THE INFLUENCE OF SUSTAINABLE HUMAN RESOURCE MANAGEMENT ON OPERATIONAL EFFICIENCY MEDIATED BY SUSTAINABLE EMPLOYEE LIFE CYCLE IN MSME CULINARY CREATIVE INDUSTRY

Abstract

The purpose of this study is to construct and empirically test a Sustainable Human Resource Management (SHRM) model combined with the Sustainable Employee Life Cycle (SELC) to enhance the productivity of culinary SMEs. The paper deals with the chronic challenges in SMEs such as lack of competency in workforce, employee turnover, and lack of systematic HR systems. Structural Equation Modeling- Partial Least Squares (SEM-PLS) was used as a quantitative method to test the causal relationships and Two-Stage Network Data Envelopment Analysis (DEA) was used to measure the efficiency in HR processes. The participants of the study were 35 employees working in three culinary SMEs in Surakarta, Indonesia. The results indicate that SHRM positively and significantly influences the productivity, which means that sustainable HR practices can be used to improve the workforce performance. Nevertheless, SELC proves to have a negative impact on productivity, which indicates that HR processes and operational systems are out of sync. More so, the DEA results show that the efficiency of the human capital formation stage is extremely low, with the utilization one being comparatively better. The results indicate that there is a gap between effectiveness and efficiency in the SME HR systems. This research paper has its contribution as it combines both behavioral and operation perspectives in HRM and offers some practical implication in matching HR strategies with production systems.