Shuhan Jia
Professor Mack, Professor Moore, Professor Bennett
ENGH 122 DP2
July 8, 2019

The relationship between HRM, employee well-being and company performance

We also know that well-being is important in our daily life, it is also critical in business filed. These years, well-being in workplace has been paid more attention by business leaders and psychology researchers. Although more and more researches had the increasing interest in well-being at work due to the general decline in nature of workplace ill health resulting from physical, psychosocial and personal factors, till recently there has been little research aimed at clarifying the relationship between HRM(human resource management) practices, employee wellbeing, and company performance.

(Baptiste, 2007) HRM is a new way to manage a company, which is focused more on the feelings and emotions of employee. I am a business major student, I have a strong curiosity to know whether HRM helps business or not and how much it helps, also wonder the importance of employee well-being for a company. It will be necessary for business leaders to manage their companies to achieve the goal of earning more money. Well-being can always be affected by many factors, so when I researched about the influence HRM brought, I should keep other factors changeless. Then, I can change different ways to do HRM practices and find the level of well-being that different ways can bring to employees.

HRM can bring influence to employee well-being in a positive way mostly in many methods, such as changing a better workplace, increasing the level of employee engagement, paying attention to the diverse culture and so on.  Company performance is a professional business concept which is used to measure how well a company developed and it can approximately predict the lost and earnings in the future. Employee well-being can bring great effects on company performance because employees are the labor workforce of a company, and a company’s development is depended by them. So we can see HRM can influence employee job-related well-being, and employee well-being influences company performance further. However, influencing well-being is only a result HRM brought, there are some other behaviors HRM did which can influence HRM.

That is to say, HRM can affect company performance in two ways, directly and indirectly, through influencing employee well-being. As for the direct way, HRM can make employee control themselves, gradually employees will manage themselves as a habit, and then, the company will be easy to be controlled. In my research paper, I will explain what HRM, employee well-being, and company performance is. And I will explain the relationship between HRM, employee well-being and company performance.

The definition of HRM
HRM, which means human resource management, is a new way of management in business field. The traditional way of business management is setting the goal of revenue and trying the best to achieve it, which only pays attention to the result, no matter how much unwilling employees had. On the contrary, HRM pays attention to the process, as well as the feelings of employees and the level of satisfy while doing work. Business leaders can make some actions to do HRM practices.

Purcell et al. (2003) defined HRM as a set of practices for managing an organization’s workforce, such as recruitment and selection, training, employee engagement, compensation and rewards, flexibility, participation in decision-making, communication, and employee benefits. They pointed out what are included in the concept of HRM. Collings and Wood (2009) said that one of the main definitions (at least in the UK) is to define human resources management as a controversial area, using hard and soft competition. It mentioned that there are two approaches to HRM.

The soft approach is focused on the importance of aligning HR policies with organizational strategies, and on the role of employees as a valuable asset and a source of competitive advantage, through their commitment to adaptability and quality. The hard approach emphasizes the use of human resources systems to “promote” the strategic objectives of the organizations (Forbrun et al., 1984). Soft human resource management emphasizes the human factor of human resource management, while the focus of the hard method is very much on resources, as a means to maximize shareholder value in the short term. As a method of management, the goal of HRM is try to maximum revenue through managing human resources. Since the concepts of HMR has covered a great number of contents and actions and it can appear in every process in business, it is an important concept for business development, which is worth being valued by companies.

The meaning of employee well-being

Employee well-being refers employees’ emotions influenced by work; it can be affected by many factors. It is a part of well-being. Russell (2008) defined well-being as “positive emotions and moods”. That is to say, well-being is happiness and satisfaction, general satisfaction with life, achievement and potential, without depression and anxiety. (Dickson-Swift, Fox, Marshall, Welch, & Willis, 2014; Diener, Suh, Lucas, & Smith, 1999). From an employer perspective, employee well-being is a key element that helps employers achieve superior performance in a sustainable manner (Luthans, Youssef, Sweetman, & Harms, 2013; Schulte & Vainio, 2010). Well-being is related to one’s feelings and emotions. And employee well-being is one part of well-being, which is only focused on people who have a job. It is affected by company development. Deci and Ryan (2006) defined well-being in a different way, well-being, which refers to optimal psychological experience and functioning, has been vigorously studied in psychology over the past quarter century. This is another way of defining well-being. It concluded more detailed and it told us the current situation of well-being in research field. Since employee well-being can be affected and affect business so much, companies should pay more attention to employee well-being. When employees are experiencing bad mood because of working, leaders could consider whether the policies or actions are suitable enough. While employees are willing to do the work, the rules they followed and the actions they did are probably in a right way to a large extent.

The concept of company performance and the factors which can affect company performance

It is hard for people to observe which company developed better intuitively, so economists created the phrase, company performance. Company performance is an integrated concept which is used by managers to measure the development of companies. Hanna Schramm-Klein & Dirk Morschett (2006) statedsaid that as the primary objective of retail company activities, the company’s overall performance is related to the company’s profitability. Overall company performance may be conceptualised by a number of approaches. The main factor is the financial performance of the company. Because the purpose to make a company is to earn money, in most companies, company performance is focused more on financial field. However, some companies pay more attention on marketing filed. We can say that company performance is related to finance and marketing, in short, it is a metrics by market range, revenue and social influence.  So it is necessary for business leaders to check the development of marketing and finance in order to measure company performance. When company performance is showing a downward trend during one period, it is a warning for managers. Managers should change ways to make their companies restore, or companies may experience a strong damage in financial or social field.

The relationship between HRM and employee well-being

Human resource management influences employee well-being and mostly is in a positive way. HRM can affect employee well-being in many ways, especially in employee engagement, the satisfaction of workplace and culture. Baptiste (2007) Nicole Renee Baptiste (2007) found that the human resource management practices had a major impact on the well-being of employees and are often more positive rather than negative. He also explained Nicole Renee Baptiste was graduated in business school of Manchester Metropolitan University, living in Manchester of UK. In his article, the fourth view is one of thethe incentive process for social communication, which isexplains the link between human resources management practices and employee bonus.

HRM creates employee benefits, and employees work harder to get bonus and benefits. When they get the bonus, they will feel happiness, on the one hand from the bonus, on the one hand from the realization of personal value. Sinikka, Kaija and Baden-Baden (2006) analyzed the relationships between HRM, company performance and employee well-being in the article HRM, Company Performance and Employee Well-being. They said that HRM practices are relatively good predictors of company performance. First of all, they identified and evaluated how company performance and employee well-being are related, and, secondly, they evaluated the possibilities of HRM policies and practices to impact on company performance and employee well-being.

Companies which has a complete HRM system can adapt the change of business situation and get better earnings. HRM influences the satisfaction of workplace to increase employee well-being. When employees live in a better environment to work, they will get more well-being and be more willing to start the work. In conclusion, business leaders should pay attention to HRM practices and employee well-being to improve company performance in a long term, or the companies may meet difficulties while developing.

The relationship between employee well-being and company performance

Although the results of some research experiments showed that employee well-being has little effect on the company performance. However, based on a large number of studies and examples, I still believe that the two are closely related. A company with high employee well-being will have greater performance, in most situation. Wright and Cropanzano (1997) tested this assertion in two separate samples (study 1: n = 47 human service employees; study 2: n = 49 public sector professionals). Results supported their hypothesis. Well-being was correlated with performance in both studies (r = .32 and .44 for studies 1 and 2 respectively), when demographic variables (e.g., age, gender, tenure) were controlled. They used the experiment to show that company performance is related to employee well-being. Although this finding should be interpreted with caution until replicated in a larger sample, it provides additional support for the relationship between employee well-being and company performance. So, eEmployee well-being should be regarded a necessary measurement project by leaders in companies and . cCompanies should check the degree of employee well-being regularly.

The relationship between HRM and company performance

HRM is crucial to company performance. Except influencing employee well-being to affect company performance, it has other ways to influence business. David G. Collings and WGeoffrey Wood (2009) statedsaid that Human Resource Management plays a key role in using its ideological loyalty to the company’s ideals by guiding employees’ initiative and self-management through the development of “responsible autonomy” (Friedman, 1977: 5; 1990; Harley, 2005). Thus, the control-consent dilemma is resolved by delineating how, where and when employees exercise their autonomy and power, and by rebuilding their subjectivity at the request of management (see Elemes and Smith, 2001; Knight and McCabe, 2001; Maravelias, 2003).  HRM makes employees more autonomous so thatand they can actively manage and control themselves. When the autonomy of the company’s employees is generally improved, the company’s performance will be significantly improved. We can see that HRM is critical to company performance, so business leaders should regard HRM as a new and better way to manage companies.


Human Resource Management is a new manage model which is focused on the feelings people had. Employee job-related well-being is the positive emotions affected by work. And company performance can be measured in marketing and financial way. Through experiments and researches, it is proved that HRM can bring positive influence on employee well-being, such as improving workplace conditions, increasing the degree of engaging the work, considering culture to satisfy employees. Employee well-being has a great correlation with company performance. Besides, HRM can influence company performance in another way, which is making employees control themselves.

I write this paper to satisfy my curiosity, at the same time, HRM and employee well-being is important for the whole company, it is necessary and useful for business leaders to know the relationship between these important concepts and use them to company practices.


Collings, D. G. (2009). Human resource management: A critical approach.

Deci, E. L., & Ryan, R. M. (2008). Hedonia, Eudaimonia, and Well-being: An Introduction. Journal of Happiness Studies , 1-11.

Morschett, H. S.-K. (2007). The Relationship between Marketing Performance, Logistics Performance and Company Performance for Retail Companies. International Review of Retail, Distribution and Consumer Research, 277-296.

Sivapragasam, P., & Raya, R. P. (2017). HRM and Employee Engagement Link: Mediating Role of Employee Well-being. Global Business Review , 147–161 .

Vanhala, S., & Tuomi, K. (2006). HRM, Company Performance and Employee Well-being. Management Revue, 241-255.

Vella-Brodrick, K. M. (2008). The ‘What’, ‘Why’ and ‘How’ of Employee Well-Being:. 441–458.