Effects of Strategic Human Resource Management Practices on Organizational Performance: Mediating Role of Work Outcomes

Abstract

Purpose: The purpose of this study was to examine the impact of strategic human resources management (hereafter, SHRM) practices on organizational performance mediated by work outcomes in manufacturing companies in Ethiopia.

Design/methodology: The study was explanatory design. A total of 380 employees and managers from 24 manufacturing companies in Addis Ababa responded to the questionnaire about SHRM practices, work outcomes and organizational performance. To analyze data, Pearson correlation, hierarchical regression and structural equation modeling were used.

Findings: The findings revealed that hierarchical regression and structural equation modeling did not show the direct impact of SHRM practices on organizational performance. SHRM practices first impact work outcomes and then work outcomes affect organizational performance. Moreover, as compared to SHRM practices, work outcomes found to have highest impact on organizational performance.

Recommendation: If manufacturing companies to increase their work outcomes, they should improve the compensation, training & development and performance appraisal SHRM practices. Some improvements should be on other SHRM practices such as recruitment & selection, and SHR alignment. To achieve lasting results and to contribute effectively to the success of the manufacturing companies, employees must be committed, intends to stay and satisfied. To do so, companies should change employees' behavior through a systematic set of high performance SHRM practices.