Human Resource Management Outsourcing in Chinese Large and Medium-sized Enterprises: Its Effect on Organisational Performance

Abstract

Globally, many enterprises practice human resource management (HRM) outsourcing activities to achieve operational efficiency and growth. Research in the Chinese context is limited and insights on the latest HRM outsourcing trends that are significant to understand the HRM outsourcing phenomenon in China are insufficient. The objective of this paper aims to examine the effect of HRM outsourcing of four activities: recruitment and selection, training, payroll management, and human resource information system, on organisational performances through the intermediating influences of HR cost efficiency and flexibility. This paper adopted a quantitative approach to test the hypotheses using descriptive, correlation and Structural Equation Modeling (SEM). The data were gathered from HR managers and employees from the manufacturing and service industry in Large and medium-sized enterprises (LMEs) in China. The analysis on 497 usable responses out of 1100 questionnaires distribute indicate that firms from manufacturing and service industries have outsourced HR functions at about 87.5%. Recruitment, training, and human resource information systems are the top three HR functions outsourced. The result of regression analysis shows that HRM outsourcing activity has a significant impact on organisational performance both direct and indirect through HR cost efficiency and flexibility. Overall, this paper contributes to HR manager by providing the guidance that organisational performance can be improved by HRM outsourcing implementation. The future direction of the Chinese HRM outsourcing practice is likely to revolve around HR traditional functions such as recruitment, training, payroll, and performance management in the next several years.

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Author Information
Enze Wan, Royal Melbourne Institute of Technology, Australia
Nuttawuth Muenjohn, Royal Melbourne Institute of Technology, Australia
Chin Eang Ong, Royal Melbourne Institute of Technology, Australia
Alan Montague, Royal Melbourne Institute of Technology, Australia

• Category: Chinese Studies

Posted by James Alexander Gordon

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