This document discusses human resource management practices in small and medium-sized enterprises (SMEs). It defines SMEs as having less than 250 employees in the EU and less than 500 in the US. The objectives of SMEs are creating employment, improving output and standards of living. SMEs contribute significantly to economies but face threats such as lack of financing, infrastructure and raw materials. Critical HRM goals in SMEs include labor productivity and quality. Common HRM practices in SMEs involve informal recruitment and training as well as employee involvement through cafeterias or events. Bangladesh has developed strong human resources and SMEs contribute greatly to its economy and employment.

1. MDASHRAFUL ISLAM
s0554283
Human Resource Management
in SMEs

2. Index
 Background
 Small and Medium-Sized Enterprises: Definition and
Significance
 Small Enterprise & Medium Enterprise
 Objective of SMEs
 Potential of SMEs
 Threats and Challengers on SMEs
 HRM Goal in SMEs
 The Role of HRM in the SMEs
 ExpectancyTheory
 MBO Method
 HRM Practices in SMEs
 HRMVision in Bangladesh
 Human Resource in Bangladesh
 SMEs in Bangladesh
 Criticism

3. Background
Current HRM studies have often limited
their examinations to large organizations
A need to examine HRM in the field of
small and medium-sized enterprises
(SMEs)
HRM in SMEs needs to be strongly
encouraged
Sesource: (Bacon et al., 1996; Despande and Golhar, 1994; Kotey and Slade, 2005), (Baron, 2003; Huselid, 2003; Mayson and Barrett, 2006)

4. Small and Medium-Sized Enterprises: Definition and
Significance
 Small and medium-sized enterprises (SMEs) are non-
subsidiary, independent firms which employ less than a given
number of employees
-SME is 250 employees in the European Union
- United States considers SMEs to include firms
with fewer than 500 employees
Sesource:ec.europa.eu

5. Small Enterprise & Medium Enterprise
These are those Enterprises
where the investment in
plant and machinery is
more than Rs. 5 crore but
does not exceed 10 crore
Where the investment in
equipment is more than
two crore Rs but does not
exceed 5 crore Rs
These are those Enterprises
where the investment in
plant and machinery is
more than 25 lakh Rs. But
does not exceed 5 crore Rs
Where the investment in
equipment is more than Rs
10 lakh but does not
exceed Rs 2 crore
Source:Aisa Pacific Business Review

6. Objective of SMEs
Creation of employment
opportunity
Improvement of output ,
income and better
standard of living
To ensure more equitable
distribution of national
Income to society at large
scale
To provide employment
and means of a regular
source of income to the
needy people living in
rural and semi-urban areas
Source:Aisa Pacific Business Review

7. Potential of SMEs
Creates Large Scale,
Low Cost, and
Employment
Opportunities
Uses Locally
Available Inputs
Mobilizes Small &
Scattered Savings
Develops
Entrepreneurship
Contribution to
Export
Source:Aisa Pacific Business Review

8. Threats and Challengers on SMEs
Finance And
credit
Infrastructure
Availability of
Raw material
Machines and
other
equipments
Marketing
problem
Delayed
payments
Problem of
sickness
Poor Database
Source:Aisa Pacific Business Review

9. HRM Goal in SMEs
 Critical HRM goals in SMEs
Non Critical HRM goals in SMEs
Labor productivity
Product/service quality
Social legitimacy and
organizational citizenship
sales, market share
Sesource:OECD SME and Entrepreneurship Outlook: 2005,

10. The Role of HRM in the SMEs
5. Job satisfaction
4. Organizational
changes
3. Environmental
analysis
2. Leadership
1. Motivation
Sesource:OECD SME and Entrepreneurship Outlook: 2005,

11. Expectancy Theory
Effort
Performance
Rewards significance
-Flexible job hour
-One extra day off
-Yearly holidays
-Bones
Source:HRM_Compensation%20Management

12. MBO Method
Process of
MBO
Define
organizational
goals
Define
employees
objectives
Continuous
monitoring
performance
and progress
Performance
evaluation
Providing
feedback
Performance
appraisal
Source:HRM_Performance%20ManagementAppraisal

13. HRM Practices in SMEs
HRM practices
Recruitment &
Selection
Career Planning
Performance
Appraisal
Training
- Providing Informal Training
Employee
Involvement
-Provide a small cafeteria or Mensa
Employee
Performance
Sesource:OECD SME and Entrepreneurship Outlook: 2005,

14. HRM Vision in Bangladesh
Institution
• Unfortunately awareness about HRM started in Bangladesh late 1990
Bitter Factors
• There are not many organization in Bangladesh that use resource
optimally. Most of them abuse, misallocated and misdirect this resource
to an incredible degree
Good Factors
• With time, organization are becoming increasingly aware of HRM
contribution to the progress and growth of their businesses.
Source: Chamber of Commerce and Industry of Bangladesh

15. Human Resource in Bangladesh
Bangladesh is blessed with high quality of human
resources, which is also industrious and productive
Bangladesh nation is hard working and has always stood
up to expectations.HR is the most important contributor to
the economic success of Bangladesh over the past decades
Human resources are playing an important role in the
transformation of Bangladesh from an
underdeveloped country to a prosperous nation.
Source: Chamber of Commerce and Industry of Bangladesh

16. SMEs in Bangladesh
Contributing 50%
GDP
Contributing 33%
of state budget
revenues (the state
budget)
Creating 62% jobs
for laborers
Contributing 49% in
creating added value
for the economy
Source: Chamber of Commerce and Industry of Bangladesh, 2015

17. Criticism
HRM best practice theory
is still a widely debated
topic in academic circles
Best fit model tend to
ignore employees’
interest in the pursuit of
enhanced economic
performance
External Recruiting Job
Candidates higher
orientation and training
costs
External & Internal
Recruiting Job
Candidates applicant pool
is significantly smaller
External Recruiting Job
Candidates hires have no
history with the firm
Internal Recruiting for
Job Candidates Employee
success in one job doesn’t
mean success in a
different job
External Recruiting Job
CandidatesTakes longer
and costs more
Source:HRM_RecruitmentSelection

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