Does strategic human resource involvement and devolvement enhance organisational performance?

Abstract

PurposeThe purpose of this paper is to test empirically the relationship between the strategic involvement and the devolvement of human resource functions with organisational performance.Design/methodology/approachThis paper is based on the primary data collected from the population of financial firms based in Jordan. The methodology adopted for the purpose of data analysis includes the use of basic statistics, zero‐order correlations, confirmatory factor analysis and hierarchical regressions.FindingsThe results provide strong support for the hypothesis that the involvement of human resource functions into the business and corporate strategy reduces employee turnover rate and enhances financial performance. The analysis does not support the second hypothesis that empowering day‐to‐day human resource functions to line managers impacts negatively on employee turnover and positively on financial performance.Practical implicationsOur results imply that financial performance can be enhanced and employee turnover rate decreased by involving human resource directors in the overall strategic decision‐making process of companies. However, our results also imply that the devolvement of routine human resource issues to line managers is neither positively related to the financial performance of the companies nor negatively related to employee turnover. This raises doubts as to whether, after having involved human resource functions into the strategic affairs of the company, they are empowered enough to make a positive impact.Originality/valueThis is one of few papers conducted on this topic in a non‐western environment, and the first of its kind for the country of Jordan. This paper contributes to the field through its approach to measuring and testing strategic human resource management theory. The paper also successfully links the core aspects of strategic human resource management with objective indicators of financial performance of the companies.