28 Oct For some time, HRM researchers have paid attention to the process dimensions of HRM systems, especially to the question of how HRM system strength impacts on HRM outcomes. However, contributi
I put the relevant requirements in the document, and I marked the places that need special attention, a total of 800 words
Human Resource Management, September–October 2017, Vol. 56, No. 5. Pp. 715–729
© 2016 Wiley Periodicals, Inc.
Published online in Wiley Online Library (wileyonlinelibrary.com).
DOI:10.1002/hrm.21798
Correspondence to: Dorothea Alewell, University of Hamburg, Faculty of Business Administration, Von-Melle-Park 5,
20146 Hamburg, Germany, Ph: 004940428384101, Fax: 004940428386358, [email protected]
HRM SYSTEM STRENGTH AND HRM
TARGET ACHIEVEMENT—TOWARD
A BROADER UNDERSTANDING OF
HRM PROCESSES
S V E N H A U F F, D O R O T H E A A L E W E L L , A N D N I N A K AT R I N H A N S E N
For some time, HRM researchers have paid attention to the process dimensions
of HRM systems, especially to the question of how HRM system strength impacts
on HRM outcomes. However, contributions tend to be theoretical, and empiri-
cal analyses are still rare. This article contributes to the discussion on HRM sys-
tem strength by empirically analyzing the links between HRM system strength
and HRM target achievement. We differentiate between single components of
strength and their partial effects on two HRM target groups: the targets focus-
ing on employee attitudes and the targets focusing on availability and effec-
tiveness of human resources. Findings from a German data set with more than
1,000 observations indicate that HRM system strength has a positive infl uence
on average HRM target achievement. Expectations regarding the differentiated
effects of single components of HRM system strength are only partially sup-
ported. Nevertheless, our analyses give reason to consider a broader concep-
tion of HRM system strength than what has been explored to date. © 2016 Wiley
Periodicals, Inc.
Keywords: HRM system, HRM system strength, HRM target, process approach, target achievement
Introduction
R esearch on strategic HRM has largely focused on the content perspective, that is, the question of how single HRM prac- tices, or HRM systems as consistently designed bundles of HRM practices, affect
HRM outcomes and firm performance ( Jackson, Schuler & Jiang, 2014; Jiang et al., 2012 ) (for an overview on HRM systems approaches, see, e.g., Alewell & Hansen, 2012; Kaufman, 2013;
Lepak, Liao, Chung, & Harden, 2006). Some HRM researchers have questioned this approach and have begun to focus on the process dimen- sions of HRM systems and, within this perspec- tive, on how an HRM system’s strength impacts on HRM outcomes and firm performance (e.g., Bowen & Ostroff, 2004; Ostroff & Bowen, 2000) (for an overview, see Sanders, Shipton, & Gomes, 2014). Building on Bowen and Ostroff (2004), HRM system strength is usually referred to as a situation in which “unambiguous messages are
716 HUMAN RESOURCE MANAGEMENT, SEPTEMBER–OCTOBER 2017
Human Resource Management DOI: 10.1002/hrm
By including
attitudinal HRM
targets as well as
availability and
effectiveness
targets, our analysis
highlights that HRM
system strength
is not limited to
communication
aspects but has
important functional
effects.
latter should be more affected by aspects such as the consistency and full implementation of HRM practices. In addition, we also assume that the number of important HRM targets should affect HRM target achievement.
By analyzing the effects of HRM systems strength on a broad spectrum of HRM targets this study contributes to the existing literature in sev- eral ways. First, we point out that specific compo- nents of HRM system strength may have different effects on different groups of HRM targets, which has not been intensively analyzed so far. In par- ticular, by including attitudinal HRM targets as well as availability and effectiveness targets, our ana lysis highlights that HRM system strength is not limited to communication aspects but has important functional effects, too. For instance, fully and consistently implementing HRM prac- tices can contribute to achieving flexibility and cost- effectiveness, independent of employees’ attitudes. Second, building on this, our study pro- vides valuable considerations related to the mea- surement of HRM system strength. Finally, we also discuss and analyze the role of different HRM tar- gets for overall HRM target achievement.
Theoretical Background and Hypotheses
The Concept of HRM System Strength
In their seminal work, Bowen and Ostroff ( 2004; Ostroff & Bowen, 2000) call attention to the ques- tion of how HRM systems should be designed and administered in order to be effective. They inter- pret HRM systems as complex communication systems that signal significant information about strategic HRM targets and behavioral expectations to employees, and thus influence the HRM cli- mate as shared employee perceptions about HRM. Strong HRM systems help to send clear signals and uniform behavioral expectations to employees, while weak HRM systems fail to clearly commu- nicate these. Thus, the concept of strong HRM systems is well connected to the psychological concept of strong situations ( Cooper & Withey, 2009; Mischel, 1977).
Building on social cognitive theory and Kelley’s ( 1967) attribution theory, Bowen and Ostroff ( 2004) conceptualize HRM system strength based on three main elements: distinctiveness, consis- tency, and consensus: Distinctiveness is high if the HRM system’s event-effect relationship is highly observable and well understood by employees. This is influenced by the HRM system’s visibility and understandability as well as by the legitimacy of authority and the perceived relevance of HRM. Consistency is high if the event-effect relationship
communicated to employees about what is appro- priate behavior” (p. 207). The general expectation is that stronger HRM systems have stronger effects on outcome variables, because they send clear signals to employees about organizational expec- tations ( Katou, Budhwar, & Patel, 2014; Sanders et al., 2014).
Several empirical studies have analyzed HRM system strength’s direct effects, including employ- ees’ work satisfaction ( Li, Frenkel, & Sanders, 2011), commitment ( Sanders, Dorenbosch, & de Reuver, 2008), intention to quit ( Li et al., 2011), improvisation behavior ( Ribeiro, Pinto Coelho, & Gomes, 2011), and organizational performance ( Cunha & Cunha, 2009). Furthermore, Katou et al. ( 2014) have shown that HRM system strength moderates the relationship between perceived
HRM practices and employee reac- tions. Thus, HRM system strength is without a doubt a very significant concept. However, to date, empiri- cal studies have concentrated on specific aspects, and no study has analyzed more broadly if and how HRM system strength contributes to HRM target achievement. This is a crucial aspect for strategic HRM, since HRM targets relate to different HRM strategies and differing exter- nal and internal contexts ( Jackson & Schuler, 1995; Jackson et al., 2014).
This article seeks to close this research gap by analyzing HRM sys- tem strength’s effects on HRM tar- get achievement. Therefore, we first introduce and discuss the concept of HRM system strength. We thereby argue that HRM system strength refers not only to communication but also includes functional effects of HRM systems. Building on this notion, we present our research
hypotheses. In line with previous literature, we argue that HRM system strength should positively influence HRM target achievement. However, besides analyzing HRM system strength’s general impact, we analyze whether specific components of HRM system strength have different effects on different groups of HRM targets. We thereby dis- tinguish between attitudinal HRM targets (e.g., motivation, commitment) on the one hand and availability and effectiveness HRM targets (e.g., endowment with qualified employees, flexibility, personnel cost reduction) on the other. Building on Ostroff and Bowen ( 2000), we expect that the former are influenced more by an HRM sys- tem’s visibility, clarity, and acceptance, while the
Human Resource Management DOI: 10.1002/hrm
HRM SYSTEMS STRENGTH AND HRM TARGET ACHIEVEMENT 717
Employee attitudes
are the most
important direct
dependent variable
in Bowen and
Ostroff’s (2004)
concept, since the
influence of the HRM
systems on employee
attitudes and shared
perceptions is the
central focus in this
approach. However,
there are other HRM
targets besides
employee attitudes.
approach ( Ostroff & Bowen, 2000). To clearly ori- entate employees by communicating employer expectations via HRM practices is an important effect of HRM systems. However, HRM systems and the HRM practices they include may influ- ence HRM outcomes via channels other than an employer’s communication ( Lepak, Liao, Chung, & Harden, 2006). For instance, an employer’s control of personnel costs may heavily depend on the work contract type and on collective or individual agreements on wages and their fit. This cost control may be independent of individ- ual employees’ understanding of the correct legal content of these contracts. Thus, there is a func- tional aspect beyond the communicative aspect. Or to give another example, human resource flexibility will depend on employee perceptions of the employer’s flexibility signals. But independent of these perceptions, there may be other significant func- tional aspects resulting from the choice of contracts, binding agree- ments on overtime, working time restrictions, task allocation rules, and the broadness of employee skills. Thus, it seems important to broadly consider different aspects of strength besides communicative issues, rather than to neglect the functional aspects that result from consistency and full implementa- tion of HRM practices.
A second aspect refers to the dimension of HRM targets and which of these are influenced by HRM system strength. Employee attitudes are the most important direct dependent variable in Bowen and Ostroff’s ( 2004) concept, since the influence of HRM systems on employee attitudes and shared per- ceptions is the central focus in this approach. However, there are other HRM targets besides employee atti- tudes. Most prominently, the ability-motivation- opportunity (AMO) framework ( Appelbaum, Bailey, Berg, & Kalleberg, 2000; Boxall & Purcell, 2003; Lepak et al., 2006) highlights that employee ability and opportunity are important HRM tar- gets, besides motivation. Furthermore, Osterman ( 1987), working on HRM system content, pointed out that companies seek to achieve flexibility, predictability, and cost-effectiveness. Gerhart ( 2007) also highlighted that costs are an impor- tant and independent consequence of HRM sys- tems. However, these employers’ availability
is the same across differing modalities and over time; for instance, it is the same for all employees in an organization. Consistency is strengthened by instrumentality of employee behavior’s con- sequences for targets, by validity of HRM prac- tices for what they purport to do, and by differing hierarchy levels communicating consistent HRM messages. Consensus is high if there is strong agree- ment among individuals’ views of the event-effect relationship, for instance, between line managers, HRM department members, and employees. It is influenced by agreement among principal HRM decision makers (e.g., between line managers from differing departments) and perceived fair- ness in distributive, procedural, and interactional respects.
Most studies on the topic refer to this con- ceptualization of HRM strength (see the overview by Sanders et al., 2014). However, Ostroff and Bowen’s ( 2000) initial work differs somewhat from the newer approach. Here, the concept of HRM system strength is embedded in a broad frame- work linking HRM systems to firm performance. Thereby, HRM system strength is related to the following characteristics of an HRM system:
• Visibility: Do employees know the HRM tar- gets and practices?
• Clarity: Do employees find the information easy to understand?
• Acceptability: Do employees buy into the sys- tem?
• Consistency of administration: Are practices uniformly applied across employees and over time?
• Effectiveness of administration and validity: Do practices do as designed?
• Internal consistency: Is there a horizontal fit between practices and programs?
• Intensity: How much time and effort is devoted to implementing the practices?
Thus, in this conceptualization of strength, besides the requirements that employees should know, understand, and accept a system and its sig- nals, there are additional conditions for a system to be strong. These characteristics not only influ- ence the perception of HRM systems but also have an additional impact on an HRM system’s func- tional performance, which is independent of the effect on employees. Accordingly, for our research question, the older concept has specific strengths compared to the newer concept.
First, HRM system strength as a quality of a communication system ( Bowen & Ostroff, 2004) is a specific and somewhat narrower interpreta- tion of HRM system strength than in the previous
718 HUMAN RESOURCE MANAGEMENT, SEPTEMBER–OCTOBER 2017
Human Resource Management DOI: 10.1002/hrm
Different components
of HRM system
strength should
impact differently on
different HRM target
types.
Hypothesis 1: The higher the overall HRM system strength is, the higher the degree of overall HRM target achievement will be.
However, building on the aforementioned argu- ments, there are reasons to assume that differ- ent components of HRM system strength should impact differently on different HRM target types. In general, there are two different HRM target types: targets that influence employee attitudes, and human resource availability and effective- ness targets. Key attitudinal targets are employee motivation, commitment, and job satisfac- tion (e.g., Katou et al., 2014; Lepak et al., 2006). Furthermore, employers might also try to influ- ence their employees’ orientations toward quality, innovation, or costs in order to increase perfor- mance. Availability and effectiveness targets refer to the endowment with qualified employees and up-to-date knowledge, but also to flexibility in terms of working time, task allocation, or number of employees. Firms might also need to plan con- fidently on labor supply and its cost ( Osterman, 1987). Thus, long-term employment perspec- tives and predictability of central HRM variables, for example, labor cost, could also be important targets. Further aspects include high employee participation, high performance levels, and the reduction of personnel costs (e.g., Osterman, 1987; Lepak et al., 2006; Subramony, 2009).
Different components of HRM system strength may impact on these distinctive target groups differently. For employee attitudes, employees’ knowing, understanding, and accepting of HRM practices should be especially important. Bowen and Ostroff (2004) summarize employees’ know- ing, understanding, and accepting of HRM prac- tices under the notion of distinctiveness. In attribution theory, distinctiveness is seen as the most critical dimension for attitudinal change ( Fiske & Taylor, 1991; Kelley, 1967; see also Sanders & Yang, 2016). This is supported by the results of Sanders et al. ( 2008) and Li et al. ( 2011), who found that the analyzed attitudes (job satisfaction, commitment, intention to quit) are particularly influenced through the distinctiveness of HRM practices. The high importance of distinctive- ness seems plausible, since employees can change their attitudes only if they know and understand a specific practice; and actual attitudinal change depends on how employees perceive the HRM practices, that is, how they interpret and accept them ( Nishii, Lepak, & Schneider, 2008). Thus, we hypothesize that attitudinal HRM targets are more strongly influenced by those partial strength characteristics that relate to employees’ knowing, understanding, and accepting of HRM practices.
and effectiveness HRM targets are not explicitly addressed in Bowen and Ostroff’s ( 2004) concept. In this respect, the previous approach ( Ostroff & Bowen, 2000) is again broader, since it can be applied to the whole spectrum of HRM targets.
In short, the strength concept as in Ostroff and Bowen ( 2000) is advantageous for our research question because it does not restrict attention to an HRM system’s communication properties but allows one to focus on an HRM system in general and is compatible with a broad spectrum of HRM targets.
HRM System Strength’s Infl uence on HRM Target Achievement
The effects of HRM system strength can be ascribed to different relationships. On the one hand, a strong situation should have a positive impact on target achievement because it results in a clear and precise communication signal of what the employer wishes to achieve and is ready to compensate for (e.g., Bowen & Ostroff, 2004;
Katou et al., 2014; Ostroff & Bowen, 2000; Sanders et al., 2014). Strong situations have a high degree of shared perceptions, which posi- tively influences employees’ atti- tudes and behavior: “a strong HRM system process can enhance orga- nizational performance owing to shared meanings in promotion of collective responses that are con- sistent with organizational strategic goals” ( Bowen & Ostroff, 2004, p. 213). On the other hand, a strong
situation also contributes to HRM target achieve- ment by creating structural and operational effi- ciencies ( Ostroff & Bowen, 2000). This argument is partially linked to the content perspective of strategic HRM research, particularly the contin- gency and configurational approaches ( Delery & Doty, 1996; Martín-Alcázar, Romero-Fernández, & Sánchez-Gardey, 2005). Following these approaches, HRM systems will have beneficial outcomes in terms of HR target achievement if they are (1) aligned to the internal and external context and (2) internally coherent. In addition to these notions of vertical and horizontal fit, the process perspective focuses attention on imple- mentation in terms of time, effort, and unifor- mity. In this respect, strong HRM systems should have a positive impact on HRM target achieve- ment because all necessary practices are actu- ally in place, are uniformly applied, and do as designed. Building on these arguments, we expect that in general HRM system strength should posi- tively influence HRM target achievement.
Human Resource Management DOI: 10.1002/hrm
HRM SYSTEMS STRENGTH AND HRM TARGET ACHIEVEMENT 719
The pursuit of HRM
targets requires
effort and resources.
In addition, some
targets may conflict
with others, and
these trade-offs
should be considered.
important to an employer could also influence target achievement because the higher the num- ber of important HRM targets, the more likely it is to miss at least some of them. The pursuit of HRM targets requires effort and resources. Thus, if there are many targets, firms might run into effort and resource trade-offs and focus more strongly on some targets at the expense of other targets, or, if several targets are pursued equally, neither one of them will be pursued effectively. In addition, some targets may conflict with others, and these trade-offs should be considered, too. For instance, flexibility, in terms of flexible staffing and reli- ance on external labor markets, and predictability of key HRM variables may be seen as conflicting targets as a high degree of flexibility reduces pre- dictability of labor supply and costs ( Osterman, 1987). Another example is the pos- sible conflict between flexible staff adjustment and the endowment with qualified employees: building qualifications might need time and a long-term perspective, possibly con- tradicting flexible staff adjustment. Such conflicts could influence gen- eral target achievement because the pursuit of one target might inhibit the achievement of another target. In line with these arguments, we hypothesize as follows:
Hypothesis 4: The higher the number of important HRM targets, the lower the degree of HRM target achievement will be.
Data Set, Measurement, and Methods
Data Set
The following analysis is based on data collected via highly structured computer-aided telephone interviews with chief executives and human resource managers of firms in Germany. Because we are especially interested in the functional aspects of HRM system strength as well as HRM target achievement, responses by chief executives and HR managers are important, as they are usu- ally more knowledgeable concerning these issues than employees ( Huselid & Becker, 2000). In addition, such a research setting allows us to con- duct interviews in a large number of firms with different HRM systems.
The data collection was conducted in 2012 and aimed at firms with at least 20 employees in the following sectors: chemicals and pharma- ceuticals, mechanical engineering, banking and
Hypothesis 2: The elements of an HRM system’s strength relating to employees’ knowing, understand- ing, and accepting of HRM practices impact more strongly on the achievement of attitudinal HRM targets than on availability and effectiveness HRM targets.
Achieving availability and effectiveness targets may depend to a lesser degree on the knowledge, understanding, and acceptance of employees. In contrast, these HRM targets should be more strongly influenced by the other characteristics of HRM system strength (i.e., consistency of admin- istration, effectiveness of administration, internal consistency, and intensity) as these are crucial for the structural and operational efficiencies of HRM systems. Thereby, internal consistency of HRM systems is of fundamental importance. According to Delery (1998), HRM practices can have either independent, substitutive, counterac- tive, or synergetic relationships. In these terms, consistency can be described as the absence of counteractive effects among HRM practices. Counteractive effects might occur if HRM prac- tices are not implemented as intended ( Wright & Nishii, 2013), or if their effects differ depending on the context in which they are implemented ( Jackson et al., 2014). Accordingly, counteractive effects may only be prevented if HRM practices are applied consistently (i.e., consistency of admin- istration) and actually do as designed (effective- ness of administration). Furthermore, even if all HRM practices are consistent, uniformly applied, and do as designed, HRM system effectiveness is not guaranteed. In the case of independent effects among HRM practices, each HRM practice adds something unique, and the use of an additional HRM practice might be necessary to achieve a cer- tain outcome level ( Chadwick, 2010). The same applies to synergistic effects, since synergies can develop only if all necessary practices are in place. Thus, time and effort devoted to full implemen- tation of HRM practices is important for HRM systems effectiveness. Based on these arguments, we assume that the achievement of availability and effectiveness targets depends more strongly on consistency of administration, effectiveness of administration, internal consistency, and inten- sity. Accordingly, we hypothesize as follows:
Hypothesis 3: The elements of an HRM system’s strength relating to aspects of consistency of adminis- tration, effectiveness of administration, internal con- sistency, and intensity impact more strongly on the achievement of availability and effectiveness HRM tar- gets than on attitudinal targets.
Besides the strength of an HRM system and its elements, the number of HRM targets that are
720 HUMAN RESOURCE MANAGEMENT, SEPTEMBER–OCTOBER 2017
Human Resource Management DOI: 10.1002/hrm
in terms of the value production of the employees working under this system.
Measuring Strength
Concerning our central independent vari- able, HRM system strength, we follow Ostroff and Bowen ( 2000) in formulating our items. Respondents were asked to indicate to what extent different statements applied (see Table I). Items were presented in random order. Response categories ranged from 1 = does not apply at all to 5 = fully applies. Single items were used in order to have a simple measurement instrument that applies to different organizational contexts.
Measuring the Average Achievement of Important HRM Targets
Our data set contains a number of items on the importance of different HRM targets and on HRM target achievement. Six of these targets relate to employee attitudes: (1) high employee motiva- tion, (2) high employee commitment, (3) high employee job satisfaction, (4) strong quality ori- entation of employees, (5) strong innovation orientation of employees, and (6) strong cost ori- entation of employees. Another 10 targets relate to availability and effectiveness of human resources: (7) good endowment with qualified personnel, (8) endowment with up-to-date knowledge, (9) high flexibility in terms of working time, (10) high flexibility in terms of task allocation, (11) flexible adjustment of workforce to personnel require- ments, (12) long-term employment perspectives, (13) predictability of key HRM variables, (14) high employee participation, (15) high performance levels, and (16) reduction of personnel costs.
Respondents were asked to indicate the importance attributed to, as well as the level of achievement, of each of these 16 targets in their organization. Concerning the importance of dif- ferent HRM targets, answers could be chosen from 1 = very unimportant to 5 = very important.
insurance, and professional services (legal and accounting services, business consultancies). Contact information was drawn from the German Chamber of Industry and Commerce database that all German firms (with the exception of craft businesses, free professions, and farms) are required by law to join. The number of randomly sampled firms in these sectors was 5,388 out of a population of 8,100 firms. Of the firms contacted, 1,175 took part in the study, which left us with a satisfying response rate of 21.8 percent. However, a first analysis of the data revealed that 76 firms did not meet the selection criteria (size and indus- try) or gave invalid answers. Thus, usable data is available for 1,099 firms. For the analysis in this article, we further excluded all cases with missing information in our central variables, namely, HRM system strength, importance of HRM targets, and target achievement (see below). The final sample therefore contains 1,009 firms.
Our sample data did not reflect the popula- tion distribution in terms of sectors (original distribution in parentheses): 23.9 percent (16.0 percent) chemicals and pharmaceuticals, 24.7 percent (51.8 percent) mechanical engineering, 28.0 percent (18.0 percent) banking and insur- ance, and 23.3 percent (14.2 percent) professional services. We therefore used a standard weighting adjustment ( Bethlehem, 2009) to approximate the sample data to population proportions.
The questionnaire acknowledged that firms might operate multiple HRM systems in one organization. If firms stated that they differenti- ate their HRM for different employee groups, all questions related to HRM referred to the employee group that is most important for the firm’s eco- nomic success (as suggested by Osterman, 1987; see also Delery & Doty, 1996). If HRM was not differentiated for different employee groups, questions were formulated such that they encom- passed all of a firm’s employees. Thus, each firm is represented with its most important HRM system
T A B L E I Measurement of HRM System Strength
Ostroff & Bowen (2000) Our Items
Visibility Employees know the HRM targets and practices.
Clarity Employees understand HRM targets and practices.
Acceptability Employees accept HRM targets and practices.
Consistency of administration HR personnel and executive managers follow the same guidelines
in implementing HRM.
Effectiveness of administration We realize the effects we intend to achieve with our HR practices.
Internal consistency All HR practices are consistent with one another.
Intensity We invest heavily in the full implementation of our HR practices.
Human Resource Management DOI: 10.1002/hrm
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