Organizational Performance

The idea of overall performance of firms is very broad. It can be any outcomes, ranging from marketing, operations, human resources, customer service and so on. The concept of firm performance has been addressed in various ways. There are many indicators that organizational performance can be defined such as the achievement of firms’ increase in productivity (employee productivity and operational productivity), employee efficiency, employee turnover, financial performance (return on investment, ROI, return on asset, ROA), and market share, economic performance, customer satisfaction level, profitability, and so forth. Of course, popularity among researchers of firm performance is financial performance depending on some indicators from financial and accounting point of views. Some other criteria can be used to measure non-firm performance, such as employee turnover, the concept of productivity, such as rework cost, scrap rate, defective rate, sales per employee, and so on.

Past studies have investigated impacts of HRM practices on productivity (Chen, et al., 2003), on efficiency and employee turnover (Huselid, 1995), on financial performance (Delery & Doty, 1996; Huselid, et al., 1997) on customer satisfaction (Koys, 2003), on turnover, absenteeism, productivity, and quality (Richard & Johnson, 2001).