The assumption underpinning the practice of HRM is that people are the organization’s key resource and organizational performance largely depends on them. If, therefore, an appropriate range of HR policies and processes are developed and implemented effectively, then HR will make a substantial impact on firm performance.
The Holy Grail sought by many commentators on human resource management is to establish that a clear positive link between HRM practices and organizational performance exists. There has been much research, as summarized in Table 1.2, over the last decade or so that has attempted to answer two basic questions: ‘Do HR practices make a positive impact on organizational performance?’ ‘If so, how is the impact achieved?’ The second question is the most important one. It is not enough to justify HRM by proving that it is a good thing. What counts is what can be done to ensure that it is a good thing. This is the ‘black box’ mentioned by Purcell et al(2003) that lies between intentions and outcomes.
Ulrich (1997a) has pointed out that: ‘HR practices seem to matter; logic says it is so; survey findings confirm it. Direct relationships between investment and attention to HR practices are often fuzzy, however, and vary according to the population sampled and the measures used’.
Purcellet al(2003) have cast doubts on the validity of some of the attempts through research to make the connection:
Our study has demonstrated convincingly that research which only asks about the number and extent of HR practices can never be sufficient to understand the link between HR practices and business performance. As we have discussed it is misleading to assume that simply because HR policies are present that they will be implemented as intended.
Further comments about attempts to trace the link have been made by Truss (2001) who, following research in Hewlett-Packard, remarked that:
Our findings did lend strong support to the argument put forward by Mueller (1996) that the informal organization has a key role to play in the HRM process such that informal practice and norms of behaviour interact with formal HR policies... We cannot consider how HRM and performance are linked without analysing, in some detail, how policy is turned into practice through the lens of the informal organization.
The Holy Grail sought by many commentators on human resource management is to establish that a clear positive link between HRM practices and organizational performance exists. There has been much research, as summarized in Table 1.2, over the last decade or so that has attempted to answer two basic questions: ‘Do HR practices make a positive impact on organizational performance?’ ‘If so, how is the impact achieved?’ The second question is the most important one. It is not enough to justify HRM by proving that it is a good thing. What counts is what can be done to ensure that it is a good thing. This is the ‘black box’ mentioned by Purcell et al(2003) that lies between intentions and outcomes.
Ulrich (1997a) has pointed out that: ‘HR practices seem to matter; logic says it is so; survey findings confirm it. Direct relationships between investment and attention to HR practices are often fuzzy, however, and vary according to the population sampled and the measures used’.
Purcellet al(2003) have cast doubts on the validity of some of the attempts through research to make the connection:
Our study has demonstrated convincingly that research which only asks about the number and extent of HR practices can never be sufficient to understand the link between HR practices and business performance. As we have discussed it is misleading to assume that simply because HR policies are present that they will be implemented as intended.
Further comments about attempts to trace the link have been made by Truss (2001) who, following research in Hewlett-Packard, remarked that:
Our findings did lend strong support to the argument put forward by Mueller (1996) that the informal organization has a key role to play in the HRM process such that informal practice and norms of behaviour interact with formal HR policies... We cannot consider how HRM and performance are linked without analysing, in some detail, how policy is turned into practice through the lens of the informal organization.
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