Relations in Small and Medium Enterprises

Relations in Sm totally and medium EnterprisesEmployee Relations in elegant and Medium EnterprisesA no.- gist ApproachIntroductionThe term SME or small and medium backing try is often used to describe a business enterprise that has anywhere amidst 10 to 15 employees for a small business whereas anything under 250 would be a medium enterprise. However, the number of employees is non the only classification that is used, and can be as diverse as turnover, industry, or business structure. According to a survey carried proscribed by the Department for Business, Innovation Skills (BIS) in 2004, the UK had 1.16 million private sector business firms with fewer than 250 employees, representing 94 per cent of all employers in the UK economy.1 These SMEs employed a total of 8.66 million employees (36 per cent of all employees in the UK) and they accounted for 47 per cent of private sector employers turnover. This suggests the app arent importance of these enterprises.The other impor tant aspect of SMEs is their ability to be innovative, and adaptive to the constantly changing mart environment, creating trading opportunities in the economy, and contri exclusivelying to the Gross Domestic Product (GDP). SMEs diverge in surface depending on the industry, and skills. A biotechnology firm is kindredly to pack fewer highly skilled employees where as a cleaning services firm will consider more unskilled workers. Nonetheless(prenominal), the fact that a evidential fraction of the working population is employed by an SME, it is necessary to understand how these enterprises are managed, and how human resources policies regarding recruitment, training, performance evaluation, and day to day employee relations are find out and practiced.Management and employment relations in an SMEA typical structure of an SME is outsizely business, product or process orientated, with little specialist pertainment in areas outside the remit of the business, human resources for instance. Managers have little expertise or qualifications to conduct personnel wariness task, most managers feed to rely on their olden experience in managing relationships. This is interesting because it provides a unique opportunity to study heed issues and strategies that can be anywhere from non-existent in a small firm to in titular and semi-formal in a medium firm. Tradition management styles that have been identified in Fox (1974) and Purcell and Sisson (1983), relate to management perspectives with regards to employee relations in an industrial setup. The classifications were based on the type of views held by both management and employees, where both could be either unitary or pluralist. Marchington and Parker (1990) evince out that these differences were in relation to how management viewed unions and their involvement on issues like employee participation and conflict resolution. These assertions are applicable in a large complex organisation save may not necessa rily be true in a small setup where human resources and employee relations may be absent altogether.Goss (1991) make up that management styles at small firms were likely to be characterised by how the owner-manager experience relative dis line of power, and identified four types of management control Fraternalism, Paternalism, Benevolent Autocracy, and perspiration.The distinction was based on how much independence employees enjoyed for every degree of dependence the employer possessed. A host of studies conducted in the UK (WERS, 2004), Europe (EIRO, 2006), and Canada (CFIB, 2004) give an idea of what management practices are adopted in the SME sector generally and how working hours, training, remuneration, and employee representation are handled. A key observation found synonymous in all the studies was that employee representation, although significant, was conducted in informal settings through individual contracts and concepts of collective bargaining and unionisation were la rgely absent in smaller firms besides rose with firm size. And where a non-union employee structure is prevalent, it is difficult to compare or comment on the effectiveness of such a structure, as all previous studies go only as far as determining the type of employee participation practiced but do not assess their quality of violation.Non-union employee participationAccording to Guest (2001), a non-union workplace needinesss formal human resources or industrial relations departments which interface between management and employees. Dundon et al., (2005) describe a non-union workplace where the importance of union is not recognised in determining employee issues such as pay and work conditions, as impertinent to whether or not employees are members of any union. They also point out the reasons, incentives, and motivation for managers for choosing a non-unionised interaction with the workforce. Guest and Hoque (1994) went on to classify the various non-union employer types, differ entiating them on the basis of a range of human resources attributes. They banded employers as either good, bad, or ugly depending on these attributes. Although some counter arguments to this classification were on the grounds of methodology selected and if it collected information on employee views on their employers, and the lack of motivation and incentive, if any, from the employees in preferring to be non-union (Dundon, et al., 2005).Although type of employee participation and representation is seen as an important part of the relationship between management and employees, it is interesting to understand how these suffer part of the culture. Freeman and Medoff (1984) describe employee representation, or employee voice, as having both consensual and conflictual connotation, and showed how participation could impact quality and productivity, whilst on the other it could help resolve disputes. Managers in a relatively small workplace are likely to view non-union participation mor e favourably because they may not have experience of transaction with unions and may feel more comfortable dealing with issues locally and informally. As the workforce becomes bigger and larger, the advantages of a non-union representation diminish and firms tend to seek a formal approach to interaction as seen in larger firms.Ackers et al., (2004) suggest that direct communication with the employees is also one of the most significant concept of a non-union employee representation, adding that managers would be more willing to share information relating to the business, work arrangements, staffing and job prospects directly with employees.Collective bargaining, remuneration, and workplace relationsThe concept of collective bargaining is more or less relevant to a union based employee representation, where the propositions are deemed to be in the best interest of the entire workforce as opposed to a single employee or groups. Since the relationships between management (owners, manag ers) and employees are less formal, such discussions can take place individually and would reflect the firms position vis--vis a particular employee. On the other hand, managers responsible for personnel matters may be involved in other tasks and is likely to spend more clock time on such tasks than those in similar positions in larger firms. Wage determinations and remuneration discussions are similarly done, and could be either set unilaterally by the management or negotiated on an individual basis. Therefore it would be common to assume a variable pay structure either by merit or performance, and the likelihood to profit-sharing. Pay reviews could be less regular in such a setup and may often require to be initiated by employees. recruitment, training, and personalised developmentThe recruitment process at small firm may be less formal or rigorous compared to large organisations because of the level of expertise and sophistication available within the firm. A lengthy recruitmen t process can be costly, and can be counter productive to the immediate requirements of the business hence employers may be willing to make quick decisions on the basis of the incumbents skills alone. WERS (2004) suggest that training and development opportunities were dependant on firm size, the larger the firm the more likely they were to offer on or off-the-job training. This can be true for two reasons, firstly cost implications, and second, the option to hire an already trained worker. In a non-union workplace this can be both beneficial and disadvantageous at the same time, since over-simplification could get the job done but may not necessarily represent the best interests of employees.Conflict resolutionIrrespective of the size of the firm, grievances can arise and depending on the relationship an employee involved has with their manager, it could be dealt with informally in the first instance, and small and medium firms would adopt such a process not because they may not ha ve a formal grievances and conflict resolution procedures as seen in large firms. Majority of employers have such procedures for regulatory purposes, but how effectively these are used varies from firm to firm. Since SMEs are not labour intensive collective disputes are unlikely to emerge requiring collective resolution through means of a union representation. This can be viewed as an incentive for managers to have a non-unionised employee representation to avoid the hassles of dealing with the union when a dispute arises (Dundon, et al., 2005).Employee attitudesThe WERS (2004) survey reveals that managers in SMEs were more likely to involve employees in workplace related decision making processes and employee influence was greater in small firms than larger ones. Guest and Hoque (1994) suggest that employees that feel better appreciated were more likely so see their employer as good non-union employers and may be even motivated to discourage a unionised workforce which would tend t o reduce their influence on management decisions. The employees perception of workplace and management being the same, changes as firm size increases. This is significant enough incentive for managers to shape a non-unionised workplace. To this extent there is a big difference between employees expectations for collective representation and employers willingness to subscribe to one. On the whole, the management is in a position to decide what type of representation they would like, and what mechanisms to utilize.ConclusionSmall and medium-size firms are vital for the growth of the economy, and play a significant role in providing employment to the population. The size and nature of products and services offered by these firms varies distinctly, and so does their management and employment practices. Size of the workforce does influence the type of management style that will be adopted, but it also depends on managers (owners) past experience and their perception of how work should b e managed based on a set of beliefs. Small businesses have been seen to be less formal and tend to follow a close contact with their employees, and do not conform to hierarchal structures of management that are predominant in large organizations. These structures of relationships tend to get more formal as the firm size increases. Employees, on the other hand, find little or no difference between their workplace and management, an important distinction observed in larger firms which clearly distinguish between the firm and the management. Although employee relations in small and medium sized firms tend to be more informal they can be inflexible to changes in the workplace. Managers may lack the necessary experience and expertise in issues like performance appraisals and dispute resolution they tend to rely on their experience and prefer to engage the employees directly. Issues of pay determinations and other forms of compensation are set out by managers but it allows employees to en gage with management over discussions, without the necessary involvement of collective employee representations like unions. The dialogue is less formal and gives the management opportunity to rate personal circumstances of employees. Similarly conflict resolution and grievances are accorded an informal process, whereas any disciplinary action resulting from such discussions may be formal and follow a traditional approach. And because managers prefer to have a less formal involvement of employees the concept of non- enrold representation is favoured as management sees more flexibility in running the business and find to have less control when a collective representation is sought. Formality in relationships increases with firm size when management wants to have more distance between owners and employees in order to maintain a consistent level of control through decentralization. The degree of formality exercised may vary within the firm itself, for instance management may adopt a m ore formal approach to employee training and development, but at the same time conduct performance appraisals informally.In regards to SMEs the nature of employment relations is not always straightforward and management practices, which may appear simple and unsophisticated, are influenced by a variety of factors and have evolved as a response to a particular need as the industry and business requirements, or regulations, evolved over time.ReferencesAckers, P., Marchington, M., Wilkinson, A. and Dundon, T. (2004), The management of voice in non-union organisations managers perspectives, Employee Relations Vol. 27 No. 3, 2005 pp. 307-319Atkinson, J. and Meager, N. (1994) Running to stand still the small firm in the labour market, in J. Atkinson and D. Storey (eds.) Employment, the Small Firm and the Labour Market, London Routledge.Bacon, N. and Hoque, K. (2005) HRM in the SME sector valuable employees and coercive networks, International Journal of man Resource Management, 16, 11 16 79-99.Benson, J. (2000), Employee voice in union and non-union Australian workplaces, British Journal of Industrial Relations, Vol. 38 No. 3, pp. 453-9.Beresford, R. (2003) Trade unions and small firms, Federation News, 53, 2.Blackburn, R. (2005) Researching the employment relationship in small firms what are the contributions from the employment relations and small business literatures?, in S.Blyton, P. and Turnbull, P. (2004), The Dynamics of Employee Relations, 3rd ed., Macmillan, London.Bolton Report (1971) Report of the Committee of Inquiry on Small Firms, Chaired by J. E. Bolton, Cmnd. 4811, London HMSO.Bryson, A. (1999) The impact of employee involvement on small firms financial performance, National Institute Economic Review, 169 78-95.Bryson, A. and Millward, N. (1997) Employee Involvement in Small Firms A Review of the Literature, London Policy Studies Institute.Carroll, M., Marchington, M., and Earnshaw, J. (1999) Recruitment in small firms Processes, methods and problems , Employee Relations, 21, 3 236-50.Chaplin, J., Mangla, J., Purdon, S., and Airey, C. (2005) The Workplace Employment Relations Survey 2004 (WERS 2004) Technical Report (Cross-Section and Panel Surveys), London National Centre for Social Research.Charlwood, A. (2003), Willingness to unionize amongst non-union workers, in Gospel, H. and Wood, S. (Eds), Representing Workers, Trade Union Recognition and Membership in Britain, Routledge, London.Cosh, A. and Hughes, A. (2003a) The British SME sector 1991-2002, in A. Cosh and A. Hughes (eds.) Enterprise Challenged Policy and Performance in the British SME Sector 1999- 2002, Cambridge Cambridge University Centre for Business ResearchCox, A. (2005) Managing variable pay systems in smaller workplaces, in S. Marlow, D. Patton and M. Ram (eds.) Managing Labour in Small Firms, London Routledge.Cully, M., Woodland, S., OReilly, A. and Dix, G. (1999) Britain at Work As Depicted by the 1998 Workplace Employee Relations Survey, London Routledge.Dun don, T. (2002), Employer opposition and union avoidance in the UK, Industrial Relations Journal, Vol. 33 No. 3, pp. 234-45.Dundon, T. and Rollinson, D. (2004), Employment Relations in Non-union Firms, Routledge, London.Dundon, T., Grugulis, I. and Wilkinson, A. (1999) Looking out of the black hole nonunion relations in an SME, Employee Relations, 21, 3 251-66.Dundon, T., Wilkinson, A., Marchington, M. and Ackers, P. (2004), The meanings and purpose of employee voice, International Journal of Human Resource Management, Vol. 15 No. 6, pp. 1150-71.Forth, J., Bewley, H., Bryson, A. (2004), Small and Medium-sized Enterprises Findings from the 2004 Workplace Employment Relations Survey, Routledge, LondonFreeman, R. and Medoff, J. (1984), What Do Unions Do?, Basic Books, New York, NY. Gall, G. (2004), British employer resistance to great deal union recognition, Human Resource Management Journal, Vol. 14 No. 2, pp. 36-53.Goss, D. (1991), Small Business and Society, Routledge, UKGuest, D. (2001), Industrial relations and human resource management, in Storey, J. (Ed.), HRM A little Text, Thompson Learning, London.Guest, D. and Hoque, K. (1994), The good, the bad and the ugly employment relations in new non-union workplaces, Human Resource Management Journal, Vol. 5 No. 1, pp. 1-14.Lavoie, A. (2004) Work-life balance and SMEs Avoiding the one-size-fits-all trap, CFIB Research 10-12Lewin, D. and Mitchell, D. (1992), Systems of employee voice notional and empirical perspectives, California Management Review, Vol. 34 No. 3, pp. 95-111.Marchington, M. (2005), Employee involvement patterns and explanations, in Harley, B., Hyman, J. and Thompson, P. (Eds), Participation and Democracy at Work Essays in Honour of Harvie Ramsay, Palgrave, London.Marchington, M., Goodman, J., Wilkinson, A. and Ackers, P. (1992), New Developments in Employee Involvement, Employment Department Research Series, Paper No. 2, HMSO, London.Marchington, M., Wilkinson, A., Ackers, P. and Dundon, T. (2 001), Management Choice and Employee Voice, CIPD Publishing, London.Pfeffer, J. (1998), The Human Equation, Harvard Business School Press, Boston, MA. Ramsay, H. (1977), Cycles of control workers participation in sociological and historic perspective, Sociology, Vol. 11 No. 3, pp. 481-506.Rose, E. (2008) Employment Relations, 3rd ed., Pearson Education Limited, UK 58-95, 273-331, 334-420.