Introduction
Statistics reveal the United States classifies over 99 percent of enterprises as small businesses. Accordingly, “These businesses are responsible for at least half of: private sector employees, highly skilled and trained employees, new jobs created, and the private gross domestic product (nonfarm)” (Fox 77). Effective processes of strategic business and human resource management planning collaborate providing small businesses a competitive edge attaining a market share of their particular industry. Fundamental to this is understanding the role theories play in strategic planning. At the same time, according to Hargis and Bradley, “In contrast to the deliberate, and proactive, structuring of human resource management practices according to the resource based view and strategic human resource management, as reviewed above, most frequently the human resource systems in place in small businesses are considered informal (at best) or non-existent” (105).
Additionally, the literature shows how both owners and managers of small businesses emerge less than likely focusing on administrative issues particular to using HRM short of having a serious business issue requiring such attention. Kotey and Slade explain in the small business world noted implementing HRM practices and policies typically “lags behind other operational decisions” (as qtd in Hargis and Bradley 105). The following research, assessment, and discourse provides a better understanding of HRM methodologies and concepts as well as a commentary.
HRM
The process of HRM in any business organization is the interrelated design, development, and the implementation of practices influencing the effectiveness of and organization not only attracts job applicants, but the process directly affecting the productivity motivation of employees for job performance aligned to organizational growth and development goals (Dessler 36). Pfeffer adds, “Effective human resource management practices, including properly developed employee recruitment and selection plans, training and development programs, and compensation and reward systems have been linked to higher employee performance and adding value to the corporation” (qtd by Hargis and Bradley 105). It is a matter of seeing a cost effective method in the recruitment by providing applicants “with a realistic preview of the job duties and functions they will perform" (Hargis and Bradley 105).
Torraco and Swanson describe how HRM’s emerging role in the planning and implementation of SBP shows the increase in this management division necessary in light of the increased information technology (IT) as pivotal to the success – or failure of every business – including small enterprises. This depends on the increased reliance on employees’ expertise in IT for establishing a competitive edge as aligned to the destabilization effect connect to existing national as well as global markets as creating and maintaining a competitive advantage (as qtd in Fox 73).
Further according to Torraco and Swanson the alignment of HRM developmental efforts in developing an effective SBP shows it meets the needs in reaching desired outcomes by focusing on building knowledgeable and expertise. The professionally set HRM brings skills that “demonstrate the centrality of employee expertise, and build flexible human resources that meet the organizations current and future expertise needs” (as qtd in Fox 73).
The core factor of the HRM developing and implementing a small business SBP shows from an internal perspective that best practices highlight focusing on the future of the organization growth and development goals by developing the needed employees with educational and training opportunities for professional development. In the small business environment development of the organizational culture emulating ethics and morals that apply to all stakeholders including the employees means HRM has such a model establishing a framework for accountabilities that meet the goals of the organization in enhancing employee motivation and production skills. In doing so applying output rewards as part of the process proves beneficial to sustaining the motivation and production activities of employees for efficiency as outlined by Yi and Hai (as qtd in Fox 71).
Literature shows small businesses using HRM as a critical component for achieving a competitive advantage have a measurable correlation between HRM performance and their capabilities. This includes the connection between performance and using HRM strategies according to Karami et al (as qtd in Fox 71). Further, Ardichvili et al research findings argues three developmental stages of small business exist with each having the direct involvement of HRM meeting the developmental needs of the organization changes. Accordingly, the stages define as service or manufacturing industry type to sales volumes of thousands of dollars. The growth of the organization requires progressively delegating more work to employees ergo more HRM development needs (as qtd Fox 71).
Small Business
Understanding the difference between the small business HRM from larger organizations remains fundamental to the discussion of methodologies and concepts (Dessler 590). The field of HRM as a profession continues growing because in today’s ever changing world of business in this era of diversity the importance of understanding, addressing, and implementing best business practices means assuring the equal opportunity of all employees in personal and professional growth opportunities as aligned to organizational growth and development. The HRM component of any business enterprise is pivotal to strategic business planning (SBP) processes in any organization large or small. Fox advises, “Human resource management and human resource development practitioners need to examine their business for weaknesses in strategy and knowledge regarding strategic planning, and ensure that critical knowledge and skills regarding strategic planning are recognized and represented in their companies” (77).
Methodologies/ Concepts
Review of the literature (Dessler 595; Carlson 531) shows research empirically demonstrates that SBP through the HRM direction increases the return on investment, profits, and sales with better employee performance through such applications as applied education opportunities. This increases motivation to do the job they are hired and creates better job satisfaction. This in turn creates and sustains the competitive advantage. “It is essential to the strength of our small business sector and to the profession of human resource management that we continue to expand upon and utilize our increasing understanding of SHRD in small businesses” (Fox 77).
Theoretical Examination
Theory versus pragmatism and the effect of HRM practices in relation to employee performance remains a little researched area – especially in small business. However, even the limited literature applied to studies of large organizations focusing on this shows the interest increasing over the past decade according to Heneman, Tansky and Camp (as qtd in Carlson et al 531) and are legitimate for applying theoretical examination about small business. This includes selectivity in recruiting, high wages, security, employee incentives and ownership, training and skill development, as well as participation and empowerment along with recruitment.
The management sciences report a growing recognition of best practices for HRM roles in small business that connect to employee working practices and high performance goals. Theoretically this applies to HRM best practices for small businesses that provide employees performance appraisals, morale maintenance, training and development opportunities, set competitive compensation that are all part of the recruitment package (Carlson et al 531).
Theoretical applications of small business using HRM links to strategically implementing this aspect of management directly connected to organizational performance. The concept of creating, adopting, and implementing best practices from the HRM perspective emerges an effective manner for managing employees to the best advantage of the small business and according to the literature significant to the success of the organization and demonstrates it as a critical function (Carlson et al 531).
The literature proposes the most commonly referenced theoretical application is the Resource Based Theory:
“Resource Based Theory is described as providing ‘a basis for addressing some key issues in the formulation of strategy for diversified firm’ and as a ‘strategy for a bigger firm involves striking a balance between the exploitation of existing resources and the development of new ones’". (Wernerfelt as qtd by Fox 77)
Granted, while this is particularly applied to large corporations, the premise nonetheless is effectively applicable to the small business enterprise from a pragmatic perspective.
Training
The research on the effect of HRM practices for training employees show a link to higher performance in alignment to the number of hours this takes place. Effective employee training in a small business affects job satisfaction and motivation as already discussed above. The key to this remains connected with HRM creating and delivering instructional opportunities that engages the learner as applied to having an open environment encouraging employee contributing constructive feedback directly related to the HRM performance as the purveyor of instructional quality in this area (Hargis and Bradley 105).
Kerr advises how HRM encouraging such input remains an, "important communication device that helps employees recognize which job related behaviors are expected and rewarded” (as qtd by Hargis and Bradley 105) as part of the outcomes of training and development among other aspects of the HRM process. Further, Hargis and Bradley determine that appropriately HRM strategies that ensure effective employer/employee communication in desired outcomes of employee training results in targeted outcomes that include better organizational understanding of their employees need for specific direction in their expected job performance (105).
Gaining the competitive edge with effective, motivated, and trained employees through HRM practices contributes to organization growth and development goals. Thus, training is a key function for HRM accountabilities that conveys a strong message to the employee about their value as a primary stakeholder in the organization (Hargis and Bradley 531).
In turn, HRM best practices that include training processes also includes demonstrating that employees are integral to the growth and development goals of the organization. Exemplifying such an outcome show, “When business leaders are able to align a strong competitive strategy with a well-designed and strategically focused human resource system, it has the necessary foundation that brings customers in the door (or to their website) initially and gets them to come back for repeat business” (Hargis and Bradley 531).
Work correlated learning the employee gleans from effective HRM training assures the desired best practices as part of a code of ethics led by organizational cultural practices – particularly in the small business setting. By maintaining the employee skills development as up-to-date industry methods, the HRM best practices for SBP means ongoing provisions for the employee in this area (Hargis and Bradley 501). Further, according to Rowden, “workplace learning (incidental, informal, and formal) correlated with employee satisfaction” (as qtd in Carlson et al 531).
Literature also shows small businesses emphasizing HRM implementation of SBP for informing and training result in better operational performance as well as a better financial performance. Training managers proves another important aspect of the HRM focus on SBP as part of the overall employee educational focus particular to the small business operation. Statistically, according to research (Hagis and Bradley 2011) 68.6 percent of employee training takes place by someone in the business while 13.85 percent receive on-the-job training, and in small business employee training annually 43 percent spent less than $5,000 out of pocket expenses per employee. Twenty-four percent spending was between $1,000 to $5,000 annually per employee (as qtd. in Carlson et al 531).
The same research (Hargis and Bradley 2011; Yi and Hai 2011) found small business HRM professionals connect their SBP practices to supporting the organizational mission, its vision as well as the organizational purpose. Achieving this means encouraging business owners aligning owners’/managers’ practices to a specific organizational plan best fitting the organizational development and growth goals (as qtd in Carlson et al 531). Keogh et al found small businesses with a high demand for training managers among 20 organizations in the research sampling with employees with five having less than ten, a dozen with ten to 50 employees and three with 50 to 250 employees. Among the 20 small businesses interviewed six provided management training. “Owners and senior managers that they interviewed expressed wanting training in communications, project management, motivation, human resource management, marketing, sales promotion, strategic planning, and finance” (as qtd in Carlson et al 531).
Worker Motivation and Productivity
Again the accountabilities of the HRM and SBP in worker motivation and productivity as directly linked to effective training so the employee has the necessary skills for doing the expected work looks at integrating worker perspectives in this process. The equitable opportunity for training employees even in the small business setting means differentiating instruction delivery for meeting diverse workforce demographics and remains an invaluable HRM organizational tool (Stern 2000; Swanson and Hold 2009).
The intrinsic and positive relationship between effective job training led by HRM accountabilities to the growth and development goals of the small business promotes personnel motivation in quality production practices. By engaging employees in this process and encouraging they have a valued voice the desired outcomes for motivation and productivity connect to the employee position as a key stakeholder in the organization as well as promoting job satisfaction (Hargis and Bradley 501).
Rowden reported that HRM resource development directly contributes SBP, it is not uncommon for small businesses failure to attribute such activities as informal learning, on-the job training (OJT), or employee skills development to HRM functions. Regardless of this failure, small organizations continue benefiting from HRM development practices directly contributing to individual or competitive marketing niches. This is an outcome of effective HRM providing skills, knowledge, and contributing to job satisfaction attitudes among employees directly affecting work performance productivity. In addition, results of another study of small business HRM practices focused on employee retention proved that "a significant portion of the job satisfaction can be attributed to workplace learning” (as qtd in Carlson et al 501).
Commentary
The employee as a pivotal stakeholder means HRM applications as a specific department or as a management approach in the small business operations must have specific focus that includes their input in the training process, production activities, and what the organization needs to achieve so employees realize they have a voice in the development and growth goals of the company. Further to this is encouraging small business environments allowing employee flexibility along with these other measures that enhances the quality of life they experience on the job and in their personal lives.
The effective HRM output of the SBP communicates, assesses, and acts on identifying the workers’ needs from their own input revealing their expectations for achieving job satisfaction. Some of the key areas as already discussed above include offering cash incentives aligned to production (or other outlined) goals, while noncash incentives link to positive performance. The small business enterprise using effective HRM creating employee job satisfaction looks at how implementing perks and benefits as connected to positive production performance or other outlined performance goals in saving the organization money are part of best HRM practices.
In today’s technologically driven global market having understanding of every aspect of best business practices for small and large organizations means focusing on providing a quality and relevant workplace environment for its employees. The accountabilities of HRM practices looks at the effectiveness of the SBP that include the characteristics aligned to employees as clearly outlined in the previous discourse above. From recruiting to providing relevant production incentives, the HRM model employed by the small business operation will show the difference between achieving a fair market share – or not.
Conclusion
The above research, assessment, and discussion successfully framed how the role of an effective HRM strategy meant having a clear understanding of the small business cultural ethics and moral entrepreneurial practices that focus on the organization and the employees’ expectations. Recognizing the human capital employees as stakeholders exist as an asset to the small business means understanding the capital investment for skills training, performance incentives, and other quality of life characteristics in the workplace does indeed extend to the personal lives of workers. Professional development opportunities for employees as stakeholders in the hiring process and retention goals are a fundamental aspect of HRM best practices. As a common cause for best business practices, the management of the small business operation at the least must stay aware of trends affecting the workplace environment that lead to development and growth because of the job satisfaction among its employees.
Works Cited
Carlson, Dawn S., Nancy Upton, and Samuel Seaman. "The Impact of Human Resource Practices and Compensation Design on Performance: An Analysis of Family-Owned SMEs." Journal of Small Business Management 44.4 (2006): 531+. 2006. Print
Dessler, Gary. Human Resource Management 14th Ed. Prentice Hall. 2014. Book
Fox, Heather L. "Strategic Human Resource Development in Small Businesses in the United States." Academy of Entrepreneurship Journal 19.1 (2013): 77+. 2013. Print
Hargis, Michael B., and Don B. Bradley, III. "Strategic Human Resource Management in Small and Growing Firms: Aligning Valuable Resources." Academy of Strategic Management Journal 10.2 (2011): 105+. 2011. Print.
Stern, A. J. and Hicks, T. The Process of Business/Environmental Collaborations:
Partnering for Sustainability. Westport, CT: Quorum. 2000. Book
Swanson, R.A., and Holton, E.F. Foundation of Human Resource Development, 2nd ed. San Francisco: Berrett-Koehler Publishers. 2009. Book
