The impact of best HRM practices on performance – identifying enabling factors

The purpose of this paper is to empirically examine the relationships between best human resource management (HRM) practices, knowledge management (KM), organization learning and organizational capabilities (OC), as well as their impact on organizational performance.

To carry out this research, a structured questionnaire was designed and distributed to 212 manufacturing firms which employ at least 50 employees. The final sample consists of 138 useable questionnaires.

Results indicate that manufacturing firms pursuing best HRM practices achieve higher performance through the interaction of these practices with KM and organizational learning capability and the creation of OC.

Possible limitations of the study include the measurement of OC, the use of subjective performance indicators and the data collection approach reflecting mainly HRM managers’ perceptions.

HR practitioners and/or managers should focus on establishing the appropriate mechanisms for integrating “best HRM practices” with learning, knowledge and OC in order to improve performance.

This paper empirically tests a new composite model which elaborates upon the mechanisms that seem to intervene between the best HRM practices – performance relationship. Moreover, the value of the human factor in KM and organizational learning initiatives, as well as on OC, is explored. While this has already been underlined in the past, there is still no complete model simultaneously describing and testing all those relationships.