Employee performance is a critical determinant of organizational effectiveness and sustainable competitive advantage, particularly in dynamic business environments shaped by technological advancement and continuous change. Although extensive research has examined the relationship between Human Resource Management (HRM) practices and employee performance, the mechanisms explaining this relationship remain fragmented. This review synthesizes existing literature on HRM practices and employee performance by integrating strategic HRM, organizational behavior, and psychological perspectives. Specifically, it examines employee performance as a multidimensional construct comprising task, contextual, and adaptive performance, while evaluating how HRM practices enhance employee outcomes through psychological mechanisms. Drawing upon Social Exchange Theory, the Ability–Motivation–Opportunity (AMO) framework, and the Job Demands–Resources model, the review highlights the mediating roles of self-efficacy and work engagement in translating HRM investments into improved performance. The review identifies key theoretical and empirical gaps, including inconsistent conceptualizations of HRM practices, limited understanding of the HRM “black box,” and insufficient attention to diverse organizational contexts. This study contributes by proposing an integrated perspective that explains how HRM practices develop capable, engaged, and adaptive employees while providing directions for future research and managerial practice.
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