Study On SME And HRM Commerce Essay

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This study seeks to investigate the association of and organizational factors with human resource Management and also analyze the integration of Human resource and business strategy. In early 1980s west world found the success of Japanese organization. The main factor behind their success was the appreciation and properly utilization of their work force. Which influenced the practitioners and writers of west countries and they also realize the importance management of work force, so they name this management as Human Resource Management (HRM).

This progress go further and the management is started making the business strategy of their firms according the skills they have in the form of their worker and from here idea of strategic Human resource management or SHRM evolved. SHRM is process by which a firm makes a relation of human and logical principal of their workers according to the strategic requirement of firm. Henry and Pettigrew (1986) argued that HR policies and activities match with the strategic features of human resource management with some clear business strategies. The key differences between traditional and strategic concepts is to what extant these hr policies and activities included in to the strategic decision making process.

SME or small and medium enterprises are defined by various people, bodies and associations in different context like some define it in the glow of the employees in numbers, while other define in the perspective of revenue of the firm. There is a really famous report about SME, s by Bolton J.E in 1971 defined a small business as followed that SME is:

* One has relatively small market share.

* One that is in the operation of its owner or part owner in modified way ,not by a controlled managerial structure.

* They will be restricted by outside essentials in matter of financial obligation.

* One that is independent with owner/manager having control of the actions of the business.

Literature review

The personnel department of organization is replace with many new set of activities along with the traditional personnel management duties which result in after the Human resource management practices. According to Ferris, Rosen and Burnam (1995) “the science and the practice that deal with the nature of the employment, association and all the decisions, actions and issues that relates to the relationship. In practice it includes the organization acquisition, growth and utilization of the employees, as well as the employee's relationship to organization and its performance”. This definition depicts the broad surrounding area that Human resource management covers. It's noted before that it is science and also a practice of decision making, actions relates and also it relates to their stakeholders of an organization which are employee, employer and organization by itself.

Armstrong (2003) says that “Human Resources Management is a strategic and rational to the management of an organization's most esteemed assets, the people working there, who independently and together contribute to the success of its objectives”. This definition can be say differently in other words like it is the most respected management of any organization i.e. people of the organization. Than Armstrong (2003) argues about Strategic Human Resource management is an move towards the decision making intentions and plans for the organizations to keep in relation to recruitment and employment relationship ,training ,development ,performance management ,reward system and employee relationship strategies ,practices and policies.

While Hendy and Pettigrew (1986) say that the SHRM strategically consists of four elements.

1. There is use of planning.

2. To the job design and management of personnel system based on employment policy and manpower strategy there is a consistent approach, and also regularly pointed by a philosophy.

3. Some clear strategies connected to HRM activities and polices.

4. Considering or giving importance to the people of organization as strategic resource for achieving competitive advantage.

As like all other business firms there is also a business strategy for SME to best compete in the market said by Spillan and Ziemnwicz (2003),while considering these decision areas about firms strategic orientation, Marketing strategies and strategic maneuvers the business manger must think broadly.these ares plays important role in the success and endurance of small and medium business.

The business strategy is major step in running the successful business especially for SME's as stated by Borch, Huse and Senneseth (1999), for small medium firm's selection of strategies is most important decision in the success of their firms.

There are many reasons given of the importance of Human Resource management for the mangers of SMEs. The first one is by considering their HRM problems as main concerns by SME's ( Dorst and VanMeteren,1999).secondly, there is particular interest for SME's in HRM ,where “In developing and sustaining their competitive advantage human resource plays a significant roles for firms”(Duberely and Walley,1995).the HR practices varies from one SME's to another. As stated by Duberly and Walley, (1995) there are highly presence of HR practices in SME's which are often determined by the philosophy and goals of the SME's owner. Likewise, Julien (1998) argues about the HRM practices in SME's as “they are usually not dignified and enormously diverse, that why it resist generalization”. They are mentioned Williamson (2001), who gives the example of avidness in USA. He argues that most of the 99 percent of USA are employers are small firms, assess of the three articles published in the top three USA academic journal (journal of applied psychology; Academy of Management Review and Personnel Psychology) during 1988 and 1998 discovered that mostly 207 articles was published which focused on recruitment, employees selection, HR and hiring issues, only seven focused on SME or uses the small business in their example.

The above explain points underline the value and require attention to HRM and HRM strategies and practices in the perspective of SMEs.the point taken out from the literature review motivated the author to do a research in this study. The researcher will explore the association of strategic factors with Human resource management. The study further inspects integration of Human resource management and business strategy in few Medium size firms. The samples are based on SME's from different business sectors. The taken numbers of employees in the sample firms are range up to 20 to 35.

Research objectives

The main objective is to explore the association of strategic factors with Human resource management and to study the integration of human resource and business strategy across the selected sample medium size firms (SME's).

The research question is, to find out the factors that are liable for the integration of HR and business strategies in selected SME's. Bowers and Akhlaghihas (1999) covers a large section of practices that needs to be measured during integration of business and human resources strategies like recruiting and selecting, learning and development, business communication, team working, supervise and reward system and many more. In this study the model given by Bowers and Akhlaghihas (1999) is adopted. This model shows the main theme of what a modern HRM is doing and which Human resource management practices is to be allied for the firm's strategy to get the maximum integration, which is the main objective of SHRM.

Research Methods

There are many research methods used for research in this research the Qualitative research approach is used. Primary data will be used for the research. It will require face to face interviews with the manger of selected SME's.

Research methodology

Research philosophy

According to Saunders, lewis, thornhill (2007) the research philosophy is the process by which the research will take to develop knowledge. He pointed out few useful views namely called Positivism, interpretivism which play important role in the research development.


According to Easterby-smith et al, (1991, p.24 cited in lewis and Stubbs, 1991) “the key concept of positivism is that reality is regarded as external and objective, knowledge is only significant if it is based on observation of this reality”.

Mainly positivism reflects quantitative research approach which means the result of the approach is scientific and can be presented in statistical form. Furthermore, in positivism philosophy the outcome is entirely based on what researcher sees happening.

The researcher will not follow the positivism due to the fact the research is basically meant to be interacting with the people in the SME,s and to gain their view point about the current business environment and strategies which cannot be completed with positivist philosophy.


According to Easterby-Smith et al, (1991, p 24 cited in lewis and stubbs,1991) “Interpretivism should not collect the facts and examine the repetition of certain patterns but it appreciate the different construction and meaning that people place upon their experience”.(Easterby- Smith et al, p 24 ,cited in lewis and stubbs,1999).

Interpretivism normally reflects qualitative research methods allow researcher to know the situation by analyzing the thinking and view of people and reality. (Saunders et al. 2007).the researcher will be able to have deep insight the research topic because of the terms used in interpretivism called ‘social constructionist' and ‘phenomenology'(Lewis and stubbs,1999).which allow the researcher to interact with different people to analyze their feeling about the surroundings.

However the researcher will agree to the philosophy of interpretivism due the fact that any standard interpretations and principals the individual interpretation is rejected by interpretivism philosophy in terms of how they perceive the reality.

Data collection

The difficult part in the research and data collection is to select the proper methodology for collection, In order to collect the data for this research work, the interviews have been conducted and the interview question are mainly based on the model explained by Bowers and Akhalaghihas (1999) in order to achieve the research objective, after collecting the data than it will be compare with literature.

There are selection of different industries of SMEs are selected for the collection of data in this research i.e. Food industry, software industry, distribution sector and import export company. These SMEs are selected because of easily accessible and on personal link. About the nature and briefs introduction of these firms like operations, number of employees and lots of other aspects which will been asked from the manger of firms in PART (A) of interview questions put in the appendix below.

In this research qualitative research method is used in the collection of data, to get the maximum observation of manager owner of medium size SME about the HR practices and its integration with business strategies. This will be come out from their helpful experience .their for this approach is adopted so than when come across the interview question from the individual in firm who are responsible for the strategy making and decision of firms will get the maximum output result in answers.

Qualitative Research

The perspective of this research is based on qualitative research be which the researcher will be able to assign subjective understanding. The researcher adopted qualitative analysis in order to get the complete picture of the HR practices in SMEs.Saunders et al. (2007), says that by the qualitative research methods you can get the detailed information about people's experience and belief about the surroundings. Whereas Dey, (1993) explain clearly about the differences between the two approaches of research (Qualitative and Quantitative) as: Qualitative data refers to meanings, while quantitative data deals with statistics. Qualitative data, especially deals with the experiences of peoples about what is going in their surroundings and what their thinking about it. In the understandings of how events and actions are performed.

The manger owners of SME's are come across in interviews by that we can know about their thinking and importance of Human Resource in the firm and also their performance in this field.


In this research while collection of the data the structured interviews will be taken in the firms premises. The main reason for choosing the structured interview for this research is because the interview questions is taken from the model proposed by Bowers and Akhlaghihas (1999).describe very nicely in the model that which Human resource strategy is to allocated for organization and what are modern HRM has to do.

Generally interview is divided in these three parts.

1. Proper introduction of firms.

2. Asking about various HR practices in the firm.

3. Finally asking about the factors responsible for the integration of HR and business strategies.

The major players of these firms are targeted in interview in this research like manger, owner or director of SME .The Reason for choosing these people because they are responsible for the various changes in the strategies of the firm. They all well experienced in their field of work. The selected SME's are food, distribution, software engineering sector and retail sector. Like few names sky high take away, awan trader etc.


There are few possible limitations during the completion of this research. one of the main limitation is to get the proper time for such detail interview from the concern person and the owner-manager of companies are so much busy because there is so much responsibilities for them regarding other issues in their firm. One another issue there is also the possibility to get unbiased answer of interview questions which is mainly considering HR and because the firm like these where many manger thinks that HR department is useless and over cost for firms. The last one is about the manger -owner which plays important role in this research interview, they are biased to give information about their firms regarding these like staff training ,recruitment policies ,employee turnover and some others.


Questions for Interview

A) Introduction

* Name of your Organization?

* Nature of your Organizations i.e. services, manufacturing, distribution etc?

* What is your role in organization i.e. HR Director, Personnel Director or CEO?

* When this organization has been established ? (idea about the life cycle of an organization and with passage of time the different HR practices

* Number of employees currently working in this organization?

B) Various HR practices in the firm

* What do you understand HR management to involve?

* Do your SME have an HR/ Personnel Manager?

* What HR qualifications does the HR manager have?

* What do you think the HR director's role should be?

* Is HR Manager on the Board? Who do they report to?

* What contribution does your HR manager make to strategy development? How far your HR dept/manager to has power in the process of strategy making?

* Are yousetting your targets according to the human resources you have or
do you set your targets first?

* Are HR policies of this SMEs in written format and available and
to all employees How are they made available?

* What Training do you provide for your staff? to your employee if needed in order to achieve your business/organizational goals ? Examples of staff development.

* How do you assess and review training needs, how do you assess future business skills requirements?

* Any Channel of Information exists, in communications between management?

And staff e.g. weekly, monthly paper, journal etc.

* What is the staff turnover of your SME annually?

* Any emphasis on Team Building/Team working and preparation for new leadership in order to produce new leader to tackle new challenges?

* What is a criterion for rewarding and monitoring the employees?

* Any attempt for organizational change in this SME? If yes what was change?

* Are you willing for strategic involvement of staff, if so, why and How?

* What is the mechanism for recruitment? In order to get right person for right job?

(C) Factors responsible for integration of HR and Business strategies

Are you trying to integrate your HR and Business/ organizational strategies? If so Why?


Hendry, C., & Pettigrew, A. (1986). “The practice of strategic human resource Management”. Personnel Review.

Ferris,Rosen and Burnam(1995), “Handbook of Human Resource Management. Blackwell Business”, Oxford, UK.

Spillan J.E and Ziemnwicz C (2003), “Strategic Management in Small Retail.

Dave Bowers and Fari Akhlaghi (1999) “Integration of modern HRM practices across contractor boundaries in FM”; MCB University Press Volume

Borch, O. J. Huse, M. and Senneseth, K. (1999) ‘An Empirical Examination of Small Firms', Entrepreneurship Theory and Practice.

Dorest , J.C and van Mereten V.M (1999) Entrepreneurial Handling of Personnel Shortage, Economic Bureau, Amsterdam Julian P (1998),”The state of Art in Small and Entrepreneurship”.

Duberely, J.P. and Walley, P. (1995),”Assessing the adoption of HRM by Small and medium size manufacturing Organization” International Journal of Human Resources Management.

Saunders, lewis, thornhill (2007), “Research methods for Business Students”. Forth Edition, Pearson edition.

Lewis and Stubbs (1999) “National expansion of British regional brands”, Journal of product and Brand Management, Vol. 8 No. 5 1999, pp. 369-386.

Dey, I. (1993) Qualitative Data Analysis: a user-friendly guide for social scientists, Routledge, London.