Critical Analysis of the Performance Management System (pms) in SMEs of Karachi

In the midst of global financial slump SMEs of developing & developed economies appear to be a center of gravity for researchers and management practitioners and advent of globalization exaggerate its role indeed. In this situation only hundred percent exploitation of financial, human and technological potential of SMEs make certain the competitiveness and growth possibilities. Relatively little research has been conducted on performance management system in Pakistani SMEs. This study is more focused headed for investigating the PMS implementation and post implementation effects in small firms. Performance Management (PM) is a process for establishing a shared understanding about what needs to be achieved. It is an approach to managing people that increases the level of personal performance and business success. Any organization with suitable performance management system increase employer conviction that it has the right people in the right place at the right time. Performance management must consist of two basic components one is talent exploitation and preservation and second is performance feedback mechanism. In an organizational perspective one thing is quiet evident that maturity of employer-employee relationship depends upon employee job satisfaction and performance and conceptually job satisfaction and performance is directly proportional to each other. The dominant findings indicate that, SMEs in Pakistan are generally less likely to adopt ʹformalʹ PMS practices, including setting goals, monitoring performance and performance evaluation practices. Similarly, they have not formulated ʹformalʹ HR policy and human resource departments usually pursue traditional means of basic HR functions such as employee recruitment, training and compensation. However, from statistical results of textile sector small and medium enterprises exposed that employees do not have a clear understanding of what performance management system aim to achieve similarly big number of employees consider that performance appraisal is not aligned with organizational goals it has no functionality in employee career planning or progression.