Abstract

This study assessed “The impact of human resource management (HRM) practices on employee performance in small and medium-sized enterprises (SMEs) in Buea, Cameroon”. The specific objectives were to evaluate the effect of leadership, motivation and performance appraisal on employee performance. Data were collected through questionnaires from 50 employees of selected SMEs in Buea. The study employed both descriptive and inferential statistics, using regression analysis to test the hypotheses.

The findings revealed that leadership, motivation, and performance appraisal significantly and positively influence employee performance. Based on these results, the study recommends that SMEs in Buea adopt structured HRM practices, including regular training, fair performance appraisal systems, and motivational strategies, to enhance employee productivity and organizational success.

CHAPTER ONE

INTRODUCTION

1.1 Background of the study

Employee performance refers to the effectiveness and efficiency with which employees carry out their job responsibilities and contribute to the overall goals of the organisation. It is a multidimensional construct that encompasses various aspects such as productivity, quality of work, and alignment with organisational objectives. According to Campbell (1990), employee performance consists of behaviors that contribute to the organisational goals and can be measured through various indicators, including task performance, contextual performance, and adaptability to changing circumstances. Task performance focuses on how well employees execute their specific job duties, while contextual performance encompasses broader behaviors such as teamwork and communication (Borman & Motowidlo, 1997). In the context of small and medium-sized enterprises (SMEs), employee performance is critical as it directly impacts the organisation’s competitiveness and ability to achieve its strategic objectives.

Human Resource Management (HRM) practices refer to a range of activities and policies designed to manage an organisation’s workforce effectively. These practices include recruitment and selection, Leadership, performance appraisal, compensation, and employee engagement initiatives. According to Becker and Huselid (1998), HRM practices are essential for creating a high-performance work environment that enhances employee capabilities and motivation. Wright and Boswell (2002) further emphasize that effective HRM practices can lead to improved employee performance by fostering a supportive and engaging work environment. In SMEs, where resources may be limited, the implementation of strategic HRM practices is crucial for maximizing employee potential and driving organisational success.

The relationship between employee performance and human resource management (HRM) practices has been extensively studied across various contexts. Research indicates that effective HRM practices significantly enhance employee performance, leading to improved organisational outcomes. For instance, a study by Becker and Huselid (1998) found that firms implementing high-performance work systems, which include comprehensive HRM practices, experienced higher levels of employee performance and organisational effectiveness. Similarly, Wright and Boswell (2002) emphasized that strategic HRM practices, such as Leadership, directly contribute to increased employee productivity and engagement.

Globally, human resource management (HRM) has been extensively studied by numerous scholars in Europe. According to Boxall and Purcell (2003), HRM encompasses a set of policies and practices designed to manage an organisation’s workforce effectively, thereby influencing overall organisational performance. Companies that implement effective HRM practices are better positioned to attract and retain talent, leading to improved employee performance and competitive advantage (Wright & Boswell, 2002). Becker and Huselid (1998) highlighted that strategic HRM practices, such as training and performance management, significantly contribute to achieving organisational goals and enhancing productivity. According to Ulrich (1997), HRM plays a critical role in aligning human resources with business strategies, ensuring that employees are effectively utilized to meet organisational objectives.

In developed countries like China, studies have shown that organisations that implement strategic HRM practices tend to see improved employee performance. For instance, Becker and Huselid (1998) found that firms with high-performance work systems, which integrate various HRM practices, experience higher levels of employee productivity and engagement.

Companies like Apple exemplify how innovation and a strong corporate culture can drive employee performance. Apple’s emphasis on creativity and collaboration fosters an environment where employees are motivated to excel in their roles. In developed countries, employee performance is a critical factor influencing organisational success and competitiveness. Research indicates that effective management of human resources significantly enhances employee performance. According to Campbell (1990), employee performance encompasses the behaviors and outcomes that contribute to the achievement of organisational goals

In developing countries, employee performance is influenced by a variety of factors, including economic conditions, cultural contexts, and the effectiveness of human resource management practices. Research indicates that organisations that focus on enhancing employee performance can achieve significant improvements in their overall effectiveness. For instance, a study by Kessy and Temu (2010) in Tanzania found that Leadership initiatives positively impacted employee performance, leading to increased productivity and job satisfaction. Similarly, research conducted in Kenya by Mwita (2000) highlighted the importance of performance appraisal systems in enhancing employee performance.

The study revealed that regular feedback and recognition of employee contributions were crucial for motivating staff and improving their performance levels. In the context of developing countries, where resources may be limited, effective HRM practices can play a vital role in maximizing employee potential. A study by Opatha and Arulrajah (2014) in Sri Lanka emphasized that employee engagement is a key driver of performance. Engaged employees are more likely to be committed to their work and contribute positively to their organisations. This is particularly relevant in developing countries, where fostering a supportive work environment can lead to higher levels of employee motivation and performance.

In Nigeria, Adegoke (2018) noted that 75% of SMEs rely on informal networks for hiring, which limits diversity and merit-based selection. A study in Ghana (Adomako et al., 2020) linked transparent recruitment to 28% higher employee retention rates. In Bangladesh, Rahman and Rahman (2019) demonstrated that SMEs investing in skills training saw a 22% increase in productivity. However, Muriithi and Rambo (2016) found that only 15% of Kenyan SMEs allocate budgets for employee development. A Cameroonian study (Ngwa & Rachidi, 2020) revealed that SMEs using regular feedback systems achieved 18% better performance outcomes. Contrastingly, in Zambia, Banda (2021) found that 60% of SMEs lack appraisal systems entire

In Cameroon especially in Buea, the number of small and medium-sized enterprises (SMEs) plays a crucial role in the local economy. According to the Ministry of Small and Medium-Sized Enterprises, Social Economy and Handicraft (MINPMEESA), SMEs constitute about 95% of all enterprises in Cameroon, highlighting their significance in the economic landscape A study conducted in Buea indicated that there are numerous SMEs operating across various sectors, including agriculture, commerce, construction, and information and communication technology (ICT). Specifically, between 2010 and 2016, a total of 61,366 SMEs were established in Cameroon, with a significant number located in urban areas like Buea.

The controversy surrounding HRMP and employee performance often revolves around the debate on the universality of HR practices. Some scholars, like Wright and Boswell (2002), argue that standardized HRMP can be effectively applied across different cultural contexts, while others, such as Boxall and Purcell (2003), contend that local customs and practices must be considered for successful implementation. This ongoing discourse highlights the importance of contextual factors in assessing the impact of HRMP on employee performance, particularly in diverse environments like those found in developing countries.

1.2 Problem of the Statement

Employee performance challenges of small and medium size enterprises in Buea, Cameroon, can be significantly influenced by human resource management (HRM) practices. Despite the critical role that SMEs play in the local economy, many face difficulties in optimizing employee performance due to various HRM-related issues. Globally, research indicates that ineffective HRM practices can lead to several performance challenges. For instance, a lack of structured performance management systems can result in unclear expectations and inadequate feedback for employees, which negatively impacts their motivation and productivity (Aguinis, 2009). In the context of SMEs in Buea, this challenge is exacerbated by limited resources and expertise in HRM, leading to inconsistent performance evaluations and a lack of employee development opportunities.

Attracting and retaining top talent remains a significant challenge for SMEs. According to Boxall and Purcell (2003), SMEs often struggle to compete with larger firms that offer more attractive compensation packages and career advancement opportunities. This situation can lead to high turnover rates, which disrupts team dynamics and affects overall performance.

In developed countries, small and medium size enterprises, often benefit from robust support systems, including access to advanced technology, skilled labor, and comprehensive financial services. For instance, in the United States, SMEs are recognized for their significant contributions to job creation and innovation, supported by favorable government policies and a strong entrepreneurial ecosystem (OECD, 2017). This environment allows SMEs to thrive and adapt quickly to market changes, leveraging resources effectively to maintain competitiveness. . For instance, in the United States, studies have shown that SMEs that implement comprehensive HRM practices experience higher employee satisfaction and productivity (Huselid, 1995)

In developing countries, the challenges are often exacerbated by economic constraints and a lack of formal HRM education. Research in various contexts indicates that SMEs frequently struggle to implement effective HRM practices due to limited awareness and resources (Muriithi & Rambo, 2016). These issues contribute to lower employee morale and performance, as workers may feel undervalued and unsupported. Consequently, the productivity gap between SMEs and larger firms widens, raising questions about the sustainability of such enterprises in the developing economic landscape.

Focusing on Cameroon, the impact of HRM practices on employee performance is particularly pronounced. A study by Ngwa and Rachidi (2020) reveals that many SMEs in Cameroon face significant challenges in implementing effective HRM practices, leading to low employee performance. Factors such as inadequate training programs and poor communication channels hinder employee engagement and motivation. This situation not only affects individual performance but also has broader implications for organizational success and economic development in the region

The controversy surrounding HRM practices and employee performance often centers on the effectiveness of different approaches. While some scholars advocate for standardized HRM practices across all organizations, others argue that contextual factors such as organizational culture, employee demographics, and economic conditions plays a crucial role in determining the success of these practices (Boxall & Purcell, 2016). This debate is particularly relevant in the context of SMEs, where flexibility and adaptability may be more valuable than rigid adherence to established HRM frameworks.

1.3 Research Questions

1.3.1 Main Research Question

What is the effect of human resource management practice on employee performance in small and medium size enterprises in Buea?

1.3.2 Specific Research Questions

1. How does leadership affect employee performance in small and medium size enterprises in Buea?
2. What part does motivation play in terms of employee performance in small and medium size enterprises in Buea?
3. How does performance appraisal increase employee performance in small and medium size enterprises in Buea?

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