The Reality of Relationship between the HRM Practices and Organizational Performance (Open the Black Box)

Abstract

This study focuses on the fact of the relationship
between Human Resources Management Practices and
Organizational Performance which have been the center of
attraction for many researches and studies. The effect of human
resource management practices positively on employee outcomes
and then on organizational performance is the engine of
organizations to sustain the competitive advantage, and the
management of this worthy resource can lead to success.
objectives: The main objective of this study is: To assess the
effect of human resources management practices on the
organizational performance of small businesses through
examining the causal order of the main variables (Human
Resources Management, Employee Outcomes, and
Organizational Performance) in an attempt to unfold the socalled
“Black Box†to clarify the ambiguous relationship between
human resources management practices and organizational
performance. To achieve this objective, a quantitative research
study was conducted on a sample consisting of 265 Malaysia
small businesses working in manufacturing sector. Structural
equation modeling with Amos 20 was used as an advanced
quantitative measure beside other statistical measures in order to
attain the prior objectives. Results: The main findings of the
study were; the existence of a significant relationship between
human resources management practices as one “bundle†and
organizational performance, and significant relationships
between the component of employee outcomes and both human
resources management practices and organizational
performance. Conclusion: the human resources management
could be one of the most significant strategies to achieve the
competitive advantage.