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International Journal of Human Resource Studies
ISSN 2162-3058
2011, Vol. 2, No. 1

The Mediating Effect of HRM Outcomes (employee
retention) on the Relationship between HRM Practices
and Organizational Performance
Fathi Mohamed Abduljlil ALDamoe
College of Business, Universiti Utara Malaysia, Malaysia
Tel: +60175443825, E-mail: ft7712@yahoo.com

Dr. Mohamd Yazam
College of Business, Universiti Utara Malaysia, Malaysia
Dr. Kamal Bin Ahmid
College of Business, Universiti Utara Malaysia, Malaysia

Accepted: December 2, 2011
doi:10.5296/ijhrs.v2i1.1252

Published: January 9, 2012

URL: http://dx.doi.org/10.5296/ijhrs.v2i1.1252

Abstract
The matter of human resources activities have been commonly used to observe organizational performance. One of the distinctive features of HRM is that better performance is achieved through the people in the organization. In recent years significant remarks have been recorded in identifying the Human Resources Management (HRM) – performance relationship. The relationship between HRM practices and organizational performance has been well documented by the previous studies. However, authors have called for the interrogation of the mediating role of HRM Outcomes such as employee retention in the relationship between HRM practices and organizational performance. Thus, the major objective of this study is to investigate the mediating effect of HRM Outcomes (employee retention) on the relationship between HRM practices and organizational performance. Based on the evidence derived from the literature, the paper concludes that employee retention is likely to mediate in the relationship between HRM practices and organizational performance. Keywords: Human Resources Management, Employee Retention, Human Resources Management Practices, Organizational Performance

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www.macrothink.org/ijhrs

International Journal of Human Resource Studies
ISSN 2162-3058
2011, Vol. 2, No. 1

Introduction
Generally, organizations come in all shapes and sizes and more often exhibit differences than similarities. However, one common factor among these organizations is their “achieved success” which dependent on the skill, knowledge and experience of the employees in the organization (Development and Learning organizations, 2011). This is more reason the matter of human resources activities have been commonly used to observe organizational performance. This further demonstrates the distinctive feature of HRM in achieving better performance through the people in the organization (Guest, 1997). In the recent years, significant remarks have been made in identifying the Human Resources Management (HRM) – performance relationship. However, few studies have documented the special relationship between human resources practices and firm or organizational performance in different contexts.

Abundant studies exist that documented the significant relationship between HRM practices and organizational performance. For instance, Katou (2008) noted that HRM practices have a direct influence or effect on subordinate attributes such as human skills, attitudes and behaviour, the so-called HRM outcomes, which in turn enhances organizational performance. Accordingly, Pfeffer (2000) observes that human resources have been essential in sustaining organizational performance.

Although, it has been generally agreed that HRM is positively associated with organizational performance, however, there is still need for additional research to be undertaken to provide more evidence to support the HRM-performance relationship from different cultural context such as Libya and other developing countries. Another issue here, is that authors have faulted the relationship between the HRM practices and organizational performance (Katou, 2008; Gerhart, 2005). They argued that their relationship lacks transparency about what exactly leads to what. Based on this, they suggested intervening or intermediary steps in the relationship...
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