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.