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Human Resource Management Practices in Small Firms: An Inter-Industry Comparison

Abstract This study investigates human resource management practices in small firms across different industry sectors. The findings show that human resource management practices reflect the type of workers employed and the areas of competitive advantage in the industry. Thus, manufacturing and engineering firms employ production workers and are concerned with reducing labour costs whilst ensuring that quantity and quality targets are achieved. Firms in the distribution and recreational service sectors and in engineering employ service workers and tailor their human resource practices to ensuring quality service and minimum labour costs. The professionals service sector and to some extent the engineering and construction sector employ symbolic analysts who are highly skilled and relatively scarce. Employees in this category are treated as investments with the aim of encouraging high performance and retention within the firm. Although the high levels of informality in human resource management peculiar to small firms are evident in all the industry sectors, differences across industry sectors are still distinct. The implications for future practice and research are discussed.