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The Impact of HRM

Based on Chapter 24 of Human Resource Management in a Business Context (2nd Edition) by Alan Price - published by Thomson Learning

Pages 677-681 of Human Resource Management in a Business Context include a full discussion on this topic. (Very) short excerpts are given here

Is there any evidence that the implementation of HRM has a significant effect on national or organizational economic performance? After all, this is the justification implicit in HRM models for valuing the human resource above all others. When the first edition of this book was written (mid-1990s) the conclusion was that we simply did not know. The following were given as possible explanations:

  • Insufficient research. Not because of lack of effort but due to the absence of clear, agreed frameworks within which to conduct comparative research. The root cause of this was perceived as HRM's own ambiguity. How were we to look for evidence of HRM and its effects if we had no agreement on what HRM was?
  • Intangibility. If people are an 'intangible resource' we have an insurmountable problem - by definition intangibles are unmeasurable!
Since then, progress has been made in conceptualizing the problem and measuring results (...). For example, Huang (2000) looked at 315 firms in Taiwan and related their human resource practices to their organizational performance. Huang's study shows a significant relationship between performance and the effectiveness of their HR functions, including planning, staffing, appraisal, compensation, and training and development. Michie and Sheehan-Quinn (2001) surveyed over 200 manufacturing firms in the UK to investigate the relationship between corporate performance and the use of flexible work practices, human resource systems and industrial relations. They found that 'low-road' practices - including short-term contracts, lack of employer commitment to job security, low levels of training and unsophisticated human resource practices - were negatively correlated with corporate performance. In contrast, they established a positive correlation between good corporate performance and 'high-road' work practices - 'high commitment' organizations or 'transformed' workplaces. They also found that HR practices are more likely to make a contribution to competitive success when introduced as a comprehensive package, or 'bundle' of practices.

More on pages 678-681 of Human Resource Management in a Business Context

Overview of HRM


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