Perceptions of Strategic and Operational Involvement in HRM as Predictors of HRM Performance

Abstract

There has been little empirical evidence regarding the involvement of public sector human resource (HR) departments in operational and strategic activities. To address this gap in the literature, this present study examines the strategic and operational involvement of public sector HRM departments in the Australian context. Survey data were collected from 112 senior executive officers of 51 commercialised and non-commercialised public service agencies in New South Wales and Queensland. The results indicate that senior line and HR executives in the public sector had different perceptions of the involvement and performance of the HR department. The results suggest that the size of the organisation is a significant predictor of HR department effectiveness. Strategic involvement of the HR department was also a significant predictor of HR department performance. Despite a strong negative correlation with HR performance, the devolution of operational HR activities to line management was not a predictor of the performance of the HR department Theoretical and practical implications are then discussed. There is a growing body of literature that focuses on the adoption of new management practices in the public service. Some have termed this development 'new public management' (Kearney and Hays, 1998) and it allows bureaucrats to manage public sector entities within the competitive market environment. During the last two decades, the public sector has implemented a number of changes to its managerial structures, systems and processes, including restructuring, performance auditing, program management and budgeting, and privatisation of state-owned entities (Osborne and Gaebler, 1992). The emphasis is on achieving efficiency, effectiveness and economy in the activities performed by public sector organizations, and on an ability to compete with private sector entities which operate in similar markets. Empirical evidence from the United Kingdom (Farnham and Horton, 1996) and New Zealand (Powell and Spicer, 1994) has demonstrated that the commercialisation of public sector entities has a number of HRM implications. These newly structured, state-owned entities have adopted new HR strategies (such as development of commercial skills and competencies, downsizing and decentralised enterprise bargaining) to respond to the need of becoming more focussed on performance and accountability in the commercialised environment, with a move from personnel management to HRM (Farnham and Horton, 1996). The fundamental philosophy in this field of study treats HR as a critical resource in the strategic management process; thus organizations should manage their HR effectively to provide a source of competitive advantage (Barney and Wright, 1998). Although there is a growing body of literature that focuses on public sector HRM function, most of these studies do not examine the status of HR departments in strategic management. These scholars argue that the adoption of new public management has achieved the shift from personnel management to a more strategic approach to HRM. These studies were conducted in the United Kingdom and the USA, with little empirical evidence available from the Australian public sector context. Research into the Australian context is important as it allows comparison with other countries in relation to the changing roles and contribution of the HRM function in the process of public sector reform. Therefore, the present study aims to contribute to this body of literature by examining the involvement of public sector HR departments in operational and strategic activities in the process of strategic management.