Importance of Human Resource Management as the Foundation for a Successful Small Business Essay

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¶ … Human Resource Management as the Foundation for a Successful Small Business

The success of any businesses, large or small, largely depends on how effective the business is in the management of its human resources. Employees are regarded the most critical resource in any organization. Unfortunately, given the small number of employees they employ, many small business owners do not fully appreciate the significance of human resource management especially when it comes to the enhancement of the success of their businesses. This text revisits human resource management in the context of small businesses. In so doing, the text will amongst other things highlight the relevance of human resource management as the foundation for a successful small enterprise.

Human Resource Managements: A Concise Definition

In basic terms, human resource management does not have an assigned meaning. In that regard, many variations of HRM definitions have been offered over time by different authors and management experts.

Human resource management in the opinion of Werner and DeSimone (2008, 8) "can be defined as the effective selection and utilization of employees to best achieve the goals and strategies of the organization, as well as the goals and needs of employees." This is the definition of human resource management that will be adopted in this text. Based on the definition given by Werner and DeSimone above, the relevance of human resource management cannot be overstated when it comes to success of business enterprises, both large and small. In a way, the extent to which employees contribute towards the accomplishment of the goals and objectives of a business enterprise largely depends on how well they are motivated and managed. Thus a business that is keen on remaining relevant in a competitive marketplace must not only attract but also retain and properly motivate its workforce.

Human Resource Management in the Small Business Context

In the words of Price (2007, 189), "defining the role of HRM in small organizations is problematic because of the limited research findings available…" Indeed, most researchers have in the recent past largely concerned themselves with human resource practices in the context of larger organizations. Regardless of this, it should be noted that HRM is as relevant to small businesses as it is to large firms.

It is important to note that to effectively discuss human resource management and its role in the context of small businesses, it would be prudent to first offer a definition of small business. Just like is the case with the terms human resource management, different definitions exist for the terms small business. While some definitions of small business zoom in on the turnover of an entity, other definitions largely limit themselves to the number of employees. Thus 'small' in this case comes across as being largely relative rather than absolute. However, for the purposes of this text, the definition of small business to be utilized will be that adopted by the U.S. Small Business Administration (SBA). A small business according to SBA (2012) is an entity "that is independently owned and operated, is organized for profit, and is not dominant in its field."

As I have already pointed out in the introductory section, many small business owners understate the role effective human resource management plays in the enhancement of the success of their enterprises. This is more so the case for those small business owners with a lean workforce. Unlike is the case for large businesses; small businesses hire and retain a lean workforce. However, this in my opinion makes human resource management for small businesses even more important. In this particular case, the effort of each employee counts towards both the short-term and long-term success of the business and thus each employee is regarded a key employee. In the section below, I will discuss the HRM function in greater detain while evaluating its importance as the foundation for a successful small business.

Human Resource Management as the Foundation for a Successful Small Business

Just like is the case with big businesses, small businesses also have to attract, retain as well as manage an able cast of employees. Poor human resource management policies and practices can interfere with the overall performance of an entity going forward. Employees of a small business that embraces effective human resource management practices are likely to be talented, motivated and high performing. Given that employees are a key resource for any business, effective human resource management is seen as the key determinant of the success of any given firm.

As Gitman and McDaniel (2008, 24) point out, determining the jobs to be filled remains one of the main important aspects of human resource management. However, in addition to determining the jobs to be filled, small and medium enterprises must attract and ultimately select employees who can make relevant contributions towards the accomplishment of the entity's goals and obligations. For this reason, "human resource planners must know what skills different jobs require" (Gitman and McDaniel 2008, 24). Human resource management does help a business in streamlining the hiring process so as to minimize the chances of hiring unwanted staff. Further, the human resource management function in this case would also come in handy in enhancing adherence to employment laws, reference checking, etc. Hiring the wrong workers could have a negative impact on a small business both in the short-term and in the long-term. With that in mind, an unskilled small business owner should consider bringing in individuals with the prerequisite human resource management skills and knowhow to handle the hiring process.

Secondly, it should be noted that the success of a small business is not dependent on attracting quality employees only. As Mathis and Jackson (2010, 163) point out, the issue of employee retention has gained much prominence in HRM circles with many business entities being forced to study not only why employees leave but also why they stay. To achieve its goals, a small business should in addition to attracting and employing quality employees also develop ways of retaining the said employees. Employee retention is not an easy undertaking. Given the number of employees a small business employs, such a business has to maintain a healthy balance between keeping good employees, managing those with a potential to be better, and getting rid of those who are irredeemably poor. Human resource management plays a key role when it comes to employee retention. Towards that end, a small business ought to have in place a retention strategy detailing the key components of the retention approach including but not limited to rewards, motivation, regular appraisals, etc. According to Mathis and Jackson (2010, 164), one of the secrets to retaining high performing employees is designing a work environment that encourages employees to stay and grow. Creating such a work environment requires the involvement of people skilled in human resource management. Still on employee retention, it is important to note that motivated employees are likely to stay with a particular employer for longer than unmotivated employees. Towards that end, a small business owner should explore various approaches to motivation including but not limited to giving constructive feedbacks, etc. It should be noted that unlike in large organizations, those charged with overseeing the human resource management function in small businesses can effortlessly maintain close relations with employees. In such a case, it becomes relatively easy to manage employee retention through motivation.

Next, having an effective human resources management department or function ensures that the business is on the safe side when it comes to compliance with the relevant rules, regulations and declarations. In most cases, employee-employer relations including but not limited to hiring, safety and termination of employment are governed by laid down rules and infringement of either of these rules could put the business on a collision course with the law.

Human resource management also comes in handy in the everyday management of staff. In addition to acting as an important tool of guidance, human resource management also offers the much needed support to both small business owners and their employees. It is important to note that in a workplace scenario, questions regarding how to handle harassment, entitlements, etc. are largely inevitable. With a human resource function in place, employees can be kept up-to-date with the relevant policies and legislation. Monitoring of employee performance is yet another key role which can be integrated into the human resource management function. Monitoring of employee performance according to Mathis and Jackson (2010, 520) helps in the enforcement of company rules, measurement of performance, etc. In a small business scenario, this need not be a costly undertaking as employees can be kept informed using the relevant handbooks prepared periodically by the business. Other issues that can effectively be handled with a dedicated human resource management function include employee disagreements, discrimination issues, resignations, etc.

It should also be noted that in comparison to large businesses, the challenges encountered by small businesses are often unique. Some of the challenges mostly faced by small and medium enterprise startups and which could benefit from good… [END OF PREVIEW]

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