Strategic HR system differentiation between jobs: The effects on firm performance and employee outcomes

Abstract

The purpose of this research was to understand the extent to which firms apply different human resource management systems to different occupations within the same organization (HR differentiation), and how this influences both firm and employee outcomes. We conducted two studies pertaining to these questions. The first study was based on data collected from managers and the results showed that firms differentiate their HR investments based on the strategic value of occupations, which was further associated with the human capital of those occupations; differentiation in human capital was also associated with firm performance. The second study was based on data obtained from non-management employees. The findings of this study indicated that employees who were recipients of less HR system investment had lower fairness perceptions, which were further associated with turnover intentions and organizational citizenship behavior. Although the evidence from these studies suggests that firms may realize benefits from HR differentiation, managers should carefully consider how to balance the effects of differentiation on firm performance and employee well-being before implementing such systems.Keywords: human resource management; high performance work systems; human capital; turnover; fairness perceptions; organizational citizenship behavior EFFECT OF STRATEGIC HR DIFFERENTIATION 3 The Effects of Strategic HR System Differentiation on Firm Performance and Employee OutcomesA core objective of strategic human resource (HR) management research is to understand how firm investment in HR systems and practices affects organizational performance (Delery & Doty, 1996). However, one area that has received relatively little theoretical and empirical attention is the extent to which firms make differential investments across occupation groups within the same organization, and what impact this has on employee attitudes, behavioral intentions, and on firm performance. One of the earliest perspectives in strategic HR management, the universal approach, proposed that greater organizational investment in HR would unilaterally improve firm performance by increasing the ability and motivation of all employees in the organization (Huselid, 1995). In contrast, scholars emphasizing a contingency approach have shown that an important factor for understanding the HR-performance linkage is the alignment between the type and amount of HR investment with the firm's competitive environment and operational strategies (e.g., Datta, Guthrie, & Wright, 2005;Delery & Doty, 1996;Youndt, Snell, Dean, & Lepak, 1996). Theory in this latter tradition, as well as limited empirical research, has more recently focused on the application of different HR systems across different occupations within the same firm based on the strategic value of the occupational skill set required for each occupation, the firm-specific nature of the required skill sets, and the availability of the occupational skills in the labor market (Lepak & Snell, 1999;Lepak, Taylo...

The impact of strategic human resource management on organizational resilience: an empirical study on hospitals

“…In 1987, Schuler and Jackson cited a list of human resource management (HRM) practices contained planning choices, 1.6. Dimensions of SHRM in this study Schmidt et al (2018) investigated the effect of SHRM system differentiation between jobs and found that a lower degree of HR system investment results in a higher turnover intention ration and lower level of organizational citizenship behavior among employees. Their study highlighted the importance of strategic value of human resource practices.…”

“…Other researchers have confirmed this goal (Fottler 2002, Sareen 2018). On the other hand, some studies have indicated the strategic importance of human resource management practices (Schmidt et al 2018). This means that resource management practices differ in terms of their contribution to help the organization to achieve its strategic objectives.…”

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