Organisational Change Effectiveness in Saudi Arabian SMEs: A PLS-SEM Analysis of Strategic Human Resource Practices and Transformational Leadership

In highly competitive business settings, organisational change has become crucial for small and medium-size enterprises (SMEs) to be competitive. But successful implementation of organisational change is heavily reliant on good practices in HR and leadership. In this study, the authors discuss the effects of strategic human resource practices on the effectiveness of organizational change and explore the mediation role of transformational leadership in the context of SMEs in Saudi Arabia. A quantitative cross sectional research design was used and data was collected from 348 employees in Saudi Arabian SMEs using a structured questionnaire. The model of the research was then analysed using the Partial Least Squares Structural Equation Modelling (PLS-SEM) software with SmartPLS 4. The results indicate that the recruitment of talent, remuneration systems, employee involvement, training and development programs and employee motivation have significant positive impact on the effectiveness of organizational change. Of these dimensions, employee motivation had the greatest direct impact (β = 0.214, p < 0.001), while the least, but still important, was the compensation system (β = 0.126, p = 0.002). Moreover, the transformational leadership was a significant factor that affected the effectiveness of organisational change (β = 0.387, p < 0.001) with the highest structure effects in the structural model. Mediation analysis results showed that transformational leadership significantly and partially mediated the relations between all dimensions of strategic HRP and organisational change effectiveness. Additionally, the structural model also exhibited significant amounts of explained variance for transformational leadership (75.7%) and organisational change effectiveness (74.2%). This study also makes a significant contribution to the strategic human resource management and organisational change field, by offering empirical evidence that transformational leadership enhances the effectiveness of strategic human resource practices in the context of successful organisational change. The results have practical implications for SME managers and policymakers, as they stress the need to combine strategic human resource practices with transformational leadership to boost organisational adaptability and better change outcomes in achieving Saudi Vision 2030.

Strategic human resource practices; transformational leadership; organisational change effectiveness; SMEs; PLS-SEM; Saudi Arabia

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