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The International Journal of Human Resource

Management
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The impact of strategic human resource management

on firm performance and HR professionals' work
attitude and work performance
a b c d
Kenneth W. Green , Cindy Wu , Dwayne Whitten & Bobby Medlin
a
School of Business, , Henderson State University , Box 7762, Arkadelphia, AR, 71999 Phone:
870-230-5018 E-mail:
b
Baylor University, Hankamer School of Business, Management and Entrepreneurship
Department , Box 98006, Waco, Texas, 76798 Phone: 254-710-7672 E-mail:
c
Baylor University, Hankamer School of Business, Management and Entrepreneurship
Department , Box 98005, Waco, Texas, 76798 Phone: tel: 254-710-6106 E-mail:
d
School of Business , Henderson State University , Box 7832, Arkadelphia, AR, 71999 Phone:
tel: 870-230-5114 E-mail:
Published online: 16 Feb 2011.

To cite this article: Kenneth W. Green , Cindy Wu , Dwayne Whitten & Bobby Medlin (2006) The impact of strategic human
resource management on firm performance and HR professionals' work attitude and work performance, The International
Journal of Human Resource Management, 17:4, 559-579, DOI: 10.1080/09585190600581279

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 Int. J. of Human Resource Management 17:4 April 2006 559– 579

The impact of strategic human resource

management on firm performance and HR
professionals’ work attitude and work
performance
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Kenneth W. Green, Cindy Wu, Dwayne Whitten and Bobby Medlin

Abstract The impact of strategic human resource management (SHRM) on

organizational performance is assessed. Additionally, the impact of a SHRM approach
on the individual performance, organizational commitment and job satisfaction levels
of human resource professionals is investigated. An organization exhibits SHRM when the
human resources function is vertically aligned with the mission and objectives of
the organization and horizontally integrated with other organizational functions. Data from
a national sample of 269 human resource professionals from large US manufacturing firms
were analyzed using structural equation modeling techniques. Results indicate that the
direct impact of SHRM on organizational performance is positive and significant, as
hypothesized. Further, SHRM was found to directly and positively influence individual
performance, organizational commitment and job satisfaction. Top managers implement-
ing a SHRM system can, therefore, expect improved organizational performance and
improved levels of individual performance, job satisfaction and organizational
commitment from the organization’s human resource professionals.

Keywords Strategic human resource management; organizational performance;

individual performance; organizational commitment; job satisfaction; structural equation
modelling.

Introduction
The area of strategic human resource management (SHRM) has attracted a great deal of
research attention over the past decade because of its potential impact on the ‘bottom
line’ issues. Various studies have confirmed the positive impact of SHRM on
organizational performance (Huselid, 1995; Huselid and Becker, 1996; Huselid et al.,
1997; MacDuffie, 1995). Recently, researchers have begun to examine the impact of
SHRM on HR effectiveness and have discovered an unexpected negative relationship

Kenneth W. Green, Jr, School of Business, Henderson State University, Box 7762, Arkadelphia,
AR 71999 (tel: 870-230-5018; e-mail: greenk@hsu.edu); Cindy Wu, Baylor University, Hankamer
School of Business, Management and Entrepreneurship Department, Box 98006, Waco, Texas
76798 (tel: 254-710-7672; e-mail: Cindy_Wu@baylor.edu); Dwayne Whitten, Baylor University,
Hankamer School of Business, Information Systems Department, Box 98005, Waco, Texas 76798
(tel: 254-710-6106; e-mail: Dwayne_Whitten@baylor.edu); Bobby Medlin, School of Business,
Henderson State University, Box 7832, Arkadelphia, AR 71999 (tel: 870-230-5114; e-mail:
medlinb@hsu.edu).
The International Journal of Human Resource Management
ISSN 0958-5192 print/ISSN 1466-4399 online q 2006 Taylor & Francis
http://www.tandf.co.uk/journals
DOI: 10.1080/09585190600581279
 560 The International Journal of Human Resource Management
(Bennett et al., 1998). Organizational and departmental performance is composed of
individual performance, which has been found to be related to individual work attitude
(Judge et al., 2001). Thus, it is natural to ask how SHRM influences HR professionals’
work attitudes and individual performance.
To date, little is known concerning how SHRM influences the work attitudes and
individual performance of the HR staff. This is understandable because of the different
levels of analysis. That is, while SHRM research uses organizations as the unit of
analysis, it largely ignores the differences in individual employees’ work attitudes and
performance. Rather, it aggregates them to form organizational outcomes. Much research
attention has been given to the relationships between SHRM and firm performance and
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between individual HR practices and individual performance (Wright and Boswell,

2002), with the cross-level issues (e.g., influence of SHRM on individual performance
and individual HR practices on firm performance) largely ignored. Researchers have
particularly called for studies that address cross-level research questions (Wright and
Boswell, 2002).
The purpose of this study, therefore, is to examine how SHRM impacts organizational
and individual work performance and attitude. Specifically, we attempt to answer the
following research questions:

1 What is the impact of SHRM on organizational performance?

2 What is the impact of SHRM on HR professionals’ individual work attitudes?
3 What is the influence of SHRM on HR professionals’ individual work performance?

To achieve this aim, we conducted a national survey of human resource managers

working in the US manufacturing sector. SHRM, organizational performance, individual
performance, job satisfaction and organizational commitment were measured in the
survey. The following section incorporates a review of the literature and develops
the study’s hypotheses. The results section includes a description of the methodology
employed to test the hypotheses, a description of the sample, assessment of the reliability
and validity of the study scales, and a presentation of the structural equation modelling
results. Finally, a conclusions section is provided, which summarizes results of the study,
describes the limitations of the study and the need for future research, and discusses the
implications of the results for theory as well as practicing managers.

Literature review
A hypothesized model is presented in Figure 1. In this model, SHRM is depicted as
positively impacting organizational performance, HR professionals’ job satisfaction,
organizational commitment, and individual performance. In addition, HR professionals’
job satisfaction is hypothesized to be positively associated with organizational
commitment.

SHRM and firm performance

SHRM researchers have adapted theories from the strategy literature to argue that human
resources can help build sustained competitive advantages (Wright, Dunford and Snell,
2001; Wright and McMahan, 1992). More specifically, a resource-based view of business
strategy states that, in order to build a sustained competitive advantage, the resource that
is intended to build a competitive advantage must add value, be unique and rare, be
imperfectly imitable, and not be substitutable with another resource by competing firms
(Barney, 1991). Given these characteristics, Wright and McMahan (1992) contend that
 Green et al.: The impact of SHRM on attitude and performance 561
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Figure 1 SHRM outcomes model with hypotheses

human resources, if properly aligned with corporate strategy, could serve as the basis for
such competitive advantage. Aligning HR practices to support business objectives
generally requires implementation of a SHRM approach (Delery, 1998; Huselid et al.,
1997; McMahan et al., 1998; Wright, Dunford and Snell, 2001).
In order to support different business strategies, both vertical fit and horizontal fit
between HR practices and business strategies have been proposed in the SHRM literature
(Delery, 1998). Horizontal fit, often referred to as ‘HR bundles’ (Delery and Doty, 1996;
MacDuffie, 1995), is the degree to which specific human resource practices are
orchestrated in a coherent and consistent manner to best support one another and to
integrate with other departments. Vertical fit, on the other hand, refers to the alignment of
human resource practices to the organizational context in order to support specific
organizational objectives. Following previous research, we also define SHRM as both
horizontal fit of HR practices and vertical fit between HR practices and business
strategies.
Although researchers have found that SHRM is positively related to firm performance,
SHRM in these studies is usually operationalized and measured as the existence or the
effectiveness of a variety of sets of HR practices that are assumed to be universally
effective (e.g., Bae and Lawler, 2000; Delaney and Huselid, 1996; Guthrie, 2001;
Huselid, 1995; MacDuffie, 1995). With limited empirical research on the fit issue of
SHRM, whether fit is necessary is indefinite. In fact, Delery (1998) even contends that
simultaneous horizontal fit and vertical fit may not be necessary or beneficial. We attempt
to address this research gap by empirically testing the vertical and horizontal fit of SHRM
and its relationship with firm performance.
Findings of SHRM studies that have taken a configurational approach may shed light on
the issues of fit. A configurational perspective takes an approach similar to horizontal fit
that examines human resource practices as a bundle as opposed to discussing each specific
HR practice and its effect on organizational outcomes. Dyer and Reeves (1995) argue that
different organizational environments require different types of employees and behaviours
and that different human resource strategies should also produce different types of
employees and behaviours from employees. Therefore, human resource strategies should
 562 The International Journal of Human Resource Management
be based on the organizational context, which points toward the importance of both the
horizontal fit and vertical fit of SHRM. Recent empirical research provides modest
support for this notion. Lepak and Snell (2002), in their investigation of 206 executives,
HR managers and line managers from 148 firms with different employment modes
(knowledge-based employment, job-based employment, contract work and alliance/
partnership), found that different HR configurations are associated with different
employment modes. Specifically, they found that job-based employment is significantly
associated with productivity-based HR configuration, contractual work arrangement is
significantly associated with compliance-based HR configuration, and alliance/
partnership is significantly associated with collaborative-based HR configurations.
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These findings suggest that in implementing SHRM, firms tend to bundle their HR
practices in a coherent manner in order to support their unique organizational context.
This also points out the importance of both types of fit. We adopt the definition of
SHRM as both horizontal fit and vertical fit and hypothesize, based on the
resource-based view of SHRM, that:

Hypothesis 1: SHRM has a direct, positive impact on organizational performance.

SHRM and HR professionals’ work attitudes

SHRM may enhance HR professionals’ work commitment and satisfaction because their
job is structured as intrinsically motivating. An organization that implements SHRM
includes the HR professionals as business partners by involving them in the strategic
planning process (Ulrich and Beatty, 2001). This allows them to use a variety of skills to
fulfil their daily job responsibilities. Specifically, horizontal fit allows HR professionals
to coordinate various HR activities into a coherent HR system (Delery, 1998), which
signifies task identity by facilitating the integration of tasks and avoiding segmenting
them. Vertical alignment links HR practices to firm strategy (Delery, 1998), which offers
the chance for HR professionals to evaluate their HR work from the organizational
perspective. This link helps HR professionals to realize the significance of their work
because it supports the accomplishment of company objectives and facilitates
organizational change (Hoogervorst et al., 2002). It also ties HR activities and
effectiveness to organizational performance, providing additional work feedback to HR
professionals. In practice, horizontal and vertical fit require that HR professionals
coordinate both inside and outside the HR department so that HR activities can
correspond with each other and with other department activities. This empowers HR
professionals to make decisions and, as a result, elevates the level of task autonomy.
As stated above, a HR professional’s job at an organization that implements SHRM,
defined as vertical fit and horizontal fit, could be depicted as having skill variety, task
identity, task significance, feedback and autonomy. The job characteristics model
suggests that when a task is significant, requires skill variety, possesses task identity, and
provides autonomy and task feedback, employees will experience higher levels of
intrinsic motivation through such critical psychological conditions as experienced
meaningfulness, experienced responsibility, and knowledge of results (Hackman and
Oldham, 1976). These job characteristics lead to higher levels of organizational
commitment (Eby and Freeman, 1999; Glisson and Durick, 1988; Thatcher et al., 2002)
and job satisfaction (Eby and Freeman, 1999; Glisson and Durick, 1988). Because
SHRM is more likely to offer these characteristics in an HR professional’s job, we
propose:
 Green et al.: The impact of SHRM on attitude and performance 563
Hypothesis 2: SHRM has a direct, positive impact on the organizational commitment
of human resource professionals.

Hypothesis 3: SHRM has a direct, positive impact on the job satisfaction of human
resource professionals.

SHRM and HR professionals’ work performance

SHRM may also enhance the performance of HR professionals because it fulfils the
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expectation of an ideal HR professional’s role. There has been an increasing recognition

that HR professionals are expected to be ‘business partners’ who have the power to
influence the business outcomes (Ulrich, 1997). For example, in a semi-structured in-
depth interview, HR professionals report that they believe their most important roles in
business are as advisors and change agents (Caldwell, 2003), both of which relate to
strategic issues but differ in how much they are allowed to intervene in strategy planning
(Storey, 1992). Ulrich and Beatty (2001) also suggest that HR professionals view
themselves as coaches to the stakeholders, architects who design the HR systems and
organizational structure, and builders who implement the blueprints sketched in the
architecture stage, facilitators who ensure the smooth teamwork and the right person –job
fit, leaders who manage the HR department like a business unit, and as gatekeepers who
ensure that HR decisions are made in an ethical fashion.
In practice, an organization where the HR function is horizontally and vertically
aligned with business strategy is likely to offer to fulfil the aforementioned role
expectations. Specifically, horizontal fit allows the HR professionals to view the specific
HR activities as a coherent system that supports the business strategy. HR professionals
are also empowered to offer suggestions to other departments in such a way that the HR
function is integrated with other organizational functions. Furthermore, vertical
alignment allows HR professionals to become strategic partners in the strategic planning
and implementation process by offering advice to management executives so that they
are ‘playing in the game’, rather than ‘playing at the game’ (Ulrich and Beatty, 2001).
This suggests that an organization that implements SHRM will entrust the
HR professionals with a high-level strategic role, which not only supports the HR
professionals’ mission but also offers to meet the role expectations in their minds.
The theory of psychological contract suggests that employees have certain beliefs
concerning the nature of the exchange agreement between the employee and the
organization (Rousseau, 1989). When employees perceive a negative imbalance where
employees’ expectations of their organization are not met, employees will take
counterbalancing actions, which, in turn, leads to reduced satisfaction with the
organization (Porter et al., 1998), reduced commitment (Robinson and Morrison, 1995;
Rousseau and Parks, 1993), reduced job satisfaction (Robinson and Morrison, 1995;
Turnley and Feldman, 2000), and higher cynicism (Robinson and Morrison, 1995). On
the other hand, the fulfilment of such expectations results in employees’ reciprocation by
increasing their effort in work, which consequently leads to higher in-role and extra-role
job performance (Turnley et al., 2003). Because an organization where SHRM is
vertically and horizontally aligned is more likely to bring an HR professional’s job role
closer to the expected role, we propose:

Hypothesis 4: SHRM has a direct, positive impact on the individual performance of

human resource professionals.
 564 The International Journal of Human Resource Management
Job satisfaction and organizational commitment
In addition to the relationships between SHRM and HR professionals’ job attitudes, the
two job attitudes, job satisfaction and organizational commitment, may also correlate
with each other. Organizational commitment refers to an individual’s attachment, loyalty
and identification with the organization (Meyer and Allen, 1984). Porter et al. (1974)
contend that satisfaction is an unstable and immediate affective response to the work
environment, while organizational commitment is viewed as a long-term, slower-
developing attitude. They therefore posit that satisfaction is an antecedent to
commitment. Extensive research findings suggest that job satisfaction is a precursor
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to organizational commitment (DeCotiis and Summers, 1987; Lok and Crawford, 2001;
Mathieu and Hamel, 1989; Wasti, 2003; Williams and Hazer, 1986).
Using two different samples from different organizations, Williams and Hazer (1986)
find that job satisfaction mediates the influence of personal characteristics and work
environment on organizational commitment. Testing a model that hypothesizes the
antecedents and consequences of job satisfaction using retail salespeople as
the respondents, Brashear et al., (2003) also found that satisfaction precedes
commitment. Similar results are found in different settings, including marketing
(Brown and Peterson, 1993), blue-collar workers (Iverson and Roy, 1994) and
information technology (Thatcher et al., 2002). Although some researchers suggest that
organizational commitment precedes job satisfaction (e.g., Bateman and Strasser, 1984),
Mathieu’s (1991) non-recursive model indicates that satisfaction has a stronger influence
on commitment than vice versa. Given the extensive and well-established previous
research findings, we hypothesize a positive relationship between job satisfaction and
organizational commitment:

Hypothesis 5: Job satisfaction has a direct, positive impact on the organizational

commitment of human resource professionals.

Methodology
To test the stated hypotheses, a two-wave mail survey of human resource professionals
for large US manufacturing companies was conducted. Since budget and time constraints
did not allow more that two mailings, several measures were taken to improve the
response rate. The focus of the study (SHRM) was believed to be of significant interest to
HR professionals and a relatively short (front and back of one legal-sized sheet)
questionnaire was used. The accompanying letter was personalized, assured anonymity,
and offered an executive summary to respondents. The survey packet included a self-
addressed, metered return envelope and was sent through first-class mail. The HR
professionals were asked to complete and return a survey form containing scales that
measure SHRM, organizational performance, individual performance, job satisfaction
and organizational commitment.
The paper will proceed with a description of the sample along with an assessment of
the effectiveness of the sample which includes discussion of the response rate, item
completion rate, and an assessment of the impact of non-response bias. The results of a
thorough assessment of the unidimensionality, reliability and validity of all scales are
provided along with an assessment of the impact of potential common method bias.
Descriptive statistics for the study variables and a correlation matrix are also provided.
Finally, the results of the structural equation modelling analysis of the hypothesized
model are described.
 Green et al.: The impact of SHRM on attitude and performance 565
Survey effectiveness
Initial and follow-up requests for participation were sent to 1,750 individuals holding
human resource management related positions within US manufacturing organizations.
The 1,750 names and addresses were randomly chosen from almost 8,000 listed in a
database provided by Manufacturer’s News, Inc. The database included information on
US manufacturers with 250 or more employees. The data collection focused on large
manufacturers because those organizations are likely to have well-established HR
functions managed by experienced HR professionals.
Completed survey instruments were received from 269 individuals representing
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manufacturing firms for a gross response rate of 15.4 per cent. The response rate is
relatively high for research that draws from manufacturing sample frames. Harmon et al.
(2002) note that low response rates are not untypical in industrial research and report a
10.8 per cent response rate from a traditional two wave mail methodology. Dwyer and
Welsh (1985) report a somewhat lower 6.3 per cent rate under similar circumstances.
Additionally, Nahm et al. (2003a, 2003b) report receiving 224 responses from a survey of
3,000 manufacturers for an effective response rate of 7.5 per cent. Additionally, Tan et al.
(2002) report a 6.7 per cent response rate from a survey of purchasing managers within a
manufacturing setting.
In addition to the survey response rate, item completion rate can be used as another
measure of survey effectiveness (Klassen and Jacobs, 2001). Klassen and Jacobs (2001:
717) define item completion rate as ‘the proportion of survey items answered relative to
all applicable items.’ The item completion rate for this study is a relatively high 99
per cent, suggesting adequate survey effectiveness.

Assessment of non-response bias

Testing for non-response bias is important to identify any potential bias due to the failure
of members of the sample to respond. Although Hunt (1990) argues that otherwise-
credible research should not be rejected solely on the basis of potential non-response
bias, the potential for such bias is always a concern when conducting mail surveys. Non-
respondents have been found to descriptively resemble late respondents (Armstrong and
Overton 1977), thus it is important to determine if the early and late responders are
similar. Lambert and Harrington (1990: 21) describe a common approach to assessment
by comparing the first and second waves and assuming that ‘non-response bias is
nonexistent if no differences exist on the survey variables.’
Following this common approach, respondents were categorized as responding to
either the initial or follow-up requests sent approximately three weeks later. Those
responding to the initial requests were classified as early responders; those responding to
the follow-up requests were classified as late responders. Of the respondents, 71 per cent
(191) were categorized as early responders and 29 per cent (78) were categorized as late
responders.
A comparison of the means of the descriptive variables and the strategic human
resource, organizational performance, individual performance, organizational commit-
ment and job satisfaction scale-item responses for the two groups was conducted using
one-way ANOVA. None of the comparisons resulted in differences statistically
significant at the .01 level. Because non-respondents have been found to descriptively
resemble late respondents, this finding of general equality between early and late
respondents lends some support to a conclusion that non-response bias has not negatively
impacted the assembled data set.
 566 The International Journal of Human Resource Management
A more precise assessment of bias requires the use of more than two waves and a final
mailing of a condensed questionnaire to non-respondents (Lambert and Harrington
1990). Teitler et al. (2003) note that budget and time constraints limit the number of
possible mailings. Such was the case in this study. Budgetary and time constraints only
allowed for two mailings to the 1,750 identified human resource professionals.

Sample description
All respondents held human resource related positions. Fifty-one per cent identified
themselves specifically as human resource managers and an additional 32 per cent as
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human resource directors. Respondents averaged 7.8 years in their current positions.
Mean sales for the firms included in the sample were $2.14 billion, and the mean number
of employees per firm was 6,852. Eighteen specific manufacturing SIC codes were
identified. Respondents represented 40 different states.

Measures
Measures of SHRM, organizational performance, individual performance, job
satisfaction, and organizational commitment were necessary to assess the direct and
indirect impact of a SHRM approach on organizational performance. We considered HR
professionals to be particularly knowledgeable of SHRM, individual performance, job
satisfaction and organizational commitment. Some concern was noted, however, related
to the knowledge of such professionals related to overall organizational performance. We
believe that both HR directors and managers are sufficiently knowledgeable of
organizational performance since both are intimately involved in budgeting, work force
level determination, and the processes related to compensation management that depend
heavily on the overall success of the organization.
The 6-item SHRM scale incorporates the use of 7-point Likert scales anchored with
‘strongly disagree’ and ‘strongly agree’. This scale was developed and assessed for
validity and reliability by Green et al. (2001). The scale incorporates two factors
reflecting the vertical-alignment and horizontal-integration components of the SHRM
definition.
The 7-item organizational performance scale was also used and assessed by Green
et al. (2001). Respondents were asked to assess the financial and marketing performance
of their organizations over the past three years as compared to the industry average. The
scale includes seven items and incorporates 7-point Likert scales with ‘well below’ and
‘well above’ anchors. Items 1 to 4 relate to financial performance and were originally
developed by Claycomb et al. (1999). Green et al. (2001) developed the three additional
items related to marketing performance based upon performance criteria described by
Kohli and Jaworski (1990).
The 5-item individual performance scale was developed for this study. The 9-item
version of the organizational commitment scale developed and assessed by Mowday et al.
(1979) and the 19-item job satisfaction scale developed and assessed by Brayfield and
Rothke (1951) were incorporated in the survey. The individual performance, job
satisfaction and organizational commitment scales used 7-point Likert scales anchored
with ‘strongly disagree’ and ‘strongly agree’. All study scales are presented in the
Appendix.
Prior to assessing the study hypotheses, it is necessary to ensure that the scales are
reliable and valid measures of the intended constructs. Specifically, measurement scales
must exhibit content validity, unidimensionality, reliability, discriminant validity,
convergent validity and predictive validity.
 Green et al.: The impact of SHRM on attitude and performance 567
Content validity Content validity results from developing scale items based upon the
theory described in the associated literature and upon expert opinions of knowledgeable
researchers and practitioners (Shin et al., 2000). Green et al. (2001) derived a 19-item
strategic human resource management scale from a careful review of the literature. They
assessed the scale with both exploratory and confirmatory samples, ultimately reducing
the scale to nine items. Of the nine items, three measured the vertical alignment of the
HR function, three represented horizontal integration of the HR function, and the final
three represented impact of the function on performance. Prior to use in this study, the
9-item scale was reviewed by a group of practising HR professionals. This group
determined that the scale developed by Green et al. (2001) should be shortened from 9 to
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6 items, removing 3 items related to the impact of the HR function on performance.

The organizational performance scale adopted from Green et al. (2001) includes both
the items related to financial performance originally developed by Claycomb et al.
(1999) and additional items related to marketing performance. These additional items
specifically relate to market share, sales volume and sales performance and were
identified by Kohli and Jaworski (1990) as measures of marketing performance. Since
the SHRM, organizational performance, organizational commitment and job satisfaction
scales have been carefully developed and thoroughly assessed in previous research
efforts (Brayfield and Rothke, 1951; Green et al., 2001; Mowday et al., 1979), content
validity is assumed. The five items in the individual performance scale were developed
by the current researchers and reviewed by a group of practising human resource
managers in an effort to ensure content validity.

Unidimensionality Confirmatory factor analysis based upon the covariance matrix

facilitates the test for unidimensionality (Dunn et al. 1994). Raykov and Marcoulides
(2000) point out that decisions related to goodness of fit should be based on a review of
multiple indices. Goodness-of-fit (GFI), non-normed-fit (NNFI) and comparative-fit
(CFI) indices greater than .90 and root-mean-squared-approximation-of-error (RMSEA)
values between .05 and .08 support a claim of unidimensionality (Ahire et al., 1996;
Garver and Mentzer, 1999). Byrne (1998) noted that RMSEA values between .08 and .10
indicate mediocre rather than good fit. Statistically significant (at the .05 level) parameter
estimates of the expected sign and values greater than .70 also provide strong evidence of
unidimensionality (Garver and Mentzer, 1999).
Confirmatory factor analysis for the SHRM scale with two dimensions returned GFI
(.95), NNFI (.93) and CFI (.96) values greater than the recommended .90 level but an
RMSEA (.12) higher than the recommended maximum of .08. When the error
covariances for items 4 and 6 were allowed to correlate, as suggested by a modification
index, the RMSEA dropped to .08. All of the parameter estimates were significant at the
.01 level and five of the six estimates were greater than .70.
It was necessary to re-specify the organizational performance scale by removing item
2 to achieve unidimensionality. Analysis of the organizational performance scale with
two dimensions returned GFI (.95), NNFI (.97) and CFI (.99) values greater than the
recommended .90 level but a RMSEA (.12) higher than the recommended maximum of
.08. When the error covariances for items 4 and 6 were allowed to correlate, as suggested
by a modification index, the RMSEA dropped to .04. All of the parameter estimates were
significant at the .01 level and greater than .70.
It was necessary to re-specify the individual performance scale by removing item 5 to
achieve unidimensionality. Following the re-specification, the confirmatory analysis
returned GFI (.98), NNFI (.91) and CFI (.97) values greater than the recommended .90
level. The RMSEA (.13) exceeded the recommended limit of .08. When the error
 568 The International Journal of Human Resource Management
covariances for items 2 and 4 were allowed to correlate, as suggested by a modification
index, the RMSEA dropped to .00. All of the parameter estimates were significant at the
.01 level and three of the four were greater than .70.
The organizational commitment scales returned NNFI (.89) and GFI (.88) values that
approached but did not exceed the recommended .90. The CFI (.92) did exceed the .90
level. The RMSEA (.12) exceeded the .08 limit. Allowing the error covariances for items
2 and 6, 1 and 13, 1 and 2, and 3 and 7 to correlate as recommended by modification
indices reduced the RMSEA to .10. All of the parameter estimates were significant at the
.01 level and six of the nine were greater than .70. Because the commitment scale is so
well established in the literature, no attempt at re-specification was made.
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The job satisfaction scale is also well established, and no attempt at re-specification
was made. The confirmatory analysis returned GFI (.83), NNFI (.82) and CFI (.84) values
that approached but did not exceed the recommended .90 level. The RMSEA (.10) falls
outside the recommended range of .05 to .08 for good fit. Allowing the error covariances
for items 13 and 16 and 14 and 18 to correlate as recommended by modification indices
reduced the RMSEA to .08. All but one of the 19 parameter estimates were significant at
the .01 level and eight of the 19 were greater than .70.

Reliability Garver and Mentzer (1999) recommend computing Cronbach’s coefficient

alpha and the SEM construct-reliability and variance-extracted measures to assess scale
reliability. They indicate that alpha and construct-reliability values greater than or equal
to .70 and a variance-extracted measure of .50 or greater indicate sufficient reliability.
The SHRM scale includes vertical-alignment and horizontal-integration dimensions.
Reliability assessment of the vertical-alignment subscale returned alpha (.85),
construct-reliability (.87) and variance-extracted (.70) values that exceed the
recommended minimum levels. The alpha (.76), construct-reliability (.84) and
variance-extracted (.64) coefficients for the horizontal-integration subscale also
exceeded the minimums.
The organizational performance scale also includes two dimensions: financial
performance and marketing performance. The alpha (.94), construct-reliability (.95) and
variance-extracted (.84) values for the financial-performance subscale exceed the
recommend levels. The alpha (.94), construct-reliability (.96) and variance-extracted
(.88) coefficients for the marketing-performance subscale also exceed the minimums.
Reliability analysis for the individual performance scale returned alpha (.79),
construct-reliability (.81) and variance-extracted (.51) values that meet or exceed the
recommended levels. The alpha (.88), construct-reliability (.92) and variance-extracted
(.56) values for the organizational commitment exceed the recommended minimums. For
the job satisfaction scale only the alpha (.87) coefficient exceeds the recommended
minimum; the construct-reliability (.50) and variance-extracted (.40) coefficients,
however, do not.

Convergent validity Ahire et al. (1996) recommend assessing convergent validity

using the normed-fit index (NFI) coefficient, with values greater than .9 indicating strong
validity. Garver and Mentzer (1999) recommend reviewing the magnitude of the
parameter estimates for the individual measurement items to assess convergent validity.
Statistical significance of an estimate indicates a weak condition of validity and an
estimate greater than .7 indicates a strong condition. The NFI for the two-dimensional
SHRM scale is .95. All associated parameter estimates are statistically significant, and
five of the six estimates are greater than .70. For the two-dimensional organizational
performance scale, the NFI is .97, and all parameter estimates are statistically significant
 Green et al.: The impact of SHRM on attitude and performance 569
and greater than .70. The NFI for the individual performance scale is .97, with all
estimates statistically significant and three of four estimates greater than .70. The NFI for
the organizational commitment scale is .90, with all estimates statistically significant and
six of nine greater than .70. The NFI for the job satisfaction scale is .79, with 18 of 19
estimates significant and eight of 19 greater than .70.

Discriminant validity Ahire et al. (1996) recommend that scales be tested for discriminant
validity using a chi-square difference test for each pair of scales under consideration.
Confirmatory factor analysis is first run on the pair of scales allowing for correlation between
the constructs and then run a second time fixing the correlation to one (Ahire et al., 1996).
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The difference between chi-squares from the two factor analyses is computed and tested for
significance (Ahire et al., 1996). A statistically significant difference in chi-squares indicates
discriminant validity (Ahire et al., 1996). Chi-square difference tests were run on all possible
pairs of study scales and subscales. The chi-square differences ranged from 237.94 to
6,460.89 with one degree of freedom. All differences are significant at the .01 level.

Predictive validity Both Ahire et al. (1996) and Garver and Mentzer (1999)
recommend assessing predictive validity by determining whether the scales of interest
correlate as expected with other measures. Values for each of the scales were computed
by averaging across scale items. Table 1 displays the correlation matrix for the scale
averages. With three exceptions all correlation coefficients are positive and significant, as
expected. The SHRM horizontal-integration variable did not correlate with either
financial or marketing performance and financial performance did not correlate with job
satisfaction.
The SHRM, organizational performance, individual-performance and organizational-
commitment scales exhibit content validity, unidimensionality, reliability, convergent
validity, discriminant validity and predictive validity. It should be noted, however, that
unidimensionality as measured by the RMSEA was achieved only when the error
covariances of certain item pairs within each scale were allowed to correlate. Minor
deficiencies in terms of reliability, unidimensionality and convergent validity were noted
for the job satisfaction scale. Since all coefficients and indices approached the desired
levels, the deficiencies are not considered significant enough to preclude use of the job
satisfaction data.

Assessment for common method bias

When data for the independent and dependent variables are collected from single
informants, common method bias may lead to inflated estimates of the relationships
between the variables (Podsakoff and Organ, 1986). Podsakoff and Organ (1986)
describe scale reordering as a procedural option for minimizing common method
variance. This option requires that the measurement items related to the independent
variable precede the items for the dependent variable on the survey instrument. The
survey instrument used was structured such that the SHRM related items preceded
the organizational performance, individual performance, organizational commitment and
job satisfaction measurement items.
Additionally, as Podsakoff and Organ (1986) recommend, Harman’s one-factor test
was used post hoc to examine the extent of the potential bias. As prescribed by Harman’s
test, all variables were entered into a principal components factor analysis. According to
Podsakoff and Organ (1986), substantial common method variance is signalled by the
emergence of either a single factor or one ‘general’ factor that explains a majority of the
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Table 1 Descriptive statistics (A) and correlation matrix (B)

A. Descriptive statistics (n ¼ 269)
Mean Standard deviation
SHRM: vertical-alignment 4.97 1.34
SHRM: horizontal-integration 6.00 .88
Financial performance 4.75 1.28
Marketing performance 4.74 1.32
Individual performance 6.08 .69
Organizational commitment 5.44 .97
Job satisfaction 5.26 .68
B. Correlation matrix (n ¼ 269)
1 2 3 4 5 6 7 8 9
1 SHRM: vertical-alignment 1.000
2 SHRM: horizontal-integration .419** 1.000
3 Financial performance .194** .117 1.000
4 Marketing performance .203** .096 .829** 1.000
5 Individual performance .315** .417** .131* .145* 1.000
6 Organizational commitment .399** .247** .170** .220** .357** 1.000
7 Job satisfaction .337** .222** .091 .137* .407** .641** 1.000
570 The International Journal of Human Resource Management

8 Number of employees .050 2.029 .031 .009 .049 2.033 2.020 1.00
9 Annual revenues .074 2.008 .041 .011 .027 2.032 2.034 .883** 1.00

Notes
** Correlation is significant at the 0.01 level (2-tailed), * Correlation is significant at the 0.05 level (2-tailed)
 Green et al.: The impact of SHRM on attitude and performance 571
total variance. Results of the factor analysis revealed 10 factors with eigenvalues greater
than one, which combined to account for 65 per cent of the total variance. While the first
factor accounted for 25 per cent of the total variance, it did not account for a majority of
the variance. Based upon these results of Harman’s one-factor test, problems associated
with common method bias are not considered significant (Podsakoff and Organ, 1986).

Results
The structural equation modelling capabilities of LISREL 8.5 software were employed to
assess the SHRM outcomes model illustrated in Figure 1. Summary values for each of the
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seven study constructs were computed by averaging across the items in the measurement
scales. SHRM and organizational performance are second-order constructs each with two
underlying dimensions. Descriptive statistics and the correlation matrix for the summary
variables are presented in Table 1. To assess the need to control for firm size in the
subsequent structural analysis, both the number of employees and annual revenues were
included in the correlation matrix. Since neither measure of size is significantly
correlated with the study variables, neither was incorporated in the structural analysis.
The structural model fits the data well. Figure 2 illustrates the SHRM outcomes model
as structurally assessed. The relative chi-square (chi-square/degrees of freedom) value
of 2.27 is less than 3.00 as recommended by Kline (1998). The root mean square error of
approximation (.07) falls below the recommended maximum of .08 (Schumacker and
Lomax, 1996), and values for NFI (.96), GFI (.97) and adjusted GFI (.93) all exceed the
recommended .90 level, indicating good fit (Schumacker and Lomax, 1996).
Results from the structural equation modelling analysis provide the information
necessary to evaluate the study hypotheses. The significant path identified from SHRM to
organizational performance exhibits a standardized estimate of 0.28 with an associated
t-value of 3.42 and supports hypothesis 1. Thus, SHRM directly and positively impacts
organizational performance. The link from SHRM to organizational commitment is also
significant with a standardized estimate of 0.31 and a t-value of 4.31, supporting

Figure 2 Structural STHRM outcomes model with standardized estimates and (t-values)
 572 The International Journal of Human Resource Management
hypothesis 2. SHRM directly and positively impacts organizational commitment. The
estimate for the SHRM to job satisfaction link is 0.53 with a t-value of 7.59 indicating
significance and support for hypothesis 3. Hypothesis 4 is also supported. The estimate
(0.62) and t-value (9.16) indicate that SHRM directly and positively impacts individual
performance. Finally, the results also support hypothesis 5 that job satisfaction positively
impacts organizational commitment. The estimate for the satisfaction to commitment
link is 0.48 with a t-value of 7.91.
Hair et al. (1998) recommend a competing models approach to structural equation
modelling when alternative formulations are suggested by the underlying theory. Recent
studies have reported a positive relationship between job satisfaction and individual
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performance (Judge et al., 2001). Therefore, an alternative model incorporating the

additional path was assessed. The estimate for the job satisfaction to individual performance
link is 0.20 with a t-value of 3.05. The overall fit did improve (relative chi-square ¼ 1.87,
NFI ¼ .97, GFI ¼ .98, AGFI ¼ .95), although it was not significant at the .01 level.

Discussion
This study was designed to assess the impact of SHRM on organizational performance
and on the individual performance, job satisfaction and organizational commitment
levels of HR professionals. A sample of human resource professionals was effectively
constructed and results of the structural equation analysis support all study hypotheses.
SHRM positively impacts organizational performance and the job attitudes and
individual performance of HR professionals.

Theoretical implications
The findings of the study raise several important theoretical implications. First, our study
highlights the importance of both vertical fit and horizontal fit. Organizations that
vertically align and horizontally integrate HR function and practices perform better and
produce more committed and satisfied HR function employees who exhibit improved
individual performance. Future research that incorporates both individual and
organizational level outcomes to assess the value of vertical and horizontal fit will not
only advance theories but also provide practical implications.
Second, findings from our study suggest that SHRM contributes positively to the
commitment, satisfaction and individual performance levels of HR professionals. These
findings seem to be contradictory to previous findings that SHRM negatively influences
HR effectiveness (Bennett et al., 1998). Specifically, Bennett et al. (1998) conjectured
that, when the HR function is fully integrated into business strategy, it becomes ancillary
and is not perceived as a department that is playing its expected role. One particularly
noteworthy point in the study, however, is that the measure of the effectiveness of HR was
obtained from top management’s (CEOs, owners, plant managers) general perceptions
with a 3-item measure. This approach provided a different source for performance
evaluation of HR from top managers who may be better informed of the firm’s strategy.
Top management may not be the most direct users of HR services and the accuracy of their
evaluation (particularly horizontal fit) may, therefore, be discounted. Wright, McMahan,
Snell and Gerhart (2001) compared the HR effectiveness ratings obtained from HR
executives and line executives, and not surprisingly found that HR executives reported
better HR effectiveness compared to the line executives’ evaluation.
Based on the notion that individual performance ultimately contributes to
departmental performance and based on the well-established linkage between work
attitude and work performance, our study took a bottom-up approach to examine the
 Green et al.: The impact of SHRM on attitude and performance 573
influence of SHRM on individual HR professionals. The positive relationships identified
in our study may suggest a higher level of HR departmental performance when the HR
professionals’ individual performance is aggregated. Apparently, the relationship
between SHRM and HR effectiveness varies significantly depending on the source of the
evaluation. Our study, along with previous findings, pinpoints the need to develop a
refined HR performance measure using multi-source evaluators. This line of research
will not only help clarify the relationship between SHRM and HR effectiveness, but also
provide rich diagnostic information to the HR managers in devising their action plans.

Limitations and future research directions

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While the objectives of the study were successfully accomplished, limitations of the
study should be noted. First, the data collected from a single source may raise concerns of
common method bias. Although Podsakoff et al. (2003) argued that statistical methods
cannot completely eliminate common source bias, we tested for the potential common
method biases with the results supporting the contention that the bias does not
significantly impact our study results. Future research should replicate our research
findings incorporating multiple sources to avoid potential common method bias. The
survey methodology yielded a 15.4 per cent return, raising concerns related to non-
response bias. Although the two waves of responses were compared and no evidence of
bias was noted, a more direct assessment of the potential bias utilizing data from
additional waves and an intensive follow-up on non-respondents would strengthen the
study.
Second, although we attempted to link the organizational level of antecedent (SHRM)
to the individual level and organizational level of outcomes and our results confirmed the
hypothesized positive relationships, methodologically no cross-level data were obtained
to further endorse our contention. Our study, however, provides initial support for these
links. We encourage future research to gather data from multiple levels to further confirm
our current findings.
Third, while we proposed the possible mechanisms through which SHRM influences
individual HR professionals’ job attitudes and performance, we did not directly test these
mediating mechanisms. Opening the ‘black box’ in which SHRM functions warrants
additional study. We also encourage future research to test intrinsic motivation and
fulfilled psychological contract as the mediating mechanisms to help theory building.
A longitudinal study design is particularly encouraged as it will more accurately capture
the formation of a psychological contract and further confirm the causal relationship
between SHRM and performance.
Finally, this study focuses on human resource professionals in the manufacturing
sector. Before the results and related conclusions can be generalized outside the
manufacturing sector, replication with other samples from other sectors (such as
the service and governmental sectors) is important. It would also be helpful to replicate the
study outside the US to determine the adoption and impact of SHRM internationally.
Theorizing and testing the mechanisms through which SHRM influences organizational
members other than human resource professionals is also encouraged in order to enhance
our understanding of the influence of SHRM on individual employees.

Implications for practice

Our study findings support the mounting body of evidence pointing to the idea that HR
should be an equal strategic business partner with operations, finance and marketing.
Whether one calls it giving HR a seat at the table, making HR a player or calling HR a line
 574 The International Journal of Human Resource Management
function, the result is the same – recognition by organizations that a strategic HR function
is equally critical to organizational success as the primary functions of the firm. Also, the
findings point clearly to developing and implementing HR systems that are vertically
aligned and horizontally integrated, as opposed to a set of separate HR practices in
traditional HR areas such as staffing, training, compensation and employee relations.
Practitioners are encouraged to adopt an SHRM strategy with the expectation that
organizational performance will be improved. Further, practitioners can expect
improvements in job-related attitudes and individual performance on the part of HR
professionals within their organizations following the adoption of SHRM. SHRM impacts
both the organization and the individuals within the organization for the better by
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strategically focusing the HR function on the mission and objectives of the organization.

Appendix

Measurement scales

Strategic Human Resource Management (alpha ¼ .81)

(7-point scales with endpoints ‘strongly disagree’ and ‘strongly agree’)

Items 1, 2 and 3 form a vertical-alignment factor (alpha ¼ .85)

Items 4, 5 and 6 form a horizontal-integration factor (alpha ¼ .76)

1 Top management incorporates HR information (plans, requirements, activities, etc.)

when establishing the direction the organization should take.
2 This organization’s top-level managers are trained to integrate all levels (supervisory
through to executive) and functions (marketing, accounting, finance, HR, etc.) of the
organization into the decision-making process.
3 This HRM unit has been fully integrated into the strategic planning process.
4 This HRM unit works hard to maintain a cooperative partnership with individual
managers.
5 This HRM unit regularly checks with other units to identify organizational training
needs.
6 This HRM unit helps departmental managers carry out their critical HR
responsibilities.

Organizational performance scale (alpha ¼ .94)

(7-point scales with endpoints ‘well below’ and ‘well above’ industry average)

Items 1, 3 and 4 form a financial performance factor (alpha ¼ .92)

Items 5, 6 and 7 form a marketing performance factor (alpha ¼ .94)

1 Average return on investment over the past three years.

2 Average profit over the past three years.
3 Profit growth over the past three years.
4 Average return on sales over the past three years.
5 Average market share growth over the past three years.
 Green et al.: The impact of SHRM on attitude and performance 575
6 Average sales volume growth over the past three years.
7 Average sales (in dollars) growth over the past three years.

Note: Item 2 was removed to achieve unidimensionality.

Individual performance scale (alpha ¼ .79)

(7-point scales with endpoints ‘strongly disagree’ and ‘strongly agree’)

1 I am very confident that I can reach my performance goals.

2 The level of my individual performance last year was excellent.
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3 I regularly accomplish my goals.

4 My individual goals directly support the goals of the organization.
5 My individual performance has improved significantly during the last year.

Note: Item 5 was removed to achieve unidimensionality.

Organizational commitment scale (alpha ¼ .88)

(7-point scales with endpoints ‘strongly disagree’ and ‘strongly agree’)

1 I am willing to put in a great deal of effort beyond that normally expected in order to
help this organization to be successful.
2 I talk up this organization to my friends as a great organization to work for.
3 I would accept almost any type of job assignment in order to keep working for this
organization.
4 I find that my values and the organization’s values are very similar.
5 I am proud to tell others that I am part of this organization.
6 This organization really inspires the very best in me in the way of job performance.
7 I am extremely glad that I chose this organization to work for over others I was
considering at the time I joined.
8 I really care about the fate of this organization.
9 For me, this is the best of all possible organizations for which to work.

Job satisfaction scale (alpha ¼ .87)

(7-point scales with endpoints ‘strongly disagree’ and ‘strongly agree’)

1 There are some conditions concerning my job that could be improved.

2 My job is a hobby to me.
3 My job is usually interesting enough to keep me from getting bored.
4 It seems that my friends are more interested in their jobs.
5 I consider my job rather unpleasant.
6 I enjoy my work more than my leisure time.
7 I am often bored with my job.
8 I feel fairly well satisfied with my job.
9 Most of the time I have to force myself to go to work.
10 I am satisfied with my job for the time being.
11 I feel that my job is no more interesting than others I could get.
12 I definitely dislike my work.
13 I feel that I am happier in my work that most people.
14 Most days I am enthusiastic about my work.
15 Each day of work seems like it will never end.
 576 The International Journal of Human Resource Management
16 I like my job better than the average worker does.
17 My job is pretty interesting.
18 I find real enjoyment in my work.
19 I am disappointed that I ever took this job.

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