Wright et al (2005) The Relationship Between HR Practices and Firm Performance: Examining Causal Order

The desire of human resource (HR) practitioners to demonstrate the value of what they do for the rest of the organization has a long history. Drucker (1954) referred to ―personnel‖managers as constantly worrying about ―…their inability to prove that they are making a contribution to the enterprise,‖ (p. 275). This has been echoed more recently by Tom Stewart, who described HR leaders as being ‖…unable to describe their contribution to value added except in trendy, unquantifiable and wannabe terms...” (Stewart, 1996, p. 105) In response to these longstanding and repeated criticisms that HR does not add value to organizations, the past 10 years has seen a burgeoning of research attempting to demonstrate that progressive HR practices result in higher organizational performance. Huselid’s (1995) groundbreaking study demonstrated that a set of HR practices he referred to as High Performance Work Systems (HPWS) were related to turnover, accounting profits, and firm market value. Since then, a number of studies have shown similar positive relationships between HR practices and various measures of firm performance. For instance, MacDuffie (1995) found that ―bundles‖ of HR practices were related to productivity and quality in his sample of worldwide auto assembly plants. Delery and Doty (1996) found significant relationships between HR practices and accounting profits among a sample of banks. Youndt, Snell, Dean and Lepak (1996) found that among their sample of manufacturing firms, certain combinations of HR practices were related to operational performance indicators. More recently Guthrie (2001) surveyed corporations in New Zealand and found that their HR practices were related to turnover and profitability. This vein of research has been summarized by Huselid and Becker who stated ―Based on four national surveys and observations on more that 2,000 firms, our judgment is that the effect of a one standard deviation change in the HR system is 10-20% of a firm’s market value‖ (Huselid & Becker, 2000; p. 851, emphasis added) Certainly, the existing research suggests a positive relationship between HR and performance. However, contrary to Huselid and Becker’s (2000) claim, this body of work tends to lack sufficient methodological rigor to demonstrate that the relationship is actually causal in the sense that HR practices, when instituted, lead to higher performance. Little, if any, research has utilized rigorous designs to test the hypothesis that employing progressive HRM systems actually results in higher organizational performance in a causal sense. The purpose of this study is to provide a more rigorous examination of the causal order in the HR practice – organizational performance relationship. It uses a unique sample of autonomous business units within the same company and explores the relationships between HR practices and past, concurrent, and future measures of operational and financial performance.

Van Der Aa et al Reducing Employee Turnover through Customer Contact Center Job Quality
Introduction An issue of growing concern for many organizations and national economies is the quality of jobs available. Better jobs constitute a primary objective of the EU employment strategy, because they encourage social inclusion and strengthen economies (European Commission 2001). Another growing element in many countries is the presence of customer contact centers (CCC), which more and more organizations use to deliver service and manage contacts with their customers (Anton 2000; Holman, Batt, and Holtgrewe 2007; Miciak and Desmarais 2001). From 1999 to 2005, the CCC growth rate in Europe, the Middle East, and Africa reached 130% (Datamonitor 2007), and such rapid growth has had significant consequences for job quality. The term ―sweatshop‖ is not an uncommon description of the work environment (e.g., Taylor and Bain 1999). Employees call CCC jobs monotonous, in that they repeatedly answer similar questions, without any variety in their tasks (Budhwar et al. 2009; Lawler and Hackman 1971), and stressful, in that they are constantly monitored on a minute-to-minute basis (Holman, Chissick, and Totterdell 2002). The quality of these jobs thus demands attention. Such attention is particularly warranted considering the consequences of low quality CCC jobs. The most pressing outcome is extreme employee turnover rates of 20–40% (Hillmer, Hillmer, and McRoberts 2004; Malhotra and Mukherjee 2004; Metter 2008; Whitt, Andrews, and Carlson 2004), or even higher (Taylor and Bain 1999). For the organization, the internal consequences of high employee turnover rates are mainly financial, including the high costs associated with training and recruitment of new employees (e.g., Glebbeek and Bax 2004; Hillmer, Hillmer, and McRoberts 2004; Robinson and Morley 2006). An employee turnover rate of 20 – 40% implies that the entire staff changes every three to five years, which in turn implies an 4

just to deal with employee turnover. especially from sociology of education. Furthermore.5 million each year just on training. Needham 2009). which should enhance job satisfaction and affective commitment.. These studies find that youth with mental health problems perform less well in school and attain lower levels of education than other youth. Agho. affective commitment.g. Spreng and Mackoy 1996).3 × _$10. Mueller. It holds for multiple indicators of mental health problems. and specific disorders such as attention deficit hyperactivity disorder . but there is a time lag before they can function at the same standard as employees with work experience. and employee turnover. Hillmer. and developmental psychology (e. Wetzels. Behavior Problems. By exploring the role of CCC job quality and its impact on job satisfaction. Campbell and von Stauffenberg 2007).g. Although patterns are not always consistent. McLeod et al Adolescent Mental Health. studies of the social consequences of mental health problems contribute equally to the sociological mission. Despite the dominance of research on the mental health implications of social organization.g. which gives managers a sense of what they actually can do to improve CCC job quality and lower employee turnover rates. Kessler et al. Recruitment—including advertising. which leads—according to service profit chain theory—to poorer service delivered to customers. 1987. can reduce employee turnover rates. Fuchs. and Dauber 1993. we provide a conceptualization and operationalizaton of CCC job quality and its role in reducing employee turnover. 1989). psychological distress and depression in preadolescents and adolescents (Needham. Matzler. To mitigate that loss. we offer clear insights into the impact of CCC job quality on job satisfaction. From a managerial perspective. several studies have shown that job quality is an important antecedent of job satisfaction and affective commitment. and Feinberg 2001. Needham 2009).000 =) $1. which offers another reason for a sense of urgency in the quest to reduce employee turnover in CCCs. Therefore.. and employee turnover. confirming the strong mark that social organization leaves on our feelings and behaviors.000 per employee. sociologists reject the assumption that the social consequences of mental health problems follow necessarily from functional impairments in favor of the alternative that these consequences reflect fundamentally social processes. That is. and Academic Achievement Sociologists maintain a long-standing interest in the social distribution of mental health problems. Entwisle.75 million annual.. Alexander. By invoking these concepts. sociologists consider social consequences to be evidence of stigma and social exclusion (e. New employees receive training. 2005). 1999. 1995.. disadvantaged social statuses are generally associated with high levels of distress and high rates of disorder (Thoits 2010). affective commitment. and Kilbourne 2010. Sasser. Heskett. and socioeconomic status (see McLeod 2013 for a review). Miech et al. we consider whether improving CCC job quality. the firm must undertake extensive training of new employees. Farmer and Bierman 2002). In contrast to clinicians and epidemiologists. who view social consequences as indicators of disorder severity (e. time invested in interviews. McLeod and Kaiser 2004. Eisenberg. Most studies come from outside the sociology of mental health. and Muller 2004).000 per employee.. Zahorik. Hillmer. Academic achievement is among the most thoroughly studied social consequences of mental health problems. we add to existing literature by offering a better understanding of the concept of CCC job quality and its impact on key outcomes.000 per employee. From a theoretical perspective. This gap reduces productivity and service quality. and Price 1993. In particular. Rust. our central research question focuses on whether CCC job quality is an effective instrument for reducing employee turnover. and Keinigham 1995. high employee turnover harms customers. raceethnicity. The findings of our study have implications for both scholars and practitioners.enormous loss of knowledge. social epidemiology. Crosnoe.g. de Ruyter. and McRoberts (2004) instead estimate approximately $25. (2009) estimate costs approximately $10. in middle and high school (Fletcher 2010. and Schlessinger 1997. and Schubert 2004. In this pursuit. and assessments—represent further costs of employee turnover. A CCC that employs 500 call center agents and experiences an average employee turnover rate of 30% thus expends (500 × _0. The results likely include low customer satisfaction and high customer turnover (e. and into the postsecondary years (Hunt.g. The association holds throughout the early life course—in elementary school (e. Kessler et al. Robinson and Morley (2006) thus estimate that total turnover costs are $12. Tett and Meyer 1993). Link et al. Literally hundreds of studies have been published on differences in levels of psychological distress or rates of psychiatric disorder based on gender.g. we help discern whether CCC job quality can provide a lever to reduce employee turnover rates. which Budhwar et al.. These estimates imply our hypothetical company could spend $3. which then influence turnover (e. including internalizing and externalizing problems in young children (McLeod and Kaiser 2004).

. We rely on a broad definition of mental health and behavior problems and include in our analysis four types of problems that predict academic achievement: depression. Rutter. The consistency of the association across diverse mental health and behavior problems confirms their significance for attainment. We advocate an equally expansive approach to the definition of mental health in analyses of social consequences. Despite many years of relevant research. estimates from studies that fail to take combinations into account may misrepresent the social consequences of mental health problems. Schwartz 2002). and related.S. First. and substance use. Many youth experience more than one problem (Costello et al. We address these limitations in our analysis by asking the following: (1) Which mental health and behavior problems have the strongest associations with future academic achievement among adolescents. Finally. 2003). Maguin and Loeber 1996. including delinquency and substance use (Lynskey and Hall 2000. It also holds for behavior problems that are closely associated with mentalhealth. independent of academic aptitude? (2) Which specific combinations of problems are most consequential for achievement? We answer these questions using data from the National Longitudinal Survey of Adolescent Health. many studies include only limited controls for academic aptitude. even when they do consider multiple problems. They also cover a range of “troubled and troubling” behaviors that are of concern to education scholars (Hobbs 1982). few studies consider multiple problems simultaneously (Breslau 2010). adolescents.(ADHD)(Galéra et al. longitudinal survey of U. Second. and Lachenbruch 1991. which means that studies of single problems will produce biased estimates. 2008). Sociologists who study the social distribution of mental health problems have argued for expanding the range of outcomes beyond depression and distress to ensure a comprehensive analysis of the consequences of social inequalities for well-being (Aneshensel. These problems cover the two major dimensions of emotional and behavioral problems: internalizing problems—inward-directed forms of distress such as depression and anxiety—and externalizing problems—outward-directed forms of distress such as conduct disorder and impulsive behavior. studies have not determined whether some combinations of problems have stronger associations than others. To the extent that they do. introducing ambiguity into the interpretation of the results. 2009). or Add Health. These limitations weaken our understanding of which problems matter most and why. empirical evidence for the association of mental health and behavior problems with academic achievement is limited in three key ways. a prospective. delinquency. Staff et al. attention problems.

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