HR flexibility and firm performance in professional service firms

Abstract

Human resource (HR) flexibility emerges as the most critical source of flexibility for professional services firms (PSFs), given that the success of these companies depends on the knowledge, expertise and behaviors of their employees. Nonetheless, few empirical studies have analyzed the extent to which the characteristics of the workforce explain the results of this type of firm. This study attempts to advance in this line of research by analyzing the influence of HR resource flexibility dimensions (skill flexibility – SF and behavior flexibility – BF) on PSF performance. It also examines whether HR coordination flexibility (CF) strengthens the effect of SF and BF on performance. Matched data from 97 general managers and 291 professionals in a sample of Spanish PSFs is used to test the hypotheses through structural equation modeling methodology. The study demonstrates that employee BF has a significant effect on the development of new services in PSFs. The moderation model shows that HR CF increases the influence of BF on the development of new services. Contrary to what was expected, no significant relationship between SF and PSF performance was found.

Building organisational resilience capability in small and medium‐sized enterprises: The role of high‐performance work systems

“…Second, while the role of human capital value in transmitting the impact of HPWSs on organisational outcomes has been well established in the extant literature (e.g., Jiang et al., 2012; Jiang et al., 2013; Takeuchi et al., 2007), including in the SME context (Haar et al., 2021), the function of the heterogeneity of human capital resources accumulated at the organisational level has been relatively underexplored (Beltrán‐Martín et al., 2021; Ployhart & Moliterno, 2011). This is an unfortunate omission as many strategic HRM scholars have long suggested that heterogeneous human capital is a critical underlying mechanism for organisational capabilities (Barney et al., 2011; Kraaijenbrink et al., 2010), and consequently central to sustainable competitive advantage (Barney, 1991; Barney et al., 2011).…”

“…In the SME context, indirect evidence can be drawn from the HR flexibility literature to support the link between human capital heterogeneity and bounce‐forward resilience. For example, research has shown that employees having the ability to learn and develop different skills and techniques for different work activities (one dimension of HR flexibility) contributes to a firm's ability to adapt to the market (Way et al., 2015) and to develop new services (Beltrán‐Martín et al., 2021; Swart & Kinnie, 2013). Arguably, such abilities in turn can help SMEs develop new knowledge and become innovative (Salavou et al., 2004), ultimately creating resilience capabilities (Demmer et al., 2011).…”

Employee Empowerment and HR Flexibility in Information Technology SMEs

“…In a survey of organizations from a broad range of industries, Katou 55 found that skill and behavior flexibility both contribute to organizational performance. In a survey of professional service firms, Beltrán-Martín et al 56 found that skill, behavior, and coordination flexibility contribute to success in the development of new services. In a survey of sales departments of pharmaceutical companies, Luu 57 found that HR flexibility promotes job crafting.…”

Innovating processes and processing innovation: strategic approach to innovation in accounting firms

“…Indeed, professional service firms, as other organizations, have to manage different types of resources, including financial, technical, human and IT (Kwon and Rupp, 2013;Kronblad, 2020;Beltr an-Mart ın et al, 2021) and external pressures including institutions, competitors, suppliers and clients (Meyer and Rowan, 1977;Pfeffer and Salancik, 1978;Reihlen and Werr, 2012;Cromwell and Gardner, 2020). These aspects are fundamental for enabling professional firms to create value for their clients (Stabell and Fjeldstad, 1998;Skaggs and Youndt, 2004;Tomo et al, 2019).…”

“…The first aspect relates to the key role of human resources in PSFs, not only because of the nature of the work (i.e. high knowledge-intensive work) but also because of the close relationships emerging from the social exchange and its impact on the everyday life of the firm that, in turn, influences the PSF's strategy and performance (Hitt et al , 2001; Kwon and Rupp, 2013; Beltrán-Martín et al , 2021). For instance, in small and medium-sized PSFs, employing a maximum of 10 professionals, the ability to manage human resources becomes critical, especially under the emotional aspect as informal relationship increase because of the very close relationships among the (few) professionals within the firm.…”