The value of human resource management for organizational performance

Abstract

All executives would like to see their organizations perform better, and most search for tools that can help make this happen. For decades, human resource managers have believed that their function enhances performance. This contention has been met with skepticism on the part of executives, who wonder whether funds allocated to the human resource function are good investments. Dozens of studies have examined this issue, but their inconsistent results have provided no conclusions. To resolve a long-standing and controversial question - does human resource management matter for organizational performance? - we take stock of the available evidence. Based on data from over 19,000 organizations, we conclude that human resource management adds significant value for organizations. In addition, the value added is strongest when human resource systems are emphasized rather than individual practices, when human resource management decisions are tied to strategy, and among manufacturing firms. © 2007 Kelly School of Business, Indiana University.