Role of Small and Medium Enterprises in the Canadian Economy
The Small and Medium Enterprises (SMEs) are acknowledged as the engines of the Canadian economy. The success of these businesses leads to prosperity in the Canadian market. In Canada, 98.1% of all the business lie in the category of small businesses and by the addition of the medium-sized businesses, it amounts to 99.8% of all the businesses. SMEs are the major contributor to job creation and economic growth in Canada. SMEs contribute to more than 45% of the total Canadian export value which is more than $ 130 billion. It is one of the concerns that the SMEs will be negatively affected in the future because of aging population and no succession planning.
In Canada, a business that consists of less than 100 employees is categorized as small-sized business and the businesses that employ 100-499 employees lie in the category of medium-sized business. The small-sized businesses in Canada employ more than 1.1 million people, and more than 20,000 are employed in medium-sized businesses. As SMEs are major contributors to the economy, the government of Canada also supports them. The debt financing for SMEs has an 85% approval rate .
In Canada, the survival rate of the SMEs is declining which will affect the economy of Canada. From the statistics, it is observed that the small and medium-sized businesses that entered the Canadian market in 2005 were not successful for a longer period. 85% of the businesses managed to survive for a year. 70% of the businesses carried their operations in the second year, and 62% stayed in the market of the third year, and until the end of five years, only 51% of the businesses survived in the market. It is a very alarming situation, as almost half of the businesses wiped out in 5 years. To overcome these uncertainties, it is necessary for the owners of the SMEs to ensure that they adopt several management strategies to improve their businesses .
There are several factors for the declining survival rate of the SMEs, but the most prominent factors that affect these businesses is the lack of proper management. As the most of the firms are comprised of fewer people, therefore, the owners avoid establishing the proper department of Human Resource Management. The Human Resource Management Department will help the companies to hire experienced people who will improve the efficiency of the business. In addition to it, the department will also help the organization in training people so that they can be efficient in their performance. The value of the Human Resource department and their strategies are important for the SMEs and therefore, it is essential to aware the owners of SMEs about such departments.
Strategies for Human Resource Management and its Importance in SMEs
Managing Human Resource is one of the most crucial parts of the business because the several factors need to be controlled to improve the performance of the company. The SMEs are totally dependent on the human capital, as the performance of these businesses is totally dependent on the performance of its employees. The SMEs can only be successful if the business is established on out of the box ideas and ambitious people. SMEs lack sufficient financial resources, therefore, it depends on the human capital to fight the uncertainties that the business is likely to face by making appropriate decisions .
The organizations save cost by not forming a Human Resource Department, as it is an additional cost. The owners of the SMEs need to realize that it is essential for the business to control people as they are the main resource of these organizations. The Human Resource Department will help the companies in hiring efficient and experienced people so that the operational activities of the business can be improved. The problem that most of the SMEs face are to hire a right person and the Human Resource Management can help these companies in hiring the right person for the right position. It is also a part of the Human Resource Management to develop the proper job descriptions for various positions in the organizations. It also increases the efficiency in the performance of the company. Furthermore, it is also important to train the employees if the organization is doing a new business that lacks experienced people in that country. Human Resource Management can train the employees to make sure that the company properly conducts the business. As the Human Resource Management entirely focuses on the human capital, therefore, it is necessary for the SMEs to focus on establishing such departments.
Research Question
The paper analyzes the problems of SMEs and the importance of Human Resource Management to help the SMEs in overcoming these issues. For this purpose, a research question is developed that is:
“What is the impact of effective Human Resources Management strategy on the competitiveness of SMEs concerning the economy of Canada?”
The paper discusses the importance of Human Resource Management and the way it can help SMEs which answers the research question to a great extent.
References
Cooper, C. L., & Burke, R. J. (2011). Human Resource Management in Small Business: Achieving Peak Performance. Cheltenham: Edward Elgar Publishing.
Innovation, Science and Economic Development Canada. (2013). Key Small Business Statistics - August 2013. Ottawa: Innovation, Science and Economic Development Canada.
Snell, S. A., & Bohlander, G. W. (2012). Managing Human Resources. Mason: Cengage Learning.
