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Edited by Rowena Barrett and Susan Mayson
Chapter 6: The Formality and Informality of HRM Practices in Small Firms
6 The formality and informality of HRM practices in small ﬁrms Rowena Barrett and Susan Mayson Introduction The nature of human resource management in small ﬁrms is understood to be characterized by ad hoc and idiosyncratic practices. The liability of smallness (Heneman and Berkley, 1999) and resource poverty (Welsh and White, 1981) presents unique challenges to managing human resources in small ﬁrms. The inability to achieve economies of scale can mean that implementing formalized HRM practices is costly in terms of time and money for small ﬁrms (Sels et al., 2006a; 2006b). These, combined with small ﬁrm owner–managers’ lack of strategic capabilities and awareness (Hannon and Atherton, 1998) and a lack of managerial resources and expertise in HRM (Cardon and Stevens, 2004) can lead to informal and ad hoc HRM practices. For some this state of aﬀairs is interpreted as problematic as the normative and formalized HRM practices in the areas of recruitment, selection, appraisal, training and rewards are not present (see Marlow, 2006 and Taylor, 2006 for a critique). However, a more nuanced analysis of the small ﬁrm and its practices in their context can tell a diﬀerent story (Barrett and Rainnie, 2002; Harney and Dundon, 2006). In this chapter we contribute to our understanding of small ﬁrm management practices by investigating a series of questions in relation to HRM in small ﬁrms. The purpose is to understand what HRM practices are used in small ﬁrms and how they are applied. In light of the debates...
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