HRM and Business Performance

Paper Summary:

In this article the writer discusses the theory that there is a correlation between people management and business performance. The writer first reviews the three theoretical human resource management (HRM) models (universalistic, configurational and contingent) and the three types of HRM control systems (behavioural, output and input). The writer then presents summarized data for some of the major studies analyzing the HRM - P link along with their main findings and discusses the limitations of the 'scientific' approach used to measure the HRM - P relationship. Finally, the writer concludes and suggests ways in order to re-think the relation between HRM and performance more realistically. Further, the writer briefly reviews the three theoretical models in order to demonstrate that they assume, unquestionably, the existence of a positive HRM - P link.

Outline:
Introduction
Theoretical Models
HRM Control Systems
Studies on the HRM - P link
Scientism and Its Limitations
Conclusion

From the Paper:

"The HRM theoretical models and control methods mentioned earlier in this essay, although differentiated by some variations, all adopt the same 'scientific' approach; that is, various metrics and measurements are used in order to quantify HR practices and business performance and, then, statistical techniques are used on these data to test hypotheses, usually resulting in the conclusion that certain HR practices can affect organizational performance. Although the surveys appear persuasive and attractive, they have not managed to avoid criticism. At this point, it is important to outline and expand on the limitations of this scientific approach as well as the implications of the studies carried out that examine the link between HRM and business performance."
"First of all, an empirical association between HRM and organizational performance does not explain the cause of this association. Even if there is a decrease in performance following a cut back in the level of HR activities, this does not constitute an explanation for the result."

Sample of Sources Used:

• Beardwell, I., Holden, B. & Clayton, T. (2004). Human Resource Management: A Contemporary Approach. 4th Ed. Harlow: Pearson.
• Boselie, P., Dietz, G. and Boon, C. (2005). Commonalities and contradictions in HRM and performance research. Human Resource Management Journal. 15 (3), 67-94.
• Bratton, J. & Gold, J. (2003). Human Resource Management Theory and Practice. 3rd Ed. New York: Palgrave Macmillan.
• Business Dictionary. (2007). Business Dictionary [online] http://www.businessdictionary.com/definition/closed-system.html/ [Accessed 27th December 2007].
• Fombrun, C.J., Tichy, N.M. & Devanna, M.A. (1984). Strategic Human Resource Management. New York: Wiley.

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