Professional Documents
Culture Documents
Human Resource Development
Human Resource Development
Human Resource Development
ON
“Visit any two SMEs. Compare and contrast their HRD practices”
A Project Report Submitted in partial fulfillment of the requirements for the award
of the degree of
BY
Mukesh Yadav
MBA-4th II
CERTIFICATE
“Visit any two SMEs. Compare and contrast their HRD practices”
Submitted in partial Fulfillment of the requirement for the award of the degree of
TO
Mukesh Yadav
Under my supervision & guidance and that no part of this report has beer.
Submitted for the award of my other degree/ Diploma or similar titles or prizes.
FACULTY GUIDE:
Name: Signature
Mr. Jatinder Singh
ACKNOWLEDGEMENT
I would like to acknowledge and thank from the deepest portion of my heart
to all the people who were help me to complete this Project. To start with I would
like to thank my institute, Rai Business School for providing me this opportunity.
I would like to thank my mentor here Mr. Jatinder Singh who gave me his
valuable inputs so that I could start my interns from the right direction. Last but not
the least; I would like to thank my parents and teachers for supporting me to
achieve this level.
I would like to thank all those people who have given their precious time for this
Project.
Mukesh Yadav
Enrollment No: PGPPE\08A\169
MBA-4th II
DECLARATION
“Visit any two SMEs. Compare and contrast their HRD practices”
TO
Is my original work and the same has not been Submitted for the award of any
other Degree/ Diploma or other similar titles or prizes.
Small and medium-sized enterprises (SMEs) are vital to the U.S. economy.
For example, of the 5,369,068 companies in the U.S. in 1995, 99.7% had fewer
than 500 employees and 78.8% had fewer than 10 employees (USSBA, 1997).
Even in larger firms (i.e., 500+ employees) entrepreneurial units (e.g., new product
development teams) can be loosely construed as small businesses.
In research, the size of the employer is with limited exceptions (e.g., executive
compensation), often omitted in the study of human resource management
practices. When size is used, it is most often only considered as a control variable.
Given the observed differences in human resource practice effectiveness between
employers of varying size (e.g., Deshpande & Golhar, 1994), it is clear that more
attention should be given to the interaction between firm size and human resource
practices. This is very difficult, however, absent sound theory and information on
human resource practices in SMEs.
Because the theory, for the most part, does not extend to SMEs, the research
that is used to test the theory and the limited insight derived from the research may
not be relevant to the needs of practitioners. That is, human resource theory and the
research being conducted may not be congruent with the actual human resource
issues challenging SME practitioners in the field. Moreover, practitioners may be
unaware of practical issues that they should be conscious of that can be identified
and explained through academic research.
To confirm the results from the focus groups, the Kauffman Center
conducted a survey in 1998 of the learning needs of young, growth-oriented
entrepreneurs. The survey was distributed to the approximately 1,100 U.S.
members of the Young Entrepreneurs Organization (YEO). The entrepreneurs
were asked to indicate the most important areas for which they and their
organizations required additional learning. Two independent raters coded the open-
ended responses across 50 categories. Participation in the survey was voluntary. A
total of 156 usable responses were collected for an overall response rate of
approximately 14%. Of the respondents, 73% were in organizations with 50 or
fewer employees, 16% were in organizations with 100-199 employees, and 11%
were in organizations with 200 or more employees. Female entrepreneurs
accounted for 13% of the respondents. Tests for significant differences between
respondents and non-respondents and between respondents and the U.S.
membership of YEO found no significant differences in terms of size of the firm,
age of the firm, age of founding entrepreneur, and primary industry.
"Gaps" between the topics that entrepreneurs are highly interested in or think
are important and the topics covered in the research literature were identified by
comparing the three "percentage" columns in Table 1 and by comparing Table 2
with the percentage columns in Table 1. The underlying assumption is that if the
published research adequately addresses the human resource management issues
that entrepreneurs are concerned about, the percentages would be similar across
samples. It can be assumed that the research has adequately addressed or perhaps
over emphasized those topics where the percentage of articles is greater than the
percentage of focus group responses. Those topics where the percentage of articles
is substantially lower than the percentage of focus group responses, however,
represent future research opportunities.
Relative to one another, staffing issues appear to be emphasized less in the
literature than they are of interest or importance to the entrepreneurs.
Compensation, on the other hand, seems to be emphasized in the literature at about
the same level as which entrepreneurs expressed a concern or need for information.
Before interpreting these findings, however, one caveat is in order. These topics
surfaced in the context of focus group discussions regarding growth in SMEs.
While this is an important goal for many SMEs, it is not the only goal and it is not
one pursued by all SMEs. Had the focus groups been in the context of goals other
than growth, the answers may have been different. However, to the extent that
growth is an important goal to many SMEs, we feel that the results are important.
The coding scheme used to group topics into categories (see Tables 1 and 2)
omitted some additional variables believed to be important by CEO/founders. One
set of concepts shown in Exhibit 3 focused on culture of the organization. The
other set of concepts appeared more oriented toward learning and growth and is
labeled as such in Exhibit 4. Learning and growth concepts include the need to
develop high-potential employees who can perform multiple roles during growth
periods of the SME.
For staffing practices, the issue of the person-organization match has been
raised in other contexts as well (Bowen, Ledford, & Nathan, 1991; Kristof, 1996).
With this approach, the focus is on selecting someone who fits with the
organizational culture, who is able to perform new duties as they are added to the
current job, who is able to handle multiple jobs as needed, and who has the ability
to take on future jobs as they arise in the organization (Heneman et al., 1997). In
order to achieve these objectives, research on staffing in SMEs will need to
examine the validity, utility, and adverse impact of selection methods not
frequently used in SMEs including personality tests (Barrick & Mount, 1991) and
person-organization profile comparisons (O'Reilly, Chatman, & Caldwell, 1991).
While these techniques focus on the "person" side of person-organization fit,
research attention will also need to be given to the "organization" side. That is, the
organizational criteria used to validate person-based selection me thods may need
to be refocused as well (e.g., performance vs. career growth).
Growth models of SMEs (Churchill & Lewis, 1983; Flamholtz, 1995;
Hanks, Watson, Jansen, & Chandler, 1993), should be particularly useful in
identifying relevant criteria. Much of the literature on the management of growth
has looked at stage models. The more recent focus, however, has been on how
entrepreneurs manage through growth transitions. This literature has focused on
the role of resources (e.g., human, financial, technological, and social) and how
resources can be effectively configured to manage the growth process (Greene,
Brush, & Brown, 1997; Hart, Greene, & Brush, 1997). This literature appears to
suggest that the needs and procedures for staffing may vary across growth stages
and that there may be different values emphasized at different stages of growth
along with a core set of values at all points on the growth continuum.
Another issue addressed with the descriptive databases was the level of
coverage of human resource management in SMEs in the published literature. The
literature appears to be rich in prescriptions, limited in sound descriptive surveys,
and sparse in analytical research. This finding is troublesome given the importance
of SMEs to the economy and the opportunity SMEs provide to test topics (e.g.,
synergy between total rewards components) that are less likely to be found in large
organizations. Our hope is that human resource scholars will become interested in
the tremendous opportunities available after reading the articles in this special
issue. We hope that current compensation and staffing researchers will continue to
conduct research on these practices in SMEs. Clearly their efforts are likely to be
appreciated by CEO/founders of SMEs. The orientation offered by compensation
and staffing researchers will need to change in directions previously described.
These changes in direction will, however, be consis tent with changes in other
contexts for the study of human resources and most importantly, are likely to be
valued by SMEs.
It should also be noted that our descriptive database indicates that there is at
least one topic where CEO/founders of SMEs need to pay more attention to what
academics have to say. Human resource strategy was shown to be a topic in which
CEO/founders did not place much importance, while the literature review showed
that it is extensively covered in SME publications. Clearly there is a need for
CEO/founders to be made aware of the interests and valuable work in the human
resource strategy area. For example, the work of Huselid (1995) has shown the
economic impact of human resource strategy on the firm, and the work of
Welbourne (1997) has direct relevance to SMEs. Our analysis reveals that there are
gaps of knowledge on both sides, and perhaps additional mechanisms need to be
developed for the two sides to exchange their knowledge.
Role theory has been receiving renewed attention in the human resource
literature (Ilgen & Hollenbeck, 1992), and roles would seem to characterize how
work is organized in SMEs where role flexibility was identified as an important
concern. Welbourne, Johnson, and Erez (1998) show how specific roles relate to
multiple dimensions of performance. Specific roles examined include job, career,
innovation, and team. Added to this list of roles in SMEs might be others such as
family, in family-owned SMEs, and growth in prospering SMEs. Role expectations
for family and growth may conflict with the role expectations for the job. That is,
the family and growth role expectations may require extra role behaviors that
conflict with day-to-day job expectations. As with compensation, SMEs would
seem to be an excellent location to study and test role theory given the multiple
role expectations of CEO/founders mentioned in the four groups.
The focus group data from CEO/founders seems to suggest that they are
seeking employees who 'fit' with the current culture, but who are 'flexible' enough
to adapt to the future culture of the organization. Wright and Snell (1998) recently
developed a framework to begin to unify fit and flexibility in human resource
decision making. Selection decisions for the SME may need to be a two-stage
process whereby employees possess two sets of competencies. One set of
competencies would ensure that the employee fits with the current director of the
SME. Another set of competencies (e.g., flexibility) would guarantee that the
employee can adapt to future directions of the organization.
The team perspective may be useful as well in that small organizations may
function together as a team. That is, the entire organization may be a team. An
important concept here that may guide staffing and compensation systems
development in SMEs is "team mental models" (Heneman & von Hippel, 1995;
Klimoski & Jones, 1995; Klimoski & Mohammed, 1995). Team mental models
consist of the shared set of values and beliefs held by team members regarding the
effective operation of the team. These models can either be implicit or explicit. At
Saturn, for example, they are explicit and in the form of a written document for
team members. Models such as these may implicitly guide selection decisions or
may be developed for formal use by SMEs as a source of selection criteria.
Several CEO/founders mentioned the high cost of selection errors and how
they wish they had been aware of the costs prior to making an incorrect selection
decision. Not only is the impact of selection decisions important to SMEs, but so
too are other human resource decisions. Both hard and soft criteria can be used to
assess human resource interventions in SMEs. For example, using hard criteria,
Welbourne and Wright (1998) looked at the impact of human resource activities on
stock prices in initial public offerings. Using soft criteria, Heneman, Eskew, and
Fox (1998) measured the impact of a new compensation system in terms of
employee pay satisfaction before and after the development of a new compensation
plan for a small employer. Undoubtedly, an assessment of the impact of human
resource decisions on actual outcomes would be helpful to CEO/founders.
Most of the research on recruitment in SMEs looks at it from the perspective
of the employer. Another useful perspective is to look at recruitment from the
perspective of the applicant (Rynes, 1993). Knowing something about applicant
reactions to recruitment policies and procedures provides important insights as to
why applicants select organizations. These insights would have important
implications for how SMEs can best design recruitment systems to best attract
qualified applicants.
Very little attention appears to have been given to the human resource
management practices of SMEs in countries outside the U.S. One potential avenue
is to look at how SMEs manage human resources in other countries. Other
countries could be a source of information to fill our gaps in knowledge in the U.S.
In taking an international perspective, care would need to be taken to ensure that
what works in one culture applies to another culture. Even with differences,
however, there are cultures similar to the U.S. (e.g., Switzerland) that need to be
investigated further in terms of their human resource practices in SMEs.
CONCLUSION
An important issue raised by one of the reviewers is why so little attention has
been paid to human resource management practices in SMEs. We believe that there
have been several obstacles to conducting the recommended types of research. One
reason is the difficulty in gathering data. SMEs may be reluctant to participate in
academic studies because of the potential time away from the business required or
because they do not view human resource management practices as a source of
improved business performance. Another reason may be the publication process
itself. In order to gain tenure, researchers in human resources are required to
publish in "mainstream" academic journals that devote almost no attention to
human resource management issues in SMEs. Also, the small samples that reside
in SMEs may preclude the use of quantitive data analysis. Although not unheard
of, qualitative studies in small companies are very difficult to publish in
mainstream journals.