Abstract
The majority of SMEs fail in the first five years of operation (Cant and Ligthelm, 2003). Human resource management (HRM) has been identified as a crucial key success factor for SMEs in today’s world. This research study investigates small business owners’ perception of the importance of HRM. The objective of this paper is to determine the perceived importance of human resources (HR) among South African SMEs and the management of it. A questionnaire was constructed and judgement sampling was used to gather the responses of 88 small business owners. The research revealed that the majority of SMEs have HR practices of some sort in place, as well as areas to improve on HR practices. The challenge now is to further increase the adoption of HR management and practices among small businesses in South Africa to ensure their success, as they play a vital role in the South African economy. Keywords: South African SMEs, developing countries, human resource functions, human resources management, HR, HRM. JEL Classification: M19
Highlights
During the developing stages, SMEs tend to be more vulnerable as they encounter many difficulties due to the lack of resources, namely financial and human capital resources
Gerhart & Parks (2005) suggest that performance evaluations improve performance in two ways: through constructive feedback on individual performance and through administrative decisions linked to rewards and punishments aimed at motivation
Research objectives This study aims to determine whether SMEs recognize the importance of human resources management (HRM) in their businesses
Summary
SMEs tend to be more vulnerable as they encounter many difficulties due to the lack of resources, namely financial and human capital resources. SMEs play a crucial role in developing countries such as South Africa, as the country faces significant unemployment and income distribution challenges (Cant & Wiid, 2013). D.Com. Marketing, Professor, Department of Marketing and Retail Management, University of South Africa, South Africa. Little research has been conducted on SMEs and in developing countries such as South Africa. The findings of HRM for large organization or in developed countries cannot be generalized for SMEs in developing countries, as they each face different barriers specific to them (Kapurubandara & Lawson, 2006). The study concludes with a discussion of the research findings and recommendations and concluding remarks are made
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