HR practices have effects (somehow)
From: Dr. Matthias Meifert
It is commonplace that HR practices must be measured according to their practical effectiveness. Thus there´s a big desire in practice to find evidence for the effects of HR practices on organizational outcomes. However the methodological approach that had been used so far didn´t allow answering the justified and often asked question: How do HR practices exactly affect organizational outcomes?
The latest meta-analytic research of scholars around Jiang(2012) closes this gap. The researches conceptually divided all different HR practices among the ability-motivation-opportunity (AMO) model in three HR dimensions:
Skills-enhancing HR practices are designed to ensure appropriately skilled employees; they include comprehensive recruitment, rigorous selection, and extensive training.
Motivation-enhancing HR practices are implemented to enhance employee motivation. Typical ones include developmental performance management, competitive compensation, incentives and rewards, extensive benefits, promotion and career development, and job security.
Opportunity-enhancing HR practices are designed to empower employees to use their skills and motivation to achieve organizational objectives. Practices such as flexible job design, work teams, employee involvement, and information sharing are generally used to offer these opportunities.
Data from 116 articles was allocated to the three dimensions mentioned above. These then were related to proximal organizational outcomes (human capital and employee motivation) and distal organizational outcomes (voluntary turnover, operational outcomes and financial outcomes). The following figure shows direct and indirect relationships among HR dimensions and organizational outcomes categories.
Fig.: Relationships among HR practices and organizational outcomes (In dependence on Jiang et al., 2012)
As one would expect all three categories of HR practices were positively related to human capital and employee motivation. Skill- enhancing practices had the significantly largest effect on human capital. Similarly Motivation-enhancing HR practices were significantly most related to employee motivation. In comparison Skill-enhancing HR practices had a small effect on employee motivation.
Analysis of further relationships indicates that human capital and employee motivation were related to voluntary turnover and operational outcomes which consequently had direct impact on financial outcomes.
This meta-analysis included data from a big number of articles with independent samples and provides two important implications for managerial practices. Firstly organizations can obtain substantial financial benefits from investing in the three HR dimensions in general. Secondly the findings suggest that companies can maximize the return on investment in HRM by focusing on the different effects of the three dimensions and using appropriate HR practices. Finally this meta-analysis empirically supports what had been a common claim in practice.
Jiang, K., Lepak, D. P., Hu, J., & Baer, J. C. (2012). How does human resource management influence organizational outcomes? A metaanalytic investigation of mediating mechanisms. Academy of Management Journal, 55, 1264–1294.