Academic journal article International Review of Management and Business Research

Human Resource Management Practices and SMEs Performance: Study Based in Kosovo

Academic journal article International Review of Management and Business Research

Human Resource Management Practices and SMEs Performance: Study Based in Kosovo

Article excerpt

Introduction

Global growth competition of recent time influences SMEs to raise constantly their performances if they want to be confronted with the competitors, to achieve this SMEs must invest in human resource management. According to Armstrong (2008), human resource management (HRM) is a strategic and coherent access of management the most valuable asset of an organization-people that work there individually or collectively contribute to achieve the objectives of the organization. SMEs that improve their performances and develop competing advantages, must apply an effective system of human resource practice (Zheng et al, 2006; Katou, 2012). Practices of human resource consist of formal access used in human management (Armstrong, 2008). Generally speaking, SME follow informal practices of management (Behrends, 2007), they persuade these informal practices of management in o rder to control the employees, where the formal structures of communication and control do not exist (Willkinson, 1999). The owners and managers of SMEs percept formal human resource management as a road leading to bureaucracy (Katz et al., 2000). According to Marlow (2002), SME ignore the application of formal HRM practice, for the reason that they do not have necessary resources. Informal practices of management, with increase they build formal regulation and policies for SME employees' control (Nguyen and Bryant, 2004; Marlow, 2002). The movement toward a more structured of formal persuade HRM can be seen when an enterprise starts to form a hierarchical structure with an access to split the work and administrative increasing process (Kotey and Slade, 2005). Informal practices of management resources are more developed in small and medium enterprises than big enterprises. According to Wright and McMahan, 1992 it is revealed that management of human resources of SME to be less structured and planned in comparison with big firms that apply more formal practices of human resources. The study made from Kotey and Slade (2005) has showed that small firms that raised the formal adaption of practices of HRM in comparison with previous periods. SME applying the formal management of human resources have a better performance than SME which do not apply the formal management of human (Gibbons and O'Connor 2005). The study of human practices are studied also from Bacon and Hoque (2005), according to them the wide range of practices which are used in SME are depended from the scale of employees' qualification, SME with low employees' qualification have less opportunity to approve some practices of HRM, whereas SME that have a high percentage of employees' qualification ha ve more opportunity to invest in such practices in order to keep and develop their talents. SME in general do not have specific department to manage human resources and decisions are made usually from the director, owner or firm management (Marlow and Patt on, 2002; Fabi et al, 2009). Even in some cases where the specialists of HRM are employed again the top of HRM is the owner or director which takes decisions for HR (Kroon et al., 2013).

Literature review

Armstrong (2008) showed that the assumption of human resources is that people are key source of organization and the performance of organizations depends especially from people. And that the wide range of appropriate policies and human resources process is developed and applied effectively, HR will substantially influenced in the firm performance. Using human resources practices effectively, the firm can survive from traditional practices not effective nor efficient which disturbs the firm to achieve the objective (Delery and Doty, 1996).The practices of HRM with the focus on employees in firm strategy implementation, influences positively the performance of firm, in the same form as the small enterprises and in the big enterprises (Arthur, 1994; Hayton, 2003).

From various empirical studies that have been made has been showed that the application of SME traditional practices of human resource management are useful for all the sizes of enterprises. …

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