Page 180 - DMGT310_ENTREPRENEURSHIP_AND_SMALL_BUSINESS_MANAGEMENT

Unit 12: HRM in Small Business

feel useful, to create and achieve something. They want to gain recognition and achieve status or Notes
to test and stretch their capabilities. To meet these multifarious needs, people and organizations
join hands. Unfortunately, this union seldom approaches perfection. Organizations face several
problems in meeting their goals, and likewise, employees report some problems in their attempts
to be productive and efficient in their jobs and to feel satisfied in their work lives. The challenge
of human resource management is to minimise these obstacles and problems and improve the
contributions made by people to organizations.

12.1 Importance of HRM

People have always been central to organizations, but their strategic importance is growing in
today’s knowledge-based industries. An organization’s success increasingly depends on the
Knowledge, Skills and Abilities (KSAs) of employees, particularly as they help establish a set of
core competencies that distinguish an organization from its competitors. With appropriate HR
policies and practices an organization can hire, develop and utilize best brains in the marketplace,
realise its professed goals and deliver results better than others.

Human Resource Management helps an organization and its people to realize their respective
goals thus:

At the Enterprise Level

(a) Good human resource practices can help in attracting and retaining the best people in the
organization. Planning alerts the company to the types of people it will need in the short,
medium and long run.

(b) It helps in training people for challenging roles, developing right attitudes towards the
job and the company, promoting team spirit among employees and developing loyalty
and commitment through appropriate reward schemes.

At the Individual Level

Effective management of human resources help employees, thus:

(a) It promotes team work and team spirit among employees.
(b) It offers excellent growth opportunities to people who have the potential to rise.
(c) It allows people to work with diligence and commitment.

At the Society Level

Society, as a whole, is the major beneficiary of good human resource practices.

(a) Employment opportunities multiply.
(b) Scarce talents are put to best use. Companies that pay and treat people well always race
ahead of others and deliver excellent results.

At the National Level

Effective use of human resources helps in exploitation of natural, physical and financial resources
in a better way. People with right skills, proper attitudes and appropriate values help the nation
to get ahead and compete with the best in the world leading to better standard of living and
better employment.

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