Abstract:
The increasing interest in human resource practices is driven by the hypothesis that
employees and their management are critical to the success of an organization. Small
and medium enterprises (SMEs) contribute significantly to several countries’ economies
in terms of gross domestic product, employment fraction and exports. Human resource
management (HRM) on the other hand plays a pivotal role in the growth and survival
of SMEs if systematically understood and implemented in these businesses. As such, this
paper aims to analyze factors that affect successful HRM and implementation in small and
medium enterprises. Our findings demonstrate that SMEs need to make an effort to close
the gap between demand and supply of labor for them to be able to compete with larger
firms in the market. We conclude that the factors that affect human resource management
are mainly due to the internal organization of these businesses and if HRM is properly
implemented, it almost guarantees sustainability and competitive advantage of small firms.
An “employee retention model” was formulated which can be used by SMEs to guide the
retention of employees hence reducing staff turnover.
Keywords: human resource management, small and medium enterprises, employee
retention, internal organization
