HRM system situational strength in support of strategy: its effects on employee attitudes and business unit performance

Abstract

ABSTRACT Strong HRM systems, characterized by HRM processes that send clear and consistent messages to employees about what their employer values, expects and rewards, should be associated with a range of valued individual and organizational outcomes. Nonetheless, there are few empirical studies of the anticipated ties, especially at a unit-level of analysis. This study uses situational strength theory to test Bowen and Ostroff′s proposition that HRM systems contribute to firm performance when they communicate messages around strategic objectives in a manner that ensures a shared interpretation among employees. As one of the few studies to examine the extent to which shared interpretations of the messages communicated by HR practices associate with strategic organization climate and performance, we assess the effects of the HRM system strength construct at both the individual and group levels. As hypothesized, employee perceptions of HRM system strength associated positively with work-related attitudes and behavior. At the unit level, HRM system strength was positively linked to a strategic climate and to business performance (e.g. net income against target). This study draws attention to the importance of capturing the group level attributes of the HRM system strength construct.