Human resource management practices and organizational life cycles

We tested the applicability of a life cycle model of startup and growth to human resource practices in small and medium sized firms. We expected recruiting and human resource management practices to become more formalized and impersonal as businesses grew and aged. Data for our investigation are from a survey study of 229 businesses in the Greater Vancouver area of British Columbia, Canada. Almost half the firms began with no employees, and from the beginning, family members were only a small part of the workforce. Thus, from the outset, founders were in the market for employees. Contrary to our expectations, the level of informal hiring practices was high throughout the entire business life cycle, as older firms were about as likely to use them as younger firms. By contrast, formal hiring practices were strongly associated with growth in workforce size. We found inconsistent evidence regarding the association of formal human resource management practices with business age, as recruiting practices became more formalized with age but not other personnel policies. Founders' desires to protect the "family business", as part of their firm inhibited the adoption of formalized practices.