This paper discusses the overlooked issue of the multidimensionality of organizational performance in strategic human resource management (HRM) research. Previous studies have shown positive relationships between HRM systems and financial performance but have ignored the fact that financial performance consists of diverse dimensions—such as productivity, efficiency, market, and sustainability—that represent distinct aspects of financial performance. As a preliminary review, we conduct a meta-analysis of 222 correlations (N = 132,212) between HRM systems and financial performance reported in prior strategic HRM studies. The results indicate that different dimensions of financial performance have varying levels of correlation with HRM systems, and only some of these correlations are generalizable across studies. Further, we review the accounting and finance literature to identify important characteristics of financial measures that have been used in strategic HRM research. We summarize each financial measure's definition, sources of variance, and its advantages and pitfalls. Finally, we integrate our reviews of the strategic HRM and accounting/finance literatures and provide recommendations for future research on HRM-organizational performance. Specifically, we suggest relevant employee behaviors as mechanisms through which HRM can enhance each dimension of financial performance and propose relevant contexts as boundary conditions for those relationships.
