Research Report on Phase 5 Of Cornell University/Gevity Institute Study: Human Resource Management Practices and Firm Performance In Small Businesses: A Look At Differences Across Industries

In this study, we look at the effects of three HR practice strategies on firm performance and examine potential differences in effects across industries. Overall, we found that employee selection based on person-organization fit, workforce management following a involvement strategy, and employee management and retention practices based on creating a family-like environment were all positively related to revenue growth, profit growth, and employee retention across when looking at all of the companies in the sample. We also found that the three HR strategies were related to higher firm performance when looking at each of the four individual industries in our study. We were surprised to find that the effects of these HR practice strategies were larger in both the retail and low-skilled services industries compared to the professional services and manufacturing industries. We were particularly surprised by these results because much of the popular press writing and conventional wisdom regarding HR practices has stressed the need to manage professional and highly skilled employees because they are potentially harder to find and retain. The specific results for each of the four industries are reported and discussed in the report as are the key takeaways for the study as a whole

The Interactive Effects of Recruitment Practices and Product Awareness on Job Seekers’ Employer Knowledge and Application Behaviors

In this paper, I draw on research from the literatures on marketing and recruitment to identify how recruitment practices and company product awareness are related to job seekers’ application behaviors through three aspects of job seekers’ employer knowledge. Based on results from a within-subjects design with data from 123 recruiting companies and 456 student job seekers, my findings suggested the relationships between recruitment strategies and application intentions and decisions are moderated by product awareness. Specifically, low-information recruitment practices are significantly and positively related to application behaviors through employer familiarity and employer reputation when product awareness is low rather than high. In contrast, high-information recruitment practices are related to job seekers’ application behaviors through employer reputation and job information when product awareness is high rather than low

Research Report on Phase 4 of Cornell University/Gevity Institute Study Human Resource Management Practices and Firm Performance in Small Businesses: A Look at the Effects of HR Practices on Financial Performance and Turnover

In this study, we found evidence that groups of HR practices that represent different strategies for managing employees were significantly related to the financial performance of small companies. In particular, we found that an employee selection strategy based on person-organization fit, employee management strategy based on self-management, and employee motivation and retention strategy based on creating a family-like environment were all significantly related to firm performance in terms of revenue and profit growth. In addition, we found that the relationships between these HR strategies and firm performance were stronger in firms that face greater competition, are pursuing growth strategies, and are larger in size

How Does Leadership Structure Affect the Bottom Line?

Key Findings Investment in High-commitment HR practices lead to key employee-based outcomes. When companies invest in employees with a system of high-commitment HR practices (see examples of these practices below) they are able to build a workforce with higher human capital and motivation to exert discretionary effort for the benefit of the organization. In particular, higher use of these high-commitment HR (HCHR) practices were significantly related to higher levels of employee education, company tenure/experience, collaboration, and helping behaviors. Higher employee human capital and motivation are resources that lead to competitive advantage. In return, these employee outcomes appear to be key organizational resources for driving competitive advantage. Specifically, higher levels of employee company tenure (i.e., firm-specific experience and knowledge), collaboration, and helping behaviors were all significantly related to higher company sales growth and perceived performance (performance relative to competitors as rated by the company CEO). Leaders make a diff in the extent to which these employee-based resources lead to competitive advantage. In general, these employee-based resources were related to higher performance, but CEOs with greater levels of human capital seemed to be able to leverage these resources for even greater performance. Compared to companies with CEOs with less experience, companies with CEOs with higher average industry and company experience and higher levels of employee human capital and motivation had significantly higher performance, suggesting that CEOs with higher experience seem to understand how to take advantage of the employee-based resources that have been built through the investment in HCHR practices

Initial Organizational Images and Recruitment: A Within-Subjects Investigation of the Factors Affecting Job Choices

[Excerpt] The purpose of this study was to examine the dimensions, influenceability, and consequences of applicants’ images of prospective employers early in the recruitment and job search process. Specifically, we examined three questions: (1) On what dimensions do applicants assess organizational images early in their job searches? (2) Which recruitment practices contribute to applicants’ organizational images? (3) How do organizational images influence applicants’ decisions to apply to organizations

Recruitment and Decision-Making: The Effects of Early Recruitment Practices on the Decision to Apply to an Organization

This study explored the relationship between early recruitment practices (company visibility, social networking, campus presence and traditional practices) and decision making during the initial phase of the recruitment process. Results indicated that the relationship between early recruitment practices and decisions to apply were mediated by attraction and perceptions of organizational attributes

The State of the Art in Performance Management: Learnings from Discussions with Leading Organizations

Performance management is one of the fundamental HR tools that has been part of organizational life for decades and has long been the backbone of other activities of the HR system (e.g., pay decisions, development plans). Despite the importance of performance management, it has historically been rated by employees, managers, and the HR function itself as one of the least effective and understood HR practices. Given the stagnation in academic research on the topic and discontent on the part of organizational stakeholders, we decided it was an opportune time to meet with leading companies to understand the state of the art in performance management. Specifically, we held two working group meetings with a total of 32 HR executives from 20 companies to discuss current challenges and best practices in the area of performance management. The discussions provided us with a deeper understanding of the dilemmas and challenges associated with performance management in large, multinational companies. We were also able to extract a handful of promising directions for enhancing the effectiveness of the performance management process

ILR Impact Brief - Pathways to Success: Human Resource Practices Do Matter

[Extract] Most researchers agree that human resource (HR) practices affect attitudes and discretionary behavior on the job and that employee actions and motivations influence company performance. The academic literature also suggests that investing in employees, through high-commitment HR practices such as internal labor markets, selecting new employees who “fit” the company rather than a particular job, compensating employees on the basis of group and company results, and training and development programs that stress team building and long-term growth, are all indirectly related to organizational success. Missing from the literature is an exploration of the causal mechanisms that mediate between these HR practices and favorable outcomes for companies operating in dynamic environments; this research begins filling the void

Research Report On Phase 3 of the Cornell University/Gevity Institute Study – Employee Outcomes: Human Resource Management Practices and Firm Performance In Small Businesses

[Excerpt] Improving company performance is something of interest to all small business leaders. Small business leaders have many tools at their disposal — from finance to marketing to customer service — that could potentially improve the performance of their company. Among these tools is the way that small business leaders manage their people. As has been mentioned in previous reports, research has shown that people management does indeed impact company performance, even at the financial level. Studies show increases in value per employee of up to $40,000 and survival rates for IPO firms as much as 20% higher for companies that effectively manage their human resources. The Cornell University/Gevity Institute study of human resource management practices in small businesses is attempting to answer two important questions faced by small business leaders: 1. Do people contribute to the success of small businesses? 2. What human resource management strategies and practices can small business leaders employ to foster firm success? In phase two of the study, we found that employee management practices help small employers improve workforce alignment, which was defined as having the right people with the right skills in the right jobs. Firms with high levels of workforce alignment experience higher performance than firms with lower levels of workforce alignment. Building on these findings, the third phase of the study addresses the positive employee outcomes that can result from effective people management and seeks to understand which employee outcomes or behaviors tend to lead to different types of performance outcomes important to small business leaders. The results for this study were taken from a sample of 111 small companies where responses were received from both the top manager as well as the employees. Companies ranged in size from 10 to 165 employees with an average size of approximately 30 employees representing a broad range of industries. The results of the study will be presented as follows: First, we briefly discuss what is known about how human resource management impacts performance through employees. Second, we discuss the performance outcomes, and employee outcomes and behaviors that were studied as well as the specific employee behaviors and outcomes that seem to drive the different kinds of performance. Finally, we present some key takeaways from the results of this study

Entrepreneurial Human Resource Strategy

[Excerpt] Entrepreneurship is the process by which opportunities to create future goods and services are discovered, evaluated, and exploited (Shane and Venkataraman, 2000: 218). In other words, it is the process by which organizations and individuals convert new knowledge into new opportunities in the form of new products and services. Strategic human resource management (SHRM) has been defined as the system of organizational practices and policies used to manage employees in a manner that leads to higher organizational performance (Wright and McMahan, 1992). Further, one perspective suggests that sets of HR practices do not themselves create competitive advantage; instead, they foster the development of organizational capabilities which in turn create such advantages (Lado and Wilson, 1994; Wright, Dunford, and Snell, 2001). Specifically, this body of literature suggests that HR practices lead to firm performance when they are aligned to work together to create and support the employee-based capabilities that lead to competitive advantage (Wright and Snell, 2000; Wright, Dunford, and Snell, 2001). Thus, entrepreneurial human resource strategy is best defined as the set or sets of human resources practices that will increase the likelihood that new knowledge will be converted to new products or services