HRM and organizational effectiveness: Is HRM adding economic value to the firm? Exploratory findings based on the Spanish CRANET Study

While the links between HR & organizational effectiveness could be explored through different conceptual angles in this empirical study the focus is on the multiple linkages that exist between certain HR policies & practices characteristics of the HR Department & the overall economic performance / success of the firm. This study has 2 innovative components: first in terms of its design, as it combines cross-sectional and prospective design, and second, the attempt to link HR parameters to objective economic yardsticks. All in all, results show that from among the multiple blocks of possible independent variables that might affect firm performance, HRM policies & practices play a major role. In relative terms, the variables connected with HRM policies and practices add significantly to the profile which explains good or poor economic performance of the firm. A conclusion is that the HR Department plays an important strategic & operational role in adding value to the firm?s performance and cannot be discounted. The results also show that when some HR policies & practices are absent or poorly implemented, the detrimental consequences for firms? economic performance can be devastating.