Centre for Innovation and Structural Change,
Galway – 21 November 2002
Sustaining the People Management and
Performance Link
John Purcell
Professor of Human Resource Management
University of Bath
Work and Employment Research Centre
Does ‘Fit’ Make a Difference? $ Change
in Market Value per Employee
Source: Huselid
Work and Employment Research Centre
HR and profit per employee
Source: Guest
Profit per employee (£)
4000
3000
2000
1000
0 to 4
Source: FoW (N=297)
5 to 7
8 to 10
11+
Number of HR practices
Work and Employment Research Centre
Sector studies reveal more on HRM and performance
Thompson
-
aerospace
Batt
-
telecommunications
Arthur
-
steel mini mills
Bailey
-
clothing
Hunter
-
Banking
West
-
hospitals
Work and Employment Research Centre
Death rates (mortality) in hospitals
and HRM
Strong relationship between HRM practices and patient
mortality:
• Appraisal has the strongest relationship with patient
mortality
•The extent of teamworking in hospitals is also
strongly related to patient mortality.
•Sophistication of training policies is linked to lower
patient mortality.
•HR Director on the Board associated with lower mortality
Source: Michael West People Management 21 February 2002
Work and Employment Research Centre
How do we explain HRM - Performance
How does people management impact on
business performance?
CIPD ‘flagship’ project 2000-2002
12 case studies of organisations trying to make
the link
Full report in 2003 - but some initial findings
already
Work and Employment Research Centre
Detailed case studies
One NHS Trust
Two major retailers, both highly successful
Three knowledge based companies
major consultancy
tele bureau
specialist software designer
Two finance companies
Three manufacturing companies
One after sales service organisation
Work and Employment Research Centre
Employee Attitude Survey
Total of 900 respondents, 40 + in each company,
repeated in the second year
Face to face interviews
Employee experience and value attached to aspects of
people management
Direct comparison with a national survey (WERS 98)
Unique research – we talk to employees!
Work and Employment Research Centre
A little theory …
Dimensions of Human Resource Management Practices
• Skill Enhancing HR Practices: Function to improve the
knowledge, skills and abilities of the collective work group through prehire selection and post-hire training
• Motivation Enhancing HR Practices: Function to affect the
motivational forces that energise, sustain and direct work behaviour.
•Empowerment Enhancing HR Practices: Function to facilitate
employee contributions of knowledge, skills and abilities to work-group
and organizational success.
Work and Employment Research Centre
The Bath People and Performance
Model
Training and
Development
Recruitment
Performance
Appraisal
Job security
Ability/skill
----------------------
Pay satisfaction
Career
opportunity
Motivation/
Incentive
---------------------Opportunity to
participate
Line
management
behaviour,
respect,
encouragement
trust,
leadership
Organisation
commitment
--------------
Discretionary
Behaviour
Motivation
-------------Job challenge/job
autonomy
Teamworking
Job
satisfaction
Involvement
Communication
Work and Employment Research Centre
Performance
outcomes +
What makes a difference
Commitment and Satisfaction in a large
accountancy/consulting partnership
Commitment
Job satisfaction
Training
√ √
√√
Performance Appraisal
√
√√
Career Opportunity
√
√√
√ √
√
Job Security
Pay Satisfaction
Job Challenge
Team Work
√√
Involvement
√
Communication
√
Management behaviour
√
Respect from manager
Climate of employee relations
√
Work and Employment Research Centre
What makes a difference
Commitment and Satisfaction in leading retail
store: Selfridges, Manchester – sales staff
Commitment
Job satisfaction
Training
Performance Appraisal
Career Opportunity
√
Job Security
√
Pay Satisfaction
√
Job Challenge
√
Team Work
√
Involvement
√√
√√
Communication
√
√√
Management behaviour
√
√
Respect from manager
√
√
Climate of employee relations
Work and Employment Research Centre
√
Employee Discretion in Omega
Location
A B
% %
C
%
D
%
Generally, how much influence do you have over how you do your job?
A lot
64 64
27
50
Some
27 36
36
40
A little
9
27
10
None
9
How satisfied are you with the amount of influence you have over your job?
Satisfied
82
Neither satisfied nor dissatisfied
9
Dissatisfied
9
82
18
Work and Employment Research Centre
36
46
18
100
Job Satisfaction at Omega
A B C
% % %
D
%
64
27
9
73
9
18
64
18
18
80
10
10
55
27
18
46
46
9
36
18
36
9
40
40
10
10
How satisfied are you with the sense of achievement
you get from your work?
Satisfied
Neither satisfied nor dissatisfied
Dissatisfied
How motivated do you feel in your present job?
Very motivated
Fairly motivated
Not very motivated
Not at all motivated
Work and Employment Research Centre
Management Behaviour at Omega
Location
A B C D
% % % %
How good are mgrs at responding to suggestions from employees?
Good
27 82 18 60
Neither good nor poor
46 9 46 40
Poor
27 9 27
To what extent does your line manager provide coaching & guidance to help
improve your performance
To a great extent
46 55 27 40
To some extent
27 45 36 40
To a limited extent
27
9 20
Not at all
27
How good do you feel the co. is at sharing & exchanging
knowledge & experience?
Good
Neither good nor poor
Poor
64 82 18
27 18 64
9
18
Work and Employment Research Centre
70
20
10
OMEGA PERFORMANCE DATA (2000/01)
(Based on averages for 12 month period Feb 2000 – Feb 2001)
Percentage variation from regional average (20 sites)
Location A
B
C
D
Availability
-0.1
0.6
-0.8
0.3
Waste/known loss
-5.5
4.7
-11.8
7.1
Shrinkage/unknown loss
5.4
63.5
-59.5
44.6
Operating expenses as % of sales
2.4
2.4
-28.2
-11.7
Waiting to be served
2.4
-6.9
-0.6
-3.3
Payroll costs as % of sales
-4.3
14.8
4.3
0.1
Profit Contribution
-13.0
21.4
-33.7
-0.1
Turnover £m
42.6
71.1
48.2
54.8
NB Data has been corrected to ensure that positive figures reflect better than average performance
and negative figures show worse than average performance
Work and Employment Research Centre
IMPLICATIONS
(A) Performance
Performance measures at the operational level are key –
not profit.
Performance measures which allow comparisons are
particularly valuable.
All performance measures are political
Work and Employment Research Centre
(B) Strategic HR
Strategy is about delivery – implementation as much as the
big vision.
Good HR policies are vital esp
- Job design for challenge and autonomy
- Appraisal
- Teamworking
- Involvement
But needs/motivators vary
- professionals
- non-managerial
- front line managers
Work and Employment Research Centre
(C) What next?
So you have all the key HR policies for AMO?
Bringing policies to life:
(a) Vision and Values – partnerships
(b) HR integration e.g. balanced score card?
(c) HR for front line managers – the behaviour you want is
discretionary too
Work and Employment Research Centre