Individual Human Resources Practices

Affecting Firm Performance

CompensationBroad-based stock optionsIncentive-based compensation

Profit sharingDiversityMinority hiring during downturns

HR Practices Positive Performance Effects

Employment

Countercyclical hiringDownsizing (employment and assets)

Early retirement programs

Employment securityHuman resource outsourcing

Productivity (lagged), growthPerformance relative to industry (P), sales

and customer satisfaction (in upscale markets)

ROA, ROE, shareholder returns, survival

Shareholder returns

Shareholder returnsROA

Shareholder returns (with good returns prior to announcement)

Financial performance (P), innovation (P)ROA

Individual Human Resources Practices

Affecting Firm Performance

Industrial RelationsDecertification elections (union retained)Positive labor relations (unionism)Strikes (11-29 days)

Internal Labor MarketInternal career opportunities

HR Practices Positive Performance Effects

MotivationDecentralized decision making

Open-book management

Participative decision making

High-performance work teams

Reduced status differentials

Shareholder returnsProductivity

Shareholder returns

ROA (prospectors), ROE (prospectors)

Operational outcomes (P)

Numerous reports of goals obtained (A)

ROA (defenders), ROE (defenders)

Quality, labor productivity

High-performance firm adoptions (A)

Individual Human Resources Practices

Affecting Firm Performance

Performance ManagementResults-oriented appraisals

StaffingCognitive tests

HR Practices Positive Performance Effects

Training

SelectivitySuccession of “outsider” CEOsStructured interviewsValidation studiesWABs and BIBsYield analysis of recruiting sources

Training

ROA

Profit, sales growth, overall performancePerformance relative to industry (P)ROA (with low firm diversification)

Profit, profit growthProfit, profit growth, overall performance

Profit, overall performanceSales growth

Performance relative to industry (P), productivity

Challenges of a Diverse Workplace

• Impact on Work Groups– More creativity and innovation– Less Cohesion– Potential increase in conflict

• Impact on the individual employee– Bias in evaluation– More difficulty in developing and

maintaining professional relationships– Less satisfaction with the job– Higher rates of turnover