The Influence of Human Resource Practices on Organizational Performance: A Study among Small and Medium Enterprises in Klang Valley

This study was undertaken to examine the relationships between human resource (HR) practices and organizational performance among small and medium enterprises (SMEs) in Klang Valley. The objectives of the study was to investigate the relationship between HR practices namely compensation policy, communication, information sharing, training and development towards organizational performance. Based on the literature reviews a model of relationship was proposed and developed to examine the
relationships between the four factors of HR practices. To examine the relationship of the variables in the model, data from 84 respondents among SMEs in Klang Valley were
used. To test the hypotheses of the study, correlation, and multiple regression analysis were performed. The correlation analysis suggested a significant and positive relationship among two of the four HR practices variables and organizational performance. The correlation results suggest that organizational performance is positively and significantly associated with communication and information sharing. Multiple regression analysis result indicated that among the four factors of HR practices, communication and information sharing were the two main predictor variables
to organizational performance. Results from correlation and multiple regression analysis further suggested that communication and information sharing are two key variables to organizational performance in Klang Valley. Based on the findings, recommendation and suggestions for organization are presented. The limitation of the study and the future research opportunities in this area are also discussed.