hrm in sme's
TRANSCRIPT
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HRM in SME’s
Project of SME
HRM in small and medium
enterprises (SME’s)
Submitted to: Ma’am Shirin
Submitted by: Noor-ul-ain Afzal (BBA-
FA08-031)
Sumaira Hafiz (BBA-FA08-
034)
Aisha Bashir (BBA-FA08-030)
Submission date: March 7, 2011
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HRM in SME’s
The University of Faisalabad
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HRM in SME’s
Table fo contents
Section 1
Focus of study, company profile and background, major
issues
Section 2
Training mad development
Section 3
Literature review
Section 4
Conclusions and recommendations
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HRM in SME’s
ACKNOWLWDGEMENT
First and fore mostly we would like to thank Almighty Allah who blessed us with
knowledge, understanding and ability to do this project.
We have discovered that the work of some unknown persons makes our lives easier
every day. We believe it's appropriate to acknowledge all of these unknown
persons; but it is also necessary to acknowledge those people we know have
directly shaped our lives and our work.
First of all we would like to thank our teacher Ms. Shirin for her guidance
throughout the semester.
We thank director marketing Mr. Uzair Saeed of Al-Noor textile Pvt. Ltd., under
whose kind supervision we got our required material.
DEDICATION
This project is dedicated to our parents who have enabled us to stand on our own
feet and have guided us in all matters of life.
May Allah bless them!
Ameen
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Section 1
Focus of study
This report explores the role and part of HRM in SME’s. Small and medium
enterprise didn’t have a clear concept about the importance of HRM for an
organization. Our aim was to investigate the level of HR formality in SME’s.
Small and Medium-sized Enterprises (SME) are recognized as a significant
part of both developed and developing economies. Numbers signify their
importance as SMEs usually represent more than 99 percent of all
Enterprises in almost every country. For developing economies they are
especially important as SMEs play a Critical role in poverty reduction through
employment generation. In the past, HRM scholars have focused mainly on
large firms. Recently, research attention has increased as scholars seem to
realize the importance of HRM in SMEs better. Researchers looking at smaller
companies focus on issues like the determinants of HR in SMEs individual HR
management practices and the level of HR formality. Most studies
researching HR formality conclude that in SME's in general, HRM is informal,
intuitive and ad hoc.
As in most small SMEs the owner/manager takes care of all HR related
activities it obviously becomes difficult for him/her to manage employees
when firm size increases. Consequently, the owner/manager starts thinking
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to delegate HR responsibilities to others, inevitably leading to more
formalization.
According to a classical definition, formal HRM means that procedures or
practices are;
_ Written down (like a list of skills and qualifications for jobs)
_ regularly applied within an organization (like yearly performance review)
_ Assured to take place (like employer sponsored training)
Brief Company Profile
We selected AL-NOOR PROCESSING & TEXTILE MILLS (PVT.) LIMITED.
Background:
The chief executive of al-Noor is Mr. Riaz Ahmad Sheikh and his family in
1965 in association with his elder brother Mr. Basher Ahmad and his family.
They joined hands to start their career in cloth processing industry they
invested their capital in Al-Noor fabrics PVT limited at Samundari Road
Faisalabad as a partner. To expand their business and to project their
investments Mr. Riaz Ahmad sheikh and his brother invest their capital in
Tanzeeb textile. They also plant of data oil mills at samundari road at convert
the plant into textile unit at the name of Al-Hamra textile on partnership
basis. With the great pace of their business they purchased the unit of Al-
Noor fabrics. It’s the independently owned unit by both brothers.
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By the grace of Allah they also registered another private limited company at
the name of Baber international (pvt) ltd. On June 12th 1990 with the capital
of Rs. 5,000,000 at Sargodha road Faisalabad. In 2001 they changed the
name of Baber textile to al-Noor processing & textile mills (Pvt) Ltd. Now this
unit is working under this name.
Management of company:
1. Riaz ahmad sheikh Chief Executive
Director
2. Basher ahmad Executive
Director
3. Muhammad Amir Riaz sheikh Executive Director
4. Muhammad Saeed sheikh Executive
Director
5. Muhammad Faisal sheikh Director
6. Muhammad Saad Director
7. Muhammad Hassan Riaz sheikh Director
8. Uzair Saeed Director
Employment:
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Al-Noor has engaged more than 350 skilled manpower to expedite the
processing of cloth, including 20 members of experienced and well educated
staff which is back bone of our business.
Business Relationships:
As the company has local as well export business, we have sound elation
with our valued customers either from local market or from local market or
from exports. We have also sound relationship with our suppliers similarly
from local as well as from foreign.
Perspective and practices of HRM of the firm:
When we talk with firm’s director about their hr perspective they answered
they don’t have separate department for HRM company management is
dealing with the HRM of company means employees matters are dealt by
company management. Starting with HR planning, there is not any kind of
clear HR strategy available in similar to their responses with respect to
business and product strategy. They verbally tell their HR strategy.
Regarding HR Practices they didn’t have any clear benchmarking about HR
policies and theories. They have some formal methods about recruitment
and selection if they need to recruit from outside. They mainly recruit
employees from family and friends otherwise internal recruitment means fill
the spaces by promoting or rotating the existing employees.
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Due to informality in SME’s firm has to face many challenges in business
world due to globalization and increased market competition. After 2005,
company has a little improvement in practicing the HR.
HR challenges in SMEs:
SMEs face unique challenges that stem largely from their size. While
economies of scale permit larger organizations to employ a team of
specialists to address the complexities involved in managing HR programs,
this is not a viable option for many SMEs. The costs associated with hiring
highly trained HR professionals on a full-time basis are likely to be prohibitive
for many smaller organizations.
As a result, HR activities often become the responsibility of line managers.
This can be problematic for two reasons.
First, the complexity of many HR activities is likely to result in them
becoming a significant drain on managerial time and resources. As such, HR
tasks may interfere with managerial responsibilities that are directly related
to revenue production. This problem is even more critical given that scarcity
of managerial talent is often cited as a key factor limiting growth in
SMEs. This scarcity of managerial talent increases the opportunity costs
associated with time spent on HR administration by SME line managers.
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Second, many HR tasks involve substantial complexity and thus the quality
of HR decisions may well be affected by the fact that line managers often
lack significant training and expertise in HR.
Section 2
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Training and Development
We select training and development approach to evaluate our selected
textile firm. In textile industry technical and creative skills are very important
for the enhanced productivity and competitiveness of a firm. Al-Noor textile
has a clear focus on training and development of their employees. Because
employees are human resources of a company and polished staff leads a
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company to success. They think that our employees are our pillars of
company. Skilled worker are the basic need of textile sector. Human
Resource Development is very important for textile firms, so HRD gained
momentum in terms of employing and develop manpower that satisfies the
professional requirements of this sector and that is well skilled.
The advent of HR practices in textile sector was rather slow in comparison to
other industrial sectors. But due to globalization there is increase in
competition as a result development of human resource has become
essential. However organized HR practices are being adopted mostly by the
mill sector. In last decade we have seen not so good performance by textile
sector, this was because of lack of HRD department in many mills. But the
scenario has changed as HRD departments have taken up their role in textile
sectors. Various training programmers pertaining to training of workforce,
textile related topics have helped in enhancing the overall performance of
the textile companies.
In order to get increased productivity from workforce it is essential to have a
well framed HRD system in the organization. If the principles of HRD are
adopted it could result in decrease in non-attendance by 20% and increase in
productivity by 30%. So to cope up with the market competition HRD is very
essential element for the textile industry.
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HRD department is responsible for developing the feeling of motivation in
the employees; this motivation in other words is the commitment of the
employees towards the job and the organization. When the work of HRD is
done effectively it would result into co-operation among team members,
demolition of centralized system of decision making, creates homely
environment, feeling of ownership and positive working atmosphere.
From the above discussion it is clearly seen that HRD has become an
important need in textile sector. So a clear trend towards HRD is also seen in
SME’s to cope up with the new emerging challenges in the world. From the
start of 21st century, SME’s start practicing to some extent because it
becomes the need for them. As the prevailing trend in SME’s Al-Noor textile
also gave attention towards their HRM practices. In the last ten years they
have adopted many of the HR practices and I will discuss here the T&D
practices they are practicing now a days.
1. The training drivers for the company are the following by which they
analyze the needs that when and why employees need training to
develop their skills:
Business performance statistics and reports.
Financial reports and ratios.
Competitor analysis and comparison, e.g. SWOT analysis
2. Training plan: A detailed plan for carrying out employee training for a
unit of work.
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They have a three step training plan to implement on:
1st- establishment of performance standards (on which employees
to be evaluated): they provide a readymade structure for a training
program.
Job Description ,Job Specifications, Market Benchmarking on the
specified jobs ,“People Culture”
2nd- training objective
“To see our employees competitive with the market and
coping up with the “people culture’’.”
3rd- Standard procedures
Unit training program for technical employees
Training workshops
On the job training (JIT)
Orientation plan: (the pre-job phase training)
The company introduces the new employees with the job and workplace. Al-
Noor textile use orientation program for the new entrants to make them
easier and familiar with their job.
Here is their orientation plan
Day 0
Prior to employee arrival
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Clean and set up office or workstation Notify current staff of the new staff and arrival date Get business cards and a name plate for office or workstation Set up equipment access ( telephone, machinery etc)
Day 1 Welcoming our new employee meeting with immediate supervisor give them the 'lay of the land'-location of restrooms, kitchen or
lunch room, dress code, hours of work introduction to team members provide a mentor or buddy who will guide the new hire arrange for security pass take the employee out to lunch
Key information to be provided job requirements and what is expected from new employees employee handbook organization chart signing of employees form location of office supplies, and general work area
Day 2 On the job training Share the right account of information that is required to the
employee to do the job connect the employee with key people whom they can go for
assistance or direction
Day 3
Official orientation program
depending on the number of new hires, set up a half day or full day orientation presentation
Allow hires to connect with each other. try ice breaker games Provide broad business information such as business strategy,
vision and mission and structure. allow employee to address any concerns they may have
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Section 3
Article reviews
Review no. 1
Encouraging Training & Development Activities in SME’s: Some Lessons from
UK Research*
BY Steve Johnson who can be contacted at [email protected]
Summary:
This article reviews some recent research that has been undertaken in the
United Kingdom (UK) into Training and development activities in Small and
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Medium Sized Enterprises (SMEs), and outlines some Lessons that could be
valuable for organizations in South Africa that are trying to encourage and
assist SMEs to engage more effectively in skill development activities.
Despite a range of statistical evidence to the contrary, UK research has
revealed that many SMEs do in Fact engages in many forms of skill
development activities.
It is important that government and other organizations recognize the
factors that inhibit training and Development in SMEs and build upon the
positive practice that does exist in many SMEs, as well as Linking skill
development initiatives more effectively with business development policies.
This article sets out some of the key lessons for policy that have emerged
from a recent review of research into skills.
Issues in SMEs (Johnson, 2002).
The policy background that forms the context for this article is the so-called
‘lifelong learning agenda’. The desire to improve the level of skills, training
and associated qualifications has long been a Component of UK economic
and labor market policy.
Given the well-documented increase in the importance of SMEs within the UK
economy, it is clearly important to consider the activities of SMEs in relation
to learning and skills development. If policy Makers are to succeed in
ensuring that the skill needs of the economy are met, they need to persuade
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and/or incentivize SMEs as well as larger employers to invest in their people,
while also convincing Individuals to invest in their own learning.
The National Skills Task Force Final Report (2000), and the subsequent
response from the Secretary of State (Department for Education and
Employment, 2000) both recognize the key role played by SMEs in the
learning and training system. These documents suggest that there are a
number of problems associated with engaging SMEs in the national skills
agenda. The problems which are identified are as follow:
1) Low levels of off-the-job training by SMEs, in comparison with larger
organizations.
2) Lack of internal capacity, and sometimes motivation, to provide learning
opportunities for their staff.
3) A "disturbingly high proportion … of owner-managers who had low or no
qualifications" (National Skills Task Force 2000: para. 4.23)
4) Very low proportions of small businesses involved in Investors in People.
The argument of this article is that the chances of success of policies to
promote lifelong learning, in the UK as well as in other countries, will be
increased if a number of key points are recognized about learning within
SMEs.This role and importance of informal learning in SMEs needs to be
recognized and appreciated. It is important to understand and appreciate the
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reasons why some SMEs do not undertake formal training. Training and
learning initiatives need to be introduced in the context of business support
and not ‘sold’ as standalone packages.
The arguments presented above suggest that care needs to be taken in
drawing general conclusions from evidence that is not totally unambiguous
and relies on definitions of training that are more relevant to large
organizations than to smaller employers. A much more sophisticated picture
needs to be built of the variations in training/learning activities between
different types of employer, if appropriate policy responses are to be
devised.
Key points:
1. UK research has revealed that many SMEs do in Fact engages in many
forms of skill development activities.
2. Documented increase in the importance of SMEs within the UK
economy.
3. Consider the activities of SMEs in relation to learning and skills
development.
4. The argument of this article is that the chances of success of policies
to promote lifelong learning.
5. Highlighted a number of factors that are relevant to the situation in
South Africa.
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Conclusion:
From this article we can summaries a large and growing body of research
evidence from the UK, and has highlighted a number of factors that are
relevant to the situation in South Africa, with its large and diverse SME
population and a policy desire to improve levels of skill development in
SMEs.This review has demonstrated that it is very dangerous to generalize
about training and skill Development activities in SMEs.
Finally, it should be recognized that improved skill development can lead to
better business performance of some SMEs under some circumstances. Skill
development initiatives need to be linked to wider programmers to help
SMEs to improve their performance. This means much closer working
between skill development agencies and business development
organizations.
Review 2
FROM FORMAL TO FUNCTIONAL: SME’S, E-LEARNINGAND KNOWLEDGE TRANSFER IN THE CANDLE
PROJECTIan Stevenson
School of Education, University of LeedsWoodhouse Lane, Leeds LS2 9JT
Summary:
Small and Medium Enterprises (SMEs) are defined to be companies that have
less than 250 employees. By contrast there are just 40, 000 large enterprises
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(LE) with more than 250 employees. (Issue, 2003). In The context of the
knowledge economy, with demanding customer-bases, reduced product
cycle periods, and global markets, SMEs are under pressure to develop and
modernize their competency and skills base. Continual competitive pressures
lead SMEs and large enterprises (LE) to innovate and Change at ever
increasing rates, and both are always looking for new sources of knowledge
and skills to exploit. Within the Large Enterprise sector there has been a
trend to “outsource” training, with recent surveys showing 90% of firms
outsourcing at least some of their training and administrative tasks (Gainey
& Klaas, 2003). The training picture for SMEs is more complex, with many
(rural and peripheral) areas relying on SMEs for employment and learning
opportunities. Conclusions reached in the context of large firms about
training may be inappropriate for small organizations. (Hill & Stewart 2000).
As Iles & Yolles (2002:6) note: “there is little evidence that small business-
owners are particularly attracted to such training, either for themselves or
their staff.” This leads to a different sense of personal and organizational
goals both in comparison to large enterprises, and between employers and
employees within SMEs. A major factor in this process of gaining new
knowledge and skills for SMEs and large enterprises is Information and
Communication Technology (ICT). Although there are distinct difference
between the SMEs and LE in their attitudes and approaches to training in
new knowledge and skills, they both need to have access to the latest
technologies and to use them effectively.
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The notion that Small, Medium, and Large Enterprises can have access to the
latest research or Techniques delivered in a style and at a pace that suits
individual learners, are one attractive solution. Much has been written about
the ways that e-learning or e-training can be used as part of this process. E-
training might benefit this SME sector the most by finding business
structures that accommodate the Internet, and help the firm assimilate to
those structures as part of their activities. The “lack of Buffering” means that
for SMEs that intend to deal with the Internet, training and using the web will
take a relatively larger share of their resources. ). Enterprises need
knowledge which will be useful in helping them to achieve, often quite
specific, organizational goals. So called “just-in-time “strategies, which
resonate with business supply chain models and practices, imply that
relevant information and training arrive at a time and pace to suit a specific
need.
Key points:
1. The survey demanding customer-bases, reduced product cycle periods,
and global markets.
2. Continual competitive pressures lead SMEs and large enterprises (LE)
to innovate and Change at ever increasing rates.
3. Training picture for SMEs is more complex, with many (rural and
peripheral) areas relying on SMEs for employment and learning
opportunities.
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4. A major factor in this process of gaining new knowledge and skills for
SMEs and large enterprises is Information and Communication
Technology (ICT).
5. The e-learning or e-training can be used as part of this process.
6. Enterprises need knowledge which will be useful in helping them to
achieve, often quite specific, organizational goals.
Conclusion:
Conclusions reached in the context of large firms about training may be
inappropriate for small organizations. And also conclude by discussing the
nature of the knowledge transferred between the participants, and the model
of Knowledge Transfer used in the scenario.
Review 3
Strategies & Solutions
Training Strategy Using Internal Experts
By Kathleen D. Miller, president of Miller Consultants, Louisville, Kentucky;Virginia S. Major, organizational consultant for Miller Consultants, Manchester, Connecticut;and Leslie Hunt, organizational consultant for Miller Consultants, Houston.
Summary:
In this article describe that how much training and development is important
in supply management and the SMEs organization. Today, supply managers
must be skilled not only in supply management but in the management of
the entire value chain, as supply management
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Organizations become significant players in organizations’ quests to gain
competitive advantages. Organizations that are on the ball will craft sound
training and development (T&D) Strategies to ensure that the supply
managers who hold these increasingly critical jobs have the know-how to
excel. But it is not easy to implement training and development in today’s
time and money –starved organizations.
The internal experts are in the best position to identify which knowledge and
skills are most essential for sourcing professionals in their organization. But if
internal experts not give the new ideas and efforts then organization hire the
outside experts who manage all the things. There are many use of external
expertise and they give the benefits to the organizations. When T&D experts
come together with SMEs, however, the group is most likely to succeed in
producing a strategy that is fresh and effective. The SMEs involved in this
project were all exemplary employees who were committed to strategic
sourcing. They were able to identify and explain the best practices, although
they required some assistance from the consultants in reaching consensus
about which practices should be incorporated into standard work processes.
But if the organizations use their internal experts they have knowledge,
skills, and abilities (KSAs) that they use to carry out their duties and make
decisions. An excellent way to develop the content for training that meets
real organizational needs is to base it on the KSAs possessed by the
organization’s finest talent. These KSAs may be of two types. The first type is
fact-based and procedural. Training professionals use fairly straightforward
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procedures called job analysis and task analysis to access this information
from SMEs. The T&D facilitators asked the SMEs to describe concrete
situations that exemplified how they carried out each step. As the SMEs
relayed their stories, the facilitators probed by asking questions, such as how
they chose between several alternatives, how they weighed options, or what
information they examined in order to make decisions.
Still another way to use internal experts is to involve them in the delivery of
the training or learning experience. With the proper materials and some
preparation, most SMEs can become effective teachers. T&D professionals
can offer valuable instruction on how to facilitate learning experiences, both
formal and informal. Some of the services they can provide include
conducting "train-the-trainer" sessions for SMEs or designing mentoring or
SOJT toolkits that the SMEs can use as guides. Changes occurring within
supply management organizations necessitate increased attention to the
training and development needs of sourcing professionals.
Key points:
1. Organizations are maximizing their resources to develop and
implement training strategy
2. By collaborating with internal experts.
3. Assemble the training and development strategy group.
4. Use different subject matter experts to determine curriculum.
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5. Use internal SMEs to deliver the training and development
experiences.
6. T&D gives the confident to work the more effective and efficient.
7. The SMEs take the clear decisions.
8. The T&D world refers to these people as subject matter experts
(SMEs). They bring profession related expertise to the table.
Conclusion: The article has described a few of the many ways to involve
internal experts in the design, development, and delivery of T&D strategies.
Regardless of the exact role they play, when sourcing experts collaborate
with T&D professionals, together they can create learning programs that
successfully support the goals of the organization while saving time and
money.
Section 4
Conclusions and Recommendations
To summarize, HR functions deal with different dynamics when contributing
to SME growth plan. While the organization plans to follow a successful
trajectory, there is a need for both HR and the Promoters to appreciate and
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agree on change management agenda through change in organization
culture. HR has the responsibility to understand business dynamics in SME
environment before implementing the standard HR practices, policies and
processes. This mutual appreciation will help HR to be an effective business
partner.
It is the hard reality, with which scholars may agree that right efforts has not
been devoted to understand the relevance of HRM formality for SMEs as
majority of the scholars wisely tried to escape from this by advocating
formality is required when SMEs grow, pressurize from larger counterparts
and so on. As literature review suggests that an appropriate level of HR
formality is required and these formal HR practices are believed to help
Owners/mangers in hiring the right candidates, developing employees,
compensating and judging their performance which in return helps
organizations achieve better results. But in reality things are different, as
hardly any study able to clearly identify 'what HR formality means for SMEs'.
Now to summarize training and development in the context. T&D has a very
positive trend in the last decade in SME’s. As increasing competition and the
globalization mean it very important for every organization to have powerful
and skilled staff, which understands the trends and changing needs of
society.
To develop the staff according to market trends HRD is playing a vital role in
making the staff competitive. So a way to enhance T&D is to work with
internal experts to design T&D strategies for the firm. Source them to T&D
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specialists so they can make learning programs which can work effectively
for the firm and it also save money.
Here are some recommendations to improve training strategies for a firm.
There are ten features which are necessary for a feature of training program
for a firm either it’s an SME because in competitive world sizes of firm have
lost its importance. The thing which is important is skilled manpower.
1. Training objectives should be strategy driven
2. Positive cost to benefit ratio
3. Training objectives should be Supported by key strategies, systems,
structures, policies, and practices
4. Training should Maximize employee ability and potential through
shared accountability
5. Training should be Work-related.
6. Learning by doing is best criteria.
7. Training should have Transferability of knowledge and skills back to
the job.
8. Linked to other people-related programs and departments
9. Continuous learning process.
10. Training should be driven through many channels.
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We have some low cost training programs as recommendations:
People Performance Potential model (PPP)
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The Process of Training and Developing Others - Typical Model