High Commitment Hrm Paradigm Management Essay
In the studies on the relations between HRM and performance, there comes the perspective of best practice/ high commitment HRM paradigm. In this prescription, it is argued that higher performance would be achieved if the worker in the firm could identify and adapt to ‘best practice’ (Boxall and Purcell, 2008). However, although an association between ‘best practice/ high commitment HRM paradigm’ and performance has been shown by previous scholars (Marchington and Wilkinson, 2005), the linkage and the mechanism are still unclear (Boxall et al., 2011). This issue is named the ‘black box’.
In this essay, the notion of the ‘best practice/ high commitment HRM paradigm’ will be defined based on some previous works on this topic. Then, to understand the meaning of ‘best practice/ high commitment paradigm’, studies that explored on the HRM practices, organizational performance and the link between human resource management. At last, by using some real cases and results of previous studies, the strengths and weaknesses of ‘best practice/ high commitment paradigm’ will be illustrated.
Definition of ‘best practices / high commitment HRM paradigm’
Various of academics have attempted to draw a definition for ‘best practice HRM’ (Boxall and Purcell, 2008). In this case, three main terms are illustrated in the previous literatures, namely, ‘high-commitment management’ (HCM) (Walton, 1985; Boxall and Purcell, 2008), ‘high-involvement work systems’ (HIWSs) (Lawler, 1986; Boxall and Purcell, 2008) and ‘high-performance work systems’ (HPWSs) (Berg, 1999; Marchington and Wilkinson, 2005) respectively. The model of HCM focuses on combining employee commitment to the firm’s goals by taking use of positive incentives and company cultures. HIWSs emphasizes on involving employees in decision making processes and on the skills and motivational practices. HPWSs, on the other hand, suggests that practices are to be reformed to increase employees’ ability and motivation to ensure that they take more responsibility and wish to do so (Boxall and Purcell, 2008). However, in Marchington and Wilkinson’s studies, ‘best practice’ theory and ‘high commit paradigm’ can be seen as the same theory.
However, as Marchington and Wilkinson claimed, no matter what the terminology is, ‘best practice’ can be identified as the idea that ‘a particular set of HR practices has the potential to bring about improved organizational performance for all organizations’ (Marchington and Wilkinson). In order to understand this definition, I will explore the aspect of ‘a particular set of HR practices’, ‘organizational performance’ and the linkage between practices and performance.
A particular set of HR practices
An HR practice, on the organizational level, could be defined as an HR system. Surely, some HR practices are better operated than others. For instance, in the realm of selection, detailed prepared interviews would be considered better than the unstructured ones (Boxall and Purcell, 2008). Also, It is declared that the practices can easily be dismissed as a short-term fad or fashion if they are applied in isolation or without the support of organizational culture. Thus, it is suggested that the HR practices should be combined together to operate more efficiently (Marchington and Wilkinson, 2005). Similarly, EI and information sharing are more likely to be welcomed by the employees on the condition that the employment security and the workplace are relatively status-free. Boselie et al. (2005) states that different practices can be classified into ‘obligatory’ and ‘optional’, ‘hygiene’ practices and ‘motivators’ (Williams et al., 2010).
How do these combinations function? There are two theories, namely, ‘fit as gestalt’ and ‘fit as bundles’. The former one proposes that the combination of these practices as a whole would function more efficiently than the sum of its parts. Hence, any element in the combination should not be missing, or the ‘gestalt’ would break down. The other theory is called ‘fit as bundle’, which suggests to select a large number of high commitment HR practices and ignore others. Different bundles can be applied in different areas (Marchington and Wilkinson, 2005).
Up to now, a lot of studies have been focused on identifying bundles of practices and sought to establish how these bundles are related to the organizational performance (Truss, 2001) . One of the most representative studies in this field is Pfeffer’s seven practices for ‘building profits by putting people first’ (Pfeffer, 1998; Boxall and Purcell, 2008). These practices are, namely, ’employment security and internal labor markets’, ‘selective hiring and sophisticated selection’, ‘extensive training, learning and development’, employee involvement, information sharing and worker voice’, self-managed teams/team working’, ‘high compensation contingent on performance’ and ‘reduction of status differentials/ harmonization’ organizations (Marchington and Wilkinson, 2005). However, Pfeffer’s theory does not stand up well in the reality. An example is the research conducted by Osterman, which states that in the firms that utilizing these practices, the trends of pay goes far away from Pfeffer’s expectation (Osterman, 2000; Boxall and Purcell, 2008). As it is explained, this approach posits a particular model to be followed, ignoring the conditions and context that the firms are embedded in (Marchington and Wilkinson, 2005).
The definition of organizational performance has been changing over time. Specifically, the performance was regarded as an enhanced financial performance only, in the firm level at first (Cook and Ferris, 1986; Truss, 2001). Then it began to include more individual aspects, such as improved employee knowledge, skills and abilities, increased motivation, decreased turnover and improved retention of talented employees (Delaney and Huselid, 1996; Truss, 2001). In Marchington and Wilkinson’s conclusion, the output measures included labor turnover, productivity and corporate financial performance (Marchington and Wilkinson, 2005). Spector et al. suggests that important employee outcomes include job satisfaction, commitment, motivation and organizational citizenship behavior (Spector et al., 1997; Williams et al., 2010). Besides, it was shown that the workers’ views had been taken into consideration when evaluating individual outcomes so as to study deeper on the relationship between HRM and performance (Guest, 1999, Truss, 2001).
To conclude, as Benkhoff et al. states, adopting financial measures to measure success is too limited. A more balanced scorecard is required in evaluating the organizational performance (Truss, 2001).
Linkage between HRM and performance
In the last decades, a growing number of studies have focused on the impacts of HRM practices on the organizational performance (Gooderham, Parry and Ringdal, 2008). The previous studies identify that the link between HRM practices and performances does exist. For instance, Ulrich claimed that investment in HR practices influences both the financial results and the market value of firms (Ulrich, 1997, Truss, 2001). Schuler and Jackson identified that HRM practices could enhance organizational performance, not least in financial terms (Schuler and Jackson 2005; Anastasia et al., 2010). Huselid concludes after researching in 1000 US organizations that an increase investment in the ‘High Performance Work Practices’ could be associated with a decrease in turnover and an ascension in market value and profits (Delaney and Huselid, 1996; Marchington and Wilkinson, 2005).
However, although it is shown that HRM inevitably affects organizational performance, how performance is conceived, and attained, are still too complicated to be known (Boxall et al., 2011). Similarly, Paauwe claimed that currently existing work fails to address or explore the processes whereby HR practices may impact on performance (Paauwe, 2004; Harney and Jordan, 2008). Additionally, Wright et al. concluded that although there are positive relationships between HRM and performance, the causal ordering of the variables integrated in these relationships was not convincing (Wright et al., 2005; Anastasia et al., 2010). This issue is commonly called the ‘black-box’ problem (Purcell et al., 2003; Boxall et al., 2011).
Plenty of studies are conducted to unlock the ‘black box’. As an example, Boxall et al. (2011) attempt to uncover the links between HR practices and performance in a standardized service environment. They designed cross-sectional, self-completion postal questionnaires and send them to 10 different locations in a single firm. Then, multiple linear regression models are conducted using Stata 10’s survey data-analysis tools. The results in this case show that the espoused HR practices (such as training and career development) and the management culture (such as supervisory style and management style) have a positive influence on the compliance behavior, customer oriented behavior and affective commitment. Then the compliance behavior may increase the supervisory ratings of employee performance while the customer oriented behavior may decrease it.
Concluded from previous works on ‘black box’, Boselie et al. (2005) indicate that there are three theoretical frameworks: the ‘contingent framework’, suggesting that HRM influences performance in relation to contextual factors from the external environment such as business strategies (Schuler and Jackson, 1987); the ‘resource based view’, saying that HRM influences performance according to the human and social capital held by the organization (Barney, 1991); The ”AMO theory” illustrates that HRM influences performance in relation to employees’ ability, motivation, and opportunity to participate (Appelbaum et al., 2000) (Katou and Budhwar, 2010). In the ‘AMO theory’, for instance, it is proposed that higher motivation could lead to higher financial performance through lower turnover and higher productivity at the individual level.
Strengths and weaknesses of ‘best practice/ high commitment HRM paradigm’
In the studies of ‘best practice/ high commitment HRM paradigm’, there are numerous of critiques. The weaknesses of it are quite obvious.
First of all, a large gap exists between ‘what ought to be’ and ‘what really is’. Scholars criticize that there are ‘nice words’ only, facing the harsh reality (Marchington et al., 2000). As it is mentioned above, seven elements of ‘best practice’ were introduced by Pfeffer. However, it is demonstrated later that with the diffusion of HR practices Pfeffer advocated, insecurity grew and firms failed to extend (Boxall and Purcell, 2008). Similarly, Truss’s (2001) selected a successful computer company, Hewlett-Packard, to explore the practices that were applied in the firm. The methodology in collecting data was an exploratory approach. Interviews, questionnaires, focus groups and the collection of documents were used at all levels of the firm in 1994 and 1996 to analyze. Truss found that fewer than half of the employees felt the training program useful. The same situation was demonstrated in the appraisal system. Besides, although the company espoused career management through various programs, only one third of employees were satisfied with the career management. All of them could be described as a strong disconnect between the ‘rhetoric’ and the ‘reality’ as a finding in Truss et al.’s research (Truss, 2001).
Apart from critique announcing the gap between ‘theory’ and ‘reality’, there is also divergence between ‘reality’ and ‘reality’. In other words, is the ‘best practice’ HRM capable of being used in any organizations? There is overwhelming evidence that firm firms adapt their HR practices to their unique context (Boxall and Purcell, 2008). For instance, Haney et al. used a ‘best practice’ index constructed to explore the determinants of the methods used in electricity network regulation. In his research, quantitative analysis was used to assess the selected firms. And the result turned out to be that, firstly, countries with higher numbers of electricity companies are more likely to have higher ‘best practice’ scores; secondly, countries in the EU score on average 2 points higher than countries in Latin America (Haney et al., 2011). From these results, it can be concluded that ‘best practice’ is not universally applicable, at least in the electricity companies. Instead, the outcomes of ‘best practice’ are influenced by the factors such as company types, company sizes and their regions. In conclusion, it is an undeniable drawback that ‘best practice’ theory ignored the differences between distinct companies and the context that the firms embedded.
What’s more, the effect of ‘best practice’ is hard to assess. To begin with, in order to make the research more convincing, the data should be gained from several matched organizations instead of from a single case. Then, it is necessary to get information from the selected firms in several time points so that changes and long term outcome can be measured, like it is designed in Truss’s research. In the aspect of the methodology, as Purcell (1999) suggested, collecting data via a questionnaire fails to enable further investigation on important qualitative issues around process, practice and implementation¼ˆTruss, 2001¼‰. Besides, the reliance on quantitative methods means that highly complex issues are reduced to one single dimension (Truss, 2001). Thus, it was argued that more qualitative method should be used (Becker et al., 1996; Truss, 2001). However, using the qualitative methods may also cause bias. It is demonstrated by Becker et al. that simultaneity bias may occur if the information about performance and HR practice is gained from a same informant (Truss, 2001).
Despite the fact that problems and limitations occur in the progress, there are actually evidences supporting ‘best practice’ and ‘high commitment paradigm’. Some articles recommended more appropriate ways to make use of the ‘best practice’ theory.
Although it is unlikely that ‘best practice/ high commitment paradigm’ would be applicable universally, there are also evidences showing that ‘best practice’ can effectively impact on employee outcome. In a cross-national research, scholars assessed the effects of ‘best practice’ HRM on worker outcomes in two matched samples from Malaysia and England local government. In the study, William et al. used questionnaires to gain data. Then he used OLS multiple regression analyses to assess the impact of country of origin, personal characteristics, working environment and HRM on each of the five dependent variables. There are hypotheses predicting that ‘best practice’ HRM will positively affect employee motivation, employee job satisfaction, employee’s organizational citizenship, job-related stress, behavior and negatively affect employee’s intention to quit, in both the England and Malaysian samples. As a result, although different contexts caused significantly influences on outcomes, analyses reveal consistent results in support of all five hypotheses (Williams et al., 2010).
There are also other studies that proving ‘best practice’ is transferable. The study conducted by Hope (2004) drew attention to the hotels in St. Lucia. In order to figure out The impact of national culture on the transfer of ‘best practice’ operations management, both interviews and questionnaires were developed. The results showed that strongly ‘best practice’ is transferable. Besides, there are two factors that strongly influenced the acceptance and the successful transfer of ‘best practice’: training and senior manager. Similarly, in the study of US and Japanese steel plants, Ichniowski and Shaw (1999) showed that similar operational performance has been achieved when US adopted the principles of employee-driven problem solving of Japanese plants. From their work we can see the intelligent adaptation of specific practices across contexts (Boxall and Purcell, 2008). As Hope quoted, the transfer of ‘best practice’ might be problematic, but it is transferable with care and effort (Hope, 2004).
Another example is the study conducted by Done et al. (2011). This research aimed at finding short-term impacts and long-term outcome for the small companies when facing a ‘best practice intervention’. In this study the researchers used case studies, in which they prepared interviews to explore the firm performance 6-9 months after the original intervention for short-term results and 12 months after intervention for long-term results. The findings indicated that the best practice intervention delivered a range of positive short-term improvement. But the firms could not achieve a long-term success without ongoing support. In other words, the intervention of ‘best practice’ can efficiently improve the short-term organizational performance of the small and medium sized enterprise (Done, 2011).
‘Best practice/ high commitment paradigm’ is defined as the idea that a particular set of HR practices has the potential to bring about improved organizational performance for all organizations (Marchington and Wilkinson).
In the aspect of ‘a particular set of HR practices’, it is shown that an effective practice may fade out soon in isolation or not being supported by the firm culture. For this reason the practices should be combined, as a ‘gestalt’ or as a ‘bundle’ (Marchington and Wilkinson, 2005). More researches are conducted on ‘a bundle of HR practice’, since it allows a selection of the given practices. One of the most representative study on this is Pfeffer’s seven practices. However, it does not work well in reality. For the part of ‘organizational performance’, it is indicated that not only financial performance, but the other employee outcomes as well, should be used to measure organizational performance (Truss, 2001). From the previous studies, it is shown that HRM practices have a significant impact on the company performances. However, how it works is still unknown. Thus, the linkage is also called the ‘black box’. A lot of scholars tried to explore and unlock the ‘black box’, including ‘contingent framework’, ‘resource based view’ and ‘AMO theory’ (Katou and Budhwar, 2010).
As it is addressed, there are conflicts between ‘nice words’ and ‘harsh reality’ (Marchington et al., 2000). Pfeffer’s seven practices did not work as it was expected. Large gap occurs between ‘what it ought to be’ and ‘what it should be’. Also, overwhelming evidence shows firm firms adapt their HR practices to their unique context (Boxall and Purcell, 2008). Attempts of looking for a universally applicable practice for all firms in varies of contexts seem to be unreasonable. Besides, the effect of ‘best practice’ is hard to evaluate. Current studies in these fields have its limitations and biases.
However, there are evidences showing ‘best practice’ and ‘high commitment paradigm’ is effective and transferable in a cross-national contexts (Williams et al., 2010; Hope, 2004; Boxall and Purcell, 2008). Also, it is suggested that ‘best practice’ has positive short-term impacts on small companies. But more resources and support are needed in the long run (Done, 2011). Thus, it might be a good choice to adopt ‘best practice/ high commitment paradigm’ when a new company is about to set up. Experience from a different context could also be utilized in a clever way.
To summarize, I would not regard ‘best practice/ high commitment paradigm’ as a useless theory. Both theoretical findings and evidence have shown its importance, although it is widely accepted to be problematic. I would suggest a new company to make use of the theory and adopt a bundle of HR practices. The experience could learn from successful organizations. But It should a carefully adventure instead of simply copying.