Abstract:
The study was carried out with the purpose of examining the effect of human resource
management practice on financial performance of small-scale enterprises in Pallisa. The
objectives for the study aimed at determining the effect of compensation system, performance
appraisal, and selection systems of employee on financial performance small scale enterprises;
qualitative and quantitative techniques in designing the research were used and A total of 40
respondents participated in the study and were selected using random sampling method. The data
was collected using questionnaires and interviews and presented using tables, graphs and pie
charts for easy analysis.
The study also highlighted some of the negative and positive effects that have been registered in
financial management as a result of human resource management in SMEs which includes ie
increases work motivation, attracts talented employees, develops organization competence,
tracks employees’ values, very costly to conduct, time consuming, Result into increased cost,
leads to loss of liquidity.
The study therefore signified that there was appositive effect of human resource management
practice on financial performance of SMEs.
