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  • Subject Name : Human Resource Management

Human Resource Management Strategy of SME Companies

Table of Contents

Introduction.

Human resource practices.

Agile human resource management practice.

Future of human resource management

Conclusion.

References.

Introduction to Practices of Human Resource Management

A successful and efficient working of any organization or business requires a collective effort from among all the function of the organization. Management in simple terms can be defined as a process which makes the efficient use of all the resources of an organization or businesses to achieve the corporate goal. It is a process to attain the business goals and to achieve specific organizational purposes through economical and optimum planning and regulation. Efficient management consists of five core functions i.e. planning, organizing, staffing, directing and controlling (DeCenzo, Robbins, and Verhulst 2016). Amongst these, staffing is the one of the most important function of this process and is responsible to ensure the optimum and the best use of the human resource or the workforce of the company to achieve the organisational goals. Staffing involves recruiting the right personnel who are responsible for the organization’s growth. Staffing is a broad concept and essentially involves many other concepts of personnel management. With the changing times and every changing dynamics of the business environment, human resource management has emerged as a very important function for all the organizations and businesses.

The presented articles give a detailed view of this function of staffing and human resource management and how it is an integral part of the management system. The report sheds light on the human resource management practices employed by the SME companies for its employee management. Such practices for the employees help to maximize employee performance and thus helps to assist to gain competitive advantage in the market

Human Resource Practices

The employees of an organization are one of the most important resources of the business. All the functions of an organization whether managerial or non-managerial need manpower to carry out these functions. Any company or business will hardly be able to function without human resources. The workforce of an firm are actively involved in the operations of any business or organization and are directly responsible for the performance, development and growth of that organization. Hence, management of human resources and employees of a company is very essential to continuously motivate and encourage the employees to put in their best efforts an perform to their maximum capacities.

Human Resources include are all the people that work collectively or in one capacity and contribute to attain the common motive of the growth of a company. Thus, human resource management is defined as an approach for strategic and effective management of people or employees in an company so that they are able to contribute to business to gain a competitive advantage (Rees and Smith 2017). Human resource management is kind of a formal systems developed for the management of people within an organization. Human resource management involves all the process of selection and recruitment of employees for an organization. After selecting and appointing the appropriate personnel for a company the human resource management team also provides induction and orientation to its workforce (Bratton and Gold 2017). The human resource management team is also responsible for imparting training to the employees and for their development. Appraising the performance of employees, providing employee benefits, giving them appropriate compensation are other essential responsibilities of the human resource management. Along with these, the human resource management team has a key role and is responsible in motivating the employees and maintaining employee relations and relations with trade unions, ensure safety of employees, their welfare and work in compliance of the prevalent labour laws of the land.

In the present times, the employees of an organization are considered as assets of an organisation, in contrast to the earlier times where the employees were viewed with the perspectives as a liability or as just tools for company’s growth (Bratton and Gold 2017). However, today the workforce of a company is considered as an investment and capital rather than an obligation or an expenditure to the company as they were considered previously.

The basic principle to the backdrop of the human resource management strategy is to understand that what should be offered to an employee of a company to extract the most optimum performance and the desired work from them (DeCenzo, Robbins, and Verhulst 2016). To human resource management these goals the human resource manager, employ and implement a variety of human resource practices.

Human resource practices are strategies or a set of ideas comprising of basic and universal human resource principles that enable businesses and organizations to perform optimally, increase their productivity and thus efficiently achieve their corporate goals. With effective adaption of human resource strategies and practices firms are able to gain new skills, expertise and knowledge. These practices also assist the organizations to effectively change the working style and attitudes of an employee and enhance organizational performance. Businesses are able to eliminate traditional inefficient practices by implementation of effective human resource practices, which then helps the organizations to maximize its productivity and optimum use of all the resources.

Small and Medium Enterprise (SME) sector has emerged as a very relevant sector of the global economy, and contributes significantly to the growth of a nation and its economy (Heilmann, Astikainen and Kultalahti 2020). Small and mid-size enterprises (SMEs) are companies that operate with revenues, assets or a number of workforces below a certain threshold (Heilmann, Astikainen and Kultalahti 2020). Though they are small in size, small and mid-size enterprises (SMEs) play a significant role in the economy. These SMEs are instrumental in economic growth of a region by generating employment innovation, increasing exports, and inclusive growth of the economy, and by promoting development in rural areas, and producing a range of products with the limited capital investment. Thus, it is important for SMEs to work on their internal management structure, processes and practices to continue their journey of growth. 

The basic principle of HRM is to align the individual employee goals with organizational goals. SMEs who successfully are able to integrate the human resource system with the vision and corporate objectives, attain their aims in a more structured manner. A business’s objective depends on the productivity of its employee. Good job role, environment of working, employee benefits, recognitions and rewards and opportunities are some of the important needs of an employee. An effective human resource management strategy or practice is able to link these practices with the business aims, objectives and structure.

 It is recommended for the firms to build an effective human resource system right from the beginning to effectively frame the various employee related practices like talent management, engagement, policies related to compensation and benefits (Nankervis, 2017). Well formularised and framed HR practices help in eliminating ambiguities related to employee’s work profile and role in the company. This helps in motivating the employee and control attrition. Some of the important human resource practices can be described as follows:

Talent Management

Talent management can be described as a structured and a strategically organized process of employee the appropriate talent onboard and to help them grow to their optimal capabilities in line with the companies objectives and goals (Kaliannan, Mathew and Ponnusamy 2016).

This process starts by analysing the talent and identifying the vacant position of a company. The human resource managers should clearly understand what kind of talent or competency and skills are required to fill a vacant position. After this analysis, the HR managers start searching and sourcing for this right talent, and once sourced the start the process of getting the recruited people on board.

Once onboarded the employees need assistance in developing in the system and in developing needed skills. They should be provided training to develop the required skills and expertise with a long-term approach. Talent management also involves effectively engaging, encouraging and motivating the employees to maximize their performance. Along, with these another important functions of talent management are the retention of talent leaving an organization. At times, employees might be dissatisfied or face some issues with their job roles and may look for other job options. The talent management practice looks at effectively managing such employee issue. These aspects of talent management explain the overarching nature of this practice i.e. its consideration of all aspects related to the employees at work while making ensure that the achievement organizational goals. Thus, talent management is an umbrella term, where series of various elements and sub-processes need to work collectively to achieve success of the business.

Aligning values

Another important human resource practice for the attainment of organisational goals is to alignment of employee goals with organisational goals. The human resource managers should effectively outline the goals and targets of its employees in conjunction with the values and goals of the organization of the company. Once these outlined, they should communicate these values to the employees effectively so that employees are able to perform in the same direction and hence display maximum performance. If the employee is unable to understand the core values and goals of the organization, their work in a manner unfit for the organization and accordingly to own values, which decreases the productivity. The HR managers should communicate the performance expectations from the employees regularly and should be able to make employees responsible for their actions. The employees should have clear understanding of the organ­i­sa­tion­al objec­tives and why these indi­vid­ual goals mat­ter. Employ­ees tend to be much more sensitive towards their roles and will be much more engaged in it when they tru­ly under­stand their job roles and how is it important. Misalignment gives rise to conflicts when employees bring different set of values from outside (Hassan 2016). Aligning the values of the organisation with the individua values also helps to provide a direction of work for the employees and thus increase job satisfaction amongst them.

Developing leaders

Human resource managers also have the responsibility of developing leaders in various organizational settings. The process of leadership that includes influencing others, determines direction of work, and directing the employee towards a specific goal or mission the systematic development of good leaders is essential in long-term organizational success (Hassan 2016). Thus, the human resource managers thus actively implement the practice and strategies to develop leadership qualities. This is a practice includes designing of all the formal and informal training and professional development programs which will enable employees to develop leadership skills. The leadership development structure depends on organization size. Human resource mangers of larger organizations nowadays usually create a formal practice, and sometimes even develop corporate colleges and programs for employee learning and imparting leadership skills. The involvement of HR professionals in the many aspects of leadership development is essential as organizations recognize the need for strategic solutions to address future leadership demands.

Developing intelligent career

Intelligent career is simple terms is the series of jobs roles or work undertaken by the employee at his own interest and will in accordance with his personal goals. Developing intelligent career options for its employees is also a practice nowadays employed by the HR managers. Developing intelligent career options involves the process and function of setting up learning objectives and new knowledge by the company for its employees and the response of the employees in return. These intelligent career options enable the employees to view themselves as skills and knowledge assets (Lai, Saridakis and Johnstone 2016). Acquiring new knowledge by the employees enables them to invest more time and knowledge in the work they do. Intelligent career options give insights to the employees of knowing why they work, how they work, and with whom they work with. Such intelligent career options benefits both the parties, the company and the employees to develop and grow.

Agile Human Resource Management Practice

In this age of rapid globalization, the business environment has become highly dynamic and has increased the risk and uncertainty. This uncertainty impacts the market share and decreases organizational productivity. The SME sector is also affected by this volatility of markets. Thus, to adapt to these changing dynamics and survive in the market, it is important for the businesses to focus on effective and efficient HR practice along with other management strategies. Thus, for this purpose the businesses have started the implementation of agile human resource management practice. Agile human resource management system is an efficient proactive style of management and strategy that employs the employees to efficiently, actively and quickly adapt to changes in order to meet the client and organisational needs (Heilmann, Astikainen and Kultalahti 2020).

Agility in simple terms is the proactiveness or how quickly a business is able respond to changing business environment by constantly evolving and adapting. The principle of agile human resource is empowering employees to better manage volatility, enhance adaptability, and strengthen the organization by applying agile methodologies. It enables the organisations to adapt to the countless small dynamics in response to environmental changes, and results in facilitating change in the fundamental building blocks of the company (Mostafa et.al 2019). An organization with an agile human resource practice has the ability to respond quickly to competitive threats and market opportunities (Heilmann, Astikainen and Kultalahti 2020) and thus survive. Thus, human resource managers should such innovative agile practices to maximize the organizations productivity.

Future of Human Resource Management

Human resource management is not just limited to being an advisory role today. With the uncertainty in the business world and increasingly unpredictable trends and outcomes, it is essential for the SMEs and other organizations to adapt to these ever-changing environments to emerge as market leaders (Lai, Saridakis and Johnstone 2016). Thus, the future of human resource management remains as an utmost important function of the management of SMEs. The function is now an umbrella and addresses various aspects of organisational strategies. The human resource practices implemented in current scenario are future-focused and growth-oriented. Such practices emphasize the importance of learning and competence management. These practices should be able to create willingness in the employees to attain corporate goals which will help the employees for individual developmental process, which in turn will improves organizational productivity overall Thus, the basic principle of future human resource management will be an efficient and effective process of employing the appropriate people onboard and enabling them contribute to the business at large. Also, with the advancement in technology it is important for the human resource managers to develop practices and strategies in conjunction with technology in future. Human resource practice should be able to help the firm to become more responsive and adaptive. It should be able to design structures which will facilitate to the employees to be flexible in matching workforce fluctuations to demand.

Conclusion on Practices of Human Resource Management

Human resource managers try to source the best talents. Human resource management ensures that the business always has the right people in the right positions. The employees or the human resource of the company are a key element and form an integral part of the organization. Human resource management views employees from the perspective of them being the most valuable resources for a business or an organisation. The human resource management practice or strategy is designed to maximize the employee performance to achieve the organization’s strategic objectives. Human resource management is also an internal structure on which the company also needs to focus. It is essential for the firms to implement an effective HR practice system to improve the performance of its company and gain and create a competitive advantage.

Small and mid-size enterprises (SMEs) are businesses units that operate on smaller scales. Even though they operate on a smaller scale, they contribute largely to the growth and economy of a region. SMEs are now seen as a significant part of the economy and the government of almost all regions also actively invests in this sector. Thus, it is important for SMEs to focus on their internal management and structures of effectively function. This management, also includes efficient management of the employees of the company which are an important resource. For this purpose, the human resource management team of a company thus apply various human resource practices like talent management, leadership development, aligning values, developing intelligent career options, agile human resource management, etc. for effective management of its workforce.

References for Practices of Human Resource Management

Bratton John, Jeff Gold. “Human Resource Management: Theory and Practice”. London: Macmillan Publishers (2017).

Festing Marion, Katharina Harsch, Lynn Schäfer, and Hugh Scullion. "Talent Management in Small- and Medium-Sized Enterprises." (2017). https://www.oxfordhandbooks.com/view/10.1093/oxfordhb/9780198758273.001.0001/oxfordhb-9780198758273-e-13.

DeCenzo David A, Stephen P. Robbins, Susan L. Verhulst. “Fundamentals of Human Resource Management”. New York: Wiley (2016)

Hassan Saria (2016). “Impact of HRM Practices on Employee’s Performance”. International Journal of Academic Research in Accounting, Finance and Management Sciences, 6, no. 1, 15-22.

Heilmann Pia, Ritta-Forsten Astikainen and Susanna Kultalahti. “Agile HRM Practices in SMEs” (2020). https://doi.org/10.1111/jsbm.12483.

Kaliannan Maniam, Abraham Mathew, and Vanitha Ponnusamy (2016). "Effective Talent Management in Malaysian SMEs: A Proposed Framework." The Journal of Developing Areas, 50, no. 5, 393-401. 

Lai Yanqing, George Saridakis and Stewart Johnstone. “Human Resource Practices, Employee Attitudes and Small Firm Performance” (2016). https://doi.org/10.1177/0266242616637415

Mostafa Ahmed Mohammed Sayed, Bottomley Paul, Julian Gould-Williams, Wessam Abouarghoub, Sophie Lythreatis. “High‐Commitment Human Resource Practices and employee outcomes: The Contingent Role of Organisational Identification”. (2019). https://doi.org/10.1111/1748-8583.1224

Nankervis Alan, Marian Baird, Jane Coffey and John Shields. “Human Resource Management – Strategy and Practice” Melbourne: Cengage Learning (2017).

Rees Gary and Paul Smith. “Strategic Human Resource Management: An International Perspective” London: Sage Publications (2017).

Remember, at the center of any academic work, lies clarity and evidence. Should you need further assistance, do look up to our Human Resource Management Assignment Help

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