Researching Personnel Management in Dutch Small and Medium Sized Enterprises

ABSTRACT This paper is very much on work in progress. Only this year did we decide to start research on HRM in small and medium sized enterprises (SME’s) in the Netherlands. Personnel management in SME’s has been little researched, yet SME’s are very important for economic activity and many owners/managers struggle with personnel issues. In this paper we will introduce an outline of our research so far. The paper offers a literature overview leading to our research model, and discusses our research approach and tool. Some results of our pilot study are presented and discussed, even though the pilot itself was less successful than we hoped. 1. INTRODUCTION Research into human resource management activities of small and medium sized enterprises (SME’s) and its effectiveness is scarce. In 2000, Heneman et. al. did an extensive literature research and concluded there were only 17 descriptive surveys and hardly any analyses on HR in SME’s (Heneman et al, 2000). At the same time, well-motivated and well-trained workers are probably the most important assets for smaller companies to stay competitive (Moore & Petty, 2000). Most research on HR however has been directed at large to very large, internationally operating companies, and one can seriously doubt if the findings and recommendations of these studies will be valid for SME’s as well. This bias in HR research is of course understandable. Larger companies have the resources and people available to implement and perform state of the art HR policies and practices and are thus more exciting research playgrounds. They usually have more, and more sophisticated HR in place. But neglecting SME’s is inconvenient, given their position in most economies. In the US for instance, 99,7% of all companies have fewer than 500 employees (the US definition of SME’s is all companies with fewer than 500 employees), a startling 78,8% have fewer than 10 employees (Heneman et al. 2000). The European definition of SME’s is companies with fewer than 250 employees. If we use that definition, in the Netherlands 714.000 out of a grand total of 717.035 companies are SME’s. Only about 1300 companies have more than 500 employees, whereas about 386.890 have no employees at all (CBS, Statline: peildatum 1 januari 2005). According to the Dutch organisation for SME’s (MKB Nederland) companies with up to 250 employees (99% of all Dutch companies) provide 2.8 million jobs, more than half of the total of 4.8 million jobs in the Dutch private sector (www.mkb.nl, May 2005). 48% of the added value and 53% of yearly turnover of this sector is generated by these small and medium sized companies (Meijaard et al., 2002:7). The importance of HRM for larger companies has been researched extensively. Its relevance for company performance and personnel turnover was researched amongst others by Arthur (1994). Huselid (1995) conducted research showing the importance for financial performance and Delany and Huselid (1996), Huselid, Jackson and Schuler (1997) looked into the relationship with company performance. Effects on competitive advantage was performed by Lado and Wilson (1994), Barney (1991) and Kamoche (1996). Much attention has been directed at the importance of strategic HRM for achieving company goals (e.g. Wright, McMahan and Mc Williams, 1994, Wright and Snell, 1998; Gratton & Truss 2003). The attention for the importance of the HR practices for company performance, coupled to an assessment of the future role and position of the HR function, has led some authors to search for optimal HR architectures (Becker and Gerhart, 1996, Lepak and Snell, 1999) or to defining HR