Implementation of Performance-Based Human Resource Management to Increase MSME Productivity in Medan City

Abstract

This community service program aims to enhance the productivity of 35 Micro, Small, and Medium Enterprises (MSMEs) in Medan City through the implementation of a performance-based human resource management (HRM) system. MSMEs face low employee productivity due to the absence of structured HRM practices, unclear performance standards, and limited understanding of HR development. The program included performance-based HRM training, workshops on job descriptions and key performance indicators (KPIs), performance appraisal training, and 10 weeks of intensive mentoring. Evaluation results show substantial improvements, with 83% of MSMEs developing job descriptions, 78% implementing performance appraisal systems, a 52% increase in productivity, a 41% decrease in turnover, and gains in job satisfaction and operational efficiency. Challenges included resistance to change, limited resources, and difficulties in measuring performance in certain roles. The program also established the Medan HR-Conscious MSME Community as a platform for ongoing learning and best-practice sharing.