Human capital enhancing HRM systems and frontline employees in Australian manufacturing SMEs

Abstract

The current study seeks to answer a number of key questions concerning the strategicmanagement of frontline employees (e.g. individuals who do not occupy an executive,managerial or supervisory role in functions such as production, maintenance, service andclerical functions) and their contributions towards the performance of small- andmedium-sized manufacturing firms in Australia. This study adopts a human capitalperspective to examine the employee and organisational performance of small andmedium enterprises (SMEs) in Australia. We were also interested in seeking to examinethe presence of the human resource management (HRM) function of SMEs in Australiaand their contribution towards employee and firm performance. Findings from the partialleast square analysis identified the antecedents and consequences of a human capitalenhancing (HCE) approach for the strategic HRM of frontline employees in Australia?smanufacturing industry. Strategic orientations of small- and medium-sized manufacturingfirms mediate the contribution of the HRM function in adopting a set of HCE HRMsystems. HCE HRM system was found to have a direct and indirect impact onmanufacturing performance outcomes. Frontline employees? performance was found tomediate the impact of HCE HRM system on manufacturing performance outcomes.Theoretical and practical implications are discussed in relation to the management offrontline employees in enhancing perceived employee and manufacturing performance.