Impact of HRM Practices on the Perceived Financial Performance of SMEs in Karachi

Abstract

SMEs are the basis of Pakistan`s monetary and economic system with an understanding of importance of such kind of enterprise. Nevertheless, SMEs are challenged in their development with respect to human resource productivity. This study explores the practices of HRM and impact on SMEs Perceived Financial Performance in Karachi, as SMEs too require HR practices to remain dynamic and sustain a practical competitive edge with a specific end goal to get improved firm performance. This paper has modified the existing conceptual model with respect to the study objectives and took HR practices like hiring, training, performance feedback and compensation. The model was changed according to the need of the SMEs` execution. Sample size for this quantitative research is 443 owners or managers of registered SME`s of service and manufacturing firms located in four industrial zones of Karachi... Analysis of data was completed through SPSS for Confirmatory Factor Analysis and Multiple Linear Regression examination. The blend of variables largely foreseen financial perceived performance of SME`s, F = 64.793, p< .005, with altogether four variables adding significantly to the prediction. The adjusted R squared value was 0.377. This clarifies that 37.7% of the variation in financial perceived performance of SME`s was clarified through the model. The results of regression exhibited positive relationship, additionally hiring, learning or training, performance appraisal and compensation does influence or impact financial perceived performance of SMEs.