You don't build the business, you build people & then people build the business!
Every Organisation is a separate, specific case, has its own history and experience with people who build it and worked in it. Because of it, in an ideal situation, every one of SMEs should be examined separately and its HRM needs should be identified individually. There are although some common features shared by majority of those companies.
Characteristic trait of small and especially micro companies is a strong position of the owner/founder. Usually the owner personally manages the firm, arbitrary deciding about powers delegation and creation of positions. As a result, it happens more often in SMEs, than in bigger companies, to have only slight distinction between roles in the company including management positions. It allows more free movement of employees from one position to the other, delegating new or additional tasks and generally more flexibility, which can be an advantage especially in the time of sudden crisis.
The drawback is disorientation and frustration of employees, tired by changes and never certain of their situation, which may lead to lowering effectiveness of their performance and boost the employees rotation.
While it is increasingly acknowledged that human resource management (HRM) is critical to competitive success, debate has rarely extended to encompass small and medium-sized firms (SMEs). This neglect is surprising given that SMEs dominate the industrial landscape , contributing to over 55 per cent of gross domestic product (GDP) and 65 per cent of total employment in high-income countries
SMEs have a number of unique characteristics which are likely to have specific human resource (HR) implications. These include the role of concentrated ownership, proximity to external environmental forces, a hierarchically contracted structure which means close relations between management and employees, and a large degree of informal practice.
However, SMEs were more likely than larger firms to have employee involvement practices. Examining the impact of bundles of practices, It deals with issues related to people such as recruitment, performance management, organization development, safety, wellness, benefits, employee motivation, communication, administration, training and staff reduction. HRM is also a strategic and comprehensive approach to people and companies culture management, that helps to heighten effectiveness, accomplishment organization's objectives and add value to companies performance.