Practices of Human Resource Management in Small and Medium-Sized Businesses

There is no longer any truth to the misconception that human resource management is exclusively important for large organizations. HRM is crucial for both small and medium businesses. In the modern world, human resource management has been viewed as a vital growth component for SMEs.

This growth has led many students to study HRM as their major where they conduct a thesis on any of the Human Resource Management Research Paper Topics. This gives them a wider prospect of the HRM function and its importance in SMEs and large corporations.

However, the HR role is just as crucial in small and medium-sized companies as it is in large ones, but it isn’t always treated with the same amount of expert rigor. If you want to understand how to address human resource management (HRM) in small and medium firms, keep reading.

The Key Distinction Between Large and SME in HR Practices

The primary differences between HR in SMEs and HR in large businesses are related to size, responsibility, resources, and acquisition. These variations are frequently visible in the way rules and procedures are presented and carried out in businesses. Read the following to get a more detailed view.

1.      Size

HR departments with professionals in many activities are necessary for large firms. In smaller companies, HRM is often handled by one to five people.

The CEO, operations director, HR department, personnel, environment supervisor, or corporate recruiter could divide the responsibilities.

Small firm HR departments typically won’t have the same degree of resources available to them as those in major corporations.

HR managers must get innovative and adopt techniques and tools that fit their economy as they must make do with less.

2.      Responsibilities

As mentioned above, small organizations mean that HR managers at SMEs are more prone to be burdened with a variety of duties—oftentimes duties that aren’t even HR-related—than their counterparts in bigger organizations.

3.      Acquisition

Employers are hired via a variety of methods, including recruiting. Although large businesses have the resources to conduct background checks, extensive screenings, etc., small businesses must make do with a quick scan on social media, a handy reference checking, and a phone call to the candidate for a final meeting. The recruiting effort is limited by time and financial constraints.

4.      Resources

Another distinction between SMEs and large businesses is in the available resources. Modest enterprises don’t bring in the same amount of money as big corporations. The HR department has limitations in terms of staff training, team cohesion, and the creation of procedures and guidelines.

Four Key Roles of HRM in the Growth of Small and Medium-Sized Corporations

1.      More Effective Hiring

The recruiting process can either build or destroy an applicant’s career, even if you locate the ideal individual who will fit perfectly with your business.

Through your company’s induction procedure, you may introduce new hires to the organization and set them ready for success in their positions. When done incorrectly, on boarding can have negative consequences and make your new hire more likely to fail.

As a result, the HR in SMEs invests their professional advice and tried-and-true onboarding processes so your new workers can get started pretty quickly.

2.      Increase Staff Turnover

High levels of turnover often result in financial losses for organizations and ultimately repel the best talent.

You’ll spend roughly 33% of the wage for that function for each departing employee who must be substituted. Sadly, a lot of small firms are unaware of the causes of the turnover.

With thorough research of pay in the market segments, HRM can assist you in understanding the causes of turnover. Even while you might have to raise pay for some roles to keep workers, you’ll end up saving money over the long run.

3.      HRM Recognizes and Appreciates Individuals

Humans require inspiration, regard, adoration, and admiration. The HR department of a small or medium corporation makes sure that workers are content and at ease while on the job.

HRM significantly boosts the chances of profitability for small firms by recruiting and developing qualified employees on the market. After all, more productive workers translate to higher economic profitability.

4.      A Firm Is Disciplined By HRM

No matter how many workers a business has—10 or 1,000—if it is legally registered following national laws and restrictions, it must adhere to the guidelines and rules set forth by the governmental agencies. Similarly to this, numerous additional laws and regulations urge employers of small firms to give employees in small enterprises the same rights as those in major businesses.

This demonstrates how important even smaller companies are to the overall economy. As a result, when HRM methods are used in small enterprises, they can aid in the attraction and retention of the greatest industry expertise.

HRM serves as a roadmap for the business to establish great working connections with workers. Lack of communication among staff and management leads to misunderstandings and uncertainty.

Growth Outlook for HRM in SMEs: What’s In Store?

Until today, only large companies looked forward to creating an HRM department; however, today, even SMEs understand the significance of HR and its responsibilities.

Most SMEs nowadays are aware of the need for organized HR procedures, and some are even prepared to introduce HRM into their businesses.

The only issue they have is a lack of resources and knowledge needed to adopt HRM. The two options for the answer are to either operate from the personnel already accessible for adopting HRM or temporarily outsource the HRM function.

Additionally, just as essay help USA-based service providers aid its students in managing coursework chores with other managerial duties efficiently by taking up their responsibilities of homework. Similarly, HRM software might assist SMEs to handle employee management and other duties effectively.

Final Note

One of the key factors influencing how well a business performs is HRM. The passion, skill, resources, and dedication of the (operator), who serves as the center of gravity for the entire staff, is crucial to the development of SMEs.

Employee concerns are frequently treated lightly and managed informally because owners typically find themselves doing manual labor and taking full accountability for workplace conduct, including wage setting. The function of human resources, therefore, enters the picture to improve organizational success and corporate profitability.


TWH.2019. 15 TOP HRM THESIS TOPICS FOR MANAGEMENT STUDENTS 2019. Online Available at: <> (Accessed: 9 November 2022).

Curado, C. (2018). Human resource management contribution to innovation in small and medium‐sized enterprises: A mixed methods approach. Creativity and Innovation Management27(1), 79-90.

Happy Reading!!!!
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