Employee perspectives on strategic human resource management practices and their impact on organisational performance in Saudi Arabian small and medium-sized enterprises

Abstract

Background: Strategic human resource management (SHRM) is central to improving organisational performance by aligning HR practices with business goals. In today’s competitive environment, SHRM drives employee engagement, talent retention and productivity. Despite growing interest, how employees themselves experience and evaluate SHRM in Saudi small- and medium-sized enterprises (SMEs) remains underexplored.
Aim: To examine the impact of SHRM practices on organisational performance in Saudi Arabian SMEs from the employee perspective, within the context of Saudi Vision 2030.
Setting: A stratified sample of 300 employees across Saudi Arabian SMEs in Riyadh, Jeddah and Dammam, representing multiple industries.
Method: A quantitative survey design was employed using validated scales (Job Satisfaction Survey and Utrecht Work Engagement Scale). Data were analysed using Pearson correlation, chi-square tests, multiple regression and structural equation modelling.
Results: SHRM practices were significantly and positively associated with employee performance (r = 0.752, p < 0.001), job satisfaction (r = 0.624, p < 0.01) and financial performance indicators. Compensation satisfaction showed a non-significant direct effect (p = 0.918), interpreted through Saudi cultural values prioritising non-monetary recognition.
Conclusion: This study provides employee-level empirical evidence that SHRM practices drive performance outcomes in Saudi Arabian SMEs. Findings offer actionable guidance aligned with Vision 2030 objectives and contribute to contextual HRM theory.
Contribution: This study contributes employee-level evidence of SHRM–performance linkages in Saudi Arabian SMEs, extends contextual HRM theory by demonstrating the cultural contingency of compensation practices in emerging-economy settings and operationalises RBV, HCT and Contingency Theory within a single integrated empirical design.