A selection of interesting articles we came across recently on HR practices and firm performance.
Does downsizing during an economic downturn enhance firm performance?
No, according to Chin-jung Luan and Chengli Tien. Their study examines the efficacy of the smiling curve, and clarifies the relationship between downsizing strategies (advertising, marketing, and research and development, respectively) and firm performance, specifically in an economic downturn. This study tests hypotheses using 1996–2010 data from the Taiwan Economic Journal on 436 listed Taiwanese companies.
The results indicate that the benefits for firms to follow the smiling curve may not occur in the short term and that downsizing strategies may not always be the appropriate strategy to improve firm performance. During an economic downturn, downsizing strategies do not appear to enhance firm performance, that is, the smiling curve should not frown during an economic downturn to enhance firm performance.
Read more: Chin-jung Luan and Chengli Tien. 2015. Should the smiling curve frown during an economic downturn to enhance firm performance?
Journal of Management & Organization, 21(5), 573-593.
Impact of high-performance work systems on firm performance
With data collected from 632 manufacturing firms in South Korea, Dae Yong Jeong and Myungweon Choi investigated
(1) the relationship between high-performance work systems (HPWSs) and firm performance, and
(2) the moderating effect of the human resource (HR) function’s influence on the relationship between HPWSs and firm performance.
Their findings showed the existence of both the main effect of HPWSs, supporting the universalistic perspective, and the moderating effect of the HR function’s influence, supporting the contingency perspective. Based on the findings, the authors concluded that HPWSs can be regarded as universal or best practices; at the same time, the presence of an influential HR function may intensify the effect of HPWSs on firm performance.
This study contributes to the debate over the respective merits of the universalistic and contingency perspectives by showing that the two perspectives are not necessarily incompatible; rather, they can be complementary.
Read more: Dae Yong Jeong and Myungweon Choi. 2015. The impact of high-performance work systems on firm performance: The moderating effects of the human resource function’s influence.
Journal of Management & Organization / FirstView Article. DOI: http://dx.doi.org/10.1017/jmo.2015.38
HR strategy during culture change
This paper explores the role played by a Human Resources (HR) department orchestrating culture change during the merger of two large State departments with dissimilar cultures. A 2-year case study determined what HR strategies were having the greatest impact on embedding new organisational values to produce a more flexible culture and how these practices could be accelerated. This paper indicates how a more strategic approach by HR departments can support and develop relational managing capability that accelerates cultures change towards a more flexible work environment.
This article describes the context of the change process, the relevant literature, and outlines the research process. The findings from the phases of the data collection are summarised revealing the traumatic perceptions of the change process, but also the instrumental actions of some managers, working creatively with their teams to tackle new tasks and projects. The evidence suggests that these informal practices of task allocation were at the core of change agency in this case study and put the new flexible organisational values into action. The findings illustrate how the organisation moves from valuing managers for their technical competence to valuing managers for their relational competence.
The authors then discuss what strategic HR actions were accelerating this process and illuminate the critical role of building managers as change agents. The paper concludes by confirming the need for a strategic approach by HR during organisational change. Building manager capability and supporting informal change agency practices is presented as a core focus for HR during such organisational cultural change programmes.
Read more: Llandis Barratt-Pugh and Susanne Bahn. 2015. HR strategy during culture change: Building change agency.
Journal of Management & Organization, FirstView Article, DOI: http://dx.doi.org/10.1017/jmo.2014.95.
Intangible assets and decline: a population ecology perspective
This paper investigates the effects of environmental pressure, human capital and social capital on organisational effectiveness and decline using a population ecology perspective. Panel data with 1,553 observations from 398 companies spanning 4 years in Taiwan were used for analyses. Research results indicate that several environmental pressure indicators significantly affect organisation effectiveness and decline. Although human capital and social capital did not predict the outcome variables, human capital plays a moderating role in explaining the variation of the relationship between environmental pressure and organisational effectiveness.
The authors provide a new perspective that suggests that organisations should accumulate intangible assets to resist the threat of external environmental pressure. The leading consumer electronics company Samsung is a good example supporting the argument that investment in human capital can produce commercial benefits, especially in tough economic times.
Read further at: Yu-Chen Wei and Carol Yeh-Yun Lin. 2015. Intangible assets and decline: a population ecology perspective.
Journal of Management & Organization, 21(6), 755-771.
Employee turnover in the face of unethical demand
This paper argues that consumer demand for unethical behaviour such as fraud can impact employee turnover through market and psychological forces. Widespread conditions of unethical demand can improve career prospects for employees of unethical firms through higher income and stability associated with firm financial health. Similarly, unethical employees enjoy increased tenure from the financial and psychological rewards of prosocial behaviour toward customers demanding corrupt or unethical behaviour.
The authors specifically examine the well-documented unethical demand for fraud in the vehicle emissions testing industry, and its impact on employee tenure. The researchers use data from tests conducted by several thousand licensed inspectors to demonstrate that fraudulent employees and employees of fraudulent firms enjoy longer tenure. These results suggest further work to separate the multiple psychological and economic mechanisms likely driving the findings.
For more information see: Lamar Pierce & Jason A. Snyder. 2015. Unethical Demand and Employee Turnover.
Journal of Business Ethics, 131(4), 853-869.
Organisational commitment explains employee turnover intention
Few studies have presented structural turnover models including both job satisfaction and organisational commitment measures. Recent research suggests that perceived supervisor leadership may contribute to employee well-being, job satisfaction and organisational commitment. This study proposes a structural turnover intention model including supervisory behaviour (person-oriented and task-oriented dimensions), job satisfaction and organisational commitment. Furthermore, the study proposes to test whether this model fits in both small- and medium-sized enterprises and in large enterprises. The sample included 763 employees from different types of organisations who have completed a measure of their perception of their supervisor’s behaviour and self-administrated measures of job satisfaction, organisational commitment and turnover intention.
Results show that person-oriented leadership behaviour affects turnover intentions through job satisfaction and organisational commitment more than task-oriented leadership behaviour. Only organisational commitment had a direct effect in explaining turnover intention. Finally, results indicate that the model is applicable both in small- and medium-sized enterprises and large enterprises.
For more details, see: Cynthia Mathieu, Bruno Fabi, Richard Lacoursière and Louis Raymond. 2016. The role of supervisory behavior, job satisfaction and organizational commitment on employee turnover.
Journal of Management & Organization, 22(1), 113-129.