This Article Full Text (PDF) References Alert me when this article is cited Alert me if a correction is posted Services Email this article to a friend Similar articles in this journal Alert me to new issues of the journal Add to Saved Citations Download to citation manager Add to My Marked Citations Citing Articles Citing Articles via Google Scholar Citing Articles via Scopus Google Scholar Articles by Singh, M. Articles by Vohra, N. Search for Related Content Social Bookmarking                         What's this?

Level of Formalisation of Human Resource Management in Small and Medium Enterprises in India

Manjari Singh is Assistant Professor in the Personnel and Industrial Relations Area, at Indian Institute of Management, Ahmedabad

Neharika Vohra

Neharika Vohra is Professor in the Organisational Behaviour area, at Indian Institute of Management, Ahemdabad

In this article, the current state of management of human resources in Small and Medium Enterprises (SMEs) in India is explored. The owner-managers play important roles in managing human resources in SMEs. The direct involvement of the owner manager also leads to ad hoc and informal HR practices. However, formal HRM systems can help increase performance. This study specifically examines the level of formalisation of human resource management in small and medium enterprises in India. Formalisation is defined as the extent to which regular and written-up procedures exists, a stated policy is in place, and a specialist designs and executes the HR systems. Data were collected using a questionnaire from 89 small enterprises and 54 medium enterprises on the level of formalisation of twelve HR functions. It was found that the level of formalisation of HRM systems in SMEs was low and owner-managers played a central role in the HR functions of their enterprises. Compared to small enterprises, the level of formalisation was found to be higher for medium enterprises. The level of formalisation increased with increase in employee strength. An inverse relationship between the extent of involvement of the owner-manager in managing human resources and the existence of a formal policy for HRM was evidenced. Implications of decisions by owner-managers to keep HR functions informal or formal in small and medium enterprises are discussed. It is necessary for SMEs to find ways in which formal and flexible systems can co-exist.

Journal of Entrepreneurship, Vol. 18, No. 1, 95-116 (2009)
DOI: 10.1177/097135570801800105


CiteULike    Complore    Connotea    Del.icio.us    Digg    Reddit    Technorati    Twitter    What's this?