Human resource management in a small business is concerned with ensuring the enterprise benefits maximally from its workers. People are the most critical resource due to their massive contribution to the realisation of organisational goals. Below is a list of six areas that can help small businesses to effectively manage their workers to be on the path of growth and profitability.
Hire the Right People
Small businesses should implement effective recruitment systems to ensure the right talents that align with organisational needs are acquired. Hiring the right people from the word go is crucial as it reduces the turnover rate that has grave ramifications on organisational performance. It also reduces the training costs and error rate which enhance business performance.
Adopt the Right Compensation Strategy
Human resource management in a small business should emphasise on adopting the right employee compensation strategy. Compensation is a crucial determinant of workforce productivity making it imperative for small businesses to streamline reward strategies. Labour laws determine wages and salaries paid to workers in small enterprises, forces in the labour market, and employee productivity. It is important to always pay above the minimum wage to avert unnecessary legal costs. The demand and supply forces determine the ideal wage rate. It is essential to analyse the labour market to identify how other organisations are paying workers occupying similar positions. Concerning productivity, value-based compensation is the best approach to rewarding employees where compensation is pegged on the workers’ contribution to the organisational goals.
Small businesses should implement training and development programs to ensure the workforce meets the specific skills requirements. These enterprises lack enough resources to invest in training and development and should, therefore, use on-job training methods such as an apprenticeship.
Participative management involves allowing the workers to contribute to decision making. The work environment in small organisations is characterised by a short distance between the top managers and the lowest level employee. Such a condition makes participative management necessary where managers seek workers’ views when making decisions which encourage them to put more effort in assigned duties. Participative management should therefore be central in human resource management in a small business.
Providing Room for Growth
Employee growth is important as it is one of the factors that make the employees not to leave the organisation. Organisation structures of small organisations are flat as they comprise of two or three levels that make promotion as evidence of growth difficult. In such a case, the manager should increase the workers’ responsibilities, control, and salary create an impression of growth. Titles are also used to manage the employee’s growth expectations.
Effective communication is an essential ingredient of human resource management in small businesses. Managers of micro enterprises should create the right environment to ensure the free flow of information. Seamless communication across the organisation structure should be emphasised to make organisational goals clear to all employees.