Annals of the University of Oradea: Economic Science (Jul 2019)
THE IMPACT OF HR POLICY ON CORPORATE PERFORMANCE
Abstract
This research contributes to the ongoing discussion on the relationship between corporate performance and human resource policies implemented by companies. It provides empirical evidence for Romanian companies that invest in the development of their employees, which generates high employment costs. The panel data analysed is consisting of 203 companies operating in the Western region of Romania, referring to financial data over the period 2010-2016. The analysis is based on comparative regression models (OLS, fixed effects, random effects). The results indicate a positive and immediate effect of employment costs towards economic performance, while the financial performance could be impacted over the long-term. Providing continuous development of employees would improve the corporate performance, most probably because it increases the effectiveness of human resources and production process. For the negative relationship between ROE and employment costs, we conclude that the financial performance is affected only over the short-term, as net profits are reduced due to high employment costs. However, the development of employees could increase the future returns ensuring sustainable growth through a steady increase in future profits.
