HRM Practices Influence WHAT?!

SALLY REESE

11/18/13

the first Meta…

Jiang, Hu, and Baer (2012)

How Does Human Resource Management Influence Organizational Outcomes? A Meta-analytic Investigation of Mediating Mechanisms

literature Past researchers’ point-of-views were either:

behavioral- (i.e., actions: an employee acts in a way that is in-line with company goals) or

ability-based (i.e., competencies/human capital/resources: a focus is placed on the employees competencies)

THE AUTHORS HERE SAY THE FOCUS SHOULD BE BOTH!!!

Aim: further explain the paths between DISTAL and PROXIMAL outcomes in order to better define the UNIVERSE of organizational outcomes.

theoretical background HRM systems DON’T affect outcomes identically. Different

types of HR practices may effect the same outcome in a heterogeneous way.

3 categories of MULTIDIMENSIONAL organizational outcomes: HR outcomes: directly related to HRM, like employee attitudes and

behaviors or turnover, Operational outcomes: related to goals of the organization, like productivity, innovation, or quality of service, Financial outcomes: reflect the fulfillment of economic goals in the organization, like sales growth

It is asserted that the above outcomes act in a sequential way (i.e., HR practices influence HR outcomes, HR outcomes then mediate the influence that HR practices have on operational outcomes (like productivity), which finally influence financial outcomes.

theoretical background Ability-Motivation-Opportunity Model - employee

performance is a function of the three following components Skills-enhancing (abilities): ensuring appropriately skilled

employees using methods like rigorous selection or extensive training

Motivation-enhancing: to enhance employee motivation using methods like competitive compensation or extensive benefits

Opportunity-enhancing: empower employees to use their skills and motivation to achieve organizational objectives

HR systems that are designed to increase performance may be viewed as “a composition” of these components

theoretical background Linking HR Dimensions to Multiple Outcomes

Hypotheses: 1a. Skill-enhancing HR practices are positively related to human

capital.

1b. Motivation-enhancing HR practices are positively related to human capital.

1c. Opportunity-enhancing HR practices are positively related to human capital

2a. Skill-enhancing HR practices are more positively related to human capital than motivation-enhancing HR practices

2b. Skill-enhancing HR practices are more positively related to human capital than opportunity-enhancing HR practices

theoretical background Linking HR Dimensions to Multiple Outcomes

Hypotheses continued: 3a. Skill-enhancing HR practices are positively related to employee

motivation

3b. Motivation-enhancing HR practices are positively related to employee motivation

3c. Opportunity-enhancing HR practices are positively related to employee motivation

4a. Skill-enhancing HR practices are less positively related to employee motivation than motivation-enhancing HR practices

4b. Skill-enhancing HR practices are less positively related to employee motivation than opportunity-enhancing HR practices

theoretical background Linking HR Dimensions to Multiple Outcomes

Hypotheses continued: 5a. Human capital mediates the negative relationships between the

three dimensions of HR systems and voluntary turnover

5b. Employee motivation mediates the negative relationships between the three dimensions of HR systems and voluntary turnover

6a. Human capital mediates the positive relationships between the three different dimensions of HR systems and operational outcomes

6b. Employee motivation mediates the positive relationships between the three dimensions of HR systems and operational outcomes

7. Human capital, employee motivation, voluntary turnover, and operational outcomes partially mediate the positive relationships between the three dimensions of HR systems and financial outcomes

methods Defining the three dimensions of HR systems:

Skills-enhancing (abilities): ensuring appropriately skilled employees using methods like rigorous selection or extensive training

Motivation-enhancing: to enhance employee motivation using methods like competitive compensation or extensive benefits

Opportunity-enhancing: empower employees to use their skills and motivation to achieve organizational objectives

methods Defining organizational outcomes:

Human capital - human capital measured with established scales and organizational education

Employee motivation - job satisfaction, commitment, climate, organizational support, and citizenship behavior

Voluntary turnover - dismissal and overall turnover were not included

Operational outcomes - productivity, innovation Financial outcomes - return on equity, sale

growth

results Differential effects of HR dimensions (H1-4): All three HR dimensions had significant and positive effects on

human capital. The Z-tests show that the regression coefficient of skill-enhancing HR practices (Beta=.29) was

higher than that of motivation-(Beta=.22, Z=2.74) or opportunity-enhancing practices (Beta=.07,Z=8.68). Analysis of relative weights indicated that the largest percent of variance in human capital (48%) was explained by skill-enhancing HR practices versus motivation- or opportunity-enhancing (36% and 16% respectively).

Significant positive effects were found regarding the relationships between all three HR dimensions and employee motivation, too.

The Z–tests show the regression coefficient of motivation-enhancing (Beta=.29 z=-8.64) and opportunity-enhancing (Beta=.25, Z=-7.07) were significantly stronger than skill-enhancing (Beta=.07). Forty-five percent of the variance of employee motivation was explained by motivation-enhancing HR practices, while 38% was explained by opportunity-enhancing, and skill-enhancing only explained 17%.

Basically – the first four hypotheses were supported.

resultsTable 2

Results of differential effects of HR Dimensions

on Human Capital on

Employee Motivation

Outcomes

p. 1273

-Indicates highest BETA

For skill- and human

Capital.

-And also for motivation-

And employee

motivation

supported 1a. Skill-enhancing HR practices are positively related to

human capital.

1b. Motivation-enhancing HR practices are positively related to human capital.

1c. Opportunity-enhancing HR practices are positively related to human capital

2a. Skill-enhancing HR practices are more positively related to human capital than motivation-enhancing HR practices

2b. Skill-enhancing HR practices are more positively related to human capital than opportunity-enhancing HR practices

supported 3a. Skill-enhancing HR practices are positively related to

employee motivation

3b. Motivation-enhancing HR practices are positively related to employee motivation

3c. Opportunity-enhancing HR practices are positively related to employee motivation

4a. Skill-enhancing HR practices are less positively related to employee motivation than motivation-enhancing HR practices

4eb. Skill enhancing HR practices are less positively related to employee motivation than opportunity-enhancing HR practices

results Mediation Results (H5-7): Posed that all three HR dimensions would have both direct and

indirect effects through the 5 outcomes

All proposed relationships had significant relationships consistent with predictions except the DIRECT relationship between opportunity- and financial outcomes (dropped this path)

DIRECT relationships between all three HR dimensions and voluntary turnover and operational outcomes (adding path from skills- to both outcomes improved model fit)

but path from skills- to voluntary turnover was not significant (path was dropped)

Added paths from motivation- to voluntary turnover and operational outcomes improved model fit Path from motivating- to operational outcomes was not significant (dropped this

path)

Added direct path from opportunity- voluntary turnover and operational outcomes and both paths were significant

results Figure 1. Theoretical Model of Effects of HR Dimensions on

Organizational Outcomes p. 1274

results Mediation Results Both human capital (Beta=-.20) and employee motivation (Beta=-.34) were negatively related

to voluntary turnover and were positively related to operational outcomes (Beta=.15 for human capital; Beta=.26 for employee motivation). Voluntary turnover was negatively related to financial outcomes (Beta=-.08) while operational outcomes were positively related to financial outcomes (Beta=.42)

Indirect relationships were significant between all three HR dimensions and voluntary turnover, operational outcome, and financial outcomes (Z varying from 8.05 – 13.89)

These results suggest that human capital, employee motivation, voluntary turnover, and operational outcomes partially mediated the relationships between skill- and motivation-enhancing HR dimensions and financial outcomes

Human capital, employee motivation, voluntary turnover, and operational outcomes fully mediated the relationship between opportunity-enhancing HR practices and financial outcomes

Hypotheses 5-7 were generally supported!

Generally Supported 5a. Human capital mediates the negative relationships

between the three dimensions of HR systems and voluntary turnover

5b. Employee motivation mediates the negative relationships between the three dimensions of HR systems and voluntary turnover

6a. Human capital mediates the positive relationships between the three different dimensions of HR systems and operational outcomes

6b. Employee motivation mediates the positive relationships between the three dimensions of HR systems and operational outcomes

7. Human capital, employee motivation, voluntary turnover, and operational outcomes partially mediate the positive relationships between the three dimensions of HR systems and financial outcomes

resultsFigure 2 on p. 1275

Final Model of

Effects of

HR Dimensions on

Organizational

Outcomes

results Indirect and total effects were obtained from three HR

dimensions on financial outcomes. Total effects using estimates in SEM:

The three HR dimensions (skills- motivation-, and opportunity-) on financial outcomes were .13, .18, and .09 respectively

Indirect effects: Were mediated by human capital, employee motivation, voluntary turnover,

and operational outcomes were .08, .05, and .09 respectively for the three HR dimensions

R2s for structural equations: human capital (.22), employee motivation (.25), voluntary turnover (.18), operational outcomes (.22), and financial outcomes (.26)

Results show that the final, 3 DIMENSIONAL model explained a moderate amount of variance in these variables.

implications This study demonstrated that HRM positively relates to financial

performance both by encouraging desired employee behaviors and by building a valuable human capital pool.

Authors tested a comprehensive mediating model that theorizes that HRM first relates to proximal outcomes, which further relate to distal outcomes. HRM and distal outcomes (e.g., operational and financial outcomes)

could be mediated through multiple pathways (e.g., human capital or employee motivation).

There were direct relationships between skill- and motivation-enhancing HR practices that could not be explained by the mediating process.

implications Prior research consistency:

HRM can improve organizational effectives through alternative approaches within organizations.

Major contribution: The results suggest differential effects of three dimension of HR systems

it’s not a pattern, they each function in a specific way according to the organization

Heterogeneity A question to ponder: If each HR dimension reacts differently

according to organization-type then how do we generalize?

implications Take away for future research:

Failure to include any one dimension may compromise the overall impact of HR systems on organizational outcomes or at least lead to inaccurate results.

The three HR dimensions should be viewed as distinct yet related components of HR systems rather than “interchangeable indicators” of HR systems.

Managerial implications: Findings indicate that the investment in all three dimensions was associated with increase in

financial outcomes (through a mediating process). Managers should determine whether their HR practices improve employee skills and motivation

effectively and whether other managerial practices could improve or weaken the effect of HR practices.

Ex. Don’t automatically assume the employee needs to be trained to improve motivation, appropriate feedback techniques may need to be implemented.

Managers should also place more focus on practices such as recruitment, selection, and training when enhancing employee skills.

Managers are encouraged to maximize on return on their investment in HRM by first using appropriate HR practices.

questions The authors report that, “potential moderators may exist

in the relationships among HR dimensions and organizational outcomes categories,” (e.g., industry type and country moderated HPWS and organizational outcomes in other research).

Q: After learning this, what would you say about the generalizability of this study?

The authors suggest for future researchers to examine the effects of HRM at the individual-level.

Q: Can you name a good example of an individual-level variable to study (versus organizational level)?

NEEEEXT!

Snape and Redman (2010)

HRM Practices, Organizational Citizenship Behavior, and Performance: A Multi-Level Analysis

objectives What are the relationships between HRM practices and employees’

organizational citizenship behavior (OCB) and in-role performance? Do they provide greater intrinsic motivation and opportunity to

perform through higher levels of perceived job influence and discretion?

What are the specific psychological mechanisms that may mediate the relationship between HRM and individual employee performance?

What are the mediating roles of job influence/discretion in the HRM-performance relationships – the antecedents of OCBs?

Hypotheses1a. Perceived organizational support will mediate the positive relationship between HRM practices and OCB (compliance)

1b. Perceived organizational support will mediate the positive relationship between HRM practices and OCB (altruism)

1c. Perceived organizational support will mediate the positive relationship between HRM practices and in-role behavior.

2a. Perceived job influence will mediate the positive relationship between HRM practices and OCB (compliance).

2b. Perceived job influence will mediate the positive relationship between HRM practices and OCB (altruism).

2c. Perceived job influence will mediate the positive relationship between HRM practices and in-role behavior.

measures 60 work places provided partial responses

Each organization completed a questionnaire at the manager level (to the senior general manager), and another at the employee level (50 to a sample)

HRM practices were measured in the HRM manager questionnaire

Included in the employee questionnaire: Perceived organizational support- four items

Perceived job influence/discretion – four items

Organizational citizenship behavior – nine items

In-role behavior – three items

Supervisory reports are the norm for this field, but this research design was too complex to gather such information.

design and measures 5 factor model worked best (perceived org. support, perceived job fit, compliance,

altruism, in-role behavior)

Usually HRM varies between studies, but the common theme is that the practices address the recruitment, development, motivation, and involvement of employees.

This study focuses on high performance work system (HPWS) approach which selects staff carefully, appraises their performance regularly, motivates them with performance related rewards, and provides them with formal induction, training, and promotion opportunities, and with information and opportunities to give their views.

PROBLEM: small sample size - ratio of subjects to variables (STV) was 4:17 (minimum requirement is 5:1)

Authors ended up aggregating 12 items into a single dimension (this is precisely what the previous article said NOT to do!) – although they did so in order to compare with previous findings

results HRM practices, perceived job influence, and organizational

support: The ratio of between-group to total variance provided an intra-class correlation

coefficient (ICC) of .128 (12.8% of the variance in perceived job influence resides between groups) for perceived job influence, and an ICC of .136 (13.6% of the variance in perceived organizational support lies between groups) – statistically significant between group variance in the two.

Table III – results suggest that managers, professionals, and women had higher levels of perceived job influence and Table IV – perceived organizational support.

None of the 2 controls (see table III) was significant in the perceived job influence analysis, but perceived organizational support was higher in public sector workplaces.

HRM practices was positively associated with both perceived job influence and perceived organizational support.

results HRM practices and employee behavior ICCs were .055 for compliance, .065for altruism, and .053 for in-role behavior

Although smaller than the previous ICCs (.128 and .136) still significant between group variance in the three behaviors.

The results suggest that compliance was higher for managers and professionals, altruism was higher for managers and for women, and in-role behavior was higher for women and lower professionals.

There was a positive DIRECT relationship of HRM practices on compliance, but not for in-role behavior.

For compliance, perceived job influence was significant (positive coefficient), and HRM practices coefficient was no longer significant. Perceived organizational support was non-significant.

Findings suggest that perceived job influence, but not perceived organizational support, FULLY MEDIATED the relationship between HRM practices and compliance (supporting H2a., not H1a.)

For in-role behavior there was no direct HRM practices effect and neither perceived organizational support nor perceived job influence were significant, (no support for H1c. or H2c.).

No significant effect for perceived organizational support, providing no support for H1b., but there was a significant positive effect of perceived job influence on altruism – mediation is ruled out according to past research.

HRM practices were significantly associated with perceived job influence, which was significantly associated with altruism (doesn’t necessarily support H2b.), but does suggest that job influence plays a role in “transmitting the effects” of HRM practices to altruism.

Hypotheses1a. Perceived organizational support will mediate the positive relationship between HRM practices and OCB (compliance)

1b. Perceived organizational support will mediate the positive relationship between HRM practices and OCB (altruism)

1c. Perceived organizational support will mediate the positive relationship between HRM practices and in-role behavior.

2a. Perceived job influence will mediate the positive relationship between HRM practices and OCB (compliance).

2b. Perceived job influence will mediate the positive relationship between HRM practices and OCB (altruism). Slightly supported

2c. Perceived job influence will mediate the positive relationship between HRM practices and in-role behavior.

results Post Hoc Analysis of the FOUR HR Dimensions: (development,

selection, rewards, and internal labor market): Development and internal labor market dimensions were positively associated with

perceived job influence

Rewards and internal labor markets dimensions were positively associated with perceived organizational support

Suggesting that job influence was associated with a developmental approach to HRM with an emphasis on employee training, appraisal, involvement, and internal career development.

Perceived organizational support was associated with collective incentive pay and internal career development.

This implies HRM practices like this are interpreted by employees as inputs into a social exchange process.

Internal labor market dimension in the case of compliance was fully mediated by job influence.

implications HRM had a positive association with compliance (mediated by job influence) and that

perceived job influence intervened in a significant INDIRECT association between HRM practices and altruism

HRM practices were significantly associated with perceived organizational support

Employees perceive organizational support as a practice where the organization cares for their well-being and appreciates the work that they do.

The impact of HRM practices on compliance and altruism is transmitted via perceived job influence ONLY

Employee’s OCB is effected by an intrinsic motivation and opportunity view of HRM.

HRM practices are significant, not just a CURRENCY in a social exchange relationship with employees, but also for their role in enhancing employees’ sense of job influence (which may provide intrinsic motivation, confidence, and OCB performing opportunities).

implications This study points to the importance work design, represented by the degree

of perceived job influence and discretion, in transmitting the effects of HRM practices to individual employee behaviors and performance.

It is suggested that HPW practices give workers autonomy and discretion, which is necessary for demands in the modern day workplace – these two factors may remove the need for constant supervision, permission, and “checking in” with managers. This is also a positive element for complex and/or fast pace work environments.

Company-level HRM may have an effect through an association with individual behaviors of the employee, and that perceived job influence is an intervening variable in this process.

Post hoc analyses revealed findings that suggested: that workers associate the job characteristics effects of HRM with an approach that

emphasizes internal careers and employee development (“make” rather than “buy” approach to staffing).

Workers associated financial rewards and internal careers with social exchange (the employers input into the exchange).

concluding implications The effects of HRM practices on employee attitudes is transmitted through

perceived job influence – which suggests discretion and job influence as being key when designing an effective HRM strategy.

Managers need to think beyond benefits and support – they should consider the effects of these types of practices and the degree to which they influence employees’ daily work.

HRM practices should:

Use training and development to build an employees’ skills and knowledge

Provide promotion opportunities for higher-level jobs

Provide more opportunities for personal discretion in an employees’ work (via problem solving and through the work design itself)

tying it all together Both studies encourage the use of rigorous selection and extensive training in order to

ensure employees are appropriately skilled

Both studies encourage the implementation of motivational methods such as competitive compensation, likely opportunities to grow within the organization, and extensive benefits Sense of job influence could provide intrinsic motivation, OCB opportunities, and even confidence

HRM practices can lead to perceived job influence which has a positive relationship with compliance and altruism

Both studies encourage opportunity-enhancing types of methods (i.e., appropriate work design to be implemented in order to allow worker to accurately do their job using their skills – in order to better serve the organization’s objectives)

Workers need to feel as if their contributions to the workplace are necessary and important

Provide employees with opportunities to use their discretion in their work – as often as possible

Managers should look to themselves first before providing further training – the issue may be in the poor work design or the lack of developmental opportunities for the employee.