HRM and Performance
HRM and Performance
The methodological implications of this area are one of the main limiting forces preventing advancement in this field. How should we measure performance? Financially such as with sales or profit figures or with production output?
Ichniowski et al. (1996) argue that financial performance is important because this is what organizations themselves are focused on. However, Inchiowski did recognize that these financial objectives are quite removed from the employees producing the products and services, who are the main focus of HP management. In addition, not all objectives for organizations are financial, they may aim to grow and capture market share at a financial loss, or they may aim to damage competitors by competitively pricing below cost margins, in order to preserve long-term market share. Would it be appropriate for the same conclusion to draw a link between HRM and performance? If one company defined their performance gains in terms of financial profit, and another company experienced a 10% rise in market share, however profits actually reduced, could the same theoretical HP model be able to explain both circumstances, I am skeptical of this, it could be possible for a universal ‘best practice’ model to achieve these, although much more research is required.
Alternatively, Appelbaum et al.’s (2000) three-industry study in the US, for example emphasized a variety of different performance measures for each industry such as: ‘uptime’ of capital in the steel industry and throughput time in the clothing industry. These in some ways can provide a truer test of effectiveness, since these are the kind of measures that the managers themselves are directing their efforts towards. The disadvantage is that the variety of these performance measures makes it difficult to compare results and to make generalizations, which form the basis of many theories.
Buyens and Dellos (2001) found that ‘top managers’ claim that the HR function added value through its change programmes following restructuring and downsizing. In contrast, HR managers noted the importance of management of the employee as an area of added value. This presents some interesting implications for the single-respondent influence on methodological validity of the results. However, this research was highly subjective and the academics were unable to quantify the magnitude of the value added of the HR function.
In addition, it is my opinion that the literature and research is too narrowly confined to academics own field of expertise. It seems that a more encompassing, common sense and realistic overview of the situation is needed. The current theoretical debate is largely removed from the HR functions seen in the majority of organizations. If this area of research, remains upon this iceberg of theory, I do not think it will offer much merit or advance the area of HRM before it melts under the confusion of thought and theory. However, there is a range of emerging support for more realistic the Resource based view, Boxall & Purcell (2003). This refers to identifying and developing internal resources, mainly employees as a source of adding value and competitive advantage. The advantage of an internal strategy, focusing upon employees as assets to be developed is that it is impossible to imitate. However, this raises a key question, is this strategy universal in nature, should it be used by all organisations in all industries? An internal focus would mean that organisations will place less emphasis on adapting to external consumer trends and changing market forces. There is a deficiency in literature to explain the advantages and disadvantages of an internal strategy vs an external strategy, although there is no shortage of literature describing these approaches. It seems that a balance addressing the benefits of each perspective would aid organizational performance if adapted to suit the individual organizations situation.
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