Small Firms and Hrm: Exceptions That Prove the Rule?

Abstract

This paper uses case study data to explore the potential of Human Resource Management (HRM) within small firms. It is argued that despite a considerable amount of evidence that emphasises the distinct human resource problems that small firms face because of their size, there is no reason to assume a priori that a formalised HRM approach cannot provide solutions to these — provided that it is sufficiently flexible. The article cautions against accepting the ‘informal’ approach to managing people often associated with small firms as an inevitable or unconditional ‘good’, demonstrating the complexities of small firm employment relations through case studies of four small firms that have adopted the Investors In People initiative. This initiative is shown to embody key principles of HRM thinking and to have provided viable answers to the human resource problems faced by the case companies. The article concludes with a discussion of the issues that will need to be faced if the management of human resources in small firms is to be opened up to new and innovative ideas in a manner that is genuinely constructive and beneficial.

The adoption of high performance work practices in small businesses: the influence of markets, business characteristics and HR expertise

“…There was also no support for the argument that large or dominant customers influence the likelihood of adoption of HPWPs either by encouraging the adoption of more sophisticated approaches (Gales and Blackburn 1990;Goss et al 1994;Hendry et al 1995;Hunter et al 1996;Kinnie et al 1999;Moule 1998) or by exerting downward cost pressure on small business suppliers thereby preventing the adoption of HPWPs (Rainnie 1989). …”

“…However, Bennett and Robson (2003) argue that the use of external advice increases once businesses grow beyond the small business size threshold, as business growth requires owner-managers to increase employee training and improve recruitment processes rather than retain their own personal approach to management (Curran and Government-sponsored initiatives such as Investors in People (IiP) might provide another source of external expertise for small businesses. IiP offers a best practice blueprint for small businesses to work towards, hence one might expect HPWPs to have been more widely adopted in small businesses that have secured IiP recognition (Goss et al 1994). Against this, however, if small businesses have been compelled to seek IiP (as a requirement from a larger customer, for example), they may view it as a procedural requirement that has no subsequent impact on employment practice once recognition has been secured (Ram 2000).…”

“…Large customers may provide small business suppliers with a blueprint for the introduction of HPWPs as part of efforts to ensure that the products and services they supply are delivered to specification (Goss, Adam Smith and Gilbert 1994). However, large or dominant customers are also in a position to exercise market power over their small business suppliers, and they may use this power to drive down prices.…”

The effects of HRM practices on organisational performance in Lebanese banks

“…Types of HRM practices. Researchers have categorised HRM practices in broad-ranging categories such as 'best practice' or 'high-performance' (Huselid, 1995); 'formal' (Aldrich and Langton, 1997); 'sophisticated' (Goss, Adam-Smith and Gilbert, 1994) and 'professional' (Matlay, 1999). On the other hand, Pfeffer (1994Pfeffer ( , 1998 claimed that the most appropriate term is 'Best HRM Practices'.…”

Small Is Beautiful or Big Is Better: How Much Do Industry and Family Ownership Matter in Firms of Different Sizes?

“…Frequent face‐to‐face communication, for example, coupled with high heterogeneity renders formalisation in SMEs redundant (Greene, 1993; Storey, 1994). This popularises the view of small‐is‐beautiful and questions the appropriateness of prescribing the rational, calculative and performance‐orientated HRM practices (also termed calculative HRM or CHRM for short) (Storey, 1994; Gooderham et al ., 2018) widely reported among large firms to SMEs (Goss et al ., 1994).…”