How does human resource management influence
organizational performance? – Katou
Abstract
Results: HRM content is more positively related to job satisfaction and motivation and less related to
organizational commitment than HRM process. Moreover, HRM system is sequentially related to
organizational outcomes (both directly and indirectly) and significantly influences employee job
satisfaction and motivation, as well as OCB (organizational citizen behaviour) and co-operation
among employees, and operational performance.
Practical implications: Employee development and rewards are the major dimensions of the content
of an HRM system and consistency and distinctiveness are the principal features of the process of an
HRM system.
Introduction
Research on the relationship between HRM and organizational outcomes has been inconsistent.
- (1) Important to explore the effects of the different components of HRM systems (the policies
and practices). Even though employees are exposed to the entire system, different components
can have different effects.
- (2) Important to take into consideration the content and the process of HR processes and
practices in an HRM integrated system => how HRM practices are executed.
- (4) Exploring the serial influence of the mediating possible path between HRM and organizational
outcomes may provide a more integrative model of how HRM systems influence important
organizational outcomes (e.g. the integration of proximal and distal outcomes).
The Research framework and hypotheses
Three primary groups of organizational outcomes:
- HR outcomes such as employee skills, employee attitudes, and employee behaviour;
- Operational outcomes as productivity, growth, and creativity.
- Financial outcomes such as sales growth, return on equity, and return on assets.
HRM => HR outcomes => operational outcomes => financial outcomes.
- Within a type of outcome, there can also be an influence, e.g. employee attitude having impact
on employee behaviour, implying that employee behaviour mediates the relationship between
employee attitude and operational outcomes.
Two theoretical perspectives:
- Behavioural perspective of HRM => organizations use HR practices to support productive
behaviours from employees and thus to achieve desirable operational and financial objectives.
- Competencies perspective of HRM => organizations use HR practices to create and maintain
human capital (i.e. combination of employee knowledge, skills, abilities), which by being a source
of competitive advantage, will help the organization to achieve its desirable operational and
financial objectives.
In understanding the relationship between HRM and organizational performance, two fundamental
approaches have been followed:
- The best practices approach => associated with the so-called universalistic models, advocates
dependence, supporting that HR practices should be consistent with a given context in
maximizing business performance.
,- The best fit approach => considered to be preferable, argues that the HRM-performance
relationship depends on contextual factors, such as business strategy or environment.
Focus on HRM system of practices instead of individual HR practices.
- Content of HRM system => the individual practices that make up the HRM system. The set of HR
practices through which organizations can improve the acquisition, development, retention, and
utilization of their human capital in order to achieve the strategic goals of the organization such
as organizational performance.
o Number and type of HRM parts differs according to the aims and objectives of each
individual work but to HRM parts are usually present in almost all works: (1) HR practices of
R&D, aiming at attracting and developing HRs; and (2) HR practices of rewards and relations,
aiming at retaining and motivating HRs.
o Some say that it are four key HRM areas of resourcing, development, rewards, and relations.
This is because employee resourcing can have higher levels of human capital leading to
higher overall performance; employee development is directly linked to the functional
capacity of the organisation; employee rewards helps to focus employee energy on specific
productive behaviours; and employee relations influence the organisation’s culture and
climate, which in turn relates to organisational outcomes.
o AMO model: HR practices should accordingly fall into one of three areas of HRM systems:
skill-enhancing, motivation-enhancing, and opportunity-enhancing.
- Distinguish between actual HRM and perceived/experienced HRM. The latter determined
organizational performance. Dependent on implementation => skills of line managers.
- Therefore, the attention has shifted from HRM content to HRM process => the way HR policies
and practices communicated to employees OR the features of an HRM system that send signals
to employees that allow them to understand the desired and appropriate responses and form a
collective sense of what is expected.
o This shift is based on the assumption that employees may find it difficult to attach only one
kind of meaning to an HRM system because individuals may not uniquely interpret the same
HR practices => employees perceive differently sometimes than of how it was intended to
be delivered.
o Argue that the formation of desired reactions by employees can only be achieved if HRM
systems are clearly perceived and interpreted as intended by the organization. HRM system
that has the features of distinctiveness, consistency, and consensus (agreement among
employee’s views of the event-effect relationship) => if an HRM system has all these, it is
considered to be strong => produces a shared meaning about HRM amongst the employees,
thus shaping common attitudes and behaviour, which influence organizational goals.
,Based on both contingency theory and the theory that if people perceive a situational similarly, they
generate uniform expectancies about appropriate responses and behaviours => based on attribution
theory and communication theory.
H1a: Business strategies positively influence HRM systems.
H1b: Business strategies positively influence actual HR practices.
H1c: Business strategies positively influence features of HR practices.
H2a: Features of HR practices mediate (fully or partially) the relationship between actual HR practices
and HR practices as experienced.
H2b: HRM content mediates the relationship between business strategies and HRM as experienced.
H2c: HRM process mediates the relationship between business strategies and HRM as experienced.
H2d: HRM content mediates the relationship between business strategies and HRM process.
Only when perceptions are shared across employees, or when a strong HRM climate exists, it is
expected employees to develop desired collective attitudes (e.g. job satisfaction) and behaviour (e.g.
work engagement) that will have a positive effect on operational performance.
Discussion and conclusion
- Consistency features of HR practices will convey compatible and stable messages across contexts
and time about the quality and innovation culture of organizations.
- Strategic management orientation (i.e. alignment of business strategies with HR practices) leads
to a strong HRM system (i.e. having the features of distinctiveness, consistency and consensus)
which eliminates the ambiguities regarding strategic and HRM goals. In turn, the strong HRM
system develops shared perceptions of HR practices.
- Findings support Bowen and Ostroff (2004, p. 215) who argue that “it is likely that some features
are more critical than others in creating a strong situation. For example, without consistent HRM
messages, distinctiveness and consensus may lose impact”.
- Additionally, the influence of HRM content on HRM as experienced (and then on operational
performance) is higher that the influence of HRM process. In other words, it may be more
important to put effort in finding appropriate HR practices according to context, than the risk of
failing to properly implement these HR practices.
- Mediating effect of HRM content is much stronger than the mediating effect of HRM process in
the relationship between strategies and HRM as experienced.
, - The direct effect from HRM as experienced on operational performance is much stronger than its
mediating effect, supporting the view that in cases of economic crisis it is the HRM climate that is
the most important determinant of organizational performance.
- The business strategies of quality and innovation are associated mostly with training and
development, rewards and relations, which by being explained and executed consistency and
distinctively develop positive shared perceptions of employees mainly with respect to training and
development and rewards. Consequently, it is job satisfaction and improved motivation that
develop OCB and co-operation among employees, which in turn have an impact on the creativity
and growth of the organization.
- The influence of HRM to proximal outcomes (e.g. employee attitude) is higher than the influence
of HRM to distal outcomes (e.g. operational performance).
- Additionally, the findings of the study suggest that it is not only the content of the HRM system
that develops shared meanings among employees about HR practices, but, it is the way this is
delivered to employees. We suggest that practitioners focus more on the features of HR practices
such as distinctiveness (e.g. visibility, understandability, legitimacy, and relevance), consistency
(e.g. instrumentality, validity, consistency of HR messages), and consensus (e.g. agreement
among message senders and fairness of the HR system).
Strategic implications of HR role management in a
dynamic environment – Sheehan, De Cieri, Cooper,
Shea
Abstract
Purpose: The impact of HR role overload and HR role conflict on the HR function’s involvement in
strategic decision making and to examine whether conditions of environmental dynamism moderate
the impact of HR role conflict and HR role overload in that relationship.
Findings: Results did not support the hypothesized negative relationships between HR role
management and involvements in strategic decision making but did establish the moderating effect
of environmental dynamism, such that these associations were more negative at higher levels of
dynamism.
Introduction
- Argument of paper: the variety, and sometimes competing expectations of the roles played by
the HR professional within their social system, potentially generate problems for HR
professionals that undermine strategic decision-making inclusion.
- Where the HR professional experiences role overload or conflict, the HR function’s power of
meaning will be diminished and HR professionals will be less likely to be involved in strategic
decision making.
- Environmental dynamism as moderating factor. Dynamic conditions are becoming the norm due
to unpredictable environments. Economic volatility creates challenges, but also opportunities for
HR managers and employers wishing to differentiate themselves by investing in HRM strategies
such as extensive training and development, employee incentive and bonus schemes.
HR power of meaning and HR role management
- Unified commitment from the top management group to HR initiatives is important. This support
is, however, not assured.
- For the HR professional to be able to operate effectively within strategic processes and make an
impact, the HR professional must be influential => socially construct and identity and
