Link between HR practices and organizational performance in small firms: A case for manufacturing sector of Pakistan

Abstract

Human Resource Management is relatively a new concept in small firms in Pakistan. The purpose of this study is to examine the impact of some of the human resource practices on organizational performance in small manufacturing firms. Using various statistical techniques confirming the adequacy of the model for small manufacturing firms, the result of the study based on the data collected through questionnaires, revealed that HR practices like recruitment, training, compensation and promotion do affect performance of organization. The intensity of these effect are positively mediated by HR outcomes i.e. employees skill, attitude and behavior. Thus it can be safely concluded that although the nature of HR practices in small firms is informal but the organizational performance can be improved by adopting carefully tailored HR practices keeping in mind the limited resources of small firms.