This paper is on the growing importance of strategic human resource management (SHRM) for small and medium-sized enterprises (SMEs). Many small firms encounter serious human resource problems, while at the same time these human resources play a vital role in developing and sustaining their competitive advantages. In (S)HRM literature specific issues concerning small firms are rarely addressed. This paper explores this issue further. We conclude that the available knowledge on HRM in small firms is highly descriptive and fragmented. We propose the application of the strategic labour allocation process--model (SLAP) as a tool to analyse HR problems in SMEs. This model focuses on the balance between the supply of and the demand for labour on a firm level. The application of the SLAP model produces two strategic scenarios for Dutch SMEs presently confronted with a tight labour market. (Contains 3 tables, 1 figure and 1 note.)