Human Resource Practices in Sme Sector: an Exploratory Case Study of Pakistan

Topics: Human resource management, Human resources, Management Pages: 19 (5848 words) Published: November 20, 2012
Issue 3(31)/2012 ISSN: 1582-8859

Human Resource Practices in SME Sector: An Exploratory Case Study of Pakistan Naveed R. Khan
Faculty of Management and Economics Sciences, Universiti Pendidikan Sultan Idris, 35900, Malaysia

Mustafa Rehman Khan
Faculty of Management Sciences, Institute of Business and Technology, 75190, Pakistan

The role of human resource practices (HRP) at its significance in small and medium enterprises (SME) become an emerging topic, especially in developing countries. This study aims to gauge the level of HR practice being exercise in SME. Quantitative approach has been followed and data was collected from 195 SMEs through a structure questionnaire. Findings suggested that SME are performing moderate level of HR practices and owner/managers are aware with the importance of HR practices in their organizations. Moreover, compensation is the most significant factor of HR practices followed by employee performance, recruitment and selection and training and development. HR function has been substantially implemented and HR practices are being carried out in number of SME and is contributes at all phases of organization’s functions. The globalization and dynamic milieu is forcing the SME sector to switch informal functions to formal manner. However more coherent approach is required to replace the traditional way of practicing HR functions. This study validates the implementation of HR practices in SME as documented in the literature. It further provides a reference for academicians and practitioner to build upon a contention for future research.

7 7

Keywords: recruitment and selection, training and development, employee performance, compensation.


Electronic copy available at:

Issue 3(31)/2012 1. Introduction
In the era of globalization, business environment becomes highly dynamic with high risk and uncertainty. This uncertainty decreases market share and increases organizational inefficiency. As elsewhere, Pakistani SMEs too are affected by the recent global economic meltdown. Escalating inflation in Pakistan further compounded the situation for SME growth. Human resource working in SME sector plays a vital role in economic growth without any space for their personal growth. It is therefore observed that retention is one of the major problems in small and medium size industries. Slightly better emoluments provide good reasons to an employee to switch over from one organization to another organization. Growth in salary in SME sector is far behind the growth in inflation which is a source of depression and made them less productive at their workplace (Khan, 2011). SMEs are identified as the leading employment generation sector, nation wide. In context of the Karachi city which contributes 30% in manufacturing sector of Pakistan and 90% in Sindh’s GDP and around 20% of the total GDP of Pakistan. These figures indicate the potential and further growth in this sector further it prove the argument that SME sector shall plays pivotal role and have potential to grow. Moreover, extensive economics activities at sea ports and industrial zones increase the significance of Karachi city, hence is called the financial and business hub of Pakistan, providing millions of economic opportunities (Ghouri et al., 2011). This study has been conducted to measure the gap between philosophies and practices of HR practices. HR scholars have argued that SMEs are insignificantly practicing the HR function in Pakistan. It may be consider that the owner / managers are not able to utilize their human resource strategically and coherently. Perhaps this is due to the shortage of HR professional in SME sector. Further, fragile structure and substandard formalization intends management to ignore organization’s most valued assets, that is, 8 the workforce. This...

References: Arthur, J. (1994). Effects of human resource systems on manufacturing performance and turnover. Academy of Management Journal, 37(3): 670-87. Armstrong, M. (2006). A Handbook of Human Resource Management Practice, 10th ed., London: Kogan Page As’ad, I., Ahmad, F., Sentosa, I. (2012). An Empirical Study of E-Commerce Implementation among SME in Indonesia. International Journal of Independent Research Studies, 1(1): 13-22. Chang, W. A. and Huang, T. C. (2005). Relationship between strategic human resource management and firm performance, International Journal of Manpower, 26(5): 434-449. Delery, J. E. (1998). Issues of fit in strategic human resource management: implications for research. Human Resource Management Review, 8(1): 289-309. Dessler, G. (2008). Human Resource Management, 11th ed., NJ: Pearson Prentice-Hall, Upper Saddle River Fisher, C.D. Schoenfeldt, L.F. and Shaw, J.B. (2006). Human Resource Management, 6th ed., Boston, MA: Houghton Mifflin Ghouri, Arsalan. M., Khan, Naveed. R., Malik, Muhammad. A., and Razzaq, Ambreen., (2011), Marketing Practices and Their Effects on Firm’s Performance: Findings from Small and Medium Sized Catering and Restaurants in Karachi, International Journal of Business and Management, 6(5) Gramm, C. L. and Schnell, J. F (2001). The Use of Flexible staffing arrangements in core production jobs. Industrial and Labor Relations Review. 54(2): 245-251 Huselid, M. A. (1995). The impact of human resource management practice on turnover, productivity, and corporate financial performance. Academy of Management Journal, 38: 63518 672 Katou, A. A. (2012). Investigating reverse causality between human resource management policies and organizational performance in small firms. Management Research Review, 35(2): 134-156. Khan, Naveed. R., (2011) HRM Significance and SME Sector, Business Recorder (DOR April 11, 2011) 7 Khan, N. R., Taha, S. M., Ghouri, A. M. (2011). Bridging the Gap through E-Recruitment: Evidences from Employment Sector in Karachi. Indian Journal of Commerce and Management, 2(6): in press. MacDuffie, J. (1995). Human resource bundles and manufacturing performance: organizational logic and flexible production systems in the world auto industry. Industrial and Labor Relations Review, 48: 197-221. Mathis, R.L. and Jackson, J.H. (2008). Human Resource Management, 12th ed., Mason, OH: Cengage Learning/South-Western Publishing. Nankervis, A. Compton, R., & Savery, L. (2002). Strategic HRM in small and medium enterprise: A CEO’s perspective? Asia Pacific Journal of Human Resources, 40(2): 260-273 Ngo, H.Y., Turban, D., Lau, C.M., and Lai, S.Y. (1998). Human Resource Practices and Firm Performance of Multinational Corporation: Influence of Country of Origin. International Journal of Human Resource Management, 9(4): 632–52. Nugroho, M. A. (2012). Correlations of Attitude to Avoid Sharing Risk and Trust with Informal Knowledge Sharing. International Journal of Economics Business and Management Studies, 1(3), 86-95. Osman, I., Ho, T. C.F., and Galang, M. C. (2011). The relationship between human resource practices and
Issue 3(31)/2012 ISSN: 1582-8859
firm performance: an empirical assessment of firms in Malaysia. Business Strategy Series, 12(1), 41-48. Purani, K. and Sahadev, S. (2008). The moderating role of industrial experience in the job satisfaction, intention to leave relationship: an empirical study among salesmen in India. Journal of Business and Industrial Marketing, 23(7): 475-485. Schlogl, H. (2004). Small and medium enterprises: seizing the potential. Observer, 243: 46-8. Sekaran, Uma. (2005). Research Methods for Business: A Skill Building Approach, 1st ed, John Wiley & Sons. Singh, M., and Vohra, N. (2005). Strategic human resource management in small enterprises. Journal of Entrepreneurship, 14(1): 59-70. Shub, A. N. and Stonebraker, P. W. (2009). The Human Impact on Supply Chains: Evaluating the Importance of “Soft” Areas on Integration and Performance, Supply Chain Management: An International Journal, 14(1): 31-40. Stone, R. J. (2005). Human Resource Management, 5th ed., Australia: John Wiley & Sons. Taha, S. M. (2006). Knowledge Entrepreneurship: A New Paradigm for Organizational Performance. Business Review, 1(1): 96-105 Walker, J. W. (2001). Perspectives Human Resource Planning. International Journal of Human Resource Management, 24(2): 6-10. Wright, P. M., McMahan, G. C. (2001). Theoretical perspective for Strategic Human Resource Management. Journal of Management, 18(2): 295−320. Wright, P. M., & Snell, S. A. (1991). Toward an integrative view of strategic human resource management. Human Resource Management Review, 1 (3): 203–225. Youndt, M. A., Snell, S. A., Dean, J. W., and Lepak, D. P. (1996). Human resource management, manufacturing strategy, and firm performance. Academy of Management Journal, 39: 836-65. Zheng, C., Morrison, M., Neill, G. O’. (2006). An empirical study of high performance HRM practices in Chinese SMEs. International Journal of Human Resource Management. 17(10): 1772-1803.
19 7
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Human Resources Case Study Essay
  • Human Resource Essay
  • Human Resources Essay
  • Human Resource Management Essay
  • Literature Review of Human Resource Management, theory versus practice Essay
  • Case Study in Human Resources Management Essay
  • Human Resources Essay
  • Essay about human resources

Become a StudyMode Member

Sign Up - It's Free