Managerial Discretion in HRM Practices and Its Effects on Employee Outcomes in Nigerian Small and Medium Enterprises

This study analytically investigates the effects of managerial discretion in HRM practice implementation on employee outcomes, including satisfaction, commitment, and performance, in Nigerian small and medium enterprises (SMEs), drawing data from manufacturing and service SMEs in Owerri, Abeokuta, and Katsina, representing three geopolitical zones. A critical observation in the HRM-performance literature is that intended HR practices and their actual implementation often diverge due to line manager discretion, a gap particularly pronounced in SMEs where formal HR infrastructure is weak. A quantitative analytical design was employed, with 220 employees and 60 line managers in 45 SMEs completing separate surveys, allowing comparison of manager-reported and employee-perceived HR practices. Polynomial regression and response surface analysis were applied to model practice implementation gaps. Bowen and Ostroff's HR Strength Framework and Mitchell, Obeidat, and Bray's Line Manager HRM Model provide the theoretical foundation. Findings reveal that the gap between managers' intended and employees' perceived HR practices is the strongest predictor of employee dissatisfaction and commitment reduction, exceeding the independent effects of either intended or perceived practices. The study identifies that managerial discretion in SMEs is highest in the areas of performance feedback, disciplinary enforcement, and training nomination, creating significant equity risks. The research fills a gap: HRM practice implementation variance in Nigerian SMEs has not been modelled using polynomial response surface methods. Recommendations include HR implementation training for SME managers, employee HR perception audits, and government-sponsored HR management standards for SMEs. Keywords: managerial discretion, HRM practices, employee outcomes, SMEs, Nigeria