The level of formalization on HRM practices in SME Family Firms

Abstract

Given that the present research is conducted in Cyprus and concentrated on Cypriot family Small and Medium – Enterprises (SMEs), this study investigates the determinants of Human Resource Management practices in family SMEs and compares them with non-family SMEs. Using a sample of 85 Cypriot SMEs, the results show many differences between non-family businesses and family SMEs, based on the HR practices that they use in their business. Empirical knowledge concerning how family SMEs use their HR practices, is limited. The present study’s purpose is to examine the formalization and utility of the HRM practices in family small and medium – sized enterprises (Family SMEs) in Cyprus. The number of employees of the family SMEs are between 10 to 100. The study emphasizes on the formality of HRM practices in family SMEs in comparison with the non-family SMEs, as well as the level of emphasis that family SMEs give to the training and development needs of their employees. Additionally, this study analyzes if family SMEs are systematic with their compensation and rewards and lastly it examines if the recruitment and selection practices in family SMEs are less formal than in non-family SMEs.