Does Strategic Human Resource Management matter for SMEs? A review of the role of strategic HRM in SMEs in UK

Module: Dissertation
Topic: Does Strategic Human Resource Management matter for SMEs? A review of the role of strategic HRM in SMEs in UK
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LITERATURE REVIEW
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Contents
Introduction 1
Overview of SMEs and Strategic HRM 2
Lincolnshire’s Economy, sHRM and SMEs 4
HR Capabilities and the Performance of SMEs in Lincolnshire 5
Theoretical Framework 8
Methodology 10
Participants 11
Data Collection 11
Data Analysis 11
Ethical Considerations 12
Discussions and Conclusion 12
References 14

Literature Review

Introduction
In recent decades, the robustness and growth in globalisation have revolutionised the business environment, now characterised by vicious competition, risk and uncertainty. According to Kathan et al. (2016), the problem with this model of business is that the uncertainty occasioned decreases in market share while crippling overall efficiency. Driven by this conceptualisation, many organisations have come up with efforts, and especially strategic human resource management (sHRM) practices that help mitigate risks, hence advantage over competitors. As such, many researchers have showcased great resolve to explore that area outlining critical signposts that outline organisational efficacy. In line with Ayyagari et al. (2003), this research acknowledges that little attention has been directed to small and medium enterprises (SMEs), which ironically contribute more to economic well-being, and state global positioning (Weber et al. 2015). For instance, narrowing the focus to England depicts that despite the admirable progress and developments in the industrial sector, it suffers uncertainties in its future competitiveness given the lack of tangible enthusiasm from SMEs, which scholars have attributed to the recent global economic meltdown. Thereby, the goal of this literature is to review the role and impact of human resource capabilities on the performance of SMEs in Lincolnshire, scoring on the research gaps and assumptions occasioned by previous research that occasioned selection of the research topic.
Overview of SMEs and Strategic HRM
Strategic human resource management practices are those unique practices that are developed specifically to reorient an organisation’s approach to strategy. It is important to note that the use of the term ‘strategic’ in reference to human resource accentuates employees as important resources that can be leveraged upon to compound the wider organisational planning. Khalil and Singh (2013) add that the strategic element of human resource is anchored on the alignment of human resource practices and models to intricate business strategies whose primary role is to usher the achievement of forecasted goals. According to Sorooshian et al. (2010), HRM is driven by three tenets which include, one conceptualisation of the fact that the human resource aspect of any organisation is aimed towards the cultivation of strategy, which can in turn occasion triumph over major competitors. Second, the HR practices foster vertical integration based on their seamlessness in being integrated into the larger organisational plan. And finally, sHRM practices lead to the creation of horizontal integration. This refers to the manner in which employees are linked, ideologically, towards the achievement of a common objective.
Recent literature also depicts SMEs as having several definitions. On the onset, Hargis and Bradley (2011) define them as independently owned entities that are operated by parties with not-so-dominant market shares in their area of specialisation. Karami (2016) notes that although a universally accepted definition of SMEs is yet to be created, the criteria that set them apart is that they are often entrepreneurial activities orchestrated by individuals, as opposed to organisations or companies. Many researchers have argued that the majority of businesses in the UK embrace the SME model, which is a clear indicator of just how much they have retained pervasiveness as far as the business sector is concerned. Moreover, Harness (2009) proffers SMEs to be understood as the glue that holds the economy of both developed and developing countries. This is based on their notable contributions to not just the GDP but also acting as the primary intervention on matters unemployment. Previous research points out that SMEs cumulatively factor about 80 per cent of the overall GDP in world economy annually (Georgiadis and Pitelis, 2012). This goes on to prove the vitality of revamping the sector as it ushers significant benefits to nations despite the limited attention that has been accorded to it by governments and other concerned stakeholders.
Recent evidence suggests that sHRM practices have previously negated the issue of SMEs, instead of according to attention to large companies and organisations. Perry and Towers (2009) mention that this disinterest is attributable to the misconstrued assumption that the same principles that apply to the large companies can be equally be embraced in SMEs and initiate achievement of the desired objectives. In this regard, as further noted by Kramar and Syed (2012) scholars have cultivated a sense of discriminatory analysis given the fact that literature detailing the nexus between sHRM practices and their applicability in SMEs has been treated as secondary. Moreover, Gold et al. (2013) defined the current conceptualisation of SMEs as an ‘under-evaluated’ area, which supports the earlier propositions premiered by this analysis that reiterate the need to accord SMEs the scholarly attention they deserve. Zakaria et al. (2011) maintain that the limited focus on SMEs can also be linked to their adoption, whereby they are perceived to lack the formality for analysis, based on their limited structures and tenets for delineation.
Lincolnshire’s Economy, sHRM and SMEs
According to Gold et al. (2013), the UK SME situation is no different from the international realm. According to the UK’s Department for Business, Energy and Industrial Strategies (2011), 70% of the country’s employment is attributable to SMEs. Ironically Cunningham (2010) reiterates that the SMEs still suffer avoidable drawbacks such as weak demand and difficult management conditions. This challenge trickles down to economic powerhouses such as Lincolnshire, which anchors this research. Located in Eastern England, Lincolnshire is the hub of many SMEs that operate diverse business models in the region. Given the region’s business statistics it is accurate to note that, SMEs account for more than 85% of all businesses, providing residents with reliable income streams that support thousands of families (Galabova and McKie, 2013). By virtue of being a semi-metropolitan area, Lincolnshire has managed to attract many immigrants from other states, counties and even countries who are drawn by the vast opportunities hidden in the region (Zakaria et al. 2011). Judging by its levels of employment, job creation capacity, value outputs and current status of business start-ups, it can be accentuated that Lincolnshire is performing competitively, at not just the national but global level. Nonetheless, it’s strategic positioning as a reliable investment hub means the region often attracts large investments, which are threatening the survival of SMEs. This makes it crucial for the crucial adjustments proposed by this research aimed at optimisation of human resources to achieve greatness in a dynamic economy that is constantly battling uncertainties posed by turbulence in global business models.
Drawing from the aforementioned proves that the sHRM adoption in Lincolnshire still is in its infancy stages, just as the wider part of the UK. Muldrew (2016) adds that analysis of the situation on the ground provides solid proof that sHRM oriented capabilities in SMEs remain relatively scarce. This corresponds with the assertions of Frenken and Schor (2019), who, drawing from a critical qualitative study concluded that the needs of the HR-driven capacities in semi-rural areas such as Lincolnshire, Northumberland and East Cumbria, among others is limited. Moreover, the lack of understanding has immensely dictated entrepreneurs’ behaviour patterns, given the fact that they have limited conceptualisation of the critical performance indicators as far as sHRM practices are concerned. In other words, the lack of expectations overruns the resolve even to pilot HRM practices. Nonetheless, the global economic meltdown witnessed in the past decades has created panic among SME owners, which though previously detrimental is now sowing seeds of adopting the sHRM practices to attain even better outcomes. Given these awakenings, Lincolnshire is the perfect context to anchor the study with the aim of establishing the current synergic significance of revamped sHRM practices for SMEs, and future prospects (Richards et al. (2009).

HR Capabilities and the Performance of SMEs in Lincolnshire
While there has been an increasing role and influence of sHRM, there still remain fundamental uncertainties on the reception by business leaders globally (Subramony et al., 2018). Despite lukewarm adoption, it is unclear whether sHRM practices are considered critical towards successful performance of SMEs in the Lincolnshire area (Kock and Ellström, 2011). Therefore, it is important to conduct a critical study exploring the role and impact of human resource capabilities on the performance of SMEs in the region to elucidate fulfilment of the gap left by previous literature. Furthermore, drawing from the universalistic arguments premiered on the subject, there lurk inconsistencies regarding the human resource practices embraced and their subsequent optimisation of SMEs’ performance. For example, conclusions drawn from McLeod (2015) research provide several sHRM practices that suggest their vital role in boosting SME performance, while Russo and Perrini (2010) provide their own practices that include, employment security, performance-related appraisals and the utilisation of formal training techniques. More crucially, based on the fact that Lincolnshire is a small semi-metropolitan area, this research evaluates the sHRM models applicable in an area of its magnitude, in line with scholars’ propositions in a summary model.
On the onset, there is the sHRM role identified as staffing that implies the various procedures and activities that SME recruiters and those wishing to outsource labour should consider to ensure the people brought on board are up to the task. Frenken and Schor (2019) further add that the recruitment exercise should be designed in a fashion that guarantees thorough scrutiny of the candidates, with not just the expertise but talent to handle Lincolnshire’s evolving business environment, especially given the fact that it has become a preferred investment hub. In their study, Richards et al. (2009) argue that most SMEs continually make the mistake of embracing informal approaches to the addition of employees, whom most of the time do not meet the desired threshold, consequently crippling SMEs’ performance.
Another role of strategic HRM practises is that they initiate employee training and development. In the words of Muldrew (2016), trained employees are vital assets to any business given their ability to adapt to changing processes and business models seamlessly. Moreover, training cultivates creativity, meaning that the SME has a competitive advantage. More crucially, since Lincolnshire is a county suit both urban and rural needs, it provides unparalleled potential for SMEs to thrive. Yet, recent research reflects small businesses often underestimate the significance of providing quality training to employees, which sets them limited in skillsets impacting overall growth. In Lincolnshire, the government has shown unwavering commitment to accentuate training programs to its citizens on vital aspects such as financial management and customer management. Such practices affirm Muldrew (2016) proposition that SMEs do not entirely lack programs, but have chosen to delineate themselves as ‘informal’ a self-developed tag that is inhibiting their access to vital information as the government-sponsored one. By leveraging on the widespread training programs, SMEs position themselves to reap significantly from technical, ideological and managerial development.
In this scope, this research identifies performance appraisal as another sHRM intervention that can affect turnaround employees’ motivation, which unfortunately as noted by Abraham et al. (2011) is ignored by SMEs in their wake to retain their informal culture. Due to the fact that the SME culture is too profit-oriented, the owner’s pursuit of the extra euro has previously stood in the way of communication and positive criticism. Fabi et al. (2010) contend this approach, maintaining that performance appraisal serves not just to ascertain employees’ performance on specific tasks, but also as avenues for discovering problems and encouraging employees towards better performance. McLeod (2015) projects that it is behaviour oriented satisfying Skinner’s reward model as it creates a reliable avenue to re-evaluate progress and give credit to the employees. Rather than taking advantage of this model to premier control, Cunningham (2010) suggests SME owners should utilise it to empower employees towards actualisation, which is a sure path to better performance. Also, SMEs should, through the performance appraisal strategies, cultivate a reliable model that can maximise exposure of the employee’s unique talents and abilities.
Theoretical Framework
The normative category of theories is articulate and tend to provide a clear set of goals and performance indexes in an organisation. In so doing, such a theory also gives forth the chronological set of actions and practices that must be adhered to in the organisation to achieve the ascribed goals. It incorporates high commitment, flexibility and quality by organisation employees in a bid to achieve desirable high performances, with the assumption that high performance in any organisation using such a theory is the ultimate measure of success. According to Cunningham (2010), normative theories of Human Resource Management are the traditional beliefs of hard work which is directly rewarded with hefty gains to the employee and consequently, to the organisation. Descriptive theories tend to have a seemingly sharp contrast from the normative theories. Theories in this category advocate for the creation of conducive work and personal environment for all employees, in a bid to achieve commitment, loyalty and better labour output with low managerial costs. Galabova and McKie (2013) state that the social attachment and emotions of an employee are a key contributing factor to the success of a business. With this, it can only be of proportional output in regard to the incentives, freedom and rewards offered to employees, ergo better performance and success of the business. In this category of theories, the policies put forward by HR management must incorporate a friendly, conducive and rewarding environment for the employees, to have maximum and willing input from the given employees (Karami, 2016). In the category of strategic theories, the main idea is to take into consideration external fortuities when formulating Human Resource policies. Accordingly, successful businesses manage to strike a balance between the business structure, strategy and Human Resource policy and thus enabling proactivity of employees and management of the business Kramar and Syed (2012). The inclusion of all employees or a substantial representation when coming up with the Human Resource policies can help broaden the thinking and work to improve adaptability and integration of such policies by the organisation employees (Galabova and McKie, 2013).

Methodology
The following section highlights the process of data collection, sampling participants, and the research design and data analysis.
Research Design
This study will employ a qualitative approach to the importance of strategic human resource management for small and medium enterprises within the Lincoln area. Morse (2016) defines qualitative research methods as non-numerical analysis of information gathered through observations. In this approach, the meaning and definitions of words can be used to draw inferences. The suitability of this approach to this study is because it answers the question of how and why, which help to find solutions to a topic of study. Qualitative studies tend to help find answers, understand a specific phenomenon through accessing and analysing non-numerical data. Typically, qualitative research begins through developing a new understanding from a topic that has not been reviewed in the past. Further, Iovino and Tsitsianis (2019) describe qualitative approaches to help understand topics with propositions, going ahead to analyse opinions in an empirical process hence finding solutions. In summary, this approach develops an inquiry, rejecting the scientific models of truth, generating hypotheses and investigating meanings in the form of words or imagery. This approach is suitable for this study topic.
Sampling
In the pursuit of detailed and in-depth information regarding this study topic, the researcher will select participants who understand the phenomenon under investigation. A purposive sampling technique is therefore suited for this research which must successfully undergo a sampling criterion. The criteria for sampling will be subjective and oriented towards the research aims and objectives.
Participants
The participants who will be recruited should be available on a full-time basis, have a strong educational background in Human resource, and worked within this setting for more than 5 years. The participants will be recruited through an online survey process. An emailed Google hyperlink will be sent to selected participants who have shown interest in this research. Upon filling in their credentials, the researcher will evaluate their documents and short answers to determine suitability. Successful participants will be contacted on how to fulfil their online survey requirements.
Data Collection
The study will deploy online interviews as a method of collecting qualitative data. The participants will be asked to carry out a one on one interview through social networking platform Skype, via video calls. The participants will be asked to answer questions related to the research, and their answers rated through a Likert scale. There is need to note that other questions will require detailed answers to enable the researcher to understand their responses in depth. The videos will be reviewed from time to time, by more than one statistician.
Data Analysis
The videos will be transcribed and coded out to enable the subsequent stages of data analysis. The relevant themes within the transcripts will be assigned to relevant codes. Each code will represent a specific theme which should also be available on several transcripts. The specific words in the transcript will be highlighted for easy access and review. The conclusions and recommendations will be drawn from the codes themes.
Ethical Considerations
The research follows the ethical concerns, including the privacy of participants. Participants will be questioned on their personal affiliations or those who invade their privacy. The videos will be handled appropriately through password-protected computers.
Discussions and Conclusion
The proposed research will adopt qualitative techniques in a bid to acquire enough information on the role and functionality of Human Resource Management in SMEs in and around Lincoln. In regard to qualitative research, in-depth and elaborative interviews will be conducted on the small business owners and managers in and around Lincoln. The interviews will sorely sere to acquire information regarding the adoption of Human Resource Management in running such enterprises and the corollary of the same. Detailed questionnaires with arithmetical details will also be issued to the leadership of these small-scale enterprises in Lincoln.
Previous research in the subject matter has leaned towards particular industries, explaining the workability of Human Resource Management in a given industry. In this research, the main focus is establishing the accrued benefits resulting from influence and input of HRM in small enterprises in all industries and fields across Lincoln (Kramar and Syed, 2012). In this, the focus is not in relation to a certain type of business, but it is more of a success or suitability research of HRM. To this effect, the research will be broad enough to cover as much diverse industrial managers as possible in Lincoln, to give a general overview of HRM in small businesses. Human Resource management still remains to be an integral part of the success of any business (Fabi et al. 2010). As more and more businesses, large and small, incorporate the field of HRM, there are increased solutions to long suffered problems in regard to relations of organisations and their employees. In the long run, also, success and bountiful proceeds have been realised by such enterprises that adopt Human Resource Management in their operations.

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