Is Human Resource Management important for Micro and Small Business Owners?


HRM Naomi Mc Laughlan 2016

Human Resource Management (HRM) seems to be important to have in firms that are classed as medium, large and enterprises, with staff ranging from 250-1000+ and who have several departments within the business, and several branches within a country or international. For micro or small business owners a HRM department might not be desired due to the additional financial resources needed at a first glance.

Initially the HRM debate was rooted in the US and eventually came over to the UK and other countries. This was greatly influenced by the open international, free market and possibility to recruit internationally and because there are more nationalities already living and working within the country.

Whether a large organisation benefits from establishing a strong HRM department, depends on the individual goals and objectives, therefore the focus might be on cost and value of HRM or even Strategic Human Resource Management (SHRM).

However, a growing business must be aware of any applicable laws, for example equality, working hours etc., but that knowledge is not necessary linked to HRM. Nevertheless, business owners have to make sure they know all required laws for the trade and industry their firm is operating in. After all, according to the Department for Business Innovation and Skills (2015) “Small businesses accounted for 99.3% of all private sector businesses at the start of 2015 and 99.9% were small or medium-sized (SMEs)…Total employment in SMEs was 15.6 million; 60% of all private sector employment in the UK.” While in the US the picture looks very similar, as  the Small Business and Entrepreneurship Council (2016) reports “In 2012, according to U.S. Census Bureau data, there were 5.73 million employer firms in the U.S. Firms with fewer than 500 workers accounted for 99.7 percent of those businesses, and businesses with less than 20 workers made up 89.6 percent.”

It is in the best interest of any business owner to know everything him or herself or at least inquire at places like HRM Revenue & Customs, the website, a professional business mentor or coach, agency or the jobcentre at times where the business grows or changes direction etc. If for instance, a solo-entrepreneur wants to employ his or her first employee he or she should inquire how to do so, to avoid any negative consequences.


The 10 most important areas of Human Resource Management include;

  1. Recruitment, selection and induction
  2. Pay and reward
  3. Performance management
  4. Flexible working and work-life balance
  5. Equality and diversity
  6. Communication and involvement
  7. Employee representation
  8. Discipline and grievance
  9. Managing business change
  10. Key performance indicators


case-study-naomi-mclaughlanHow Human Resource Management applies to a Micro Business in the United Kingdom

Recruitment, selection and induction are applicable for any size of business, which is in the process of hiring staff.

Paying at least minimum wage in the UK is required by law, rewarding is something a micro business owner and some SME are not yet able to do on a large scale.

Performance management might be applicable for a SME’s, but not for micro businesses due to the limited number of staff members.

Flexible working and work-life balance, from my experience of micro and SME’s I know that most organisations care about their staff and treat them in respect to their family life.

Equality and diversity is regulated by law in the UK, through the Equality Act 2010 and is applicable for any business.

In a small business all employees communicate and are involved in the process to a more or less extend, due to the number of staff and close proximity of work places. As most micro and small businesses have no or only a limited number of managers, communication is taking place with little or no formal line of communication.

Employee representation is often not used in a formal setting in micro or small businesses, due to the low number of employees. However, in some industries and sectors it is still possible that employees are members of trade unions or associations.

Discipline and grievance is an area that needs to be addressed in any size of organisation and it should be regulated by having a policy in place.

Managing business change is something that is often performed by the owner him or herself in micro businesses and in SME’s who have line managers in cooperation with the owner/s.

Key performance indicators are important for any size of business operation, because it measures progress. including the development, performance or position of the business, against each element of the firms’ strategy,

Let me know what you think!

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All the Best,

Naomi xxx


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