Gender and Successful Human Resource Decisions in Small Businesses

Deborah Cain Good

• Publisher: Routledge
• Year: 2017
• eBook ISBN: 9781351853200
• Topic: Business
• Subtopic: Business General
• Index: Business

This book, first published in 1998, is an attempt to better understand the human resource programs utilized by small firms and the basis for their choice. Much of the study is designed to provide a working framework from which to begin to understand the myriad of human resource decisions made in these companies on a daily basis. In this way the research seeks to make some contribution to the development of a theoretical grounding for human resources in the small business area. This title will be of interest to students of business studies and human resource management.

CHAPTER 1

Introduction

Small businesses are a critical part of the U.S. economy. In 1993, they employed close to 60 percent of the work force, generated 54 percent of the sales and were responsible for over 40 percent of gross domestic product. From 1987 to 1992, small and midsize firms created all of the 5.8 million new jobs in the U.S. economy. Meanwhile, companies with 500 or more employees recorded a net loss of 2.3 million jobs for the same period. In addition, small firms produce twice as many innovations per employee as large firms. In short, small business is a major innovator, economic force and job creator in today’s marketplace.

THE RESEARCH PROBLEM

The continued vitality of this economic sector, however, requires a renewed focus on increasing productivity, and improving employee and managerial skills. Such prescriptions require an understanding of the types of human resource programming utilized by small business owners. Although those in the human resource management area have shown a great interest in developing human resource strategy to support the firm’s competitive business strategy as a means to accomplishing organizational objectives and gaining competitive advantage, surprisingly little is known about human resource practices in the small business sector.

This dearth of knowledge is especially surprising given the exponential growth of the service sector over the past few years, a sector characterized by small, labor intensive firms where, seemingly, human resource policies will have a short term, direct impact on the firms’ performance. On the other hand, simple observation suggests that even within the same industry (e.g. retailing) firms pursue a wide array of human resource programs, plans, policies and practices. Even though much attention has recently been paid to small business at various levels of government and in the popular press, few efforts have made to bring some sense of order to the diversity in human resource practices utilized in the sector. This study will begin to provide some insight on these issues so as to identify those human resource strategies which are the most successful in the small business area.

The logical starting points for such an endeavor are the existing management models which have been formulated in the corporate setting. One such model, from the strategic management field, examines the alignment or “fit” of internal and external variables in a firm. For example, a “fit” between competitive business strategy and the context of the firm should lead to positive performance for that firm.

This study will be the first to examine the same relationship in the small business setting in spite of arguments made by some scholars that small businesses do not have competitive business strategies or that their human resource practices are not sophisticated.¹ Yet, all businesses, even “Mom and Pop shops”, make some type of selection, compensation, training and development decisions. While the model developed from an examination of corporations may not be entirely appropriate for small businesses, until a new one is created, the former serves as an adequate baseline from which to begin to find out exactly what occurs in the small business with regard to human resources.

The alignment model calls for an assessment of the relationships between internal and external variables within a system. Even in the small business area, there are a maddening number of variables and relationships between them to investigate. Assessing which of those variables directly determines another and which simply influence others is a formidable task. However, once again, the corporate setting can offer some hints on where to begin to examine the determinants of human resource strategy in the small business setting. Research conducted in large corporations has suggested that competitive business strategy is the primary determinant of human resource strategy.² Thus, competitive business strategy will be the initial focus of this study.

Equally important and unique to this study, will be an assessment of the impact of the contextual factor of owner gender on the competitive business and human resource strategies of small businesses. In contrast to the corporate setting where upper level leadership and ownership are heavily male dominated, the small business arena boasts a decided female influence.

The investigation of the impact of business owner gender on the practices of the business is especially important in the small business setting given the contributions of women-owned firms to the sector. Small businesses as a whole are increasing in numbers, with women-owned enterprises responsible for a substantial portion of that overall increase. In fact, government statistics indicate that the annual growth rate of women-owned businesses more than doubled that of male-owned firms during the 1979–1989 period.³ Yet, the similarities and differences between the two are only now beginning to be investigated with little comprehensive data on women-owned businesses from which to start.⁴ Indeed, gender may influence aspects of human resource strategy ranging from the choice of business to the overall effectiveness of the firm.

RESEARCH QUESTIONS

This study will seek to provide preliminary answers to the questions:

1. What types of human resources strategies
are found in small businesses?

2. Does gender influence the type of human resource strategy chosen by a small business?

3. Is the choice of human resource strategy related to a small business’ performance?

PURPOSES OF THE BOOK

The goals of this research are:

1. To define and measure the concept of human resource strategy;

2. To examine the relationships between human resource strategy and its chief determinant, competitive business strategy;

3. To examine the relationship between a demographic characteristic, gender, and human resource strategy; and

4. To assess the relationship between human resource strategy and firm performance.

THE NATURE OF THE STUDY

This research project was conducted in four phases. Phase one was an in-depth interview with small business owners regarding their human resource practices.⁵ Phase two was the content analysis of company documents supplied by those business owners.⁶ The analysis was designed to assess the types of human resource practices formally recognized in the firm. The third phase of the study was the pre-test of a questionnaire developed from an extensive literature review of the area and the outcomes of phases one and two.⁷ The project’s final phase was a large scale questionnaire study of small business owners to ascertain their human resource strategies.⁸

A wide variety of small business support groups⁹ readily offered their advice and resources to facilitate the completion of this study. The directors’ help was solicited in securing membership listings as well as in identification of small businesses which might participate in either phase one or three of the project. Given the nature of such sampling, this project is cross-industry in character.

Firms are identified as “small businesses”¹⁰ for the purposes of this study if they meet the following criteria:

1. Management by individual managers where managers are also the owners.

2. Capital supplied and ownership held by an individual or small group.

3. Area of operations mainly local with workers and owners being from the home community. However, markets for the products need not be local.

4. The size in the industry is small relative to the largest unit in that field.

ORGANIZATION OF THE BOOK

This book is the culmination of two years of case study and survey research in the small business area. The research project it describes was originally designed to be a detailed examination of human resource strategy whose chief contribution was as an academic definition in the human resource area only. However, a serendipitous research project introduced the author to the small business area. And, as they say, “the rest is history”. A few minor adjustments of the originally conceived research design and the study has become one of potential to small business owners and those interested in gender-based issues in the area.

Chapter 1, the Introduction, describes, in general fashion, the background, research problem and research questions that are the basis of this study.

A review of relevant literature is presented in Chapter 2. This chapter combines information from the strategic management, human resource, small business and gender studies areas to create the background for this project. In addition, the development of the study’s model, and the definition and manner of measurement of relevant terms is also presented.

Chapter 3 details the assessment of human resource priorities within the small business. The nature of such priorities and their relationship to competitive business strategy, gender and financial performance is highlighted.

Human resource decisions related to programs and practices is presented in Chapter 4. Again, patterns in human resource programming in relation to competitive business strategy, gender and financial performance are examined as they appear in the sample of small businesses participating in the study.

The final chapter of this dissertation, Chapter 5, discusses the implications of the study’s findings. Study findings are interpreted as to their impact on public policy makers and academics. The significance of the research findings and the limitations of this study are also discussed.

NOTES

1. Miller and Toulouse (1986) argue that small businesses do not have competitive business strategies. Huselid (1993b) used an index created by the Department of Labor to measure the sophistication of human resource practices. He determined that, in general, human resource practices are not highly sophisticated in most small businesses.

2. Researchers reaching this conclusion include Wils and Dyer (1984), Dyer (1984), DeBejar and Milkovich (1986b) and Buller, Beck-Dudley and McEvoy (1990).

3. Refer to The State of Small Business, 1992, for a full discussion of statistics on the growth of women-owned businesses in the United States during this time period.

4. From the annual report to the President, The State of Small Business, 1992, p.50.

5. Fifteen small business owners participated in the initial case study phase of this project. The businesses were located in the southwestern Pennsylvania region. The industries represented by the 15 firms interviewed include: electrical products, high technology, manufacturing, health care, and food service. The number of individuals employed by the firms ranges from 23 up to 201 with a median of 76 employees and a mean of 107 employees per firm. Mean sales (billings) of the firms is $1.7 million per year with the range of sales extending from $450,000 to $100 million annually and a median sales level of $1,940,000. The oldest firm studied in this phase was established in 1954, the most recent was created in 1989. The mean age of the firms interviewed was 14 years, the median 9 years. Accordingly, the firms are small businesses but generally not in their introductory stages. In all cases the firms are owner-managed establishments.

6. Interviews averaged one and one-half hours in length although three of the fifteen were two hour interviews and one stretched to three hours. The structured questionnaire used in the interviews appears in Appendix 1. Appendix 2 contains the format for analysis of those interviews. All fifteen participants requested complete anonymity in the publication of this document. Accordingly interview quotations are presented throughout the text of this document with only a general identification of the individual making the statement.

In an attempt to secure a more national sampling for the project a heavy focus was placed on gaining the assistance of Small Business Development Centers (SBDCs). Under the direction of the Pennsylvania SBDC director, the other state SBDC directors were contacted by phone to describe the project and request their assistance in the survey. Thirty three directors expressed an interest in the project, and a follow-up letter detailing our phone conversation was sent to their attention. Ultimately, twenty-two SBDCs throughout the country participated in the project. Each SBDC was requested to secure five respondents for the study, alth...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• List of Tables
• List of Figures
• Preface
• Acknowledgments
• Chapter 1: Introduction
• Chapter 2: Building the Human Resource Strategy Model
• Chapter 3: Human Resource Decisions: Orientation
• Chapter 4: Human Resource Decisions: Practices
• Chapter 5: Toward a New Model of Human Resource Strategy
• Figures
• Appendices
• Bibliography
• Index