Human resource management systems and firm performance

Abstract

Purpose

The purpose of this study is to test a model where human resource inputs (e.g. motivation, employee skill) and human resource processes/practices (e.g. training and development; profit sharing) are hypothesized to contribute uniquely and positively to organizational outputs, i.e. job performance and firm performance.

Design/methodology/approach

The cross‐sectional study consisted of 350 business professionals (91 percent managers; 9 percent consultants) from a midwestern US professional organization who took a battery of survey measures via the internet.

Findings

After statistically controlling for the background variables (organizational type, size and status), the hierarchical regression analyses demonstrated that both the human resource inputs and process/practice variables explained statistically significant variance in each of the nine regression models. The effect size in each model was medium to large.

Originality/value

The findings illustrate the considerable utility of researchers and managers examining the entire human resource system of an organization when searching for productive leverage points to improve organizational outputs like job and firm performance. The results suggest that human resource managers can have a positive influence on firm performance through implementing and supporting organizational policies and procedures that serve to positively motivate workers (e.g. reasonable incentive compensation and rewards, fair grievance procedures, and performance management), and learning and development activities that stimulate optimal task and contextual job performance.

Citation

Ferguson, K.L. and Reio, T.G. (2010), "Human resource management systems and firm performance", Journal of Management Development, Vol. 29 No. 5, pp. 471-494. https://doi.org/10.1108/02621711011039231