The Role of Human Resource Management in Organizational Performance Optimization of Small and Medium Enterprises (SMEs) in Abuja

Abstract

This study investigates the relationship between Human Resource Management (HRM) practices and organizational performance both financial (FIN) and non-financial (NONFIN) in Nigerian Small and Medium-sized Enterprises (SMEs). Using a structured comparative analysis, the research identifies Occupational Health and Safety (OHS), Human Capital Development (HCD), and Employee Performance Management (EPM) as the only HRM practices significantly linked to performance outcomes. OHS and HCD were positively associated with NONFIN performance, emphasizing the importance of employee well-being and skill development, while EPM had a direct impact on FIN performance. Conversely, practices such as Employee Relations (ER) and Reward Management (RM) showed no significant influence, likely due to weak implementation and measurement limitations. The findings underscore the value of strategic HRM in enhancing SME effectiveness and suggest that improved application of select HR practices can foster sustainable organizational growth in Nigeria’s SME sector.