Professional Documents
Culture Documents
HUMAN
RESOURCE
MANAGEMENT
Dr Ray Richardson
Marc Thompson
Acknowledgement
The success of this project depends upon the contributions of many people, especially those who shared their precious
and valuable time in giving thoughtful suggestions to improve our work.
We would like to extend our sincere feelings towards our project guide Prof. whose continuance guidance made this
project a great success. We especially thank our institute called RIM which gave us this golden opportunity to prove
ourselves by doing something which is blend of both practical and theory.
Titles in the Issues series:
Dr Ray Richardson
London School of Economics
Marc Thompson
Templeton
College
University of
Oxford
All rights reserved. No part of this publication may be reproduced, stored in an information
storage and retrieval system, or transmitted in any form or by any means, electronic,
mechanical, photocopying, recording or otherwise, without the written permission of the
Institute of Personnel and Development, IPD House, Camp Road, London SW19 4UX
Typeset by Paperweight
IN S TI TU T E O F P E RS O N N E L
AN D D E VE L O P ME N T
Preface vii
Executive summary xi
-vi-
Angela
Baron
Institute of Personnel and
Development
There is a new and exciting area of research emerging which marks an important
phase in the development of our understanding of the relationship between people
management and organisational performance. Managers know that the way people
are managed and developed affects the bottom line, but the difficulties of evaluation
have, until now, limited the arguments that can be made in favour of more
sophisticated, systemic approaches to people management. In the last few years
the situation has begun to change, and a body of hard evidence is now emerging
which demonstrates that the way people are managed is a crucial factor in predicting
business performance.
This report reviews the most significant literature currently available. It analyses
the evidence in an objective, structured way identifying what we can be confident
of, and where we need more data to prove the case. In particular, the researchers
have studied the range of methodologies used and the way in which data have
been analysed and interpreted to identify gaps in the research and hitherto
unexplored sectors and industries.
But, although the IPD has come further than ever before in proving the link
between people management and development practices and business performance,
the evidence is not yet complete. In particular, we need to develop a much better
understanding of how this relationship works in practice. We need to understand
the impact of context, both economic and geographical. We need to be confident
that the methodology and analysis is robust enough to combat even the most
sceptical, and we need to be able to understand it all within a coherent set of
arguments and theory.
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vii-
To improve the evidence available and develop our understanding of this area, the
IPD has embarked on an ambitious programme of work. This programme includes
new research, collaborative work and consultation among members and other
interested agencies and individuals. The programme is, therefore, multi-faceted
and aimed at all levels of our profession as well as the wider business and economic
communities. However, there is one overall research hypothesis that is guiding
the entire programme of work: that a coherent framework can be developed within
which organisations can make informed choices about which people management
practices and combinations of practices are most likely to lead to better
performance.
The IPD programme of work has its origins in the mid-1990s. From the research
available then, including the extensive work carried out at Cranfield School of
Management, it was apparent that little was known about the causal links between
people management and business performance. The studies that are currently in
progress should add to this understanding, but there is a need to develop a theory
of causality and to identify a form or forms of evaluation to determine how and
why certain practices make a difference.
These results are supported by work carried out in the USA by Mark Huselid and
others, which demonstrates a consistent positive relationship between people
management practice and current and subsequent performance. In addition to the
survey data available, a wealth of best practice evidence is beginning to emerge.
Both David Ulrich and Jeffrey Pfeffer put forward frameworks to analyse the role
that the personnel function needs to adopt to help deliver organisational excellence.
Their evidence has been refined from observations over a number of years in many
different organisations and from the literature that already exists. The Institute is
tapping into this evidence to inform our research programme, and for the 1999
IPD National Conference programme and consultation purposes.
In 1998 we commissioned this report from Marc Thompson and Ray Richardson
to help us in developing our plan of action. We asked them to review the available
evidence from an academic standpoint, identifying the strengths and weaknesses.
We hoped from this process to be able to develop a way forward that would enable
us not only to contribute to and develop the academic debate but to bring the
views of practitioners and academic researchers together in a meaningful and useful
dialogue.
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viii-
Feedback from other practitioner groups indicates that practitioners are both able
and willing to take a lead in this area in the further development of our programme.
In particular, there is a strong belief that practitioners must be proactive in the
development of diagnostic tools and engage in meaningful dialogue with academics
if any of the academic efforts are to have real impact and benefit in the day to day
process of managing business. Of course, the IPD is catering for the needs of a
number of different audiences. These range from practitioners who want advice
on the design and choice of practices, to business leaders who need definitive
evidence and explicit understanding to adopt strategies that will both achieve higher
business performance and satisfy the needs of all the stakeholders in their business
– employees, shareholders and customers.
The Institute has therefore developed a plan of action designed to build upon the
achievements to date in this field of research, which we believe represents a major
breakthrough in the understanding of the value of good people management. We
intend to focus out efforts on two major areas:
• extending and developing the data and supporting the development of a theory
to underpin the evidence that exists in this area
In addition it is vital that our programme of work ensures that the debate is carried
out among as wide a group as possible. It is not just the people management
specialists who have a stake in this field, but everyone concerned to develop business
success. We also need to engage the business leaders and those responsible for
shaping the competitiveness agenda. In addition, there is an urgent need to develop
better ways of accessing the considerable body of academic research that already
exists and using it as a basis for developing usable tools for managers. Without
this, much valuable work will be wasted simply because managers have no means
by which to apply it in their own business situation.
The literature search has itself thrown up a number of issues. It is evident that
although there may be some guiding principles, it is unlikely that there will ever
be ‘one way’ to business success that will work in all organisations in all
circumstances. Organisations need to develop strategies, which are rooted in their
particular environment and business position. This report provides a critical focus
-ix-
We do not intend or expect to achieve all of our aims and objectives alone. We
shall take every opportunity within our work programme to operate in partnership
with other agencies and interested organisations. We also do not want to reinvent
the wheel, and are consulting as widely as possible to be aware of all the initiatives
that are taking place under this broad heading of people management and business
performance. In particular, we intend to look at some of the sectors that, hitherto,
have been untouched by the research that has been carried out.
-x-
This report summarises some of the key themes emerging from an on-going review
of the theoretical and empirical work in the area of people management strategies
and business performance.
There are in the region of 30 empirical studies that have sought to address the
relationship between HR practices and business performance. This research field
has been pioneered in the USA and the bulk of the articles report on studies
conducted in North America. However, there are also a growing number of UK-
based programmes of work.
As the work in the area has developed, researchers have begun to delineate three
broad perspectives on the way in which HR practices contribute to business
performance:
1 Best practice – one set of HR practices can be identified which when implemented
will raise business performance
2 Contingency – business performance will be improved only when the right fit
between business strategy and HR practices is achieved
-xi-
Virtually all the statistical analysis defines and measures strategy by a statistical
procedure rather than a principled argument. There is a need to start to identify
strategies by their intrinsic theoretical and real world properties.
We need to move away from a concentration on the analysis of two end points and
pay more attention to the intervening steps, for example looking at what mediates
the two variables ‘strategy’ and ‘performance’. We need to understand why
particular combinations of policies might work and what discretion managers might
have within their ability to affect these mediating variables.
How something is done is often more important than what is done, and we need
to pay much more attention to how clusters of HR polices are adopted and
implemented as well as to the specific contexts in which policy innovation is
attempted.
A good deal of the research work in this area has progressed with very little
engagement with the practitioners who are important ‘customers’ for this research
and whose behaviour is the most likely to be influenced by convincing research
findings. If this situation continues, the studies may not provide enough policy
precision and little guidance for personnel and development managers on the
content and form of strategy. It is clear that there is a need for process-based
research which can also lead to the development of learning tools that can help
practitioners make better decisions about personnel and development investments.
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xii-
In his book, The Human Equation , Jeffrey Pfeffer argues that the way in which
organisations treat their employees is at the heart of their success (Pfeffer, 1998).
Pfeffer is highly prescriptive. He claims that virtually all organisations, commercial
and non-profit organisations alike, will be more successful if they follow a particular
Human Resource strategy, comprising a specified number of people management
policies. He supports this position with a wealth of anecdotes and illustrative cases
but, in contrast to other books in this mode, his message is also firmly grounded
in a growing number of well-thought-out research studies which use heavyweight
statistical analysis.
For example, he quotes Huselid, who looked at a large sample of firms from across
the whole of the US economy and concluded that the heavy use of a number of
specified HR practices was associated with a level of sales revenue that was on
average $27,000 per year peremployee. The corresponding increase in shareholder
value was put at $18,500, while the increase in profits was estimated at nearly
$4,000 per year per employee (Huselid, 1995).Subsequent and more refined studies
by Huselid suggest that the gains are even larger. These are very impressive numbers
but they are not unique. Other studies by a variety of authors, whether in
automobiles, steel, clothing, oil refining or in the service sector, point to similarly
impressive outcomes, usually measured by productivity gains. So, Pfeffer claims,
there is powerful evidence to suggest that deploying certain high performance
management practices makes bottom line sense.
Findings like these excite both the academic and the practitioner, and they promise
to move the personnel or HR function away from being seen as a peripheral
administrative activity and put it at the centre of the organisation’s activities. The
key purpose of this report, therefore, is to look hard and critically at the body of
academic work that underpins Pfeffer’s analysis. Like him, we see these studies as
having very important implications. They stimulate thought, they cannot be lightly
dismissed, and they point to something that deserves sustained attention. Where
we differ from Pfeffer is that we do not see them as being quite so authoritative a
basis for firm and detailed prescription. The studies have their weaknesses and
these should not be underestimated. They are neither absolutely conclusive nor
do they address all the relevant issues. So this report explores both the strengths
and the frailties of the research to see where we stand at present.
As a prologue, and to provide a context for what is to come, we set down a little
more detail from Pfeffer. He concludes that a set of seven people management
policies ‘seem to characterize most if not all of the systems producing profits
through people’ (p.64). He specifies these policies as:
• putting in a lot of resources to recruit the right people in the first place
-1-
Pfeffer’s HR strategy then becomes, at its core, these seven people management
policies, each of which may be embodied in a variety of concrete and detailed
people management practices (eg there are many techniques that might encourage
the sharing of information within an organisation). Pfeffer does not suggest that
the practices have to be the same in every organisation. Even so, however, his
conclusions go some way beyond the academic research.
First, the empirical support for each of the seven policies is of variable strength –
it is clearer for some than for others. Second, there is even less agreement on the
merits of the different practices that might be used to achieve any one policy – for
example, are all methods of linking pay to organisational performance equally
effective? Third, not all of the studies he relies on include all of the seven policies
when they relate HR strategies to business performance. This means that the
empirical support for Pfeffer’s particular combination of policies is less secure
than he implies. Many modern managers will agree that his seven policies are worth
taking seriously, though some may also feel that he has omitted some important
candidates. And Pfeffer is to be applauded for making his case so clearly and with
such enthusiasm. Nevertheless, matters have not been resolved as completely as
his advocacy claims. The management literature has seen too many prescriptions
which seem persuasive, but turn out to be premature or misleading or simplistic.
More caution, and more knowledge about the underlying scientific work, is
appropriate at this stage.
-2-
Strategy in general
Defining ‘strategy’ is no easy matter. For the purposes of this report, however, a
strategy, whether an HR strategy or any other kind of management strategy, must
have two key elements: there must be strategic objectives (ie things the strategy is
supposed to achieve), and there must be a plan of action (ie the means by which it
is proposed that the objectives will be met).
A strategy is often taken to imply a long-term perspective. This is often, but not
quite always, true. It might be entirely sensible for an organisation knowingly to
pursue a short-term strategy, or indeed simultaneously to have both a short-term
and a long-term strategy that were not identical.
-3-
The objectives of HR
strategy
To illustrate this point, one may envisage a chain or sequence of connections, see
Figure 1. A commercial firm wanting to increase its profits (its ‘ultimate objective’)
will see that one way to achieve this is to reduce its unit labour costs (a ‘production
objective’); one way to reduce unit labour costs is to increase employee productivity
(a ‘behavioural objective’); one way to increase employee productivity is to make
employees more competent (a ‘generic HR objective’); one way to increase
employee competence is to improve existing training programmes (an HR policy);
one way to improve the training programme is to bring in professional trainers
and make the process more formal and systematic (an HR practice, part of the
firm’s action plan). So we have a possible sequence:
The HR objective could be expressed as being any one of higher profits, lower
unit labour costs, higher productivity, or enhanced competence. They are all
objectives but they exist at different levels of generality.
-4-
Quit rates
Table 1 implies that there are many possible chains or sequences. It suggests that
there may be three generic objectives of human resource policies, all referring to
the organisation’s workforce. All organisations want the right number of
employees, the right mix of employee competencies, and the right set of
motivations from their workforce. Of course, different organisations seek different
numbers of employees, and different bundles of competencies, and different types
of motivation, and an important part of a successful HR strategy is bound to be
the correct identification of these three elements.
The extent to which an organisation achieves its generic objectives will influence
how well it achieves its various ‘behavioural’ objectives. All three generic objectives,
for example, will directly affect productivity levels. But firms are not interested
purely in output per employee; they increasingly want their employees to pay
close attention to quality standards, or to act in an innovative or creative way, or
to co-operate and share valuable information with one another; and they will also
normally want their employees (or, at least, their effective employees) to stay
with the firm rather than leave. Organisations will think that such aspects of
employee behaviour are influenced by employee competence and by the extent to
which employees are motivated to pursue a variety of behaviours. So the extent to
which desired behaviour is achieved will turn heavily on the extent to which an
organisation succeeds in reaching its generic HR objectives.
The extent to which the behavioural objectives are reached will influence the success
the firm has in attaining its ‘production’ objectives. It is no longer adequate to
think of firms being interested solely in unit labour costs, important as these are
for competitive advantage. Real and perceived product quality levels are also
important. In this respect, much of the service sector is in a distinctive situation
because its employees frequently interact directly with customers, so that product
quality inherently becomes a matter of direct employee performance (with little
or no possibility of subsequent ‘rectification’).
Achieving the firm’s ultimate objective, eg profits, will obviously depend on the
degree to which its production objectives are reached. Low unit labour costs lead
directly to profits via higher profit margins; they can also lead indirectly to higher
profits by allowing the firm to cut its product prices and increase its market share.
Similarly, high quality levels may allow prices to be raised, thereby raising profit
-5-
In fact, most researchers in this field measure the firm’s plan of action purely by
its choice of HR practices; indeed, that is typically how they represent the HR
strategy itself (ie different HR objectives are very often ignored). In other words,
researchers tend to focus exclusively on the combination of individual HR practices
that a firm does or does not adopt; it is a particular combination of practices which
assigns the firm to one strategy category or another; the specification of strategic
objectives, the problems of policy implementation, and the nature of the arguments
that might link policies to objectives are usually not explored in any depth.
Huselid, for example, in a very widely quoted study (Huselid, 1995) develops two
complex measures of so-called ‘high performance work practices’ which are, in
essence, his index of the firm’s HR stance, or strategy. As Table 2 shows, the first
measure, ‘Employee skills and organizational structures’, is a conglomeration of
nine HR practices; the second, ‘Employee motivation’, is a set of four such policies,
rules or practices. Huselid has also, however, made some attempt to capture
implementation by asking about coverage or intensity of use (eg in his formulation
‘what proportion of the workforce is covered by…’?). This is not a full measure of
implementation. It should capture how widely a firm’s practices are targeted but
it will certainly not capture such matters as the manner in which they are deployed,
eg whether they are pursued by managers with consistency, equity, vigour and
belief.
-6-
01 What is the proportion of the workforce who are included in a formal information
sharing program?
02 What is the proportion of the workforce whose job has been subjected to a formal
job analysis?
03 What proportion of non-entry level jobs have been filled from within in recent
years?
04 What is the proportion of the workforce who are administered attitude surveys on
a regular basis?
05 What is the proportion of the workforce who participate in QWL programs, QCs
and/or labor-management participation teams?
06 What is the proportion of the workforce who have access to profit sharing/gain
sharing plans?
07 What is the average number of hours of training received by the typical employee
over the last 12 months?
08 What is the proportion of the workforce who have access to formal grievance
procedures and/or a complaint resolution system?
09 What proportion of the workforce is administered an employment test prior to
hiring?
Employee motivation
10 What is the proportion of the workforce whose performance appraisals are used to
determine their compensation?
11 What proportion of the workforce receives formal performance appraisals?
12 Which of the following promotion rules do you use most often? (a) merit or
performance rating alone; (b) seniority only if merit is equal; (c) seniority among
employees who meet a minimum effort requirement; (d) seniority.
13 For the five positions that your firm hires most frequently, how many qualified
applicants do you have per position (on average)?
Huselid (1995)
Huselid’s approach identifies firms that are more or less heavy users of (some)
high-performance work practices. In this case, therefore, only one HR strategy is
articulated and explored; firms are arranged on a continuum which ranges from
heavy users of high performance practices to those who make no use of them at
all. A different way of specifying HR strategies comes from concentrating on the
links between the set of HR policies and the three generic objectives, ie how and
why HR policies might allow the organisation to achieve its three generic objectives.
Some years ago, Walton (1985) compared two different styles of managing people.
He talked about a control approach and a commitment approach. Both approaches
have active practices in each of the standard HR policy areas, ie all organisations
have to make selection decisions, training decisions, work design decisions, etc.
But, for Walton, the detailed choice of practices within each of these areas were
different for the two HR approaches. What he was essentially distinguishing were
two very different underlying employment relationships (these might also be called
different psychological contracts or different implicit contracts).
-7-
The second column of Table 3 suggests that employment relationships can vary
on many dimensions. They might, for example, be long term or short term; they
might be predicated on the development of high commitment, or loyalty, or they
might not; they might place a premium on encouraging what is sometimes called
organisation citizenship behaviour (eg encouraging people to go voluntarily beyond
their job descriptions and engage in valuable extra-role behaviour), or not; they
might rest on the belief that the motivation to perform well is merely a matter of
designing the appropriate reward system, or they might think that task is far more
complex.
-8-
This approach to thinking about strategy puts a premium on exploring the ways
in which particular HR practices are likely to create a relationship which, in turn,
delivers what we have called the generic HR objectives of competence and
motivation. It implies that, to understand an HR strategy, it is necessary to know
not only the particular practices the firm adopts but also something about the
nature of the employment relationship it is trying to generate.
The issue of
‘fit’
A key idea in the strategy literature is ‘fit’. A set of HR policies is often said to
constitute an HR strategy if and only if two forms of ‘fit’ are achieved. First, the
different HR policies must ‘fit’ together sufficiently (have ‘internal fit’); second,
the HR policies must ‘fit’, or be congruent with, the firm’s policy choices outside
the area of HR (have ‘external fit’).
What this implies in turn is that the classification of HR strategies, at least as far as
internal fit is concerned, might rest on a theory of what motivates employees. It is
no accident that some modern writing talks about ‘high commitment management’,
ie the HR strategy that rests on the notion that it is employee commitment that
acts as the motivational ‘glue’ that binds many of the different policy elements
-9-
The notions of fit can also be explored through the contribution of Delery and
Doty (1996) who argue that there are three ‘dominant modes of theorising’ that
characterise current empirical endeavours. They term the modes, the ‘universalistic’,
the ‘contingency’ and the ‘configurational’ and the underlying argument refers to
the importance of different notions of ‘fit’.
-10-
Delery and Doty argue that each of these three theoretical perspectives is valuable
and that empirical work needs to be clear as to which framework is being deployed.
Ideally, they would like to see researchers apply the three frameworks in order to
evaluate their power. In their own empirical work (carried out in the US banking
sector, and looking at one occupational group) they found the strongest support
for the ‘universalistic’ model.
Final thoughts
This last point is very well illustrated in Wright and McMahan’s (1992) discussion
of the role of performance or incentive pay in characterising HR strategies which,
as they note, shows some of the dangers arising from a lack of theoretical care
when designing empirical research. They start by claiming that there is no theory
that can help researchers understand the role of incentive pay in HR strategy and
business performance research – this is perhaps too sweeping. But a lack of
theoretical rigour leads to (some forms of) incentive pay being seen in some studies
as central to ‘high commitment’ or ‘innovative’ HR systems, and in others as
integral to ‘control’ systems (ie low-skill, low-trust systems). An adequate theory
might indicate that a certain form of incentive pay is more likely to form part of a
‘control’ type system, whereas another type of incentive pay scheme would be
part of a ‘commitment’ system. However, it is also possible that incentive pay
schemes may be rewarding different behaviours and outcomes. For example, an
incentive pay scheme tied to innovation might be more appropriate for a business
pursuing a differentiation strategy, whereas a scheme tied to cost savings might
-11-
Researching HR strategies
Three questions
Empirical and theoretical research into HR strategies might focus on three different
questions:
All three questions are very difficult to answer in a satisfactory way. The main
focus in this paper is the third question, the evaluation of HR strategies. The
simpler of the two issues here is whether the pursuit of a specified strategy enhances
business performance, ie whether it causes or leads to business performance being
better than it would otherwise have been. At a minimum, this requires one first to
characterise or conceptualise the HR strategy, then to measure it, and finally, in
some way or other, to relate its use to a measure of business performance.
-12-
Developing a taxonomy of
policies/strategies
Evaluation rests on being able to specify clearly the thing being evaluated. The
first step when evaluating performance-related pay arrangements is to describe,
or classify or provide a taxonomy of them. This is not a simple matter because
performance-related pay practices may assume a number of distinct forms along a
variety of dimensions (are they group or individual based, do they involve large or
small amounts of money, are the payments made in a lump sum or in smaller, more
continuous amounts, how old are they, etc?). Each form may have its own degree
of success, so one must evaluate them separately. But the number of interesting
dimensions is relatively limited, so workable taxonomies based on them can be
developed.
As has been shown above, this is not true for HR strategies. There it was suggested
that one would like to know about the underlying employment relationship which
lay at the core of the strategy, as well as the links between chosen policies and that
relationship. Notions of internal and external fit would also be relevant.
-13-
The broader objective measures are undoubtedly more impressive and authoritative
to many observers, and some of the US work that claims to establish a close
connection between HR strategies and profits or productivity has undoubtedly
made the whole area very sexy. But these indicators of success are relatively ‘far
away from’ the HR intervention, ie they are all very heavily influenced by a whole
range of non-HR factors. If these latter factors can be taken into explicit account
this may not be a problem, but this is not usually done adequately.
One of the difficulties, but also perhaps one of the opportunities, within the field
of HR strategy is the fact that different researchers come from different disciplines.
So there is the prospect of a genuine multi-disciplinary approach developing. This
does not make things any easier, but it could eventually be very fruitful. McMahan
et al(1999) provide a very useful conceptual framework for understanding the
theoretical perspectives influencing the field. They identify a number of broad
theoretical approaches that have influenced empirical work in the area. These they
group into ‘reactive’ theories and ‘proactive’ theories. The proactive perspectives are:
-14-
• cybernetic systems
• resource dependence
• institutional theory.
Their review of these various perspectives concludes that the field is still relatively
new; being in an adolescent phase, it does not have a well-established theoretical
or empirical base. They argue that much of the empirical work in the area is ‘data-
driven theory application’ rather than ‘theory-driven’ research.
One of the features of current empirical work is that researchers are seeking to
refine both the range and the nature of the measures they include in their models.
They are, for example, extending the range of variables in order to control for the
effects of other organisational factors on performance outcomes (eg investment
in technology) as well as trying to improve the precision and reliability of existing
measures (eg as with Huselid, the attempt to gauge policy coverage by asking
what proportion of the workforce is covered by particular policies). While these
pursuits are laudable and will certainly improve future data collection, there is a
risk that as the number of influencing variables grows the only performance that
is really being evaluated is that of the statistical programmes manipulating these
data. In other words, researchers will be forever adding to the contingencies that
could influence performance outcomes. This illustrates the limitations of a research
field without a rigorous theoretical framework.
-15-
An important theoretical criticism made about much of the empirical work in the
area (and also some of the emerging paradigms) is that it fails to take account of
developments over time. Cross-sectional surveys and one-point-in-time case
studies have difficulties in taking proper account of the evolutionary nature of
organisational effectiveness and the relative power and influence of HR and other
managers within the organisation on the development of HR strategies. This points
to the relevance of longitudinal designs (such as the work of West and his colleagues
at Sheffield) and the importance of combining both quantitative and qualitative
methods.
These are all central considerations for developing the IPD strategy in this area
and, for us, they underline the need to understand the competing theoretical models
and their implications for research design.
End-
note
1 If there were only two HR practices (A and B) there would be four possible
combinations (both A and B, either A or B, and neither A nor B). In this sense
there would be four possible HR strategies. If there were, say, 10 HR practices,
there would be no fewer than 1,024 possible ‘strategies’.
-16-
Measuring HR practices
-17-
Firms scoring high on the ‘Investment Employment Practices’ index are judged
to be more successful than are those using ‘Contractual Employment Practices’.
But the detail contained in each of the two strategies looks odd, and neither
precisely overlaps with that in, say MacDuffie’s excellent study (MacDuffie 1995).
In the latter, the strategy being examined is captured in two indices, each an amalgam
of a set of individual items.
‘Work system’
‘HRM policies’
The extent to which the firm’s hiring criteria emphasise openness to learning and
interpersonal skills
An index measuring the degree to which an individual’s pay is influenced by the output
of the whole workforce
-18-
Three other general points are illustrated by the lists of items from the studies by
MacDuffie (1995) and Chadwick and Cappelli (1998):
• The precise groupings of the various items into different indices are often
puzzling and seem arbitrary; eg why are communication skills important in
Chadwick and Cappelli’s contractual system but not in their investment
system?
• Many indices or surveys simply omit certain HR policy areas; so, for example,
communication policies or interest representation practices are often
downplayed or ignored.
Measuring strategy
-19-
Measuring outcomes
Unit of analysis
One of the other problems that has dogged the area is the unit of analysis adopted
in survey design. A wide number of approaches have been used, and the following
breakdown illustrates some of the possibilities as well as examples of existing work
that fall into each category:
° single-industry (eg Delery and Doty, 1996; Thompson, 1998; Guest and
Peccei, 1994)
-20-
° multi-firm, multi-industry
• Mixed method
° longitudinal survey and case studies (eg West, 1996; Huselid et al, 1997).
Our review of the research in this area found that there was a broad range of
designs, techniques and approaches deployed. For example, Huselid (1995) wanted
to use financial databases to derive financial performance indicators as his outcome
measures. This meant that he needed to collect data on HR practices at the
corporate level (to ensure that the outcome and practices data both refer to the
same units). A widely recognised problem with this is that the data on HR practices
is not necessarily reliable because responses will often come from corporate head
offices and fail to recognise the diversity in practices across establishments within
multi-establishment firms. In the UK, the work by West et alat Sheffield has
concentrated on single-site companies in the manufacturing sector in order to
control for variation, and the work by Guest and Peccei (1994) in the NHS and
Thompson (1998b) in the UK aerospace industry both use an establishment
approach as well as gathering establishment-level performance measures.
Establishment-level surveys raise their own problems. Such surveys (eg Huselid,
Guest and Peccei, Thompson) tend to ask about employees in a very general way
(eg ‘please respond for your non-management employees’) and tend to obscure
the variations in jobs, skills and occupations that go to make up an employment
site. For example, the category ‘non-management employee’ could cover technical
and professional staff as well as semi-skilled workers. Firms may well be operating
different types of HR practice for these employee groups. To give an example,
engineers in the aerospace sector may be subject to performance pay as would
skilled shop-floor workers but the performance measures (ie competency for
engineers and output measures for shop-floor workers) may differ significantly
in their character and how they fit with the rest of the HR system. In the case of
engineers, competency-linked pay might be part of a new career development
structure (ie a dual career ladder for technical and managerial staff) whereas for
shop-floor employees the output measures might be part of a very flat job structure.
The pursuit of perfect measures can in itself be a problem, as any measure can be
open to criticism. In the case of ‘level of analysis’, there is a strong preference for
cross-sectional survey work to work at the lowest possible level (ie the
establishment) where more accurate data on HR practices can be captured. The
business unit rather than the company should be where data gathering takes place.
-21-
This area has been partly addressed by Huselid, Jackson and Schuler (1997) in
their study on the technical and strategic capabilities within the HR function.
They found that firms that had high levels of strategic capability in the HR function
tended to have higher levels of financial performance.
Managerial
cognition
The research field is currently dominated by positivistic research designs that only
partly succeed in capturing managerial views and attitudes about the adoption of
new HR practices and their relationship to improved business performance. These
designs can help us understand the correlations between HR practices and
performance outcomes (close or distant) as well as estimating the size effects of
these relationships. They do not help us understand the factors that have influenced
firms to adopt these practices (or even whether they are introduced as ‘bundles’)
or indeed, the other organisational changes that have been introduced alongside
these new HR practices. Similarly, the emphasis in the literature on demonstrating
that the greater use of ‘high-performance’ practices does indeed lead to higher
business performance often prohibits an examination of examples of where the
introduction of new HR practices has failed. Understanding the factors that are
associated with such failures is probably as important as understanding stories of
success.
-22-
To extend this example, a cross-sectional survey would pick up firm A and firm B,
both of which have adopted the same incentive scheme. However, firm A has low
relative organisational performance despite using, on the surface, the same incentive
scheme. We may be able to explain this by other ‘contingency’ factors covered in
a survey, but it may also be because of much softer process issues that the survey
approach cannot grasp.
And herein lies one of the great risks of the research endeavour on HR practices
and business performance. Policy and employer bodies may advocate the adoption
of so called ‘best practices’ in HR without understanding the complementary
circumstances and factors that are needed for the optimal performance outcomes
for the business. Managers acting upon such guidance may find themselves
introducing new HR practices without fully understanding the risks involved or
even if the practices are appropriate, given their organisational circumstances.
This problem was recognised by Becker and Gerhart (1996) in their review of the
research in the field when they concluded that ‘there appears to be no best practice
magic bullet short of organising a firm’s HR system from a strategic perspective’.
What we now need to understand is ‘how’ firms achieve this strategic approach to
the management of the HR system and what internal process factors account for
success or failure. This suggests that a wider set of research techniques may need
to be adopted and that future studies should consider more interdisciplinary
research designs and methods. For example, Marchington and Sparrow (1998)
allude to various psychological methods that can be used to explore managerial
decision-making (eg cognitive mapping, scripts, schema) which may help
researchers understand the causal linkages and paths that explain why organisations
adopt, or fail to adopt new HR practices.
-23-
Although there have been some detailed case studies of industries and companies
that have sought to limit these methodological problems, little if any of the current
literature looks at both strategic fit ideas as well as performance outcomes in terms
of employee motivation and commitment. The only study (that we are currently
aware of) that has attempted to combine both measures of organisational
performance, measures of strategy and measures of impact on motivation and
commitment is the work of Patterson et al (1997) at Sheffield. Their work
concentrates on SMEs in the manufacturing sector and found that 18 per cent of
the variation between companies in productivity could be accounted for by certain
HR practices (namely, job design and skill acquisition and development). The
Sheffield study, although under way for several years, has not reported any
subsequent findings and there is little detailed information available on
methodology and measures used.
End-notes
1 Our reviews of this paper and the MacDuffie paper which form the basis of
the discussion in this section are given in the appendix. A number of other
papers are also reviewed.
2 The extent to which such findings give support to the emerging ‘bundles’
orthodoxy is also open to question given the observed lack of theory in the
field.
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Practitioner perspectives
Introductio
n
An important part of the current review involved consulting with practitioners
and involving them in the development of the next stage of the IPD research
programme. A number of events have taken place, including a one-day event hosted
by the IPD in London in February, 1999, which brought together senior HR
managers and academics. This chapter aims to bring together the main themes and
issues arising from this meeting, as well as separate discussions held with
practitioners across the UK co-ordinated by the IPD. The focus is on practitioner
views that are relevant to HR strategies and business performance, and not
necessarily on the wide range of views expressed. In that sense the task has been
to narrow down the contributions to reflect the on-going interest in the relationship
between HR strategies and business performance, but not to the extent of excluding
relevant and pertinent research questions – a difficult balance.
General comments
It was clear from the discussions that practitioners are not generally aware of the
growing body of evidence on HR strategies and business performance. While HR
directors in larger international businesses tend to have a more informed view, the
bulk of the HR profession could be said to be reasonably uninformed. This is, in
large part, due to the highly quantitative nature of the existing work (which makes
severe demands on the reader and also limits its wider appeal) and the fact that
most published research is of US origin (and both more difficult to access and
relate to). In meetings with practitioners in the IPD regions it was clear that few
had read or heard of even the more accessible work of writers such as Pfeffer
(either Competitive Advantage through Peopleor The Human Equation ). Not many
were aware of the Sheffield study or articles published in People on
the topic. Management
This is not to say that practitioners are unaware of the importance of these issues,
just that they seem rarely to read research-based evidence. Furthermore, as the
discussions with practitioners revealed, even if they were aware, many are sceptical
of such research and remain to be convinced of its merits. This raises a number of
questions about how knowledge and learning takes place among senior managers
and how research findings can be effectively diffused. It has been suggested that
social learning processes such as forums, seminars and short programmes where
reading is minimal may be of more relevance. 1 These are clearly important concerns
for the IPD and third-level institutions providing CPD; however, in the context
of this research review they are of secondary importance. We are interested in
understanding the practitioners’ agenda – what do they feel they need to know in
order to make HR strategies deliver better bottom line performance. From this
perspective, practitioner interest tends to be more heavily weighted in favour of
process-based research. In other words, understanding how organisations develop
HR strategies, implement them and how this works right the way through to
-25-
To them, the argument that HR makes an impact on the bottom line is not in
dispute, their interest is in knowing the best means to make an impact. These
interests have clear ramifications for preferred research designs and suggest that a
greater emphasis be placed on longitudinal case studies that explore the processes
of HR strategies, organisational change and performance over time.
Understanding process
A common theme from the practitioner discussions was that the process of
developing HR strategies differs considerably, depending on a number of specific
contextual factors. Indeed, although the London meeting did not seek to develop
data that could be content analysed as a step towards understanding the relative
weight of these various factors, the issues that did emerge are important in shaping
our thinking about some of the terrain that process-based research should encompass.
The importance of building partnerships with business leaders was also identified
as a key attribute, and this opened up a range of issues around the skills,
competencies and behaviours that are required of senior HR managers to shape
and develop effective relationships at this level of the business. These sets of issues
link very strongly to the work of Ulrich (1998) and others on the changing nature
of HR and the new skills and abilities now being demanded. Although Ulrich’s
work can be criticised on a number of grounds, particularly its strong prescriptive
tenor and the lack of rigorous empirical evidence to support his models of the
new HR role, it provides one of the few insights into these areas. Clearly, there is
a demand for research that explores these dimensions in the UK context.
‘Good’ v ‘bad’
processes
Another important theme was the importance in understanding what processes
were most important for ensuring the effective development and implementation
of HR strategies. Managers recognised that not only did they need some way of
determining which HR strategies to prioritise and sequence, but they also needed
to understand what design and implementation processes were the best ones to
adopt. These concerns were at the level of system-wide HR strategies as well as at
the level of single practices (such as payment system design).
-26-
A strong and recurrent theme in discussions was the importance of wider business
performance metrics and methodologies. Two in particular were mentioned. First,
a growing number of organisations are using the Business Excellence Model (BEM)
developed by the European Foundation for Quality Management (EFQM) to
understand how a wide range of business processes impact on performance. This
model is built explicitly on the assumption that people processes account for 12
per cent of total business performance processes.
The model (and the audit tool that accompanies it) is helpful in encouraging
organisations to develop a broad range of metrics to understand the impact of
various business processes. However, the criticisms that practitioners levelled at
the extant research on HR strategies and business performance also hold true for
this model. It does not help to resolve practitioner concerns about which HR
strategies and processes should be adopted in which contexts and why.
Strategic choices
Two major constraints face senior HR managers — time and resources. These
featured prominently in debates, and practitioners wanted methods or criteria for
making decisions on the allocation of time and resources to various HR strategies.
Their issues were not so much which practices they might want to adopt (ie .
Pfeffer’s seven practices) but understanding which ones were best in their own
particular organisational context. The discussions revealed that practitioners
generally worked very much from a contingency or configurational perspective.
Furthermore, they also wanted to know if there was a sequence that should be
followed — did they need to introduce a certain set of changes prior to putting in
place a new HR strategy, or was there a pattern to the introduction of HR strategies?
There is a risk, as became apparent in some of the group discussions at the London
seminar, that practitioners may still be thinking in terms of discrete practices (such
as performance pay) rather than in terms of HR systems. Understanding what an
HR system consists of and how it can be developed to meet business needs, is a
clear challenge.
-27-
Time-based element of
change
While the need to make fast and informed decisions in the context of rapidly
changing business environments is recognised as one of the key challenges,
practitioners also recognised that there is a time-based element to the development,
introduction and acceptance of new HR strategies in an organisation. For example,
Peugeot reckoned it took nearly five years for their communication processes to
become embedded and start to pay returns (based on employee attitude survey
data).
This time lag between policy deployment and impact becomes an important tension
in businesses that are looking for ‘quick wins’, and practitioners felt they needed
some rules of thumb to guide them on the time-period for HR investments to
start making a payback.
Diffusio
n
If the use of more ‘innovative’ HR strategies is regarded as important in explaining
variations in business performance between firms, why are more organisations
not adopting these practices? It was felt that we needed to understand why
organisations failed to adopt high performance work practices and HR systems.
-28-
Conclusion
This review of the range of practitioner interests and needs underlines the need
for a new departure in the research that currently exists on HR strategies and
business performance. The demand is clearly for process-based research and detailed
case studies that track the process of change in organisations (perhaps something
akin to the study by Pettigrew on ICI) but which can also lead to the development
of learning tools that can help practitioners to make better decisions about HR
investments and also be more aware of the problems and issues likely to arise.
End-
note
1 Management academics and HR professionals at a meeting of the steering
group expressed these views.
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Future research
Introductio
n
At this stage we should like to flag up a number of points for further consideration.
In settling on these we are concerned with the interests not of the academic
community but of the practitioner community keen to draw guidance from the
frontier work being done by academic researchers. Such people, either directly or
via their professional associations like the IPD, are trying to learn what they can
do to improve the performance of their organisations. In this respect, the IPD
faces a major task in disseminating the existing research findings in a form that
can be properly appreciated by its members. Our impression was that the
practitioners in the seminars were keen to be involved.
Key points
From what we have already said in this report we would highlight the following
six points:
1 The claims that a universal best practice HR strategy has been identified are
premature. Managers should not en masse be discarding their present
arrangements. This is not to say that the studies on which such claims are
based are without interest. Quite the contrary, and they give a checklist of
policy combinations which organisations should very actively consider
adopting. But there are so many difficult problems still to be resolved that
they should not be considered to be a sufficient basis for policy decisions.
3 Even if we did have a clear idea of the optimal combinations, we should still
have to resolve the formidable problem of whether they were the same for all
organisations (as the universalist approach claims) or differed according to
different underlying motivational links or wider business strategies. It would
be rash to conclude, just because the weight of current evidence seems to
support a universalist interpretation, that policy advice should move heavily
in that direction too.
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5 We need to turn from so heavy a concentration on analysing the two end points
of evaluation, ie from associating ‘strategy’ with ‘performance’. We should
pay more attention to the intervening steps, looking at what mediates these
two variables. We should look more closely at why a particular combination of
policies might work, and how much discretion managers might have in their
ability to affect these mediating variables.
6 We should pay much more attention to how clusters of HR policies are adopted
and implemented, as well as to the specific contexts in which policy innovation
is attempted. We have all heard simple recipes for salvation, whether commercial
or personal. We have all witnessed policy fads. Surely we should have learned
that ho something is done is often more important that wha is done – existing
w
empirical studies concentrate almost entirely on wha is tdone.
t
Implications for future research
Our review of the literature and discussions with academics and practitioners point
to a number of important research gaps that may attract IPD funding. An
interesting feature of the academic and practitioner perspectives is the growing
convergence between both. The research agenda being developed by researchers
is beginning to reflect many of the themes raised by practitioners. This is
particularly evident in the concentration on process and, by implication, the
preference for more detailed, process-based case study designs. However, it should
be stressed that the field as a whole suffers from a lack of theoretical rigour that
can help shape effective research designs and also serve to underpin the transfer of
knowledge to practitioners. Without a sound theoretical basis, it will be difficult
to translate research into learning materials and processes of benefit to IPD
members. This is a crucial area of research and one that is central to the future
research agenda.
Recognising the importance of theory as a first step, the potential areas for future
research are (and this list is neither exhaustive or in sufficient detail):
• mapping out the linkages in the chain from HR strategies through to business
performance (and the factors influencing these key linkages)
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• how important is time lag in terms of the design and introduction of new HR
strategies as well as their impact on organisational effectiveness
These are just some of the potential areas to which we feel resources could be
directed to meet both practitioner and academic needs. These, of course, raise a
number of linked methodological issues and here, too, we find considerable
convergence of the practitioner and academic agendas. The emphasis on
understanding process and the ‘how’ of effectiveness clearly lends itself to more
case study designs. Furthermore, the need to broaden out the range of factors that
may shape and influence successful HR strategies suggests a need for greater
interdisciplinary designs, and lastly, the recognition of the time-based element
between strategy implementation and impact forces us to consider more
longitudinal studies (such as the Sheffield programme).
While research is important, it also needs to be recognised that the majority of the
IPD practitioner base are mostly unaware of its existence and relevance. This
suggests that considerable attention needs to be given to the diffusion of knowledge
and research and the ways in which senior HR managers, in particular, learn.
-32-
• the firm’s production strategy can be achieved only when such discretionary
effort is forthcoming.
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Ap p1 .p 65 33 16 /0 6/ 03, 15: 28
process, and which highlight production problems and therefore stimulate the
search for improvements. In line with his core argument, MacDuffie suggests that
this is precisely the context within which innovative HR practices can work most
effectively. His hypothesis is that innovative HR has a large potential in flexible
systems (and, presumably, little or no payoff in traditional mass production
systems). The data come from a survey of, and field visits to, 70 plants in the
world’s auto industry.
• ‘buffers’, an index of the degree to which a plant adopts the flexible production
approach
Measurement issues
Our interest is mostly on the two indices ‘work system’ and ‘HRM policies’. The
components of these are shown in Table A1. In spite of their labels, both variables
are essentially HR variables. Thus, all of the six items which make up ‘work system’
would normally be thought of as reflecting HR considerations (cf the items in
Guest and Hoque). This is reinforced by MacDuffie’s claim that the first four will
affect employee motivation and commitment (p.203); why the other two might
not have the same effect is not made clear.
MacDuffie does not make completely clear his basis for choosing the five ‘HRM
policy’ items except that in his field work these were seen to differentiate the two
main types of production systems. This index is therefore inductively generated
and omits important areas of HR policy. There is, for example, no mention of job
security or communication policies. There is also arbitrariness in the precise way
in which the HR policies are measured and calibrated (see the notes to Table A1).
Also, the five items are given equal weight in the overall index, eg in their effect on
performance, policies on training and pay are seen to be no more important than
that on status differentials, so the former are seen to have no stronger an impact
on motivation or commitment or capabilities.
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Work system
% suggestions implemented 36 25 24 72
Job rotation 02 01 02 03
HRM policies
Hiring criteria 35 33 36 39
Contingent pay 02 01 02 03
Status differentiation 02 01 02 03
Notes to Table A 1
Job rotation: 0 = none; 1 = infrequent rotation within teams; 2 = frequent rotation
within teams; 3 = frequent rotation within and across teams in same department; 4 =
frequent rotation within and across teams and across departments.
Decentralisation of quality control: 0 = functional specialists responsible for quality; 1,
2, 3, and 4 depending on how many of inspection of incoming parts, work-in-process,
finished products, gathering SPC data, production workers responsible for.
Hiring criteria: low scores for criteria which emphasise fit between applicant’s existing
skills and the job requirements (eg previous experience in a similar job), and high scores
for criteria which emphasise openness to learning and interpersonal skills. The metric
used is not specified.
Contingent pay: 0 = none; 1 = pay contingent on corporate performance; 2 = pay
contingent on plant performance, for managers only; 3 = pay contingent on plant
performance or skills acquired, for production employees only; 4 = pay contingent on
plant performance, all employees.
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Ap p1 .p 65 35 16 /0 6/ 03, 15: 28
Status differentiation: 0 = no attempt to break down status barriers; 1, 2, 3 or 4
depending on how many of common uniform, common cafeteria, common parking,
and no ties are implemented.
Training of new employees (ie in first six months): 0 = less than one week; 1 = one to
two weeks; 2 = two to four weeks; 3 = more than four weeks.
Training of experienced employees: 0 = average of 0-20 hours per year; 1 = 21-40
hours; 2 = 41-80 hours; 3 = over 80 hours.
Results
Table A1 shows that Flexibility is associated with higher values for all of the items
in ‘work system’ and ‘HRM policies’ than is mass production, and that this seems
to be especially true for ‘work system’. This is not surprising because these items
have been chosen precisely because they differentiate between the two systems.
MacDuffie also reports that the average values of both productivity and quality
are much higher for the flexible plants.
The formal multiple regression analysis supports these simple findings. First,
‘buffer’, ‘work system’ and ‘HRM policies’ each works to increase both
productivity and quality; second, synergy seems to be present, in that an overall
index combining all three elements has a more powerful effect on both dependent
variables.
On the face of it, the results suggest that, other things being equal, the buffered
system, ‘work system’ and ‘HRM policies’ all tend to raise productivity and quality
levels when used in isolation. This means that (eg) ‘HRM policies’ are associated
with higher productivity in both mass production and flexible systems (and there
is no evidence that the marginal effect would be different between the two systems).
In that sense, one of MacDuffie’s propositions, that innovative HR practices are
useful only in certain circumstances, seems to be rejected. This seems to be a
universalistic conclusion, ie the policies have some beneficial effect whatever the
context.
But the ‘fit’ argument seems to be strongly supported, in that the performance
consequences of using ‘buffers’ together with ‘work system’ and ‘HRM policies’
seem to be especially notable. So using all three components together does seem
to have a distinctively powerful effect.
-36-
The conceptual basis for having the two variables, ‘work system’ and ‘HRM
policies’, is still fragile. MacDuffie rejects the argument that these primarily reflect
‘skill/knowledge’ and ‘motivation/commitment’ respectively, saying that many
items in either variable will have an effect on both of these influences. He dismisses
the appropriateness of factor analysis to discover meaningful bundles when he
says that that technique ‘is best suited to identifying the interrelationships among
a set of items in a scale, all designed to measure the same construct’ (p.204); he is
therefore saying that there are no such constructs in play here.
There is another problem, and it is very important. All that MacDuffie’s cluster
analysis achieves is to distinguish between different production systems by the
degree to which they use his 11 items (see Table A 1). The cluster is therefore
defined on the production system, not on the work arrangements and HR policies.
By itself, it does not allow him to bundle the 11 items into a smaller number of
variables. The conceptual basis on which this reduction was done is not explained.
So how MacDuffie moves from 11 items to two variables is quite unclear. His
factor analysis evidently gives a different assignment from the one presented in
the published study. So we are some way short of a convincing specification for
these influences. The fact that he subsequently carries out reliability analysis is
not terribly useful here. Many different combinations of the 11 items might well
have acceptable reliability scores; if this were the case, we should still have the
problem of deciding which bundles were best, and why.
Theoretical
background
This study draws upon the resource-based view of competitive advantage. This
theory posits that firm-specific competitive advantage arises when human resources
are defined by the following criteria:
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Ap p1 .p 65 37 16 /0 6/ 03, 15: 28
• must add value
HR practices can influence each of these areas. Therefore, in order to assess the
impact of innovative HR practices any study would need to develop appropriate
measures in these domains.
Huselid contends that the approach in his article has three novel dimensions:
• The outcome measures used include both ‘intermediary measures’ (ie absence
and turnover) as well as financial performance outcomes. He argues that the
intermediary measures provide a check against criticisms of reverse causality
(ie successful companies are able to introduce innovative practices because
they are successful).
Prior work
This is seen as limited because of the range of HR practices covered (partial and
not consistent), lack of consistency in the dependent variables used and the
industries explored (some are multi-industry and others single industry studies).
Huselid also questions the linkages between sets of dependent variables – for
example, the link between increased productivity and profits is not a ‘given’ nor is
the link between profitability and productivity a ‘given’. Other independent factors
can explain variations in these measures. In order to get round the partial nature
of measures used in prior work, Huselid seeks to develop a fuller range of measures
including intermediate and financial performance
Measures
He deploys Delaney, Lewin and Ichniowski’s (1989) 10 measures and adds three
more. These measures are organised into two broad categories: employee skills
and organisational structures, and employee motivation. The questions used are
in the tint box below:
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What proportion of non-entry level jobs have been filled from within in recent
years?
Employee
motivation
What is the proportion of the workforce:
Which of the following decision rules do you use most often: (a) merit or
performance rating alone, (b) seniority only if merit is equal, (c) seniority among
employees who meet a minimum merit requirement, (d) seniority?
For the five positions your firm hires most frequently, how many qualified
applicants do you have per position (on average)?
These practices were measured for both managerial and non-managerial employees
and the responses weighted by the proportion of employees in each category. From
these measures, two scales of HR practices were created and then tested for
convergent validity by testing against two independent external measures:
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Ap p1 .p 65 39 16 /0 6/ 03, 15: 28
A number of financial measures were also derived from the annual reports: Tobin’s
q (market value of firm divided by book value of assets), and GRATE (gross rate
of return on capital).
The questionnaire was sent to the senior HR manager in firms with more than 100
employees. Firms were excluded if they were foreign owned, holding companies
or publicly held divisions or business units of larger firms. His response rate was
28 per cent (ie 986 firms).
Hypotheses
Finding
s
Main finding is that 1 standard deviation increase in HR practices index is associated
with 7.05 per cent decrease in labour turnover and $27k more in sales, $18.6k
more in market value and $3.8k more in profit.
In terms of the ‘internal’ and ‘external’ fit models, the evidence was not convincing.
There was no support for internal fit and modest support for external fit.
Comment
s
The unit of analysis is the company level, and data on both HR practices and
financial performance are reported at this level. A problem with this level of
response data is that they encompass a wide number of multi-establishment
enterprises. We know that both performance and HR practices can vary
considerably between establishments in a company. This heterogeneity may be
diffusing the results and weakening both internal and external fit models through
the reporting of ‘average’ scores across establishments with diversity in HR
practices and performance outcomes. Therefore, it is possible that ‘fit’ may exist
in some of the establishments and not in others, and performance may be better
or worse in some establishments than others. The averaging out of responses that
happens at the company level in multi-establishment enterprises does not help us
understand the cases in which fit and performance are occurring. The study would
-40-
For example, in the aerospace study one of the authors (MT) received replies
from several BAe sites as well as the company HO. There is considerable diversity
in the reporting of both HR practices and in evaluations of firm performance.
Some establishments conform to the high-performance work practices/business
success model, whereas other sites do not.
This may suggest that there is an element of strategic choice in the employment
models being used, and this dimension is not considered in the Huselid article.
Overall, a dense and sophisticated article that excels in the art of measurement.
Theoretical framework
Strategic choice from the organisational theory field (revisionist contingency theory
arguing for a mediation between actor-centred theories of organisational change
and structural determinism).
Model tested
Study expects to find different HR practices associated with these broad approaches
and also different performance outcomes. Hypothesised that commitment model
will lead to higher performance than control model.
Methodolog
y
Cross-sectional survey of 54 steel mini-mills employing 460 people on average
(sd 318). Establishment-based responses, completed by HR manager and top line
manager (for business strategy information); 29 usable replies from both
respondents.
Measures
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Ap p1 .p 65 41 16 /0 6/ 03, 15: 28
• : level of discretion of non-management employees over a
Decentralisation range of production decisions (eg quality, work flow,
investment in kit, product development)
• General training : proportion of training given to areas that are not task/job
focused
Statistical
techniques
Cluster analysis used to differentiate HR systems. Six clusters identified but
reduced to two because of degrees of freedom problems (ie small number of cases)
in subsequent analysis.
Hypotheses tested using regression analysis. Unionisation the main control variable
– a wider set (thus enabling more complex contingency tests) could not be used
because of small sample size.
Main
findings
Mills that conformed to the ‘commitment model’ demonstrated higher
productivity, lower levels of employee turnover and lower scrap rates.
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Limitation
s
The cross-sectional survey does not permit understanding of causality in
development of HR systems and firms’ better performance. It also fails to take
account of process issues and managers as strategic actors.
Essentially, Conyon seeks to estimate the association between firms’ sales levels
and the degree to which they use a variety of so-called ‘innovative’ HR policies.
He deploys a standard production function approach and concludes that, after
taking certain other conditions into account, a more intense use of innovative HR
policies is associated with a significantly higher level of sales; given that he controls
for the size of the labour force, this means that innovative HR is also associated
positively with labour productivity (ie output per employee). He suggests that a
‘unit increase’ in HR innovation may raise productivity by 8 per cent.
He uses data from the 139 respondents to a survey sent to the HR director of the
largest 1,000 UK firms with a stock market quotation (excluding investment
trusts). He is centrally concerned with the issue of complementarities among HR
practices, and his review of the theoretical literature is relatively wide ranging in
this respect. However, his way of operationalising complementarities is perhaps
not so well developed. This is done in the following way.
• communications
• work teams
• employment security
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Ap p1 .p 65 43 16 /0 6/ 03, 15: 28
• job flexibility
For each of these areas he has more than one indicator, ranging from two indicators
for employment security to nine for incentive pay systems (not eight as is stated
in the text, page 18). There are 32 indicators in total. Each indicator is measured as
a yes/no dummy; ie do you make any use of policy X? For each of the six areas a
firm is said to make intensive use of innovative practices if it answers yes to at
least 75 per cent of the indicators (this presumably implies that for a firm to be an
intensive user in those areas with only a few indicators, it has to answer yes to all
the questions). Conyon then sums up the number of intensive HR areas to form
his measure of the HR system; (on page 19 he says that this can range from a value
of 1 (least innovative) to 6 (most innovative); in fact, the lowest possible score is
surely 0; see also page 23). High values on this scale are said to imply greater HR
complementarity, ie the practices are not seen to be possible substitutes for one
another.
• Within any of the six HR areas, all indicators are given the same weight. So,
for example, when measuring the intensity of incentive pay, the use of executive
share options is deemed to have the same importance as, say, individual pay
being linked to skills. Further, all six areas are given the same weight; so that a
firm which is an intensive innovator in incentive pay, work teams and skills
and training gets the same HR system score as one stressing communications,
employment security and job flexibility. Are all these indicators/areas reall of
equal importance for productivity? Do communications policies have as ystrong
an impact on productivity as pay systems? There is no theorising here.
• Conyon estimates the regressions for a set of years, 1989 to 1995. But the HR
measures mostly refer to arrangements in a single year, 1996. If HR
arrangements change significantly over time (as eg Huselid claims), it’s not
quite clear how one interprets Conyon’s associations, which are between pas
productivity and curren practices. t
t
• Conyon wishes to explore complementarities further by seeing whether there
is more explanatory power if the individual HR practices are added to the
equation (which means that he runs an additional 32 equations). When doing
this he finds that most of the individual practices are not significant (but no
fewer than eight – one quarter – are!). This looks like an odd procedure, and it
is not clear what it shows. First, the individual practice is already represented
in the overall HR index (though its impact may be pretty dilute); to have it a
-44-
• In Table 3 Conyon reports that there are 991 observations; given that he has
data for seven separate years on 139 companies, it’s not easy to see why there
are quite as many as 991 observations.
GUEST D. an H OQUE K. (1994) ‘The good, the bad and the ugly: employment
d new non-union workplaces’. Human Resource Management Journal.
relations in
Vol. 5, No. 1. pp.1-14.
Objectives of the
study
The authors claim that they have three objectives:
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Ap p1 .p 65 45 16 /0 6/ 03, 15: 28
Data were collected by postal questionnaire. The parent study collected data on
347 establishments (from 1000 originally contacted), but this study is confined to
the non-unionised establishments.
A fourfold classification of HR
arrangements
Guest and Hoque divided the establishments by (a) whether they had an HR
strategy, and (b) the content of their HR practices.
Was there a
strategy?
In deciding whether there was an HR strategy Guest and Hoque relied on the
answers to a single survey question ‘Do you have a human resource strategy
formally endorsed and actively supported by the top management team at the
establishment?’; 64 said yes, 55 said no.
These data were used in a somewhat crude way. Guest and Hoque say that ‘It
might be argued that some practices are more important than others, but we know
of no theoretical basis on which to determine this’ (page 6). If this is true it might
also be true that there is no clear theoretical basis for specifying the original list –
certainly, other research specifies somewhat different lists. The decision was taken
to count ‘high’ HRM practice where establishments used more than half the
practices, whatever precise combination was employed; low HRM practice
establishments used a minority of the practices.
We therefore have the following fourfold classification, using Guest and Hoque’s
somewhat tendentious labels:
Table A2 Four HR
classifications
HRM strategy
High Low
-46-
HR type and
performance
Guest and Hoque have three sets of outcome variables. They have eight so-called
HR outcomes (eg employee commitments levels, staff flexibility, etc), three so-
called IR outcomes (industrial dispute incidence, labour turnover rates and
absenteeism), and six organisational outcomes (eg quality and productivity
measures, and economic health). All but the IR variables and one of the
organisational variables come from questions that ask for respondent judgements
on five-point scales.
Guest and Hoque follow two different procedures. First, they look to see whether
the average score on each of these 17 measures differs as between the four HR
types; second, they carry out a limited multivariate analysis to see whether, certain
other things held constant, outcomes vary by HR type. Their own conclusion is
that ‘The good…consistently report the best results for…[organizational]
performance outcomes. In contrast, the bad…consistently report the poorest
outcomes’ (page 11). This seems to be an over-statement, certainly if one wishes
to employ tests of statistical significance. We concentrate here on the six
organizational outcomes.
The results of the simple comparisons is shown in Table A3. There is little to
distinguish the four types as far as their organizational outcome is concerned.
‘Good’ firms tend to have slightly higher scores, but the differences are not statistically
significant except (weakly) in the case of quality benchmarked against the UK.
The multivariate analysis suffers from the limited number of interesting variables
that could be controlled for (establishment size, type, parent organisation, region
and national ownership). ‘Good’ certainly does not do worse than the others but
there is no clear tendency for it to do better than each of the other three types, or
for ‘Lucky’ and ‘Ugly’ to do better than ‘Bad’, which is what one version of the
theory might predict.
How well was the recession weathered 4.1 3.9 3.9 4.1 0.20
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Ap p1 .p 65 47 16 /0 6/ 03, 15: 28
Conclusions and discussion
points
• There is at best a weak and inconsistent link between HR type and
organizational outcomes.
• The use of the practices data, simply adding up any combination of 23 practices
see Table A4 , regardless of whether they fit together, is questionable.
Policy/practice % use
-48-
Theoretical framework
Objective
Methodolog
y
Survey of technology, work practices and performance of 135 large US retail banks.
Questionnaire surveys were sent to branch manager. These were combined with
independent measures of customer behaviour and census data on local
demographics. 241 branches were included in analysis from 101 banks.
Measures
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Ap p1 .p 65 49 16 /0 6/ 03, 15: 28
Statistical
techniques
OLS regression model. Variance in performance measures (productivity, cross-
sell rates and branch errors) used to understand contribution of work organisation
and HR practices. Use of other independent data sources to assist in building
reliable performance measures.
Finding
s
The analysis found that flexibility and autonomy when used separately are
correlated with higher productivity and sales. However, when they are used together
they are negatively associated with performance. These results go against the
findings of manufacturing-based studies that found complementarity and
synergistic results when broad jobs and greater decentralisation of decision-making
were combined. This underlines some of the difficulty in studying these issues in
service sector firms.
Hunter draws attention to the finding that autonomy and flexibility are positively
correlated and interprets this as showing that managers are making choices about
what work organisation systems they want to use – managers who want to minimise
loss might chose a different work system than those who want to increase sales. A
strategic choice model of HRM may therefore be supported by the data.
Comment
s
Measures of HR practices appear to be both inconsistent and weak. Few of measures
used in manufacturing studies were deployed and the author resorts to human
capital measures instead (ie education levels).
-50-
Birkbeck
Guest is also working with Sheffield (Patterson) and Kings College (Peccei) on
further analysis of the 10-year longitudinal data set held at Sheffield.
It is likely that Birkbeck will also be using WERS to explore HR and business
performance issues.
Templeto
n
Thompson has a number of studies that are of relevance. First, there is an
establishment-based survey of the aerospace sector, which captures HR practices
as well as value-added per employee performance data. This survey, first conducted
in 1997, is being repeated in 1999 and will contain a large panel element, which
allows for comparability over time. This was a mono-respondent survey but
completed by senior managers (MDs, etc). Second, a number of case studies of
aerospace establishments are being conducted that look at HR strategies in practice,
particularly their impact on employees. The psychological contract model is being
used to compare HR strategies in different organisational contexts. Third, under
the ESRC innovation programme, a mixed method design is being adopted to
look at HR and reward practices and one dimension of business performance
(innovation). This survey is of the ‘knowledge’ economy, and deals mostly with
high technology and pharmaceutical companies. Five years of business performance
data have also been captured. A number of case studies are being conducted. Fourth,
Thompson is working with Richardson and Peccei on cross-sectoral survey data
collected in 1997 that explores HR practices and business performance issues.
Thompson is also working with SKOPE at Oxford to develop work in the aerospace
sector that looks at skills, training and economic performance. A number of detailed
case studies are being developed, and the intention is to look at comparative research
designs in other European aerospace establishments. SKOPE will be focusing on
high performance work systems as one of their core areas and will shortly be
commissioning a critical review of research and theory.
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Ap p1 .p 65 51 16 /0 6/ 03, 15: 28
Warwick
Bath
John Purcell is co-ordinating work on the engineering sector that, among other
issues, is looking at HR practices and business performance. This is concentrating
specifically on SMEs, which is a neglected area in the current literature, and as
well as survey material it also involves detailed case studies.
-52-
ARTHUR (1994)
Methodolog
y
The data were collected at 30 US steel mini-mills. The study is cross-sectional and
industry specific. OLS regression used.
Independent
variables
• HR Systems (control or commitment) categorised according to levels of
decentralisation, participation, general training, skill, supervisor, social, due
process, wages, benefits, bonus (incentive payments).
• Total turnover.
• Control variables include age, size, union status and business strategy.
Dependent
variables
• Labour efficiency (average number of labour hours to produce one tonne of
steel)
• Scrap rate (number of tonnes of raw steel melted to produce one tonne of
product).
Finding
s
• A commitment HR system is a positive and significant determinant of both
labour hours and scrap rates.
Conclusions
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Ap p3 .p 65 53 16 /0 6/ 03, 15: 29
Authors
Independent
variables
• Establishments are categorised as ‘good’ (clear HR strategy and good HR
practices full utilisation, high involvement HR model), ‘ugly’ (efficiency driven
model with HR strategy but little use of HR practices), ‘lucky’ (no clear
strategy but use of HR practices) and ‘bad’ (no HRM strategy and low uptake
of HR practices). These categorisations are made on the basis of a question
about the existence of HR strategy and the use of 23 practices.
• Controls include size, national ownership, sector, regional location and degree
of independence.
Dependent
variables
• Percentage of quality targets attained.
Finding
s
• The ‘good’ claim to have weathered the recession significantly better than the
‘lucky’.
• The ‘bad’ claim to be doing the best in terms of attainment of quality targets
attained.
-54-
Methodolog
y
Cross-sectional data collected from 62 automotive plants representing 16 countries.
Hierarchical regression analysis using Cobb-Douglas production function.
Independent
variables
• Use of buffers
• Work systems (index incorporating measures such as per cent in work systems,
employee involvement, production-related suggestions, job rotation and quality
tasks)
• Total automation
• Production scale
• Parts complexity
Dependent
variables
• Labour productivity (hours of actual working effort to build single vehicle
adjusted for comparability across plants)
Finding
s
• The three production organisation indices (leaner buffers, more multi-skilled
work system and practices) are associated with productivity and quality (except
use of buffers for quality)
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Ap p3 .p 65 55 16 /0 6/ 03, 15: 29
Conclusions
Author
H USELID M. (1995)
Methodolog
y
Cross-sectional, multi-industry study of 968 US-owned firms with over 100
employees. Regression Analysis used.
Independent
variables
• Employee skills and organisational structures index of practices that enhance
employees’ knowledge, skills and abilities, ie formal job design programme,
providing training, QWL programmes, quality circles, labour-management
teams, information-sharing programmes, formal grievance procedures, profit
and gain-sharing plans.
Dependent
variables
• Turnover
Finding
s
• Turnover determined by employee skills and organisational structures (+).
Motivation insignificant.
-56-
Conclusions
• One standard deviation increase in each practice reduces turnover by 1.30 raw
percentage points.
• Per employee effect of increasing practices one standard deviation was $18,641
in profit.
Authors
Independent
variables
• Staffing selectivity index
• Training index
• Incentive compensation
• Grievance procedure
• Decentralized decision-making
• Vertical hierarchy
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Ap p3 .p 65 57 16 /0 6/ 03, 15: 29
Dependent
variables
• Perceived organisational performance constructed from seven items assessing
performance of organisation over the last three years relative to rest of industry.
Finding
s
• When HR practices are entered simultaneously training (+), incentive
compensation (+) and vertical hierarchy (+) are significant determinants of
perceived organisational performance.
Conclusions
Authors
Independent
variables
• Administrative HR system index (ie selection for manual and physical skills,
training, results based performance appraisal, individual equity, individual
incentives and hourly pay)
• Human capital enhancing HR system index (ie selective staffing, selection for
problem-solving and technical skills, development and behaviour-based PA,
external equity, group incentives, skill-based pay and salaried compensation)
-58-
Dependent
variables
• Machine efficiency (self-report scale consisting of items such as equipment
utilisation, scrap minimisation)
Finding
s
• Models that included interaction terms with HR strategies show that HR
systems were all significant determinates (main effects) to all independent
measures.
Conclusions
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Ap p3 .p 65 59 16 /0 6/ 03, 15: 29
° Administrative HR systems still appropriate in context where need to
reduce costs.
Authors
Independent
variables
• Planning investment (two item index dichotomously coded)
Dependent
variable
• Labour productivity (net sales divided by number of employees).
Finding
s
• Labour productivity is determined by HR planning (+) and hiring (+).
-60-
Authors
Independent
variables
• Internal career opportunities
• Training
• Appraisal
• Profit sharing
• Employment security
• Employee participation
• Control variables include bank size, age, holding company and Federal Reserve
district).
Dependent
variables
• Return on average assets
• Return on equity.
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Ap p3 .p 65 61 16 /0 6/ 03, 15: 29
Finding
s
• ROA determined by results-oriented appraisals, profit sharing and employment
security. HR practices significantly explained 12.55 per cent of variance above
the control variables.
• Model exploring interactions between strategy and each of the practice variables
had insignificant results. Post hoc tests revealed some support for the
contingency view-links between performance and the practices of performance
appraisal, participation and internal career opportunities are contingent on
strategy.
• A model that classifies each bank according to the ideal employment system it
closely resembles showed the closer the employment system resembled the
market type system the higher the ROA and ROE.
Conclusions
• Some support for the contingency view – banks able to align HR practices
with strategy are estimated to have a 50 per cent higher ROA and ROE than
those banks whose HR practices were one standard deviation of alignment.
Authors
Independent
variables
• HRM system index constructed from mean of 24 questions focusing on
intensity with which high performance policies and practices have been adopted
by the firm.
-62-
• Controls include prior firm growth in sales, tangible assets, no. of employees,
investment in R&D, unionisation, firm systematic risk and industry codes.
Dependent
variables
• Variation of Tobin’s q
Finding
s
• Both factors are significant determinants of Tobin’s q.
Authors
Independent
variables
• Strategic HRM (scale of eight items including teamwork, communications,
involvement, enhancing quality and developing talent to serve business in
future).
• Control variables include capital intensity, union coverage, firm size, industry
concentration, sales growth, stock variability, industry and R&D sales. Some
models contained control for a previous year’s performance.
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Ap p3 .p 65 63 16 /0 6/ 03, 15: 29
Dependent
variables
• Employee productivity (net sales per employee)
Finding
s
• Labour productivity (model including strategic and technical HRM only)
predicted by strategic HRM (+).
Conclusions
Authors
-64-
• System 2 (similar to three but also includes extensive training and high
involvement in teams)
• Note: systems are classified on the basis of profit sharing, line incentives, high
screening, recruitment, high participation, multiple teams, formal team practice,
employment security, job rotation, high training, low training, information
sharing, managers meet workers regularly, meet with union, unionised, low
grievances.
• Twenty-five controls that affect uptime (ie capital vintage, learning curve effects,
computerisation, etc).
Dependent
variables
• Productivity (production-line uptime, which is the percentage of scheduled
operating time that the line actually runs)
• Quality (the percentage of total production that met the standards as prime
finished steel)
Finding
s
• Lines with HRM system 1 have the highest productivity, followed by systems
2, 3 and 4.
• The more innovative the HR practices the higher the quality of steel produced
on the lines.
Conclusions
• If one line changed form HRM system 4 to system 2 and maintained these
changes over 10 years, it would increase its operating profits by over $10 million
strictly as a result of the HRM changes.
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Ap p3 .p 65 65 16 /0 6/ 03, 15: 29
• Evidence also shows that systems of HRM practices determine productivity
and quality. Marginal changes in individual work practices have little effect.
Authors
Independent
variables
• Japanese model:
• American model:
° Traditional US system
• Twenty-five control variables are included. For example, age of the line,
technology and quality of supplied steel.
Dependent
variables
• Productivity (percentage of scheduled operating time that the line actually
runs)
• Quality (prime yield rate – the percentage of total production in a month that
meets specific quality standards for designation as prime finished steel).
-66-
• The regression that explores relative differences between the types of US lines
shows that quality is substantially higher in the Japanese and innovative US
lines compared with the high teamwork or the low teamwork system.
Conclusions
• Japanese production lines are more productive that the average US lines (by 6
per cent), however where the US lines have introduced innovative work systems
they perform equally as well as the Japanese lines.
• The lines having innovative HR practices in Japan and the US are on average 7
per cent more productive than the US employing traditional HR practices.
• Qualitative data indicate that the different work practices comprising the
Japanese HR system are mutually reinforcing. HR systems that support
employee participation enable workers to fine-tune production process with
minimal investments.
Authors
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Ap p3 .p 65 67 16 /0 6/ 03, 15: 29
Independent
variables
• Acquisition and development of employee skills (selection, induction, training
and use of appraisals).
• Job design (skill flexibility, job responsibility, job variety and use of formal
teams)
• Communication
• Harmonisation
• Comparative pay
Dependent
variables
• Labour productivity (ratio of sales over employment in firm, divided by the
ratio of sales over employment in the industry).
• Real profits per employee (profits before tax, deflated by the producer price
index of the industry and controlling for size of firm).
Finding
s
• HRM practices account for 19 per cent of variation between companies in
change in profitability. Acquisition and development of skills and job design
are significant determinants of change in profitability.
Authors
-68-
• Union
• Industry
• TQM programme
• Capital intensity
Dependent
variables
• Total sales of the establishment (natural log of sales)
• Turnover.
Finding
s
• Investment HR systems are universally more effective than contractual systems
in increasing sales and value added and decreasing turnover.
• Interaction tests show that low cost strategies reduce sales and value added
significantly and increase turnover when combined with investment HR
systems (by 4 per cent, 4 per cent and 1 per cent respectively)
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Ap p3 .p 65 69 16 /0 6/ 03, 15: 29
Conclusions
• Investment systems are associated with a 34 per cent increase in sales compared
with contractual systems that decrease sales by 5 per cent
Author
SHEPPECK M. A. (1998)
Methodolog
y
Cross-sectional, multi-industry study of 106 organisations. Hierarchical regression
used.
Independent
variables
• Competitive strategy
• Employee skills and work policies (ie staffing, training, work design and
employee relations policies that foster skill acquisition)
-70-
Dependent
variables
• Perceived organisational effectiveness (self-report measure consisting of six
items comparing the rater’s organisation to competitors in the industry).
Finding
s
• Hierarchical regression results show that HR practices contribute and
additional 13.2 per cent to the prediction of organisation effectiveness above
the variance accounted for by the control variables, environment and
competitive strategy along (although no single practice in itself is significant).
Author
Methodolog
y
Longitudinal study of 388 manufacturing firms. Export performance data collected
30 months after predictor data. OLS regression used.
Independent
variables
• International HRM strategy (scale incorporating extent to which HR strategies
of status and influence, financial rewards, hiring, promotion, training and
development and performance appraisal)
• Controls include age of firm, size, R&D intensity, stage in life cycle, foreign
exposure, risk avoidance, international orientation of firm’s future plans,
profitability expectations, attitude towards growth, profit and market
development, systematic exploration of marketing opportunities and
commitment to foreign advertising.
Dependent
variables
• Export performance (index created by standardising and adding three measures:
changes in international market share; changes in export intensity; and export
intensity relative to industry).
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Ap p3 .p 65 71 16 /0 6/ 03, 15: 29
Finding
s
• International HR strategy is a significant determinant (+) of export
performance and increases explained variance by 0.09 per cent (after controlling
for other factors).
Authors
Independent
variables
• Companies allocated into four categories of HR system based on index
containing items related to incentive pay systems, communications, work
teams, employment security, job security, skills and training.
• Controls include log of employment, capital use, union, labor relations and
competition.
Dependent
variables
• Productivity (log of real company sales).
Finding
s
• All systems of HRM are significant determinants of productivity in the OLS
model.
-72-
Author
HUNTER L. W. (1999)
Methodolog
y
Cross-sectional, single industry study (banking) of 241 US bank branches from
101 retail banks. Survey data were matched with customer behaviour data and
census data. Analysis used is OLS regression.
Independent
variables
• Branch flexibility (8 item scale)
•Pay
Dependent
variables
• Branch productivity
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Ap p3 .p 65 73 16 /0 6/ 03, 15: 29
Finding
s
• HR practices have no impact on branch productivity. Repeated analysis with
interaction term between autonomy and cross-training is negatively associated
with productivity.
• HR practices have no impact on the cross sell rate. Repeated analysis with
interaction term between autonomy and cross-training is negatively associated
with the cross-sell rate.
Conclusion
• For productivity and sales effectiveness, autonomy and job breadth appear to
contradict one another.
However, these results should be treated with some caution as autonomy and
flexibility are positively correlated.
References and further reading
ARTHUR , JEFFREY B (1992) ‘The link between business strategy and industrial
relations systems in American steel minimills’ Industrial and Labor Relations
Revie Vol 45.
w
ARTHUR , J EFFREY B (1994) ‘The effects of human resource systems on
manufacturing performance and turnover’ Academy of Management Journal
Vol 37 No 3.
BOXALL , PETER (1996) ‘The strategic HRM debate and the resource-based view of
the firm’ Human Resource Management Journal Vol 6 No 3.
GUEST , D AVID E an H OQUE , K IM (1994) ‘The good, the bad and the ugly:
d
employment relations in new non-union workplaces’ Human
Management Vol 5 No 1 pp 1–14. Resource
Journal
GUEST , D an P ECCEI , R (1994) ‘The nature and causes of effective human resource
d
management’. British Journal of Industrial Relations 32 pp 219–242.