HUMAN RESOURCE MANAGEMENT PRACTICES IN SMEs: AN OVERVIEW
Dr.R.SEENIVASAGALU Associate Professor, PG & Research Dept.of commerce, Government Arts college(Autonomous), Nandanam, Chennai- 600 035.
In this article, the current state of Human Resources Management practices in Small and Medium Enterprises (SMEs) is explored. The owner-managers play important roles in managing human resources in SMEs. This study specifically examines the current HRM practices prevailing in SMEs and its implications. Data were collected by using questionnaire from79 Small enterprises and 44 Medium enterprises located in and around Chennai cit (Tamilnadu) on the prevailing HRM practices. It was found that the formal HRM systems in SMEs were low and owner-managers played a central role in the HR functions of their enterprises. Compared to small enterprises, the level of formal HRM practices was found to be higher for Medium enterprises and also higher when employee strength is more. An inverse relationship between the extent of involvement of the owner-manager in managing human resources and the extent of a formal policy for HRM was evidenced. Implications of decisions by owner-managers to keep HR functions informal or formal in SMEs are also analysed. It is necessary for SMEs to find ways in which formal and flexible systems can co-exist. There are about 7500 large enterprises and 11.8 million small enterprises in India. These enterprises employ 28.3 million people (Economic Survey Report, 2005-2006). They contribute more than 50 percent to India’s GDP. Since independence, the government’s industrial policy promoted small scale industries, protected them from competition from large industries, and extended tax benefits. The SMEs were mostly family managed and had loose management structure; they did not invest in specialised technical and professional skills. Among SMEs, in some sectors like information technology, greater attention is being paid to human resource management (HRM) practices. Systematic studies of Indian SMEs to assess the extent to which formal HRM systems have been instituted and practiced are scant. Sample
The sample enterprises were categorised into Small and Medium size based on employee strength. Enterprises having 50 or less employees were treated as Small enterprises and those having between 50 and 250 employees were classified as Medium enterprises. Slightly more than half of the Small enterprises and three-quarters of the Medium enterprises were involved in manufacturing. Others were involved in service and trading. Data were collected through a questionnaire. The questionnaire was prepared on the basis of literature related to this topic and discussions with experts in HRM. From each enterprise one respondent is selected. The respondents were asked to tick all the options applicable to their organisation. Data were collected from 79 small and 44 medium enterprises located in and around Chennai city where more number of Small and Medium enterprises are functioning.
Results and discussions:
The current state of formal HRM practices prevailing in SMEs are assessed on the basis adoption of standard HRM practices in the following HR Functions: 1.HR Planning; 2.Job Description; 3.Recruitment and Selection; 4.Training and Development 5.Performance appraisal; 6.Reward System; 7.Employee Remuneration; 8.Career Management; 9.HR Information; 10.Communication; 11.Grievance Handling; and 12.Exit.The frequencies of various HRM practices followed were computed separately for small and medium enterprises. Role of Owner – Managers in HRM
The most observable characteristic of HRM in these enterprises was the dominant role of the owner–manger. In 82 percent of small enterprises and 78 percent of medium enterprises, the owner–manager or one of the executive partners played the decisive role in managing human resources. In 60% of...
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