APPROPRIATE HRM PRACTICES FOR SMALL AND MEDIUM ENTERPRISES: A STUDY IN AFRICA

Abstract

Although several studies have shown that the survival and success of firms depend, to a large extent, on the effectiveness of their HRM practices, most of the studies have focused on the HRM practices of large corporations. Very little research has been done on the HRM practices of small and medium enterprises (SMEs), particularly in the developing African economies. The main cause of business failure in SMEs is, among others, the lack of sound HRM practices. Large and small firms differ in respect of resources and expertise. Since an SME is not a mere miniaturised form of a large firm; it needs unique and customised HRM practices that suit its unique conditions, resource endowments and environment. An SME needs a customised approach for designing appropriate organisational structure, communication channel, flow of information, selection and recruitment procedure, performance appraisal system, and a training and development scheme. Application of HRM practices and policies of large, multi-product, multi-divisional and multi-national corporations (MNCs) may have serious implementation problem unless they are thoroughly modified and customised to the objective conditions in which an SME is operating. This paper analyses the various HRM practices in general; the characteristics and current HRM practices of SMEs in particular; and develop a conceptual framework integrating the best HRM practices with characteristics of SMEs in a developing economy, like Botswana. The paper presents new insights in the development of appropriate HRM practices for SMEs. Some suggestions are also made for owners, managers, and trainers of SMEs on the critical dimensions of HRM practices and on customising them for situations in which SMEs operate. Implications for future research in the area are also indicated.