The relevance of strategic human resource management



Introduction

This paper will be on the growing importance of strategic human resource management (SHRM) for small and medium-sized enterprises (SMEs) in industrialised high growth countries. More specifically? it will take the Dutch situation as a case to demonstrate the relationship between on the one hand major economic? technological and social changes in the SMEs' environments and? on the other? the urge to a more strategic thinking on the management of the human resources of this type of firms (Lever and Peters? 1998). From a SME perspective? the study of strategic human resource management (SHRM) is relevant for several reasons. First? it is observed that SMEs consider their SHRM problems to have top priority (McEvoy? 1984; Hess? 1987; Hornsby and Kuratko? 1990; Huang and Brown? 1999; Dorst and van Meteren? 1999). Second? SHRM is of special interest to SMEs because for these firms human resources play a vital role in developing and sustaining competitive advantage (Lado and Wilson? 1994; Duberley and Walley? 1995; Huiban and Bouhsina? 1998; Flanagan and Deshpande? 1996; Ferligoj et al.? 1997)). In small firms this is even more relevant as a result of their specific work organisations and because SMEs are relatively labour intensive (Flanagan and Deshpande? 1996). Moreover? as a direct result of the small scale? each individual employee represents a substantive part of the SME's workforce (Bacon et al.? 1998)? thus increasing the importance of every single HR-decision.

As to the developments in HRM? we observe a shift from SHRM to strategic SHRM. However? precision is lacking about the status and the definition of SHRM (McMahan et al.? 1999? p. 101) even to the extent that it blocks the development of systematic theory (Dyer and Kochan? 1994). For example? Brewster (1999) pointed to the different perspectives of universal and contextual models of (S)HRM? while accepted definitions vary from emphasising the elements of HR planning (Wright and McMahan? 1992; Lundy? 1994)? the management of organisational changes (Hendry and Pettigrew? 1990? 1992) and co-ordination mechanisms of the organisation (Watson? 1986)? to highlighting HR policies as a tool for business strategy (Beer? 1984; Truss and Gratton? 1994; Ulrich? 1997; Dyer and Holders? 1988; Boxall? 1999; Guest? 1987; Lengnick-Hall and Lengnick-Hall? 1990; Schuler et al.? 1993). Whatever the differences in definition? most contributions to the literature stress the relation between business strategy and HR practices as the core of SHRM. In this paper? we broadly share this latter type of definition; our specific interpretations will be discussed in the fourth section.

The question of the research study

What is the relevance of strategic human resource management (SHRM) for the growing small business?

Specific Research Objectives

Specific Research Objectives of this paper will be to focus on the growing importance of strategic human resource management (SHRM) for small and medium-sized enterprises (SMEs). Many small firms encounter serious human resource problems? while at the same time these human resources play a vital role in developing and sustaining their competitive advantages.

CHAPTER II

Proposed Review of Related Literature

Distinctive characteristics ...