A meta-analysis of the variability in firm performance attributable to human resource variables

Abstract

The contribution of Human Resource Management (HRM) practices to organisation-wide performance is a critical aspect of the Human Resource (HR) value proposition. The purpose of the study was to describe the strength of HRM practices and systems in influencing overall organisational performance. While research has concluded that there is a significant positive relationship between HRM practices or systems and an organisation’s market performance, the strength of this relationship has relatively not received much analysis in order to explain the degree to which HRM practices explain variance in firm performance. The study undertook a meta-analysis of published researches in international journals. The study established that HRM variables accounted for an average of 31% of the variability in firm performance. Cohen’s f2 calculated for this study as a meta effect size calculation yielded an average of 0.681, implying that HRM variables account for 68% of variability in firm performance. A one sample Kolmogorov-Smirnov test showed that the distribution of R2 is not normal. A major managerial implication of this study is that effective HRM practices have a significant business case. The study provides, quantitatively, the average variability in firm success that HRM accounts for.