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www.etasr.com Hashemi and Dehghanian: A Survey and Analysis of the Relationship between Human Resources … 
 

A Survey and Analysis of the Relationship between 
Human Resources Management and Organizational 

Performance 
 

Seyed Ahmad Hashemi 

Department of Government Management 
E-campus 

Islamic Azad University 
Tehran, Iran 

Farideh Dehghanian 
Department of Government Management 

E-campus 
Islamic Azad University 

Tehran, Iran
 

 
Abstract—This study aims to evaluate the relationship between 
human resources management and organizational performance 
with emphasis on the mediating role of organizational innovation. 
The study methodology is descriptive-correlation and structural 
equations modeling. The study population is employees of the 
electricity distribution company of Tehran city. The reliability 
and validity of measures were evaluated using Cronbach’s alpha 
and confirmatory analysis and the results showed the acceptable 
reliability and validity of measures. For data analysis, Pearson 
Correlation coefficient and structural equations method with 
Lisrel software were used. The results showed that the effect of 
organizational innovation mediating variable was indirectly 0.17 
meaning that if human resources management is increased as 
1%, the organization performance with the mediating role of 
organizational innovation is increased as 16%. This study 
evaluates the relationship between human resources management 
and organizational performance with emphasis on the mediating 
role of organizational innovation. 

Keywords-Human resources management; Organizational 
innovation; Organizational performance. 

I. INTRODUCTION 
In most organizations, leaders and managers attempt to 

promote and improve their performance. Previous studies 
results emphasized on the role of human resources 
management and organizational innovation in the improvement 
of organizational performance. A few studies evaluated the 
direct and indirect effects of mentioned variables on the 
framework of structural equations modeling on organizational 
performance. Thus, the evaluation of these is necessary. 
Nowadays, non-assurance, complexity, globalization and 
increasing technological changes are considered important 
features. Innovation, creativity and problem solving capability 
are key skills [1]. Creativity and innovation are required for the 
durability of each organization and non-innovative 
organizations are eliminated over time [2]. The organization 
that can present new thoughts can accept changes well and can 
also act as a factor of making changes. Thus, it is necessary for 
organizations to use creativity and innovation or else they are 
threatened with elimination from the competition. Thus, it is 

necessary to identify the predictors and outcomes of 
organizational innovation. Electricity distribution company of 
Tehran attempts to use new strategies, including the use of a 
proposition system and its active use in decision making 
process, maximum use of existing human resources, 
development of participation in all levels, recognition, 
development and prosperity of existing human resources, 
increase of empathy and collaboration, qualitative and 
quantitative improvement of activities and the increase of 
satisfaction and innovation of employees. The increase of 
motivation, improvement of human relationships, achieving 
optimal service providing methods, decision making, saving in 
organization, accepting the positive changes and 
implementation of productivity techniques can improve the 
performance of this company. Based on the necessity in the 
approach of electricity industry to use new advanced 
technologies to improve performance, the innovation of 
employees is of great importance. Based on the electricity 
distribution company of Tehran, we can say low level of 
innovation of employees in an organization can endanger its 
performance. The important role of human resources 
management for the organization’s survival can oblige the 
electricity distribution company of Tehran to adapt to the 
increasing complexities and rapid changes. Under such spaces, 
the organizations with high creativity can respond rapidly to 
the environmental challenges and they have better performance 
compared to that of non-creative organizations. Thus, due to 
the importance of performance and innovation, the 
identification of effective factors on these variables is of great 
importance. The present study evaluates the relationship 
between human resources management and organizational 
performance with emphasis on the mediating role of 
organizational innovation [3]. 

II. THEORETICAL BASICS 
 Human resources management: Human resources 

management is defined as the arrangement and activities of 
planned human resources model with the goal that the 
organization is enabled to achieve its goals [4]. 



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 Education: Education is experience based on learning. 
Normally, it is said that education can lead to the change of 
skills, knowledge, attitude and social and organizational 
behavior [5]. 

 Employees’ participation: Creating a space in which all 
organization employees collaborate and participate in 
decision making process and resolving the organization 
problems with the management [3]. 

 Performance assessment: Performance assessment refers to 
the measurement of employee performance [3]. 

 Job analysis: Job analysis refers to the definition of 
responsibilities and job position of employees and revision 
in those responsibilities under necessary conditions [3]. 

 Employee’s development: Employees development refers 
to the opportunities provided by the organization for the 
employees to progress in their job [3]. 

 Organizational innovation: Organizational innovation refers 
to the development or acceptance of a new idea or behavior 
in business operation [6]. 

 Innovation production: Innovation production refers to 
presenting new ideas for job improvement, using new 
methods, new work techniques and coming up with new 
solutions [6]. 

 Innovation improvement: Innovation improvement refers to 
stimulating innovative ideas [6]. 

 Innovation execution: Innovation execution refers to 
turning the innovative thought to useful methods [6]. 

 Organizational performance: Performance means the result 
and amount of work. In another definition, it is the amount 
of results achieved by a person, team organization or 
process [4]. 

III. RESEARCH BASICS 
Authors in [7] evaluated the correlation of human resources 

strategies based on the model of Allen Yelsi with the 
organizational performance of the employees of Ayatollah 
Kashani hospital of Shahre Kord. The results showed that there 
was a significant correlation between human resources strategy 
and organizational performance. Authors in [8] conducted a 
study to evaluate the impact of knowledge management 
strategies on innovation and organizational performance. The 
results showed that knowledge management had positive 
impact on organizational innovation and performance. In 
addition, organizational innovation had positive and direct 
impact on organizational performance. Authors in [9] evaluated 
the relationship between human resources strategic 
management and firm performance. The study findings showed 
that the companies following the activity of human resources 
strategic management have better performance compared to the 
companies that don’t. Author in [3] evaluated the relationship 
between human resources management, organizational 
innovation and organizational performance in the framework of 
structural equations in the companies with high performance. 
The results showed that human resources management was 

effective on organizational innovation and performance. In [4], 
authors evaluated the impact of human resources strategic 
management on organizational performance, based on the 
mediating role of organizational learning processes in Korean 
organizations. It was found that the strategic management of 
human resources had a positive and significant impact on the 
organizational learning processes and organizational 
performance. The organizational learning processes had 
positive and significant impact on organizational performance. 
Authors in [10] evaluated the relationship between knowledge 
management, strategic orientation, organizational innovation 
and organizational performance. It was found that knowledge 
management had a direct impact on strategic orientation but the 
relationship between other variables was not significant. 
Authors in [6] evaluated the relationship between innovation, 
organizational learning and performance. The results showed 
that innovation and organizational learning had positive impact 
on commercial performance and organizational learning had 
positive impact on organizational innovation. 

IV. STUDY POPULATION, SAMPLE SIZE AND SAMPLING 
METHOD 

The study population of the present study is the 250 
employees of the electricity distribution company of Tehran. 
Based on the sample study, to determine the sample size, 
Cochran’s formula is used: 

2 2

2 2 2

t s
n

d t s
N

N



 

Thus, 151 employees of electricity distribution of Tehran 
are selected as the study sample. The sampling method in the 
present study is simple random method. 

A. Introduction of Study Measures 
The variables of the present study are the methods of 

human resources management, organizational innovation and 
organizational performance. To evaluate each of the variables, 
standard questionnaires were used. 

 Human resources management: To measure human 
resources management, the questionnaire presented in [11] 
is applied. This questionnaire is composed of 19 items. The 
questions are scored based on Likert scale (totally 
disagree=1, totally agree=5). 

 Organizational innovation: To measure organizational 
innovation a questionnaire composed of 9 items is applied. 
The questions are scored based on Likert scale (totally 
disagree=1, totally agree=5). 

B. Determine Validity and Reliability of Study Measures 
The measure validity and reliability are the most important 

factors in a study. To determine the test reliability in this study, 
Cronbach’s alpha is used. This method is used to calculate the 
internal consistency of measures measuring the different 
attributes. To calculate Cronbach’s alpha coefficient, at first we 
should calculate the variance of scores of each sub-set of 



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questions of questionnaire and total variance. Then, by the 
following formula, alpha coefficient value is calculated. 


2

1
21 )1

n

j
j

s
J

r
J S

 



 

In this study, alpha above 0.7 is a suitable for the reliability. 
Thus, measurement of reliability is performed using 
Cronbach’s alpha and SPSS 18 software. To evaluate validity 
of measures, besides the content validity, confirmatory factor 
analysis is used. 

C. Data Analysis Methods 
To analyze the data of this study, descriptive and inferential 

tests were used. In descriptive section, percent, mean and 
standard deviation and in inferential section, Pearson 
correlation and structural equations modeling were used. For 
data analysis, SPSS, LISREL software were used. 

V. STUDY RESULTS 

A. Evaluation of the Demographic Features of Study Sample 
Study findings show that 19.86% of respondents are 

women and 80.14% men. 42.47% have a diploma, 48.63% BA 
and 8.90% MA and above. 31.51% of the respondents are at 
the age group of 30-40 years, 43.83% at 41-50 and 24.66% are 
above 51 years old. The respondents with 10-15 years of 
experience are 7.53%, 64.39% have 16-20 years of experience 
and 28.08% above 20 years. 

B. Descriptive Indices of Study Variables 
Table I shows the indices of descriptive statistics for the 

study sample as mean and standard deviation for the studied 
variables. 

TABLE I.  THE DESCRIPTIVE INDICES OF STUDY VARIABLES 

Variables Mean SD 
Human resources management 3.09 0.72 

Organizational innovation 2.74 1.06 
Organizational performance 2.86 0.94 

 

C. Evaluation of Normality of Data 
At first, the normality and non-normality of data is 

determined and then the study hypotheses are evaluated. To 
evaluate data normality, Kolmogorov-Smirnov test was used. 
As shown in Table II, Kolmogorov-Smirnov test for all 
variables is not significant. Thus, the study variables are 
normal and Pearson correlation and structural equations 
modeling are used for stud hypothesis testing. The results of 
correlation coefficient are shown in Table III. The results show 
that correlation coefficient of human resources management 
with organizational innovation (r=0.51) and organizational 
performance (r=0.53) is significant and positive at the level 
p<0.01. The correlation coefficient of organizational innovation 
with organizational performance (r=0.48) is significant and 
positive at the level p<0.01. Figure 1 shows the tested model 

with the standardized values on each path. The results show 
that the effective of human resources management on 
organizational innovation and organizational performance is 
positive and significant. The effect of innovation on 
organizational performance is positive and significant. Figure 2 
shows the t-valued of tested model. T-values above ±1.96 to 
2.58 are significant at the level 0.05 and t-values above ±2.58 
are significant at the level 0.01. As shown in Figure 2, t-values 
show that all coefficients are significant. Table IV shows the 
path coefficients of study variables.  

D. Correlation Coefficient of Variables 
After determining the validity of measures, the 

identification of the relationship between the variables is the 
next step. To identify the relationship between the presented 
variables, Pearson correlation coefficient is used. As shown in 
Table IV, the direct effect of human resources management on 
organizational innovation (β=0.59) and organizational 
performance (β=0.44) is positive and significant at the level 
0.01. The direct effect of organization innovation (β=0.28) on 
organizational performance is positive and significant. The 
indirect effect of human resources management on 
organizational performance via organizational innovation 
(β=0.17) is positive and significant at the level 0.01. The 41% 
variance of organizational performance and 34% variance of 
organizational innovation are explained by the existing 
variables in the present study. The fit indices of the tested 
model in Table V show that RMSEA index in the estimated 
model with 0.023 is acceptable and other fit indices as CFI, 
GFI, NFI, AGFI are 1, 0.96, 0.99 and 0.93 respectively, which 
is at suitable level. This shows that the study data have good fit 
with the factor structure. 

TABLE II.  KOLMOGOROV-SMIRNOV TEST OF STUDY VARIABLES 

Variables Z Significance level 
Human resources management 0.740 0.644 

Organizational learning 1.292 0.071 
Organizational performance 0.913 0.375 

 

TABLE III.  THE CORRELATION MATRIX OF STUDY CONSTRUCTS 

Variables  1 2 3 
Human resources management 1   

Organizational innovation **0.51 1  

Organizational performance **0.53 **0.48 1 

* p < 0.05 ** p < 0.01 

TABLE IV.  PATH COEFFICIENTS OF STUDY VARIABLES. 

Path Direct effect 
Indirect 

effect 
Total 
effect 

Explained
variance 

On Organizational 
performance from    

41% Organizational innovation **0.28   - **0.28  
Human resources management **0.44  **0.17  **0.61  
On organizational innovation 

from    34% 
Human resources management **0.59  - **0.59  

* p < 0.05 ** p < 0.01 



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Fig. 1.  The tested model of study (* p < 0.05 ** p < 0.01) 

 
Fig. 2.  t-value of tested model of study (* p < 0.05 ** p < 0.01) 

 

TABLE V.  THE FIT INDICES OF FITTED MODEL 

AGFI NFI GFI CFI RMSEA x/df 
0.93 0.97 0.96 1 0.023 1.09 

 

E. Hypothesis test 
Overall results hypothesis test are shown in Table VI. 

1) First hypothesis: 
There is a significant relationship between human resources 

management (education, participation, job analysis, 
performance evaluation and employee development) with 
organizational performance (executive and market). The results 
of structural equations showed that the effect of human 
resources management on organizational performance was 
positive and significant. This result is consistent with the 
results of [12] and [3]. The continuous employee education, the 
teaching of new skills, the consideration of employee’s 
opinions, the initiative encouragement, the objective employee 
evaluation, the offered career opportunities are among the 
things making the employees to have high motivation to 
improve personal and therefore organizational performance.  

TABLE VI.  STUDY HYPOTHESES TEST 

Hypothesis  Path coefficient 
Supported/

Rejected 

There is a significant relationship 
between human resources management 

with organizational performance 
0.44 supported 

There is a significant relationship 
between human resources management 

with organizational innovation 
0.59 supported 

There is a significant relationship 
between organizational innovation and 

organizational performance 
0.28 supported 

Organizational innovation in the 
relationship between human resources 

management and organizational 
performance has a mediating role. 

0.17 supported 

 
2) Second hypothesis: 

There is a significant relationship between human resources 
management (education, participation, job analysis, 
performance evaluation and employees development) with 
organizational innovation (production, promotion and 



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execution of innovation). The results of structural equations 
showed that the effect of human resources management on 
organizational innovation was positive and significant. Thus, 
the involvement of human resources in varied duties is 
effective on organizational innovation. The goal of investment 
in human resources management is the emphasis on the 
employee improvement with continuous learning and 
education. This result is consistent with [13] stating that the 
organizations by using effective strategies of human resources 
can create some features and behavior in the employees which 
are necessary for the organization success. Today, the 
importance of human factor and its unique role as a strategic 
source is increased. Today, the organizations use human 
resources with rapid growth, continuous improvement, 
efficacy, effectiveness, flexibility, preparation for the future 
and excellent position in their activities. Organizations without 
these qualities, organizations enter the competition with a 
handicap. Via human resources management methods, the 
organizations can create organizational innovation. 

3) Third hypothesis: 
There is a significant relationship between organizational 

innovation (production, promotion and execution of 
innovation) and organizational performance (executive and 
market). The results of structural equations showed that the 
effect of organizational innovation on performance is positive 
and significant. We can say innovation is the source of system 
change for progress. Via innovation the organization equips 
itself with new tools, methods and techniques and it is aware of 
the latest progress and knowledge and by using them, 
optimization is improved leading to the improvement of 
organizational performance [14]. 

4) Fourth hypothesis: 
Organizational innovation (production, promotion and 

execution of innovation) in the relationship between human 
resources management (education, participation, job analysis, 
performance evaluation and employee development) and 
organizational performance (executive and market) has a 
mediating role. The results of structural equations showed that 
the indirect effect of human resources management on 
organizational performance was positive and significant. This 
result emphasizes on the mediating role of organizational 
innovation in the relationship between human resources 
management and organizational performance.  

VI. CONCLUSION 
The results showed that the direct and indirect effect of 

human resources management on organizational performance 
was positive and significant. Thus, the results of study 
emphasize on the role of organizational innovation as an 
important mediator. If human resources management applies 
education, participation of employees, job analysis, objective 
evaluation of performance and development of employees, 
organizational innovation is provided affecting the organization 
performance. The human resources management methods 
should be applied in creating organization’s processes, services 
and products. If the organization cannot use the human 
resources management, it cannot achieve competitive 
advantages.  

VII. RECOMMENDATIONS 
It is proposed to the managers of the electricity distribution 

company of Tehran to use competence methods of human 
resources in human resources management, i.e. to apply 
improvement opportunities and job development for the 
employees, provide learning opportunities, support good 
decision making and evaluate employees based on their 
performance. These can affect the organizational innovation 
and organizational performance. It is proposed to the managers 
of electricity distribution of Tehran to provide the conditions in 
which the employees are encouraged to present new ideas and 
solutions, to search new tools, methods and techniques, to 
support innovative ideas, to attempt to turn innovative thought 
to useful methods, to relate innovative thought with the work 
and to evaluate the effectiveness of innovative thought by 
which organizational performance is improved. 

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