Final paper presents the concept and significance of employee selection through six fundamental parts. The aim of the paper is to review the specificities of employee selection in small companies in the Republic of Croatia. Basic function of employee selection, as a unique process which aims to select the best employees, is presented. Methods and techniques of selection process, which are conducted by companies in order to identify the high-quality candidates, are defined. Furthermore, the paper reviews the effects that employee selection has on success and economic growth of the company. The paper also presents a particular review of business challenges that small companies face. The emphasis is placed on specificities of employee selection process in small companies in the Republic of Croatia. According to the stated above, a research study was conducted in which small entrepreneurs were asked to fill out an anonymous questionnaire. Empiric research obtained from the results in the questionnaire presents the results of the employee selection process in small companies in Croatia and the importance of the selection for economic growth in small companies.