HRM policies & worker/company performance

1. HRM policies & worker/company performance • 1. HRM policies • 2. The effect on worker performance • Job satisfaction • 3. The effect on company performance • Ichniowski et al (1997)

2. 1. HRM policies • HRM practices are a substitute for unionisation, offering management • ‘…the prospect of improved performance whilst simultaneously improving workers’ job satisfaction, security and perhaps pay’ (Machin & Wood, 2004). • ‘High performance workplace practices’ • (a) Recruitment & selection • (b) Training • (c) Pay policies & incentives

3. 1. HRM practices • (d) Non-pecuniary elements • (e) Unions & union agreements • (f) Employee involvement schemes • (g) Team working • ‘transform’ organisations into being cost-efficient and productive, whilst also increasing employee well-being (Black and Lynch, 1997)

4. 2. The effect of HRM practices on worker performance • Data • The Changing Employment Relationships, Employment Contracts and the Future of Work Survey (CERS) • Collected between July 2000 and January 2001, • Main aim of the Survey was to identify and describe the key changes in British employee relations. • Two data collection methods were used: interviews and self-completion questionnaires. • Sample size = 2,466, respondents = 2,349 (95% response rate) • Omit respondents with missing values on key variables and the self-employed (334), the sample drops to 1,518. • The Workplace Employment Relations Survey (WERS) contains a much larger sample of workers • 19,890 once we allow for missing data, - both employees and their managers.

5. 2. The effect of HRM practices on worker performance • Methods of analysis • Dependent variables = 7 point likert scale • Completely satisified (7),……, Completely dissatisifed (1) • Not normal – not OLS • Ordered logit model • Descriptive statistics

6. Table 1 The distribution of overall job satisfaction (CERS) Note: 10 respondents did not state their level of job satisfaction.

7. Table 2B The distribution of satisfaction over pay (WERS) Note: 1.16 percent of respondents (326) did not answer the question, or answered ‘I don’t know’.

8. Table 3 The effect of HRM practices and perceived pay inequality on overall job satisfaction (CERS)

11. 3. The effect of HRM practices on company performance • Data • 36 homogeneous steel production lines • 17 companies – visits • Longitudinal data – 2,190 months • Changes in productivity & changes in HRM practices • Theory • Engineering production function • Actual Qit = [f(wit. git. sit. hsit)] X (1-dit)

12. 3. The effect of HRM practices on company performance • Control variables & complementary HRM practices • HRM System 4 (Traditional) • E.g. supervision, rules, incentive pay for Q, etc. • HRM System 3 • As above but also worker involvement in teams & improved communications • HRM System 2 • As above but skills training & worker involvement in teams • HRM System 1 • See Table 2 Ichniowski

13. 3. Fixed effects models • Why fixed effects models? • Uit = µHit + bXit + ai + eit • Results • Production lines using innovative HRM practices • substantially higher levels of productivity • Complemetarities in HRM practices

14. Conclusion • HRM practices are important for worker & company performance • Data problems – under-researched area by economists