Abstract

The purpose of this study is focus on the impact of human resources management on organisational performance case of small and medium sized enterprises in Buea . It’s specific objective where to determine The impact of training and development on the performance of SMEs , analyze the role of compensation management in enhancing organizational performance , investigate how work-life balance contributes to employee productivity and performance in SMEs.

A descriptive research design was adopted as appropriate study designs were a sample of 50  employees and managers of SMEs in Buea were selected using purposive  sampling techniques and a non-probabilitic sampling approach.The quantitative methods of data collection were used in this work were a self-administered questionnaire composed of closed ended, and likert scale questions was used to collect data from the respondents.

Data obtained through a structured questionnaire were analysed using descriptive statistics and the multiple regression analysis with the help of Statistical Package for Social Sciences (SPSS) software. The findings reveal that strategic HRM practices significantly enhance organizational performance by fostering a more committed, skilled, and motivated workforce. H

owever, many SMEs in Buea face challenges such as limited resources and lack of formal HR structures, which hinder the optimal implementation of HRM strategies. The study concludes by recommending tailored HRM frameworks and capacity building initiatives to support SME growth and sustainability in the region.

CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

Human Resource Management (HRM) has increasingly become a pivotal element in ensuring organizational success, especially within small and medium-sized enterprises (SMEs). As organizations continue to evolve in a highly competitive environment, the strategic management of human resources has been acknowledged as a core component in driving business performance, fostering innovation, and ensuring sustainability.

In Buea, a growing business hub in the Southwest Region of Cameroon, SMEs dominate the local economy. These businesses are crucial contributors to employment, innovation, and income generation. However, many of these enterprises operate informally, often without well-structured HRM systems. This has significant implications for their growth, productivity, and long-term viability.

In recent years, small and medium-sized enterprises (SMEs) have emerged as vital contributors to economic growth in Buea, Cameroon. As these businesses navigate competitive markets, the role of Human Resource Management (HRM) becomes increasingly significant. HRM encompasses a variety of practices designed to maximize employee performance and align individual goals with organizational objectives. Studies have shown that effective HRM can lead to improved organizational performance by enhancing employee engagement, productivity, and retention (Becker & Huselid, 2018; Kramar, 2014).

In today’s dynamic and highly competitive global economy, the importance of effective human resource management (HRM) cannot be overemphasized. HRM plays a vital role in shaping the capabilities of an organization, particularly in its ability to adapt, innovate, and maintain sustainable growth. HRM encompasses a range of organizational activities, including recruitment and selection, training and development, performance management, employee relations, compensation and benefits, and strategic human resource planning. These functions collectively influence the performance, productivity, and sustainability of organizations across different sectors.

Human resources are often considered the most valuable asset of an organization. This is particularly true in the context of small and medium-sized enterprises (SMEs), where the quality and motivation of personnel can have a direct and significant impact on performance. SMEs typically operate with limited resources, and the effective utilization of their human capital can determine their survival and competitiveness. Unlike large corporations, SMEs often lack the structured HR systems and departments that facilitate comprehensive human resource management. As a result, the management of people within these enterprises tends to be informal and reactive, rather than strategic and proactive.

SMEs play a crucial role in the economic development of both developed and developing countries. In Cameroon, SMEs represent a significant portion of the private sector and contribute substantially to employment creation, poverty alleviation, and gross domestic product (GDP). The town of Buea, located in the Southwest Region of Cameroon, has emerged as a notable hub for entrepreneurial activity, especially in the tech industry, often referred to as “Silicon Mountain.” This thriving business environment is characterized by numerous SMEs engaged in various sectors such as technology, retail, hospitality, education, agriculture, and manufacturing.

Despite their economic significance, many SMEs in Buea face persistent challenges related to human resource management. These include high employee turnover, limited access to skilled labor, poor employee engagement, inadequate training and development opportunities, and ineffective performance appraisal systems. Such challenges are compounded by the fact that most SMEs operate without formal HR departments or specialized HR personnel. Consequently, HRM is often handled by business owners or managers who may lack the requisite knowledge and expertise.

The absence of strategic HRM practices in SMEs can adversely affect organizational performance. When employees are not effectively recruited, trained, or motivated, their productivity and commitment to organizational goals can suffer. Furthermore, the lack of structured HRM systems can lead to inefficiencies, employee dissatisfaction, and increased labor costs due to turnover and recruitment challenges. This underscores the need for SMEs in Buea to adopt effective HRM practices that align with their strategic objectives and contribute to enhanced organizational performance.

Research has shown that the implementation of structured HRM practices in SMEs can result in improved employee performance, better customer service, innovation, and increased profitability. For instance, firms that invest in employee training and development are more likely to benefit from a skilled and adaptable workforce. Similarly, effective performance appraisal systems can help align employee goals with organizational objectives, foster accountability, and recognize high performers. Compensation and benefits also play a crucial role in attracting and retaining talent, while positive employee relations contribute to a harmonious and productive work environment.

The increasing recognition of HRM as a critical success factor in SMEs has prompted scholars and practitioners to explore how best to design and implement HR strategies that are both effective and feasible within the context of resource-constrained environments. In Cameroon, however, there is a paucity of empirical research on HRM practices in SMEs, particularly in the Buea municipality. Most studies have focused on large organizations, leaving a significant gap in understanding the unique HRM dynamics within SMEs.

This study seeks to fill this gap by examining the impact of HRM on organizational performance in SMEs in Buea. It aims to explore the extent to which HRM practices are being implemented, identify the challenges faced by SMEs in managing human resources, and assess the impact of these practices on various performance indicators such as productivity, employee satisfaction, customer service, and profitability. The findings of this study will provide valuable insight. Also,

Evaluation of Human Resources Management in Small and Medium-Sized Enterprises (SMEs) in Buea

The evaluation of Human Resources Management (HRM) in SMEs in Buea involves assessing the effectiveness of HRM practices in achieving organizational goals and objectives. the evaluation of HRM will focus on the following aspects: training and development, compensation management, work life balance and the evaluation will also examine the impact of human resources management practice on organisational performance including productivity, employee satisfaction, financial performance by evaluating human resources management in small and medium sized enterprises in Buea, this study aims to provide insight in to the effectiveness of human resource management practices in achieving organisational goals and objectives and to identify areas of improvement.

1.2. Problem statement

Despite the recognized important of human resources management, Many small and medium sized enterprises in Buea face challenges in implementing effective human resources management practices Human resource management is becoming increasesingly important as human resources of an organization are considered to be a source of competitive advantage.

A number of researchers have been interested in establishing the link between human resource management and the organizational performance. Although SMEs are considered engines of growth, entrepreneurship, innovation and employment, most studies on human resource management are mainly focused on large enterprises. Therefore, there is scant research about the efficiency of HRM practices in SMEs. There is a need of understanding what practices are undertaken to manage the workforce in small and medium sized enterprises.

Small and Medium-Sized Enterprises (SMEs) play a vital role in economic development, especially in emerging economies like Cameroon. In Buea, a key urban center in the South West Region of Cameroon, SMEs contribute significantly to job creation, poverty alleviation, and innovation. However, despite their importance, many SMEs in Buea face persistent challenges that hinder their performance and sustainability. A major underlying issue is the ineffective management of human resources.

Globally, SMEs struggle with limited access to skilled labor, inadequate training and development programs, poor employee retention strategies, and weak performance appraisal systems. These challenges are often compounded by a lack of strategic human resource planning and the absence of formal  human resource departments due to limited financial and human capital (Gampine, 2024; Buwah et al., 2024).

In Cameroon and Buea specifically, SMEs often operate informally, with business owners managing HR functions based on intuition rather than formal training or systems, resulting in low productivity, high staff turnover, and inconsistent organizational performance (Douanla et al., 2020). This research seeks to examine the impact of Human Resource Management (HRM) practices such as recruitment and selection, training and development, performance appraisal, compensation management, work life balance and employee motivation on the performance of SMEs in Buea.

The goal is to identify which HRM practices are most effective in improving business outcomes, thereby offering evidence-based recommendations for SME owners and policymakers. By addressing this problem, the study aims to fill the knowledge gap on human resources management strategic role in SME performance within the Buea context. It also contributes to broader discussions on how tailored human resource practices can enhance organizational efficiency, competitiveness, and sustainability in similar developing economies.

SMEs in Buea typically face challenges such as limited access to finance, inadequate infrastructure, and regulatory constraints, which makes the study of HRM practices particularly relevant in this context. By limiting the study to Buea, the research captures insights specific to the socioeconomic and cultural dynamics of the town. The findings will help understand how human resource management practices affect organizational performance in SMEs within this unique environment.

1.3   Research Questions

1.3.1 Main Research Question

What is the effect of Human Resource Management on organizational performance in small and medium-sized enterprises in Buea?

1.3.2 Specific Research Questions

1. What are the effects of training and development on organizational performance in small and medium-sized enterprises in Buea?
2. What are the influences of compensation management on organizational performance in small and medium-sized enterprises in Buea?
3. What is the effect of work-life balance on organizational performance in small and medium-sized enterprises in Buea?

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