Driving SMEs’ Performance in South Africa: Investigating the Role of Performance Appraisal Practices and Managerial Competencies

Abstract

Managerial competencies and performance appraisal practices are often ignored when considering the performance of Small-to-Medium Enterprises (SMEs). Yet, these competencies and practices are fundamental for the survival of the SMEs. SMEs are critical for economic growth and job creation in many economies. The current study sought to establish whether managerial competencies and performance appraisal practices correlate with SMEs’ performance in South Africa. Firm performance was measured using two variables: innovation and return on investment (ROI). The study adopted a structural equation modelling analytical approach. Interpersonal competencies were found to be a significant factor of managerial competencies, but conceptual and political competencies were not. The study also found that managerial competencies, and not performance appraisal practices, significantly correlated with both innovation and ROI. The study recommends that performance appraisal practices be tailored to suit SMEs in the developing countries context.

Meningkatkan Kinerja Karyawan melalui Keadilan Penilaian Kinerja dan Kompensasi Berbasi Kinerja

“…Karena penilaian kinerja telah digunakan untuk menilai apakah prestasi dan kinerja kerja karyawan sudah efektif, sesuai harapan perusahaan (Na-Nan et al, 2020). Bahkan, (Mashavira et al, 2022)…”

The Effects of Hierarchy on Boundary Spanners' Communication

“…Finally, organizations should develop their performance appraisal system to encourage purchasing managers to listen to boundary spanners. Performance appraisal is a measurement of the human resources management to encourage appropriate behaviors and motivate employees (Kamphorst & Swank, 2018;Mashavira et al, 2022). Mashavira et al (2022) suggested that organizations could include supportive communication and listening behavior in performance appraisal criteria to measure managers' interpersonal competencies.…”

“…Performance appraisal is a measurement of the human resources management to encourage appropriate behaviors and motivate employees (Kamphorst & Swank, 2018;Mashavira et al, 2022). Mashavira et al (2022) suggested that organizations could include supportive communication and listening behavior in performance appraisal criteria to measure managers' interpersonal competencies. More specifically, the performance appraisal system needs to collect feedbacks from employees regarding how frequently supervisors listen to their opinions, how sympathetic the supervisors are when they listening to subordinates, to what extent their opinions are accepted by the supervisors, etc.…”