A SURVEY OF THE EFFICIENT AND EFFECTIVE PERSONNEL MANAGEMENT IN SMALL AND MEDIUM SCALE ENTERPRISES

posted on October 12, 2017

CHAPTER ONE

INTRODUCTION

1.0 Background of the Study

Personnel management is defined as a strategic and coherent approach to the management of a small business‘s most valued assets – the people working there who individually and collectively contribute to the achievement of its objectives. The importance of personnel (human resources) in small and medium enterprises has received much attention in recent years. At a macro level, endogenous growth theories suggest that the accumulation of human capital constitutes the main engine of macro-economic growth (Mankiw et al., 1992). At a micro level, resource-based theory points to the human capital of employees as a major source for sustained competitive advantage for individual firms. Due to the increasing importance of personnel or human capital, which to a large extent is related to developments in information and communication technologies, current western economies are described as knowledge-based economies.

The increased importance of personnel or human capital is apparent at both the demand and the supply side of the labour market. However, an adequate supply of and demand for highly qualified labour is in itself not enough to guarantee economic progress; for each individual firm, supply of and demand for labour and human capital must be matched. Companies in the knowledge-based economy are challenged to meet their demands for highly trained employees in labour markets characterized by a shortage of qualified labour (Audretsch and Thurik, 2000). Human resources are becoming more important, and therefore also the management of these resources.

According to Heathfield (2011), Human Resource Management (HRM) is the function within a small business that focuses on recruitment of, management of, and providing direction for the people who work in the small business. Human Resource Management can also be performed by line managers. Human Resource Management is the organizational function that deals with issues related to people such as compensation, hiring, performance management, organizational development, safety, wellness, benefits, employee motivation, communication, administration, and training.

Gale (1991) sees Human Resource Management (HRM) as a term used to describe formal systems devised for the management of people within a small business. These human resources responsibilities are generally divided into three major areas of management: staffing, employee compensation, and defining/designing work. Essentially, the purpose of (HRM) is to maximize the productivity of a small business by optimizing the effectiveness of its employees. This mandate is unlikely to change in any fundamental way, despite the ever-increasing pace of change in the business world. The basic mission of human resources will always be to acquire, develop, and retain talents; align the workforce with the small business; and be an excellent contributor to the small business. Those three challenges will never change.

Human Resource Management is also a strategic and comprehensive approach to managing people and the workplace culture and environment. Effective (HRM) enables employees to contribute effectively and productively to the overall small business direction and the accomplishment of the organization’s goals and objectives.

For small and medium enterprises to grow they need to efficiently and effectively manage their personnel or human resources, this will in turn contribute to their growth and development. When an enterprise is made up of quality personnel, it will have a positive impact on their productivity.

1.2 Statement of the Problem

Personnel management in small medium scale industries has been faced with multi-dimensional problems. Managers of small and medium enterprises do not take personnel management seriously and consequently this affects the productivity of employees as they are not properly trained and motivated to carry out their responsibilities effectively. There is the absence of a flexible and caring management style so that staff will be motivated, developed and managed in a way that they can give of their best to support departments‘ missions. In addition most departmental units in small and medium enterprises do not meet their business goals as a result of an ineffective approach in managing the personnel that work there. The lack of training also contributes to the ineffectiveness of the personnel of small and medium enterprises.

1.3 Objectives of the Study

To examine how effective and efficient personnel management affects the productivity of small and medium enterprises.
To find out how training of personnel of small and medium scale enterprises helps in achieving their goals.
To determine how wrong selection and recruitment of personnel affect small and medium enterprises.
To examine the management difficulties hindering effective and efficient personnel management in small and medium enterprises.

1.4 Research Questions

The following research questions were formulated based on the objectives of the study:

How does effective and efficient personnel management affect the productivity of small and medium enterprises?
In what ways can the training of personnel of small and medium enterprise help in achieving their goals?
How does wrong selection and recruitment of personnel affect small and medium enterprises?
What are the management difficulties hindering effective and efficient personnel management in small and medium enterprises?

1.5 Statement of Hypotheses

As a guide to achieve the objectives of the study, the following hypotheses were formulated:

H_o: Recruiting of qualified personnel, trained staff for boosting of productivity, motivated and committed employees for increasing the financial returns of an enterprise will not affect the productivity of an enterprise.

H_a: Recruiting of qualified personnel, trained staff for boosting of productivity, motivated and committed employees for increasing the financial returns of an enterprise will affect the productivity of an enterprise.

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