Jan. 2009, Vol.5, No.1 (Serial No.

44)

Journal of Modern Accounting and Auditing, ISSN1548-6583, USA

HR and firm performance at companies in Turkey: Correlative analysis

Grhan Uysal1, Gzde Koca2
(1. Department of Business Administration, Faculty of Economics and Administrative Sciences, Ondokuz Mays University,
Samsun 55139, Turkey; 2. School of Business, Bilecik University, Bilecik 11000, Turkey)

Abstract: Aim of this study is to discuss matters with HR and firm performance. Therefore, we used HR and
firm performance questionnaire from Delaney and Huselid (1996). HR variables include recruitment, training,
compensation and promotion. Firm performance divided into organizational and market performance. Therefore,
correlation analysis demonstrates that HR has positive and significant relationship with organizational performance,
and HR has positive but weak relationship with market performance. Therefore, we can propose that HR is partly
correlated with firm performance for those companies in sample. Therefore, since we didnt realize demography of
companies in study, it is arguable, findings of this study can be generalized to other companies in Turkey.
Key words: HR; firm performance; correlative regression

1. Introduction
Micro Financial Economy is to produce products for customers by resource utilization. Businesses carry
duties and responsibilities to convert resources to products. Strategic role of accountings involves effectiveness in
resource utilization in organizational operations (Yalkin, 2006).
Therefore, strategic role of accounting also include use of resources for societal purposes. Therefore,
accounting develops social responsibility of company for society. Because records, analyses, and audits of
financial activities permit managements to watch and organize activities in convert. Therefore, aim of this study is
to discuss correlation between human resource management and firm performance for companies in Turkey.

2. Human resource management and firm performance

HR develops knowledge and skills of employees, and therefore, contributes to productivity improvements in
firms (Becker, Gerhart, 1996; Gelade, Ivery, 1996). Because recruitment hires capable employees for
organizational objectives. Employees can obtain company-specific knowledge in training (Huselid, et al., 1997).
In addition, training improves specialization of employees in their occupation, and therefore, increases employee
involvement with managerial decisions (Gelade, Ivery, 2003).
Performance evaluation allows company to align compensation with performance of employees (Hayton,
2003). Because incentive compensation system encourages employees to reach company-specific objectives
(Huselid, et al., 1997). Performance-based compensation reflects employee efforts and work with wages they
obtain. Therefore, performance-base payment connects efforts and work to organizations operational goals. Thus,
pay for performance reduces absenteeism (Harel, Tzafrir, 1999, 287).
Grhan Uysal, assistant professor, Ph.D., Department of Business Administration, Faculty of Economics and Administrative
Sciences, Ondokuz Mays University; research field: strategic human resource management.
Gzde Koca, research assistant, Ph.D. candidate, School of Business, Bilecik University; research field: quntitative methods.
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HR and firm performance at companies in Turkey: Correlative analysis

To conclude, HR increases productivity, know-how, work-orientation, goal commitment through practices

such as recruitment, training, performance evaluation, compensation, promotion; therefore, increases its effect on
firm performance.

3. Research
3.1 Methods
To analyze correlation between HR and firm performance we used questionnaire from Delaney and Huselid
(1996). Questions are related to recruitment, training, performance-base compensation and promotion in HR side
and organizational performance and market performance in performance side.
Questionnaire was applied to 188 employees in companies in Marmara region in Turkey.
Delaney and Huselid (1996) divide firm performance in to two parts: organizational performance and Market
performance. Organizational performance includes such variables as customer satisfaction, product development,
employee relations, company attractiveness, quality of work. Market performance contains variables as sales,
profit, market share and marketing performance of employees.
3.2 Hypotheses of this study
Therefore, hypotheses of this study can be explored as follows:
H1: HR has positive and significant relationship with organizational performance.
H1a: Recruitment has positive and significant relationship with organizational performance.
H1b: Training has positive and significant relationship with organizational performance.
H1c: Performance-base compensation has positive and significant relationship with organizational
performance.
H1d: Promotion has positive and significant relationship with organizational performance.
H2: HR has positive and significant relationship with market performance.
H2a: Recruitment has positive and significant relationship with marketing performance.
H2b: Training has positive and significant relationship with marketing performance.
H2c: Performance-base compensation has positive and significant relationship with marketing performance.
H2d: Promotion has positive and significant relationship with marketing performance.
3.3 Data analysis
Correlation analysis is used for data analysis in the study to observe employees intentions and outpoints for
relationship between HR and firm performance.
Table 1

Correlations between HR and organizational performance

Recruitment
Training
Compensation
Promotion
Org.al Perf.
Recruitment
1
Training
,428
1
Compensation
,171
,078
1
Promotion
,264
,429
,165
1
Org.al Perf.
,219**
,273**
,330**
,364**
1
Notes: ** represents correlation is significant at 0.01 level (2-tailed); * represents correlation is significant at 0.05 level
(2-tailed).

Correlations in Table 1 demonstrate that HR variables have positive and significant relationship with
organizational performance. Therefore, hypotheses H1a through H1d were accepted. Therefore, crucial hypothesis
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HR and firm performance at companies in Turkey: Correlative analysis

for H1, HR has positive and significant relationship with organizational performance is accepted.
Table 2

Correlations between HR and market performance

Recruitment
Training
Compensation
Promotion
Mark. Perf.
Recruitment
1
Training
,428
1
Compensation
,171
,078
1
Promotion
,264
,429
,165
1
Mark. Perf.
,003
,234**
-,319**
,165*
1
Notes: ** represents correlation is significant at 0.01 level (2-tailed); * represents correlation is significant at 0.05 level
(2-tailed).

Since correlation between recruitment and market performance was not significant, at Table 2, hypothesis
H2a was rejected.
Correlation between training and market performance is significant at 0.01 level. Therefore, hypothesis H2b
was accepted.
Correlation between compensation and market performance are significant at 0.01 level but negative;
therefore, H2c was rejected.
Correlation is at 0.165 level with 0.05 significance between promotion and market performance. Therefore,
H2d was partly accepted.
Therefore, we can propose that HR partly supports market performance. Therefore, crucial hypotheses H2,
HR has positive and significant relationship with market performance is partly accepted.

4. Discussion
Findings of this study sign for that Turkish companies manage recruitment, training, compensation and
promotion practices in human resource management. Therefore, employees develop correlative opinions for about
HRM and firm performance.
In recruitment companies attract plenty of apply for job opportunities, and companies are able to select
ability-employees for organizational purposes and needs.
Training develops knowledge and skills of employees to do their jobs. Therefore, increased knowledge and
doings develop efficiency in operations to reach operational purposes.
In accordance with correlations among HR practices (i.e., recruitment and training and promotion, training
and promotion), companies apply training practice to their new employees, and to their employees, and trainees
have priority in promotion. Because correlation is 0.428 between staffing and training, and it is 0.264 between
staffing, training and promotion. In addition, correlation of training with promotion was 0.429.
To understand effect of HR practices on others we can use hierarchical regression model. Therefore, we can
observe impact of staffing on training, and their reciprocal effect on promotion.
Moreover, companies use performance-based compensation model; therefore, employees obtain payment
aligned with their performance. Performance-base compensation increases employee performance respectively,
because employees are more oriented to their work at job; i.e., to quality of work, satisfaction of affected, and to
their duties and responsibilities. However, negative correlation was observed with compensation and market
performance. Because managements do not consider employee performance in marketing initiatives for
compensation, they may be more intended to organizational performance in to develop compensation model than
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HR and firm performance at companies in Turkey: Correlative analysis

to market performance. In addition, managements also have more tendencies to the organizational performance in
promotion than market performance. Because correlation is marked stronger between promotion and
organizational performance while it is weak between promotion and market performance.

5. Conclusion
To increase hierarchical effect of HR practices on performance of both employees and firm, firms should
understand the need for professional implementation of HRM. Therefore, recruitment should bring quality of
people with organizational needs. Training should heighten knowledge and ability of employees, and performance
evaluation is to take out between employee differences. Promotion activity should further talents and capabilities
in organizational ladders. Therefore, HRMs are to use professional techniques in human resource management to
achieve those specific purposes in HRM.
To clear out effectiveness of companies in transformation of resources to the products, liability side of
balance sheet can include financial value of resources so that managements can observe value-change in company
products. Therefore, asset side should include market and financial value of company products. Therefore,
dimensions between asset and liability can show us transformation effect in company operations.
Finally, we couldnt realize demographic qualifications of companies in sample. Therefore, we can not say,
results of this study can be generalized to other companies in Turkey.
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(Edited by Cathy and Linda)

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