Module 1: HRM systems
Delery & Doty (1996)
Model
1. Goal: is there a perspective which explains the relation between HRM and firm performance?
2. Three perspectives:
a. Universalistic perspective: HR practices  firm performance. Which HR practices
always contribute to firm performance, irrespective of the organization.
i. effect of seven HR practices on firm performance (hypothesis one)
b. Contingency: HR practices  firm performance, moderated by strategy.
i. Strategy measured with one contingency variabele (innovation), which is the
one single variable that differentiates all the strategies (hypothesis two).
Because prospectors are highly innovative, analyzers mediocre and defender
little innovative (see Miles & Snow).
c. Configurational: bundles of HR practices  firm performance
Bundles of HR practices which are equally effective and contribute to firm
performance.
i. They researched both the effectiveness of bundles of practices and the
effectiveness of the practices which most resembled the organizations
strategy (prospector, defender, analyzer).
ii. Hypothesis four and five have a contingency element in them, however,
contingency perspective tests the impact of individual HR practices on firm
performance, whereas the configurational perspective tests the impact of
bundles of HR practices.
Methodology
1. HR practices measured through questionnaires at certain point in time, financial
performance measured with key figures from the year before. So actual they measure the HR
practices after the measures of the financial performance, the causal order is therefore
wrong (see article of Paauwe).
2. Research in banking sector, questionnaires filled in by loan officers (no employees)
3. Practices usually measured with one item in the questionnaire (e.g. profit sharing).
Results
1. Universalistic perspective: three practices always contribute to firm performance: results
oriented appraisal, profit sharing and employment security (= possibilities to be employable.
Internal training possibilities). The financial performance increases by 30% when the three
HR practices were used.
2. Contingency perspective: almost no support for hypothesis two. Only appraisal strategy
which differed significantly between strategies. However, it showed to have a 50% increase
in financial performance if it was aligned with the strategy.
3. Configurational perspective: no support for the hypotheses. However, they found support
that similarity to the market-type employment system increased financial performance.
Lepak e.a. (2004)
1. Discussion between researchers which HR practices belong to control, and which to
commitment oriented HR systems. Two reasons for that:
a. Level of analysis might be to high: many researchers focus on organizational level,
but there might be a significant variability in the HR practices, which is neglected if
you focus on the organization as a whole.
b. Organizations take the organizational context into account when designing their HR
system (i.e. strategy), but there might be considerable difference within this context.
Not everyone contributes the same to the firm’s strategy, their desired employee
behavior may vary.
2. Goal: provide framework for understanding the variations within HR systems.
3. Three levels on analysis: HR architecture/philosophy (commitment/control), HR policies
(selective staffing, development training) and HR practices (structured interview, internal &
external recruiting; on-the-job training).
a. Lepak e.a. (2004) argue for analysis on policy level, to overcome described problems.
4. Model: based on the assumption that not the HR practices are relevant, but the reasons why
such practices are implemented (i.e. for desired employee contribution).
a. Strategic orientation of a firm required employees to behave in a certain way.
Therefore, strategy influences desired employee contribution.
b. The configuration of HR policies implemented for different employees are likely to
vary based on their desired employee contributions.
c. Managers have a choice to which extend they align their HR philosophy with their
strategy. Therefore, indirect relation between strategy and HR philosophy (strategic
choice perspective, see also Miles and Snow). Without regard to HR philosophies,
researchers may focus on HR policies which are maybe not suitable for the
organizational context in place.
d. Decision which HR policies are used is dependent on the way the organization wants
to manage their employees. Therefore, the HR policies depend on the HR philosophy.
5. Why are HR systems relative? Because of the differences in the desired employee
contributions and HR philosophies.
a. Desired employee behavior: Not everyone in the organization is expected to deliver
the same contributions, depends on the employee. Core vs. non-core distinction is
important. The HR policies that the firm has in place is according to the authors
dependent on the desired employee behavior, that means that the company has HR
policies in place which stimulate that kind of behavior.
b. HR philosophies: is dependent on the firm strategy, reflects the way in which
managers want to manage their employees. Firm strategies differ, as do HR
philosophies.
This means that there is no single set of HR policies for the whole company, but
constellations of HR policies to account for the different desired employee behaviors in
the company. The universalistic approach is too simple. So, HR systems are relative.
6. Contingency perspective: HR policies and practices are dependent on the desired employee
contribution.
Miles & Snow (1978)
1. Strategic choice perspective: behavior of employees is partially influenced by the
environment, but most by the choices of top managers.
2. Three problems of organizational adaption:
a. Entrepreneurial problem: entrepreneurial insight must be developed into a concrete
definition of an organizational domain: a specific good/service and target market.
b. Engineering problem: management’s solution to entrepreneurial problem (which
technology, etc.).
c. Administrative problem: stabilizing activities which solve problems in the
organization. Rationalization (create structures and processes which rationalize
previous decisions) and articulation (facilitate organization’s future capacity to
adapt).
3. Three strategies (strategic typology):
a. Defender: maintains an environment for which is stable organization is appropriate
i. Primary risk: ineffectiveness, unable to respond to major shifts.
b. Prospector: finding and exploiting new possibilities.
i. Low profitability due to inefficiency and overextension of resources
c. Analyzer: maximize profit, minimize risk.
i. Inefficiency and ineffectiveness, because twin characteristics of prospector
and defender limit it to move in either of the two directions.
d. Reactor: inconsistent and unstable, usually responding inappropriately to
environmental change, poor performance as a result and reluctant to act
aggressively.
Enterpreneurial
Engineering
Administrative
Defender
How to seal off a
portion of the market
Prospector
How to exploit new
possibilities
Which technology for
most efficiency
How to sustain control
How to avoid long
term commitment
How to facilitate and
coordinate numerous
operations.
Analyzer
How to exploit new
possibilities and
maintain current
customer base
How to be flexible and
efficient
How to accomodate
both stable and
dynamic areas of
operation
Schuler and Jackson (1987)
1. Model: Strategy  HRM practices, mediated by needed role behavior.
a. Three competitive strategies: innovation strategy (develop new products, different
from those of competitors), quality enhancement and cost reduction.
b. Why relation between strategy and HR practices? Because you have to think about
the desired employee behavior to complete a certain task, aligned with your
strategy.
2. Strategy has implications for HR practices: use of certain HR practices is contingent on the
firm’s strategy.
3. Which strategy is best? Depends on customer wants and the environment.
4. Firms need several competitive strategies, they need multiple strategies to stimulate and
reward different role behaviors.
5. Methodology: three case studies.
6. To which extend can HRM be called strategic?
7. Strategy is about how to achieve long term competitive advantage. Schuler and Jackson
claimed (and found empirical evidence) that HR practices where dependent on the strategy.
In this way, HRM is related to strategy and has a strategic value. However, HRM itself can be
a source of competitive advantage. From a resource based view, resources which are
valuable, rare, inimitable and non-transferable, can create a competitive advantage. Lepak
and Snell (2002) found empirical support for the resource based view, because the value of
the employment modes differed in their research. Next, firms with a well organized HRM
system have in itself a VRIN resource: when an HRM system creates a workforce whose
contributions are valuable, unique and difficult to imitate, it contributes to competitive
advantage (Guthrie, 2001). In this way, HRM is a strategic asset. All in all, both from a
relation with firm performance and from a resource based view, HRM can be called strategic.
Module 2: strategic HRM and firm performance
Capelli and Neumark (2001).
1. Goal: which HR practices, and to what extent, contribute to firm performance?
2. Model: HPWP  labor costs per employee
sales per employee
3. Methodology:
a. HPWP operationalized as TQM, self managed teams, meetings, teamwork training,
job rotation, cross training, pay for skill, profit sharing.
i. These were the dominant practices in the ‘70’s when their research started,
but they sound more like HIWP.
ii. The authors don’t control for industries. This is a problem, because they use
practices from manufacturing firms, but want to generalize to all firms.
b. Interviews with plant manager in manufacturing sector and site manager in nonmanufacturing sector.
c. Authors use data from 1977 onwards, so new established companies were not
included in the sample.
d. Universalistic perspective: which practices always contribute to firm performance?
4. Results:
a. More HPWP increases labor costs, so it’s not efficient!
b. No statistical effect of the relation between high performance HR practices and sales
per employee.
c. Therefore, if the increased labor costs outweigh the increases in sales per employee,
the overall firm performance will be negatively affected. Thus, according to the
authors the high-involvement work practices only positively affect firm performance
if their costs do not outweigh their benefits.
Guthrie (2001)
1. Model: HIWP  firm productivity, moderated by employee retention.
2. Methodology:
a. HR practices: configurational perspective: tests the relation between bundles of HR
practices and firm performance. Continuous scale of all practices together.
b. Productivity: logarithm of sales per employee.
c. Questionnaires sent to companies to senior managers.
3. Results:
a. When employee retention is high, HIWP have a positive relation on firm
performance.
b. When employee retention is low, HIWP have a negative relation on firm
performance.
c. Greater use of HIWP means significant productivity losses when employees leave.
d. However, the statistical evidence is very weak, with only 22% of the variance in firm
performance explained by the existence of high-involvement work practices.
Paauwe (2009)
1. Definition HRM is difficult, because HRM is about people, and people itself are inherent to
change.
2. Research has progressed far enough to say that HRM can be crucial. However, effect sizes are
typically small, so the results have to be treated with caution. All in all, HR practices are
weakly related to firm performance.
3. Five critics to HRM – firm performance link:
a. Relation between HRM and firm performance: advocates breaking down in two
levels of analysis: individual and organizational. Scholars need to use more
complicated and sophisticated models, because HR practices at the organizational
level affect individual performance of the employees, which in turn affect
organizational performance. Because firms do not perform, individual do. This means
that scholars have to control for a wide range in variables, including employee
satisfaction, performance and collaboration. It also means that scholars have to
focus on employees instead of only on managers. This is necessary to advance in the
field of HRM – firm performance.
i. Guthrie (2001) and Capelli & Neumark (2001): none of the authors explicitly
takes this multi-level perspective into account. Both articles take control
variables such as firm age and firm size into account, but these variables
recite on the organizational level, instead on the individual level. Next,
Capelli & Neumark focused on plant managers, Guthrie (2001), focused on
the senior manager of the organization. These managers had to answer
questions regarding the HR practices used for other employees, which could
lead to bias in the results, because the employees themselves were not
interviewed.
b. Measures of performance: most researches use financial measures to measure
performance, such as profit and sales. This is problematic, because a difference in
profit can be attributed to more variables then just HRM. The distance between HR
practices and financial performance of the organization could potentially be too big
to find statistical valid relations. In this sense, Paauwe (2009) argues for the use of
qualitative and flexible performance measures, such as flexibility and legitimacy.
i. Capelli & Neumark and Guthrie use both financial measures, respectively
sales and labor costs per employee and the logarithm of sales per employee
c. Causal order of the variables: most articles use organizational performance measures
from a year before the research was conducted, whereas HR practices almost always
try to uncover the present situation, due to cross sectional research. As a
consequence there is a problem in the causal order, because in practice most
researchers analyze the present HR practices and relate them to past performance.
i. Cappelli & Neumark (2001) are an exception to this, mainly because of the
longitudinal design used. The article of Guthrie (2001) does not give enough
information to analyze the causal order of the variables. However, it can be
argued that the causal order might be wrong, because the information about
HR practices and firm productivity were measured with the same
questionnaire. Measures of the organizational performance are normally
from the year before, whereas questions about HR practices try to uncover
the present situation. From this perspective, it can be argued that the causal
order in the article of Guthrie (2001) is indeed wrong.
d. Meaning of HRM: Paauwe (2009) comments that there is a lack of consensus on the
nature of HRM and the practices that constitute HRM. Every researcher seems to
have their one way of defining HRM and operationalizing their practices. However,
there appears to be a growing consensus that training and development, contingent
pay, performance appraisal and careful recruitment and selection reflect the main
objectives of HRM.
i. Cappelli & Neumark (2001) use a completely different set of HR practices,
ranging from Total Quality Management to teamwork and meetings. The HR
practices used by Guthrie (2001), such as skill based pay and cross-training,
resemble more the practices named by Paauwe (2009), although differences
can be noted.
e. Measurement of HRM: no agreement on how to measure the practices, some use
absence/presence of a practice, some the extent of coverage. Paauwe argues for
more consensus and relate the measurement of the practices to one (preferably core
group) of employees, which are well enough informed to give a good view on the
practices that are involved and the way the practices are implemented. He argues for
multiple respondents, including employees.
i. Guthrie (2001) uses a continuous scale to measure the practices and
therefore the extent of coverage of HIWP. Capelli & Neumark (2001) use the
percentage of coverage of each practice to measure HPWP. However, both
authors focus on all employees in the organization, instead of selecting one
group of employees.
HRM and new employment relationship
Way e.a. (2010)
1. Model and results:
H1(-): no support
Standard employee
withdrawal behavior
ESCLS
H3(-): support
HIHRS
H2(+):support
Standard employee
withdrawal behavior
LCCLS
H4(+):support
HIHRS
2. Two strategies for making use of contingent workers which influence standard employee
withdrawal behavior:
a. ESCLS: enhancement of employment stability for standard employees, is used to
buffer the standard employees from fluctuations in environmental demand (H1).
b. LCCLS: using them to lower labor costs. This gives a signal to the workforce that the
firm does not value their contributions ore care about their well being, thus
enhancing standard employee withdrawal behavior (H2).
c. HIHRS negatively moderates the relationship between ESCLS and SEWB, so that the
relationship will be further negative when HIHRS is in place. HIHRS signals to the
employees that the employer invests in long term employee well being and skill
development.
d. HIHRS positively moderates the relationship between LCCLS and SEWB, so that the
relationship will be stronger when LCCLS is in place. The authors argue that the logic
of HIHRS is inconsistent with the logic of LCCLS, because HIHRS signals that the
employer cares about the employees’ wellbeing, whereas LCCLS signals that he
doesn’t. Mixed messages lead to higher SEWB.
3. Methodology:
a. Interviews with senior HR managers.
b. SEWB measured through absenteeism and turnover, also measured the importance
given to it by senior management.
c. HIHRS measured through six HR practices. Presence/absence of a practice is
measured. More practices means more use of HIHRS.
d. Critics: ESCLS and LCCLS measured with one single item.
Lepak and Snell (1999)
1. Goal: develop a framework for the management of human capital
a. Human capital: competences, skills and knowledge of employees.
b. Authors argue that management of human capital is a make-and-buy decision
nowadays.
2. Authors use three theories to make their conceptual framework:
a. TC theory: when TC is high, then make it internal.
b. Human capital: investments in HR must be lower than benefits.
c. RBV: core competences should be developed internally, because those are VRIN
(valuable, rare, inimitable and non-transferable).
3. Based on these theories, the authors define two dimensions along which managers make
employment sourcing decisions:
a. Value: the contribution to a firm’s strategy. A company has core and peripheral
assets, core assets are vital to a firm’s strategy to generate value for the customer
and require internal development (RBV). However, costs are also important,
therefore, value is the function of strategic benefits to the customer relative to the
costs incurred.
b. Uniqueness: firm specifity of human capital. If a skill is highly unique to a company, it
provides a source of competitive advantage (RBV) and externalize the development
may lead to high costs. Therefore, firms should develop unique assets internally (TC
theory).
Value of human capital
Employment mode: alliance. Unique, so
incentive to develop internally (TC theory).
However, limited value, so no need to own these
skills (RBV). Limited benefits can be expected
(HC), so no need to develop them internally.
Therefore, create alliances to produce a jointly
shared outcome. Both parties capitalize on the
others knowledge, without having the costs to
develop them internally.
Employment relationship: partnership.
Information sharing and trust necessary.
Therefore, create partnerships that focus on
mutual investments.
Uniqueness of human capital
HR configuration: collaborative. No investments
in individuals, but in the relationship itself.
HR practices:
1. Limited training, if done, then focus on
process facilitation and team building.
2. Facilitate information sharing, through
job rotation, communication
mechanisms, mentoring, etc.
3. Group based pay system to encourage
employees from both firms to share
information and knowledge.
Employment mode: contracting. Many
alternative sources, low strategic value 
decrease employment costs by contracting
externally. No risk that competitive position is
jeopardized. Reduce overhead, increase
flexibility. Focus development costs on core
employees.
Employment relationship: transactional. Focus
on short-term economic exchanges, because of
limited association with the firm and explicit
performance expectations. Employer doesn’t
seek loyalty/continuity, as compared to Q2.
HR configuration: compliance. Much in common
with Q2 (low investment in employees),
however, limited responsibility, more focus on
compliance with T&C of the contract.
HR practices
1. Limited training, if it’s done, then focus
on company policies/procedures.
2. Performance appraisal based on job and
specific results.
3. Concentration on enforcement of rules
Employment mode: internal development
(knowledge based in Lepak & Snell, 2002). Core
employees. Both from strategic and financial
view, internal development is better.
Employment relationship: organization focused.
Encourages significant mutual investments.
Long-term involvement and commitment.
HR configuration: commitment. Create
involvement. Form psychological contract
between goals of organization and individual.
Prospector strategy. Encourage employees,
motivate them to invest in organization.
HR practices:
1. Loosely defined jobs
2. Staffing decisions based on employee
potential.
3. Significant investments in training.
4. Sponsoring of career development
5. Pay system focus on employee learning
and information sharing
Employment mode: acquisition (job based in
Lepak & Snell, 2002). Valuable, however, not
unique  not rare  risk that employees leave
the company  no ROI  buy  instant
access, without need for internal development.
Employment relationship: symbiotic. Both the
employee and the employer are likely to
continue the relation as long as both benefit.
Each party has other alternatives, because
uniqueness is low.
HR configuration: market based (productivity
based in Lepak & Snell, 2002). Emphasizes
staffing for immediate contribution. Managers
invest less in employees, because of risk that
employee leaves.
HR practices:
1. More attention on staffing then training
(as opposed to commitment).
2. Achievement testing, to identify
employees with specific skills who can
perform immediately.
3. Wages focused on productivity.
4. Empowerment to make decision that
impact value.
5. Managing the HR architecture requires attention for all four quadrants. Two primary issues:
a. Complexity of HR architecture: the authors argue that a best practice (i.e.
universalistic approach) is too simple and one set of HR practices is too simple to
manage all employees. Firms require different HR configurations for different
employment modes. Therefore, configurational (different bundles of practices)
contingent (depended on employment mode) perspective.
b. Dynamics of HR architecture: competitive situations change  value and uniqueness
of human capital change as well. Barriers to imitation of human capital are
threatened. Existing knowledge may become obsolete. Potential decrease of value
and uniqueness. Therefore, firms should make their human capital more unique of
valuable:
i. More unique through customizing human capital, e.g. through on-the-jobtraining. Increase tacit knowledge  increases firm specificity of human
capital.
ii. More valuable, through extending and leveraging human capital. If partners
in alliance or a contract can be utilized in a fundamental different way, their
value may increase up to a point that justifies internal development.
Lepak and Snell (2002)
1. Goal: have different employment modes a different strategic value and uniqueness and do
they use different HR configurations?
2. Model and hypotheses:
Hypothesis
Support?
Uniqueness is higher in alliances / knowledge- No support, uniqueness alliances > contract,
based then in contract / job based.
but uniqueness alliances < knowledge and
equal to job-based.
Value higher in knowledge based/alliances
Support
then in contract/alliances.
Commitment HR configuration most used in
No support, firms use collaborative,
knowledge based
commitment and productivity to manage
these employees.
Productivity HR configuration most used in
Support
job-based.
Compliance HR configuration most used in
Support
contract.
Collaborative HR configuration most used in
Support
alliances.
3. Methodology:
a. questionnaires which were sent to senior executives, senior HR managers and line
managers
b. Critics:
i. Low response rate
ii. In some instances two individuals of the same firm completed the
questionnaires. In these cases, the results of the questionnaires were
aggregated and combined with firms where only one individual completed
the questionnaire
iii. HR configurations measured by HR practices. More practices = more
adherence to a configuration.
4. Results
a. Study supports the notion that different employment modes are associated with
variations in human capital value and uniqueness.
b. Not only financial figures are important in researching HRM (see Paauwe, as opposed
to Capelli & Neumark, Guthrie), also the value is important. Therefore, the study
supports the resource based view of the firm.
c. No support for the proposed uniqueness of the employment modes. Although
alliances were more unique then contract, it was lower than knowledge and not
different from job-based.
d. Commitment based HR configuration was used most for knowledge based and
contract based HR configuration was used most for contract workers. Findings for
the other two employment modes was more complicated. This suggests that
managers need two opposing approaches to HR: one based on commitment, one
based on compliance.
e. The within employment mode analysis reveals that different HR configurations are
used for these employment modes. This means that the use of an HR configuration is
dependent (contingent) on the employment mode.
f. The results do not preclude the use of best practices (universalistic perspective),
because the commitment based HR configuration consists of many best practices.
Next, the authors found high correlation between the HR configurations, suggesting
overlap.
g. Some functions appear in more quadrants.
Module 4: Human resource management systems
Bowen & Ostroff
1. Previous researchers tried to link the content (HR practices) to firm performance. Bowen and
Ostroff include the process.
a. Process of HR systems: how are messages send and perceived?
b. Content (HRM as prescribed) vs. process (HRM as perceived)
2. What is the process of an HR system and why is it important? The process of an HR system is
about both the sending and perceiving of messages. Process of an HRM system is important,
because given a desired content of the HR system, HR systems might still not lead to desired
employee behavior, because employees interpret the HR system differently. This leads to
variability. Therefore, Bowen & Ostroff focus on how managers can send unambiguous
messages to employees. To do this, managers have to create a strong HR system through
distinctiveness, consistency and consensus. Through a strong HR system the organizational
climate (the perception of formal and informal organizational policies) can act as a strong
situation, in which employees share a perception about which behavior is expected from
them. This allows them the understand the appropriate behavior and form a collective sense
of what is expected from them. This leads to a more effective organization and thus to
improved financial performance. Answers the question how HRM to firm performance.
3. Based on attribution theory, in which we can attribute a cause to an effect if it is distinctive,
consistent and there’s consensus.
a. Distinctiveness: the degree of attention and interest that the HRM system captures
b. Consistency: degree of consistency among the messages that are sent. Does the
presumed effect occur every time the cause is in place?
c. Consensus: the degree of agreement among employees about expected behavior.
4. Content and process have to be integrated.
Francis & Keegan
1. Business partner modeling framework has received considerable attention. It defines the
roles of HR professionals along two dimensions: people vs. process and strategic vs.
operational focus.
2. Trend in which HR professionals want to be a strategic partner (process, strategic focus).
Very few see themselves as an employee champion and even less want to become one.
3. More and more operational and day-to-day HR activities are delegated to line managers,
who are not trained to day this and have neither the time or motivation to do this
appropriate. Next, some HR practices are performed in a call center.
4. Two main problems with business partnering model:
a. Disconnection between strategic and operational activities
b. Disconnection between employees and HR personnel.