How HR Impacts Organizational Performance

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Managers rely upon HR departments for services such as recruitment, payroll, and employee relations, but experts have found that HR plays a much more significant role in organizations. To explore this role, Meera Alagaraja of the University of Louisville published “HRD and HRM Perspectives on Organizational Performance: A Review of Literature” in the Human Resource Development Review June 2013 issue:

A systematic review of literature on the relationship of human resources (HR) and organizational performance (OP) revealed a dearth of contribution from human resource development (HRD) in establishing the linkage. This linkage, which refers to the significant relationship between HRD and OP, is an important topic relevant to research and practice. The review utilized OP as the dependent variable to survey the state of human resource literature and thus, includes contributions from human resource management (HRM). The literature review revealed similarities and differences in the conceptualization of OP as a dependent variable between the two fields. On further analysis, the similarities and differences reveal convergence in specific areas of inquiry as well as emphasize the underlying differences in the philosophical assumptions of HRD and HRM. The independent contributions of HRD and HRM in establishing the HR–OP linkage also reflect the utilization of diverse research designs, methods of data collection, analysis, and findings. Both fields have focused on strategic contributions for improving organizational performance and are very much connected in practice. Much of the separation therefore, appears to be academic where competing views highlight a tension that exists in theory, research and what we know about effective HRD or HRM in practice.

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