Human resource management practices and longitudinal workplace performance

Abstract

Recent studies have examined the impact of human resource management (HRM) practices on workplace performance. Most find that the adoption of a coherent system of new HRM practices such as flexible job definitions, cross-training and work teams, along with extensive reliance on incentive pay, results in substantially higher levels of productivity than more traditional HRM practices. Studies have found that there is a correlation between HRM systems and labour productivity. We find that greatest contributor to labour productivity is the employee’s wage is congruent with the literature. The literature to date has shown that HRM practices in isolation may increase productivity or may reduce productivity because they have an inefficient side to them. Our study shows that when aggregated, HRM practices reduce productivity in Canada. Somewhat surprisingly, when combined with benefits, they increase productivity substantially. The main message from the aggregate productivity regressions is that: HRM by itself reduces productivity while HRM with BENEFIT increases productivity. Training by itself increases productivity and training with HRM also increases productivity. Wages clearly have the greatest impact on voluntary quits. HRM is not found to be statistically significant in the reduction of voluntary quits.

Keywords:

• human resource management
• productivity and performance
• longitudinal
• benefits
• voluntary quit

JEL Classification:

• M54
• M52
• M51

Acknowledgements

We thank the Southwestern Ontario Research Data Centre at the University of Waterloo for providing access to the workplace records. More information about the RDC program can be found online at http://www.statcan.gc.ca/rdc-cdr/index-eng.htm. Our programs can be supplied to interested individuals. The data, on the other hand, remain the property of Statistics Canada. To obtain access specific criteria must be met.

Notes

¹ Access to the confidential establishment records is not automatic. First a research proposal is submitted to Social Sciences and Humanities Research Council of Canada. It must pass academic review for merit and feasibility. Upon approval, the investigators are subjected to a criminal background check by the Royal Canadian Mounted Police. Upon successful security screening the researchers are sworn in as deemed employees (for life) of Statistics Canada; then a contract is signed.

² In terms of employee retention, wage again is the most important variable. We found that benefits and human resource management (HRM) practices in isolation and in combination do not impact the probability of quitting. However, combining HRM practices with training does reduce turnover.