How does human resource management influence organisational performance? An integrative approach-based analysis

Abstract

Purpose - Drawing on the contingency perspective between business strategies and human resource (HR) practices, this study examines the effects of human resource management (HRM) system (which integrates both content and process of HR practices), on both proximal organisational outcomes (such as job satisfaction, motivation, and organisational commitment) and distal organisational outcomes (such as employee engagement, organisational citizen behaviour - OCB, co-operation among employees, intention to quit, and operational performance). Design / Methodology / Approach - The analysis is based on a sample of 996 Greek employees working in 108 private organizations and the statistical method employed is structural equation modeling with bootstrapping estimation. Findings - The results indicate that HRM content is more positively related to job satisfaction and motivation and less related to organisational commitment than HRM process. Moreover, HRM system is sequentially related to organisational outcomes (both directly and indirectly) and significantly influences employee job satisfaction and motivation, as well as OCB and co-operation among employees, and operational performance. Research limitations / implications – The data was collected using a questionnaire at a single point in time, and thus, not allowing dynamic causal inferences. Considering that Greece is experiencing a severe financial crisis, the findings from this unique context may not generalize across other contexts. Practical implications – The core messages to decision makers are that employee development and rewards are the major dimensions of the content of an HRM system and that consistency and distinctiveness are the principal features of the process of an HRM system, even in cases where the organization is operating under an economic crisis environment. Originality / Value – Investigations into the relationship between HRM systems and organisational performance have become increasingly common. Nevertheless, empirical studies that measure the impact of HRM systems, which being contingent on business strategies integrate both content and process of HR practices, on organizational performance are still rare. This article partially fills this gap.