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Human Resources & Organizational Effectiveness Essay

Small scaled businesses are very important for developing countries and as well as developed countries. In a country like the China a small business can become success and it will play an important role in the economy of the country.

Small businesses are growing in importance in the China; hundreds of small businesses are opened every month in the country, by people who have found themselves squeezed out of a corporation due to downsizing or who voluntarily leave the corporate world so that they can seek a slower pace and healthier balance between world and family life. Small businesses are mostly opened by women and minorities in the China. As the smallest businesses become increasingly complicated due to globalization, government regulations and customer demands for better quality at lower prices, managerial dexterity is very complex and it is very hard to become a success. (Szarka, 1990)

Managers in small businesses tend to emphasize roles different from those managers in large companies. Managers in small companies often see their most important role as a spokesperson, because they need to promote the small, growing company to the outside world. The entrepreneur role in the small business is very important, because the managers must be very creative and help their company to develop new ideas so that they can be competitive with other companies. Small business managers tend to rate lower on the leader role and on information processing roles compared with counterparts in large companies. As the world of small organizations become increasingly complex, managers should carefully incorporate the 3 categories for roles. They must simultaneously mange by information; manage through people, and mange through action to keep their organizations healthy. (Szarka, 1990)

Managing a Small Growing Business

Once a business is set up and running, how does the owner manage it? Often the traits of self-confidence, creativity and internal locus of control lead to financial and personal grief as the company grows. A hands-on to the entrepreneur who gave birth to the small business or company, loves perfecting every ting detail of the company. But after the start-up, continued growth requires a shift in the management style. Those who fail to adjust to a growing business can be the cause of the problems rather than the solution for the company. A small business goes through distinct stages of growth; with each of the stage the company requires different management styles and skills.

Intrapreneurship in a Small Business

Intrapreneurship can be defined as a process which recognizes the need for innovation within the company, plus it helps with managing the company. The following rules help to develop the necessary environment which is required in the company, they are as follows:

1.      The employees should be encourages

2.      The management should use informal meeting whenever possible

3.      The company should learn to tolerate failure and learn from it

4.      The employees should be rewarded for their innovative ideas

5.      Teams should be formed

Human Resource Practices

The human resource practices in a small and medium business differ from large organizations.


In the early stage of existence, formal planning tends to be nonexistence except for the business plan. The business plan can be defined as a document which specifies the business detail of the company by the entrepreneur.

The primary goal is to remain alive within the industry. As the company grows, formal kind of planning is not usually instituted until the company does not reach its success stage in the growth stages of the company. For example, records selling company in the China has defined a goal by carving out a niche in the volatile record industry by focusing only on roots music, which is an electric mix of soulful and down home sounds with country edge. This company is only one of the few surviving profitable companies in the country.  (Cameron & Miller, 2008)


In the 2 stages of company’s growth, the company’s organization structure is very informal, where all the employees are reporting to the owner of the company. By the third stage the functional managers are hired to take over the duties from the owner. A functional organization will be created and there will be changes in all the departments of the company. In this stage the managers will be able to learn how to delegate responsibilities to others. But these days most small companies in the China are limiting creating ways so that they can stay small but still grow. For example, Woodspirits, it a company that produces and distributes 300,000 soaps to its customers annually. It just employs 3 that work for the company. The company doesn’t want to lose its edge and flexibility; therefore the companies are willing to stay small.


Leading is considered to be the driving force in the development of the company, and it is one of the ways to manage a company. The vision along with the leader’s personality actually shapes the small company. With the help of leadership, it is able to point out cultural values, efficiency and ethics of the company. Leadership is also considered important because a great deal of small businesses usually have a hard time of employing qualified workers. There is always a labor shortage for a small company, and these shortages usually damage the company a great deal.


It is also important that there is a financial control in the company. In the company’s starting days control was exercised by simple accounting records and through personal supervision. The control techniques usually become more sophisticated during the resource maturity of the company. For example, the Sock Shop was originally a hit in the US, but it failed due to a lack of control within the company. (Fullmer, 1983)


Compensation of employees in a SME is mostly based on the jobs and its evaluations.  With job analysis information as a part of the department’s HR information system, compensation analysts have the minimum information needed to evaluate the work activities of their employees. Job evaluations are steps and procedures that help to identify the relative worth of jobs or work activities. There are different kinds of approaches to the evaluation of a job; these approaches consider the responsibility of the employee, skills that are needed for the job, efforts done by the employee and the working conditions related to the job. Without job evaluation the HR department would not be able to create a rational approach to pay. The most common methods for job evaluation that helps with a compensation plan are job ranking, job grading system where as in large organizations it is done through factor compensation and the point system.  But the best way the HR can compensate the employees is through job grading, why, because, it is the simplest way to classify a job and the companies don’t have to spend a great deal of money on it. (Werther & Davis, 1996)

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