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HRM and Performance

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Title: HRM and Performance


1
HRM and Performance
  • MGTO 231

2
(No Transcript)
3
PERFOR-MANCE
4
Can HRM improve Firm Performance?
  • HR leaders are unable to describe their
  • contribution to value added except in trendy,
  • unquantifiable and wannabe terms

Source Stewart, T. (1996), Taking on the Last
Bureaucracy, Fortune, 133(1), p. 105.
5
Can HRM improve Firm Performance?
  • Strategic HRM (SHRM) Yes! HRM practices can be
    useful strategically and can help the firm
    achieve a competitive advantage.

6
Resource Based View (RBV)
  • According to the RBV, firms can achieve a
    competitive advantage if they have the best
    PEOPLE on board.
  • These people should have KSAOs that are
  • Rare
  • Hard to imitate
  • Valuable
  • Lack of substitutes
  • However, RBV is a highly abstract idea that
    provides little practical guidance for HRM (nor
    for HRM researchers)

7
HRM Functions and Performance
  • The more extensive recruitment and selection
    procedures the higher firm profits (Terpstra
    Rozell, 1993)
  • Link between adoption of training programs and
    financial performance (Russell et al., 1985)
  • Using performance appraisal and incentive pay
    leads to higher profitability (Gerhart
    Milkovich, 1992)

Gerhart, B., Milkovich, G.T. (1992), Employee
compensation Research and practice. In M.D.
Dunnette L.M. Hough (Eds.), Handbook of
Industrial and Organizational Psychology, vol. 3
481-569. Palo Alto, CA Consulting Psychologists
Press. Russell, J.S., Terborg, J.R., Powers,
M.L. (1985), Organizational performances and
organizational level training and support.
Personnel Psychology, 38 849-863. Terpstra,
D.E., Rozell, E.J. (1993), The relationship of
staffing practices to organizational level
measures of performance. Personnel Psychology,
46 27-48.
8
High-Performance Work Systems
  • Instead of looking at people or the effectiveness
    of individual HR functions, the HPWS idea focuses
    on the SYSTEM of HR functions

9
High-Performance Work Systems
Low Turnover
Satisfied Workers
Lower Costs
Interesting Jobs
Low Absenteeism
Higher Profits
Satisfied Customers
High Quality
Higher Sales
High Innovation
Greater Productivity
Knowledge Sharing
10
Conditions that Contribute to High Performance
  • Teamwork and Empowerment
  • Knowledge Sharing
  • Job Satisfaction
  • And Ethics

11
Teamwork and Empowerment
  • A popular way to empower employees is to
    establish self managing work teams
  • Bring together a variety of knowledge
  • Feeling of being part of a team may improve job
    satisfaction and output quality
  • Managers need to provide support, open
    communication, and resources

12
Knowledge Sharing
  • Learning organization an organization in which
    people continually expand their capacity to
    achieve the results they desire.
  • Continuous learning refers to each employees
    and each groups efforts to gather information
    and apply the information to their decisions.
  • A learning culture is an organizational culture
    in which learning is rewarded, promoted, and
    supported by manager and organizational
    objectives.

13
Knowledge Sharing
  • Knowledge Management at Hewlett Packard
  • If only HP knew, what HP knows!
  • Solutions implemented at HP.

14
Test Your Knowledge
  • Charlotte is a manager overseeing the work of a
    team. Which of the following behaviors would
    empower the team the least?
  • Opening lines of communication between the team
    and other groups within the organization.
  • Directing the team and monitoring their
    day-to-day activities.
  • Ensure the team has the resources they need.
  • Keep the team informed as new, relevant
    information becomes available.

15
Job Satisfaction
  • People are satisfied with their jobs when they
    find them fulfilling and allow them to fulfill
    important values
  • Occupational intimacy occurs when employees
  • Are fully engaged in their work
  • Care about their coworkers
  • Find their work meaningful

16
Practical Aspects of a HPWS
  • Extensive staffing procedure
  • Self-managed teams
  • Decentralized decision making
  • Extensive training
  • Flexible work assignments
  • Open communication
  • Incentive pay

17
Strong Evidence or Just Another Buzzword?
  • Strong evidence that shows that implementation of
    a HPWS is associated with
  • Perceptions of higher firm performance (Delaney
    Huselid, 1996)
  • Actual firm profits (Guthrie, 2001 Huselid,
    1995)

Delaney, J.T., Huselid, M.A. (1996), The impact
of human resource management practices on
perceptions of organizational performance.
Academy of Management Journal, 39,
949-969. Guthrie, J.P. (2001), High-involvement
work practices, turnover, and productivity
Evidence from New Zealand. Academy of Management
Journal, 44, 180-190. Huselid, M.A. (1995), The
impact of human resource management practices on
turnover, productivity, and corporate financial
performance, Academy of Management Journal,
38(3) 635-672.
18
Implementing a HPWS
  • Difficult to achieve in an already existing
    organizations (for reasons mentioned in previous
    two sessions).
  • Easier to use as a model when setting up a new
    affiliate/branch/factory.

19
Test Your Knowledge
  • The HR director of a medium-sized corporation
    spends 90 of his time meeting and working with
    fellow HR staff. He is primarily concerned with
    ensuring the company meets all legal requirements
    with regard to HR activities. This HR director
  • Is a major contributor to a high-performance
    organization
  • Has a strategic focus
  • Is concerned with customer satisfaction
  • Has limited the utility and value he could bring
    to the organization

20
In Sum
  • Human Resource Management should not be seen
    purely as a cost center
  • Human Resource Management can make a valuable
    contribution to firm performance.
  • Estimates are that a 1 s.d. improvement in the HR
    system will increase the firms performance by
    10-20

21
Administrative Issues
  • Immediate feedback will be given on presentations
    but grades will be published after the last
    presentation.
  • After final course grades have been published you
    have one (1) week to make a rebuttal.
  • Only well-argued rebuttals will be considered.

22
Administrative Issues
  • Bring PRS handsets to presentation sessions
  • Specific recommendations are the most important
    part of the presentation (and final report)this
    is what the company would pay you for.
  • In the presentation, you tell the audience what
    you will be advising the company
  • Use the opportunity for peer evaluation (starts
    next week).
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