SUGGESTIONS FOR IMPROVEMENT OF SMALL BUSINESS HUMAN RESOURCE MANAGEMENT
Beverly L. Little, Lander College ABSTRACT This paper addresses problems and frustrations often felt by owner/mangers of small businesses in managing their personnel. It offers specific advice, particularly in the realms of selection and motivation. INTRODUCTION Small businesses have self-professed personnel problems. Study after study report small businesspeople's frustrations. A Roper Organization poll found that the most difficult problem for small businesses was "finding competent workers and then motivating them to perform." A national survey by Dun and Bradstreet and a study of rural entrepreneurs in Texas reported similar findings -- the most frequently-cited problems of small business managers were personnelrelated.[4;8] Small businesses find themselves in a conundrum. They are dependent on their employees for success, and the importance of each employee is magnified in the small business, where each constitutes a larger percentage of the workforce. But human resource planning is a very low priority in most small businesses and is viewed as something that anyone can do. While recognizing personnel as a problem, the owner/manager is reluctant to get outside professional help, choosing rather to perform the personnel-related duties himself. Research has shown that, in fact, most small firms do not employ a full-time personnel-related employee. Accordingly, the employers' actions become the personnel policies. This complicates the problem doubly, for the owner/manager not only is not trained in personnel activities but also views any time spent on personnel duties as time spent away from other business functions. One study has shown that in small businesses the owner/manager performs the duties of: establishing wage and salary levels, screening and interviewing applicants, counseling and disciplining employees, and evaluating employees. Even among those small firms employing a full-time personnel employee, the owner/manager retains certain functions. It would appear that many personnel problems of small firms could be reduced if two major categories of personnel activities were improved: the screening and selection of potential employees ("finding competent workers") and the motivation and retention of employees ("motivating them to perform"). Employers tend to oversimplify these functions, perform them with "unimaginative" methods, and then are frustrated by the outcomes. SELECTION Recruitment McEvoy  states that of all the aspects of personnel management, selection is the one area that could be most easily and to the greatest benefit improved. Time spent on the development of a personnel selection program could be a very good investment for the owner/manager of a small business. It could provide a time-efficient means of screening potential employees, identify those best qualified for the particular job (thereby reducing future personnel problems), and provide for "behavioral consistency" - i.e., remove some of the "gut reaction" syndrome. The problem arises from the point of departure in the selection process. The planning horizon is often short, usually determined by the turnover of current employees. No long-term source of applicants is maintained on a regular basis, forcing the owner/manager into catch-as-catch-can situations. But even if personnel needs are anticipated, recruitment devices are usually limited to newspaper advertisements and walk-ins. Newspaper advertisements may attract large numbers of applicants, which leads to much time being spent screening many unqualified or undesirable applicants. The manager who depends on walk-ins for quality employees is even more sporadic in his personnel planning than the average!
Other, more efficient possibilities for getting names of potential employees could include : 1. referral services provided by professional associations, 2. rewards offered to employees for recommending competent applicants, 3. internship and coop programs at nearby colleges and tech schools. Students in such programs are usually pre-screened to some degree by the institution. Hired as part-time, probationary employees, they offer little risk to employers and have the potential for later full-time employment. Screening Screening is an area in which great potential for improvement exists in small business personnel performance. The problem is twofold: the employer often does not know what characteristics he is looking for, and he does not know how to identify the unknown characteristics in applicants. Although most owner/managers of small businesses would cringe at the idea of devoting time to writing job analyses and specifications for their employees, the time spent in doing so could greatly reduce the time spent later in screening applicants and the number of mistakes made in hiring. A simplified selection program for a small business could include these steps . 1. Performance of job analysis. Statements are created which describe the task, purpose, outcome, and equipment of a particular job. The information for job analyses for small companies could be gathered from the individuals most closely associated with the job, often job incumbents. 2. Identification of worker characteristics. The job analysis is translated into specific knowledge, skills (kind and level), and abilities required for job performance. Again, these probably can be defined best by those who know or perform the job. 3. Collection of information to translate experience and schooling into specific job-related skills and knowledge. The employer needs to have selection devices that enable him to identify the knowledge, skills, and abilities in job applicants. Once jobs and needed abilities are defined, screening becomes a more concrete, less subjective process. Much of the guesswork is eliminated. The most often-used selection techniques by small businesses are the application blank and the interview. Many owner/managers are not aware of alternative selection devices. Because they are so widely known and used, the application blank and the interview should not be thrown out, but should be tailored to the situation to make them work as efficiently as possible. Specialized application forms should be devised for different categories of jobs. They should translate former experience and training into specific tasks as defined in the job descriptions to enable the owner/manager to evaluate them in terms of needed knowledge, skills, and abilities. Such an application blank eliminates obviously unqualified applicants and reduces the number and type of questions required in the interview. Few, if any, jobs are filled without a personal interview (in any size firm). The key to the successful (valid) interview is for the interviewer to know what he needs to find out from the interview and to have a means of finding it. While finding out about the applicant's personality is certainly important, if the interview serves no other purpose, selection will often be made on the basis of charisma at the expense of other, more important factors. The interview should focus on a few major points. A major means of making the interview a valid screening device is through use of a structured interview. All applicants should be asked the same questions in the same order. Comparison of applicants is easier when it is based on a common base of information. The use of a board or group interview, having more than one person interview simultaneously, improves objectivity. "What if" questions can help identify abilities that would not be listed on any application blank. When handled correctly, work sample tests may be the most valid device to use in garnering verifiable job-related information.  Tied to standards of competency set in job descriptions, work sample activities must be critical, the weights must reflect the importance in the job, and the level of difficulty should match that of the job in order to be valid.  As mentioned in relation to earlier activities, the time spent in devising work samples could easily pay for itself in a few interviews. MOTIVATION The second part of the personnel problem facing small businesses is the motivation/retention of good employees. Many
small firms are unable to be competitive with larger firms in terms of compensation. Size may prohibit the ability to provide certain benefits; profitability (or cash flow) may be of more immediate concern (and not seen as directly related to personnel problems). Small firms must be creative in terms of compensation that will not immediately affect cash flow. Despite studies such as Porter and Lawler's, which have shown that there should be direct links between pay and productivity, it has been shown that as few as 8 percent of small firms tied pay to productivity. Explanations for not tying pay to productivity cited most often were difficulty in correctly measuring performance and administrative inconvenience. The use of clearlydefined incentive pay plans of commissions, bonuses, or profit-sharing would appear to justify administrative inconvenience if motivation is enhanced without cash flow's being hampered (and possibly being improved). Variations of stock option plans can be offered by small corporations. While at a disadvantage in their inability to be competitive in compensation areas, small firms have the ability to provide flexibility. Flexibility of scheduling is one option open to many small firms, especially those in the service and retail industries. One study found that 25 percent of firms that use permanent part-time employees do so because of employee choice. Another aspect of flexibility that can prove to be motivational is job design. Small businesses can design or modify jobs (with employee input) to provide intrinsically challenging work. The person who performs the job daily often has a better idea of how it should be done. Small businesses also can involve employees in goal setting. Congruence of employees' goals and incentives toward the goals and mission of the organization can provide motivation that salary alone cannot. TWO OTHER SUGGESTIONS As has been pointed out, most owner/managers of small businesses must wear the hat of personnel specialist along with all the others required of him. The owner/manager for whom time is even more scarce than money has two external means of improving his personnel activities. One choice is through the use of the expertise of a professional human resource expert. Whether on a one-time or ongoing basis, the cost of a consultant's advice or a part-timer's help can pay for itself many times.[l] A second alternative being undertaken by more and more small businesses is the relinquishing of their personnel administration to a personnel leasing company which can provide them with better benefits packages and more professional personnel administration. Such agencies provide for more productive use of the owner/manager's time and recruitment of better employees based on attractive benefits. This is not an arrangement that should be entered into without a great deal or research, but it is an alternative that can be considered. SUMMARY Personnel problems plague small businesses. Many have personnel problems beyond even those of large companies , without, they feel, the corresponding ability to deal with them. While some of the problems are caused by the lack of available resources (i.e., compensation, benefits, etc.), many could be eased by a small infusion of time, money, and attitude. Most small firms fail to develop systematic compensation and personnel maintenance practices for long run needs. While recognizing personnel problems, they seem not to relate worker productivity to the practice of personnel management techniques. Personnel costs in small businesses are perceived as being only indirectly connected with the mission of most small businesses, and are typically held to a minimum. Most companies need not do anything as drastic as lease their employees back from another company. More realistically, companies should view the time and thought given to personnel considerations as a positive function for the organization , not as a nuisance which must be kept to a minimum. Small improvements in selection devices and motivational techniques which involve little increase in cost can help overcome the most frustrating problem of small businesses. REFERENCES
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