Why Human Resources Matters for Organizational Outcomes

Topic(s):
Publication: Academy of Management Journal (2012)
Article: How does human resource management influence organizational outcomes? A meta-analytic investigation of mediating mechanisms
Authors: Kaifeng Jiang, David P. Lepak, Jia Hu and Judith C. Baer
Reviewed by: Scott Charles Sitrin

According to a meta-analytic review by Kaifeng Jiang of Rutgers, David P. Lepak of Rutgers, Jia Hu of Notre Dame and Judith C. Baer of Rutgers, human resource management matters for organizational outcomes. In this study, human resource management is divided into three dimensions: skill-enhancing human resource (HR) practices, motivation-enhancing HR practices, and opportunity-enhancing HR practices.

Skill-enhancing HR practices include recruitment, selection, and training; motivation-enhancing HR practices include performance management, competitive compensation, incentives and rewards, extensive benefits, career development, and job security; and opportunity-enhancing HR practices include flexible job design, employee involvement, and information sharing. As regards organizational outcomes, there were two types: proximate and distal. Proximate organizational outcomes included human capital (e.g., employees’ knowledge, skills, and abilities) and motivation, and distal organizational outcomes included voluntary turnover, operational outcomes (e.g., productivity, product quality), and financial outcomes (e.g., sales growth, return on assets).

In breaking down the finding that human resource management influences organizational outcomes, the investigators determined that skill-enhancing HR practices, motivation-enhancing HR practices, and opportunity-enhancing HR practices impact the proximate organizational outcomes of human capital and motivation that in turn influence the distal outcomes of voluntary turnover, operational outcomes, and financial outcomes. So, if you want to drive important outcomes of your business, you now know a good place to start.