The Impact of HR Management on

Organisational Performance
Organizations around the world today are under pressure to continually improve their performance.
The main drivers behind these competitive pressures are globalization, advances in information
technology, and increasing regulation of global markets (Becker & Gerhart, 1996; Dany, Guedri, and
Hatt, 2008). These changes have a profound effect on a country's ability to maintain competitiveness
(Laprade, 2005). Without an efficient workforce, organizations lose the ability to compete locally and
internationally, eventually leading to poor organizational performance and ending up with little or
no economic success (Tomaka, 2001). Natural resources, technology and capital have become the
most important resource for modern human resources companies today, unlike in the past when
they were a major factor in determining the competitive advantage of one nation's companies over
other nations. Gaining strategic advantage over other companies (Dany et al, 2008). This is because
managers in both the public and private sectors consider the human resources of their organization
as the main source of competitive advantage by having, recruiting, selecting, motivating and having
efficient 'best' human resource systems. Managing their people (Mesch, 2010).

As a result of these changes in the business strategy of the global economic environment, the field of
human resource management is changing faster today than ever (Becker & Gerhart, 1996).
Furthermore, of all the organizational factors that contribute to organizational performance, human
resources are now considered the most fundamental factor (Mesch, 2010).

Recent research on HRM shows a strong and positive link between HRM usage and organizational
performance (Carlson, Upton, and Seaman, 2006; Collins & Smith, 2006). Therefore, it is important
for managers to have a better understanding of the role of HRM in creating a successful
organizational performance.

Accordingly, this chapter presents a review of the literature relevant to this research study on the
relationship between human resource practices and organizational performance.

HRM and Corporate Performance

Human Resource Management

Armstrong (2006, p3) defines 'human resource management' as "a strategic and cohesive approach
to managing the most valuable assets of an organization that contributes individually and collectively
to achieving its objectives".

Human resource management is "policies, practices, and systems that affect employee behavior,
attitudes, and performance" (De Cieri, Kramar, Noe, Hollenbeck, Gerhart, and Wright, 2008, p5).

Delery and Doty (1996) state that once HRM best practices are identified and implemented, there is
always improved corporate performance.

Fox and McLeay (1992) found that their unique empirical study of forty-nine companies, mainly in
the UK engineering and electronics sectors, had a strong supportive influence on six critical HRM
practices to achieve a general segment performance relationship of more than 10. Time of year.
These HRM applications (ibid):
Recruitment and selection,
Management Education,
Training and Development,
Performance appraisal,
Wages and prizes, and
Professional planning throughout the company.

Organizational performance

A recent definition of ‘organizational performance’ is given by Antony and Bhattacharyya (2010,

p43). They define 'organizational performance' as "a measure of how well an organization manages
and the value they place on customers and other stakeholders."

According to Daft (2000), 'organizational performance' is the ability of an organization to achieve its
goals efficiently and effectively.

Organizational performance represents the value of an organization in terms of its full contribution
to the efficient and effective management of its human resources (Neumann & Segev, 1978).