Academic journal article Management Revue

Human Resource Practices and Organisational Performance: Can the HRM-Performance Linkage Be Explained by the Cooperative Behaviours of Employees?**

Academic journal article Management Revue

Human Resource Practices and Organisational Performance: Can the HRM-Performance Linkage Be Explained by the Cooperative Behaviours of Employees?**

Article excerpt

This paper addresses the question as to whether the linkage between HRM and organisational performance can be explained by the effect of the internal and strategic fit of HRM on the cooperative behaviours of employees. We expect that the more HRM practices are aligned within themselves (internal fit) and the more HRM is aligned with an organisation's strategy (strategic fit), the better employees know what is expected of them, and the more they behave cooperatively towards their co-workers and towards their supervisor. Next, we hypothesised that the cooperative behaviours of employees are positively related to the financial and non-financial performance of the organisation. These hypotheses were tested using multilevel regression (N=723 employees; 10 organisations). We found that cooperation with co-workers is negatively related to turn over and positively related to sick leave. No support was found, however, for the hypothesis that a better internal and strategic fit leads to more cooperative behaviour on the part of employees. The implications of these findings for future research and for human resource management are discussed.

Key words: Cooperative Behaviour, Organisational Performance, Internal Fit, Strategic Fit, Mutual-Investment Model

Introduction

The management of human capital in organisations has become to be seen a critical factor in maintaining and improving organisational performance (Bowen/Ostroff 2004; Ostroff/Bowen 2000). Research has shown that the people in organisations are an important variable when it comes to trying to stay ahead of the competition and that Human Resource Management (HRM) can play a decisive role in organisational performance (Arthur 1994; Decker/Gerhart 1996; Boselie/Dietz 2003; Boselie/Dietz/ Boon 2005; Boselie/Paauwe 2000; Guest/Michie/Conway/Sheehan 2003; Wood 1999; Youndt/Snell/James/Lepak 1996). Although a positive relationship is sometimes shown between HRM and organisational performance, little is yet known about its underlying mechanisms (Baron/Kreps 1999; Bowen/Ostroff 2004; Klein/Kozlowski 2000).

HRM is assumed to affect knowledge, skills, abilities (Schuler/Jackson 1995), attitudes and behaviour of employees (Guest 1997), and may therefore affect the performance of an organisation (Den Hartog/Boselie/Paauwe 2004). The alignment of HRM with the organisation strategy (strategic fit) and the alignment of the various HRM practices, such as career opportunities, training and appraisal, within the organisation (internal fit) (Baron/Kreps 1999) are assumed to be important factors in explaining the link between HRM and organisational performance. When HRM within an organisation is well aligned, the employees know what is expected of them, may therefore act similarly and have uniform expectations about work and behaviour (Baron/Kreps 1999).

A basis for our theoretical reasoning is the "mutual-investment" model (Tsui/ Pearce/Porter/Tripoli 1997). The maxim of the mutual-investment model is the following: when the employer looks after her employees, her employees will look after her. When the employer signals that she takes care of the well-being of her employees, employees will react with more good will, commitment and willingness to cooperate. Tsui et al. (1997) add a layer of explanation to existing efficiency-wage models with their argument that the employment relationship is not only made up of a single layer of (predominantly) financial exchange, but that a further layer involving social exchange also exists. In this layer of social exchange, the employer and employee exchange goods that have not been agreed upon beforehand. A way for the employer to offer employees these types of "social" goods is to give employees opportunities for career enhancement.

In the context of the mutual-investment model (Tsui et al. 1997; Tsui/Wang 2002), the internal and strategic fits within an organisation are considered to be either job-focussed or organisational-focussed. …

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