The Perceived Impact Of Performance Appraisal On The Performance Of Small-To-Medium-Sized Enterprises In Zimbabwe

Abstract

Orientation: The increasing focus on human resource management (HRM) and performance appraisal, in particular, in small- to- medium-sized enterprises (SMEs) is a comparatively recent phenomenon. Unfortunately, much of our knowledge of traditional HRM topics in large corporations may not necessarily apply in the enterprises. Research purpose: This study purposed to examine whether performance appraisal had an impact on SMEs’ performance measured by return on investment (ROI) and innovation in Harare Province, Zimbabwe. Motivation for the study: Small- to- medium-sized enterprises are becoming the dominant form of business in terms of the socio-economic development of countries worldwide, in areas such as gross domestic product and employment. In view of this, a systematic collection of information about employees in the enterprises, which forms the bedrock of all human resource (HR) practice, can be done through performance appraisal. Unfortunately, performance appraisal in SMEs has not received adequate research attention. Research design, approach and method: The study employed an ex post facto correlational design that adopted a purely quantitative approach. A total of 106 owners or managers took part in the survey. A self-constructed structured questionnaire was used to collect data. The Statistical Package for Social Sciences (SPSS) version 20 was used for both descriptive and inferential statistics. Main findings: Most owner or managers made use of the 360-degree performance appraisal method. The study established that very weak and statistically insignificant relationships existed between performance appraisal and firm performance measured by both ROI and innovation. Practical/managerial implications: It is recommended that the government through the relevant ministries and agencies should consider more financial inducements, tax relief for start-ups and additional grants to support investments in new technology, and more training for owner or managers. This could, amongst other things, go a long way in assisting them to acquire sufficient information technology infrastructure for effective implementation of performance appraisals. Contribution/value-add: The current study is one of the very few, if any, that sheds light on the nexus between HRM and performance appraisal in particular and the performance of SMEs in the country. Unlike most studies, the current study adopted a hybrid approach in the measurement of performance, making use of both objective and subjective measures.