This study investigates the relationship between supervisory behavior, conflict management strategies, and sustainable employee performance and inquires the mediating effect of conflict management strategies. Data were collected from the SMEs of the manufacturing industry of Pakistan. The significance of the model was assessed using the PLS-SEM (structural equation modeling). The findings of the study revealed a positive and significant relationship between supervisory behavior and sustainable employee behavior. Similarly, conflict management strategies had a positive effect on the relationship between supervisory behavior and sustainable employee behavior. This study adds in the current literature of supervisory behavior as a critical predictor of sustainable employee performance in two ways. Firstly, this study validates Conflict management strategies as an influential mediator between the relationship of supervisory behavior and sustainable employee performance. Secondly, this study provides substantial practical implications for managers at SMEs to enhance sustainable employee performance through supervisory behavior, stimulated by conflict management strategies. This study is based on cross-sectional data; more longitudinal studies can further strengthen the generalizability of relationships between the constructs. The study adds in the current literature of PLS-SEM as an assessment model for direct and mediation relationships.