Perceived organizational justice in family SMEs: The challenge of HRM consistency

Abstract

AbstractLiabilities of smallness, family relations, leadership style, and preferences are all reasons why owners of small and medium‐sized family enterprises (family SMEs) apply procedures to manage employees inconsistently. For family and non‐family employees of family SMEs, inconsistencies in human resource management (HRM) may be a source of frustration that hampers their performance and wellbeing. Using a sample of 713 respondents in 116 family SMEs, we examined how HRM consistency as a whole, and as three HRM bundles (ability, motivation, and opportunity) could enhance the perceived organizational justice of employees in family SMEs, and whether this differs for family and non‐family employees. We indeed found that HRM consistency is a condition for perceived organizational justice of employees and that this effect was more pronounced for non‐family employees than for family employees. We explain this difference by the distinct environment where the fairness heuristics of employees developed. Where non‐family employees develop their fairness heuristics only in the business sphere, family employees start to develop their fairness heuristics earlier on in the family sphere. We also found evidence that inconsistencies in the motivation‐enhancing HRM bundle were most susceptible to negative perceptions of organizational justice.