A review of the human resource management dilemma for SMEs: case of central Uganda

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.