The nature of Small and Medium Enterprises

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Due to the nature of SMEs, each individual employee would represent a substantive part of the workforce, thus increasing the importance of every single HR decision (Bacon et al, 1998). In larger organisations, HRM plays an equally significant role in larger organisations too, because of its impact on performance outcomes it has a strategic role to play in business management, and merits careful attention by practically all types of manager, irrespective of functional responsibilities (www.bized.ac.uk). Lado and Wilson (1994) have suggested that HRM practices in large and multinational corporations "can contribute to sustained competitive advantage through facilitating the development of competencies that are firm specific, produce complex social relationships …and generate organisational knowledge." Therefore, aside from the amount of workers in employment by the well-founded, the significance of Human Resources Management is extensively renowned as massively significant to enormous associations, besides it consumes also been perceived that SME's consider their HRM problems to have top priority (Hornsby and Kuratko, 1990; Huang and Brown, 1999).

An interesting difference concerning small firms is their recruitment policies. They make extensive use of job-tryouts (Duberley and Walley, 1995), which are inexpensive and very well suited to evaluate the actual fit of a person with the implicit demands of the job. The personal atmosphere of small firms is reflected in the high use of informal procedures like job posting and bidding (Deshpande and Golhar, 1994). Small firms are also more likely to make the use of recruitment agencies to provide them with temporary workers for period of heightened seasonal activity, and employ a number of part-time workers due to the cheaper labour, and also providing more flexibility to the owner / manager and the employees. However, within larger organisations, recruitment and selection are critical elements of effective human resource management. Within the HRM paradigm, these are not simply mechanisms for filling in vacancies, but are viewed as key 'push' and 'pull' levers for organisational change. The behavioural competencies of the large workforce can be determined and gradually modified by the management to fashion issues such as team working and company culture. Attention has switched from rigid lists of individual skills and abilities that are much more valuable for SME's, to broader-based competences. In general, there is greater regard for personal flexibility and adoptability - a reorientation from present to forthcoming constancy. In stark assessment to excessive relations, as many owe their survival to low labour costs (Hilbert et al, 1994) "The importance of the recruitment and selection process which is essential of organisational competitiveness and a failure to approach this function effectively will have consequences for future job performance," as was aptly recognised by Nankervis, Compton & McCarthy, (1999). "A good recruitment system is crucial to the organisation, because the recruitment of suitable employees will improve retention and morale among the existing workforce by accentuating to those both inside and outside the organisation the importance it attaches to people" (Hall et al 1991). Large organisations usually have an intense recruitment system composing of various styles of interviews such as the behavioural based criterion, the biographical interview and the situational interview, along with assessment centres and psychometric tests (www.shl.com).

Level of state involvement

In Europe the autonomy of the organisations to manage their affairs is constrained by legislation and state affairs. This may be in the area of education, life-long learning and tax incentives for organisations. There is also a high involvement in social security provision, provision of more personnel and industrial relation services and a more directly interventionist role. Pieper (1990) pointed out that the major difference between HRM in the US and in Western Europe is the degree to which HRM is influenced and determined by state regulation. There is greater regulation of recruitment and dismissal, formalisation of education certificates, quasi-legal characteristics of industrial relations framework. An example can be taken dealing with issues related to contracts. D'lribarne (1989) pointed out that US managers are free to reward or fire employees within the boundaries of a 'fair contract'. Where as HR specialists in Europe have to deal with a much wider range of legislative requirement than their US counterparts. However there are arguments which suggest that this legal framework is seen not as a constraint but as a comparative advantage (Hall and Soskice ,2001).

Antagonism of US management to trade unionism:

"U.K is pictured as closer to the American model with a shared history, language and spirit of free enterprise" ( Harzing 2004). The European countries are more heavily unionised then the US. In many European countries the law requires that trade unions be recognised for collective bargaining purposes. In Europe more than seven out of every ten organisations with more than 200 employees formally recognise trade unions (Morley et al 1996). The practice of EI (Employee Involvement) is wide spread in Europe. The European Union is seeking a harmonisation of employee representative right in all member state. The EU legislation encourages the formation of European Work Council (EWCs) for organisation with subsidiaries located in different member states.(Henzing 2001).

Difference in Culture:

The term culture is defined by a number of authors. Shankar (2003) has defined culture as "complex and interrelated set of elements, comprising knowledge, beliefs and values, arts, laws, and habits acquired by a human as a member of a particular society. These act together to distinguish one group from another. "Culture determines the identity of a human group in the same way as personality determines the identity of an individual" (Hofstede, 1984). Further he always defined culture as the collective programming of the mind which distinguishes the members of one human group from another. In order to compare the cultures of different organisations Gerant Hofstede discovered five dimensions which he found universally present in different nations and organisations. They are Power distance, Uncertainty avoidance, Individualism vs Collectivism, Masculinity vs. femininity and long term vs Short term orientations. Hofstede's dimensions discovered that the USA and UK are the two countries having individualism as the highest dimensions. The societies are with a more individualistic attitude and a loose bond with others. How ever the power distance in both the countries are low, which enables the staffs at lower level to interact with the top officials.

Decentralisation of authority and communication system:

Decentralisation of authority can be found in the American management system which results in the decision taking authority being pushed down at the lower levels of the organisation structure. This reduces in the time delay as the subordinates have been given the authority to take decision affecting their area of responsibility. This helps to take quick decisions in this tough competitive market. Only very major and important decision, deciding the fate of the company will be taken by the management. Many authors said that USA has a flattened hierarchy. Now a days Team work is introduced to replace the individualism that dominated the American work scenario.

Similarly communication is an essential aspect of an efficient management function. Through downward communication the subordinates will be informed about the decisions taken by the management regarding certain policies and through upward communication the employees' suggestions and view points will be transferred to the management. Conflicts can be readily solved through communication.

TQM as an integrated process of HRM:

The role of information technology has made HRM more effective in US. (Warner et al 1996). Concepts such as Total Quality Management is also playing important role in the human resource management

In the formulation and implementing a total quality strategy American organisations typically follow four steps (Warner et al 1996).

1. formulate a vision or mission statement

2. get top management actively involved

3. plan and organise the effort

4. implement and control the entire process

The concept of empowerment has become a cornerstone in the quality movement in American firms. The objective of empowerment is to encourage employees to become more personally involved in where the caution is in improving the quality of product or service to customers.(Hodgetts 1993). All the procedures and processes of the companies are targeted to meet this goal. Good leadership quality will automatically lead to an increase in the firm's performance. Training facilities are also provided to increase the performance level of the employees and also to enable the workforce to have full participation in the affairs of the company. Reward system is there to motivate the workers and increase in the commitment of the employees.

American management is committed to never being satisfied. Continuous improvement is the process of continually making changes that increase the efficiency and effectiveness of an organisation's goods and services.

Discussion and Conclusion:

It is clear that, social and cultural diversity is there. It can be difference in the attitude and behaviours of the native workforce or other cultural or legislative factors. (Jackson,1995). There is also diversity with recruitment in two countries as it has to be focused on personnel centred or not. Individualism is there in both the countries but there is a difference in level of bureaucracy.

Human Resource Management had its origin in the US. Employees are viewed as an important asset rather then cost for the organisation if managed strategically can lead to the competitive advantage of the firm. There is an increase in the service sector of employment. The employee's pattern of behaviour should be guided by the corporate culture which is shaped by the top executives in the firms. The main them of HRM in the US is the link between business planning and human resource management planning. This implies that the HRM issues should be considered in the formulation of business plans (Salaman ,1992).

There is a closer link with the customers and suppliers. There is less hierarchical and compartmentalised organisation for greater flexibility. There is a well developed internal labour market in matters like training, promotion and career development. Knowledge based pay. High level of individual employee and work group participation in task related decisions. Extensive internal communication arrangement.

In the United Kingdom there has been a change in the labour market for example there has been a decline in the primary and the manufacturing sector but an increase in the service sector. There has been an increase in flexile working hours also like part-time jobs. There has also been a decline on the power of the trade unions (Proctor, 2000). The societal culture of each countries also varies based upon such things like the individual and collective identities, focus for loyalty and commitment, status and hierarchy. Moreover the structure of the organization, role of the state, production systems and management practices differs from countries to countries so we can say that the same techniques for managing people of different countries cannot be same.

It may be that the value of coherence and unity enjoyed by countries such as USA and Japan is lessened and the value of diversity increased. If so then regions like Europe with its capacity to draw on substantial diversity may be in a better position to respond to the challenges of the modern era. There is certainly scope for HRM 'made in Europe'(harzing 2001).

HRM had its origin in the US. Employees are viewed as an important asset rather then cost for the organisation if managed strategically can lead to the competitive advantage of the firm. There is an increase in the service sector of employment. The employees pattern of behaviour should be guided by the corporate culture which is shaped by the top executives in the firms. The main them of HRM in the US is the link between business planning and human resource management planning. This implies that the hrm issues should be considered in the formulation of business plans (Salaman ,1992).

There is a closer link with the customers and suppliers. There is less hierarchical and compartmentalised organisation for greater flexibility. There is a well developed internal labour market in matters like training, promotion and career development. Knowledge based pay. High level of individual employee and work group participation in task related decisions. Extensive internal communication arrangement.

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