In the eyes of the beholder: the HRM capabilities of the HR function as perceived by managers and professionals

• Published date: 01 November 2015
• DOI: http://doi.org/10.1111/1748-8583.12078
• Date: 01 November 2015

In the eyes of the beholder: the HRM capabilities of

the HR function as perceived by managers and

professionals

Sofia John, Department of Management, Hanken School of Economics

Ingmar Björkman, School of Business, Aalto University

Human Resource Management Journal, Vol 25, no 4, 2015, pages 424–442

This study investigated factors influencing line managers’ and professionals’ perceptions of the HRM

capabilities of the HR function. Using a sample of 913 managers and professionals in subsidiaries of 11

Nordic multinational corporations, we tested the extent to which features of the unit’s HRM system,

attitudes of the unit’s general manager and characteristics of the HR manager helped explain the

perceived HRM capabilities. The analysis revealed that perceived HRM practice visibility and HRM

inducements (the link between individual performance and HRM-related benefits) were strong predictors

of individual perceptions of the HR function’s HRM capabilities. The use of e-HRM and the most senior

manager’s attitudes towards the unit’s HRM practices were also significantly related to perceived HRM

capabilities.

Contact: Professor Ingmar Björkman, School of Business, Aalto University, PO Box 21210,

Helsinki FI-00076, Finland. Email: ingmar.bjorkman@aalto.fi

Keywords: HRM capabilities; employee perceptions; HRM process theory

INTRODUCTION

There is growing consensus that effective management of human resources is critical to an

organisation’s success (Lawler and Mohrman, 2003). Simultaneously, the HR function

finds itself under increased scrutiny and pressure to demonstrate how it adds value

to business (Ulrich, 1997). In order to meet the demands of its various stakeholders, the HR

function needs to substantiate its HRM capabilities; that is, organisational actors should

perceive that the function is successful in developing and implementing HRM practices in areas

such as performance management, training and development, and compensation and rewards

that contribute to the performance of the organisation (Huselid et al., 1997; Park et al., 2004).

The devolution of responsibility for implementation of most HRM practices means that the

HR function is dependent on the opinions and actions of line managers and professionals

(Bowen and Ostroff, 2004; Nishii and Wright, 2008). Research on the HRM process initiated by

Bowen and Ostroff (2004) has led to growing interest in employee perceptions relating to HRM

(e.g. Sanders et al., 2008; Kehoe and Wright, 2013) because the way employees perceive and

interpret HRM practices is causally linked to their attitudes and behaviours (Nishii and Wright,

2008). In a similar fashion, the way line managers and professionals perceive the HR function

can be expected to impact their attitudes and responses to the HR function and the HRM

policies, tools and processes that the HR function attempts to implement in the organisation.

An HR function perceived by line managers and professionals as possessing relevant

capabilities is more likely to afford their buy-in and have its initiatives positively received than

a function viewed as being lacking in capabilities (Truss et al., 2002). An HR function viewed

as capable is also likely to gain power and credibility and thereby be in a better position to

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doi: 10.1111/1748-8583.12078

HUMAN RESOURCE MANAGEMENT JOURNAL, VOL 25 NO 4, 2015424

© 2015 John Wiley & Sons Ltd.

Please cite this article in press as: John, S. and Björkman, I. (2015) ‘In the eyes of the beholder: the HRM capabilities of the HR function as perceived

by managers and professionals’. Human Resource Management Journal 25: 4, 424–442.

legitimise its actions (Bouquet and Birkinshaw, 2008), influence business decisions (Truss et al.,

2002) and impact organisational outcomes (Wright et al., 2001; Nishii and Wright, 2008).

The capabilities of an organisational unit can be conceptualised as its ability to develop

and deploy resources to produce desired outcomes (Collis, 1994). Capabilities are typically

intangible, tacit, and ambiguous, and consequently difficult to assess (Szulanski, 1996; Denrell

et al., 2004). Information-processing theories suggest that given the limitations in human

information processing, individuals use heuristic cues in the process of evaluation to simplify

the cognitive demands it requires (Lord and Smith, 1983). Therefore, given the difficulties

involved in evaluating the extent to which the HR function is doing a good job in contributing

to the success (performance) of the unit, employees have to base their perceptions on the cues

that they have at their disposal (cf. Fiske and Taylor, 1991) regarding how “well” the HR

function is performing its tasks.

Previous explanatory research on the assessment of HRM capabilities has shed light on how

structural features of the hierarchical relationships between the HR department of an

organisational unit and the top manager of the same unit as well as the HR director at corporate

headquarters influence how these stakeholders perceive the capabilities of the HR function

(Mäkelä et al., 2013). In the present study, we examine the HR function from another

perspective: that of line managers and professionals who experience and use the HRM policies

and practices of their units in their daily work. The goal of our study is to shed light on factors

influencing line managers’ and professionals’ perceptions of the HR function’s operational

HRM capabilities, an issue that so far has received scant attention in the HRM literature.

Building on HRM process theory (Bowen and Ostroff, 2004), we hypothesise that line managers

and professionals form their perceptions of the HRM capabilities of the HR function by using

cues related to the HRM system of the unit, the attitudes of the general manager of the unit

towards the HRM practices and the professional credibility of the HR manager. The hypotheses

are tested with data from a sample of 913 respondents from 105 subsidiaries in 11 Nordic

multinational corporations (MNCs) with the HR function that we study being the HR

department of these subsidiaries.

THEORY AND HYPOTHESES

The framework we posit for understanding managers’ and professionals’ perceptions of HRM

capabilities is illustrated in Figure 1. As argued below, some of the influencing factors operate

primarily at the individual level, whereas others are unit-level factors. We therefore take a

multilevel approach to analysing how managers and professional perceive the HR function’s

capabilities.

The HRM system

Attributing capabilities to the HR function is not necessarily driven by a conscious,

effortful assessment of the HR function’s contribution to organisational performance.

Information-processing theories suggest that individuals make causal assessments of

phenomena to the most proximal and salient source (Feldman, 1981; Lord and Maher, 1990).

As the HR function is principally responsible for the HRM system – the collection of an

organisation’s HRM practices (Bowen and Ostroff, 2004) – the HRM system is a key medium

through which managers and professionals experience and form opinions about the HR

function’s HRM capabilities (Lord and Smith, 1983). More specifically, we posit that line

managers and professionals who perceive HRM practices to be highly visible and the level of

HRM inducements to be high (i.e. they perceive there to be a strong link between employee

Sofia John and Ingmar Björkman

HUMAN RESOURCE MANAGEMENT JOURNAL, VOL 25 NO 4, 2015 425

© 2015 John Wiley & Sons Ltd.