Comprehensive Analysis of Human Resource Development in SMEs

This essay delves into the critical role of Human Resource Development (HRD) within Small and Medium Enterprises (SMEs). It highlights the significance of HRD in enhancing employee skills and competencies, thereby contributing to organizational effectiveness and competitive advantage. The essay discusses various HRD approaches, including training, career development, and performance appraisal, tailored for SMEs. It examines how SMEs can leverage HRD to address challenges like limited capital and skill gaps, emphasizing the importance of employee engagement, succession planning, and fostering a culture of continuous learning and development. The analysis covers diverse methods for performance evaluation and the use of job enrichment and rotation to enhance employee motivation and commitment. The essay underscores the impact of effective HRD on employee satisfaction, talent retention, and overall business growth, providing valuable insights for SMEs aiming to optimize their human capital.

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Working of Human Resource Development in SMEs
Human resource development (HRD) is department which works for the development of
skills and competencies of the employees which can be helpful for the employee through the
learning activities and the training. This allows the organization to use training and make
career development efforts which can improve the individual and organizational
effectiveness. Human resource development is important for Small and Medium Sized
(SMEs) Organizations which strives to enhance the capital investment and create a
sustainable competitive advantage by developing efficient human resource (Garavan &
Nolan, 2015). Here, the essay has discussed the development of human resource in SMEs
through various ways. The essay has highlighted the significant approaches to be used by
SMEs in the management of human resources and also through the using use of diverse set of
measures for the undertaking of HRD activities.
Basically, human resource development focus on the learning and development of the
employees in which the organization can increase the human resource capacity into the
organization. The learning in SMEs is distinctive as it elaborates the distinctive
characteristics of managers and the owners of small business. This has later taken into the
direct and indirect approaches of learning to be undertaken by the managers which shows the
distinctive characteristics of SMEs (Coetzer, et al., 2019). Moreover, scope of human
resource development is not only to recruit the employees but also appraising them for the
improving their capabilities. Also, this seeks to set the learning plan which will be undertaken
for the performance of current and future jobs. The key purpose of human resource
development is to maintain higher productivity and better relations within the organization.
This works through the development of new skills which can enhance the knowledge and
attitude of the workforce. Besides, this can be brought up by the creating efficiency culture
making the organization effective which strives to maintain the management of resources
which can be utilized and achieved in a better way (Garavan & Nolan, 2015). This is directly
related to management of the employees through the creation of the opportunity to enhance
the employee programs and also leading to the better human resource planning.
Small and Medium Sized organizations generally suffer from the insufficiency of investment
capital in comparison with other large organizations. SMEs usually suffer from the lack of
sufficient skills and know how, there is huge role of functions under the human resource
development. This provides the significant ways by which these organizations can increase

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their capacity of the employees by providing the career opportunities to the employees
(Coetzer, et al., 2019). Thus, the human resource development in SMEs work through
addressing the issues of the employees and also making the employees skilled for the
performance of the activities which later brings competitive advantage over the competitors.
SMEs usually make recruitment for hiring the efficient workforce which can add to their
profits. Besides, small businesses strive to make the management strategies which can lead to
the personnel management that can make the employees focused and being more focused on
the business goals.
Further, the perspective of Hubner is different in which the small organizations account for
the networking and creativity which is the best way to leverage the skills and competencies of
the employees and often playing a major role in the HRD process (Hubner & Baum, 2018).
Besides, after the research made on the entrepreneurs, it is being observed that the HRD’s
approach is based on the decision-making process in which causation and effectuation can be
undertaken through theorizing about the entrepreneurs. With this context, effectuation is the
creative and means oriented process that leads to the enhancement in the competencies and
on the other hand, causation is described as the process in which goal-oriented steps can be
undertaken by avoiding the contingencies. This majorly affects the decision-making logic
within the organization in which entrepreneur’s communication and the decision-making
process can affect the human resource development. Moreover, there is impact of HRD
approach on the SMEs in which the employees cab be motivated through the maximum
satisfaction of the employees which can later bring on to the attainment of personal and
professional goals (Hubner & Baum, 2018). This has also combined with the undertaking of
the better recruitment strategy and conducting the better analysis of higher motivation of the
employees which is the crucial part of the human resource development.
Further, the human resource function in small organizations can be through the training and
development. SMEs provide the career structure in which the organizations can provide the
guaranteed promotion which reduces the money spent on the recruitment and training of the
employees. The human resource development in SMEs can be through the training for the
increasing morale and retention of the employees. The career structure of the companies leads
to more promotion of the employees which eliminates the need for training. The human
resource function in SMEs works through the overall development of the employees which
leads to better opportunities to gain the personal and professional goals. As the quality of the
human capital is the key factor for the success of more SMEs. Specifically, organizations use

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the work standardization method for the improvement in the individual performance of the
employees. The area of human resource development is attained through the development of
professional competencies. The organizations develop the quality of internal communications
and the harmonization of personal and professional life which are successfully implemented
by SMEs and are differently implied by the small organizations (Nolan & Gravan, 2019).
Further, small organizations face the difficulties in the building of the professional networks
which is examined by Nolan. They acquire resources from the internal sources and also
through the external sources as examined earlier through the recruitments (Nolan & Gravan,
2019). For SMEs, there is need of committed and focused team of employees who work
together for the growing of the business. Basically, SMEs take the appraisal meetings which
are being undertaken through the interpersonal meeting with the boss which lasts for half an
hour and conducted during the period of every six months. The evaluations are generally
made on the basis of level of commitment and motivation of the employees. These meetings
can resolve the issue by taking the feedback which is the best way to retain the talent and
automate the process of workflow. Besides, the small organizations use the rating scale as the
method for performance appraisal method in which the employees are graded on the basis of
their skills and their team work and communication skills. Also, appraisal in SMEs takes
place through the 360-degree appraisal method in the organizations review the performance
of the employees through getting insights of the behaviour and personality through the
feedback of peers and supervisors. All these methods are used for the acquiring of the talent
through the internal networking.
In contrast, human resource development in SMEs comprises of enhancing the competencies
which can include the process of job enrichment and job rotation which specifically tends to
create a sustainable competitive advantage (Chapman, et al., 2018). This internal networking
can later be helpful in earning of competitive advantage and will lead the organization to
success. The purpose of job enrichment is to add more responsibilities in which the
employees can feel engaged and motivated to perform better into the organization. Further,
SMEs make the process of job rotation through the assignment of different role and making
them accountable for new job roles which can certainly make the employees motivated and
also committed towards the work. Job rotation plays a positive role in the small
entrepreneurial development in which the employees get a holistic understanding of their
contributions within the organizations. More specifically, SMEs get the integrated knowledge

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through the seminars and the workshops through the actual job performance. This has
impacted the organization to get the sustainable competitive advantage over the competitors.
One of the basic functions of human resource development is succession planning which can
work well with SMEs. Succession planning is the process of identifying and developing the
new leaders or managers for the filling up of the critical business positions. It can be
observed that the succession planning as an important function has impact on the human
resource development of small organizations (Otoo & Mishra, 2018). SMEs are specifically
reliant on the individual staff who have technical knowledge rather than the people who are
hired from outside might leave the organization in the sticky situation. There are certain
reasons for the succession planning of through the replacement of the key employees. The
additional talent will continue to grow through the supporting growth. SMEs look into both
internal and external talent. Also, the process of succession planning works through the
identification of critical roles which are managerial, creative and technical. Further, SMEs
look for diversity in the succession planning which can breed innovation helping the business
to grow in a great pace. This plan can help small business to make the engagements with
women and youth entrepreneurs. Small businesses use the process in terms of choosing of
successor, formal training program and set up of the plan which is done by the management
of the organization.
Moreover, Otoo has stated that the objective of human resource development is to treat the
employees equal and ensure adaptability and employability which can make the employees
satisfied. Small businesses make sure that the employees are treated in an equal way without
the differences in caste, gender and religion. The organization attempt to create the culture
and provide equal opportunity to all the employees and maintain the work-life balance and
create the quality of life. Further, the objective also consists of the creation of employability
which can be through the development of skills and competencies. Basically, small
enterprises focus on the HRD through the improvement in the skills for the increasing
effectiveness and also making the employees motivated in order to perform better into the
organization. Further, the objective is also consisting of the training of the employees which
can develop the level of confidence and also develop the level of professional skills which
have a crucial role in the human resource development. This can certainly enable the
employees to adapt to the changes which take place on the continuous basis.

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It is important for SMEs to manage human resources through undertaking the functions of
human resource development. The suggestions that could be given to small organizations is
that the employees should be trained and developed in such a way that their skills lead to
their professional and personal development (Garavan & Nolan, 2015). SMEs should be
working upon the facilitation of the career planning and development which can lead to the
more efficient workforce who are satisfied and dedicated to the organization. With regard to
the human resource development, SMEs must focus upon the employee participation into the
management in which the organization account for the increasing employee engagement
(Otoo & Mishra, 2018). Besides, SMEs should use the performance appraisal methods which
can not only motivate them but also the organizations will get the insights of evaluation of
performance which certainly leads to the motivation of the employees and also leading to
more effective performance.
Conclusively, human resource development is the process of making the employees efficient
and making enhancement in the skills and competencies of the organization’s employees. The
role of HRD is crucial in SMEs as it facilitates the significant ways for which the
organization can make their workforce efficient and also can make the employees dedicated
to the completion of their respective role and responsibilities into the organization. Here, the
essay is based on the human resource development theme of the small organization. It has
highlighted the various ways by which the organization can undertake the several functions
of human resources wherein the organization can make their employees effective through the
development of skills and competencies making the employees engaged and more loyal
towards the organization.

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References
Chapman, E., Sisk, F., Schatten, J. & Miles, E., 2018. Human resource development and
human resource management levers for sustained competitive advantage: Combining
isomorphism and differentiation. Journal of Management & Organization, 24(4), pp. 533-
550.
Coetzer, A., Wallo, A. & Kock, H., 2019. The owner-manager’s role as a facilitator of
informal learning in small businesses. Human Resource Development International, 22(5),
pp. 420-452.
Garavan, T. & Nolan, C., 2015. Human Resource Development in SMEs: A Systematic
Review of the Literature. International Journal of Management Reviews, 18(1), p. 85–107.
Hubner, S. & Baum, M., 2018. Entrepreneurs' human resources development. Human
Resource Development Quarterly, 29(4), pp. 357-381.
Nolan, C. & Gravan, T., 2019. External and internal networks and access to HRD resources
in small professional service firms. Human Resource Development International, 22(5), pp.
477-503.
Otoo, F. & Mishra, M., 2018. Measuring the impact of human resource development (HRD)
practices on employee performance in small and medium scale enterprises. European
Journal of Training and Development, 42(7/8), pp. 517-534.