The impact of HR practices, HR effectiveness and a ‘strong HR system’ on organisational outcomes: a stakeholder perspective

Abstract

This paper explores the general hypothesis that effectiveness of human resource (HR) practices will help to explain the well-documented association between human resource management and performance. This paper adopts a stakeholder perspective, hypothesising that the ratings of HR effectiveness of senior line managers will be more strongly associated with the outcomes than those of HR managers. Furthermore, building on Bowen and Ostroff's concept of consensus as part of a ‘strong’ HR system, it is hypothesised that shared perceptions of (high) effectiveness will be associated with higher performance. This study is based on a sample of 237 matched pairs of senior line managers and HR managers, and measures a range of subjective and objective outcomes. The analysis confirms the association both between more HR practices and higher HR effectiveness and a range of performance outcomes. The associations are mostly stronger for HR effectiveness. There are low levels of agreement between HR and line managers about HR effectiveness and where agreement exists, it is not associated with superior outcomes. This study, therefore, confirms the importance of HR effectiveness, but fails to support any impact of consensus.