 High Performance Work Practices (HPWP) are human resource management activities which research has shown to be positively related to organizational performance, including the bottom line. These practices, such as selective hiring, extensive training, performance appraisal (including 360-degree feedback), incentive compensation, employee involvement and others, are widely used in large firms but not so much in small to medium-sized enterprises (SMEs). I recently conducted a study to answer the research question, why aren’t HPWP more widely used by SMEs? Four issues came to light. The leading issue was that of cultural incongruity. Many small firms leverage informality, flexibility, decision speed and related factors for their success. HPWP are perceived as more formal, structured and time-consuming, and therefore not consistent with the organization’s culture. The second two most common issues were the cost of HPWP and a lack of knowledge/experience with HPWP. These findings suggest that lower cost practices should be targeted by small firms to start, and that education, hiring and consulting in HPWP may be helpful. The last issue was a lack of benefit of HPWP for small firms. With fewer employees and less organizational complexity, small firms simply don’t need some practices designed for the challenges faced by larger firms. So, should small firms abandon high performance work practices? Not at all. The same body of research shows HPWP to support lower turnover, higher productivity and improved financial performance in firms of all sizes. The relevant questions for small firms are which practices to use, when to start using them, and with what degree of rigor. The four issues identified above should help small firms to think through these questions and tailor their practices to gain the most from HPWP.
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