Small businesses should not overlook the 'fundamental' role that human resources (HR), or people management, can play in driving long term performance, says the Chartered Institute of Personnel and Development (CIPD).
Research based on studies with various SMEs, HR directors and business leaders, found that SMEs could benefit from better HR management, regardless of their size and whether it has a dedicated HR department or staff.
The CIPD said that SMEs often overlook HR practices because of 'restraints on material and finances', although this only further necessitated the case for better employee management.
Research adviser at the CIPD Jill Miller, said: "SMEs are vital to the UK economy, but with limited material and financial resources, good people management is fundamental to their long-term performance and growth."
"As an organisation's workforce grows and the scope of operations changes, particular challenges arise, particularly when it comes to balancing the need for formal systems and processes with the desire to preserve value-creating innovative and entrepreneurial cultures."
According to the CIPD, business performance of larger SMEs particularly relies on a manager's attitude to HR issues. This is because a business's purpose and vision becomes more challenging as the distance between the owner and employees increases.
Its report uncovered six key points which SMEs should consider in regards to HR:
Jill Miller added: "Whether responsibility for people management rests with the owner/founder, office manager or HR practitioner, it is through anticipating and responding in a timely way to the people management opportunities and challenges presented at different stages of growth that an organisation can achieve competitive advantage."
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