Human Resource Management and Organizational Performance

Human Resource Management and Organizational Performance



Human Resource Management and Organizational Performance

Introduction

During the last two decades, public sector performance has become more and more of an issue. Several innovations in the field are aimed to increase the quality of public service while reducing its costs. However, research about the contribution of human resource management (HRM) to support these developments has been scarce. Therefore, our aim is to gain insight into the relationship between HRM and the quality of public service in order to help public organizations improve their performance by means of better HRM policies. Based on a secondary analysis of the data from a national survey of employee well-being among municipal employees in the Netherlands, two of the three hypotheses were confirmed. The hypothesis that there is a direct effect of HRM activities on organizational performance must be rejected. The other two hypotheses were confirmed, showing that a) the relation between HRM and organizational performance is mediated by employee satisfaction and b) a transformational leader uses more HRM activities that are aimed at the development, motivation and commitment of employees.

Discussion With the rise of New Public Management, targets, performance and a more business-oriented management approach have come to play central roles within the public sector (Osborne and Gaebler, 1992; Boyne and Chen, 2006; Meier, O'Toole, Boyne and Walker, 2006). This results in more awareness of public sector performance. Longer waiting lists for health care and increased shortages of educational staff result in dissatisfaction among the general public about the public sector's performance. These facts, together with increased pressure on government finances, have urged governments on the central and local levels to both downsize and increase the efficiency and effectiveness of the sector. Several innovations in the field are aimed to increase the quality of public service and to reduce its costs at the same time. However, research about the contribution of human resource management (HRM) to support these developments in the public sector has been scarce (Gould-Williams, 2003). We will Discuss the relation between HRM and performance.

Relation Between Hrm And Performance

The increased focus on performance in the public sector has encouraged much research on this subject (Smith, 1990; Halachmi and Bouckaert, 1996; Bouckaert and Auwers, 1999; Boyne et al., 2006). In particular, the impact of management on performance in public organizations has been studied frequently (Nicholson-Crotty and O'Toole, 2004; Meier et al., 2006; Hicklin, O'Toole and Meier, 2007). The O'Toole and Meier model of management (1999) is a well-known model of the management-performance relationship. With this model, the impact that managers might have on public organizational performance has been tested. In a recently presented paper, O'Toole and Meier (2008) focused on the internal side of management and, in particular, on the contribution of the human side of public organizations to organizational performance. They examined the relation between the attraction and development of the organization's human capital and the organizational performance. Nevertheless, previous research focused in particular on the relation between HRM outcomes ...