HRM in SME’s

Last Updated: 02 Jul 2021
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The main purpose of this paper is to provide conceptual study and evidence on how HR Management processes that is applied in SME’s different to large corporations. Some of the key terminologies and processes that apply in HRM such as: hiring process, training, outsourcing, reward system, etc. will be carefully discussed and how it is applied for both SME’s and large industries.

HRM in SME’s


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All organization always aims to find better ways on how they can reduce cost and at the same time achieve quality processes and services.

But having to achieve this would take a lot of management will and effort to make it happen. For the management, effort such as understanding the current processes, technology and even understanding the current technical skills of the staff is highly desirable. That is why most decisions by managers must carefully validated through understanding current needs and from these needs reliable information must be prepared in order to have rightful decisions, which most of the time the problem part for most managers, they don’t clearly understand the need.

One strategy that most companies do is outsourcing, this is taking a pool of staff from an outsourcing agency to perform specific project and since it is per project based agreement, there will be expected duration and cost. But, for most organization are just overwhelmed by these challenges and forgetting that it is still the main focal point is on people, on how companies must see better potential in every staff in the company.

Managing the employees or staff should always be a welcome challenge for entirely any companies whether it is privately owned or government managed, this is because this is where they have to put more of its energy and not always on the people they serve, or what they called as “customers”. In fact employees or staffs are also customers, which in most business term, that called as “internal customers. ” They must be given extra attention because in true sense they are the ones that perform the duties of true service in the organization.

In the modern times, if finding how best corporation and highly productive and big “bottom lines” companies, it is easy to find out that their priority to people is there like, the company provide better performance incentives, better vacation and even sometimes provided a well structured work scheduling since what the modern company needs is results and not just forcing employees to just come in to the office and waste a lot of resources.

In this paper it will focus more on how the different processes in SME’s HR Management and how it can be differentiated with large industries or companies. It will also provide some relevant evidence and necessary theory on how HRM is applied for both SME’s and large industries. HRM Process In a typical company, the following will be the listing of the most effective and efficient process of each items in the HRM Process, which is being applied by most companies.

For recruitment, listed below are the expected workflows:

  1. recruitment strategy, the main key here is for the HR team to provide a comprehensive plan on how hiring of new employee should be done, like is it appropriate to have an online recruitment, which is very attractive anyway for IT applicants, or can it be applicable to advertisement through Universities, etc.
  2. Internal Posting, it should always look into the internal possibility of getting the right person for the job, before hiring from the outside,
  3. Screen resume, carefully assessing the skills, work experiences and educational background in each of the applicant’s resume,
  4. Interview shortlist, at this point schedule of interview will be conducted, for short listed and qualified applicants, and lastly, is New hire intakes, this is giving the final selection to take the exam, and whoever passed the exam with satisfactory results will be the one to be hired.

So regarding the case for the abovementioned company, it does not have a systematic approach in conducting the recruitment process, like there was no short listing of applicants; sometimes there are no qualified HR personnel to conduct the test and interview, which should not happen because it can create issue from other applicants who will be hired in the company. (HR Recruitment, n. d. ). In big industries, recruitment is now very much using the latest technology like through the use of internet with agencies working for them. Also, for big industry, it is usually outsourcing is applied.

Outsourcing is simply the contractual agreement between the supplier and the client in serving a specific project that caters to certain specific requirement. In the Information Technology (IT) trend, outsourcing is becoming a familiar scene, where you can see for instance a company would engage into project by an IT Outsourcing company like to developed a system for example a Supply Chain System that will eventually help the manufacturing process of a certain industry, this project will be rendered by the outsource agent for an agreed period like five years and with agreed amount.

The main drive of most industries why they engage to this kind of strategy is simply to reduce cost and at the same time focusing on the main importance of the company like improving competencies, like in the side of manufacturing, delivery and service. Since the need for information system is mostly done one time and support sometimes will not be on a regular basis, and with that outsourcing become more appealing to industries.

Outsourcing in IT usually happens in the following requirements:

  1. development of a new systems,
  2. user support or call center,
  3. infrastructure need,
  4. and lastly is business process,

like if the requirement is typically improving the current IT operation of the company, like if they are in align with Capability Maturity Model (CMMi) requirement. (Outsourcing, 2007). For big industries it reduces cost, but there are also other reasons why it is adopted by many industries or organization.

One, it gives the management a more authority on the project, like they can imposed whatever they want with the outsource agent, advising them about the time frame of the project and even the number of resources sometimes are being mandated as well, Another is that when it comes to infrastructure, hardware and software requirement is that most of the time the outsource agent provides their own resources like their developer’s PC, test servers and other hardware requirements, license softwares and other staff for the project.

And most important among all they don’t maintain staff in the company and with that they don’t even have to be worrying about how the staff working in the project because most management and technical leads are also assigned by the outsource agent. The only person for the company is the Platform Architects who defines technical requirements for them and another one; Project Manager which will be the over-all person that will oversee the job of all the teams, this person is also the single point of contact for the management.

The major services that falls under Technology Outsourcing Services, it includes:

  1. Electronic Commerce, this involves more on the technology that pertains to online transaction like what specific tool that can be used to validate user’s credit card and othe secured payment transactions,
  2. Infrastructure, most specifically the need in Networks, this is also common to most companies since setting up of network can be done one-time, this is where the outsource agent setups the saervers and how the computer of both inhouse and remote clients connects to the server through network, with the right access rights and membership because in the concept of network it does not mean anybody can access the server there should be identification of access to be set and that is where the access rights is set in the server,
  3. Software or Systems. Application development, definitely this is one of the most common if not the most used service in technology outsourcing, this is when a company needs to have a system that will support specific process, which this process can improve and automate their daily transactions, it can be from payroll systems, inventory systems up to more advanced systems like in the category of artificial intelligence or embedded systems,
  4. Telecommunication for user need in teleconferencing and video conferencing and other stuff that would relate to this one and ,
  5. Website development and Hosting, this is like development of website of the company and usually the development of website outsource agent usually host the site and maintain it, but if the company have the enough resource usually hosting also done in the company and the one who maintain it can either from the customer or it can be from the outsource agent, but for others there can be from the ourtsource, that is why, you can see other wensites where information are so outdated, this is because the website is not typically hosted by the company.

On the other hand, Business Process Outsourcing, it primarily involves:

  1. Customer Contact/ or Customer Relation Management, this common nowadays for most companies, support are being handled by the outsource agent, but actually what they do is light issues and not that technical ones which should go to Level2 or Level3 support, the support usually done here are more on “how the system should be used” like as basic as “how to log to the system” and how to reset password, etc.
  2. Equipment, like rent of hardwares or even softwares or connecting to certain license server to have license to the softwares, etc.
  3. Finance or Accounting, in order to be validated by the processes being applied that is related to accounting, this is more on the need for compliance to standards,
  4. Human Resources, this happens when they are the outsource agent are the one looking and evaluating for a candidate for the position that needs by the company, they company’s duty is just to give the skill sets neede for the job and the outsource partner will be doing the initial interview and final interview and final negotiation goes to the company,
  5. Logistics, maybe other than people or hardware and or software, this can be training requirements.
  6. Procurement or Supply Chain Management and lastly, this may also goes hand in hand with the finance and accounting
  7. Security, like the process on how to secure important records of the company, the standard in managing passwords and the process on how to keep servers and client’s computers, and even to somewhat more critical processes that involves business continuity process, which is important for security because it focues on how the company would operate if the building just accidentally encounter fire or other unexpected disaster, is there any contingeny plan and how it can be prevented. And this process must be well understood or else operations and critical assets of the company will suffer. (Types of Outsourcing, n. d. ).

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HRM in SME’s. (2018, Aug 14). Retrieved from

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