HRM and Performance: Achievements, Methodological Issues and Prospects

Abstract

Twenty years ago Guest (1987) published his normative framework describing the essence of HRM. He presented HRM as a new approach to personnel management, emphasizing its strategic contribution, its closer alignment to business, the involvement of line management, and focusing on HRM outcomes like commitment, flexibility and quality. The achievement of these human resource outcomes was, in turn, expected to contribute to a range of positive organizational outcomes, including high job performance, low turnover, low absence and high cost-effectiveness through the full utilization of employees, now relabelled as human resources. Put this way, it is not difficult to understand the wide appeal that the notion of HRM had (and still has) to academics and practitioners alike. It led to the renaming of chairs/departments within universities and to changed job titles in the business community. The attractiveness of the concept of HRM increased considerably when Huselid, in 1995, published a ground-breaking paper in the Academy of Management Journal in which he demonstrated a correlation between the degree of sophistication of HR-systems and the market value per employee among a range of publicly quoted companies in the USA. The paper generated admiration, criticism and an abundance of 'me too' research, trying to replicate the proclaimed relationship between HRM and Performance (Delery and Doty, 1996; Guthrie, 2001; Koch and McGrath, 1996; Wright et al., 2003). Since then many academics on both sides of the Atlantic have become active in this field, with a special focus on the relationship between HRM and Performance. Within this rapidly expanding field of study, the HRM–Performance relationship has been approached from a variety of perspectives rooted in organizational behaviour, sociology, economics, industrial relations and organizational psychology, with a particular emphasis placed on the impact of various combinations of human resource practices on a range of performance outcomes at the individual and organizational level of analysis.