which was for quite long time neglected, but truly, employees of an organizations are non other then the back bone of an organization, so if they are selected, managed and used properly according to the skills they have to achieve the goals of an organization, no doubt they can make an organization from nothing to something and then everything.

Strategic human resource management:

Many writers believe that strategic Human Resource Management is about the integration of HRM and business strategies to achieve the business goals.

Bowes and Akhlaghi (1999) proposed that what Modern Human Resource Management has to do and which Human Resources strategies or practices are to be aligned to the strategy of the organization to get maximum integration and that is the main goal of Strategic Human Resource Management. Typically these practices are:

Improved communications - improved two way communications between management and staff;

Empowerment - strategic involvement and accountability of staff;

Team working - new leadership responsibilities and multi- skills;

Devolved personnel process management -traditional personnel matters dealt with directly by line managers;

New focus on recruitment - more extensive efforts to recruit the right people;

Business process re-engineering (BPR) - de layering management structures;

Performance management - personnel monitoring, appraisal and reward systems;

New training philosophy - business related, and personal development;

Culture change - promote dynamic working environment.

Strategic human resource management is covering all the area which is important to be developed in any organization.

Bowes and Akhlaghi (1999) further explained SHM tools that these practices can give competitive advantage to the firm as compare to the competitors, so manager/owners of SME,s can use these tools SHRM for achieving their objectives.

About the integration of Human resource strategy and organizational strategy Boxal and Purell (2003) said that:

The linking of HR policies and practices with the strategic management process of the organization.

The internalization of the importance of HR on the part of line managers

The integration of the workforce into the organization to foster commitment or an 'identity of interest' with the strategic goals.

The above statements will help me to combine Human Resources and Strategic Human Resource management with business strategies in SME,s.


Through out the research approach section, it is clearly shown and exploained about the approach going to be used in tackling direct and indirect research. Methods of data gathering are described in detail, to spot advantages and disadvantages of different methods to be used. The researcher have chosen interview method for his research because this will bring me in close contact with SME, s managers and owners and it will help me to find the factors which would be helpful in integration of HR and business strategies in SME,s.

Research approach:

The research approach is also very important for the researcher. There are two types of research approaches:

Deductive approach.

Inductive approach.

Deductive approach guides a theory while Inductive approach helps in building a theory. (Lecture Notes, 2006)

Many people are working in this area to highlight the importance of HR values in SME,s , because this will help to develop the employees and achieve the firms objectives. This is a big area of research and the researcher will follow a deductive approach to work on different theories which would help in highlighting the importance of HR and business strategies in SME,s.

Research method:

Top choose a methodology for research the meaning and understanding of research methods are very important for a researcher. There are two main types of research methods. 1) Quantitative method. 2) Qualitative method.

Quantitative research is about the numerical data calculation as questioner is one of the best examples of quantitative research. Qualitative research is a type of research in which there is no numerical data calculation. Interviews are one of the best examples of qualitative research (Lecture Notes, 2006). In research philosophy we have studied positivism, Interpretivism and realism. Here I will use the concept of Interpretivism because Ea-Smith et al (2002) said that interpretivism is based on the principle that reality is socially constructed and given meaning by the people. Further to choose and follow a method for research is mainly depend upon the personal skills, knowledge, experience of a researcher that how a researcher can use best a method to complete his research.

This research is solely based on the qualitative research and we have encountered that from the manager-owner of SME's by interviews that, what they are thinking about importance of Human Resource in their firm and what are their practices in this field. One of main tool for collection of qualitative data is interview from concern person by which we can get the relevant information from right person


Interviews can mainly be classified into three categorizes which are as follow

Structured interviews

Unstructured interviews

Semi structured interviews

Saunders, Lewis and Thornhill (2003) said that structured interview is a"Data collection technique in which an interviewer physically meets the respondent, reads them the same set of questions in a predetermined order, and record his or her response to each." About the structured interviews Saunders, Lewis and Thornhill (2003) further explained that" there is a social interaction between you and respondent, such as explanation that you(interviewer) will need to provide, you(interviewer) should read out the question in the same tone of voice so that you do not indicate any bias. " The reason for not showing bias is that a respondent may not respond correctly and provide incorrect information causing ambiguity and loophole in conclusion. Using structured interviews, the researcher should know what information is required and he has predetermined questions to collect this information. On the other hand researcher enters the unstructured interviews with general questions, unplanned in term of order and words. While semi structured interview is a kind of interview in which interviewer is neither just asking specific questions just like in structured interview nor conducting interview with very broad or unplanned questions just like in unstructured interviews. So semi structured interviews can be placed in between structured and unstructured interviews.

In order to conduct this research and collect the data, structured interviews have been conducted at the firm's premises.


There are two types of data for conducting a research.

Primary data.

Secondary data.

Primary data is a type of data which is not available in literature but the researcher will have to work on it and collect the data for his research. On the other hand secondary data is always available in literature in the form of books, journals, research papers, newspapers and other official statement.

The researcher will collect the secondary data from Journals, articles, newspapers, books, official statements and from different research papers about human resource management, strategic human resource management, business strategies and their integration in SME,s. Primary data will be collected by conducting interviews of SME,s managers and owners and then these two types of data will be linked together.


The researcher will go through a wide range reading of journals, research papers, newspapers, books, articles and other official reports to carry out this research in a best way. Secondly the researcher will take appointments from the managers and owners of different types of SME,s . This might be a time costing process but the researcher will work hard to conduct these interviews because it is the most important part of this research.

The researcher will use the most relevant, reliable and valid data for his research. For qualitative point of view the researcher priority will be to analyze the most recent data. This will give a true shape to the research work and will show what recent work is going on in the field of HRM, SHRM ant their integration with business strategies in SME,s.

The researcher will divide his time in two parts, in first part the he will conduct interviews and in the second part he will spent most of his time in University library to read large number of books, journals, research papers, variety of reports and different types of articles and the internet facility which has a key importance in carrying out this research.

For correct information and guideline the researcher will meet to the assigned supervisor at least once a week. This will help the researcher to take advice and feedback from the supervisor. This will encourage the researcher to work properly and complete his dissertation on correct time.