Human Resource Management Practices in SME's: A Comparative Analysis of Family and Non-Family Businesses

By Reid, Renee; Morrow, Trevor et al. | IBAR, July 1, 2000 | Go to article overview

Human Resource Management Practices in SME's: A Comparative Analysis of Family and Non-Family Businesses


Reid, Renee, Morrow, Trevor, Kelly, Bridgita, Adams, John, McCartan, Pat, IBAR


Introduction:

It has become widely acknowledged during the last decade or so that large mainstream companies in the UK have adopted a new agenda for managing people. However, relatively little is know about the impact of this new agenda on small businesses. Moreover, the role of Human Resource Management (HRM) and ongoing professional development in companies of all sizes, and its potential to contribute to commercial success, is a hotly debated subject. Yet the grounds of the debate are relatively confined, since research into HRM has generally been preoccupied with large organisations - and has thus tended to bypass the Small & Medium Enterprise (SME) sector; comparative analyses of family and non-family businesses have been even harder to come by.

Small firms have certainly been neglected in the academic literature relating to HRM (Bacon et al, 1996), for although SMEs may be included in HRM survey samples, they are rarely analysed specifically or separately. A number of themes emerge from even the most cursory assessment of HRM in the SME sector. For example, it is generally accepted that the larger the company, the more likely it is to provide training to its staff (Cambridge Small Business Research Centre, 1992; Blackburn, 1990; Creagh, Barrow and Morrow, 2000). In 1994-5 only 36% of SMEs (defined as in this case as establishments with fewer than 25 employees) provided any training for their employees, compared with the 78% of medium and large firms that did so (DfEE 1996). There is also evidence that SMEs employing less than 100 people spend significantly less on training than larger firms (Training Agency 1989: 24-27; OECD, 1991: 153-154). On the one hand SMEs declare an enthusiasm for training, yet are less likely than other firms actually to engage in it (Matlay and Hyland 1997:330).

The Importance of Small Firms

In the Northern Ireland economy small firms are a major source of employment and output. Firms with 50 employees or fewer account for about 56% of total employment in the private sector, a considerably higher proportion than in the UK overall, where the figure is 48%. Small manufacturing firms in Northern Ireland represent almost 90% of all manufacturing units, and account for just under one-third of all manufacturing employment. Compared to the position in the early 1970s, when small firms provided only 10% of manufacturing employment, there has clearly been a massive increase in their contribution. (Strategy 2010 DED: 112). The importance of small firms to the manufacturing sector in Northern Ireland can also be gauged from the proportion of manufacturing output (Gross Value Added) from firms with under 50 employees. Figure 1 indicates that such units generate over 28% of output. The comparable figure for the UK, as a whole is 25%. The greater degree of large scale manufacturing units in other areas of the UK is also evident from Table 1.

This paper examines the findings a large-scale postal survey based on an adaptation, described as the Small Business Survey (NISBS), of the Cranfield Network (CRANET) Survey of International Strategic FIRM. The NISBS utilised a sample of 1,369 organisations, representing every company employing between ten and one hundred people in Northern Ireland. We will present here what have been identified as the key issues emerging from the 219 responses received, and provide a comparison of practice in the family and non-family divisions of the SME sector.

Managing People in SMEs

Training in Small Enterprises

A training landscape that was dominated by large national players and by a corporatist approach until the late 1980s was redesigned under the Conservative government explicitly to try to abolish corporatism and get closer to meeting SME training needs. We believe that this attempt failed. Crouch et al (1999:132) summed up the Conservative government's approach as follows:

Rapid and frequent policy change has itself been a policy, consistent with the emerging British model of placing maximum emphasis on short-term appraisal of an institution's performance. …

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