Bachelor Thesis

Human Resource Studies

The influence of employee perceptions of HRM systems on employee performance

A literature review

Student: Merijn Sijtsma

ANR: 489665
Supervisor: J. van Beurden
Second reader: S. van den Groenendaal
Topic: HRM effectiveness, well-being and performance
Date: June 2017
Abstract
This literature review investigates the impact that Human resource management (HRM)
systems have on employee performance (in-role and extra-role). Previous literature has mainly
focused on the managerial perspective and organizational performance, this review focusses on
the employee perspectives. Data has been collected through a literature search in three
databases, which resulted in a total of eleven relevant articles which subsequently have been
analyzed. Results of this study consistently show a positive relation between HRM systems and
employee performance, this means that the higher the level of HRM systems, the higher
employees perform in-role and extra-role. Furthermore, several factors mediating this relation
have been found, and an overview of practices composing HRM systems has been derived from
the literature. Finally, at the end of this review the theoretical and practical implications, and
recommendations for future research will be discussed.

Key words: Human resource management (HRM) systems; High performance work systems;
Perceived HRM effectiveness; Employee performance; Extra-role performance; In-role
performance.

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Introduction
According to Boselie (2014) human resources are part of the organizations most
important and valuable assets, because human capital is one of the major sources of competitive
advantage to organizations (Noe, Hollenbeck, Gerhart, & Wright, 2012). In order to stay
competitive and sustain company effectiveness human capital needs to be managed. Human
resource management (hereafter HRM) practices and policies have a direct influence on the
human capital in organizations (Delery & Shaw, 2001). These practices include for example
recruiting, selection, training and development, and compensation (Noe et al., 2012). Since the
1990s, scholars have observed an increasing amount of academic research which focusses on
the impact that HRM practices as a set or bundle, better known as the so called HRM systems
have on organizational performance (Mihail, Links, & Sarvanidis, 2013). These HRM systems
are bundles of HRM practices specifically designed to enhance skills, commitment and
performance of employees. Although individual practices can improve skills, abilities, and
knowledge of employees, the use of HRM systems over individual practices is argued to be
significantly more effective (Huselid, 1995). HRM systems have been found to increase
employees’ motivation, and reduce shirking. It also can encourage non-performers to leave,
while enhancing retention of good employees (Huselid, 1995). Besides the organizational
benefits, the presence of HRM systems gives a strong signal to employees that the organization
sees their value and their importance in improving performance (Tang & Tang, 2012).
Many studies have found the relationship between HRM systems and performance to
be positive (Jeong, & Choi, 2016; Lin, & Liu, 2016; Obeidat, Mitchell, & Bray, 2016; Wu,
Hoque, Bacon, Llusar, & Carlos, 2015; Zheng, Morrison, & O’Neill, 2006). However, Wright
and Gardner (2003) claim that the relationship between HRM systems and individual outcomes
may not be direct and might be more complicated than typically is depicted. While prior
research has mainly focused on managerial reports of the use of HRM systems, the role of the
individual worker and their experiences with HRM systems has generally been ignored (Lepak,
Liao, Chung, & Harden, 2006). This could be concerning, since there may be a disconnection
between managers views of their implementation of HRM systems and what employees actually
experience, as is confirmed by Liao, Toya, Lepak, and Hong (2009).
Furthermore, as the focus has mainly been on organizational outcomes, existing literature has
only given limited insights into the influence that HRM systems have on employee outcomes.
Therefore, further research on the level of the individual employee could clear up the complex
relation between HRM systems and organizational performance.

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 Existing literature has suggested the existence of multiple factors influencing the effects
of HRM systems on performance. Chang and Chen (2011) for example, state (based on the
social exchange theory by Blau (1964)) that the existence of HRM systems may be taken as
evidence that the organization cares about its workers, which they would then repay with
increased performance. Although scholars have begun to explore the mediators to the relation
between HRM systems and employee attitudes and behaviors, the assumption that these
mediators exist has still remained largely unproved (Takeuchi, Chen, & Lepak, 2009) and
empirical research concerning mediating mechanisms is needed (Kehoe & Wright, 2013).
The contribution of this paper is twofold. First, this paper contributes to the existing
literature by giving an overview of the literature written thus far about the efficiency of HRM
systems from the perspective of the employee. More specifically, the effects of HRM systems
on performance of individual employees. Second, although many articles have been written
concerning organizational performance, the individual level has only been coming up in the
recent past. In addition, this study is practically relevant for several reasons. First of all it will
give insight in which combinations of HR practices that are called HRM systems have an
influence on performance, and how their effect is evaluated by individual employees. This can
be relevant for HR personnel in providing a basis of knowledge when implementing HRM
systems and how employee performance will be affected. Second, it will give insight in the
types of performance that can be improved by HRM systems and which factors influence HRM,
which will provide the opportunity to target specific outcomes for the organization. Hence, the
following research question will be addressed in this research:

To what extent do employee perceptions HRM systems have an influence on employee

performance and what factors influence this relation?

Method
The research method of this paper is a literature review. The collection of relevant
scientific articles for this review was done by the use of keywords in the databases Web Of
Science, ScienceDirect, and PsycInfo. Keywords included for instance ‘high performance work
systems’, ‘employee performance’, and ‘task proficiency’. A full overview of the used
keywords is presented in Table 1. In order to narrow the search down, combinations of these
keywords have been used. An example of such a combination is “HPWS” AND “Performance”
AND “Subjective”. Forward and backward snowballing has been applied using Web of Science.

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This means that reference lists as well as a list of citing articles have been used to find additional
articles. Both quantitative and qualitative studies were subject of this search.
Articles that were included in this literature review had to meet several criteria. These
criteria included being presented in a peer-reviewed journal, with an impact factor in order to
assure the quality of the journals and thereby the articles. Secondly, the articles had to be written
in English. Thirdly, the articles needed to apply their research on the level of the individual
employee in organizations. Year of publication has not been a criteria for the selection of
literature for this study, since HRM systems are a relatively recent development in the literature.
Therefore, all years have been included in order to make sure all relevant studies were part of
this review.
After applying these criteria the relevant articles were selected based on their title,
keywords, abstract, and scanning of the article. This resulted in a total of eleven articles relevant
for this literature review and all eleven studies were quantitative. The results of the search have
been collected and are presented in appendix 1, author, year of publication, number of citations,
impact factor of the journal, sample, key concepts, main findings and performance outcome
have been included.

Table 1

Keywords

Independent variable Dependent variable

High performance work systems Employee performance

HPWS Subjective performance

High commitment work systems In-role performance

HCWS Task proficiency

High involvement work systems Employee perspective

HIWS Perceived performance

HRM systems Extra-role performance

HR effectiveness

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Results
In the next part of this review the two main topics of this research, namely HRM systems
and employee performance will be defined. Furthermore, the relation between these variables
and the factors influencing this relation will be discussed based on existing literature. In this
last part a review of the literature on the relationship between HRM systems and employee
performance will be presented.

HRM systems
As stated before in the introduction, in order to effectively manage human resources,
HR personnel can make use of a wide range of practices (Delery & Shaw, 2001). These
individual practices can include amongst others measures regarding recruiting, selection,
training and development, and compensation (Noe et al., 2012). Ever since the 1990s HRM
systems have started to emerge. According to Boselie (2014) HRM systems can be
conceptualized as “a consistent and coherent system of HR practices that enhance the high-
performance culture of an organization to achieve the organizational goals”. Kepes and Delery
(2007) state that an internal fit between different practices into a system leads to better outcomes
than the sum of individual practices. Often these systems are called by different names,
including ‘high involvement work systems’ (HIWS), ‘high commitment work systems’
(HCWS), and ‘High performance work systems’ (HPWS), and each system is meant to promote
respectively involvement, commitment and performance (Boselie, 2014). Although, while the
names and purpose are different there is no fundamental difference between the different HRM
systems (Boselie, 2014). According to a literature review by Boselie, Dietz, and Boon (2005)
HRM systems typically consist of five key practices; selective recruitment and selection;
compensation & performance related pay; appraisal and performance management; training and
development; and employee involvement. Although a wide range of practices can be included
such as the sixteen Pfeffer (1994) named in his article, like employment security; selectivity in
recruiting; high wages; incentive pay; information sharing and long term perspective. To
conclude, in this study focus will be on HRM systems in a broad sense, including HIWSs,
HCWSs, and HPWSs.

Performance
The two main ultimate business goals of an organization are creating and sustaining
viability, and the search for a sustained competitive advantage over their rivals (Boxall &
Purcell, 2003). These goals are amongst other things reached by securing organizational
performance (e.g. labor productivity & market share). Meeting these criteria is vital to stay in

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business and avoid bankruptcy (Boxall & Purcell, 2003). One important way to secure
organizational performance is through human capital, which is one of the major sources of
competitive advantage to organizations (Noe et al., 2012). According to literature by Peeters,
de Jonge, and Taris (2014) generally, employee performance can be divided into three types.
The first is task performance, the second organizational citizenship behavior and the third is
counterproductive work behaviors. In this study two types of employee performance are
distinguished which are in line with the first two types named by Peeters et al (2014). The third
named by Peeters et al (2014), namely counterproductive work behaviors did not appear in the
literature reviewed in this study, and therefore will not further be discussed. The first type of
performance that is discussed in this study is in-role performance (task performance) and the
second is extra-role performance (organizational citizenship behavior). First, in-role
performance has been conceptualized by Edwards, Bell, Arthur, and Decuir (2008) as behaviors
that are expected of employees, and which are explicitly named in their job descriptions. This
type of performance is what generally is depicted when speaking about performance or job
performance. Examples of this type of performance are service quality of hospitality employees
(Karatepe, 2013; Karatepe, & Olugbade, 2016) or quality of patient care in case of healthcare
employees (Lee, Lee, & Kang, 2012). Second, extra-role performance (also called extra-role
behavior) includes behavior mostly not explicitly included in employees’ tasks and
responsibilities. As Organ, Podsakoff, and MacKenzie (2006) state, extra-role behavior
“involves actions like being helpful and cooperative, tolerating inconvenience at work, taking
on additional responsibilities, and keeping up with company affairs”. Other examples of extra-
role behavior include creative performance (Karatepe & Vatankhah, 2014) or discretionary
behaviors (Shih, Chiang, & Hsu, 2010). The following sections of this review have been
structured based on these two types of employee performance.

The relationship between HRM systems and in-role performance

In this section literature concerning the effect of HRM systems on in-role performance
will be discussed. In this part of the literature two kinds of in-role performance can be
distinguished, the more general job performance, and service performance, which is specifically
focused on service in hospitality and healthcare. First the articles measuring job performance
will be named, subsequently the ones regarding service performance.
The first article in this section is the written by Chang and Chen (2011). The goal of this
article was to integrate the social exchange theory (Blau, 1964), and human capital theory
(Becker, 1964) perspectives to examine how shop-level HPWS affect employee individual

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performance (in this study this is conceptualized as average monthly sales per employee) in the
service context, especially focusing on the small-scale professional service organizations. The
social exchange theory by Blau (1964) suggests that positive actions from the side of the
employee (such as the implementation of HPWS) result in reciprocal behaviors from the
employees. The human capital theory by Becker (1964) suggests that people poses knowledge,
skills and ability that contribute to the economic state of the organization. This study included
five practices in the system (selection, security, training, compensation, and reduced status
differentiation). Data were collected from multiple sources, including hair salon shop owners
(N = 97) and hairdressers (N = 284). The results indicate that employee affective commitment
and their human capital positively mediated the relationship between shop-level HPWS and
employee job performance. In other words, HPWS have a positive impact on employee
commitment and human capital in terms of the sum of knowledge, skills and ability. These two,
in turn, have a positive impact on the average monthly sales per employee.
Secondly, Latorre, Guest, Ramos, and Gracia’s article (2016), the goal of this study was
also to tests a HRM system and its relation with absenteeism and employee performance. This
study tested the effects of a high commitment model of human resource practices (HCWS). In
this study employee performance reflects the extent to which employees can handle
responsibilities, perform their tasks without mistakes, and get things done on time. Job
satisfaction was hypothesized to mediate the relation between HCWS and absence and
employee performance. The relation between HCWS and job satisfaction was in turn
hypothesized to be mediated by employee perceptions and attitudes (including job security,
organizational support, and psychological contract). This study included seven practices in the
system (training, empowerment, compensation, appraisal, environment free of harassment,
equal opportunities, and support with non-work responsibilities). Data were collected from
Spanish workers (N = 835) from three sectors including education, services, and food
manufacture through a questionnaire survey. Results indicated a positive relation between
HCWSs and employee performance and a negative relation between HCWSs and absenteeism.
These relations were mediated by job satisfaction. The relation between HCWS and job
satisfaction was positively mediated by perceived organizational support, a fulfilled
psychological contract, and job security. In other words, a high level of HCWS leads to higher
levels of employee perceptions and attitudes, in turn to higher levels of job satisfaction, and this
leads to higher levels of employee performance, and lower levels of absenteeism.
Thirdly, Shih et al. (2010) were the last studying the effects on job performance. Their
goal was to find the effects of the implementation of HIWS by multinational companies on the

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work-family conflict and the performance of their expatriates. Expatriate performance is
conceptualized in this study as the level of productivity (job related behaviors and outcomes)
in relation to his/her peers. Work-family conflict is a result of employees’ inability to balance
the demands from work and private life (family). This study included eight practices in the
system (selection, security, training, empowerment, compensation, teamwork, employee
participation, job design, and appraisal). Data were collected from Taiwanese expatriates (N =
174) that were situated in China by use of a survey. In order to test the hypotheses data were
collected in four areas; perceived application of HIWS; perceived work-family conflict; job
satisfaction; and supervisor ratings of expatriate job performance. Results indicate a positive
relation between HIWS and expatriate satisfaction and level of productivity relative to his/her
peers. In this study performance can be divided in two types, task performance and contextual
performance (good relations with employees and host nationals). At the same time, however,
HIWS is positively related to expatriate work-family conflict, which in turn is negatively related
to expatriate satisfaction and performance. In other words, when HIWS is increased,
satisfaction and performance increase. At the same time work-family conflict increases, which
leads to lower levels of satisfaction and performance.
The study by Aryee, Walumbwa, Seidu, and Otaye (2012) tested for the service
performance outcome. The goal of this article was to examine the processes linking HPWS and
service performance outcomes at the individual as well as the organizational level. The study
was underpinned by the empowerment theory which is based on the assumption that
empowered employees perform better than less empowered employees (Kanter, 1977). While
existing literature has mainly focused on the effect of HPWSs on organizational performance,
this study also gives insight in the effect of HPWSs on employee outcomes. This study included
eight practices in the system (training, empowerment, compensation, employee participation,
appraisal, communication, internal service, and service discretion). Data were collected from
37 branches of two banking institutions in Ghana. Results showed that generally branch-level
HPWS relates to empowerment climate. The hypothesized cross-level relationships revealed
three findings. First, the influence of branch-level HPWS on psychological empowerment is
partially mediated by experienced HPWS and empowerment climate. Second, the influence of
empowerment climate and experienced HPWS on service performance is partially mediated by
psychological empowerment. Third, the relationship between psychological empowerment and
service performance is positively moderated by service orientation. This means that the impact
of intended HPWS on psychological empowerment depends on how employees perceive the
HPWS. Further, psychological empowerment is increased with higher levels of HPWS, and in

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turn leads to better service performance. Lastly, it means that an increase in psychological
empowerment leads to better service orientation, and in turn better service performance.
The fifth article is the one by Liao et al. (2009). Which also tested the relation between
HPWS and service performance. While Aryee et al (2012) linked to individual as well as
organizational outcomes, the goal of this study was to differentiate management and employee
perspectives of HPWSs and examining how the two perspectives differentiate and relate to
employee individual performance in the service context. Individual performance in this study
consisted of general service performance, which refers to the overall professional appearance,
and knowledge-intensive financial service performance, which refers to the ability to
recommend, design and sell financial services. The cause for this research was the focus in
current literature on the managerial perspective on the effect of HPWSs on firm-level
performance. There may be a difference in perspectives between managers and employees, one
of the goals of this study is to understand these differences. This study included thirteen
practices that were included in the HRM system (selection, security, training, empowerment,
compensation, teamwork, opportunities, employee participation, reduced status differentiation,
job design, appraisal, communication, internal service, and service discretion). For this research
91 branches in two banks in Japan were studied. The data of the study was collected from
multiple sources, of which the respondents included 292 managers, 1.772 customers, and 830
employees of these banks. Significant differences between management and employee
perspectives of HPWSs were found. Also amongst different employment statuses and with
employees of the same status significant differences were found. Employee perspective of
HPWSs and individual general service performance were positively related, mediated by
perceived organizational support and employee human capital. The employee perspective of
HPWSs was further positively related to individual knowledge-intensive service performance,
mediated by psychological empowerment and employee human capital. Finally, the
management perspective of HPWSs and employee human capital and both types of service
performance were positively related.
The goal of the study by Lee et al. (2012) was just as the previous study by Liao et al
(2009) to empirically test the effects of HPWSs on service quality. Next to this relation the
relation between HPWSs and employee attitude, customer satisfaction, and customer loyalty in
health-care organizations was measured. Employee service quality in this study is measured by
the employees’ perception of the quality of the service that is provided by the hospital. This
study fills up the paucity left by existing literature which focused on quality of care and
employee satisfaction in HPWS. This study included three practices in the system (training,

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compensation, and communication). Data were collected from 196 pairs of employee–customer
respondents in four selected hospitals in South-Korea with more than 500 beds. The results
indicate a positive relation between customer satisfaction and loyalty through efficient
operations, employee engagement, and service quality. Finally, it was found that HPWSs in
health-care organizations improve employee reaction and service quality. In other words, when
employees’ reactions improved through training, compensation, and communication, service
quality improves.
The last article in this section was written by Bonias, Bartram, Leggat, and Stanton
(2010). Their goal was to investigate the relation between HPWS and service quality, but this
study focused specifically on patient care in hospitals. Next to that relation, the mediation
effects of the four components of psychological empowerment on the relationship between
HPWS and perceptions of patient care quality among hospital employees was investigated.
Existing literature is extended by including the effects of HPWSs on employee attitudes and
employee perfection of the quality of patient care. This study included nine practices in the
system (selection, security, training, compensation, teamwork, reduced status differentiation,
job design, communication, and transformational leadership). Data were collected by surveying
541 hospital employees in a large regional Australian health service. Results indicated that
psychological empowerment fully mediated the relationship between HPWS and the perception
of the quality of patient care. The relationship between HPWS and the perception of quality
care was fully mediated by three of the four individual components of psychological
empowerment (autonomy, competence and meaning), the fourth (impact) was non-significant.
In other words, this means that an increase in HPWS leads to higher psychological
empowerment in terms of autonomy, competence and meaning, and these in turn have a positive
impact on the perception of patient care quality.
To conclude on the articles solely measuring in-role performance (job performance and
service performance) as dependent variable, overall the relation between HRM systems and in-
role performance has been found to be positive. Therefore, when HRM systems are
implemented, employee in-role performance will rise. Although, practices used in the HRM
system widely differ, between 60 percent and 100 percent of the articles used a practice related
to selection, empowerment, appraisal, and communication. Compensation and training were
even used by all seven articles. A number of different factors influencing the relation between
HRM systems and employee performance were found. These included perceived organizational
support, employee human capital, employee commitment, psychological empowerment,
service orientation, a fulfilled psychological contract, job security and job satisfaction. All these

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factors have a positive impact on the relation between HRM systems and employee
performance. The last, work-family conflict is positively influenced by HIWS, and in turn
negatively influences employee performance.

The relationship between HRM systems and extra-role performance

In this section literature concerning the effect of HRM systems on extra-role
performance will be discussed. Two articles are named in this section, both measure amongst
other variables creative performance, and mediating factors.
The goal of this article by Karatepe and Olugbade (2016) was to examine the effects of
HPWSs on absence intentions, service recovery, and creative performance and the mediating
role of work engagement on this relation. Creative performance and absence intentions can be
seen as extra-role behavior in the sense that these are not demands stated in the job description,
but are still desirable behaviors. Work engagement in this study refers to the level of vigor,
dedication and absorption. The Job Demands - Resources model (Bakker & Demerouti, 2008)
is used as theoretical frame for this study. According to the study, the model proposes that work
engagement mediates the relation between job resources and employee outcomes. This study
included four practices in the system (selection, security, teamwork, and opportunities). Data
were collected from frontline (N = 287) employees and their supervisors in international chain
hotels in Nigeria. Results indicate that the use of high performance work practices bundled in
a HPWS have a positive relation to work engagement. Work engagement, in turn, has a negative
relation to absence intentions. Finally, HPWS has a positive relation to creative performance
and service recovery, and this relation is mediated by work engagement. In other words, HPWS
leads to higher work engagement. When work engagement is high, turnover intentions are low,
and creative performance and service recovery increase.
The second study in this section is the article by Karatepe and Vatankhah (2014) and
this study also took place in the service sector. Their goal was to investigate the role of job
embeddedness as a mediator of the effects of HPWSs on creative performance and extra-role
customer service. Job embeddedness was conceptualized as the forces that keep employees
embedded in their jobs, this includes links to other people, fit with the organization, and costs
of leaving the job. Creative performance consists of new ideas generated, extra-role customer
service was described as the discretionary behaviors of contact employees, extending on the
formal job requirements. This study included seven practices in the system (selection, security,
training, empowerment, compensation, teamwork, and opportunities). Data were obtained
collected from flight attendants (N = 164) with a time lag of two weeks in Iran. Results indicate

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that the joint effects of HPWPs on performance outcomes are fully mediated by job
embeddedness. More specifically, job embeddedness is enhanced by HPWSs. In turn, job
embeddedness has a positive relation to the level of creative performance and extra-role
customer service. This means that an increase of HPWPs used in a system leads to an increase
in the level of job embeddedness of an employee. This job embeddedness leads to more creative
ideas and better discretionary behavior in contact employees.
In conclusion on the articles solely measuring the relation between HRM systems and
extra-role performance (creative performance, absence intentions, and extra-role customer
service), the overall relation has been found to be positive. As well as the articles adressed in
the previous part, many different HR practices were used to compose the HRM systems.
Selection, security, teamwork, and opportunity were the practices used by both articles in this
section. In the previous articles two different factors that mediate the relation between HRM
sytems and employee performance were found. These two were job embeddedness and work
engagement and both have a positive effect on this relation.

The relationship between HRM systems, in-role performance and extra-role

performance
In this section literature concerning the relation between HRM systems and a
combination of in-role performance and extra-role performance will be discussed. In addition
to articles that examine the role of either HRM systems and in-role performance, or HRM
systems and extra-role performance, two articles examining both these performance measures
were found. The articles have been ranked based on the impact factor of the publishing journals
(see appendix 1). The article from the journal with the highest impact factor will be named first.
The goal of this study by Karatepe (2013) was to investigate whether work engagement
functions as a mediator of the effects of HPWSs on job performance and extra-role customer
service. Job performance was conceptualized as level of productivity of an employee compared
to his/her peers. Extra-role customer service has been described as discretional behavior
performed by employees that go beyond the formal job requirements. The social exchange
theory (Blau, 1964) was the main theoretical basis for this study. Karatepe (2013) stated that
employees tend to repay the organization for the resources it gives through work engagement,
and in turn through better performance. This study included three practices in the system
(training, empowerment, and compensation). Data were collected from full-time frontline hotel
employees (N = 110) and their managers in hotels in Romania. The results indicate that the
effects of HPWSs on job performance and extra-role customer service are fully mediated by

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work engagement. More specifically, HPWSs, as manifested by frontline employees’ appraisal
of training, empowerment, and rewards, enhance work engagement. In turn, these HPWSs have
a positive impact on job performance and extra-role customer service.
Just as the previous article by Karatepe (2013), this study examined both in-role and
extra-role performance. The goal of this article by Shen, Benson, and Huang (2014) was to
examine the role of quality of working life in the relationships between HPWSs and employee
in-role performance and extra-role behavior in teachers. In-role performance was described as
behaviors formally required for the job. Extra-role behavior was also described as
organizational citizenship behavior and involved behaviors that were discretionary and not
formally required, in this case they included student-directed behavior, civic virtue, and
personal development. This study adds to existing literature by executing a multilevel research
on organizational as well as individual level. This study included eight practices in the system
(selection, security, training, compensation, employee participation, job design, appraisal, and
internal mobility). Data were collected from teachers (N = 1.051) and their immediate
supervisors in Chinese schools (N = 63). Results indicate that HPWSs have a direct influence
on teachers’ in-role performance and their extra-role behavior. This relation is mediated by the
perceived quality of working life.
Finally, concluding on the articles measuring the relation between HRM systems and
in-role performance as well as extra-role performance, the overall relation has been found to be
positive. In these articles also a wide selection of practices was used to compose the HRM
systems, but training, and compensation. were the practices used by both of the articles in this
section. In this part of the literature two factors positively influencing the relation between
HRM systems and employee performance were found. These included work engagement and
quality off working life. This means that when HRM systems are implemented, the levels of
work engagement and quality of working life rise. Subsequently in-role and extra-role
performance improves.

Discussion
This literature review has examined the relation between employee perceptions of HRM
systems and employee performance. Although many studies have provided evidence for a
positive relation between HRM systems and (organizational) performance (Jeong, & Choi,
2016; Lin, & Liu, 2016; Obeidat et al., 2016; Wu et al., 2015; Zheng et al., 2006), results were
often from a manager perspective and on organizational performance. Researching the
employee perspective and performance on the level of the employee will therefore add to

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current literature and this insight will provide new opportunities for HR personnel. Hence, this
led to the following research question: To what extent do employee perceptions of HRM systems
have an impact on employee performance and what factors influence this relation? This review
started out by describing the research methodology through which all relevant literature on the
relation between HRM systems and employee performance was found, a total of eleven studies.
The results section began by elaborating on the concepts of HRM systems and employee
performance. Afterwards, the relation between HRM systems and consequently in-role
performance, extra-role performance, and a combination of in-role and extra-role performance
and the factors influencing this relation were examined. The results of all relevant literature
provided a clear positive relationship between HRM systems and employee performance.
Although many different practices are used to compose HRM systems practices, in the current
literature training and compensation are the ones most widely implemented. In other words,
although HRM systems can be composed of a wide range of different practices, the
implementation of such a system leads to increased levels of employee performance. Finally, a
number of factors influencing the relationship between HRM systems and employee
performance were found, including psychological empowerment, perceived organizational
support, and work engagement.
These findings were supported by all eleven articles that were used in this review. Six
out of the total of eleven studies found a positive relationship between HRM systems and in-
role performance (Latorre et al., 2016; Liao et al., 2009; Lee et al., 2012; Chang & Chen, 2011;
Bonias et al., 2010; Aryee et al., 2012). Three of the studies focused specifically on extra-role
performance, and found that this was increased by HRM systems (Karatepe & Vatankhah,
2014; Karatepe & Olugbade, 2016; Shih et al., 2010). Finally, the remaining two studies
examined in-role performance as well as extra-role performance, and also found a positive
relation with HRM systems (Karatepe, 2013; Shen et al., 2014). Although the performance
measures of these eleven studies could be categorized in in-role and extra-role performance, all
studies used different definitions for the type of performance measured.
In addition to these direct effects of HRM systems on employee in-role and extra-role
performance, evidence was found for variables mediating this relation. Three out of the eleven
articles found a positively mediating effect of psychological empowerment (Bonias et al., 2010;
Aryee et al., 2012; Latorre et al., 2016). Three other articles examined work engagement (Chang
& Chen, 2011; Karatepe & Olugbade, 2016; Karatepe, 2013) and found a positively mediating
effect in the relation between HRM systems and employee performance. Besides those,
perceived organizational support (Liao et al., 2007), job embeddedness (Karatepe & Vatankhah,

14
2014), and quality of working life (Shen et al., 2014) were found to have a positively mediating
effect on the examined relation. Finally, one negative mediating effect was found by Shih et al.
(2010). This study found work-family conflict was positively impacted by HPWS, and in turn
negatively impacted job satisfaction and employee performance. Concluding, personal factors
such as work-family conflict and psychological empowerment as well as organizational factors
such as perceived organizational support were taken into account by the different studies.
In the literature currently included in this review many different practices have been
used to compose HRM systems, in total nineteen different practices were examined in the
literature. Training and compensation were the most widely spread practices and were used by
a total of ten out of eleven studies. Selection was used in seven, and empowerment and security
in a total of six studies. Five studies included teamwork, four employee participation, job design
and communication, and finally a number of practices were used by three or less cases (reduced
status differentiation, opportunities, internal service, service discretion, transformational
leadership, environment free of harassment, equal opportunities, support with non-work
responsibilities, and internal mobility). To conclude, although many different practices were
used to compose HRM systems by different studies, in this sample training, compensation,
selection, empowerment and security were the practices most widely used. Compared to the
five key practices named earlier in the results section (Boselie et al., 2005) appraisal was not
used as widely as expected, while security was used by a higher amount of studies.

Limitations and suggestions for future research

Although much can be concluded from this literature review, there is a number of
limitations to this study. In this section the limitations will be named, as well as suggestions for
future research.
Since literature on HRM systems only evolved since the 1990s and the employee
perspective has only been researched since more recent times, only a small amount of relevant
literature was available for this review. This has led to inclusion of a number of articles from
journals with a low impact factor. Further research is needed on the specific area of the relation
between HRM systems and employee performance in order to strengthen conclusions on this
subject.
A second methodological limitation to this study is that all studies performed in the
literature were quantitative, and no qualitative research has been done on this subject. Since
research on this subject has been fairly recent and not much research has been done it is
understandable that studies have mainly been working with questionnaires. Although, to get a

15
more in depth overview of the relation between HRM systems and employee performance, and
the factors influencing this relation, it is important to perform qualitative research.
A third limitation to this study was the vast amount of factors influencing the main
relation in this review. Only few factors have been researched by a larger number of studies,
and since literature on this topic is limited naturally there might be more factors that have not
been researched. Therefore, more specific research on the factors influencing the relation
between HRM systems and employee performance is necessary to provide conclusive results
on the impact of these factors such as psychological empowerment and work engagement and
to give a complete view on this subject.
A final limitation to this study can be found in the fact that in the examined literature a
vast amount of different practices is used to compose the HRM systems. Due to this lack of
uniform approach to HRM systems results are difficult to generalize to the entire population.
Although this study has found that key practices in the use of HRM systems in the reviewed
studies largely correspond with existing literature on HRM systems, no conclusive results can
be stated without explicit research on the composition of HRM systems.

Theoretical and practical implications

The contributions of this literature review to the existing literature is threefold. First, by
giving an overview of the literature written thus far about the efficiency of HRM systems from
the perspective of the employee. More specifically, the effects on performance of individual
employees. Although many articles have been written concerning organizational performance,
the individual level has only been coming up in the recent past. Second, another contribution
can be found in the fact that this review gives an overview of the factors influencing the
relationship between HRM systems and employee performance. Relatively few studies have
taken place to clear up the black box linking those two variables. This study provides a clear
overview of the current knowledge in regard to mediating factors to this relationship. Finally,
this paper gives an overview of the different compositions of HRM systems in the current
literature. In existing literature no clear collection of practices could be found, this study
provides an overview of all practices used in current literature on the relation between HRM
systems and employee performance.
This study is practically relevant for a number of reasons. First of all it gives insight in
which combinations of practices that are called HRM systems have an influence on
performance, and how their effect is evaluated by individual employees. This can be relevant
for HR personnel in providing a basis of knowledge when implementing HRM systems. It could

16
also be a basis for the measurement of levels of engagement and organizational behavior that
was mentioned by interviewee one (appendix 2). Besides, this study gave insight in the types
of performance that can be improved by HRM systems, which will provide the opportunity to
target specific outcomes for the organization. Another practical implication can be found in the
discrepancies between the interests of the organization and the employee, and their points of
view. According to interviewee one there can be a difference between management and
workers. This study gives the organization insight in the perspectives of the employee, and
employee outcomes in contrast to the organizational point of view often held by management.
Finally, the overview of personal and organizational factors such as work-family conflict,
psychological empowerment, and perceived organizational support, influencing the relation
between HRM systems and employee performance provides an opportunity for HR personnel
to strengthen the effects of implemented HRM systems. Measures could be taken to improve
the factors having a positive effect on the strength of the relation between HRM systems and
employee performance, while other measures could limit the effects of the factors weakening
this relation.

Conclusion
This literature review has investigated the impact that HRM systems have on in-role
and extra-role employee performance. Previous literature has mainly focused on the managerial
perspective and organizational performance, this review has focused on the employee
perspectives and employee outcomes. Data has been collected through a literature search in
three databases, which resulted in a total of eleven relevant articles which subsequently have
been analyzed. All of the eleven articles were quantitative studies. Results of this study
consistently show a positive relation between HRM systems and employee performance, this
means that the higher the level of HRM systems, the higher employees perform in-role and
extra-role. Furthermore, several factors mediating this relation have been found. These included
amongst others perceived organizational support, psychological empowerment, job
embeddedness, and work-family conflict. An overview of practices composing HRM systems
has been derived from the literature. Main practices were training, compensation, selection,
empowerment and security, which largely corresponds with the existing literature. Finally, at
the end of this review several theoretical and practical implications, and a number of
recommendations for future research have been discussed.

17
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Appendix
Appendix 1
Table 2
Author matrix
Authors & year of Number of Sample Key concepts Main findings Performance
publication citations & outcome
impact factor
Aryee, Walumbwa, 40 citations 37 branches of two HPWS, service A positive relation between In-role
Seidu, and Otaye Impact factor: banking institutions in performance HPWS and service performance
(2012) 3.81 Ghana performance. Mediated by
psychological empowerment,
empowerment climate, and
service orientation
Bonias, Bartram, 33 citations 541 hospital employees HPWS, quality of A positive relation between In-role
Leggat, and Stanton Impact factor: in Australia patient care HPWS and the quality of performance
(2010) 0.769 patient care. Mediated by
autonomy, competence and
meaning
Chang and Chen 11 citations 97 hair salon owners HPWS, employee A positive relation between In-role
(2011) Impact factor: and 284 hairdressers job performance HPWS and employee job performance
1.262 performance. Mediated by
employee commitment and
human capital
Karatepe (2013) 25 citations 110 full-time frontline HPWS, job A positive relation between In-role & extra-
Impact factor: hotel employees and performance, extra- HPWS and job performance role performance
2.061 their managers in hotels role customer and extra-role customer
in Romania service service. Mediated by work
engagement

21
Karatepe and 0 citations 287 frontline employees HPWS, service A positive relation between Extra-role
Olugbade (2016) Impact factor: and their supervisors in recovery HPWS and creative performance
2.176 hotels in Nigeria performance, performance and service
creativity recovery. Mediated by work
performance engagement
Karatepe and 4 citations 164 flight attendants HPWS, creative A positive relation between Extra-role
Vatankhah (2014) Impact factor: with a time lag of two performance, extra- HPWS and creative performance
1.084 weeks in Iran role customer performance, and extra-role
service customer service. Mediated
by job embeddedness
Latorre, Guest, 0 citations 835 workers from the HCWS, employee A positive relation between Extra-role
Ramos, and Gracia Impact factor: education, services and performance, HCWS and employee performance
(2016) 1.437 food manufacture expatriate job performance. Mediated by
sectors performance, perceived organizational
creative support, a fulfilled
performance, extra- psychological contract, job
role customer security, and job satisfaction
service
Lee, Lee, and Kang 15 citations 196 pairs of employee- HPWS, employee A positive relation between In-role
(2012) Impact factor: customer pairs in four service quality HPWS and employee performance
0.776 hospitals (500+ beds) in reaction and service quality
South-Korea
Liao, Toya, Lepak 161 citations 292 managers, 1,772 HPWS, individual A positive relation between In-role
and Hong (2009) Impact factor: customers, and 830 general service HPWSs and individual performance
3.81 employees of 91 performance, general service performance,
branches in two banks in knowledge- individual knowledge
Japan intensive service intensive service
performance performance. Mediated by
perceived organizational
support and employee human
capital.

22
Shen, Benson, and 0 citations 1.051 teachers and their HPWS, in-role A positive relation between In-role & extra-
Huang (2014) Impact factor: supervisors in 63 performance, extra- HPWS and in-role role performance
1.798 Chinese schools role behavior performance and extra-role
behavior. Mediated by quality
of working life
Shih, Chiang, and 15 citations 174 Taiwanese HIWS, job A positive relation between Extra-role
Hsu (2010) Impact factor: expatriates situated in performance, extra- HIWS and employee performance
1.262 China role customer satisfaction and performance.
service Negatively mediated by
work-family conflict

23
Appendix 2: Interviews
Interview 1
The first interviewee was a former HR director of the Dutch division of a large
multinational company. His tasks included leading the HR team of the company and translating
policies provided by the global headquarter to fit the situation in the Netherlands. The
interviewee was also a member of the team of directors of the organization. The responsibilities
of his HR team were instrumental (e.g. payment and selection of employees) as well as strategic
(e.g. creating ideas to promote performance and commitment of employees). In his role he was
aware of a number of activities in place to increase in-role employee performance. An example
of one of these activities was a talent development cycle, during this process HR would develop
a development plan for individual employees by talking to those workers about their goals and
how to reach them within the organization. Part of this process is proactively responding to the
availability of potential within employees by approaching people to work on projects that suit
them best. Another activity to promote performance is the facilitation of theoretical
development of employees through external training and education and an internal digital
‘studytube’ were employees can get training on a large number of areas. The interviewee also
mentioned that the organization gives employees opportunities to gain experience in additional
projects that employees could take place in during working hours. Employees also had the
opportunity to implement skills that they already had to complement existing internal training.
Another more indirect practice were programs for supervisors to get the most out of their
worker. The interviewee concluded by saying that in general HR in this organization tries to
give the employees space and responsibility in the location where they work (at the office or at
home), when they work, and the way in which teams perform and cooperate.
The interviewee also mentioned a number of examples of activities meant to promote
extra-role employee performance (organizational behavior). The view of this HR department
on the promotion of organizational behavior translates into a way of looking at employees that
is not based on function, but on talent. Employees get the opportunity to participate in all kinds
of organization wide events (for example a kick-off event at the beginning of the year), and
more informal activities such as department drinks for which funds are made available. Another
method to promote extra-role performance that is practiced in this organization is by giving the
opportunity to take place in several social development projects, for which an employee can get
time within their contract hours. According to the interviewee this helps the employee to gain
new perspectives, make their own decisions, and put their passions into practice. The
organization tries to facilitate cooperation across the different labels within the company and
24
often adapts the situation if formal regulations are in the way. According to the interviewee
formalizing engagement and organizational behavior is a difficult thing to do. By measuring
engagement and the contributing factors every quarter data is gathered to make new plans
regarding engagement and organizational behavior that can be implemented organization wide
as well as department specific.
The interviewee acknowledged the existence of factors that have an influence on the
outcomes of practices of HR. According to him some activities are directly connected to the
employee, but those are generally more instrumental activities such as the formal working
conditions. At the same time some actions taken by the organization have side effects on
employees that can be positive as well as negative. For example, when increasing the level of
efficiency when performing jobs can also have a negative effect on job security. Mobility, for
example, is another contemporary issue that is currently often involving older employees. When
workers lack the drive to keep learning and developing there may be a disconnection between
the organizational goals and the employees’ skills and interests. The interviewee also made a
comment about the impact of changes in bonus schemes that are implemented from the global
headquarters, these changes can often be difficult to bring across to employees. A last remark
on this subject by the interviewee was that HR often tries to buffer and mediate between the
organization and employees, but that this is not their role. He sees the role of HR as making
sure that actions taken by HR are perceived as positive by the employees and making sure they
lead to positive outcomes for the organization, which includes coping with ambiguous
situations.
Interview 2

The second interviewee was an employee that works for the organization where the
previous interviewee was HR director. This interviewee has worked as account consultant in a
local team of +/- twelve employees. At the moment she is the project manager for a project
concerning the development and improvement of the customer journeys of the organization.
The interviewee has stated to have experienced several HR practices, one thing that came to
mind was the organizations bonus scheme. Every quarter employees get a bonus for direct
profits generated by that individual employee. Also team of the year and employee of the year
are chosen and they get small rewards. After this the interviewee found it more difficult to name
measures to promote performance, since as an employee you take many things for granted, and
that is why they might not immediately come to mind. She recalled several things such as an
online learning platform and standardized forms to keep track of personal development. The

25
interviewee also named the possibility to participate in projects that are not part of the formal
job requirements during working hours. She perceived this as positive, although it can be
difficult to plan these activities, and therefore they can lead to increased pressure and stress.
The measures she experienced that were specifically focused on increasing task performance
were bonusses, development and coaching, the relation with her supervisor(s), and the culture
aimed at giving and receiving constructive feedback. The interviewee concluded that she
perceives it as positive that these measures are in place, but according to her most are not strictly
necessary.
Answering a question about the effectiveness of these HR practices the interviewee
responded by saying that they do tend to give a boost in performance. She claims to make more
overtime, and is willing to give more to perform well. A downside to this is that it could lead
to a disproportion in the work-life balance. Although the organization claims to free up time for
activities that do not belong with the formal job requirements in practice this proves to be rather
difficult. A last remark the interviewee made was the positive effects of flexibility. Although
dependent on the specific supervisor, she experiences the availability of opportunities to do
work in her own time and in her self-chosen geographical location. This gives the opportunity
to take off time to relief stress, avoid traffic, and in general avoid energy waste.

26