Strategic human resource management
(SHRM) research focuses on
the contribution that HR practices
can make to organizational performance
and competitive advantage
(Collins & Clark, 2003).In recognition of this research need, the
current study investigates the "black box"
between the HR strategic role and financial
performance by exploring the mediating role
of HPHRPs, defined as a system of interrelated
human resource managerial practices that,
taken together, influence employee's ability,
motivation, and opportunity by creating
conditions of high involvement and participation
in them in order to increase organizational
effectiveness (Huselid, 1995). HPHRPs
reflect a combination of HR practices that
aim to improve organizational performance
(Boselie, Dietz, & Boon, 2005). Building on
recent work by Applebaum, Bailey, Berg,
and Kalleberg (2000), this study employs the
Ability-Motivation-Opportunity taxonomy
of performance to categorize the components
of HPHRPs. Consistent with previous definitions,
the term HPHRPs is used to refer to a set
of HR practices that are intended to enhance
employees' skills, motivation, and opportunity
to participate, and which, in turn, seek
to improve organization performance. A strategic role for HR management is
argued to enhance the effective utilization
of HPHRPs, which, in turn, increases financial
performance through increased human
resource productivity. In addition to exploring
this indirect relationship, this study also
explores the moderating role of devolvement
of responsibility for HR practices to line
THE EFFECT OF STRATEGIC HUMAN RESOURCE MANAGEMENT ON ORGANIZATIONAL PERFORMANCE 901
Human Resource Management DOI: 10.1002/hrm
Line management
devolvement is
argued to increase
the operational
integration of
HR practices
and facilitate a
strategic focus for
HR professionals
by reducing their
responsibility for
traditional HR
practice execution
and administration. management in the relationship between the
HR strategic role and HPHRPs. Line management
devolvement is argued to increase the
operational integration of HR practices and
facilitate a strategic focus for HR professionals
by reducing their responsibility for traditional
HR practice execution and administration. This study contributes to current research
in a number of areas. First, we respond to calls
to investigate the impact of the HR strategic
role, and pathways through which this effect
occurs. Previous research in SHRM has been
criticized for its lack of theoretical and empirical
work on the mediating, explanatory
pathways through which HR strategic factors
lead to firm outcomes (Becker & Gerhart,
1996; Delery, 1998; Dyer & Reeves, 1995). This study builds on prior research exploring
the impact of HR strategic role and is one of
the first to focus on HPHRPs as a mediating
pathway explaining this effect. Moreover,
this is one of very few studies to do so in a
non-Western context (Bae & Lawler, 2000),
providing greater understanding of the utility
of the HR strategic role in promoting financial
performance in non-Western contexts,
especially developing countries. The empirical
data reported in this article comes from
Jordan, a developing country in the Middle
East. A further contribution stems from the
investigation of line management devolvement
as a moderating variable, enabling
researchers, HR professionals, and managers
to understand the situations under which a
strategic role for HR professionals is more or
less likely to generate positive organizational
performance effects (H. T. Chang & Chi,
2007). By exploring a moderated mediating
relationship, this study clarifies a key mechanism
that explains the influence of HR strategic
role, as well as identifying circumstances
that affect the operation of this mechanism. Theoretical Background and
Hypotheses
The following sections submit the rationale
underlying the proposed relationships and
discuss how HR strategic role is linked to
HPHRPs, which, in turn, is linked to financial
performance. The subsequent discussion argues
the moderating role of line management
devolvement in this relationship and a moderated
mediated pathway between the HR
strategic role and organization financial
performance. HR Strategic Role, HPHRPs, and
Financial Performance
Dessler, Griffiths, and Lloyd-Walker (2007)
argue that, ideally, the strategic partner role
incorporates HR as a full participant in both
the development and operationalization of
organizational strategies. This role requires
HR managers to support strategic HRM initiatives
by aligning HR goals, strategies,
and practices with corporate
objectives and the implementation
of business strategy
(Andersen, Cooper, & Zhu, 2007). It also requires the participation of
HR managers in the strategic business
planning process (Sheehan,
2005), which means that HR managers
have an active role in both
strategy formulation as well as
strategy implementation (DeCieri
et al., 2008). A critical function for HR managers
in a strategic planning role is
to build the organization's human
resources as a source of sustained
competitive advantage (Barney &
Wright, 1997; Becker & Gerhart,
1996). This implies the incorporation
of HR practices that contribute
to organizational performance
into the strategic decision-making
process (Huselid, 1995). In
their meta-review, Delery and
Doty (1996) identified seven such
practices, which are consistently
depicted as HPHRPs. These practices are theoretically
and empirically connected to organizational
performance and include practices
related to ability, such as training systems;
factors related to motivation, including
results-oriented appraisal; and factors related
to opportunity, such as employee participation
programs. 902 HUMAN RESOURCE MANAGEMENT, NOVEMBER-DECEMBER 2013
Human Resource Management DOI: 10.1002/hrm
A critical function
for HR managers in
a strategic planning
role is to build
the organization's
human resources
as a source
of sustained
competitive
advantage. A pivotal determinant of the adoption of
HPHRPs is a perception of HRM in a strategic
role as a legitimate mechanism to enhance
organizational performance. Those HR professionals
possessing a legitimate strategic
role through their hierarchical position
within an organization are likely to have
the authority, opportunity, and resources
to search for and adopt innovative HPHRPs
(Gooderham, Nordhaug, & Ringdal, 1999;
Jennings, 1994). Equally important, as an HR
professional, is expertise in HPHRPs, which
leads to the perception of "individual competence"
(Walton, Allen, & Gaffney, 1987).The devolvement of HR practices, which
has been referred to as "downward integration"
of HRM (Zhu, Cooper, De Cieri,
Thomson, & Zhao, 2008), is defined as the
involvement of line managers, commonly
904 HUMAN RESOURCE MANAGEMENT, NOVEMBER-DECEMBER 2013
Human Resource Management DOI: 10.1002/hrm
The devolvement
of more traditional
HRM activities
to line managers
allows HR
professionals
to adopt a more
strategic role
because it releases
them from the more
traditional and
time-consuming
operational
activities. referred to as supervisors, in the execution
and administration of HR practices (Budhwar,
2000a, 2000b), including selection, training,
and performance management. While some
authors, like Thornhill and Saunders (1998),
state that the increased role of line managers
in the management of human resources is a
vital characteristic of any HRM model; others,
like Brewster and Larsen (2000), go further by
arguing that the devolution of HR responsibilities
to line managers is seen as a defining
issue in HRM since line managers' actions
and behaviors are largely responsible for the
difference between intended and actual HRM
implementation. Arguments for the moderating role of line
management devolvement are
based on the assumption that, if
HR professionals are going to hold
a more strategic role, the dayto-
day HR activities need to be
decentralized and shifted to line
managers (Kulik & Bainbridge,
2006). The devolvement of more
traditional HRM activities to line
managers allows HR professionals
to adopt a more strategic role
because it releases them from
the more traditional and timeconsuming
operational activities
(Conner & Ulrich, 1996; Ulrich,
1997). In addition, numerous
studies suggest the role of line
managers is important in ensuring
effective implementation of HRM
strategy and policies (Bhatnagar
& Sharma, 2005). In particular,
the adoption of more commitment-
oriented HPHRPs requires
line managers to be involved in
the initiation and implementation
of "high-performance" models,
especially when the actions
of line managers are the difference between
intended and actual HR practices (Boxall &
Purcell, 2008).The HR strategic practitioner is often
depicted as an organizational change agent--
a professional who is willing and sufficiently
skilled to identify HR-related initiatives that
will enhance organizational performance,
and enable and oversee their implementation
(Beatty & Schneier, 1997; Russ, Galang,
& Ferris, 1998). Therefore, while underresearched,
the connection between the HR
professional in a strategic role as a critical element
impacting the adoption of HPHRPs has
considerable merit. Following this, we will hypothesize a positive
relationship between the HR strategic
role and HPHRPs:
Hypothesis 1: The HR strategic role is positively
related to HPHRPs. In particular, the RBV emphasizes
the role of HR practices in influencing
the human capital within organizations in a
way that may lead to organizational success. Within this context, there is significant evidence
for the link between HPHRPs and organizational
financial performance. There is significant evidence that the range
of practices comprising HPHRPs enhance productivity
and, consequently, organizational
financial performance. Similarly, motivation-enhancing
HR practices have been linked to employee
productivity and incorporated into previous
models of HPHRPs. Substantial research on the link between
HPHRPs and organizational performance has
occurred worldwide since pioneering work
was published in the mid-1990s (Becker &
Gerhart, 1996; Huselid, 1995).One item was reversed and
modified ("HR manager is seen as strategic
partner" became "HR manager is not seen as
strategic partner"). Negatively worded questions
are recommended in order to reduce
pattern response bias (Hinkin, 1995). Mediating Variable: HPHRPs
Based on extensive review of the literature,
scales were developed for measuring the three
HPHRP dimensions: ability-enhancing, motivation-
enhancing, and opportunity-enhancing
practices. All items measuring HPHRPs
were adopted from survey items used by
Flood et al. (2008), Huselid (1995), and Snell
and Dean (1992). All items were measured
using a seven-point scale. Nine items were used to measure ability-
enhancing practices, including staffing
(i.e., formal job analysis, recruitment, and
selection) and training and development practices
(e.g., "How much importance is placed
on the staffing process in this company?")
Six questions relating to motivation-enhancing
practices were designed to measure both
performance management and compensation
practices.A legitimate HR
strategic role, therefore, builds the
credibility of HR-related initiatives
(Bennett, Ketchen, & Schultz,
1998; Galang, Elsik, & Russ, 1999). Once legitimacy of the HR manager
as a strategic partner is established,
research indicates that
this will enhance influence over
resource allocation and decisionmaking
authority. Possible benefits
include a greater allocation
of resources and increased authority,
both of which provide greater
opportunities to drive the adoption
of HPHRPs (Coopey, Keegan,
& Emler, 1998; Galang et al., 1999;
Kanter, 1988).Past research suggests that the most senior
HR manager is well placed to provide expert
judgment on HR-related policy and practices
(Guthrie, 2001; Way, Lepak, Fay, & Thacker,
2010). This is particularly true in our study,
which required knowledge of the HR strategic
management policy and also required understanding
across a wide range of HR-related
management practices. As an additional strategy to reduce the
risk of CMV bias, we asked respondents to
nominate the source of information about
financial performance and we also nominated
measures that were less open to subjective
interpretation: return on equity,
return on assets, sales growth, and market
share. Previous research suggests that using
more objective and concrete measures is less
likely to be associated with bias (Podsakoff &
Organ, 1986).Selective
staffing techniques are used to identify applicants
whose abilities are compatible with the
THE EFFECT OF STRATEGIC HUMAN RESOURCE MANAGEMENT ON ORGANIZATIONAL PERFORMANCE 903
Human Resource Management DOI: 10.1002/hrm
needs of the organization (Huselid, 1995),
and the provision of comprehensive training
can lead skilled employees with capabilities
that are honed to the particular requirements
of developing organizational technologies
(Arthur, 1994).In particular,
many empirical studies have shown positive
HPHRPs influence on a range of indicators
of organizational performance, including
financial performance (Huselid, 1995), emplo y -
ee productivity (Guthrie, 2001), turnover
rate (Arthur, 1994; Vandeberg, Richardson,
& Eastman, 1999), and absence rate (Marks,
Mirvis, Hackett, & Grady, 1986; Wood & De
Menezes, 1998).906 HUMAN RESOURCE MANAGEMENT, NOVEMBER-DECEMBER 2013
Human Resource Management DOI: 10.1002/hrm
Dependent Variable: Financial Performance
This study adopted quasi-perceptual measures
of performance, which evaluate performance
in objective terms (e.g., return on equity, sales
growth, and profitability) through the subjective
perception of managers (Ketkar & Sett,
2009).While previous research
indicates that the strategic role held by HR
professionals is a critical aspect of HRM policy
enactment (Hailey, Farndale, & Truss, 2005),
few studies have investigated, or established,
the link between the literature on HPHRPs
and HR professionals' strategic role.In general,
empirical research on the HPHRPs and performance
link has demonstrated that HR
practices are related to a set of organizational
performance measures (Wright & Kehoe,
2008), and this has provided a basis for many
authors to promote the practical benefits
that can be gained from adopting HPHRPs
compared with the more control-based personnel
approach (Tsai, 2006).Globalization of business and the associated
intensification in competitive pressures has
led to an increasingly strategic role for HR
professionals, directed toward aligning
HR practices with business strategy (Raub,
Alvarez, & Khanna, 2006).Given the importance of
consistency between what a role
purports to achieve and its actual impact, a
strategic role for HR professionals should focus
on the achievement of organizational goals
by aligning HR practices with business objectives
(Conner & Ulrich, 1996).Predictor Variable: HR Strategic Role
HR strategic roles were measured using a scale
derived by Conner and Ulrich (1996), frequently
used in similar research on HR managerial
roles (Raub et al., 2006; Voermans &
Veldhoven, 2007). The decision to exclude organizations
employing fewer than 100 employees was
based on results of previous research in HRM,
which indicates that the larger the firm, the
more likely it is to have a formal organizational
unit dealing with human resources as
well as more formalized HR practices (Guthrie,
2001; Huang, 2000).Among HR
roles, many authors argue that the
"strategic role" is a pivotal one for
HR professionals in today's organization
(Cleland, Pajo, & Toulson,
2000). Despite the priority placed
on HR professionals as strategic
partners, recent reviews suggest
that there has been little effort to
evaluate the strategic contribution
of the HR role (Cabrera & Cabrera,
2003).Thus, we hypothesize the following:
Hypothesis 3: HPHRPs mediate the relationship
between the HR strategic role and organizational
fi nancial performance.