This study attempts to examine both of direct relationship between firm’s profitability and job creation effect and moderating effect of HPWS (High-Performance Work System) for Small and Medium Enterprises (SME). Using a sample of 188 SMEs from HCCP (Human Capital Corporate Panel) panel dataset, we found that more profitable SMEs hire more employees on average during the next three years. In addition, companies utilizing more HPWS practices (high-HPWS) tend to hire employees regardless of their profitability, whereas companies utilizing less HPWS practices (low-HPWS) tend to hire elastically depending on their profitability. When the quality of employment is examined, the degree of quality of employment is high in high-HPWS companies. This study provides various policy implications to better understand and resolve the manpower shortage issues of SMEs in South Korea.