The relationship between human resource investments and organizational performance: A firm-level examination of equilibrium theory.

Abstract

It is commonly believed that human resource investments can yield positive performance-related outcomes for organizations. Utilizing the theory of organizational equilibrium (H. A. Simon, D. W. Smithburg, & V. A. Thompson, 1950; J. G. March & H. A. Simon, 1958), the authors proposed that organizational inducements in the form of competitive pay will lead to 2 firm-level performance outcomes--labor productivity and customer satisfaction--and that financially successful organizations would be more likely to provide these inducements to their employees. To test their hypotheses, the authors gathered employee-survey and objective performance data from a sample of 126 large publicly traded U.S. organizations over a period of 3 years. Results indicated that (a) firm-level financial performance (net income) predicted employees' shared perceptions of competitive pay, (b) shared pay perceptions predicted future labor productivity, and (c) the relationship between shared pay perceptions and customer satisfaction was fully mediated by employee morale.

Ignoring Clustering in Confirmatory Factor Analysis: Some Consequences for Model Fit and Standardized Parameter Estimates

“…Collins & Smith, 2006;Detert, Schroeder, & Cudeck, 2003;Ebesutani, Okamura, Higa-McMillan, & Chorpita, 2011;Garb, Wood, & Fiedler, 2011;Glisson & James, 2002;González-Romá, Peiró, & Tordera, 2002;Han, Chou, Chao, & Wright, 2006;Hatami, Motamed, & Ashrafzadeh, 2010;Keller, 2001;Law, Shek, & Ma, 2011;Merrell, Felver-Gant, & Tom, 2011;Nelson, Canivez, Lindstrom, & Hatt, 2007;Oliver, Jose, & Brough, 2006;Patterson et al, 2005;Philips et al, 2006;Raspa et al, 2010;Riordan, Vandenberg, & Richardson, 2005;Robert & Wasti, 2002;Salanova, Agut, & Peiró, 2005;Schaubroeck, Lam, & Cha, 2007;Takeuchi, Lepak, Wang, & Takeuchi, 2007;C. M. Tucker et al, 2011;van der Vegt & Bunderson, 2005;Zohar & Tenne-Gazit, 2008) and only a few studies that properly account for clustering (Breevaart, Bakker, Demerouti, & Hetland, 2012;Jackson, Levine, & Furnham, 2003;Mathisen, Torsheim, & Einarsen, 2006;Subramony, Krause, Norton, & Burns, 2008;Wang, Willett, & Eccles, 2011). Throughout this article, we show that a few methods accounting for clustering in CFA are readily applicable in such situations, and we encourage researchers to avoid disaggregation.…”

The virtuous circle of human resource investments: A precrisis and postcrisis analysis

“…The greater effort, initiative, and collaboration fostered by this relationship of trust help the company to develop its creativity and organizational learning capability, allowing it to respond effectively to the competitive intensity of the environment. As Subramony et al (, p. 778) claim, “there seems to be support for the idea that inducements offered to employees are predictive of employees' levels of contribution to the organization.” Empirically, Tsui, Pearce, Porter, and Tripoli () and Subramony et al () demonstrated that HR investments are associated with high levels of employee performance. Likewise, Muse, Rutherford, Oswald, and Raymond (), based on data from the National Workplace Employee Survey in the United States, and Roca‐Puig et al (), using the Survey on Business Strategies in Spain, provided empirical evidence for a positive effect of OCE on labor productivity.…”

Antecedents and outcomes of contingent workers' attitudes toward their temporary help services firm: A unit level longitudinal investigation

“…Studies need to be conducted to establish the empirical links between service failure and turnover rates in THS units, with their long-term financial outcomes. Moreover, the argument that ''organizations invest the financial gains, at least partly derived from employee contributions, into inducements to motivate further contribution by employees'' (Subramony, Krause, Norton, & Burns, 2008;p. 779), can be tested using longitudinal studies where long term financial measures (e.g., sales and net income) are utilized as predictors of THS firm's human resource investments (e.g., competitive pay, training, and supportive work conditions).…”