Sustainable Human Resource Management Practices and Organizational Performance in SMEs: Evidence from Pakistan

Abstract

Limited empirical evidence has examined multiple dimensions of sustainable human resource management (SHRM) simultaneously in relation to organizational performance among small and medium-sized enterprises (SMEs) in Pakistan. This study examined the relationships of sustainable recruitment and selection (SRS), sustainable training and development (STD), employee participation and empowerment (EPE), sustainable performance management and rewards (SPMR), and employee well-being and work–life balance (EWB) with organizational performance. A quantitative cross-sectional survey was conducted among 100 employees and managers from Pakistani SMEs using a structured questionnaire with five-point Likert-scale measures. Data were analyzed using descriptive statistics, Cronbach's alpha, Pearson's correlation, and multiple linear regression, with regression assumptions also assessed. All five SHRM dimensions showed positive and significant correlations with organizational performance, with coefficients ranging from r = .55 to .63 (p< .01). In the simultaneous regression model, SRS (β = .21, p = .016), STD (β = .24, p = .006), and EPE (β = .18, p = .037) showed significant positive associations with organizational performance, whereas SPMR and EWB were not statistically significant. The model explained approximately 56% of the variance in organizational performance. The findings indicated that capability development, recruitment, and employee participation were particularly relevant within the sampled SMEs, while further research using larger, longitudinal, multisource, and objective measures was warranted.