businesses may be in the close personal contact with their employees, and therefore, more effective communication and teamwork between the owner-manag

Transcription

1 HUMAN RESOURCE MANAGEMENT INFORMATION NEEDS OF OWNERS OF SMALL BUSINESSES IN LOUISIANA Larry E. Short, Northwestern State University John Paul Dunn, University of Louisiana at Monroe Abstract The purpose of this study was to determine the human resource management information needs of owners of small businesses. In a convenience sample of 74 owners of very small businesses in Louisiana (most employed 20 employees or fewer), at least 50 percent of the owners indicated they that considered seven of the eight the major human resource management functions as not important in their business. Only training rose to the level where at least a majority (60 percent) of the small business owners considered it as important. Yet, when small business owners were asked to rate their need for information on how to perform specific human management resource duties, most of them indicated a medium-high to high need for such information. The authors conclude that the lack of knowledge about human resource management activities probably influences the small business owners perception of their importance to their business. Background Human resources and the management of these resources are one of the most important factors in every kind of business, large and small. (Hodgetts & Kuratko, 1995) Carland and Carland (1998) recognize that human resources can influence the success or failure of any business; but suggest that they may be even more important in smaller businesses because these businesses can be greatly affected by the loss of a single valued employee or the addition of an incompetent employee. Baumback and Lawyer (1979) postulate that, since every progressive business seeks some superiority over its competitors, the major competitive advantage in small ASBE 35th: Proceedings Page -290-

2 businesses may be in the close personal contact with their employees, and therefore, more effective communication and teamwork between the owner-manager and employees. Rauch, Frese, and Utsch (2005) have found in studies of small businesses that the proper management of human resources is an important factor in predicting the success of small businesses. Scarborough and Zimmerer (2006) point out that it is the employees who actually do the work, implement the strategies and get the results, and thus, the quality of a firm s employees determines the heights to which it can climb or the depths to which it can plummet. Thus, most experts of small business management and entrepreneurship concur that good human resource management is often the underlying reason for the success of a small business. Then why is human resource management a low priority among many small business owners? Heneman, Tansky, and Camp (2000) believe the lack of information about human resource management in small businesses can be a problem. Small businesses develop and implement human resource management policies and procedures differently than large businesses. Yet, both small and large businesses must perform the basic human resource management functions in order to be effective and efficient. (Hernande & McClure, 2004.) As a small business grows, attracting, hiring, motivating, and retaining a strong, committed workforce becomes a key issue one that is central to the continued growth of the business. (Baron and Shane, 2008.) Although the current human resource practices used in small businesses often vary from those used in larger businesses, many of the techniques of human resource management common in larger businesses can also be used to the advantage of smaller businesses. (Hodgetts and Kuratko, 1995; Baumback & Lawyer, 1979) A study by Hornsby and Kuratko in 2003, however, suggests that human resource practices in small businesses have generally stagnated and even appear to have regressed in some areas over the past decade. They ASBE 35th: Proceedings Page -291-

3 propose three practical suggestions to help reverse the decline in effective human resource management practices in small businesses: (1) Small business/entrepreneurship curriculums in college and universities should offer more course work specific to human resource management issues. (2) Consulting services (example, SBDCs) targeted to small businesses should increase their emphasis on human resource management practices. (3) Professional organizations (such as SHRM) should play a larger role in promoting awareness of the need to focus on developing more sophisticated human resource management practices for smaller businesses. Purpose of Study This study examines the perceptions of owners of very small businesses to ascertain the need, if any, for special attention to the practice of human resource management and to identify the areas informational assistance that should be given to small business owners. Specifically the purpose of this study is to determine the human resource management informational needs of owners of very small businesses in Louisiana. Research Methodology Questionnaire A study of 165 small business owners in Louisiana suggested that owners of small businesses felt that human resource management was more important and that they needed assistance in performing these functions more than owners of small businesses with 10 or fewer employees. (Dunn, Liang, & Short, 2008) Thus, it appeared that smaller businesses did not perceive the importance of and the need for information in human resource management. To examine this issue more closely, a questionnaire was designed to target owners of very small ASBE 35th: Proceedings Page -292-

4 businesses in Louisiana to identify specifically what major human resource management functions they considered important and which of the specific human resource management duties within these major human resource management functions that they needed additional information on in order to perform these duties. Small business owners were asked to examine a list of human resource management duties and rate their need for additional information on these duties on a five point scale, with 1 indicating a low need for information, 5 indicating a high need for information, and 3 indicating a medium need for information. See Appendix A for a copy of the questionnaire. Administration of the Survey After the questionnaire was designed and pre-tested, in business entrepreneurs were contacted by a research contact person and asked to complete the questionnaire. After permission was granted, the entrepreneur was given the questionnaire and allowed to complete it in private. After completion, the questionnaire was returned to the research contact person. The collection was during business hours; however it was sometimes necessary to administer the questionnaire while the business was closed or at a convenient time that met the business owners schedules. The questionnaire was administered to a convenience sample of business owners in the Mississippi River Delta region in spring, There was no direct personal relationship (family members) between the interviewers and the respondents. However, it is possible that the interviewers were acquainted with the respondents through other connections. Findings The sample of small business owners were mostly male (70.8 percent) and were primarily owners of very small businesses 68.9 percent of the respondents employed 10 or fewer employees. Most of the businesses in the sample (91.5 percent) were either service or retailing ASBE 35th: Proceedings Page -293-

5 businesses, which is fairly representative of that portion of businesses employing 10 or fewer employees in Louisiana. Table 1 shows the demographics of the sample. Table 1 Sample Characteristics Gender N % Male Female Total Number of Employees 0-5 employees employees employees Over 200 employees Total Type of Business Service Retail Manufacturer Distribution Contractor Total Table 2 shows the perception of small business owners as to the importance to their business of eight human resource management functions. As can be seen in Table 2, most of the small business owners do not consider human resource management as an important function in the conduct of their business. Only one of the eight human resource management functions (i.e., training employees) was considered important by at least one-half of the respondents (60 percent). The remaining human resource management functions were rated as important by a low of 33.8 percent to a high of 47.3 percent of the small business owners. This would suggest ASBE 35th: Proceedings Page -294-

6 that the owners of small businesses really do not consider the management of human resources in their businesses as important and supports Hornsby and Kuratko s 2003 study that human resource management practices in small businesses have stagnated. Table 2 Importance of Human Resource Management Functions Human Resource Management Function Important Yes No The Supervisor s Job 33.8% 66.2% Job Analysis Recruiting Employees Training Employees Managing the Work of Employees Managing the Conduct of Employees Improving Employee Relations Communicating With Employees Interestingly, however, when asked to identify specific human resource management duties in which they need information on how to perform these duties, quite a different picture emerges. As can be seen in Table 3, an overwhelming majority of small business owners recognize the need for more information on performing specific duties of human resource management. Overall, small business owners perceive their highest need for information in the area of managing the work of employees (average of 81.5 percent), followed by recruiting employees (average of 76.8 percent), and understanding the supervisor s job (average 72.8 percent). The middle two areas of perceived need for information are communicating with employees (average of 72.4 percent) and improving employee relations (average 71.5 percent). ASBE 35th: Proceedings Page -295-

7 Table 3 Importance of the Need for Information On How to Perform Selected Human Management Resource Duties Human Resource Management Duties % Indicating High Need for Information* Item % Ave. Function % THE SUPERVISOR S JOB 72.8 Defining the duties of a supervisor 65.8% Defining the authority of a supervisor 65.0 Defining the responsibility of a supervisor 87.8 JOB ANALYSIS 58.1 Analyzing the current job 60.4 Developing job definitions/descriptions 57.1 Determining needed employee qualifications 53.0 Improving present work methods 70.0 Determining appropriate pay 50.0 RECRUITING EMPLOYEES 76.8 Identifying sources of labor 60.0 Obeying employment laws 84.5 Selecting the right employee 91.5 Introducing employee to the job 71.4 TRAINING EMPLOYEES 67.1 Learning instructional techniques 72.7 Conducting on-the-job training 74.1 Conducting safety training 63.5 Training supervisors 58.4 MANAGING THE WORK OF EMPLOYEES 81.5 Developing performance expectations 84.6 Evaluating employee performance 78.4 MANAGING THE CONDUCT OF EMPLOYEES 65.6 Developing rules of behavior 71.4 Developing discipline procedures 59.6 Administering discipline 65.9 IMPROVING EMPLOYEE RELATIONS 71.5 Determining employee morale 62.8 Improving employee morale 72.7 Handling employee complaints 75.6 Developing a productive supervisory style 75.0 COMMUNICATING WITH EMPLOYEES 72.4 Identifying channels of communications 68.8 Improving communications with employees 76.0 ASBE 35th: Proceedings Page -296-

8 *Percent identifying this duty as medium-high to high in need for information on how to perform the duty. The three human resource functions perceived as requiring less information than the others although all three reflect a fairly high need for information are training employees (average of 67.1 percent), managing the conduct of employees (average of 65.6 percent), and job analysis (average of 58.1 percent). Table 3 clearly shows that small business owners perceive that they do not possess sufficient knowledge to perform the human resource management functions adequately. In a closer examination of Table 3, a few areas stand out. Over 80 percent of the small business owners indicate a lack of sufficient knowledge in defining the responsibility of a supervisor, obeying employment laws, selecting the right employees, and developing performance expectations. Seventy to 78 percent indicate that they need more information on improving present work methods, introducing employees to the job, learning instructional techniques, conducting on-the-job training, evaluating employee performance, improving employee morale, handling employee complaints, developing a productive supervisory style, and improving communications with employees. Fifty to almost 69 percent of small business owners identify a need for information on the remaining 13 human resource management duties. These findings indicate that a small majority to a rather large majority of small business owners, depending on the specific human resource management activity to be performed, need additional information in order to perform that activity well. Conclusions Although most small business owners do not recognize the importance of human resource management in the conduct of their business, a larger majority of them admit needing ASBE 35th: Proceedings Page -297-

9 information to better perform these duties. Thus, it would appear that a lack of knowledge about human resource management may have led small business owners to consider the area as not important to their business. The suggestion by Hornsby and Kuratko (2003) that specific actions are needed by (1) the academic world in providing more human resource management material coverage in small business/entrepreneurship programs; (2) the consulting services by targeting an emphasis on human resource management; and (3) professional organizations by promoting awareness of human resource management in smaller businesses may be what is really needed to bring smaller businesses into the 21 st Century of human resource management. References Baron, R. and S. Share, (2008). Entrepreneurship: A Process Perspective, 2 nd ed., Mason, Ohio: Thomson-South-Western. pg 376. Baumback, C. and K. Lawyer, (1979). How to Organize and Operate a Small Business, 6 th ed., Englewood Cliffs, NJ: Prentice-Hall. pg. 299, 300, and 322. Carland, J. and J. Carland, (1998). Small Business Management: Tools for Success, 2 nd. ed., Houston, TX: Dame Publications, Inc. pg , 327. Dunn, P., K. Liang, & L. Short Human Resource Management Importance in Small Business, Small Business Institute Journal, October 2008, Vol. 2. Pp Heneman, R., J. Tansky, and S. Camp, (2000). Human Resource Management Practices in Small and Medium-Sized Enterprises: Unanswered Questions and Future Research Perspectives, Entrepreneurship: Theory and Practice, Vol. 25., Fall. pg. 12. Hernandez, V. and G. McClure, (2004). "Human Resource Management Basics: Small Versus Large Firm Practices," Proceedings of the Annual Conference, Association for Small Business and Entrepreneurship, Albuquerque, NM, March. pg Hodgetts, R. and D. Kuratko, (1995). Effective Small Business Management, 5 th ed., Fort Worth, Texas: Dryden Press. pg Hornsby, J. and D. Kuratko, (2003). Human Resource Management in U.S. Small Businesses: A Replication and Extension, Journal of Developmental Entrepreneurship, Vol. 8, No. 1. pg Rauch, A., M. Frese, and A. Utsch, (2005). Effects of Human Capital and Long-Term Human Resources Development and Utilization on Employment Growth of Small-Scale ASBE 35th: Proceedings Page -298-

10 Business: 681. A Causal Analysis, Entrepreneurship Theory & Practice, Vol. 20, No. 6. pg. Scarborough, R. and N. Zimmerer, (2006). Effective Small Business Management: An Entrepreneurial Approach, 8 th ed., Englewood Cliffs, NJ: Pearson-Prentice Hall. pg ASBE 35th: Proceedings Page -299-