Recruitment Practices in Small and Medium Size Enterprises. an Empirical Study among Knowledge-Intensive Professional Service Firms**

By Behrends, Thomas | Management Revue, January 1, 2007 | Go to article overview

Recruitment Practices in Small and Medium Size Enterprises. an Empirical Study among Knowledge-Intensive Professional Service Firms**


Behrends, Thomas, Management Revue


The lesser degree of institutionalization and formalization of HR-practices in small and medium-size enterprises (SMEs) usually leads to them being attested a severe "(HR-)Management Deficit". However, the vast majority of these empirical investigations argues from a perspective dominated by the viewpoint of large corporations. As a consequence, the highly differentiated HRM-systems of larger organizations are seen as the "desirable ideal" for small and medium-size enterprises as well. On the basis of an empirical investigation into the recruitment practices of more than 300 professional service firms the study at hand tries to break from this deficit model. Instead, it is assumed that smaller organizations due to their - size-dependent - different preconditions resort to certain functional equivalents in accomplishing their elementary HR-requirements. It becomes apparent that first and foremost the quality of employee relations has a high impact on various measures of recruitment success in smaller organizations. This applies especially to those businesses that do not have implemented a separate HR-department.

Key words: Small and Medium-Size Enterprises, Professional Service Firms, Recruiting

1. Introduction

Following the basic argument proposed by the resource based mew, any sustainable competitive advantage will only be realized through the specific utilization and availability of such resources that are valuable, scarce or rare and not easily imitated or substituted by competitors (Barney 1991; Grant 1991; Wernerfelt 1984). In light of these resource characteristics it seems evident to accord a substantial strategic potential to the so called soft factors of management (such as organizational culture, social capital etc.) - and thus the respective human resources available (Colbert 2004; Wright et. al. 2001; Lado/ Wilson 1994). This consideration gains even further importance when looking at small and medium-si^ professional service firms (PSFs). On the one hand, because of their comparatively lesser endowment with material or financial resources, smaller businesses are often highly dependent on an above-averagely motivated and qualified workforce. On the other hand, in the professional service sector - as in no other industry - there exists an extraordinarily close connection between workforce quality and the quality of those external products (or more precisely: services) offered on the market (Alvesson 1995; Cappelli/Crocker-Hefter 1996). Therefore, one can legitimately assume that in these companies the human resources available constitute an especially important prerequisite for sustainable organizational success. Consequently, the recruitment policies deployed by knowledge-intensive professional service firms should be of above-average importance and thus deserve a high level of attention.

Against the backdrop of these deliberations most of the pertinent empirical findings regarding recruitment practices in small and medium-size enterprises (SMEs) seem -at first sight - to reveal a substantial management deficit (Holliday 1995; Marlow/Patton 1993; Carroll et. al. 1999; Windolf 1983): Smaller companies often abstain from any systematic and professional approach when selecting new employees. They rarely use any long-term planning of manpower requirements, job profiles etc. and the usage of formal selection instruments is usually limited to the conducting of job interviews. However, the explanatory power of these empirical results has (at least) two major limitations: First, many studies are mainly focusing on SMEs in "classic" industries. In these companies a lot of jobs are of a relatively simple nature with accordingly less complex skill requirements. They might thus be mapped out quite easily by employing relatively simple recruitment patterns. Under these circumstances and at least from an economic perspective any elaborate and highly differentiated recruitment policy seems less expedient (Martin 1996; Williamson 1981, 1984). …

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