Strategic Human Resource Management

Strategic human resource management

effectiveness and . HRM performance

Orlando C. Richard and Nancy Brown Johnson

Abstract This study tests whether strategic human resource management (SHRM)

effectiveness signi. cantly affects organizational level outcomes. Using the resource-based

view of the . rm, this study examines the effective use of human capital on organizational

performance. Further, the role that a contextual factor – capital intensity – plays in

modelling is explored. Results show that SHRM effectiveness signi. cantly reduces

employee turnover and increases overall market performance assessment. However,

SHRM effectiveness affected both . rm productivity and return on equity only when

moderated by capital intensity.

Keywords Human resources; strategy; effectiveness; outcomes.

The interest of strategic management in examining the role of human resources as

value-added has evolved (Baird and Meshoulam, 1988) to broaden the focus of human

resource management research from a micro (i.e. individual effectiveness focus)

approach to a macro (i.e. organizational effectiveness focus) or strategic approach

(Butler et al., 1991). The strategic human resource management perspective (SHRM)

makes evident the importance of human resource practices for organizational performance,

such as employee turnover, productivity and . nancial performance.

The current focus on HRM as integral to . rm's strategic processes involves viewing

HRM activities as a resource contributing to . rm pro. tability as opposed to a cost of

production (Butler et al., 1991; Delery and Doty, 1996; Huselid, 1995; Lado and

Wilson, 1994). However, previous work has concentrated on linking the existence of

individual or sets of HR practices to . rm performance. Huselid et al. (1997) note that

future research needs to go beyond the mere presence of HR practices and their

relationship to . nancial performance to examining the effectiveness of the practices

compared to the desired outcome. They argue that...