Are Human Resource Departments Really Important? An Empirical Study on Malaysian Small and Medium Enterprises (SMEs) in the Service Sector

The intention of this study is to examine the significant differences in terms of employees’ job satisfaction and firms’ performance for Malaysian SMEs that has their own Human Resource (HR) department against organisations who doesn’t have their own HR department. Besides that, this study provides more insight towards Malaysia’s Human Resource Management practices based on 43 SMEs in the service sector. Findings The finding of the study reveals that there are significant differences between organisations with HR department and organisations without HR department in terms of employees’ training and development, performance appraisal, employee relations and communication and also in terms of employees’ job satisfaction.

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