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Chapter 10: Formalizing Relationships? Time, Change and the Psychological Contract in Team Entrepreneurial Companies
Lynn M. Martin, Shaheena Janjuha-Jivraj, Charlotte Carey and Srikanth Sursani Reddy Introduction In this chapter the main focus is the ‘formalization’ of human resource management (HRM) practices and processes in the growing small ﬁrm. More formal HRM practices, such as regular performance appraisal and employer-based training programmes, are usually associated with larger organizations (De Kok and Uhlaner, 2001). Larger ﬁrms are generally more formal and bureaucratic in their practices than smaller ﬁrms, and this can be seen in their approaches to recruitment (Barber et al., 1999) and training (Storey, 2004). Smaller ﬁrms, on the other hand, are characterized as operating in informal ways and adopting more formal modes only when forced to do so by breakdowns in communication and other pressures (Vinten, 1999). Despite the growing importance of strategic HRM, the available knowledge about HRM in small ﬁrms is highly descriptive and fragmented (Brand and Bax, 2002). Nankervis et al. (1996) found little empirical evidence on HRM strategies and practices in small and medium enterprises (SME) while Marlow (2000) suggests that there is little information on how or if SME owners make strategic use not only of their own skills but also of their management team to achieve business aims and growth. There are, however, studies showing that more formalized HRM may be connected to improved performance in small ﬁrms. Carlson et al. (2006) show HRM practices such as training and development, recruitment packages, use of performance appraisals, and competitive compensation are important for high sales growth ﬁrms. Beaver and...
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