The Impact of Strategic Human Resource Management Practice on Organisational Effectiveness: A Case Study of Selected Insurance Companies in Ethiopia

The purpose of this study is to show the impact of strategic human resource management practices on organisational effectiveness. Towards this end, an explanatory research design was employed. Out of 160 targeted population, a sample size of 115 was taken using the Guilford and Fruchter (1973) formula and the responses of the 115 employees were obtained. The study uncovered that the level of SHRM practices was medium, since its mean value lies between 3.33-3.69 based on the five-point Likert scale measurement. The results of the Pearson correlation coefficient analysis have shown positive and significant relationships between each SHRM practice and organisational effectiveness. Furthermore, the predictive power of the aggregate SHRM practice on organisational effectiveness was found to be .457, meaning that in 45.7% cases, variations on organisational effectiveness can be explained by SHRM practices. Therefore, the study suggests that organisations should place more emphasis on strategic HRM practices to gain better organisational effectiveness.