Graham Beaver and Kate Hutchings
This chapter examines the role for human resource management (HRM) in small business. Much of the current literature has suggested that the employment relations and/or management of human resources in small business is fundamentally different from that of large business and this can primarily be attributed to the lesser financial and time resources available to small businesses. We acknowledge that many small businesses may have too few employees to ever viably consider the creation of an actual HRM department or even allocate one individual to the role of HRM functions, yet effective management of human resource is necessary for any organisation. We do not suggest that what is good for a large business may not necessarily be good for a small business. However, it is our contention that there is still much that small business may learn from HRM literature and practice and that HRM policy and practice may inform small business through its strategic focus on people development.
Previous HRM research has focused primarily on large businesses with very little attention given to managing human resources in small businesses (exceptions include Deshpande and Golhar 1994; Flanagan and Deshpande 1996). Moreover, HRM texts do not devote enough attention to relevant people management for small businesses, despite the fact that small businesses owners often rank HRM as the second most important management activity for them next to organisational management (Hornsby and Kuratko 1990). For example, a recent sixth edition of a text on strategic management (Scholes and Johnson 2002) that runs to over a thousand pages devotes only one page to discussion of small business! For their part, small business textbooks devote only a miniscule percentage of their discussion to HRM with most of the focus being given to finance or marketing, and the problems, motives and prospects for small business (Curran 1991; Goss 1991). Yet, given that human resources, like other organisational assets, must be a key consideration for small businesses that are attempting to enhance their competitive advantage (King et al. 2001:3; see also Senge and Fulmer 1993; Ulrich and Lake 1990), greater attention