HRD and HRM Perspectives On Organizational Performance - A Review of Literature - 2013

Human Resource
Development Review
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HRD and HRM Perspectives on Organizational Performance: A Review of

Literature
Meera Alagaraja
Human Resource Development Review 2013 12: 117
DOI: 10.1177/1534484312450868
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garajaHuman Resource Development Review
HRD12210.1177/1534484312450868Ala
Integrative Literature Review
HRD and HRM Perspectives

on Organizational
Performance: A Review
of Literature
Human Resource Development Review

12(2) 117143
2012 SAGE Publications
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DOI: 10.1177/1534484312450868
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Meera Alagaraja1
Abstract
A systematic review of literature on the relationship of human resources (HR) and
organizational performance (OP) revealed a dearth of contribution from human resource
development (HRD) in establishing the linkage.This linkage, which refers to the significant
relationship between HRD and OP, is an important topic relevant to research and
practice. The review utilized OP as the dependent variable to survey the state of human
resource literature and thus, includes contributions from human resource management
(HRM).The literature review revealed similarities and differences in the conceptualization
of OP as a dependent variable between the two fields. On further analysis, the similarities
and differences reveal convergence in specific areas of inquiry as well as emphasize
the underlying differences in the philosophical assumptions of HRD and HRM. The
independent contributions of HRD and HRM in establishing the HROP linkage also
reflect the utilization of diverse research designs, methods of data collection, analysis, and
findings. Both fields have focused on strategic contributions for improving organizational
performance and are very much connected in practice. Much of the separation therefore,
appears to be academic where competing views highlight a tension that exists in theory,
research and what we know about effective HRD or HRM in practice.
Keywords
human resource development, human resource management, organizational performance
Introduction
Senior executives consistently profess the importance of human resources (HR) in
enhancing organizational performance (OP). The HR function, as a significant con1
University of Louisville, Louisville, KY, USA
Corresponding Author:
Meera Alagaraja, Workforce & Human Resource Education Program, Department of Leadership,
Foundations & Human Resource Education, University of Louisville, KY 40292, USA.
Email: meera.alagaraja@louisville.edu
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Human Resource Development Review 12(2)
tributor in the development and management of people in organizations, is most often

perceived as adding less value in comparison to other critical and essential business
interests. HR departments are often underrepresented at the highest levels of the organization, where key business- and people-related decisions are made (Becker &
Huselid, 2009). Strategic business priorities involving operations, processes, products,
and services remain critical issues for senior leadership (Becker & Huselid, 2009). Not
surprisingly, the vast majority of organizations assess performance primarily based on
financial and economic indicators (Haggerty & Wright, 2009). Transforming the
people are our most valued assets rhetoric into reality is by far one of the biggest
challenges facing organizations today.
Traditionally, organizations rely on the HR function in the management of employeeand job-related services such as recruitment, selection, payroll, benefits, employee relations, and legal issues. The strategic role in leveraging employee-related skills, abilities,
and knowledge, as a source of competitive advantage, remains an aspirational goal for
many HR departments. Few senior executives perceive a significant value and role for
the HR function in the development of organization members (Barney & Wright, 1998).
Although research has established that a high level of investment in HR practices and
systems influences organizational-level outcomes such as labor productivity, turnover,
profitability, sales growth, and quality (Bae & Lawler, 2000; Collins & Clark, 2003;
Huselid, 1995; Huselid, Jackson, & Schuler, 1997; Lam & White, 1998), companies
continue to focus on other organizational functions to achieve corporate goals.
Nevertheless, the impact of HR in organizations is an area attracting increasing interest from scholars and practitioners.
Purpose Statement
As noted by Ruona and Gibson (2004), the distinction between human resource development (HRD) and human resource management (HRM) fields is blurring. Both
fields have established HR as an important function in organizations. However, they
disagree on the definition, role of HR in organizations and how to study that role.
Each field focuses on different questions and provides unique understanding and perspectives about HR. Although scholars view these as competing perspectives, the
increasing complexities in organizational contexts underline the need for drawing on
the contributions of the two fields. This article argues for a pluralistic approach in
treating HRD and HRM perspectives as complementary, and doing so provides an
enriched understanding of HR in the scholarship and practice of HRD/M (human
resource development and management). To demonstrate this, I build a case using
literature from HRD and HRM by addressing HRD/M linkage to OP. Examining the
link between OP and HRD/M is important and useful for assessing the value and
impact of HR in organizations. The article compares and contrasts HRD with HRM
from multiple perspectives such as ontology, epistemology and how the fields are
understood (as a construct and/or as a practice). The article outlines some of the
significant differences in understanding OP, how those differences developed, the
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Alagaraja
implications of the differences, and how this improved understanding is helpful in

bridging the researchpractice gap in HRD.
Introduction to the Key Terms

In academic environments, HRD and HRM are independent fields. HRD programs are
typically aligned to the colleges of education, whereas HRM programs are likely to
be based in colleges of business, although in practice these boundaries have begun to
blur. The programmatic emphases in HRD are training design, delivery, and evaluation, whereas HRM programs have a strong managerial flavor (Kuchinke, 2003, p.
296). Despite the extensive discussion, debate, and documentation of definitions in
HRD (McLean & McLean, 2001; Weinberger, 1998), very few discussions focus on
OP as the dependent variable. In comparison, scholarly discussion defining HRM
produces fewer definitions, but notably links HRM with the concept of OP. Given the
focus of the article, definitions of HRD, HRM, and HR associated with OP were
selected. The terms HRD, HRM, and HR were operationalized below in Table 1 to
begin the literature review process.
Table 1. Definitions of the Key Terms.
Key terms
Selected definition
1 Human resource development (HRD)
2 Human resource management (HRM)
3 Human resources (HR)
HRD is a process of developing and

unleashing expertise for the purpose of
improving individual, team, work process,
and organizational system performance
(Swanson & Holton, 2009).
The design and management of human
resource systems based on employment
policy, comprising a set of policies designed
to maximize organizational integration,
employee commitment, flexibility, and
quality of work (Guest, 1997; Hendry &
Pettigrew, 1990).
HR is an organizational function responsible
for all of the programs, policies, and
practices that firms utilize to manage
individual employees and teams.
Literature Review Process

The literature review process involved the examination of empirical publications
relevant to the HRD/Ms linkage to firm performance. The researcher made four
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Table 2. Final Count of the Articles Reviewed on HRD and HRM.
Keyword search
HRD, organizational
performance
HRM, organizational
performance
ABI/
INFORM
Total articles (repeat

Social Sciences
articles across the
EBSCO Citation Index (SSCI) databases were removed)
16
39
30
163
232
decisions with respect to the search strategy. The first decision involved the selection
of keywords that were defined at the outset to reduce researcher bias. The following
keywords were selected for conducting the search in HRD and HRM literatures,
respectively: HRD, OP and HRM, OP. The key-word search was performed using
Google Scholar to conduct a preliminary assessment of the extent and scope of the
review. The search furnished 32,300 results for HRM and 14,400 results for HRD. In
order to manage the review process, a second decision was made to exclude practitioner reports, books, and other Internet outlets and narrow the list to peer-reviewed
publications. The third decision was made to maintain consistency in the search findings. Thus, three databases (ABI/ Inform, EBSCO and SSCI) were commanded to
refine the search linking HRD/M to OP. All the databases were accessed through
online library resources. The fourth decision involved the development of a review
protocol to further refine and narrow the final selection of articles for conducting the
review and is presented in the next section.
As mentioned before, the search was conducted separately for HRD and HRM. The
search results were not limited to a specific date range to ensure full coverage of the
topic. The keyword search was performed in the abstract and/or in the article title. This
was to ensure that the central line of the research inquiry was consistent with the focus
of the literature review. The final list of articles was reviewed, and any redundancies in
the citations were removed. The results were verified by using peer member checking
to ensure robustness of the review protocol. This was the last step in the refinement and
selection of the final tally of the articles before performing the systematic review. Table
2 describes the search results across each database and the final count of articles that
were included for the review.
In addition to the articles identified using the above criteria, the HRD/M and OP
landscape was carefully scanned to include seminal reviews of HRD and HRM literature. These articles helped the researcher develop an understanding of the important
debates and scholarly conversations on the topic in both HRM and HRD. In addition
to ensuring the robustness of the literature review process, the reference sections in the
seminal reviews (Arthur & Boyles, 2007; Becker & Huselid, 1999; Combs, Liu, Hall,
& Ketchen, 2006; Ferris et al., 1998; Garavan, Morley, Gunnigle, & McGuire, 2002;
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Garavan, ODonnell, McGuire, & Watson, 2007; Jacobs, 2003; Kuchinke, 1996, 2003;
Lengnick-Hall, Lengnick-Hall, Andrade, & Drake, 2009; McGuire, ODonnell, &
Cross, 2005; Swanson, 1995; Wood, 1999; Wright & Boswell, 2002) were culled and
compared to the overall publication pool that was laid out for review and analysis. It
became apparent that fewer studies examined the HRD role in the OP area (16). The
review of articles pertaining to the HRM -OP linkage, on the other hand, revealed a
larger set of articles (232). The researcher made two decisions with respect to the
analysis of the articles. The first decision related to the coding of the articles separately
for the two fields. The thematic results from the analysis of HRM articles were not
unique and in fact have been widely reported in the HRM literature (Arthur &
Boyles, 2007; Becker & Huselid, 1999; Combs et al., 2006; Wright & Boswell,
2002). Despite the dearth of articles on the topic in the HRD literature, the contributions reveal a range of theoretical streams that reflect evolving interests, a general
degree of confusion on what constitutes HRD, the intended audiences, and beneficiaries (Garavan et al., 2002, p. 9; McGuire, Garavan, ODonnell, & Watson, 2007).
The first decision thus, entailed a close examination of the meaning of HRD/M and
how it is studied. The second decision related to how OP is studied in HRD/M. Any
substantive differences from this analysis were likely to surface underlying assumptions and values that define HRD and HRM. Variations if any, in the understanding
of OP would be valuable in building knowledge and improving the practice of HRD.
In the following section, the analysis of the articles identified from the literature
review process is presented.
Coding scheme
Most scholars agree that OP is critical in the study of HRD and HRM in organizations.
The adoption of OP as a common variable opened up a new line of interpreting the
fundamental issues of how HRD and HRM scholars view HR in organizations. The
empirical articles identified for the study guided the initial development of coding and
category development in the literature review. The abstract from the final list of articles were coded separately for HRD and HRM.
The initial coding adopted a chronological perspective in tracing the evolution and
growth of the fields. Scholars hold different ontological views regarding each field
(HRD and HRM). They also adopt different epistemologies for conducting research on
the HRD and HRM linkage to OP. Based on the purpose of the systematic review, a 2
2 matrix was developed to assist the analysis. This organizing system (Table 3)
helped in deriving the major themes of the study.
The four cells from Table 2 form the four main themes from the literature. Each cell
provides an unique but incomplete understanding of HR in organizations. By combining the insights from the four cells, the article hopes to provide a fuller understanding
of areas of scholarship, which will benefit both fields and the practice of HR in organizations. The article begins by presenting the ontological views of HRM and HRD
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Table 3. Organizing System for Coding and Analysis.

Ontology
Epistemology
HRD in relation to
organizational performance
What constitutes HRD?
How do HRD scholars study OP?
HRM in relation to
organizational performance
What constitutes HRM?
How do HRM scholars study OP?
scholars in relation to OP. This is followed by a discussion of the approaches both

fields use for defining OP and the methods used for studying the linkage.
Ontological Views of HRM in

Relation to Organizational Performance
The HRM literature search yielded two distinctive themes establishing the HRMOP
linkage. Essentially, this linkage helps in describing how researchers view HRM: as
(a) a single practice or combination of practices, and (b) as a system (including practices, climate, etc.). The rich literature on the topic area highlights micro-level perspectives of the HRM function specifically in terms training, recruitment, retention,
and compensation.
The two themes pertain to the conceptualization of HRM as a single or combination
of practices and as a system of practices and have been extensively reported in the
literature (Bowen & Ostroff, 2004; Lengnick-Hall et al., 2009). The first theme examined the effect of individual or combined set of HR practices on OP, and the second
underlined the impact of HR as a system on OP.
HRM as a Single Practice or Set of Practices

The early streams of HRM research investigated the effect of HRM practices on OP.
The first research stream involved the examination of single HRM practices (such as
training, performance appraisal) and the effect of such practices on firm performance
(e.g., Delaney & Huselid, 1996; Delery & Doty, 1996). The second stream of research
underscored the combined effect of interrelated HRM practices rather than any specific practice, such as training or compensation, on OP (Arthur, 1994; Delaney &
Huselid, 1996; Huselid, 1995; Huselid et al., 1997; Ichniowski, Shaw, & Prennushi,
1997; MacDuffie, 1995). The extensive empirical HRM work has focused on understanding how single or combinations of HR practices are linked to OP. The evaluation
of HRM is understood in terms of the strength of the practice and its effect on OP. The
distinction in studying single or sets of HRM practices and OP is important as it
underlines the fit and contingent relationships between HR practices and organizational outcomes (Lengnick-Hall et al., 2009).
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HRM as a System
In recent years, several mediating constructs that enable or inhibit HRM system
impact on OP have been identified. Becker, Huselid, Pickus, and Spratt (1997) recommended that HR departments direct their interest on macro-level business outputs and
develop a systemic perspective since traditional HR role expectations appeared to have
no apparent connection to OP. In Guests (1997) HR model, two intervening
constructsHR outcomes (commitment, quality, and flexibility) and behavioral
outcomes (effort/motivation, cooperation, involvement, and organizational citizenship)
linked HR strategy and practices to firm-level performance outcomes. While developing an HR -firm performance model for software companies, Paul and Anantharaman
(2003, p. 1249) defined a set of intervening variablesemployee competence, teamwork, organizational commitment and customer orientationto render causal linkages between HR practices and a firms performance (operational and financial).
HRM practices aligned closely with organizational strategy reported higher financial
outcomes (Delery & Doty, 1996; Huselid, 1995; Youndt, Snell, Dean, & Lepak,
1996).
Although no single HR practice was found to have a direct causal connection with
financial performance (Becker & Huselid, 2009), several HR practices, such as training, job design, compensation, and incentives, directly affected operational performance measures, namely, employee retention, employee productivity, product quality,
speed of delivery, and operating cost. Of these, operational measures, employee retention, and, to some extent, employee productivity have been traditionally associated
with HRM system outcomes, although these and a few individual HRM practices (job
design, work environment) are dependent on enterprise-level dimensions such as organizational strategy and business orientation.
HRM structure and design is determined by the organizations business and strategic initiatives (Becker & Huselid, 1999). As a formal system, HRM provides an
important foundational support for training and performance. Although the quality of
HRM system and outcomes is dependent on organizational-level business initiatives,
scholars have taken the approach that HRM as a system is an important component
that can help an organization become more effective and achieve competitive advantage (Becker & Huselid, 1999). A related perspective has framed HRM systemfirm
performance linkage as a process through which a set of intervening variables are
generally aligned in ways to ensure that the HRM system is a source for competitive
advantage (e.g., Becker & Gerhart, 1996; Wright, McMahan, & McWilliams, 1994).
Wright and Snell (1998) linked HRM practices to strategy by demonstrating a case
of sustainable fit of HRM practices with company strategy. HRM practices aligned
closely with organizational strategy reported higher financial outcomes (Delery &
Doty, 1996; Huselid, 1995; Youndt et al., 1996). There is a lack of consensus on what
constitutes HR systems or practices and how these individually or as a combination
define the construct of HRM (Paauwe & Boselie, 2005). Different themes emerging
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from the literature review HRM as best practices (Delery & Doty, 1996) or consider
internal fit. While Boxall and Purcell (2003) argue the case for emphasizing both best
practices and the internal fit approach. Wood (1999) noted internal, organizational,
environmental, and strategic fit as four different types of fits that consider different
linkages in establishing HR contribution to firm performance.
The HRMOP linkage shaped the agenda of the HRM field in the 1990s and
asserted the value and impact of HR in organizations. In addition to improving our
understanding of the linkages between HRM and OP, the empirical conversations significantly influenced the formulation of strategic role for HR in organizations. The
HRM discipline reframed the traditional role of HR departments from a maintenance/
administrative function to that of a strategic business partner. The intellectual roots of
the field suggest that HRM contributions emphasize fuller integration of micro- and
macro-level approach theories and analysis linking HR with organizational-level performance outcomes. This is an important perspective on the role and contribution of
HR to the bottom-line performance in organizations. The underlying assumption of
HRM suggests that the field values the managerial paradigm in that HR policies, practices, and systems are designed to enhance organizational and individual performance.
Thus, investments in human capital benefit the performance of the organization. This
overarching philosophy is also important to understand from an HRD perspective. In
the following section, HRD perspectives on the linkage to OP are discussed.
Ontological Views of HRD in

Relation to Organizational Performance
In order to follow a consistent method for investigating the similarities and differences
in the HRD/M-OP relationship, I examine the work of HRD scholars toward establishing the HRDOP linkage. As a field, HRD strongly identifies with career development (CD), organization development (OD), and training and development (T&D)
domains (Swanson & Holton, 2009). Theoretically, these HRD activities (OD, T&D,
and CD) may be treated as a bundle of HR competencies that mediate human expertise and human effort in organizations (Ruona, 2000 & 2001). The earliest contribution in establishing the importance of HRD-OP linkage emphasized workforce
productivity as an OP outcome (Swanson, 1995), but the HRD-OP area has remained
largely prescriptive. For example, Jacobs (2003) argued for investigating the linkage
between employee development programs and OP.
Watkins and Marsicks (2003) seminal work on the learning organization is perhaps
the most significant contribution in establishing the HRD -OP linkage. Their model
highlighted the learning organization characteristics as an important component of
HRD at the individual, team, and systems level of the organization. This significant
contribution established the effect of HRD on OP. In addition, organizational culture
has also been acknowledged to significantly affect performance-related outcomes
within organizations (Egan, Yang, & Bartlett, 2004). Empirical support for HRD as a
single practice or combination of practices affecting OP however, has been found
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lacking (Katou, 2009). This is not a flaw, as HRD researchers highlight multilevel
(individual, team, organizational) perspectives to establish the linkage to OP. This is
in sharp contrast to the HRM field, which emphasizes a different vantage point.
Viewing HRD as Learning at the System Level

The examination of processes within the HRD subsystem and, their relationship with
the production system, measurement, and evaluation also received the attention of
scholars (Wang, Dou, & Li, 2002). The systems approach was combined with a focus
on fulfilling internal and external stakeholder needs in other HRD studies. Ellinger,
Ellinger, Yang, and Howton (2002) and Jashapara (2003) found positive relationships
between learning organization characteristics and OP. The contributions of HRD in
advancing the linkage to OP are limited but no less significant than HRM contributions. From the standpoint of HRD, connections between structural, cultural, and
system characteristics of the organization and their effect on higher levels of performance were central in addressing the HRDOP linkage.
Usefulness of Comparing the HRD/M

Organizational Performance Literature
The comparisons of the HRD and HRM contributions toward enhancing the linkage
between HR and OP are important from an HRD perspective. The multiplicity of perspectives that define HRD as a field potentially offers new lines of interpretation to the
HRD/MOP conversations. The HRMOP conversation has begun to explore and
accept different methodologies and paradigms (qualitative, systems perspective)
toward approaching the linkage between HR and OP. In addition, the HRD/MOP linkage literature would also benefit from the more critical/social constructivist HRD
scholars, who do not use OP as an important outcome of HR work in organizations
(McGuire et al., 2005). Thus, HRD scholarly conversations could advance current
debates on the HRD, HRM and OP connection. For example, strong linkages to OP
support an expanded role for the HR departments in addition to increasing their credibility and reputational effectiveness (Alagaraja & Toby, 2011). Perceptions of the
strategic role of HRD and HRM functions in organizations are diminished when the
linkage to performance is weak (Alagaraja, 2013). These findings are important since
they continue to advance the scholarly interest in developing robust models of the
HRD/M connection to OP.
Two other conclusions can be drawn from comparing and contrasting the HRD/
MOP literature. With respect to HRM and HRD, the content of an HRM system
and an HRD system are dissimilar. For example, in the HRM studies, there is confusion about what components constitute the HRM system. In HRD studies, aside from
adoption of the systems perspective (Swanson & Holton, 2009) as a foundational theory, there is little discussion on the HRD system. In terms of individual HRM or HRD
126
practices, there is some similarity as both fields have investigated T&D practices
extensively. In addition to this, three other practices (compensation, performance management, recruitment and selection) were reviewed extensively in the HRM literature.
However, these practices may have different levels of impact on OP since HRM or
HRD systems have been understood differently and are not comparable. This is especially true when comparing best-practices and best-fit concepts in both literatures.
These concepts should be considered carefully in comparisons because the best-fit
concept carries the influence of organization and the HRD/M or HRD practices on OP.
Although scholars have argued that both concepts may be right in their own way
(Boxall & Purcell, 2003), the best-fit approach highlights the importance of external
and internal organizational contexts in the design and effectiveness of HRD/M best
practices in the workplace (Paauwe, 2005). However, both approaches are important
in exploring the HRM and HRD linkage to OP.
Therefore, it is not surprising that OP is a common thread in comparing the research
and practice of HRD or HRM in organizations. Some scholars have also used the term
firm performance. Although the article does not view firm performance as an alternative concept to OP, the two phrases have been used interchangeably in HRD and HRM
literature. It is interesting that both HRD and HRM scholars define OP using different
sets of indicators. These divergent explanations represent different epistemologies in
the study of HR in organizations. An analysis of how OP is defined, understood, and
studied by HRM and HRD literature is presented in the next section.
Epistemological Differences
in Studying Organizational Performance
OP has been addressed in a broad manner in the management sciences. These descriptions help in defining as well as identifying universally accepted perspectives of OP.
Since OP is a common variable in the management sciences, this section presents
generally understood perspectives of OP in the management literature.
Early conceptualizations of OP in the management sciences describe OP (a) as a set
of goals of the organization such as profitability and turnover (Etzioni, 1964), (b) internal and external resources utilization (Yutchman & Seashore, 1967), and (c) fulfilling
internal and external stakeholders needs (Thompson, 1967). These descriptions were
useful in developing comparisons between HRM and HRD perspectives on OP. The
insights gained from this examination would be valuable since these variations have not
been explicitly discussed in the HRD literature. The new insights would also enhance
the value of HRD practice in an increasingly complex global context. In what follows,
HRM and HRD perspectives on OP are compared and contrasted. These perspectives
add value, expand, and enrich our understanding of research, theory, and practice of
HR in the HRD and HRM literature. They also stimulate future avenues of research
and practice and spark debates on the further evolution of the two fields. The next section discusses how OP is studied in HRM.
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Alagaraja
Measures of Organizational Performance Utilized in HRM

The HRM literature reveals the following most frequently used OP measures: organizational and employee productivity, perceptual measure of organizational and market
performance, organizational turnover, corporate financial performance, profitability,
sales growth, and quality. The measures are consistently quantitative in nature, capturing macro-level performance metrics. One outcome of this review reveals a lack of
uniformity in the use of OP measures. In the following paragraphs, a synthesis of
research studies (Katou, 2009; Wright & Boswell, 2002) reporting organizational
measures in HRM is presented.
Productivity. Two measures of productivity(1) employee, and (2) organizational
levelwere used by several scholars to capture OP measures and are described separately. However, the studies did not use a combination of both indicators as a measure
of performance. Employee productivity was measured as labor efficiency in terms of
dollar output spent on labor (Cappelli & Neumark, 2000). Other scholars (Bae & Lawler,
2000; dArcimoles, 1997; Koch & McGrath, 1996; Wright, Gardner, & Moynihan,
2003) also viewed labor productivity in similar terms to measure the efficiency of the
labor force. Richard and Johnson (2001) evaluated the net income per employee.
MacDuffie (1995) measured labor productivity, but adjusted for absenteeism. Organizational productivity was measured in terms of sales per employee (Huselid, 1995;
Huselid et al., 1997; Ichniowski & Shaw, 1999; Konrad & Mangel, 2000).
Perceptual measures of organizational and market performance. Measures examined
under the organizational and market performance constructs were composed of interchangeable survey items asking respondents to evaluate and compare the performance
of their organizations with competitors. Diverse organizational and market performance measures were utilized. According to Delaney and Huselid (1996), perceptual
OP measures addressed product quality, customer satisfaction, and new product development. Harel and Tzafrir (1999) also covered similar aspects and included employee
acquisition and retention. Perry-Smith and Blum (2000), in addition to the aforementioned measures, incorporated employeemanagement relationships. Financial and
operational performance measures such as change of business results, forecasts, and
estimated changes in the market share, were compared by Lahteenmaki, Storey, and
Vanhala (1998). Perry-Smith and Blum (2000) assessed perceived market performance
relative to that of other firms in terms of marketing and market share. Parallel to the
earlier study of Delaney and Huselid (1996), Harel and Tzafrir (1999) paid attention to
profitability, market share, and accounting for product price and sales increase. In all
these studies, researchers asked respondents to evaluate the performance of their organizations in comparison to their competitors over a period of time. Some scholars measured market performance in purely economic terms such as profitability and market
share (Delaney & Huselid, 1996; Harel & Tzafrir, 1999) and others measured the performance on process outcomes. For example, public image and goodwill were also
measured by Bae and Lawler (2000), whereas Montemayor (1996) assessed market
performance in terms of product/service quality, customer satisfaction, and customer
retention.
128
Organizational turnover. Huselid (1995) included two measures of turnover separately

for exempt and nonexempt employees. The average annual turnover included both voluntary and involuntary departures. Richard and Johnson (2001) collected annual turnover measures for nonexempt employees as a measure of organizational turnover.
Industry-specific turnover measures were analyzed by Shaw, Delery, Jenkins, and
Gupta (1998). Measures of driver turnover as a percentage of total firm employment
were reported separately for both voluntary and involuntary separations in their study.
Corporate financial performance. Standard market-based measures of short-term
(annual) profitabilitygross rate of return on assets (GRATE)were utilized as measures of OP (Bae & Lawler, 2000; Huselid, 1995; Huselid et al., 1997). Traditional
measures of accounting profits such as the return on assets and return on equity were
calculated (d Arcimoles, 1997; Delery & Doty, 1996; Lam & White, 1998; Lee &
Chee, 1996; Lee & Miller, 1999). Return on equity, the ultimate measure of the financial strength of the institution, was included in some studies (Delery & Doty, 1996;
Lee & Chee, 1996; Richard & Johnson, 2001). Two research studies also measured
stock performance by the extent to which firms maximized shareholder value by
assessing the annual growth rate of the organizations stock market value (Collins &
Clark, 2003; Lam & White, 1998).
Profitability. Increased firm profitability over a period was another OP measure utilized in the identified literature (Bae & Lawler, 2000; Banker, Lee, Gordon, & Srinivasan,
1996). Several studies included both profitability and sales growth as a combination to
assess OP (Perry-Smith & Blum, 2000; Terpstra & Rozell, 1993; Wright et al., 2003).
Simons, Pelled, and Smith (1999) conceived top management performance in terms
of increased firm profitability and sales. Wright et al. (2003) also incorporated operating expenses as an OP measure.
Sales growth. Another important measure of OP was the calculation of the average
annual growth in sales for a specific period. This measure was used to indicate the
extent to which customers accepted the firms products and services (Bae & Lawler,
2000; Collins & Clark, 2003; Lam & White, 1998; Lee & Chee, 1996; Simons et
al.,1999). In another study, individual average monthly sales were developed to assess
sales productivity (Batt, 1999).
Quality. Self-reported measures of quality were reported by respondents indicating
their work groups service quality as well as product service quality improvements,
according to Bae and Lawler (2000) and Batt (1999). MacDuffie (1995) and Wright et
al. (2003) measured the number of defects or errors per pieces of the vehicles emphasizing fit and finish of the final product. Shaw, Gupta, and Delery (2001) captured
quality as a ratio of out-of-service percentage due to driver fault to the total number of
inspections. Montemayor (1996) also added effort performance as a measure to estimate the percent of employees who manifested extra-role behavior that improved the
overall quality performance of the organization. Customer satisfaction data was also
utilized to capture long-term performance data (Banker et al., 1996). In addition, the
ratio of workers compensation expenses to sales (Wright et al., 2003) and accident
frequency ratio (Shaw et al., 2001) were other quality-related measures adopted as a
measure of OP.
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Measures of Organizational Performance Utilized in HRD

In contrast to HRM studies, both traditional and nontraditional indicators of OP have
been explored in HRD literature. Several HRD scholars examined the learning organization characteristics and impact on bottom-line performance (Baek-Kyoo Joo, 2010;
Egan et al., 2004; Ellinger et al., 2002; Gilbreath & Montesino, 2006; Kontoghiorghes,
Awbrey, & Feurig, 2005).
Turnover intention. HRD scholars highlighted turnover intention as a key element for
predicting turnover behavior (Baek-Kyoo Joo, 2010; Bedeian, Kemery, & Pizzolatto,
1991; Bluedorn, 1982; Koch & Steers, 1978; Lee & Bruvold, 2003). Turnover intention, or the intent to leave, was identified as the single best predictor of turnover. Ulrich,
Halbrook, Meder, Stuchlik, and Thorpe (1991) found that a decrease in turnover
enhanced OP. Based on several studies, Egan et al. (2004) suggested turnover intention
as a strong precursor to turnover, as has been widely verified in the literature (Abrams,
Ando, & Hinkle, 1998; Lee & Mowday, 1987; Michaels & Spector, 1982). Articles in
this area suggested that turnover intention influences the relationship between HRD
and OP.
Strength of HR orientation. The human resource orientation in companies and linkage to corporate performance was examined by Lam and White (1998). They found
that companies with a strong HR orientation performed significantly better than firms
with a weaker HR orientation. The strength of the HR orientation was determined by
three behavioral componentsattraction, retention, and development of the firms
human capital. Organizational or corporate performance was determined by using
three measures: return on assets, growth in sales, and growth in stock values.
Learning organization characteristics. The examination of processes within the HRD
subsystem, their relationship with the production system, and measurement and evaluation also received the attention of scholars (Wang et al., 2002). The systems approach
was combined with a focus on fulfilling internal and external stakeholder needs in
some HRD studies. For instance, Ellinger et al. (2002) and Jashapara (2003) found
positive relationships between learning organization characteristics and OP. Ellinger
et al. (2002) examined correlation with the dimensions of the learning culture questionnaire and the financial performance measures of organizations in a national context, providing an economic rationale for creating a learning culture. Several others
have conducted large-scale national and international studies with different types of
organizations and employee groups (Dymock, 2003; Hernandez, 2003; McHargue,
2003; Sta-Maria, 2003). Watkins and Marsick (2003) recommended the need for more
studies using this approach for establishing evidence of validity and credibility of HRD
constructs. In another study, Kontoghiorghes et al. (2005) examined the relationship
between certain learning organization characteristics and change adaptation, innovation, and bottom-line OP. The authors defined OP in terms of quality, productivity,
profitability, organizational competitiveness, and employee commitment indicators.
The focus in HRD in relation to OP remains exclusively on performance improvement at the level of the individual and the team. Thus, the nature of the scholarly
130
inquiry has seldom moved beyond individual and team processes, structuring interventions at these two levels, and long-term emphasis on training, learning, and development. As the literature demonstrates, the connection of human effort to organizational
outcome can be tenuous. Multilevel empirical research demonstrating cause at one
level (person) and effect at another (organization) is complex. It is not necessarily a
flaw or gap in HRD literature because the discipline and its foundations are not as
focused as HRM on OP outcomes. This is an important and fundamental issue that is
discussed in the following section.
The analysis of the literature review considered the following measures of OP in
HRM: productivity, market performance, organizational turnover, financial performance, profitability, sales growth, and quality. The following measures of OP were
considered in HRD: turnover intention, learning organization characteristics, and
strength of HR orientation. The measures with respect to HRM refer to ultimate measures in the HRMOP relationship, the measures with respect to HRD refer to mediation measures in the HRDOP relationship. It is apparent that the performance
outcomes of HRD are captured through the use of mediation measures. In contrast,
HRM utilizes financial outcomes (profits, sales, market share, Tobins q, GRATE),
organizational outcomes (productivity, quality), and mediation measures similar to
HRD (satisfaction, commitment, and turnover intention) to conceptualize OP. In the
next section, I discuss the key findings from the literature review highlighting the differences in approaches in the two fields in identifying and exploring the dependent
variable and the underlying philosophies that guide and inform them.
Discussion
The scholarly conversations pertaining to HRD definitions reveal divergent perspectives in understanding the role of HRD at multiple levels of the organizations (and at
the national level) for the purpose of enhancing learning and performance. Given the
multiplicity of perspectives in HRD, numerous theories and theoretical frameworks
thus, inform the field and continue to energize the scholarly conversations that expand
the field. In comparison, the HRM focus is concerned with the scholarly debates over
the best-practice versus best-fit approach, the components of the HRM system, the
inclusion of different employee groups, and the perceived effect of practices (Paauwe,
2005). Three theoretical frameworks dominate and inform these HRM concerns: the
contingent framework, which suggests that HRM influences performance in relation
to contextual factors from the external environment such as business strategies (Schuler
& Jackson, 1987); the resource based view, which asserts that HRM influences performance according to the human and social capital held by the organization (Barney,
1995); and the AMO theory, which asserts that HRM influences performance in
relation to employees ability, motivation, and opportunity to participate
(Appelbaum, Bailey, Berg, & Kalleberg, 2000). In contrast to HRM, seminal conversations in HRD reveal that the theoretical frameworks and theories are too numer-
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ous to mention. The underlying philosophical assumptions of HRM and HRD

inform these dominant theoretical frameworks in the area.
Empirical studies exploring the HR linkage to OP provide a list of frequently measured organizational-level performance indicators. These quantitative indicators provide a baseline for the evaluation and assessment of OP improvement and effectiveness.
The overarching themes of HRD studies expand on the strong linkage between learning
organization characteristics and firm performance. Thus, important contributions of the
HRD-OP linkage literature emphasize learning organization characteristics. It is clear
that HRD places importance on the learning organization characteristics to determine
and establish a connection with OP. There is limited evidence of empirical studies that
examine these linkages in HRM. The learning versus performance debate (Kuchinke,
1996) is an outcome and a reflection of the importance HRD lays on the learning organization characteristics. These characteristics are important intermediating mechanisms
that determine the strength of OP outcomes. This stream of research also suggests that
HRD places importance on the role of formal, informal, and other forms of learning
organization and training. HRD scholarship emphasizes a systems-based organic
approach to uncovering complex relationships and discerning the nuances in the intricate linkages involved in fulfilling internal and external stakeholder needs through the
adoption of different variables (e.g., organizational commitment, prediction of turnover). The wealth of HRD scholarship in the HRD-OP linkage topic appears to emphasize the intangible mechanisms that are significant but difficult to explicate in
understanding the value and contribution of HRD to OP.
The learning organization model developed by Marsick and Watkins (2003) is a
significant HRD contribution in advancing the literature on the HR-OP linkage. Their
contribution toward the development of comprehensive learning organization characteristics is also a reflection of the philosophical assumptions that characterize our field.
There is growing evidence of scholarship utilizing OL as a conceptual or a theoretical
framework from different disciplines (Ellinger et al., 2002; Jashapara, 2003). Although
achieving consensus on a common definition of HRD has been difficult, the adoption
of the learning organization model has brought about a great deal of acceptance among
HRD scholars in establishing the connection between HRD and OP. In comparison,
the everyday management of the traditional HR function in organizations continues to
occupy the interest of HRM scholars. The HRM field closely identifies itself with the
components that constitute the traditional HR function. HRM scholars emphasize
objective measures of OP. Empirical studies in HRM established the effect of HRM
practice, policies, and systems on, and their relationship to, OP using quantitative
measures.
Organizational Performance as an Outcome

The stream of HR-OP performance research was a milestone in the evolution of HRM
as a separate discipline (Swanson & Arnold, 1996). This stream of research addressed
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an important debate about the importance of HR in organizations that continues to this

day in practice
The HRM approach in addressing the linkage between HR and OP suggests that
scholars aimed to achieve the same level of importance for HR as other traditional and
direct functions/departments (operations, finance, quality, marketing, and sales) in the
organization. The HRM philosophy placed more emphasis on assessing the impact of
HR practices, policies, and systems on the financial success of the organization. In
contrast, the HRD research stream reflects a more humanistic, holistic, and systemic
approach, with scholarly inquiries focusing on learning and performance at the level
of the individual, team, and the organization.
A great diversity of philosophical and theoretical perspectives and the accompanying debates in HRD reflect the emphasis on the development of human resources. In
contrast, it appears that the significant HRM focus on OP indicators as measures of
financial, sales, or operational outcomes reflects the management orientation in
addressing the linkage between HR and bottom-line performance.
The HRM scholarly contributions in establishing the HR-OP linkage has been substantive in comparison to HRD, where this line of inquiry has not been pursued as
vigorously. However, HRD has much to offer to advance research in this area. For
example, HRD theories support the examination of characteristics such as context,
strategy, and culture as socially complex systems (Watkins & Marsick, 2003), although
fewer scholars have contributed significantly in utilizing systems-level thinking to
guide empirical studies in the HRD-OP linkage. Empirical studies have typically
focused on employee-level performance indicators or micro-level approaches
(Kuchinke, 1996), with the exception of the studies conducted by Ellinger et al. (2002)
and Jashapara (2003), where positive relationships between certain learning organization characteristics and objective measures of OP were explored.
It appears that a great diversity of philosophical and theoretical perspectives take
the HRD focus away from some of the more important challenges facing HR practitioners. However, multitheoretical and diverse perspectives have been foundational to
the development of HRD as an independent discipline, where scholars wrestle with
competing paradigms and individual-, team-, and organizational-level approaches
within the organization. This is a potential area of opportunity for HRM. HRM must
leverage HRDs multitheoretical and diverse perspectives to reconcile competing priorities at the level of the individual, team, and the organization to expand the HR-OP
line of inquiry.
Methodological Differences
Different data designs produce different results (Wright, Gardner, Moynihan, & Allen,
2005). Thus, when data designs are categorized into (a) predictive (i.e., practices are
not measured before the performance period), (b) post-predictive (i.e., practices
are measured after the performance period), (c) contemporaneous (i.e., practices are
measured contemporaneously with performance), and (d) retrospective (i.e., prac-
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tices are measured based on past performance period), they contribute to variations in
the findings on the linkage between HRM, HRD and OP. Thus, methodological differences produce mixed results. In this section, I consider the methodological differences when comparing HRD/M and OP linkage.
The quantitative approaches in some of the studies (Bae & Lawler, 2000; Delery &
Doty, 1996; Huselid, 1995; MacDuffie, 1995; Shaw et al., 1998) relied on singlemember responses for gathering organizational-level performance and HR practices
data (Patterson, West, & Wall, 2004). These studies utilized cross-sectional data collection methods involving multiple firms, across or within particular industry sectors,
enabling generalization of findings. In contrast, fewer longitudinal studies (Cappelli &
Neumark, 2001; Huselid, 1995) investigated HRM and firm performance relationship.
Large-scale survey designs dominate the HRMOP research stream. The findings from
quantitative-based designs have resulted in offering snap shots and high-level analysis of HR-OP linkages. HRM studies imply deterministic, static, and objective notions
of the linkage between HR and OP. These notions also influenced the HRD line of
inquiry in determining HRs relationship to OP-level outcomes.
The qualitative methodology, on the other hand, offers a different line of approach
in addressing the HROP linkage. This methodology addresses the notion of HR practices as institutionally embedded. Thus, accessing multiple respondents in every organization is required to obtain a variety of perspectives. By focusing on the influences
of local contexts on organizational members, the qualitative approach is well-suited
for examining micro-level approaches toward establishing the linkage between HR
and OP. The multiplicity of perspectives that define HRD allow for the adoption of a
variety of research methods. In contrast, several HRM scholars have only recently
begun to call for qualitative studies (Becker & Huselid, 2009). Therefore, it is not surprising to note that the HROP linkage has been examined exclusively through the lens
of quantitative research. Building cumulative evidence from a variety of research
designs, methodologies, and data collection sites will strengthen scholarship and credibility for HRM and HRD theory, research, and organizational practice. Both largescale studies and small, highly contextualized studies would advance the scholarly
inquiry on the HR-OP linkage (Alagaraja & Egan, 2011). The qualitative methodology
also complements the many quantitative research studies. More important, the methodology would elaborate the dynamic interactions among key organizational decision
makers on how the HR-OP linkage is achieved in organizations.
Conceptualization of HRD/M
One outcome of the review is to suggest the adoption of the term HRD&M as a
better approach for defining HR to include people management (HRM) and development aspects (HRD) as a combined system of practice, policies, and performance
outcomes. A new term HRD&M is proposed as a more inclusive reflection of the work
HRM and HRD professionals do in organizations. As more organizations look to
134
adopt broad approaches in practice, a more accurate reflection of the practice of HRM
and HRD in organizations as HRD&M is useful. However, this may not always be the
case, and there may be some resistance in larger organizations with resources or the
wherewithal to have separate HRM and HRD departments.
HRD/M can also be considered as a field of theory, research, and practice involving
the management and development of human resources in organizations. HRD/M function includes human capital development at the individual level (knowledge, skills,
and abilities), social networks and relationships (social capital), and human capital
management of human resource systems based on employment policy, comprising a
set of policies designed to maximize functional and organizational integration, employee
commitment, flexibility, and quality of work that support HR systems and structures
within an organizational context. The work of Gilbreath and Montesino (2006) recommended an expanded HRD role to include both employee well-being and OP. The conceptualization of HRD/M is similar to the goals stated by their research. Organizations
need to develop a greater understanding of HRD&M as a system with clearly defined
performance expectations and outcomes (Colakoglu, Hong, & Lepak, 2009). Effective
HRD&M systems integration with operational aspects of business is thus imperative
for the performance and improvement of individuals, processes, and the organization as
a whole (Becker & Hueslid, 2009; Guest, 1997). The goal of HR function involving the
development and management aspects thus, places a central value in simultaneously
embracing the development and management of the HR function. Achieving balance
between competing employee and organizational demands and needs would contribute toward effective OP. Thus, HRD&M can be understood as a field involving the
management and development of human resources in organizations. HRM&D function includes human capital at the individual level (knowledge, skills, and abilities),
social networks and relationships (social capital), and organizational capital.
Need for Systems-Level Perspectives

More research in utilizing systems-level perspectives is required to address the gaps
in the literature. Based on research evidence to date, HRM scholars have devoted a
great deal of attention examining HR practices and OP using macro- and micro-level
approaches. In HRD, although the focus has been on system-level issues that contextualize, influence, and direct organizational-level outcomes, the performance indicators have typically focused on employee-level performance indicators (Kuchinke,
1996) with the exception of Watkins and Marsick (2003).
Role of the HRD/M Function

Although empirical support for the impact of HRM and HRD as practices and as a
system on OP is well-established, the actual role of HR as an organizational function
has been largely neglected (Haggerty & Wright, 2009). The impact of the HR function
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in organizations and their contributions to OP has not received attention from either
fields. This is a major gap that was identified in the literature review. Both HRM and
HRD need to support practitioners in the application of theories, research, and models
for evaluating the performance and service delivery of HR function.
Strategic Perspectives
The implementation of strategy is important in establishing the HR-OP linkage.
Becker and Huselid (2009) call for future research studies in the implementation of
strategic human resource management (SHRM). According to them, strategy implementation is an equally important area of study as SHRM theory development. Other
notable empirical research gaps from the literature call for identifying key intermediate outcomes in accomplishing strategy implementation (Doorewaard & Meihuizen,
2000) and increased within-industry studies (such as Doorewaard & Meihuizen,
2000; MacDuffie, 1995). These scholars suggest the need for balanced perceptions
toward understanding HR performance, taking into account multiple stakeholder
expectations. Haggerty and Wright (2009) contend that the strength of an HR system contributes to desired organizational-level performance and recommended
future research in this area. These are complex constructs that need in-depth understanding of the interacting dynamics between organizational culture, structure, strategy, and context.
Gilley and Maycunich (2000a, 2000b) recommended the integration of HRD as a
strategic partner to maximize OP. Garavan (2007) and Holton and Yamkovenko (2008)
have also called for studies examining the impact of strategic human resource development (SHRD) on firm-level performance outcomes. The theoretical and intellectual
debate about the importance of HRD or HRM as a strategic partnership has not yet
translated into an established line of inquiry. There is a convergence across both fields
in the conceptualization and positioning of strategic human resource development and
management (SHRD&M) for conclusively establishing the effect of human resources
on OP.
Conclusions
The accumulation of research evidence for HR-OP linkages would make a strong case
for greater role, status, and influence of the HR function in organizations. The general
and academic discourse on the effect of HR function in organizations continues to
remain an underdeveloped area. Greater integration of HRD and HRM theoretical
perspectives and the general HR practitioner discourse would significantly improve
the role, status, and influence of HR function on OP. It would also help in developing
a deeper understanding of HR functional service capacity and performance delivery
in organizations. To do so, research studies adopting innovative approaches are
needed to enhance our understanding of HR performance, taking into account multiple stakeholder expectations. The article recommends that both HRD and HRM draw
136
from each others strengths, acknowledging their contribution in the development,

furthering of knowledge, and application of theories in improving HR service delivery
and its impact on firm performance. The progress in achieving the HROP linkage in
theory, research, and practice cannot be overstated. To be valued as a strategic and
tactical source of competitive advantage, HRD and HRM need to draw on each others disciplinary perspectives, assumptions, and methodologies to fully leverage the
development and management of human resources -- the most important of all organizational resources. Both fields have sought to become more strategic over the past
two decades and are very much connected in practice. Much of the separation, therefore, appears to be academic. The synergy between the two disciplines would help in
fully translating the people are our most valuable assets rhetoric into reality.
Declaration of Conflicting Interests
The author(s) declared no potential conflicts of interest with respect to the research, authorship,
and/or publication of this article.
Funding
The author(s) received no financial support for the research, authorship, and/or publication of
this article.
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Author Biography
Meera Alagaraja is an assistant professor of human resource development at the University of
Louisville. Her research interests include strategic HRD, performance interventions, international HRD, and learning in organizations. Her work has appeared in publications such as
Human Resource Development Review, Human Resource Development International, and the
Human Resource Development Quarterly.

HRD and HRM Perspectives On Organizational Performance - A Review of Literature - 2013

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HRD and HRM Perspectives on Organizational Performance: A Review of

Academy of Human Resource Development

Integrative Literature Review

HRD and HRM Perspectives

Human Resource Development Review

University of Louisville, Louisville, KY, USA

Human Resource Development Review 12(2)

tributor in the development and management of people in organizations, is most often

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implications of the differences, and how this improved understanding is helpful in

Introduction to the Key Terms

1 Human resource development (HRD)

2 Human resource management (HRM)

3 Human resources (HR)

HRD is a process of developing and

Literature Review Process

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Human Resource Development Review 12(2)

Table 2. Final Count of the Articles Reviewed on HRD and HRM.

Total articles (repeat

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Table 3. Organizing System for Coding and Analysis.

What constitutes HRD?

How do HRD scholars study OP?

What constitutes HRM?

How do HRM scholars study OP?

scholars in relation to OP. This is followed by a discussion of the approaches both

Ontological Views of HRM in

HRM as a Single Practice or Set of Practices

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Human Resource Development Review 12(2)

Ontological Views of HRD in

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Viewing HRD as Learning at the System Level

Usefulness of Comparing the HRD/M

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Human Resource Development Review 12(2)

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Measures of Organizational Performance Utilized in HRM

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Human Resource Development Review 12(2)

Organizational turnover. Huselid (1995) included two measures of turnover separately

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Measures of Organizational Performance Utilized in HRD

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Human Resource Development Review 12(2)

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ous to mention. The underlying philosophical assumptions of HRM and HRD

Organizational Performance as an Outcome

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an important debate about the importance of HR in organizations that continues to this

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Human Resource Development Review 12(2)

Need for Systems-Level Perspectives

Role of the HRD/M Function

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