Relationship between human resource management practices, enterprise strategy and company outcomes: Service industry of China

Abstract

This study explores the linkage between HRM practices, enterprise strategy and company performance in the context of Service Industry of China. A total of 110 employees in 90 randomly selected companies responded to self reported questionnaire which measured five HRM practices and subjective measures of enterprise strategy and company performance. The study examined five HRM practices such as recruitment and selection, training and development, employee participation, compensation and reward and performance appraisal. Structure equation modeling and Multiple Regressions were used to measure the linkage between HRM practices, enterprise strategy and company performance. The results indicated that all HRM practices are significantly and positively correlated with company performance. In particular, training and development practices are seen to be significantly related with capacity to deliver quality service and on firm sale growth as perceived by managers surveyed. Recruitment and selection methods that are used more by banks and advertising firms have contributed to better firm performance. Not all formalized HR practices lead to increase firm performance and the degree to which HR is perceived to have impacted on firm performance varies. HR managers, practitioners and firms could benefit greatly if focused on these practices to improve their company performance.