The Impact of Human Resource Management on Organizational Performance: Progress and Prospects

doi:10.2307/256712

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The Impact of Human Resource Management on Organizational Performance: Progress and Prospects

Journal Article•DOI•

The Impact of Human Resource Management on Organizational Performance: Progress and Prospects

Brian E. Becker¹, Barry Gerhart²•Institutions (2)

University at Buffalo¹, Vanderbilt University²

01 Aug 1996-Academy of Management Journal (Academy of Management)-Vol. 39, Iss: 4, pp 779-801

TL;DR: In this paper, the authors describe why human resource management (HRM) decisions are likely to have an important and unique influence on organizational performance, and their hope is that this research forum will help advance...

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Abstract: We describe why human resource management (HRM) decisions are likely to have an important and unique influence on organizational performance. Our hope is that this research forum will help advance ...

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Journal Article•DOI•

Understanding HRM–Firm Performance Linkages: The Role of the “Strength” of the HRM System

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David E. Bowen¹, Cheri Ostroff²•Institutions (2)

Arizona State University¹, Columbia University²

01 Apr 2004-Academy of Management Review

TL;DR: In this paper, the authors introduce the concept of the strength of the HRM system and describe the meta-features that result in a strong organizational climate, analogous to Mischel's "strong situation", where individuals share a common interpretation of what behaviors are expected and rewarded.

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Abstract: Theory building has lagged on the intermediate linkages responsible for the relationship between HRM and firm performance. We introduce the construct “strength of the HRM system” and describe the meta-features of an HRM system that result in a strong organizational climate, analogous to Mischel's “strong situation,” in which individuals share a common interpretation of what behaviors are expected and rewarded. The strength of the HRM system can help explain how individual employee attributes accumulate to affect organizational effectiveness.

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2,646 citations

Cites background from "The Impact of Human Resource Manage..."

...The resource-based view has prompted recent work on how HRM practices contribute to firm performance by leveraging human capital, discretionary effort, and desired attitudes and behaviors (e.g., Becker & Gerhart, 1996; Lado & Wilson, 1994; Wright et al., 1994)....
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...The configural approach examines how a pattern of numerous HRM practices is related to firm performance so that the total effect of HRM is greater than the sum of the individual practices themselves (Becker & Gerhart, 1996; Delery & Doty, 1996; Ichniowski, Shaw, & Prennushi, 1997)....
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...…much has been written on the importance of designing an HRM system with practices that complement one another and fit together as a whole in achieving the organization’s goals (e.g., Becker & Gerhart, 1996; Delery & Doty, 1996; Schuler & Jackson, 1995; Wright & McMahan, 1992; Wright & Snell, 1991)....
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Journal Article•DOI•

The Human Resource Architecture: Toward a Theory of Human Capital Allocation and Development

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David P. Lepak¹, Scott A. Snell²•Institutions (2)

University of Maryland, College Park¹, Pennsylvania State University²

01 Jan 1999-Academy of Management Review

TL;DR: In this article, the authors draw on the resource-based view of the firm, human capital theory, and transaction cost economics to develop a human resource architecture of four different employment modes: internal development, acquisition, contracting, and alliance.

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Abstract: Recognizing, that not all employees possess knowledge and skills that are of equal strategic importance, we draw on the resource-based view of the firm, human capital theory, and transaction cost economics to develop a human resource architecture of four different employment modes: internal development, acquisition, contracting, and alliance. We use this architecture to derive research questions for studying the relationships among employment modes, employment relationships, human resource configurations, and criteria for competitive advantage.

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2,550 citations

Journal Article•DOI•

Does Stakeholder Orientation Matter? The Relationship Between Stakeholder Management Models and Firm Financial Performance

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Shawn L. Berman¹, Andrew C. Wicks², Suresh Kotha², Thomas M. Jones²•Institutions (2)

Boston University¹, University of Washington²

01 Oct 1999-Academy of Management Journal

TL;DR: In this paper, the authors contributed to stakeholder theory development by deriving two distinct stakeholder management models from extant research, and testing the descriptive accuracy of these models, and including important variables from the strategy literature in the tested models.

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Abstract: Little empirical work has been done on the effect of stakeholder management on corporate performance. In this study, we contributed to stakeholder theory development by (1) deriving two distinct stakeholder management models from extant research, (2) testing the descriptive accuracy of these models, and (3) including important variables from the strategy literature in the tested models. The results provide support for a strategic stakeholder management model but no support for an intrinsic stakeholder commitment model. Implications of these findings for management practice and future research are discussed.

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2,329 citations

Journal Article•DOI•

On becoming a strategic partner: The role of human resources in gaining competitive advantage

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Jay B. Barney¹, Patrick M. Wright²•Institutions (2)

Max M. Fisher College of Business¹, Cornell University²

01 Mar 1998-Human Resource Management

TL;DR: In this paper, the role of the HR executive as a strategic partner in developing and maintaining competitive advantage within the firm is also examined, and why some popularly cited sources of sustainable competitive advantage are not, and what aspects of a firm's human resources can provide a source of sustainability competitive advantage.

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Abstract: Although managers cite human resources as a firm's most important asset, many organizational decisions do not reflect this belief. This article uses the value, rareness, imitability, and organization (VRIO) framework to examine the role that the human resource (HR) function plays in developing a sustainable competitive advantage. Why some popularly cited sources of sustainable competitive advantage are not, and what aspects of a firm's human resources can provide a source of sustainable competitive advantage are discussed. The role of the HR executive as a strategic partner in developing and maintaining competitive advantage within the firm is also examined. © 1998 John Wiley & Sons, Inc.

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1,927 citations

Journal Article•DOI•

How much do high-performance work practices matter? a meta-analysis of their effects on organizational performance

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James G. Combs¹, Yongmei Liu¹, Angela T. Hall¹, David J. Ketchen²•Institutions (2)

Florida State University¹, Auburn University²

01 Sep 2006-Personnel Psychology

TL;DR: In this paper, the authors use meta-analysis to estimate the effect size and test whether effects are larger for high performance work practices (HPWPs) versus individual practices, operational versus financial performance measures, and manufacturing versus service organizations.

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Abstract: Although there is growing evidence that high performance work practices (HPWPs) affect organizational performance, varying sample characteristics, research designs, practices examined, and organizational performance measures used has led extant findings to vary dramatically, making the size of the overall effect difficult to estimate. We use meta-analysis to estimate the effect size and test whether effects are larger for (a) HPWP systems versus individual practices, (b) operational versus financial performance measures, and (c) manufacturing versus service organizations. Statistical aggregation of 92 studies reveals an overall correlation that we estimate at .20. Also, the relationship is stronger when researchers examine systems of HPWPs and among manufacturers, but it appears invariant across performance measures. We use our findings as a basis to offer 4 suggestions intended to shape research practices such that future meta-analyses might answer today's emerging questions.

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1,903 citations

Cites background or methods from "The Impact of Human Resource Manage..."

...However, varying sample characteristics, research designs, practices examined, and performance measures used has led extant findings to vary dramatically, making the size of the overall effect difficult to estimate ( Becker & Gerhart, 1996; Ferris et al., 1999; Wood, 1999)....
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...However, because there is not unanimity among SHRM researchers as to which practices are HPWPs (Becker & Gerhart, 1996), we eliminated nine practices from consideration that appeared in fewer than five studies....
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...We then culled the reference sections of each of the identified studies as well as six reviews of the SHRM literature (i.e., Becker & Gerhart, 1996; Becker & Huselid, 1998; Ferris et al., 1999; Wood, 1999; Wright & Boswell, 2002; Wright, Gardner, Moynihan, & Allen, 2005)....
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...As Becker and Gerhart (1996) point out, there is little consensus concerning what is, versus what is not, a HPWP....
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...Several conclude that published research provides support for the notion that HPWPs positively affect organizational performance (e.g., Becker & Huselid, 1998; Becker & Gerhart, 1996; Wright & Boswell, 2002)....
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References

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Book Chapter•DOI•

Firm Resources and Sustained Competitive Advantage

[...]

Jay B. Barney¹•Institutions (1)

Texas A&M University¹

01 Mar 1991-Journal of Management

TL;DR: In this article, the authors examined the link between firm resources and sustained competitive advantage and analyzed the potential of several firm resources for generating sustained competitive advantages, including value, rareness, imitability, and substitutability.

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46,648 citations

"The Impact of Human Resource Manage..." refers background in this paper

...Why might it be especially difficult to imitate human resource strategies that are deeply embedded in an organization? Two of the key factors are causal ambiguity and path dependency (Barney, 1991; Collis & Montgomery, 1995)....
[...]

Book Chapter•DOI•

The Core Competence of the Corporation

[...]

C. K. Prahalad¹, Gary Hamel²•Institutions (2)

University of Michigan¹, London Business School²

01 Jan 2006-Harvard Business Review

TL;DR: The most powerful way to prevail in global competition is still invisible to many companies as discussed by the authors, which is why the concept of the corporation itself has not yet been recognized as a powerful competitive advantage.

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Abstract: The most powerful way to prevail in global competition is still invisible to many companies. During the 1980s, top executives were judged on their ability to restructure, declutter, and delayer their corporations. In the 1990s, they’ll be judged on their ability to identify, cultivate, and exploit the core competencies that make growth possible — indeed, they’ll have to rethink the concept of the corporation itself.

...read moreread less

15,465 citations

Book•

The balanced scorecard : measures that drive performance

[...]

Robert S. Kaplan¹, David P. Norton•Institutions (1)

Harvard University¹

17 Apr 2015

TL;DR: A "balanced scorecard" is developed, a new performance measurement system that gives top managers a fast but comprehensive view of the business and complements those financial measures with three sets of operational measures having to do with customer satisfaction, internal processes, and the organization's ability to learn and improve.

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Abstract: Frustrated by the inadequacies of traditional performance measurement systems, some managers have abandoned financial measures like return on equity and earnings per share. "Make operational improvements and the numbers will follow," the argument goes. But managers do not want to choose between financial and operational measures. Executives want a balanced presentation of measures that allow them to view the company from several perspectives simultaneously. During a year-long research project with 12 companies at the leading edge of performance measurement, the authors developed a "balanced scorecard," a new performance measurement system that gives top managers a fast but comprehensive view of the business. The balanced scorecard includes financial measures that tell the results of actions already taken. And it complements those financial measures with three sets of operational measures having to do with customer satisfaction, internal processes, and the organization's ability to learn and improve--the activities that drive future financial performance. Managers can create a balanced scorecard by translating their company's strategy and mission statements into specific goals and measures. To create the part of the scorecard that focuses on the customer perspective, for example, executives at Electronic Circuits Inc. established general goals for customer performance: get standard products to market sooner, improve customers' time-to-market, become customers' supplier of choice through partnerships, and develop innovative products tailored to customer needs. Managers translated these elements of strategy into four specific goals and identified a measure for each.

...read moreread less

12,976 citations

"The Impact of Human Resource Manage..." refers background in this paper

...There is clearly a need to fill in this gap at the business-unit level and to pay attention not only to traditional financial outcomes, but also to intermediate and process-related criteria that indicate how financial results are achieved (see, for example, Kaplan and Norton's [1992] "balanced scorecard" approach)....
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Journal Article•

The balanced scorecard : measures that drive performance

[...]

R. S. Caplan

01 Jan 1992-Harvard Business Review

9,617 citations

Posted Content•

The Impact of Human Resource Management Practices on Turnover, Productivity, and Corporate Financial Performance

[...]

Mark A. Huselid¹•Institutions (1)

Northeastern University¹

05 Apr 1995-Social Science Research Network

TL;DR: In this article, the authors examined the linkages between systems of high performance work practices and firm performance and found that these practices have an economically and statistically significant impact on both intermediate outcomes (turnover and productivity) and short and long-term measures of corporate financial performance.

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Abstract: This paper comprehensively examined the linkages between systems of High Performance Work Practices and firm performance. Results based on a national sample of nearly one thousand firms indicate that these practices have an economically and statistically significant impact on both intermediate outcomes (turnover and productivity) and short- and long-term measures of corporate financial performance. Support for the predictions that the impact of High Performance Work Practices is in part contingent on their interrelationships and links with competitive strategy was limited.

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8,131 citations

"The Impact of Human Resource Manage..." refers background or methods in this paper

...Huselid and Becker (1996) illustrated this point....
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...Although studies that use the firm as the exclusive unit of analysis provide the most generalizable and direct test of the relationship between HR and firm financial performance (Huselid, 1995; Huselid & Becker, 1996), to date they have provided little insight into the process by which this value is created....
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...Source: Huselid and Becker (1995)....
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...The conceptual and empirical work relevant to this question has progressed far enough to suggest that the role of human resources can be crucial (Arthur, 1994; Cutcher-Gershenfeld, 1991; Huselid, 1995; Huselid & Becker, 1996; Gerhart & Milkovich, 1990; Ichniowski, Shaw, & Prennushi, 1994; MacDuffie, 1995)....
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...This idea, that a system of HR practices may be more (or less) than the sum of the parts, appears in discussions of synergy, external and internal fit, bundles, holistic approaches, configurations, contingency factors, and so forth (Amit & Shoemaker, 1993; Delery & Doty, this issue; Doty, Glick, & Huber, 1993; Dyer & Reeves, 1995; Gerhart, Trevor, & Graham, 1996; Huselid, 1995; LegnickHall & Legnick-Hall, 1988; Meyer, Tsui, & Hinings, 1993; Milgrom & Roberts, 1995)....
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