Human Resource Management  and Growth of a Small Business

Nadeem Yousaf

By definition, ‘small business’ in developed countries donates the working environment in which 25 to 100 employees are employed. The growth of the small business is considered to be the backbone of most economies and is a substantial source of reducing unemployment in a country. In order to sustain a small business undoubtedly government policies should be favorable but human resource planning of a company should be good as well. The subject matter of this paper is limited to examine human resource management in small firms in Pakistan. 

Pakistani business community must appreciate that it is not enough to have capital to run a successful business and provide quality product. The long-term success of a business depends upon management skills in searching, recruiting and managing human resource of the company. It is imperative for entrepreneurs to develop managerial skills in handling human resource to grow their organizations. The best way of developing managerial skill is to have an awareness of principles of management instead of only relying only on charismatic managerial skills or speculative management. Unfortunately, most Pakistani entrepreneurs think that they have ‘God gifted’ managerial skills and consider themselves experts of business management. This false confidence leads to run a business without a vision of future. Consequently, they face either a loss or meager profit.

It is clear by observing business enterprises that many entrepreneurs believe business management means renting and decorating offices, hiring female receptionist, advertising in newspapers and so on (it is unfortunate this strategy to some extent works in Pakistan and customers pay without questioning the quality). They lavishly spend money on many other things but hardly appreciate the need for professional help, which is essential to run and grow a business in the long term.

 Human resource management gives one of the basic principles for business management, “right person at the right place at the right cost.” Most of our businessmen have one concern in their minds when they hire a person, that is, “who is ready to work on meager package and ready to be exploited.” They prefer to employ a person ‘who can do something’ at ‘less payment’ than employing a ‘qualified and competent’ person at ‘appropriate rate.’ They do not appreciate that unqualified persons cost more in reality than qualified person.

Undoubtedly, Human resource management is a critical management function, which calculates the required needs of recruitment, competence and maintenance of human resources of the company.  The research shows that firms that are highly active in Human Resource Management produce better results than those firms that ignore it. The following table shows the difference.  

 Do Pakistani businessmen understand the importance of human resource management? Human resource management and planning is considered the least important factor when a business is established. It is unfortunate that managers in this country eagerly learn the latest management terminologies without comprehending the concept behind those terminologies. For example, there are many organizations in Pakistan prefer army personnel or lawyers as head of the department without appreciating that this department is a department of ‘generalists’ and not specialists. Likewise, many Human Resource Managers hardly know functions of Human Resource Management except knowing a few terminologies. Collecting application for the advertised jobs, sending show-cause notices or preparing yearly appraisal reports are not the only functions of the HR but also to be part of strategic planning. A few are aware that the human resource is a research-oriented department and play an advisory role for the company; it is a bridge between employees and the management. Good human resource professionals do not provide ready-made answer to the issues but collect data before suggesting a solution to the problem.

Those managers who have good knowledge about HRM fail to implement HR Strategies due to non-cooperation of top executives. Unfortunately, in Pakistani organizations both Tayloristic and humanistic approaches are highly ignored, which are basis of Human Capital development.  The concept of Taylorism reflects the idea that top management should itself be competent, and further to that it should: recruit competent personnel; pay according to competence; and give reasonable work according to one’s capacity. Humanistic approach highlights the advantages of providing a favorable working environment to employees. Sadly, our entrepreneurs disregard the principles of these approaches. Pakistani style of human resource management is exploitative due to various factors including ignorance, lack of adequate government policies and high growth of population; consequently, companies do not provide quality product and services to their customers. For example, Pakistani exporters have hardly appreciated the fact that if our exports have declined over the period, one of the major reasons that the labor had not produced the quality product due to exploitative style of management. Similarly, if Pakistani education standard has not improved even after paying heavy fees to private colleges, the reason is that basic principles of Human Resource Management have been ignored by the management of the colleges. It should be appreciated that making profits by employing unethical tactics reflects that the organization did not fulfill its social responsibility as corporate citizen. Moreover, entrepreneurs must understand that temporary profit does not reflect that their business is growing or stable. It is not a secret that employees in Pakistan in general are in pathetic situation when we compare them with the employees of developed nations. Employees of the developed countries draw handsome salaries according to their qualification and age. They work 35-39 hours 5 days a week whereas Pakistani employees work more than 48 hours 6 days a week. The workers of the developed nations get handsome wages if they work overtime. Our businessmen hardly consider that working continuously for longer hours or continuously working in second shift (2 P.M to 10 P.M) or night shifts disturbs employees and their family lives.

In short, inadequate Human Resource Management has many negative consequences not only for the business firm but also has repercussion for the country. It increases employee’s absenteeism, employees’ turnover, induce stress and disheartens employees, influence level of motivation, develops psychological and psychosomatic diseases, which is not good for the organization as well as for the society. It is not sufficient using latest terminologies in discussions or advertisements (as usually happens in Pakistan) unless the essence of these terminologies is understood and applied. Being a corporate citizen business community must appreciate that they have their role in the development of the country and without having a good HR policy they will not fulfill their responsibility even if they are making profit because employees growth directly related to the development of the country.  

Tuesday July 29, 2008