The International Scientific Conference INPROFORUM 2015, November 5 - 6, 2015, esk Budjovice, 110-114, ISBN 978-80-7394-536-7.

________________________________________________________________________________________________________________________________________________________________________________________________

Strengths and Weaknesses of Human Resources Management

in SMEs
Petr eho25

Abstract: The SWOT analysis is a core of strategic management. A part of this analysis is analysed in this paper.
It comprehensively analyzes the external and internal environment of human resource management in small and
medium-sized enterprises (SMEs) in South Bohemia and support them in choosing a suitable personnel strategy. This
analysis should not analyze past development only as the ability of managers to predict future developments and adapt
to changes has been more and more important for strategic management. Communication processes and employee
training has been considered by managers the greatest weaknesses and strengths.

Key words: Human resource Management SWOT analysis Communication SMEs

JEL Classification: L10 M10

1 Introduction
The quality of functioning of the human factor is one of the most important factors influencing the success or failure
of enterprises in a competitive environment (Armstrong, 2002). Akhtar, Ding and Ge (2008) surveyed general managers
and HRM directors in 456 Chinese companies on product/service performance and financial performance of their
companies and a range of SHRM practices. They found that a set of HR practices (training, participation, reoriented
appraisals, and internal career opportunities) affected both product/service performance and financial performance.
HR practices influence an organization's social climate, which in turn, shapes knowledge exchange and combination
and leads to better organization performance (Collins & Smith, 2006). Richard and Johnson (2001) found that HRM
effectiveness significantly reduces turnover, which in turn increases overall market performance assessment.
Nikandrou and Papalexandris (2007) examined HRM practices that distinguish top-performing firms from others
regarding management of people in mergers. They noted that for economic synergies to be realized, human synergies
must be achieved first and HRM has a vital role to play in the process. The researchers found that successful companies
had increased HR involvement in strategic decisions, formalized HR practices, built organizational capability through
training and development activities, devolved HR activities to line managers, and emphasized internal labor market
opportunities. Macky and Boxall (2008) found that HR practices have an additive, positive relationship with the
employee work attitudes of job satisfaction, trust in management, psychological identification with their organizations,
and intention to remain employed with their organizations.
Management approaches and the status and nature of human resources work in the organization has been changing
with increasing demands on human resources (Bohlander, 2004). Many researchers agree that the human resource
function is one of the most crucial elements in an organisation's success (Dolan & Jackson, 2002). Armstrong (2002)
defines Human Resources Management as a strategic and coherent approach to the management of an organizations
most valued assets the people working there who individually and collectively contribute to the achievement of its
objectives (Armstrong, 2002). Kleibl et al. (2001) define the goal of human resources management, more specifically,
as securing the quantitative aspects of human resources (number, age and occupational structure and formal
qualifications) and also qualitative aspects (performance, creativity, motivation and identification with the goals
of an enterprise).
The concept of human resources as the key factors of strategic importance for the success of an organization
contributes to emphasize the strategic approach and long-term aspect of Human Resource Management (Koubek, 2002).
HRM is clearly being renewed in organisations and gradually affirming its strategic role (Pinto & Prescott, 1988).
De Pablos (2005) argued that to create a sustainable competitive advantage, organizational flexibility (both resource
and coordination) and fit (both internal and external) must be achieved simultaneously to create a firm that renews itself
and can respond quickly to environmental demands. Recent studies have continued to examine the relationship between
HRM and competitive performance. Foot and Hook (2002) recommend a strategic approach to human resources

25
doc. Ing. Petr eho, Ph.D., University of South Bohemia, Faculty of Economics, Department of Management, Studentsk 15, 370 05 esk
Budjovice, e-mail: rehor@ef.jcu.cz
Strengths and Weaknesses of Human Resources Management in SMEs 111
________________________________________________________________________________________________________________________________________________________________________________________________

management. The employee development should be a part of the strategic plan of an organization and clearly relates
to corporate objectives. Strategic human resources development should contribute to the implementation of corporate
strategies through policy and practice of human resource development (Hronk, 2007). As Trainer (2004) reports,
the organization analysis through the SWOT analysis gives a systematic way of evaluating internal and external forces
of the environment and thus is a part of strategic planning.
The SWOT analysis is a classification method that enables a summary evaluation of social and economic analysis
(eho, 2007). It is suitable for the formation of a future strategy (Johnson, Scholes & Whittington, 2012). Its task is
to detect information (strengths and weaknesses) and to enable the designated authorities identify on the one hand, the
possibilities for development of a municipality, on the other hand to point out potential problems (risks) and specify the
necessary steps for their removal - to formulate a strategy (Janekov & Vatkov 1999). Its outcome is defining
a strategy that seeks to use the strengths and opportunities and to eliminate weaknesses and threats (Tyll, 2014).

2 Methods
The aim of the paper is to assess the human resources management in small and medium-sized enterprises and to define
the strengths and weaknesses of this important management function.
Primary data was obtained using quantitative methods questionnaire. The research sample was selected using non-
probabilistic method of random selection, because of the difficult conditions of data collection. Research sample
therefore contains 300 small and medium sized enterprises from the South Bohemia region. The questionnaire survey
had the character of the scale (within the evaluation questionnaire were determined intervals from 0 to 20% poor,
21 to 40% below average, 41-60% average, 61-80% satisfactory, 81 - 100% perfect). These intervals are applied
in the evaluation of the operation of individual processes. Within the SWOT analysis, first of all, the managers
of SMBs were supposed to specify what their strengths and weaknesses in human resources management were.

3 Research results
3.1 Rating a process of internal communication by their importance for an enterprise
This question was dealing with rating nine important processes in an enterprise. The managers of SMEs were
supposed to rate the processes by their importance for the organization. The average rating is reported in figure 1.
The production process was reported as the most important (average rating of 2.6) followed by trade, finance and
quality control. The process of internal communication was reported at the seventh position (rating of 6.5); preceded
by the process of human resources management (rating of 5.5). The managers did not see the area of communication
(both internal and external which was rated as the least important) so vitally important for the management of an
organization.

Figure 1 Rating a process of internal communication in SMEs by their importance

9
7.76
8 7.16
7 6.51
6 5.52 5.53
5 4.01 4.02
4 3.01
3 2.55
2
1
0

Source: Own processing

Petr eho 112

________________________________________________________________________________________________________________________________________________________________________________________________

3.2 Rating a process of internal communication by its functioning

The SMEs managers in South Bohemia also rated functions of the processes. The rating was performed in % (0% -
does not work 100% - maximum satisfaction with the functioning). As reported in figure 2, the best results were
reported for the production process (88%). The Quality management and trade were rated by more than 80%. Internal
communication was reported at the 6th place (65%). External communication was seen as the worst process of this
rating (52%). Again, this result clearly indicates that the area of communications is not fully implemented and that there
are a number of ways to make this process more efficient as the managers would appreciate.

Figure 2 Rating a process of internal communication by its functioning in %

100 88.0
90 80.6 79.1 81.4
80 69.1
70 61.3 65.3 61.8
60 52.2
50
40
30
20
10
0

Source: Own processing

3.3 SWOT analysis

Strengths
Through the SWOT analysis, the managers of SMEs should determine their strengths in the field of human
resources management at first. Most of them (nearly 9%) considers the development and training of employees a very
strong area. This is further followed by the following aspects (see Table 1): communication (8%) and remuneration;
attitude and behaviour of employees and their stability in the organization (all around 6%).
Table 1 Strengths of SMEs in HRM

n %
Development and Education 19 8.72
Communication 17 7.80
Remuneration 13 5.96
Attitude and behaviour 13 5.96
Stability of employees 13 5.96
Team work 11 5.05
Market position 9 4.13
Working environment 9 4.13
Qualification 8 3.67
Expertise 8 3.67
Source: Own processing

The following were also reported as strengths: flexibility, motivation, corporate culture, hiring and recruitment,
work organization, experience, tradition and reputation, evaluation and satisfaction.
Strengths and Weaknesses of Human Resources Management in SMEs 113
________________________________________________________________________________________________________________________________________________________________________________________________

Weaknesses
The area of communication with employees was reported as the most important weakness by more than 11%
of SMEs followed by development and training of employees (nearly 11%) and remuneration (approximately 9%) see
Table 2.
Table 2 Weaknesses of SMEs in HRM

n %
Communication 21 11.23
Development and Education 20 10.70
Remuneration 16 8.56
Remuneration 11 5.88
HRM 11 5.88
Recruitment 10 5.35
Evaluation 8 4.28
Fluctuation 8 4.28
Organization of work 7 3.74
Behaviour of employees 6 3.21
Source: Own processing
The following were also reported as weaknesses: employee motivation, time, finance, experience, management
skills, overloading of employees, social policy and seasonality.

4 Conclusions
SMEs in the market environment of the 21st century are exposed to conditions that are changing literally overnight due
to rapid globalization and highly turbulent environment. Competition gains a whole new dimension forcing enterprises
to rapid responses to emerging threats. Activities of enterprises have been expanding. Thanks to innovations,
discoveries and progress of modern science new products are created and together with opportunities as other products
become obsolete and decline. Product life cycles is shortening and forcing enterprises to be more flexible. Methods and
procedures in the management of organizations and human resources have been changing too. More than ever before,
it is difficult to attract and retain quality employees in particular.
SMEs may enjoy greater flexibility because of the simplicity of their internal organization, being faster at adapting
and responding to changes. This new situation reveals the need to suggest or find more efficient management processes
so that SMEs can apply strategies that allow them to achieve a better performance. The most important process for
SMBs in South Bohemian Region is the realm of manufacturing production (2,6), which is followed by trade, finance
and quality management. Process of internal communication ranks behind human resources management (5,5) and
it occupies the seventh place (6,5). Managers should pay more attention to these processes. The role and importance
of human resources in the company is constantly growing and people have become one of the most important resources
of enterprise in recent years
The area of communication and human resource development and education are mostly reported by the SMEs
as their biggest strengths or weaknesses. SMEs must eliminate weaknesses and improve communication with
employees and enable them to develop their skills. Development and training of human resources should provide
opportunities for learning, development and training to improve the performance of individuals, teams and
organizations. Investment in the training and education of employees manifestly would enhance organizationally
specific knowledge, particularly where this has a broad perspective that includes helping employees to learn a wide
range of skills, rather than equipping them simply to complete a restricted job.

Acknowledgement
This article has been presented with the financial support of the project: GAJU 039/2013/S.

Petr eho 114

________________________________________________________________________________________________________________________________________________________________________________________________

References
Akhtar, S., Ding, D. Z., & Ge, G. L. (2008). Strategic HRM practices and their impact on company performance in Chinese
enterprises. Human Resource Management, 47(1), 1562.
Armstrong, M. (2002). zen lidskch zdroj. Praha: Grada. ISBN 8024704692.
Bohlander, G. W., & Snell, S. (2004). Managing human resources. 13th ed. Mason, OH: Thomson/South-Western. ISBN 0-324-
28286-9.
Collins, C. J., & Smith, K. G. (2006). Knowledge exchange and combination: The role of human resource practices
in the performance of high-technology firms. Academy of Management Journal, 49(3), 544560.
De Pablos, P. O. (2005). Strategic human resource management and organizational competitiveness: The importance of fit
and flexibility. International Journal of Human Resource Development and Management, 5 (1), 115.
Foot, M., & Hook, C. (2002). Personalistika. 1. vyd. Praha: Computer Press. ISBN 8072265156.
Hronk, F. (2007). Rozvoj a vzdlvn pracovnk. 1. vyd. Praha: Grada. ISBN 9788024714578.
Janekov, L., & Vatkov, M. (1999). Marketing mst a obc. Praha: Grada Publishing. ISBN 80-7169-750-8.
Johnson, G., Whittington, R., & Scholes, K. (2012). Fundamentals of strategy. Harlow, England: Pearson. ISBN 9780273757252.
Kleibl, J., Dvokov, Z., & ubrt, B. (2001). zen lidskch zdroj. 1. vyd. Praha: C.H. Beck. ISBN 8071793892.
Koubek, J. (2002). zen lidskch zdroj: zklady modern personalistiky. 3. vyd. Praha: Management Press. ISBN 8072610333.
Macky, K., & Boxall, P. (2008). High-involvement work processes, work intensification and employee well-being: A study of New
Zealand worker experiences. Asia Pacific Journal of Human Resources, 46(1), 3855.
Nikandrou I., & Papalexandris, N. (2007). The impact of M&A experience on strategic HRM practices and organisational
effectiveness: Evidence from Greek firms. Human Resource Management Journal, 17(2), 155177.
Pinto, J. K., & Prescott, J. E. (1988). Variations in critical success factors over the stages in the project life cycle. Journal
of Management, 14(1), 518.
eho, P. (2007). SWOT analza trhu prce Jihoeskho kraje. Auspicia, 4(1), 77-80.
Saba, D., & Schuler, J. (2002). La gestion des ressources humaines. Montral: ERPI.
Trainer, J. F. (2004). Models and tools for strategic planning, New Directions for Institutional Research, 123, 129-138.
Tyll, L. (2014). Podnikov strategie. Praha: C.H. Beck. ISBN 9788074005077.