Human Resource Management in Small Firms: Keeping It Strictly Informal

Recent research into the use of human resource (HR) practices within small firms suggests that it is characterized by an absence of personnel policies, limited planning and little strategic integration. These practices are further explored by reviewing some of the results obtained from a survey into the attitudes towards and existence of HR practices within small businesses. The specific issues considered are the extent to which HR practices operate formally or informally, the attitudes of owner‐managers towards them and the extent to which the attitudes expressed are consistent with their use. The results indicate a very high take‐up rate for each of ten specific practices identified in the survey. In most instances this is reflected in the utilization of informal practices rather than formal systems. Similarly, owner‐managers exhibit positive attitudes towards five of the six HR dimensions adopted for the study, suggesting a consistency between practices and attitudes. The findings of this small sample suggest that HR practices appear to be more widely used in small businesses than has previously been recognized, although there remains a reluctance to formalize the arrangements adopted.