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How Does Human Resource Management Influence Organizational Outcomes?
A Meta-Analytic Investigation of Mediating Mechanisms
K. Jiang, D.P. Lepak, J. Hu, & J.C. Boer (2012)
Drawing on the AMO-framework, this meta-analysis examined the effects of three dimensions of HR
systems (skills-enhancing, motivation-enhancing, and opportunity-enhancing) on proximal and distal
organizational outcomes.
Proximal organizational outcomes: human capital and motivation.
Distal organizational outcomes: voluntary turnover, operational outcomes, and financial outcomes.
Introduction
Traditional HRM research has focused on the impact of individual HR practices.
The strategic perspective on HRM research emphasizes bundles of HR practices, often referred to as
High Performance Work Systems (HPWS), high-involvement work systems, and high-commitment
work systems. These bundles are used in examinations of the effects of HRM on employee and
organizational outcomes.
The use of systems of HR practices intended to enhance employees’ KSA’s, motivation, and
opportunity to contribute is associated with positive outcomes such as:
- Greater commitment
- Lower turnover
- Higher productivity and quality
- Better service performance
- Enhanced safety performance
- Better financial performance
Despite the evidence for the positive relationship between HRM and organizational outcomes,
important issues remain regarding the mechanisms through which HRM is associated with different
organizational outcomes:
1. The theoretical logic underlying the mechanisms linking HRM and organizational outcomes
remains fragmented
2. It remains unclear how HRM relates to different organizational outcomes that range from
very proximal to more distal
3. The components of HR systems have identical impacts on outcomes.
Fragmented theoretical mechanisms linking HRM and organizational outcomes by researchers
Behavioural perspective: HR practices affect organizational outcomes by influencing
employee role behaviours; if employees act in ways that are consistent with company goals,
performance should improve.
Human capital & Resource-based perspective: focus on potential contributions of employees’
competencies – their knowledge, skills, and abilities – to organizational outcomes.
Employees contribute through both their competencies and actions, but researchers have typically
focused on one perspective to understand how HR systems impact organizational outcomes.
Therefore, a suggestion of this research: considering multiple perspectives simultaneously provides a
broader and more complete picture of the relationship between HRM and organizational outcomes.
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How is HRM related to different organizational outcomes (proximal and distal outcomes)?
The lack of integration of how HRM relates to different organizational outcomes is problematic given
the different perspectives adopted in the literature.
Exploring the possible paths between HRM and financial outcomes will likely provide a more
integrative model of how HR systems operate to impact a multitude of related and important
outcomes.
Components of HR systems with identical impact on outcomes
Adopting an additive approach to measure HR systems, each component of the system is
treated as if it exerts an equal influence on the outcomes under investigation.
It is important to explore the differential effects of the different components of HR systems.
Goal of this study: develop an integrative model of the mechanisms mediating between HRM and
organizational outcomes through a meta-analytic approach.
- While drawing upon the behavioural perspective on HRM, human capital theory, and the
resource-based view of the firm.
This study aims to extend and refine existing HRM-organizational outcomes models by exploring
multiple mediating paths and differentiating among the effects of sub-dimensions of HR systems.
Theoretical Background and Hypotheses
Longstanding goal of HRM research: understanding the relationship between HRM and
organizational outcomes.
This stream of research has several key components:
1. Organizational outcomes are viewed as multidimensional:
a) HR outcomes
b) Operational outcomes
c) Financial outcomes
HR outcomes: refer to those most directly related to HRM in an organization, such as employee skills
and abilities, employee attitudes and behaviours, and turnover.
Operational outcomes: related to the goals of an organizational operation, including productivity,
product quality, quality of service, and innovation.
Financial outcomes: reflect the fulfilment of the economic goals of organizations.
Typical financial outcomes include sales growth, return on invested capital, and return on assets.
2. Different types of outcomes may not necessarily have equivalent relationships with HR
practices. Moreover, HRM may influence the three types of organizational outcomes in
sequence.
Existing research often implies that HR outcomes serve as a key mediator between HR systems and
key outcomes, the specific natures of models of this mediation depend on the theoretical perspective
researchers have adopted.
On the one hand, several researchers have adopted the behavioural perspective of HRM.
On the other hand, some macro HRM researchers have focused less on the behaviours of
employees and more on their competencies within organizations: human capital theory and
resource-based view of the firm.
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Behavioural perspective of HRM: according to this perspective, organizations do not perform
themselves, but instead use HR practices to encourage productive behaviours from employees and
thus to achieve desirable operational and financial objectives.
Human capital theory: emphasizes that human capital – the composition of employee knowledge,
skills, and abilities – is a central driver of organizational performance when the return on investment
in human capital exceeds labour costs.
Resource-based view: provides additional insights as to why human capital can help firms to outpace
competitors and proposes that organizations obtain a competitive advantage from resources that are
rare, valuable, inimitable, and non-substitutable.
- Human capital (and especially organization-specific human capital) has the potential to
serve as a source of competitive advantage.
- HR practices to create and maintain valuable human capital, which drives high
operational and financial performance.
Under all these three perspectives HR outcomes are viewed as a critical path from HRM to
operational and financial outcomes. Even with this agreement, researchers have not successfully
combined multiple approaches to delineate an overarching picture of how this path unfolds.
Most research has (for example) examined the influence of HR systems on operational or
financial performance either through motivation-related variables or through human capital
variables.
Thus, research is needed to explore how HRM can help organizations achieve financial goals
through multiple paths.
Decomposing HR Systems into Three HR Dimensions
Most research has portrayed an HR system as an additive index of a set of individual HR
practices, but the highly varied set of HR practices can be categorized into sub-dimensions.
Some researchers have drawn upon the ability-motivation-opportunity (AMO) model of HRM:
suggests that employee performance is a function of three essential components: ability, motivation,
and opportunity to perform. Several empirical studies have adopted and validated this conceptual
framework.
Leepak and colleagues (2006) suggested: conceptualising HR practices as falling into one of these
three primary dimensions.
1. Skill-enhancing HR practices
2. Motivation-enhancing HR practices
3. Opportunity-enhancing HR practices
Skill-enhancing HR practices: designed to ensure appropriately skilled employees;
- Comprehensive recruitment
- Rigorous selection
- Extensive training
Motivation-enhancing HR practices: implemented to enhance employee motivation;
- Developmental performance management - Promotion and career development
- Competitive compensation - Job security
- Incentives and rewards
- Extensive benefits
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Opportunity-enhancing HR practices: designed to empower employees to use their skills and
motivation to achieve organizational objectives;
- Flexible job design
- Work teams
- Employee involvement
- Information sharing
Linking HR Dimensions to Multiple Outcomes
According to the AMO-model of HRM, HR outcomes can be divided into human capital, motivation,
and opportunity to contribute.
Human capital and employee motivation are two of the most critical mediating factors that
have been examined in the literature. Here lies the focus of this research as well.
Human capital: the composition of employees’ knowledge, skills, and abilities.
Employee motivation: the direction, intensity, and duration of employees’ effort, as manifested by
positive work attitudes and work behaviours.
The expectation is that all three HR dimensions are positively related to both human capital
and employee motivation;
Another expectation is that these three HR dimensions play different roles in building human
capital and enhancing employee motivation.
We expect that, compared with motivation-enhancing and opportunity-enhancing HR practices,
skill-enhancing HR practices will likely have a stronger impact on human capital and a weaker impact
on employee motivation.
Outcome: human capital
Hypothesis 1a. Skill-enhancing HR practices are positively related to human capital.
Hypothesis 1b. Motivation-enhancing HR practices are positively related to human capital.
Hypothesis 1c. Opportunity-enhancing HR practices are positively related to human capital.
Hypothesis 2a. Skill-enhancing HR practices are more positively related to human capital than
motivation-enhancing HR practices.
Hypothesis 2b. Skill-enhancing HR practices are more positively related to human capital than
opportunity-enhancing HR practices.
Outcome: employee motivation
Hypothesis 3a. Skill-enhancing HR practices are positively related to employee motivation.
Hypothesis 3b. Motivation-enhancing HR practices are positively related to employee motivation.
Hypothesis 3c. Opportunity-enhancing HR practices are positively related to employee motivation.
Hypothesis 4a. Skill-enhancing HR practices are less positively related to employee motivation than
motivation-enhancing HR practices.
Hypothesis 4b. Skill-enhancing HR practices are less positively related to employee motivation than
opportunity-enhancing HR practices.
In line with:
Social exchange theory and the norm of reciprocity: employees who perceive an
organization’s actions toward them as beneficial may feel obligated to reciprocate and be
motivated to exert more effort at work.
Motivation-enhancing HR practices provide employees with extrinsic motivation that links
their work efforts to external rewards.
