Pick up any human resources (HR) text and you will see numerous examples taken from Fortune 500 companies. In contrast, there will be few examples, if any, from small enterprises. This is a particularly striking omission when one realizes that, according to a 1995 report by the U.S. Small Business Administration, 99.7 percent of American employers have less than five hundred employees. Should we simply assume that the HR practices of large organizations are equally effective in small companies? Or have small companies been disadvantaged by our profession’s failure to identify and study the HR practices that are effective in small companies?These questions have led us to conduct several studies of effective HR practices in small enterprises, and to compare HR practices in small versus large companies. Our results show that small firms cannot be fully effective by relying on large-enterprise HR practices alone. Moreover, leaders of small companies often have a different conception of the HR function than do managers in larger organizations.The conclusions we present below are a result of our own research and of an assessment of the existing HR literature. In the past few years, we conducted focus groups with 210 chief executive officers (CEOs) and founders of small businesses. We also surveyed 672 small business CEOs and 537 professionals at small and large organizations. In addition, we reviewed over two hundred articles on HR management in small businesses. The questions and answers are summarized below.1
