Abstract
Purpose: This article draws on the meta-analysis technique to systematically analyse and compare the association of human resource management (HRM) practices with financial, market and operational performance. Design/methodology/approach: An exhaustive search of HRM-performance link resulted in a final sample ( k ) of 24 independent studies. For this purpose, Comprehensive Meta-Analysis (Version 3.0) software was used. Heterogeneity of the studies was determined using Q-statistic with a p -value, I 2 , T 2 and Tau. As the degree of heterogeneity was very high, random effects model was selected to estimate the mean of effects. Lastly, publication bias was studied using graphical and statistical methods. Findings/results: The results revealed the average correlational ( r ) association of HRM practices with financial performance, market performance and operational performance as 0.305, 0.434 and 0.311, respectively. More specifically, HRM practices have the strongest association with market performance. Practical implications: The results statistically quantify the association between HRM practices and organisational performance measures for developing desired knowledge, skills and abilities to generate higher and improved performance. The results of this study provide HR managers with evidence that right investment in human resources does significantly contribute to the bottom line; they should make better and higher allocation of the resources for HRM. Originality/value: To the best of our knowledge, this study is the first to meta-analytically examine the varying association of HRM with three distinct organisational performance measures.
Highlights
Starting in the 1990s, the first studies statistically analysed the linkage between human resource management (HRM) practices and organisation performance (Arthur, 1994; Becker & Gerhart, 1996; Becker & Huselid, 1998; Huselid, 1995; MacDuffie, 1995; Welbourne & Andrews, 1996)
The average correlation for association between HRM practices and financial performance (0.305) is lower than the average correlation for association between HRM practices and market performance (0.434). It is lower than the average correlation for association between HRM practices and operational performance (0.311)
Our findings show that HRM practices positively affect organisational performance measures and largely influence market performance
Summary
Starting in the 1990s, the first studies statistically analysed the linkage between human resource management (HRM) practices and organisation performance (Arthur, 1994; Becker & Gerhart, 1996; Becker & Huselid, 1998; Huselid, 1995; MacDuffie, 1995; Welbourne & Andrews, 1996). An increasing number of HRM scholars have attempted to establish that human resource practices (HRPs) lead to better organisation performance (Guest, 2011; Katou & Budhwar, 2007; Singh, 2004; Tzafrir, 2005). Another argument is that the so-called high-performance work practices (HPWPs) in strategic HRM (SHRM) can improve organisation performance by developing employees’ competencies, increasing their knowledge and commitment (Appelbaum, Bailey, Berg, & Kalleberg, 2000). Researchers are increasingly using meta-analysis to aggregate the results of empirical studies on key organisation outcomes, such as recruitment, selection, training and job http://www.sajbm.org
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