Samenvatting

Due to their limited size, many small and medium enterprises (SMEs) cannot justify full-time HR professionals in their organizations. Thus, the complex and time-consuming nature of many HR activities can result in a significant drain on existing managerial resources. Professional employer organizations (PEOs), however, offer SMEs an alternative for handling their workforce by providing compensation programs, regulatory compliance, and other HR-related services. Results show that firm growth, past HR problems, workforce size, contractual detail, service representative-client relations, value congruence, and overall PEO usage are significantly related to managerial satisfaction with PEO services.
While managing HR presents significant challenges to a firm, small and medium enterprises (SMEs) face unique challenges that stem largely from their size. While economies of scale permit larger organizations to employ a team of specialists to address the complexities involved in managing HR programs, this is not a viable option for many SMEs. The costs associated with hiring highly trained HR professionals on a full-time basis are likely to be prohibitive for many smaller organizations. As a result, HR activities often become the responsibility of general managers. This is problematic for two reasons.
First, the complexity of many HR activities is likely to result in them becoming a significant drain on managerial time and resources. As such, HR tasks may interfere with managerial responsibilities that are directly related to revenue production. This problem is even more critical given that scarcity of managerial talent is often cited as a key factor limiting growth in SMEs. This scarcity of managerial talent increases the opportunity costs associated with time spent on HR administration by SME general managers. Second, many HR tasks involve substantial complexity and, thus, the quality of HR decisions may well be affected by the fact that general managers often lack significant training and expertise in HR.