How Employee Perceptions of HRM Develop: Employees as Co-Creators of HR Shared Service Value

Abstract

An increasing number of organizations are making use of the HR shared services model for providing HRM practices such as personnel administration, training and development services. The majority utilizes the shared services model because of expectations such as cost reductions, quality improvement and a more strategic influence of HRM. However, to reap these benefits and ensure the success of the HR shared services model, HR shared service centers first have to create high-level value for employees. However, the existing research provides little insight into the creation of HR shared services value. Although some studies have examined the features of HR shared service centers as possible antecedents, there are few that examine how value develops at the employee level. In this article, we seek to provide a better understanding of this. We base our ideas on the service-dominant logic by reasoning that employees are the consumers of HRM, and thus they co-create value out of the HRM practices provided. By regarding them as HRM customers, we build hypotheses around the notion that the human capital of employees, being developed through the use of HRM practices, enables them to co-produce and utilize HRM practices better and so increase their perceptions of HR shared services value. To test these hypotheses, we utilize survey data obtained from a sample of 2,002 employees from 19 organizations.