Question 1 - Harmon

Mid-Term Review
Question 1
There is a considerable body of evidence that suggests good human resource management
(HRM) practices significantly contribute to organization success. What positive outcomes
(success factors) are generally attributed to good HRM practices? Also, based upon your
readings, what HRM practices contribute to organization success (a minimum of five should be
listed and explained)? Provide some examples of organization practices that have been
successful (e.g., provide some examples of organizations that have employed successful
What positive outcomes are generally attributed to HRM practices?
There is substantial empirical evidence that suggest a strong correlation between how firms
manage their people and financial success. These empirical studies suggest that “substantial
gains” upwards of 40% can be achieved through the implementation of “high performance
management” practices.
What HRM practices contribute to organization success?
“Putting People First for Organizational Success” details seven (7) practices of organizations
that are successful in producing profits through people.
1. Employment security – is fundamental to the implementation of other high performance
management practices.
2. Selective hiring – hiring the right person the first time requires a large applicant pool, the
organization must be clear about the most critical skills and attributes needed in the
applicant pool, all skills and values sought must be consistent with the position and the
organization’s approach to its market, and organizations should screen for qualities that
are difficult to change through training.
3. Self-managed teams and decentralization as basic elements of organizational design –
studies have shown that teams are an effective principle of organizational design.
Teams substitute peer-based control for hierarchical control of work. Teams are also
successful in instilling a sense of accountability and responsibility in all levels of
4. Comparatively high compensation contingent on organizational performance –
successful companies can pay more and often do, however, high pay in and of itself can
produce economic success. See Pathmark example below.
5. Extensive training - training is an essential component of high performance work
systems because these systems rely on front line employee skill and initiative to identify
and resolve problems,, to initiate changes in work methods, and to take responsibility for
6. Reduction of status differences – organizations perform at a higher level when they are
able to utilize the ideas, skill, and efforts of employees at all levels. To achieve this level
of involvement at all staff levels, firms must reduce the status distinctions that separate
individuals and groups.
7. Sharing information – information sharing such as the dissemination of financial
performance, strategy, and operational measures conveys to employees the sense that
they are trusted. This sharing creates a high trust organization and “open book