Journal of European Industrial Training

Human resource management – a survey of practices within family and non-family firms
Renee S. Reid John S. Adams
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Renee S. Reid John S. Adams, (2001),"Human resource management – a survey of practices within family and non-family
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 Human resource management ± a survey of practices
within family and non-family firms
Keywords
Family firms,
Downloaded by UNIVERSITY OF INDONESIA At 00:04 22 December 2016 (PT)
Human resource management,
Small- to medium-sized enterprises
Abstract
Much of the literature relating to
human resource management
(HRM) has attempted to
demonstrate that the ``Human
resource'' is the most valued
asset in a company. Large
companies have revolutionised
their approach to the training and
development of their personnel in
order to maximise their
``competitive edge''. Hotly
debated is whether investment in
``good HRM'' is linked to
commercial success. However,
very little is known about HRM
practices within the small- to
medium-size business (SME) and
even less is known about the
practice within a family business.
This survey describes the HRM
practices of SMEs (both family
and non-family businesses) in
Northern Ireland. Comparisons
between the groups are made and
findings suggest that family
businesses practice HRM
differently than their non-family
counterparts. Implications for the
training and development of these
two groups question whether
family businesses need to be
treated as a ``special case''.
The authors would like to
thank Dr Barbara Murray,
Director of the Centre for
Family Enterprise at Glasgow
Caledonian University, for all
her support and advice.
Journal of European Industrial
Training
25/6 [2001] 310±320
# MCB University Press
[ISSN 0309-0590]
[ 310 ]
Renee S. Reid
Management Institute, Faculty of Business & Management, University of Ulster,
Shore Road, Newtownabbey, Co. Antrim, Northern Ireland
John S. Adams
Management Institute, Faculty of Business & Management, University of Ulster,
Shore Road, Newtownabbey, Co. Antrim, Northern Ireland
Human resource management and
SMEs
Ulrich and Lake (1990, p. 40), state that the
most enduring and the most difficult thing to
achieve is ``gaining competitive edge from
the improved organisational capability of
people''. They define ``organisational
capability'' as ``a business's ability to
establish internal structures and processes
that influence its members to create
organisational-specific competencies and
thus enable the business to adapt to changing
customer and strategic needs''.
Human resource management (HRM) has,
until recently, been seen as inappropriate for
the smaller firm and consequently little
research on the practices within the small
firm sector have been documented. Storey
(1994), highlights ``The Bolton Report''
(Bolton, 1971) as the first major survey that
stated small firms required different and
specific attention in the areas of employment,
trade and industrial policy.
According to Hughes (1989), small firms are
more likely than large ones to take on young
people and people without qualifications.
This factor is becoming more relevant today
and, therefore, makes the study of small firm
employment features and HRM practices in
particular, a necessity if small- to medium-
enterprises (SMEs) are to maximise their
``competitive edge'' using best practice HRM.
HRM and family owned and controlled firms
Attention has been drawn by several reports
(Ward, 1987; Leach, 1990, 1994; Dunn, 1995;
Reid et al., 1999) on differences which may
exist between family businesses and non-
family businesses. A significant proportion
of SMEs in the UK are family firms, yet
Cromie et al. (1995) and Dunn (1995) argue
that research into the UK's family business is
in its infancy. Elsewhere, such as the USA,
The research register for this journal is available at
http://www.mcbup.com/research_registers
the field of family business research is
maturing.
In a comprehensive review of family
business literature and publications Desman
and Brush (1991) reported that only 4 per cent
of the 202 citations reviewed dealt with the
development of human resources through
education and training. Additionally the field
of HRM is an especially sensitive area for
family businesses; having been criticised for
engaging in nepotism and in some cases
failing to provide management training for
family members. Therefore, the necessary
starting point for these family businesses is
to identify their current HRM practices in
order to identify any strengths and
weaknesses which may exist.
The purpose of this survey is twofold: first,
to identify HRM practices within the SME
(20-100 employees) population in Northern
Ireland and second, to compare practices
between ``family'' and ``non-family''
enterprises within the Northern Ireland SME
market. The survey provides the first truly
comprehensive examination of HRM
practices within the SME sector in Northern
Ireland. Additionally, it will set these
findings in the context of HRM practices
identified by both HRM researchers in family
and non-family enterprises.
As previously stated, the search by SMEs
for a ``competitive edge'' through more
effective utilisation of human resource
practices appears to put family firms, in
particular, under even greater stress. Family
businesses may be pressured at times to
employ, promote or end employment for close
or extended family members. It is also
extremely difficult for a CEO who is the
father, mother or uncle to practise HRM
management objectively with family
members.
The current issue and full text archive of this journal is available at
http://www.emerald-library.com/ft
 Renee S. Reid and
John S. Adams
Human resource management
± a survey of practices within
family and non-family firms
Journal of European Industrial
Training
25/6 [2001] 310±320
Downloaded by UNIVERSITY OF INDONESIA At 00:04 22 December 2016 (PT)
Current HRM issues
Storey (1989) identified that HRM models,
whether British or American, commonly
assert that employees should be regarded as
valued assets and that there should be an
emphasis on commitment, adaptability and
consideration of employees as a source of
competitive advantage. Thus, the theory of
``resourceful humans'' may more accurately
be posited. Edwards (1987) and Storey (1989)
suggest there is a need to further understand
the role of line managers in operationalising
HRM. These authors highlight survey
evidence suggesting that personnel managers
are not generally involved in matters of
strategic importance, and additionally, it
seems they are also not always involved in
implementation. This lack of involvement of
these line managers at key stages makes it
extremely difficult for them to manage the
human resource effectively. In the family
business setting, where many companies are
dominated by the CEO, the involvement of
line managers in HRM strategy is perhaps
even less likely.
A study by Atkinson and Meager (1991)
found that, not surprisingly, the ``owner-
proprietor'' as a distinct managerial position
diminished slowly with firm size. Following
this, the appointment of specialist managers,
(in particular personnel managers) were
found among only 12 per cent of the largest
firms (50 plus employees). These studies
suggest that many of these companies prefer
to undertake their own ``in-house'' training
and personnel practices.
Huselid (1995) found that extensive
recruitment and training procedures,
incentive compensation and increased
employee involvement were associated with
higher levels of turnover, higher
productivity and better financial
performance.
Current trends
Minehan (1996) sees a new role of HRM in
that eligibility for government assistance
will be further tied to employment and job
creation. The influx of unskilled and low-
skilled workers will focus attention on
improving the quality of the workforce thus
necessitating more emphasis on in-house
training and development programs with
more interest in school-to-work programs
and other business-education partnerships.
Keep (1987) uses statistical evidence to re-
enforce this argument suggesting that the UK
is lagging behind in training provision even
at the macro level. He points out that ``while
leading employers in West Germany, Japan,
and the USA spend up to 3 per cent of
turnover per annum on training, on average
employers in the UK spend only 0.15 per
cent''. This statistic implies a vicious cycle ±
SMEs have to generate jobs to get support ± to
generate jobs requires a competitive edge.
Pfeffer's (1998) book The Human Equation:
Building Profits by Putting People First
suggests that the impact on performance is
more pronounced when complementary
groups (or ``bundles'') of HR practices are
used together, and that this conclusion holds
good for all organisations and industries
irrespective of their context. This may be
appealing to the ``in-house'' SME types,
however, Guest (1992) remarks that these
ideas might be ``right enough to be
dangerously wrong''. Pfeffer does identify
seven practices of successful organisations,
which reduces his earlier (Pfeffer, 1994) list of
16 (see Table I).
A significant problem with the various
lists of ``best practice'' HRM is that there are
inconsistencies between studies, with some
ignoring one factor but including another.
For example, despite the importance
attached to employment security by Pfeffer,
this is not included in quite a number of the
other lists (e.g. Delaney and Huselid, 1996;
Wood and de Menezes, 1998). Also, ``best
practice'' is largely a wish list of descriptors
and may seem unreal or unattainable in
some SMEs.
Although Pfeffer encourages working with
unions, he does not suggest the format this
working relationship should take. However,
he argues that, because of improved and open
communication, co-operation with employee
representatives can only have positive
outcomes.
Family businesses ± a special
case?
Family business should be regarded as a
special case regardless of size, as the long-
term commitment of the CEO and family
members involved in management require
the balance of not only management but
Table I
HRM practices of successful firms
Employment security Selective hiring
Self-managed High compensation contingent
teams/team on organisational
performance
Extensive training Reduction of status differences
Sharing of information
Source: Pfeffer (1994)
[ 311 ]
 Renee S. Reid and
John S. Adams
Human resource management
± a survey of practices within
family and non-family firms
Journal of European Industrial
Training
25/6 [2001] 310±320
Downloaded by UNIVERSITY OF INDONESIA At 00:04 22 December 2016 (PT)
[ 312 ]
ownership. Family businesses employing
family members need to address both these
issues in many cases. Owing to the unique
organisational structure of the family
business HRM policies may require greater
clarity in the areas separating ownership and
management. Astrachan and Kolenko (1994)
suggest that limited organisational capability
may be one key factor contributing to the
short life span of family firms in an
increasingly competitive global market.
Cascio (1991) reports ``people costs represent
approximately 55 per cent of operating
budgets across all US industries, it is
important that there be more research focus
on organisational capability and human
resource practices in family businesses''. It
should also be remembered that family
businesses are the predominate form of
business not only in the USA but also in
the UK.
Taguiri and Davis (1992), Holland and
Boulton (1984) and Beckhard and Dyer (1983)
suggest that relationships between the
management of the firm and the family
increase the complexity of organisational
and management problems. In particular,
Astrachan and Kolenko (1994) suggest that
this special relationship between family and
firm creates a volatile situation concerning
tasks such as employee selection,
compensation, appraisal and personal
development. They also suggest that family
businesses more frequently use employee
reviews, compensation plans, written
employee policies, and written job
descriptions than written succession plans or
formal entry requirements for family
members. Yet the latter are the very means
by which family recruitment, selection and
promotion and exclusion are determined!
Lansberg (1983) emphasises strongly (as
does Ward, 1987), that effective management
in family businesses requires the
establishment of structures and processes
which link management and ownership. The
establishment of these reduce conflict and
can be especially helpful in the area of HRM
to improve the practices of selection,
compensation and equity, appraisal, training
and development, and promotion. It also
establishes a firm basis for decision making
that can be understood and adhered to
equitably by all employed family members.
Leon-Guerrero et al. (1998) state that
researchers to date have not offered
extensive evidence linking specific practices
with the development of the family and the
business. The stage of evolution of the family
business is thought to be of significant
influence. A family business at a relatively
mature development point would be older
and have greater turnover, more employees,
and perhaps three or more participating
family generations implying ``family'' could
be expected to considerably influence
operations. Mintzberg and Waters (1990)
suggest that the formalization of the family
business is an inevitable result of growth.
Company growth spurs change in
management practices, transforming the
``small, personalized, flexible, knowledge-
based firm into a larger, more formal,
economically powerful corporation''. In later
stages of firm development, the utilisation of
business-focused practices are increasingly
used and are more dependent on business
growth.
Leon-Guerrero et al. (1998) hypothesised
that practices, such as formal employee
reviews, incentive compensation plans,
written job descriptions, training and career
development plans are utilised more
extensively as family businesses grow and
develop.
Many approaches to strategy begin with
defining the mission of the firm and the
development of a mission statement (Harris
et al., 1994). They further suggest that the
presence of a family mission statement is the
fundamental starting point in strategy
formulation because it sets out the
expectations of the owners (who are related
to each other) in terms of their expected
return on investment. It also represents the
most visible and public part of a strategic
plan, specifying the foundation for priorities,
resource utilisation, and organisational
structure.
Leon-Guerrero et al. (1998) reported results
that suggested in ``higher revenue businesses
family-focused practices diminished,
whereas utilization of business-focused
practices increased''. Also, the utilisation of
formal business practices, such as employee
reviews and incentive compensation plans,
was significantly different between revenue
categories, although that practice was not
related to the number of family generations.
It is therefore, again, more meaningful to
explore the stage of family ownership and to
expect more formality as ownership becomes
more complex, as in the case of sibling
partnerships and cousin consortiums
(Gersick et al., 1997).
Astrachan and Kolenko's (1994) study of
over 600 family firms found that employee
reviews, compensation plans, etc., were used
significantly more frequently in family firms
for non-family employees than similar HRM
practices for family members.
They found positive correlation's between
HRM practices and gross firm revenues.
Their results also support prior arguments
 Renee S. Reid and
John S. Adams
Human resource management
± a survey of practices within
family and non-family firms
Journal of European Industrial
Training
25/6 [2001] 310±320
Downloaded by UNIVERSITY OF INDONESIA At 00:04 22 December 2016 (PT)
for competitive advantage gained through
effective use of HRM practices. These
findings lend weight to the argument that as
companies grow the structures required to
support them become more formalised and
complex.
Cascio (1995) suggests that larger non-
family firms are now approaching succession
planning by defining more generic
competencies rather than specific knowledge
and skills. He also states that career
development is being left to individual
responsibility with no promises regarding
future opportunities in the firm. The family
firm, he asserts, is employing a range of
strategies to deal with succession from
individual grooming at a young age to letting
siblings choose their own leader or leaders.
This may signify much more flexible
approaches to HR matters than earlier
ideas about nepotism in family firms
suggested.
In the light of the perceived importance of
HRM practices and ``competitive edge'' and
the appearance that family ownership and
size of firm may be factors effecting outcome,
this paper will explore the HRM practices of
SME family firms in Northern Ireland,
comparing them to the practices reported in
their non-family counterparts.
Methodology
Population
The population base comprised all companies
based in Northern Ireland employing
between 20-100 employees (referred to as the
small- to medium-sized enterprise SME
employer).
The definition used to distinguish a
business as a family firm was one utilised in
a previous family business survey (Reid et
al., 1999) that ``the family'', own more than 50
per cent of the shareholding of the business
and participate in the management of the
business.
Questionnaire design
The survey was designed using automated
Design and Capture software (FORMIC 3.3).
This package allows for automatic direct data
capture of questionnaire returns via
scanning.
The questions comprised 47 fixed and
multiple-choice answers in order to assist in
the process of automated data capture.
Content of the questionnaire was designed by
the HRM Research Group, within the Faculty
of Business and Management at the
University of Ulster-based on the Cranet
Survey on International Strategic Human
Resource Management at Cranfield
University examining HR practices within
larger enterprises (> 100 employees).
Appropriate amendments were made in
order to reflect areas of relevance to a
smaller enterprise, for example, the
exclusion of assessment centres when
recruiting employees. The questionnaire was
divided into six sections examining CEO
characteristics, company characteristics,
HRM policy, staffing practices, employee
development and family employee practices.
Data collection
Questionnaires were mailed to 1,360 SME
businesses in Northern Ireland. A total of 230
responses were received of which 219 were
usable (16 per cent). Five respondents
actually employed between 15-18 employees
and, although this was less than the required
number of 20 employees, they were included
in the analysis. Family firms accounted for 61
per cent (n = 133) and non-family firms 39 per
cent (n = 86) of the returns. No follow up was
carried out to increase returns as the rate
was considered reasonable ± being based on
the total population of SMEs in Northern
Ireland. No effort had been made to ensure
``family firm'' representation as previous
studies (Cromie et al., 1995) suggested that
the majority of all enterprises are family
owned/managed and the returns for this
survey confirmed these figures. The
questionnaires were electronically scanned
using the aforementioned Data Capture
Software and the responses analysed using
SPSS for Windows (Version 6).
Analysis and results
Basic descriptive statistics and chi-square
tests of independence were utilised to
examine differences (if any) between family
and non-family enterprises. The results on a
per section basis are presented as follows.
Results section 1 ± CEO/director
characteristics
Table II summarises the characteristics of
the owner or director who has responsibility
for HRM. In family businesses, 48 per cent of
the sample were owners and in non-family
businesses only 16 per cent were owners.
Additionally, a higher percentage (81 per
cent) of family businesses had male owner/
directors than non-family businesses (71 per
cent).
The age structure of the owner/director in
family businesses highlights the fact that
owners of family businesses tend to remain
in control for much longer (average tenure 24
[ 313 ]
 Renee S. Reid and Table II
John S. Adams Characteristics of owner/director with HRM responsibility
Human resource management
± a survey of practices within Family business (%) Non-family business (%)
family and non-family firms
Yes No Yes No
Journal of European Industrial
Training Are you the founder 48 52 16 83
25/6 [2001] 310±320 Male Female Male Female
Gender of owner/director with HRM responsibility 81 15 17 28
Base n = 133 n = 86
Age (years)
< 25 26-30 31-40 41-50 51-60 61-70 71+
Age of owner
(family business) 2% 4% 21% 34% 30% 8% 1%
Age owner/director with
HRM responsibility
(non-family business) 0% 7% 30% 37% 21% 5% 0%
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Family business (%) Non-family business (%)

Yes No Yes No
Do you have a university degree 33 67 63 37
Male Female Male Female
Have you a professional qualification 32 68 44 56

years (Dunn, 1995)) than their non-family
counterparts. The non-family owner/
directors dominated the age range 26-50 years
while the family group dominated the 51-71+
range.
A substantially higher percentage of the
non-family business owner/directors (63 per
cent) had a university degree compared to
the family group (33 per cent). The difference
was not as marked when examining those
who held a professional qualification ±32 per
cent of family owner/directors compared to
44 per cent of non-family owner/directors.
Results section 2 ± company
characteristics
Table III details company characteristics and
both family and non-family businesses, as
expected, were most strongly represented in
the service sector. However, a higher
percentage of family businesses (32 per cent)
to non-family businesses (14 per cent) were
represented in ``other manufacturing''.
The breakdown of businesses by employee
size and turnover is given in Table IV.
Family businesses were more highly
represented in the 26-50 employee group (74
per cent) whereas, non-family businesses
were larger in that 24 per cent of non-family
businesses employed 51-75 employees in
comparison with their family counterparts
(14 per cent). In terms of turnover however,
family companies were larger with 84 per
cent of the sample producing turnovers in
excess of £1 million per annum against 74 per
cent of non-family companies. These higher
turnover figures could reflect the higher
percentage of family companies from the
``other manufacturing'' sector.
Labour costs for non-family businesses
were much higher than family businesses
(see Table V).
A total of 72 per cent of non-family
businesses reported that more than 20 per
cent of last year's turnover or revenue budget
accounted for labour costs whereas for family
businesses the percentage was 43 per cent.
This too could also be a reflection of the
respective sectoral breakdown between
family and non-family firms.

Table III
Company chacteristics ± sector
Family Non-family
business business
Main sector of industry or services you operate (%) (%)
Agriculture, hunting, forestry, fishing 4 5
Energy and water 0 0
Chemical products; extraction and processing of non-energy materials 3 1
Metal manufacturing, mechanical, electrical and instrument engineer 9 9
Other manufacturing (food, drink, tobacco; textiles, paper, etc.) 32 14
Service sector 47 51
Public sector 4 19

[ 314 ]
 Renee S. Reid and Table IV
John S. Adams Company characteristics ± employees and turnover
Human resource management
± a survey of practices within Total number of employees Company turnover
family and non-family firms
Family business Non-family business Family business Non-family business
Journal of European Industrial
Training (%) (%) (%) (%)
25/6 [2001] 310±320 15-25 10 12 Under £100,000 0 1
26-50 74 62 £100,000-£999,999 16 23
51-75 14 24 £1-£5 million 65 57
76+ 2 2 £5 million+ 19 17

Table V
Company characteristics ± labour costs
Percentage of the last financial year's turnover or revenue budget Family business Non-family business
accounted for by labour costs (%) (%)
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1-10 19 12
11-20 36 14
More than 20 43 72

Results section 3 ± human resource policy
Table VI reports the results of the companies'
human resource policies. Where appropriate
significant chi-square results are reported.
Significantly higher numbers (2 = 5.19;
1df; p < 0.05) of non-family businesses
reported having a personnel or HRM
department/manager. Less than 50 per cent
of both family and non-family businesses
reported that the head of HRM did not have a
place on the board. These findings support
those of Edwards (1987) and Storey (1989) who
pointed out that HRM/personnel managers
are generally not involved in matters of
strategic importance. It also supports family
firms research (Ward, 1987) that many CEO's
in family firms tend to fight relinquishing
control and highlights the lack of division
between ``ownership'' and ``management''.
Significantly higher numbers (2 = 9.73;
1df; p < 0.01) of non-family businesses
negotiated with trade unions on pay and
conditions. This again may reflect the
sectoral breakdown, additionally, it may also
underline the view that family firms tend to
be introverted and ``family centered''. It also
highlights an issue that Pfeffer (1998) raised
when he recommended that firms should
become more open with their information
and negotiations with trade unions was one
of the steps that he recommended.
Significantly higher numbers (2 = 18.80;
1df; p < 0.01) of non-family businesses had a
mission statement. Ward (1987) saw this as
one of the first public signs that family firms
should adopt to indicate a more strategic
approach to their business.
Significantly higher numbers of non-
family businesses kept records on disability
(2 = 10.16; 1df; p < 0.01), ethnic origin
(2 = 4.22; 1df; p < 0.05), gender (2 = 9.13; 1df;
p < 0.01) and religion (2 = 7.35; 1df; p < 0.01)
and once again this may indicate the fact that
many family firms suffer from a ``family

Table VI
Personnel ± human resource policy
Family business (%) Non-family business (%)
Yes No Yes No
Does your organisation have a personal or HRM department 40 60 55 45
Does the head of the HRM department have a place on the
board 41 46 36 55
Do you negotiate with trade unions on pay and conditions 10 88 28 72
Does your organisation have:
A mission statement 45 47 77 20
A business plan 65 29 77 17
A personnel/HRM management plan 26 63 34 52
If you have a business plan ± what stage is the person
responsible for HRM involved in its development:
From the outset 47 52
On implementation 7 14
Not consulted 15 12

[ 315 ]
 Renee S. Reid and
John S. Adams
Human resource management
± a survey of practices within
family and non-family firms
Journal of European Industrial
Training
25/6 [2001] 310±320
Downloaded by UNIVERSITY OF INDONESIA At 00:04 22 December 2016 (PT)
[ 316 ]
first'' ethos as opposed to a ``business first''
ethos (Reid et al., 1999).
Only 26 per cent of family and 34 per cent of
non-family businesses reported having a
personnel/HRM management plan. Of those
companies who had a business plan only 47
per cent of family and 52 per cent of non-
family businesses reported that the person
responsible for HRM was involved in its
development.
Interestingly, both family (34 per cent) and
non-family (40 per cent) businesses
considered the major challenge for HRM in
their businesses over the next five years to be
``Training and development''.
Results section 4 ± staffing practices
Managerial vacancies in both family (65 per
cent) and non-family (72 per cent) businesses
were generally filled by ``advertising in
newspapers nationally''. Significantly higher
numbers of non-family businesses (2 = 4.46;
1df; p < 0.05) than family businesses reported
using references as a selection method.
Following this 54 per cent of family
businesses reported recruiting managerial
vacancies internally, while the percentage
for non-family businesses was 44 per cent.
Significantly higher numbers of non-
family businesses (2 = 5.08; 1df; p < 0.05) had
been involved in a take-over by another
organisation lending support for the findings
of Dunn (1995) and Reid et al. (1999) that
family businesses prefer to keep their
businesses in family ownership. Similarly,
significantly higher numbers of non-family
businesses had used appraisal systems for
managers (2 = 19.33; 1df; p < 0.01) and
clerical staff (2 = 18.93; 1df; 9 < 0.01) than
family businesses. This finding, along with
more in-depth record keeping by non-family
businesses, would suggest a more ``business
first'' ethos for the non-family group (Reid et
al., 1999).
The following findings continue to lend
support for the ``business first'' approach of
non-family businesses. Significantly higher
numbers of non-family businesses reported
that immediate superiors (2 = 6.44; 1df;
p < 0.05) and employees (2 = 7.65; 1df;
p < 0.01) contributed to the appraisal process
than family businesses. Significantly higher
numbers of non-family businesses used
appraisal systems for individual training
needs (2 = 11.75; 1df; p < 0.01); organisational
training needs (2 = 9.96; 1df; p < 0.01) and for
organisation of work (2 = 4.59; 1df; p < 0.05).
These figures appear to support the view of
Astrachan and Kolenko (1994) that limited
organisational capability may be a feature of
some family businesses.
Significantly higher numbers of family
businesses used flat rate and individual
bonus pay and reward mechanisms (2 = 3.99;
1df; p < 0.05) for manual workers than non-
family businesses. This could be due to the
high percentage of family firms in ``other
manufacturing''. Significantly higher
numbers of non-family businesses used
merit/performance related pay (2 = 3.92; 1df;
p < 0.05) as a pay reward mechanism for their
management than their ``family''
counterparts. The findings suggest that many
of the non-family firms have put in place
HRM structures and policies ahead of their
``family firm'' counterparts.
Results section 5 ± employee development
Family businesses reported spending less of
their annual salaries and wages bill on
training than their non-family counterparts
(see Figure 1). Even though both family and
non-family enterprises reported that
``training and development'' was their biggest
HRM challenge over the next five years,
investment in training does not appear to be
taking place. These results support Keep's
(1987) findings that the UK is lagging behind
when it comes to paying for training
provision.
Family enterprises also reported fewer
employees had been on training activities
within the last year (see Figure 2).
Significantly higher numbers of non-
family businesses (2 = 6.10; 1df; p < 0.05)
reported systematically analysing employee
training needs than family businesses. This
suggests that a greater number of non-family
enterprises have already implemented many
of the HRM policies and practices suggested
by the literature as ``appropriate''.
Results section 6 ± family employee
practices
Table VII reports on the characteristics and
practices that family businesses operate
regarding family employees. It is noticeable
that founders who have handed over
management to the next generation have not
relinquished their majority shareholding at
the same time. Also, there is evidence that
the majority of firms are in transition from
founder to next generation (62 per cent of
first generation having majority
shareholding). Few of these reported having
completed much of the succession work
required during this transition period, i.e.
ownership and control. Therefore, in
transition this struggle between old and new
runs with tension affecting management
practices throughout the organisation.
Of family businesses, 89 per cent reported
that they intended to retain the current level
 Renee S. Reid and Figure 1
John S. Adams Percentage of annual salaries and wages spent on training
Human resource management
± a survey of practices within
family and non-family firms
Journal of European Industrial
Training
25/6 [2001] 310±320
Downloaded by UNIVERSITY OF INDONESIA At 00:04 22 December 2016 (PT)

Figure 2
Percentage of employees on training activities within last year

(which was high in many businesses) of businesses reported using a formal

family members working in the business. Of
family companies, 65 per cent stated that
family members in management roles
received management training. This may
reflect the fact that siblings in many family
businesses receive their training in the
family business rather than availing of
outside experience. Only 27 per cent of family
performance system to assess family
members. Of that 27 per cent only 38 per cent
report that the remuneration package the
family member receives is based on that
appraisal. This would endorse the findings of
Astrachan and Kolenko (1994) that family
firms tend to offer training and utilise
appraisal systems, etc., for employees more
[ 317 ]
 Renee S. Reid and
John S. Adams
Human resource management
± a survey of practices within
family and non-family firms
Journal of European Industrial
Training
25/6 [2001] 310±320
Downloaded by UNIVERSITY OF INDONESIA At 00:04 22 December 2016 (PT)
[ 318 ]
Table VII
Family business characteristics (n = 133)
Which generation currently has majority shareholding
Which generation currently manages the company
Numbers of family members working in the business
How many family members work directly in the business
Is it your intention to retain the current level of family
members working in the business
Does the company ensure that family members in
management roles receive management training
Is a formal performance system used to assess family
members
If yes, is the remuneration package they receive based
on this appraisal
often than they do for family members. It also
highlights Ward's (1987) view that for a
family firm to professionalise itself, it is
important to separate ownership and
management roles. The fact that
remuneration packages are not based on
performance can only create difficulties
within the business for other non-family
management members. Ward also suggests
that remuneration could be made through
ownership for family members and that
payment for the job should be based on
market value. The implications for so many
of these companies who have not addressed
the control issue, i.e. leadership and
ownership and who are in the transition
period, is that they may experience
tremendous difficulty in trying to establish
unified management practices necessary to
achieve sound organisational capability.
Discussion
Overall the findings would generally support
those of Astrachan and Kolenko (1994), that
family businesses, perhaps partly due to
their limited organisational capability, have
lagged behind their non-family counterparts
in implementing HRM policies and practices.
However, many are clearly in transition and
the new generation may have plans to change
things, when they get power. As Cascio (1991)
points out, if ``people costs'' represent
approximately 55 per cent of operating
budgets, it is important that organisational
capability and HRM practices in family firms
develop in line with their non-family
opposites.
Astrachan and Kolenko (1994) also point
out that the volatility created by the overlap
of family, business and ownership makes
implementing employee selection and
1st (%) 2nd (%) 3rd (%) 4th (%) > 4th (%)
62 20 13 2 0
52 27 12 4 1
1 2 3 4 >4
13 32 20 12 11
Yes (%) No (%)
89 9
65 28
27 65
38 62
compensation more difficult in family firms.
This survey clearly demonstrates that some
of the family firms need to professionalise
their procedures regarding HRM,
particularly in relation to the introduction of
family members into the business. As
Lansberg (1983) and Ward (1987) recommend,
separating the reward for ownership and the
reward for management of the business will
help clarify how the family extract wealth
from the business. Ensuring that
remuneration for non-working family
members (this may take the form of perks)
derives from the ownership ``pot'' and that
working family members who have market-
based salaries coming from the management
``pot'', will assist in establishing sound
structures that may mitigate intra family
firm tensions. Even when the family owners'
mission is clearly a ``family first'' one,
remuneration must be managed realistically.
Although Mintzberg and Waters (1990)
suggest that all companies will
professionalise with increasing size, the
family firms in this study have tended to
operate their HR practices in a more
distinctive fashion compared to their non-
family counterparts. This is characterised by
informality despite the push for
formalisation typical of larger sized firms to
improved efficiency.
Many of the CEO characteristics of the
family firm group indicate that succession
has already taken place with respect to
handing over management responsibilities,
(i.e. ``management'' succession). However,
the power base in many cases (i.e.
shareholding) is still being held by the
previous generation (i.e. the ``ownership''
succession is not yet complete). The majority
of these companies will be undergoing total
succession within the next ten years and the
 Renee S. Reid and
John S. Adams
Human resource management
± a survey of practices within
family and non-family firms
Journal of European Industrial
Training
25/6 [2001] 310±320
Downloaded by UNIVERSITY OF INDONESIA At 00:04 22 December 2016 (PT)
need for implementing sound governance
and organisational structures and processes
is necessary to aid the transitional process.
Lack of management training provision
being provided to family members (only 65
per cent receiving such training) in these
companies may also adversely effect
successful transition of each generation if not
fully prepared for the giving and receiving of
power. HRM practices appear to be one area
where family business carry out practices
differently to their non-family counterparts.
Whether their practices are more or less
successful requires further enquiry.
Many siblings entering the family business
within the next ten years will have the
benefits of tertiary education, Gersick et al.
(1997) (many of whom will be MBA
graduates), and this may offset the lack of
formal management training. Through their
education and exposure to peer group
practices these siblings may perhaps be
aware of the need to professionalise
management in their businesses.
The fact that many family businesses are
often viewed as ``introverted'' would appear
to have some support from these findings.
Pfeffer's argument for openness and freedom
of information in, for example, negotiating
with trade unions and the keeping of records,
has found more support within the non-
family group.
Caution should possibly be exercised in the
interpretation of some of the findings
presented here, as the sectoral breakdown of
the companies, in particular the high
numbers of family firms in manufacturing,
may partially explain some of the differences.
Furthermore, the higher turnover and the
smaller company size (employee numbers) of
the family firm group may indicate
differences that are sectorally-based rather
than simply due to ownership.
These initial findings are the starting point
for the study of HRM policies and practices in
the SME sector (in particular the family
firms group) in Northern Ireland. Further
longitudinal research to examine differences
in HRM practice between the generations in
family firms may highlight interesting areas
for further study.
Businesses entering the global market
must be able to take advantage of whatever
``competitive edge'' is available. By
implementing the separation of ownership
and management roles, responsibilities and
functions (the people are often the same),
family firms may be able to more
successfully integrate HRM practices which
effect not only employees but also family
members hoping to enter the business.
Business advisors, educators and training
organisations need to be aware of the
differences that exist between family and
non-family businesses when designing
training interventions. HRM in a family
business, the authors believe, needs to be
treated as a ``special case'' due to the complex
relationship which exists between ownership
and management. Some family members
have share ownership and work in the
business, other family members may have
only shareholding, while others are involved
only in management. Interventions,
therefore, need to address the perspective of
all groups. Additionally, the reported
operating practices of family business
owners in this study support those from
previous studies suggesting that they tend to
practice HRM differently (for their
employees) than their non-family
counterparts. These issues are all extremely
important for training providers to be aware
of when attempting to marry HRM
interventions within the complex,
introverted nature of the family business.
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