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s the field of human resource man-agement matures, increasing empir-ical evidence supports the efficacyof many human resource practices.However, scientists and practition-

ers are concerned that despite the researchevidence, these practices do not show highrates of adoption (Johns, 1993; Rynes, Col-bert, & Brown, 2002). On the other hand,many HR practices that are not backed upby empirical evidence seem to haveachieved higher-than-expected rates ofadoption (Carson, Lanier, Carson, & Guidry,

2000). For instance, although a voluminousliterature emphasizes the importance ofstructured and behavior-based interviews(Campion, Palmer, & Campion, 1997), un-structured interviews continue to enjoy

popularity among managers. Contrast thisusage with the current interest in emotionalintelligence tests that have not demon-strated high levels of construct and predic-tive validity (Davies, Stankov, & Roberts,1998; OConnor & Little, 2003).

This issue is important to multiple con-stituencies involved in the adoption of HRpractices. Like other forms of investment,the adoption and implementation of HRpractices involve costs in the form of money,organizational resources, and time thatcould be devoted to other strategic issues.

Therefore, managers need to be sure that thedecision to adopt a practice is the rightonewould the HR practice benefit the or-ganization, given these costs? For HR de-partments, a track record of adding value by

WHY ORGANIZATIONS ADOPT

SOME HUMAN RESOURCE

MANAGEMENT PRACTICES AND

REJECT OTHERS: AN EXPLORATION

OF RATIONALES

M A H E S H S U B R A M O N Y

This article explores reasons why organizations adopt or reject human re-

source practices. Four theoretical approaches are brought to bear on this issue.

According to the economic approach, organizations adopt HR practices thatare economically beneficial to them. Similarly, the alignment approach views

firms as adopting HR practices if these practices are aligned with strategic ob-

jectives. In contrast, the decision-making approach invokes a constrained-ra-

tionality model of managerial judgment, and the diffusion approach attributes

the adoption/rejection decision to institutional pressures that encourage imi-

tation. Literature in these areas is reviewed and the implications for HR re-

search and practice are discussed. 2006 Wiley Periodicals, Inc.

Correspondence to: Mahesh Subramony, Department of Psychology, University of Wisconsin at Oshkosh, 800Algoma Blvd., Oshkosh, WI 54901, Phone: (920) 424-7168; Fax: 424-1204, E-mail: [email protected]

Human Resource Management, Summer 2006, Vol. 45, No. 2, Pp. 195210

2006 Wiley Periodicals, Inc.

Published online in Wiley InterScience (www.interscience.wiley.com).

DOI: 10.1002/hrm.20104


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196 H UMANRESOURCEMANAGEMENT, Summer 2006

adopting effective HR practices is likely tolead to benefits in terms of credibility, visi-bility, and power; a history of unsuccessfulprograms could be detrimental to the depart-ments image among managers and employ-ees (Buyens & De Vos, 2001). Finally, em-ployees are likely to trust managers and HRdepartments that demonstrate long-termcommitment to effective HR practices. Con-stant change in practiceswith one ineffec-

tive practice replacing anotheris likely to lead to initiativefatigue and resistance to change(Abrahamson, 2003).

Although several explana-tions have been proposed to ex-plain the issue of adoption/rejec-tion, these vary widely and

typically focus on limited aspectsof the phenomenon. For in-stance, the low rates of adoptionof effective HR practices have var-iously been attributed to the slowdiffusion of knowledge from re-searchers to practitioners (Johns,1993), managerial perceptions ofutility (Boudreau & Ramstad,2003), and the complexity of im-plementation (Pfeffer & Sutton,2000). This article aims to present

these varied explanations byviewing the decision to adopt orreject an HR practice as an out-come of both rational and nonra-

tional forces operating in organizations.Four theoretical approaches can help us

understand the decision by firms to adopt orreject HR practices. Each of these approacheshas something unique to contribute to thediscussion and has the potential to limitsuch discussion if treated as being self-suffi-cient. Two of these approaches, economic

and alignment, stem from the emerging fieldof strategic human resource management(Lengnick-Hall & Lengnick-Hall, 1988) andsuggest that close ties between human re-source practices and business objectives oroutcomes will increase the probability ofadoption. The diffusion and decision-mak-ing approaches, on the other hand, focus onthe nonrational aspects of managerial deci-

sion making (Abrahamson, 1996; March,1994), and view adoption and rejection deci-sions as emerging from the interplay be-tween managerial judgment, organizationalconstraints, and institutional pressures thatencourage imitation.

These approaches are described, an illus-trative case is presented, and implications forresearch and practice are discussed in this ar-ticle.

The Economic Approach

The economic approach attributes accept-ance of HR practices to their connectionwith the firms financial results. According tothis view, HR practices that help the organi-zation maximize its profits through cost re-

duction or revenue generation have a betterchance of being accepted than those that donot obviously provide these benefits. At leastthree different research streams address theeconomic benefits of HR practices.

Utility Analysis

Utility is typically demonstrated by assign-ing monetary values to HR practices. A de-tailed description and review of the utility-analysis approach can be found elsewhere

(see Boudreau & Ramstad, 2003). However, itis important to note three characteristics ofmost utility-analysis models. First, utility-analysis modeling requires the calculation ofthe expected payoff from using the HR prac-tice. This payoff is a product of its predictivevalidity (i.e., the extent to which the practicepredicts future performance) and SDY, thestandard deviation of dollar-valued job per-formance. Second, the benefits from usingthe practice are compared to the monetarycosts of its implementation. In the case of se-

lection, the associated cost would be that oftesting a candidate. Third, the comparison ofthe HR practice is with a null situation,where there is no such practice. For instance,the utility of a selection device would be thedegree to which its use increases the qualityof applicants selected beyond what wouldhave occurred if that device had not beenused (Cascio, 1991).

This article aims to

present these

varied explanations

by viewing the

decision to adopt or

reject an HR

practice as an

outcome of both

rational and

nonrational forces

operating in

organizations.

Human Resource ManagementDOI: 10.1002/hrm


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Why Organizations Adopt Some Human Resource Management Practices and Reject Others 197

Recently, Boudreau and Ramstad (2003)proposed that HR practices have the highestutility when they are applied to strategic tal-ent pools or roles characterized by highstrategic value and high variance in valuedperformance (SDY). An example of a strategictalent pool would be the product develop-ment roles in a company embarking upon aproduct innovation strategy. If performancevariation in this talent pool is high, HR prac-tices that reduce variation and improve per-formance will have the highest utility. Inother words, HR practices have the most tocontribute in talent pools that are perceivedas critical for the business success of the firm.

Evidence indicates that organizationaldecision makers might not consider utilityanalysis outputs while making personnel de-

cisions (Latham & Whyte, 1994; Whyte &Latham, 1997). This omission has been at-tributed to the complexity of utility modelsand questions regarding the underlying as-sumptions of these models. Boudreau andRamstad (2003) suggest that this acceptanceproblem could be mitigated somewhat if de-cision makers and other influential individu-als are involved early on in designing utilitymodels.

A potential limitation of the utility-analysis approach is that it is concerned

more with the cost savings resulting fromimplementing an HR practice than with thelong-term benefits of the HR practice (i.e., in-creased revenue) that are addressed on theincome side of the company balance sheet.Like other investment decisions, managersare required to subject HR practices to a cost-benefit or return-on-investment (ROI) analy-sis to guide their decisions. Unfortunately,costs are easier to find and calculate, sincethey often are incurred at the onset of an in-tervention. Waiting for long-term benefits is

more difficult. For instance, adopting a rig-orous selection process using a multiple-hur-dle approach usually involves costs related toassessing the candidate multiple times, re-training (in-house) assessors, finding/acquir-ing new selection tools, and gaining organi-zational buy-in. The key for HR is todemonstrate that the incremental benefits ofthe new HR practice (over and above the pre-

vious practice) clearly exceed the incremen-tal costs of adoption.

Human Capital

The human capital approach attributes thefocus on reducing HR costs to the way in-tangibles are measured and presented byfirms. It has been observed that intellectualcapital and knowledge are not measured orreported adequately in income statements(Stewart, 2001). People-relatedexpenses such as recruiting, se-lection, training, and compensa-tion are subtracted from thefirms revenue and reflected inthe income statement everyyear. The benefits from hiring,

training, and compensatinghigh-value employees are not re-flected in these statements, ex-cept in terms of the ultimateoutput measures or lagging indi-cators, such as sales. The humancapital approach provides somealternatives for measuring intel-lectual capital, which has beendefined as the knowledge thattransforms raw materials and makes themmore valuable (Stewart, 2001, p. 12). One

such measure, knowledge earning, is calcu-lated by subtracting earnings from finan-cial and physical assets from the firmstotal earnings. Another measure, Tobins Q,is calculated by dividing the market valueof the firm by the estimated replacementvalue of a companys physical and financialassets. The logic underlying both thesemeasures is that the firm is more than justa physical and financial entityits value isderived substantially from its intangible as-sets, the intellectual capital stored in the

people, brands, and relationships.Although the human capital approach

provides a compelling argument in favor ofinvesting in people, very few firms have in-corporated or paid serious attention to intel-lectual capital measures in their financialstatements. This oversight may be due toseveral factors. First, it is difficult to untan-gle the people component of intellectual

The human capital

approach attributes

the focus on

reducing HR costs

to the way

intangibles are

measured and

presented by firms.



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capital from other intangible factors, such asbrand perceptions and reputation. Second,the gap between book value and marketvalue could vary by industry, with knowl-edge-based companies (i.e., those requiringsubstantial human expertise) clearly possess-ing fewer physical assets than companies incapital-intensive industries. Finally, themeasurement and management of knowl-edge work also appears to have taken a back-seat in a struggling economy where the sup-ply of talent, at least in perception, exceeds

its demand, leading to an under-investment in human resourceinterventions focused on increas-ing human capital.

High-Performance Work

Practices

Research evidence has steadily ac-cumulated over the past twodecades demonstrating the posi-tive impact of high-performancework practices (HPWPs) on busi-ness performance (Huselid, 1995;MacDuffie, 1995; Subramony,Adams, Webster, & Bentz; Wright,Gardner, Moynihan, & Allen,2005). Although the specific prac-

tices vary across studies, their gen-eral focus is on developing a skilledand motivated workforce throughthe application of sound HR prin-ciples, such as rigorous employee

selection, reward for performance, training,and employee involvement.

It has been proposed that HPWPs aremost effective when they operate together asa sophisticated and internally consistent sys-tem or bundle (MacDuffie, 1995). Firmsadopting these practices, therefore, need to

make a significant investment in realigningtheir various HR subsystems to reflect thishigh-performance emphasis. In addition, ithas been proposed that in order to be suc-cessfully adopted and to provide an inim-itable competitive advantage, HPWPs shouldbe integrated with the firms unique strategyand structure (Becker & Gerhart, 1996). Forinstance, companies utilizing a differentia-

tion strategy that requires employee creativ-ity and discretion might find it easier toadopt employee involvement initiativesthan firms following a cost-leadership strat-egy that emphasizes uniformity.

It should be noted that the propositionof strategy-HPWPs fit has received mixedsupport, with some studies demonstratingan interactive relationship between competi-tive strategy and HPWPs (e.g., Youndt, Snell,Dean, & Lepak, 1996) and others not demon-strating this interaction (e.g., Ordiz-Fuertes& Fernndez-Snchez, 2003). These findingsindicate that the issue of fit between HRpractices and the organizational context ismore complex than has been addressed inliterature. As an example, competitive strate-gies cannot be neatly characterized as one or

the othera company can aim to build astrong brand in one product or consumersegment (e.g., high-end machines) whilebeing cost-focused in another (e.g., light-bulbs). Also, professed strategies do not shedlight on how well the strategy has been im-plemented and communicated in the organ-ization (Wright, 2002).

Finally, there is a need to consider fit overtime. Few organizations can afford to over-haul their entire HR system and adopt an in-ternally consistent bundle of practices.

Rather, individual practices might evolve overtime to become assimilated into organiza-tional routines (e.g., objective assessmenttools might be complemented by subjectivefit interviews in organizations that value af-filiation), as well as influence the adoption ofother HR practices (e.g., the successful imple-mentation of rigorous selection might moti-vate the organization to attend to the devel-opment of talent, leading to the adopting of arigorous performance management process).

Strategic HR researchers have also pro-

posed that environmental characteristics in-fluence the adoption and effectiveness ofHPWPs. This proposition has received sup-port with evidence that industrial character-istics such as capital intensity, annualgrowth rate, and product differentiation(Datta, Guthrie, & Wright, 2005) moderatethe relationship between HPWPs and organi-zational performance.

Research evidence

has steadily

accumulated over

the past two

decades

demonstrating the

positive impact of

high-performance

work practices on

business

performance



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Despite evidence linking HPWPs witheconomic outcomes, a common refrain isthat the knowledge regarding the usefulnessof these practices is not often translatedinto action (Pfeffer & Sutton, 2000). Part ofthe explanation for this lies in the environ-mental contingencies previously stated. Itis, however, also possible that findings re-lated to HPWPs and business performancemight be perceived by decision makers asbeing too generic, as not invented here,or not aligned with the firms idiosyncraticcharacteristics. The alignment perspectivetakes this view and aims to promote adop-tion by linking HPWPs to business goalsand strategies.

The Alignment Approach

The alignment approach argues that manymanagers view the human resources func-tion as being disconnected from the realwork of the organization (Ulrich, 1997, p.125). According to this view, the HR func-tion traditionally has assumed an adminis-trative or transactional role and is per-ceived by managers as being distant fromthe creation and implementation of busi-ness objectives. This distance, in turn, re-duces the functions credibility and compe-

tence in promoting effective HR practices.Indeed, there is evidence that HR profes-sionals tend to view their functions contri-bution to business success more favorablythan do line managers (Wright, McMahan,Snell, & Gerhart, 2001), and that the lattercontinue to view HR as primarily a mainte-nance or administrative function (Buyens& DeVos, 2001; Ulrich, Brockbank, &Yeung, 1989). To address this problem, ithas been proposed that the human re-source function should take on a more

proactive partnering role in formulatingand implementing the firms business strat-egy, and by measuring and tracking HRoutcomes.

Strategic Partnering

A role in strategy formulation requires thepresence of HR representatives at very sen-

ior levels in the firm, and strategy imple-mentation requires the alignment of HRpractices with the firms business objec-tives. For example, in a firm pursuing aproduct innovation strategy, the HR func-tion would need to recruit and select em-ployees who have the potential to createinnovative products, create performancemanagement systems that reward innova-tion, and train employees to usetools and techniques related toinnovation. Although there areseveral benefits to strategicalignment, three are particularlyimportant. First, it allows HR de-cision makers to prioritize theirdecisions on the basis of theirperceived impact on the busi-

ness. Second, prioritization ofHR decisions also leads to priori-tization of the resources re-quired to implement these deci-sions (e.g., if it is important tohire product managers, a sub-stantial portion of the HR re-cruiting budget should be fo-cused on attracting andselecting candidates for this po-sition). Third, HR decision mak-ers can influence the adoption

of HPWPs by aligning these withbusiness objectives, with exist-ing HR practices (e.g., assess-ment tools integrated with online recruit-ing). The central notion of strategicpartnering is that the benefits of maintain-ing an HR function should exceed its costs,and that HR has the potential to signifi-cantly impact the achievement of businessgoals. Therefore, the organization needs toexplicate how various HR processes con-tribute to business success and quantify

this contribution using specific measures.

Measurement of HR Outcomes

The alignment perspective stresses the im-portance of rigorously measuring employee-related outcomes and integrating thesemeasures with business measures. Thisprocess is usually accomplished through the

The central notion

of strategic

partnering is that

the benefits of

maintaining an HR

function should

exceed its costs,

and that HR has the

potential to

significantly impact

the achievement of

business goals.



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design of an HR scorecard integrated withthe firms balanced scorecard (Becker,Huselid, & Ulrich, 2001; Kaplan & Norton,1992).

The balanced scorecard, in theory, pro-vides the firm with a way to heighten theimportance of human resources by placinghuman resource metrics on an equal foot-

ing with operating performance,customer, and financial meas-ures. HR metrics such asturnover and employee commit-ment are considered leading in-dicators influencing futurebusiness performance (the lag-ging indicators). Scorecards canassist firms in communicatingstrategic priorities to employees,

balancing financial and nonfi-nancial goals, and linking finan-cial rewards to effective manage-ment practices (Kaplan &Norton, 1992). The justificationfor tracking employee outcomesas part of the balanced scorecardcan come from displaying thelogical relationship between em-ployee outcomes, customer out-comes, and financial outcomesin the form of a strategy map

(Kaplan & Norton, 2000) or byproviding actual empirical evi-dence in favor of these linkages(e.g., Rucci, Kirn, & Quinn,

1998). In order to establish these linkages,researchers typically collect employee sur-vey data (e.g., organizational commitment,quality/customer focus) and correlate thesewith measures of business performance(e.g., sales, customer satisfaction, and fail-ure rates). Results of such research can bebeneficial to organizations because they

pinpoint the HR practices that need to beimproved in order to drive business resultsand assist in the prioritization of scarce re-sources. Also, because these linkage modelsare customized to the organization, theycould be perceived as being more crediblethan generic models demonstrating link-ages between HPWPs and business per-formance.

Summary of the Economic andAlignment Approaches

The economic and alignment approachespresent part of the solution to the issue ofadoption by attributing these decisions vari-ously to environmental contingencies, eco-

nomic utility of the decision, and the pres-ence or lack of alignment between the HRpractice and firm strategy. These perspectivescertainly shed light on the importance of HRpractices. However, it might be beneficial toconsider additional approaches that empha-size the nonrational side of organizationalbehavior, as opposed to the rational modelso prevalent in the organizational sciences(Highhouse, 2002). Two such approaches aredescribed here.

The Decision-Making Approach

The decision-making approach provides apsychological or micro explanation forwhy organizations adopt or reject various HRpractices. The focus here is not on the or-ganization or the HR function, but on theprocess of decision making in which man-agers engage while deciding whether toadopt or reject the practice. It is important toexamine this approach because HR practicesmight meet rational decision criteria such as

psychometric soundness, cost-effectiveness,and strategy alignment, but nevertheless berejected due to the intriguing ways in whichmanagers make decisions.

Research on judgment and decision mak-ing (JDM) indicates that rational reasoningand intuition are distinct processes, eachleading to different outcomes for the sameproblem-solving tasks (Kahneman, 2003).While the process of reasoning is slower, ef-fortful, conscious, and deliberate, the processof intuition is fast, automatic, implicit, and

often emotionally charged. Intuitive deci-sion making often involves the use of heuris-tics or mental shortcuts that conserve effortwhile increasing the chance of error (Tversky& Kahneman, 1981). Managers are suscepti-ble to judgment and decision-making errorsarising from the use of heuristics because ofthe substantial demands on their time andthe need to make decisions under conditions

HR practices might

meet rational

decision criteria

such as

psychometric

soundness, cost-

effectiveness, and

strategy alignment,

but nevertheless be

rejected due to the

intriguing ways in

which managers

make decisions.



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that often are ambiguous and complex(March, 1994). Heuristics help managersadapt to their environments by reducing in-formation-processing demands and decision-making time (Mintzberg, 1990).

With the proliferation of popular man-agement books and articles, managers are ex-posed to and influenced by claims made forpractices that have reportedly worked well inother companies (Abrahamson & Fairchild,1999). There is also evidence that managerstend to get their information about effectivepractices from business magazines and news-papers, rather than academic sources (Ryneset al., 2002). Thus, when faced with a choicebetween a well-researched practice with littlepopular interest and a practice that has moreor less found its home in popular literature,

managers probably will choose the latter.This set of heuristics reflects the phenome-non of accessibility and refers to the ten-dency to treat vivid and easily accessible in-formation as commonplace (Kahneman,2003). These heuristics provide one explana-tion for why popular authors exaggerate theclaims of efficacy of their pet practicestheseare more salient and stay in the minds of peo-ple, ready to be accessed when the individualis looking for a solution to a problem.

The odds of adopting a popular practice

increase when the practice is framed by the au-thor as presenting a high chance of success asopposed to focusing on the negative fallouts ofthe practice not working well in the host or-ganization. As an example, consider the prac-tice of top grading, or the forced distributionof employees on a bell curve. This practice wasadvocated in the 1990s by, among others, thecharismatic CEO of a financially successfulFortune 100 company and seemed to be apanacea to the problem of low variance in per-formance evaluations. The business press de-

scribed top grading as a tough and objectivealternative to other allegedly lenient perform-ance evaluation models (Axelrod, Handfield-Jones, & Michaels, 2002). These descriptionswere probably responsible for making it salientand accessible, and several organizationsadopted or contemplated adopting this prac-tice despite its doubtful psychological and sta-tistical foundations.

The reputation of these organizationsalso helped in promoting adoption. Briefly,people tend to correlate unrelated factorsthat are available and salient to them(Hamilton & Gifford, 1976). Thus, an organ-ization that adopts top gradingmight also be one that is admiredfor creating shareholder value,leading to the belief that adopt-ing the practice will also make theimitator more profitable. A morefeasible explanation, of course, isthat companies that are large andprofitable have sufficient slack re-sources and political goodwill toexperiment with various manage-ment practices, some of whichwork and others that do not (Den-

rell, 2005). Although the practiceof top grading received negativeattention in the popular press dueto a reverse-discrimination suitfiled against another Fortune 100company, it does not seem tohave significantly lost momen-tum as a management practice(Johnson, 2004).

Another highly researchedtopic in JDM is prospect theory(Tversky & Kahneman, 1986),

which argues that additional gainshave less value for people who already haveexperienced gains and that response to lossesis consistently much more intense than theresponse to corresponding gains (Kahne-man, 2003). Thus, people avoid risks to retaintheir existing gains and take risks to avoidlosses. There is a great deal of evidence sup-porting this proposition in behavioral eco-nomics and some emerging research in thecontext of HR practices. For instance, present-ing utility-analysis information in terms of

the losses from not using selection programsseems to trigger the loss aversion predicted byprospect theory (Hazer & Highhouse, 1997).

Prospect theory predicts that managerswho do not perceive a significant competi-tive threat or performance problem are likelyto continue supporting practices that havedoubtful utility or efficacy because they arerisk-averse and because of past investment

The odds of

adopting a popular

practice increase

when the practice is

framed by the

author as presenting

a high chance of

success as opposed

to focusing on the

negative fallouts of

the practice not

working well in the

host organization.



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into those interventions, or sunk costs. Con-versely, managers who have a real need tochange, or a burning platform, are likely toaccept new practices, perhaps uncritically, inorder to minimize losses. These practicesmight be adopted even when they have alow probability of affecting the problem, dueto decision-maker hubris or overconfidence.

While acknowledging the intention ofdecision makers to be rational in theirchoices, contemporary JDM research revealsthat in reality, decision makers are con-strained by limited cognitive resources and

incomplete or ambiguous infor-mation. In evaluating choices,they select actions that are goodenough, as opposed to choosingthe best possible option (March,

1994). This research suggests thatinstead of evaluating HR practiceson many important criteria, deci-sion makers might utilize only afew criteria and make prematuredecisions to accept or reject theseinterventions.

The managerial decision-mak-ing approach complements therational view of adoption and re-

jection decisions by increasing awarenessabout failures of rational judgment in deci-

sion making. A similar focus on nonrationaldecision making is also assumed by the dif-fusion approach, which attributes the adop-tion of management interventions to extra-organizational factors.

The Diffusion Approach

Diffusion has traditionally been defined asthe process by which innovations are com-municated through certain channels overtime and among members of a social system

(Rogers, 1962). Innovations are adopted be-cause they are perceived as providing solu-tions to existing problems in an uncertainenvironment (Rogers, 1995). Typically, a fewinnovative individuals or firms first adoptthe intervention, and the actual or perceivedefficacy of the intervention prompts imita-tion among other individuals or firms. Thus,an S shaped curve characterizes the cumu-

lative rate of adoption of most innovations,with the number of adopters increasing withtime and then reaching its asymptote.

Much like early decision-making re-search, early diffusion literature assumedthat rational actors adopted efficient innova-tions. This assumption has come under criti-cism in management literature mainly dueto the finding that ineffective innovationsare commonly adopted over efficient ones(Abrahamson, 1996) and that firms succumbto bandwagon pressures, as opposed to ra-tionally evaluating the innovations utility(Abrahamson, 1996).

Several reasons explain why managersact in this seemingly irrational manner. Thegoals of these innovative practices often areambiguous, and managers may not under-

stand how or why these practices work. Inaddition, limited evidence exists regardingthe short- and long-term impact of these in-novations on organizational effectiveness(i.e., given the presence of multiple influ-ences, how success can be attributed to thespecific practice [Abrahamson & Rosenkopf,1993]). When faced with such ambiguity,firms subjectively assess certain practices asfavorable and legitimate if consultants or thebusiness media persuasively promote them,or if popular firms or other firms in the same

industry adopt them.Environmental factors reinforce band-

wagons. For instance, regardless of the factthat many modern management innova-tions are difficult to implement (Carson etal., 2000) and often do not lead to superioreconomic performance (Staw & Epstein,2000), firms that adopt them tend to attainfavorable reputations and are admired fortheir innovativeness. Similarly, CEO pay isassociated with the adoption of popularmanagement innovations, possibly because

of favorable evaluations of such decisions bythe board or by investment analysts (Staw &Epstein, 2000). Arguably, these factors serveas incentives for senior leaders to adopt prac-tices that are popular as opposed to thosethat are not.

According to the diffusion approach, in-novations are passed along faster in groupsthat are characterized by homophily or simi-

decision makers

are constrained by

limited cognitive

resources and

incomplete or ambig-

uous information.



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larity among members on key attributes, andslower in heterophilous groups where mem-bers differ on these key attributes. A recentstudy found that CEOs of firms facing simi-lar strategic challenges often seek advicefrom other CEOs with similar professionalbackgrounds and from friends, as opposed tosources that are dissimilar or more effective,leading to homogeneity in firm strategy (Mc-Donald & Westphal, 2003). Thus, what getsdiffused is not best practice, but friendly ad-vice. This homophily might also partly ex-plain the finding that HR professionals lackhigh levels of awareness regarding the effec-tiveness of various interventions (Rynes etal., 2002). It could be argued that these pro-fessionals, when evaluating choices, seek in-formation from peers, consultants, and trade

publications as opposed to behavioral scien-tists and scientific publications.

Summary of the Decision-Makingand Diffusion Approaches

The decision-making and diffusion ap-proaches present a significant part of the so-lution to the issue of adoption by attributing

these decisions to the institutional and psy-chological processes underlying the decisionto adopt or reject HR practices. These ap-proaches, along with the economic andalignment approaches, help create a compre-hensive picture of the dynamics underlyingadoption/rejection decisions (see Table I).

The following case, based on the experi-ences of an industrial/organizational (I/O)psychologist employed as an HR manager at aFortune 500 corporation, illustrates how thefour approaches discussed in this article canassist practitioners in planning and imple-menting HR practices. Specifically, these ap-proaches are applied to the analysis of a casewhere the corporation, a large consumer-products organization, adopted a survey-feed-back program. It should be noted that this

case is not intended to represent how HRpractices typically are implemented in organ-izations. The same HR practice might ormight not be successful in different organiza-tions due to factors such as resource availabil-ity, leadership support, organizational culture(e.g., emphasis on improving employee workexperiences), and status of the HR function(administrative versus strategic).


Approaches Literature Reason for Adoption Reason for Rejection

Economic Utility Analysis, High- HR practice delivers economic HR practice perceived as cost

Performance Work value and as delivering inadequate

Practices, Human value

Capital

Alignment Strategic HRM, HR practice aligned with HR strategies and practices not

Linkage Research corporate strategy aligned with corporate strategy;

HR department not a strategic

partner

Decision Social/Cognitive Decision-making processes Decision-making processes that

Making Psychology, (heuristics, intuitive decision are not conducive to the adoption

Behavioral making, risk taking) that are of an HR practice (e.g.,

Economics conducive to the adoption of overemphasis on speed leading to

an HR practice lowered decision quality)

Diffusion Diffusion of HR intervention proven effective Lack or decrease of interest in

Innovations, inside or outside the organization; current intervention and

Bandwagons consistent with fads and fashions emergence of interest in another

T A B L E I Overview of Literature


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Illustrative Case: Adoption of aSurvey-Feedback Program

General Background

Survey-feedback programs (SFPs) have beenin existence in corporations for over sixdecades and are accepted as good HR prac-

tice by most experts (e.g., Wa-clawski & Church, 2002). Briefly,SFPs consist of the followingbroad phases: survey construc-tion, data gathering, action plan-ning, implementation of selectinterventions, and evaluation oforganizational improvements.Well-designed and implementedsurvey-feedback programs canbenefit employees by providing

them an opportunity to possiblyinfluence management decisions.These programs also help man-agers by providing them access tomuch-needed information aboutemployee attitudes. However, thesuccessful adoption and imple-mentation of survey-feedbackprograms frequently can be chal-lenging because of the need toobtain organizational buy-in atthe onset, ensure rigor during the

process, and ultimately produceactionable results. The currentcase demonstrates how these andother challenges can be sur-mounted by utilizing the four ap-

proaches discussed in earlier sections.

How the Survey-Feedback ProgramOriginated

The impetus for the survey-feedback pro-gram came from two sources: employees

who expressed the need for a process to com-municate their opinions about the com-panys direction and the HR department thatwas charged with the task of including rele-vant employee-metrics in the companys bal-anced scorecard. Exploratory interviews withline and HR leaders revealed an entire spec-trum of opinions regarding SFPs, includingopposition (too cumbersome), mild inter-

est (could work if results are meaningful),and clear support (next step in our evolu-tion as a company). It was also discoveredthat past corporate surveys had not enjoyedpopularity mainly because managers andemployees viewed them as being too long,poorly worded, cumbersome to administer(paper-pencil), expensive, and not alignedwith company strategy. However, a majorityof stakeholders still appreciated the notionof an SFP and indicated that they would sup-port a business-relevant, inexpensive, andactionable process.

Making the Business Case for SFP

Based on stakeholder feedback, a busi-ness case was developed to support the adop-

tion of the SFP. This case primarily focusedon issues of business relevance, administra-tive ease, and action focus. Lessons learnedfrom the four approaches were followed todesign and communicate the importance ofadopting the SFP. These lessons are outlinedbelow.

a) Linking HR Practices with Business Out-comes (Economic Approach). In order tomeet a strategic objectiveincreasingcustomer loyaltythe company had ini-

tiated a significant customer loyaltymeasurement effort and was in theprocess of communicating this informa-tion in the form of causal models to linemanagers. This effort was well receivedwithin the organization. Leveragingmanagers receptiveness to empiricaldata and causal models, a model was de-signed outlining possible links betweenemployee engagement and customer loy-alty. To support the model, managerswere referred to empirical research relat-

ing employee attitudes to business per-formance (e.g., Harter, Schmidt, & Hayes,2002).

b) Framing the Problem (Decision-Making Ap-proach). The underlying premise of theSFP was that measuring and managingemployee engagement would assist thecompany in attaining high levels of cus-tomer loyalty, primarily because engaged

the successful

adoption and

implementation of

survey-feedback

programs frequently

can be challenging

because of the need

to obtain

organizational buy-

in at the onset,

ensure rigor during

the process, and

ultimately produce

actionable results.



11/16


employees are likely to be loyal, exert dis-cretionary effort (above the call ofduty), and empathize with customers.The costs of low employee engagementwere described in managers own words(e.g., insufficient employee involvementin activities related to the strategy), andthe vision of an engaged workforce waspresented (e.g., employees enthusiasti-cally advocating the brands). These link-ages were readily endorsed by a majorityof managers. Thus, it was relatively easyto advocate for an SFP to both assess andimprove engagement levels.

c) Involving Stakeholders Early (Alignment Ap-proach). The preliminary model describedabove was discussed and debated in vari-ous leadership meetings and forums.

Focus groups were conducted with em-ployees representing various functions,levels, and ethnic groups to understandwhat creates engagement or disengage-ment in their jobs. Employee input wasalso sought via Internet polls. The em-ployee engagement model was finalizedafter several weeks of employee and man-ager input. Both the outcome (the sur-vey) and process of developing the en-gagement model enabled employees tohave a voice in issues of importance to

them and the organization.d) Aligning HR Objectives with Business Objec-

tives (Alignment Approach). The HR de-partment adopted improving levels ofemployee engagement as one of its fourstrategic objectives and aligned this ob-jective to the corporations top strategicobjectives (e.g., increasing customer loy-alty). Elevating employee engagement tothe level of a strategic objective gave theSFP the resources and visibility that itneeded. In addition, all HR managers

were assigned objectives related to im-proving employee engagement as part oftheir formal performance review, thusformally answering the question of howdo I fit in? Following the lead of HR,many line managers assigned similargoals to their teams.

e) Ensuring HR Representation in Key Deci-sion-Making Teams (Alignment Approach).

Members of the HR department partici-pated in meetings of key stakeholders(e.g., various diversity networks, regionaland departmental meetings) and relatedthe SFP to their objectives (e.g., employ-ees will not be engaged if they do not feelincluded and respected for their diver-sity). The vice president of HR was al-ready represented on the companys topexecutive committee and discussed theSFP in every relevant meeting. Withtime, discussions about engagement be-came more and more common in re-gional and global executiveteam agendas.

f) Managing Costs (Economic andDecision-Making Approaches).A cost-effective model of sur-

vey administration was devel-oped. First, exploratory datacollection obtained throughfocus groups was outsourcedto external consultants to pro-vide objectivity. Next, the sur-vey design was conducted in-house to create a sense oforganizational ownership,leverage internal expertise,and save consultant costs. Fi-nally, the survey was imple-

mented using an Internet toolto ensure process efficiency.Employee time away from thejob was minimized by creat-ing a short survey, allowing secure accessto the survey from computers outside thecorporate network, and incorporatingcross-regional action planning into al-ready scheduled business meetings, thusminimizing travel for the exclusive pur-pose of action planning.

g) Sharing Best Practices (Diffusion Approach).

Survey practices of other companies weregathered and shared with managers. Con-sultants made presentations about em-ployee engagement and its relevance tobusiness outcomes. Finally, business arti-cles and benchmark reports dealing withemployee engagement were shared withline and HR leaders (e.g., Buckingham &Coffman, 1999; Rucci et al., 1998).

The HR department

adopted improving

levels of employee

engagement as

one of its four

strategic objectives

and aligned this

objective to the

corporations top

strategic objectives.



12/16


h) Making the Practice Salient (Decision-Making Approach). The concept of meas-uring and improving employee engage-ment gained much interest within thecompany due to the use of various com-munication channels. Beside the com-mon communication vehicles such astown-hall meetings and newsletters,several innovative forms of communi-

cation were used. Some exam-ples of these communicationswere quick polls taken on the in-tranet, leader-led engagementmeetings, and pictures of whatengagement looked like (e.g.,a jazz artist immersed in hisartflow). The SFP wascontrasted with previous surveys

by focusing on its alignmentwith business objectives and thecompany-specific engagementmodel. The contrast with otherprograms was also made appar-ent by the support extended tothe SFP by line leaders, who dis-

cussed this process in various town-hallmeetings.

Outcomes

The business case for the SFP was presentedto the companys executive team and boardof directors, who unanimously approved it,and the survey process was successfully im-plemented within the stated timeline andbudget. Manager and employee reactions tothe survey process were positive, as demon-strated by postsurvey focus groups and highsurvey response rates across levels and loca-tions. Action-planning sessions were utilizedin all key corporate locations with the spon-sorship of senior leaders. Also, a full day was

devoted to action planning at the companysannual global strategy meeting. This helpedconvey the message to the rest of the organ-ization that instead of being an end in itself,the survey was an input for reasoned mana-gerial decisions. In all, the planning andselling phase of the SFP took six months,but the time and effort contributed to its suc-cessful adoption.

Recommendations for Research andPractice

This article invoked four theoretical explana-tions for why HR practices are adopted or re-jected by organizations. In this next section,specific recommendations are made to assist

researchers in investigating, and practition-ers in managing, the process of adoption.

Future Research

The Economic and AlignmentApproaches

Although there is substantial empirical evi-dence relating HR practices to business per-formance, little research exists on how theknowledge of these findings shapes the

strategic decisions made by managers. Aresome companies and managers more opento utilizing such findings to implementHPWPs in their own organizations? If so,how is such openness connected to businessperformance?

There is also a need for more research onthe contextual aspects of HR adoption. Al-though the research on fit between competi-tive strategy and HR practices is a good start-ing point, less is known about strategyimplementation. In addition, how is adop-

tion affected by organizational factors suchas unionization and the organizations expe-rience with implementing HPWPs?

Finally, most of the literature on align-ment and the strategic role of HR is pre-scriptive. Few studies have examined theprocess by which HR departments adopt,negotiate, and maintain their role as astrategic partner or identified the results ofthis process. Similarly, it is necessary to in-vestigate whether managerial attitudes to-ward the HR function predict adoption/re-

jection decisions.

The Decision-Making and DiffusionApproaches

The experimental paradigms utilized inJDM and related literature could help in rig-orously investigating some of the issuesraised in the current article. For instance,

the planning and

selling phase of

the SFP took six

months, but the time

and effort

contributed to its

successful adoption.



13/16


controlled studies could be designed to studyhow various situational constraints on ra-tionality produce suboptimal decisions re-lated to choosing HR practices. For instance,constraints on rationality can be introducedby simulating distractions, work overload,and tight deadlines. Similarly, policy-captur-ing studies could help investigate the relativeweights placed by managers on various deci-sion criteria.

Recent research has examined the diffu-sion of academic knowledge from re-searchers to HR practitioners (e.g., Rynes etal., 2002). This body of literature can be ex-tended by exploring not only how the gapsbetween these two constituencies arise, butalso by investigating how academic knowl-edge gets transformed as it reaches the in-

tended audience through the popular press.Also, most studies of diffusion examine thisphenomenon at the level of organizations orindustries. Future studies could explore howHR practices diffuse within organizations be-tween departments, functions, and divisions,and the role played by credible managersand informal networks in legitimizing thesepractices.

Recommendations for Practitioners

The Economic and AlignmentApproaches

Utilize linkage models and summaries ofempirical research relating human re-source practices with desired businessoutcomes (e.g., Huselid, 1995; Wright etal., 2005) to help decision makers see thelong-term economic value of these prac-tices.

Involve stakeholders early in the processof developing the HR practice. Commu-nicate statistical models using terminol-

ogy familiar to decision makers. Inte-grate these models with the companysbusiness models and balanced score-card.

Ensure that HR objectives are alignedwith business objectives and the HRfunction is adequately represented in keydecision-making teams (e.g., executiveteam).

Although benefits are critical, costs docount. It is important to manage pro-gram costs and design programs that de-liver favorable returns on investments.

The Decision-Making and Diffusion

Approaches In order to motivate the or-

ganization to pay attention tothe adoption of progressiveHR practices, frame thesepractices as opportunities togain benefits (e.g., increaserevenue and sales) and avoidlosses (e.g., decrease employeeturnover). Similarly, reducethe influence of sunk costs by

framing additional invest-ments in a failing program asa losseven though moneymight already have beenspent on the program. Con-tinuing to support it leads towasted effort and resources.

Increase decision makers ac-cess to findings from empiri-cal literature. Researchers canachieve this objective by con-tributing to more accessible

communication channels(e.g., practitioner magazinesand conferences), disseminat-ing scientific knowledgethrough consulting practice(e.g., using validated instru-ments and educating practi-tioners about their value), debunking at-tractive but ineffective practices, andsupplementing academic research find-ings with credible and relevant bench-marking information.

Focus on the salient aspects of the HRpractice by contrasting it with otherpractices and repeatedly exposing deci-sion makers to its benefits.

Ensure that sufficient time is available tomake adoption/rejection decisions, andthat all important characteristics and im-plications of the HR practice are consid-ered prior to making a decision. Avoid

In order to motivate

the organization to

pay attention to the

adoption of

progressive HR

practices, frame

these practices as

opportunities to gain

benefits (e.g.,

increase revenue

and sales) and

avoid losses (e.g.,

decrease employee

turnover).



14/16


prematurely stopping the considerationof alternatives or overly focusing on oneaspect of the HR practice (e.g., set-upcosts).

Identify early adopters willing to test theHR practice in their department or busi-ness unit and pilot the HR practices intheir unit. Utilize informal networks andcredible managers to communicate thesuccess stories.

Conclusion

If it is true that scientists and practitionerspractice their trades in different worlds(Kuhn, 1962, p. 149), the role of scientist-practitioners is, perhaps, to bridge this di-vide. Is it possible to meet the demands of

the organization and its stakeholders whilemaintaining ones allegiance to fact-basedscience? This article presents the argumentthat it is indeed possible to influence theadoption of scientifically grounded HRpractices, if both the rational and nonra-

tional forces influencing the adoptionprocess are understood and harnessed.Thus, while it is critical that HR profession-als demonstrate the economic values of HRpractices and possess credibility as strategicpartners, it is equally essential that theyovercome barriers to the adoption of thesepractices arising from constraints on deci-sion makers time and cognitive resources(e.g., use of heuristics) and the tendency oforganizations to gain legitimacy by follow-ing the latest fad or fashion. The skillfulcombination of these approaches in re-search and practice is likely to lend legiti-macy and success to the work of scientist-practitioners.

Acknowledgments

I am grateful to Arthur Yeung and theanonymous reviewers for their valuable feed-back. I would also like to thank Gary Adams,Barbara Rau, and Michele Jayne for their com-ments on earlier drafts of this manuscript.


MAHESH SUBRAMONY is an assistant professor of psychology at the University of Wis-

consin at Oshkosh. His research interests are primarily in the area of strategic human re-

source management. He is currently intrigued by why effective HRM practices are

adopted or rejected by business organizations, and how these practices impact businessperformance. He also conducts research in areas such as customer-oriented climates and

business-process outsourcing. He received his PhD in I/O psychology from Central Michi-

gan University and an MA in applied psychology from the University of Delhi, India.

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