Putting the Pieces Together: A Review of HR Differentiation Literature and a Multilevel Model

Abstract

Inspired by a pursuit of higher returns on human resource management (HRM) investments as well as a trend towards the individualization of HRM, several scholars have focused on the phenomenon of HR differentiation, that is, the differential allocation of resources across employees through the use of HRM practices. Yet, different definitions and angles to study HR differentiation have been used. As a result, ambiguities render it difficult to compare research findings and draw meaningful conclusions about HR differentiation and its consequences. Based on a systematic analysis of 164 articles from five different research streams (i.e., strategic HRM, talent management, i-deals, pay dispersion, and diversity management literatures), we identify four properties of HR differentiation (its basis, formalization, resource, and purpose) and propose a more fine-grained definition of the construct. Next, drawing from optimal distinctiveness–based inclusion theory, we develop an integrated multilevel model with propositions that helps explain the social psychological consequences of HR differentiation at three integrated levels of analysis (employee, workgroup, and organization). Subsequently, we derive an agenda for future research. In doing so, we contribute by developing a common language for scholars with different disciplinary backgrounds and inspire future research on HR differentiation.