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Human Resource Management, September–October 2017, Vol. 56, No. 5. Pp. 715–729
© 2016 Wiley Periodicals, Inc.
Published online in Wiley Online Library (wileyonlinelibrary.com).
DOI:10.1002/hrm.21798
Correspondence to: Dorothea Alewell, University of Hamburg, Faculty of Business Administration, Von-Melle-Park 5,
20146 Hamburg, Germany, Ph: 004940428384101, Fax: 004940428386358, [email protected]
HRM SYSTEM STRENGTH AND HRM
TARGET ACHIEVEMENT—TOWARD
A BROADER UNDERSTANDING OF
HRM PROCESSES
S V E N H A U F F, D O R O T H E A A L E W E L L , A N D N I N A K AT R I N H A N S E N
For some time, HRM researchers have paid attention to the process dimensions
of HRM systems, especially to the question of how HRM system strength impacts
on HRM outcomes. However, contributions tend to be theoretical, and empiri-
cal analyses are still rare. This article contributes to the discussion on HRM sys-
tem strength by empirically analyzing the links between HRM system strength
and HRM target achievement. We differentiate between single components of
strength and their partial effects on two HRM target groups: the targets focus-
ing on employee attitudes and the targets focusing on availability and effec-
tiveness of human resources. Findings from a German data set with more than
1,000 observations indicate that HRM system strength has a positive infl uence
on average HRM target achievement. Expectations regarding the differentiated
effects of single components of HRM system strength are only partially sup-
ported. Nevertheless, our analyses give reason to consider a broader concep-
tion of HRM system strength than what has been explored to date. © 2016 Wiley
Periodicals, Inc.
Keywords: HRM system, HRM system strength, HRM target, process approach, target achievement
Introduction
R esearch on strategic HRM has largely focused on the content perspective, that is, the question of how single HRM prac- tices, or HRM systems as consistently designed bundles of HRM practices, affect
HRM outcomes and firm performance ( Jackson, Schuler & Jiang, 2014; Jiang et al., 2012 ) (for an overview on HRM systems approaches, see, e.g., Alewell & Hansen, 2012; Kaufman, 2013;
Lepak, Liao, Chung, & Harden, 2006). Some HRM researchers have questioned this approach and have begun to focus on the process dimen- sions of HRM systems and, within this perspec- tive, on how an HRM system’s strength impacts on HRM outcomes and firm performance (e.g., Bowen & Ostroff, 2004; Ostroff & Bowen, 2000) (for an overview, see Sanders, Shipton, & Gomes, 2014). Building on Bowen and Ostroff (2004), HRM system strength is usually referred to as a situation in which “unambiguous messages are
716 HUMAN RESOURCE MANAGEMENT, SEPTEMBER–OCTOBER 2017
Human Resource Management DOI: 10.1002/hrm
By including
attitudinal HRM
targets as well as
availability and
effectiveness
targets, our analysis
highlights that HRM
system strength
is not limited to
communication
aspects but has
important functional
effects.
latter should be more affected by aspects such as the consistency and full implementation of HRM practices. In addition, we also assume that the number of important HRM targets should affect HRM target achievement.
By analyzing the effects of HRM systems strength on a broad spectrum of HRM targets this study contributes to the existing literature in sev- eral ways. First, we point out that specific compo- nents of HRM system strength may have different effects on different groups of HRM targets, which has not been intensively analyzed so far. In par- ticular, by including attitudinal HRM targets as well as availability and effectiveness targets, our ana lysis highlights that HRM system strength is not limited to communication aspects but has important functional effects, too. For instance, fully and consistently implementing HRM prac- tices can contribute to achieving flexibility and cost- effectiveness, independent of employees’ attitudes. Second, building on this, our study pro- vides valuable considerations related to the mea- surement of HRM system strength. Finally, we also discuss and analyze the role of different HRM tar- gets for overall HRM target achievement.
Theoretical Background and Hypotheses
The Concept of HRM System Strength
In their seminal work, Bowen and Ostroff ( 2004; Ostroff & Bowen, 2000) call attention to the ques- tion of how HRM systems should be designed and administered in order to be effective. They inter- pret HRM systems as complex communication systems that signal significant information about strategic HRM targets and behavioral expectations to employees, and thus influence the HRM cli- mate as shared employee perceptions about HRM. Strong HRM systems help to send clear signals and uniform behavioral expectations to employees, while weak HRM systems fail to clearly commu- nicate these. Thus, the concept of strong HRM systems is well connected to the psychological concept of strong situations ( Cooper & Withey, 2009; Mischel, 1977).
Building on social cognitive theory and Kelley’s ( 1967) attribution theory, Bowen and Ostroff ( 2004) conceptualize HRM system strength based on three main elements: distinctiveness, consis- tency, and consensus: Distinctiveness is high if the HRM system’s event-effect relationship is highly observable and well understood by employees. This is influenced by the HRM system’s visibility and understandability as well as by the legitimacy of authority and the perceived relevance of HRM. Consistency is high if the event-effect relationship
communicated to employees about what is appro- priate behavior” (p. 207). The general expectation is that stronger HRM systems have stronger effects on outcome variables, because they send clear signals to employees about organizational expec- tations ( Katou, Budhwar, & Patel, 2014; Sanders et al., 2014).
Several empirical studies have analyzed HRM system strength’s direct effects, including employ- ees’ work satisfaction ( Li, Frenkel, & Sanders, 2011), commitment ( Sanders, Dorenbosch, & de Reuver, 2008), intention to quit ( Li et al., 2011), improvisation behavior ( Ribeiro, Pinto Coelho, & Gomes, 2011), and organizational performance ( Cunha & Cunha, 2009). Furthermore, Katou et al. ( 2014) have shown that HRM system strength moderates the relationship between perceived
HRM practices and employee reac- tions. Thus, HRM system strength is without a doubt a very significant concept. However, to date, empiri- cal studies have concentrated on specific aspects, and no study has analyzed more broadly if and how HRM system strength contributes to HRM target achievement. This is a crucial aspect for strategic HRM, since HRM targets relate to different HRM strategies and differing exter- nal and internal contexts ( Jackson & Schuler, 1995; Jackson et al., 2014).
This article seeks to close this research gap by analyzing HRM sys- tem strength’s effects on HRM tar- get achievement. Therefore, we first introduce and discuss the concept of HRM system strength. We thereby argue that HRM system strength refers not only to communication but also includes functional effects of HRM systems. Building on this notion, we present our research
hypotheses. In line with previous literature, we argue that HRM system strength should positively influence HRM target achievement. However, besides analyzing HRM system strength’s general impact, we analyze whether specific components of HRM system strength have different effects on different groups of HRM targets. We thereby dis- tinguish between attitudinal HRM targets (e.g., motivation, commitment) on the one hand and availability and effectiveness HRM targets (e.g., endowment with qualified employees, flexibility, personnel cost reduction) on the other. Building on Ostroff and Bowen ( 2000), we expect that the former are influenced more by an HRM sys- tem’s visibility, clarity, and acceptance, while the
Human Resource Management DOI: 10.1002/hrm
HRM SYSTEMS STRENGTH AND HRM TARGET ACHIEVEMENT 717
Employee attitudes
are the most
important direct
dependent variable
in Bowen and
Ostroff’s (2004)
concept, since the
influence of the HRM
systems on employee
attitudes and shared
perceptions is the
central focus in this
approach. However,
there are other HRM
targets besides
employee attitudes.
approach ( Ostroff & Bowen, 2000). To clearly ori- entate employees by communicating employer expectations via HRM practices is an important effect of HRM systems. However, HRM systems and the HRM practices they include may influ- ence HRM outcomes via channels other than an employer’s communication ( Lepak, Liao, Chung, & Harden, 2006). For instance, an employer’s control of personnel costs may heavily depend on the work contract type and on collective or individual agreements on wages and their fit. This cost control may be independent of individ- ual employees’ understanding of the correct legal content of these contracts. Thus, there is a func- tional aspect beyond the communicative aspect. Or to give another example, human resource flexibility will depend on employee perceptions of the employer’s flexibility signals. But independent of these perceptions, there may be other significant func- tional aspects resulting from the choice of contracts, binding agree- ments on overtime, working time restrictions, task allocation rules, and the broadness of employee skills. Thus, it seems important to broadly consider different aspects of strength besides communicative issues, rather than to neglect the functional aspects that result from consistency and full implementa- tion of HRM practices.
A second aspect refers to the dimension of HRM targets and which of these are influenced by HRM system strength. Employee attitudes are the most important direct dependent variable in Bowen and Ostroff’s ( 2004) concept, since the influence of HRM systems on employee attitudes and shared per- ceptions is the central focus in this approach. However, there are other HRM targets besides employee atti- tudes. Most prominently, the ability-motivation- opportunity (AMO) framework ( Appelbaum, Bailey, Berg, & Kalleberg, 2000; Boxall & Purcell, 2003; Lepak et al., 2006) highlights that employee ability and opportunity are important HRM tar- gets, besides motivation. Furthermore, Osterman ( 1987), working on HRM system content, pointed out that companies seek to achieve flexibility, predictability, and cost-effectiveness. Gerhart ( 2007) also highlighted that costs are an impor- tant and independent consequence of HRM sys- tems. However, these employers’ availability
is the same across differing modalities and over time; for instance, it is the same for all employees in an organization. Consistency is strengthened by instrumentality of employee behavior’s con- sequences for targets, by validity of HRM prac- tices for what they purport to do, and by differing hierarchy levels communicating consistent HRM messages. Consensus is high if there is strong agree- ment among individuals’ views of the event-effect relationship, for instance, between line managers, HRM department members, and employees. It is influenced by agreement among principal HRM decision makers (e.g., between line managers from differing departments) and perceived fair- ness in distributive, procedural, and interactional respects.
Most studies on the topic refer to this con- ceptualization of HRM strength (see the overview by Sanders et al., 2014). However, Ostroff and Bowen’s ( 2000) initial work differs somewhat from the newer approach. Here, the concept of HRM system strength is embedded in a broad frame- work linking HRM systems to firm performance. Thereby, HRM system strength is related to the following characteristics of an HRM system:
• Visibility: Do employees know the HRM tar- gets and practices?
• Clarity: Do employees find the information easy to understand?
• Acceptability: Do employees buy into the sys- tem?
• Consistency of administration: Are practices uniformly applied across employees and over time?
• Effectiveness of administration and validity: Do practices do as designed?
• Internal consistency: Is there a horizontal fit between practices and programs?
• Intensity: How much time and effort is devoted to implementing the practices?
Thus, in this conceptualization of strength, besides the requirements that employees should know, understand, and accept a system and its sig- nals, there are additional conditions for a system to be strong. These characteristics not only influ- ence the perception of HRM systems but also have an additional impact on an HRM system’s func- tional performance, which is independent of the effect on employees. Accordingly, for our research question, the older concept has specific strengths compared to the newer concept.
First, HRM system strength as a quality of a communication system ( Bowen & Ostroff, 2004) is a specific and somewhat narrower interpreta- tion of HRM system strength than in the previous
718 HUMAN RESOURCE MANAGEMENT, SEPTEMBER–OCTOBER 2017
Human Resource Management DOI: 10.1002/hrm
Different components
of HRM system
strength should
impact differently on
different HRM target
types.
Hypothesis 1: The higher the overall HRM system strength is, the higher the degree of overall HRM target achievement will be.
However, building on the aforementioned argu- ments, there are reasons to assume that differ- ent components of HRM system strength should impact differently on different HRM target types. In general, there are two different HRM target types: targets that influence employee attitudes, and human resource availability and effective- ness targets. Key attitudinal targets are employee motivation, commitment, and job satisfac- tion (e.g., Katou et al., 2014; Lepak et al., 2006). Furthermore, employers might also try to influ- ence their employees’ orientations toward quality, innovation, or costs in order to increase perfor- mance. Availability and effectiveness targets refer to the endowment with qualified employees and up-to-date knowledge, but also to flexibility in terms of working time, task allocation, or number of employees. Firms might also need to plan con- fidently on labor supply and its cost ( Osterman, 1987). Thus, long-term employment perspec- tives and predictability of central HRM variables, for example, labor cost, could also be important targets. Further aspects include high employee participation, high performance levels, and the reduction of personnel costs (e.g., Osterman, 1987; Lepak et al., 2006; Subramony, 2009).
Different components of HRM system strength may impact on these distinctive target groups differently. For employee attitudes, employees’ knowing, understanding, and accepting of HRM practices should be especially important. Bowen and Ostroff (2004) summarize employees’ know- ing, understanding, and accepting of HRM prac- tices under the notion of distinctiveness. In attribution theory, distinctiveness is seen as the most critical dimension for attitudinal change ( Fiske & Taylor, 1991; Kelley, 1967; see also Sanders & Yang, 2016). This is supported by the results of Sanders et al. ( 2008) and Li et al. ( 2011), who found that the analyzed attitudes (job satisfaction, commitment, intention to quit) are particularly influenced through the distinctiveness of HRM practices. The high importance of distinctive- ness seems plausible, since employees can change their attitudes only if they know and understand a specific practice; and actual attitudinal change depends on how employees perceive the HRM practices, that is, how they interpret and accept them ( Nishii, Lepak, & Schneider, 2008). Thus, we hypothesize that attitudinal HRM targets are more strongly influenced by those partial strength characteristics that relate to employees’ knowing, understanding, and accepting of HRM practices.
and effectiveness HRM targets are not explicitly addressed in Bowen and Ostroff’s ( 2004) concept. In this respect, the previous approach ( Ostroff & Bowen, 2000) is again broader, since it can be applied to the whole spectrum of HRM targets.
In short, the strength concept as in Ostroff and Bowen ( 2000) is advantageous for our research question because it does not restrict attention to an HRM system’s communication properties but allows one to focus on an HRM system in general and is compatible with a broad spectrum of HRM targets.
HRM System Strength’s Infl uence on HRM Target Achievement
The effects of HRM system strength can be ascribed to different relationships. On the one hand, a strong situation should have a positive impact on target achievement because it results in a clear and precise communication signal of what the employer wishes to achieve and is ready to compensate for (e.g., Bowen & Ostroff, 2004;
Katou et al., 2014; Ostroff & Bowen, 2000; Sanders et al., 2014). Strong situations have a high degree of shared perceptions, which posi- tively influences employees’ atti- tudes and behavior: “a strong HRM system process can enhance orga- nizational performance owing to shared meanings in promotion of collective responses that are con- sistent with organizational strategic goals” ( Bowen & Ostroff, 2004, p. 213). On the other hand, a strong
situation also contributes to HRM target achieve- ment by creating structural and operational effi- ciencies ( Ostroff & Bowen, 2000). This argument is partially linked to the content perspective of strategic HRM research, particularly the contin- gency and configurational approaches ( Delery & Doty, 1996; Martín-Alcázar, Romero-Fernández, & Sánchez-Gardey, 2005). Following these approaches, HRM systems will have beneficial outcomes in terms of HR target achievement if they are (1) aligned to the internal and external context and (2) internally coherent. In addition to these notions of vertical and horizontal fit, the process perspective focuses attention on imple- mentation in terms of time, effort, and unifor- mity. In this respect, strong HRM systems should have a positive impact on HRM target achieve- ment because all necessary practices are actu- ally in place, are uniformly applied, and do as designed. Building on these arguments, we expect that in general HRM system strength should posi- tively influence HRM target achievement.
Human Resource Management DOI: 10.1002/hrm
HRM SYSTEMS STRENGTH AND HRM TARGET ACHIEVEMENT 719
The pursuit of HRM
targets requires
effort and resources.
In addition, some
targets may conflict
with others, and
these trade-offs
should be considered.
important to an employer could also influence target achievement because the higher the num- ber of important HRM targets, the more likely it is to miss at least some of them. The pursuit of HRM targets requires effort and resources. Thus, if there are many targets, firms might run into effort and resource trade-offs and focus more strongly on some targets at the expense of other targets, or, if several targets are pursued equally, neither one of them will be pursued effectively. In addition, some targets may conflict with others, and these trade-offs should be considered, too. For instance, flexibility, in terms of flexible staffing and reli- ance on external labor markets, and predictability of key HRM variables may be seen as conflicting targets as a high degree of flexibility reduces pre- dictability of labor supply and costs ( Osterman, 1987). Another example is the pos- sible conflict between flexible staff adjustment and the endowment with qualified employees: building qualifications might need time and a long-term perspective, possibly con- tradicting flexible staff adjustment. Such conflicts could influence gen- eral target achievement because the pursuit of one target might inhibit the achievement of another target. In line with these arguments, we hypothesize as follows:
Hypothesis 4: The higher the number of important HRM targets, the lower the degree of HRM target achievement will be.
Data Set, Measurement, and Methods
Data Set
The following analysis is based on data collected via highly structured computer-aided telephone interviews with chief executives and human resource managers of firms in Germany. Because we are especially interested in the functional aspects of HRM system strength as well as HRM target achievement, responses by chief executives and HR managers are important, as they are usu- ally more knowledgeable concerning these issues than employees ( Huselid & Becker, 2000). In addition, such a research setting allows us to con- duct interviews in a large number of firms with different HRM systems.
The data collection was conducted in 2012 and aimed at firms with at least 20 employees in the following sectors: chemicals and pharma- ceuticals, mechanical engineering, banking and
Hypothesis 2: The elements of an HRM system’s strength relating to employees’ knowing, understand- ing, and accepting of HRM practices impact more strongly on the achievement of attitudinal HRM targets than on availability and effectiveness HRM targets.
Achieving availability and effectiveness targets may depend to a lesser degree on the knowledge, understanding, and acceptance of employees. In contrast, these HRM targets should be more strongly influenced by the other characteristics of HRM system strength (i.e., consistency of admin- istration, effectiveness of administration, internal consistency, and intensity) as these are crucial for the structural and operational efficiencies of HRM systems. Thereby, internal consistency of HRM systems is of fundamental importance. According to Delery (1998), HRM practices can have either independent, substitutive, counterac- tive, or synergetic relationships. In these terms, consistency can be described as the absence of counteractive effects among HRM practices. Counteractive effects might occur if HRM prac- tices are not implemented as intended ( Wright & Nishii, 2013), or if their effects differ depending on the context in which they are implemented ( Jackson et al., 2014). Accordingly, counteractive effects may only be prevented if HRM practices are applied consistently (i.e., consistency of admin- istration) and actually do as designed (effective- ness of administration). Furthermore, even if all HRM practices are consistent, uniformly applied, and do as designed, HRM system effectiveness is not guaranteed. In the case of independent effects among HRM practices, each HRM practice adds something unique, and the use of an additional HRM practice might be necessary to achieve a cer- tain outcome level ( Chadwick, 2010). The same applies to synergistic effects, since synergies can develop only if all necessary practices are in place. Thus, time and effort devoted to full implemen- tation of HRM practices is important for HRM systems effectiveness. Based on these arguments, we assume that the achievement of availability and effectiveness targets depends more strongly on consistency of administration, effectiveness of administration, internal consistency, and inten- sity. Accordingly, we hypothesize as follows:
Hypothesis 3: The elements of an HRM system’s strength relating to aspects of consistency of adminis- tration, effectiveness of administration, internal con- sistency, and intensity impact more strongly on the achievement of availability and effectiveness HRM tar- gets than on attitudinal targets.
Besides the strength of an HRM system and its elements, the number of HRM targets that are
720 HUMAN RESOURCE MANAGEMENT, SEPTEMBER–OCTOBER 2017
Human Resource Management DOI: 10.1002/hrm
in terms of the value production of the employees working under this system.
Measuring Strength
Concerning our central independent vari- able, HRM system strength, we follow Ostroff and Bowen ( 2000) in formulating our items. Respondents were asked to indicate to what extent different statements applied (see Table I). Items were presented in random order. Response categories ranged from 1 = does not apply at all to 5 = fully applies. Single items were used in order to have a simple measurement instrument that applies to different organizational contexts.
Measuring the Average Achievement of Important HRM Targets
Our data set contains a number of items on the importance of different HRM targets and on HRM target achievement. Six of these targets relate to employee attitudes: (1) high employee motiva- tion, (2) high employee commitment, (3) high employee job satisfaction, (4) strong quality ori- entation of employees, (5) strong innovation orientation of employees, and (6) strong cost ori- entation of employees. Another 10 targets relate to availability and effectiveness of human resources: (7) good endowment with qualified personnel, (8) endowment with up-to-date knowledge, (9) high flexibility in terms of working time, (10) high flexibility in terms of task allocation, (11) flexible adjustment of workforce to personnel require- ments, (12) long-term employment perspectives, (13) predictability of key HRM variables, (14) high employee participation, (15) high performance levels, and (16) reduction of personnel costs.
Respondents were asked to indicate the importance attributed to, as well as the level of achievement, of each of these 16 targets in their organization. Concerning the importance of dif- ferent HRM targets, answers could be chosen from 1 = very unimportant to 5 = very important.
insurance, and professional services (legal and accounting services, business consultancies). Contact information was drawn from the German Chamber of Industry and Commerce database that all German firms (with the exception of craft businesses, free professions, and farms) are required by law to join. The number of randomly sampled firms in these sectors was 5,388 out of a population of 8,100 firms. Of the firms contacted, 1,175 took part in the study, which left us with a satisfying response rate of 21.8 percent. However, a first analysis of the data revealed that 76 firms did not meet the selection criteria (size and indus- try) or gave invalid answers. Thus, usable data is available for 1,099 firms. For the analysis in this article, we further excluded all cases with missing information in our central variables, namely, HRM system strength, importance of HRM targets, and target achievement (see below). The final sample therefore contains 1,009 firms.
Our sample data did not reflect the popula- tion distribution in terms of sectors (original distribution in parentheses): 23.9 percent (16.0 percent) chemicals and pharmaceuticals, 24.7 percent (51.8 percent) mechanical engineering, 28.0 percent (18.0 percent) banking and insur- ance, and 23.3 percent (14.2 percent) professional services. We therefore used a standard weighting adjustment ( Bethlehem, 2009) to approximate the sample data to population proportions.
The questionnaire acknowledged that firms might operate multiple HRM systems in one organization. If firms stated that they differenti- ate their HRM for different employee groups, all questions related to HRM referred to the employee group that is most important for the firm’s eco- nomic success (as suggested by Osterman, 1987; see also Delery & Doty, 1996). If HRM was not differentiated for different employee groups, questions were formulated such that they encom- passed all of a firm’s employees. Thus, each firm is represented with its most important HRM system
T A B L E I Measurement of HRM System Strength
Ostroff & Bowen (2000) Our Items
Visibility Employees know the HRM targets and practices.
Clarity Employees understand HRM targets and practices.
Acceptability Employees accept HRM targets and practices.
Consistency of administration HR personnel and executive managers follow the same guidelines
in implementing HRM.
Effectiveness of administration We realize the effects we intend to achieve with our HR practices.
Internal consistency All HR practices are consistent with one another.
Intensity We invest heavily in the full implementation of our HR practices.
Human Resource Management DOI: 10.1002/hrm
HRM SYSTEMS STRENGTH AND HRM TARGET ACHIEVEMENT 721
On average, our
respondents
characterized the
HRM systems in their
firms as moderately
strong: average
values for the single
strength items are
between 3 and 4,
indicating a neutral
to slightly positive
characterization of
HRM system strength.
bargaining agreements/none). Since our question- naire focused on HRM and its effects and already contained many questions, control variables were operationalized quite simply in order not to fur- ther increase the complexity for interviewees. Thereby, the use of dummy variables seemed a good solution, as they are commonly used in stra- tegic HRM research ( Heavey et al., 2013).
Method
To test HRM system strength’s influence on HRM target achievement, we estimated linear regres- sions with our three indices as different depen- dent variables. In each case, we first calculated a basic model that included only the control vari- ables, and a full model that also incorporated the HRM system strength variables as well as one vari- able for the respective number of important HRM targets.
To examine the chosen meth- od’s appropriateness, we conducted several tests ( Hair, Black, Babin, & Anderson, 2010). To test for multi- collinearity, we referred to variance inflation factors (VIFs), which all remain below 2.1 and thus below the recommended threshold of 10. We used residual plots (studentized residuals) to evaluate the normality of residuals (linearity, homoskedas- ticity, independence). Thereby, two outliers were detected. After exclud- ing these cases from the analyses, plots did not indicate any nonnor- mality problem. Finally, we also used normal probability plots to test the normality of the error term dis- tribution. Again, no problems were identified (For descriptive statistics and correlations see appendix.).
Results
HRM System Strength
On average, our respondents characterized the HRM systems in their firms as moderately strong: average values for the single strength items are between 3 and 4, indicating a neutral to slightly positive characterization of HRM system strength. (see Table II)
Importance of HRM Targets
On average, by naming 11.7 out of 16 HRM targets, respondents characterized a relatively high num- ber and broad mix of HRM targets as important or very important to their firm. With the excep- tion of the targets reduction of personnel cost
Concerning target achievement, respondents were asked to state, for each target, their degree of approval to a preformulated statement expressing full (positive) HRM target achievement (e.g., Our payroll costs are very low), with the response cat- egories ranging from 1 = does not at all apply to 5 = fully applies.
Based on this information, we created indices for the average achievement of important HRM tar- gets. Therefore, we first created dummy variables for importance of targets. These dummy variables contain the information whether a specific HRM target is important (original values 4 or 5; dummy = 1) or not (original values 1 to 3; dummy = 0). In a second step, these importance dummies were multiplied with the target achievement values. Target achievement is thus accounted for only if a specific HRM target is important to a firm. In the last step, these values were added up for all HRM targets per firm and then divided by the total num- ber of important HRM targets in that firm. This gives us a value for the average achievement of important HRM targets. Following this procedure, three different indices were created: one for the average achievement of important HRM targets (out of all 16 targets), one for the average achieve- ment of important attitudinal HRM targets (out of 6 attitudinal targets), and one for the average achievement of important availability and effec- tiveness HRM targets (out of 10 targets).
Measurement of Control Variables
Several control vari ables were included. First, we controlled for firm size and firm age because large firms have usually more resources in order to achieve their targets ( De Winne & Sels, 2013) and the full implementation of HRM systems requires time ( Paauwe & Boon, 2009). To consider a firm’s external context ( Jackson & Schuler, 1995; Jackson et al., 2014), we included industry, strong order fluctuations (yes/no), and pressure of competition (response categories ranging from 1 = nonexistent to 5 = very high). Furthermore, as the HR depart- ment’s role and the HRM task types fulfilled by it might affect HRM target achievement ( Guest & Bos-Nehles, 2013), we also controlled for the endowment of the HR department (number of full time equivalents (HFTE) per employee in the per- sonnel de partment), the strategic orientation of HRM (yes/no), and the use of differentiated HRM for different employee groups (yes/no). Finally, to control for institutional influences ( Jackson et al., 2014), we included the existence of collective employee representation (works council and other forms/works council only/other forms only/none) and collective bargaining agreements (binding legal commitment to/orientation on collective
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Human Resource Management DOI: 10.1002/hrm
that, on average, firms have achieved most of the important HRM targets but that there is still work to be done. There is a comparatively high degree of approval for target achievement regard- ing employment security, employee commitment, endowment with qualified personnel, quality ori- entation of employees, and performance. A com- paratively low approval for target achievement can be found for personnel costs and the ability to adjust the number of employees.
Results of the Regressions
The results of regression analyses are presented in Table V. Concerning our control variables, we find strong effects for industry and order fluctuations. For firm size, we see partial effects. No effects could be found for firm age, pressure of competition, endowment of HR department, HRM’s strategic orientation, differentiated HRM, employee repre- sentation, and collective bargaining agreements.
Hypothesis 1 assumes that the higher the over- all HRM system strength, the higher the degree of achievement of HRM targets. It is partially sup- ported by our results: five out of seven items on HRM system strength show a positive relation- ship with average target achievement. Internal consistency of HRM practices shows the strongest effect, followed by acceptability, effectiveness of administration, and clarity. Consistency of administration has a comparatively weak effect.
and flexible adjustment of workforce to personnel requirements, all other targets were considered important by more than 50 percent of respon- dents. Furthermore, the HRM targets related to employee quality awareness, motivation, perfor- mance levels, job satisfaction, long-term employ- ment perspectives, employee commitment, and good endowment with qualified employees were characterized as important by 90 percent or more of respondents. (see Table III)
HRM Target Achievement
Table IV presents descriptive results for the achieve- ment of important HRM targets. The results reflect
T A B L E I I HRM System Strength
Mean Standard Deviation
Visibility 3.52 0.910
Clarity 3.47 0.820
Acceptability 3.64 0.739
Consistency of administration 3.76 0.915
Effectiveness of administration 3.58 0.705
Internal consistency 3.28 0.834
Intensity 3.32 0.923
Note: n = 1,009; response categories range from 1 = does not apply
at all to 5 = fully applies.
T A B L E I I I Importance of HRM Targets
HRM Target Mean Standard Deviation
Employee
attitude targets
High employee motivation 0.95 0.220
High employee commitment 0.90 0.301
High employee job satisfaction 0.92 0.268
Strong quality orientation of employees 0.96 0.193
Strong innovation orientation of employees 0.62 0.487
Strong cost orientation of employees 0.58 0.494
Availability and
effectiveness
targets
Good endowment with qualifi ed employees 0.95 0.218
Endowment with up-to-date knowledge 0.83 0.377
High fl exibility in terms of working time 0.67 0.470
High fl exibility in terms of task allocation 0.60 0.489
Flexible adjustment of workforce to personnel
requirements
0.42 0.493
Long-term employment perspectives 0.90 0.294
Predictability of key HR variables 0.54 0.499
High employee participation 0.51 0.500
High performance levels 0.92 0.274
Reduction of personnel costs 0.38 0.487
Note: n = 1,009; dummy-coded variables with 1 = target is very important or important and 0 = target is not important at all, unimportant, or
neither important nor unimportant.
Human Resource Management DOI: 10.1002/hrm
HRM SYSTEMS STRENGTH AND HRM TARGET ACHIEVEMENT 723
because several targets require higher levels of effort and resources and bear the risk of trade-offs between the targets. However, no effects could be found for overall target achievement and the achievement of important attitudinal HRM tar- gets. As we assumed a general effect, not limited to specific target groups, Hypothesis 4 is only par- tially supported.
Discussion and Conclusion
Our findings show that HRM system strength influences HRM target achievement in a signifi- cant and positive way. This is in line with results from previous empirical research on HRM system strength’s influence on specific variables such as overall organizational performance, job satis- faction, and organizational commitment (e.g., Cunha & Cunha, 2009; Li et al., 2011; Ribeiro, Pinto Coelho, & Gomes, 2011; Sanders et al., 2008). Since we base our study on a large sample of German firms in different industries, our results may be generalized for firms with different organi- zational contexts and with differing HRM system contents. Hence, our findings strongly support the relevance of the overall concept of HRM sys- tem strength. By focusing on the impact of HRM systems on HRM target achievement, our analyses make three main contributions to the field.
First, in our view, research on HRM processes should take a broader conception of HRM system
No effect can be found for visibility of the system and intensity.
Hypotheses 2 and 3 are only partially sup- ported by the data. Hypothesis 2 states that the effect of visibility, clarity, and acceptability should be stronger for the attitudinal HRM targets than for the availability and effectiveness targets. However, this is true only for the HRM system’s clarity and acceptability. For visibility, the rela- tionship is reciprocal and not significant, which is against Hypothesis 2. The results for Hypothesis 3 are similarly inconclusive. Here, the effects for the strength items relating to consistency of administration, effectiveness of administra- tion, internal consistency, and intensity should be stronger for the availability and effectiveness targets than for the attitudinal HRM targets. This holds only for internal consistency and intensity. The results for the two other items (consistency of administration, effectiveness of administration) point in the opposite direction.
Finally, Hypothesis 4 states that the num- ber of important HRM targets should lower the degree of HRM target achievement. Our findings show a significant negative effect of the number of important HRM targets on the achievement of important availability and effectiveness tar- gets. The achievement of availability and effec- tiveness targets is reduced if firms try to achieve many HRM targets at the same time, for example
T A B L E I V Average Achievement of Important HRM Target Achievement
HRM Target Mean Standard Deviation
Employee
attitude
targets
Employees are highly motivated. 3.95 0.684
Employees show high commitment. 4.25 0.648
Employees show high job satisfaction. 3.67 0.661
Employees are highly quality oriented. 4.03 0.671
Employees are highly innovation oriented. 3.65 0.807
Employees are highly cost oriented. 3.48 0.720
Availability
and
effectiveness
HRM targets
Endowment with qualifi ed employees is good. 4.10 0.666
Employees have up-to-date knowledge. 3.91 0.656
Personnel allocation is very fl exible concerning working time. 3.95 0.790
Personnel allocation is very fl exible concerning task allocation. 3.69 0.701
Number of employees can be adjusted easily. 3.24 0.999
Employees have long-term employment perspectives. 4.43 0.688
Key HR variables are highly predictable. 3.38 0.882
Employee participation is high. 3.68 0.692
Employees show high performance. 4.03 0.640
Personnel costs are low. 2.82 0.955
Note: Response categories range from 1 = does not apply at all to 5 = fully applies.
724 HUMAN RESOURCE MANAGEMENT, SEPTEMBER–OCTOBER 2017
Human Resource Management DOI: 10.1002/hrm
T A B L E V HRM System Strength and HRM Targets Achievement
Average Achievement of Important HRM Targets
Average Achievement of
Important Attitudinal HRM Targets
Average Achievement of Important
Availability and Effectiveness HRM
Targets
(basic model) (full
model) (basic model)
(full model)
(basic model) (full model)
Firm size (ref. 20 to 49)
50 to 99 –0.039 –0.073* –0.045 –0.070* –0.026 –0.059
100 to 499 –0.006 –0.019 –0.028 –0.040 0.005 –0.012
500+ –0.012 –0.015 –0.033 –0.034 –0.001 –0.011
Firm age 0.015 0.052 0.002 0.027 0.027 0.062
Industry (ref. mechanical
engineering)
Chemicals and pharmaceuticals 0.004 –0.026 0.006 –0.017 –0.001 –0.028
Banking and insurance –0.080* –0.137*** –0.074 –0.117** –0.085* –0.145***
Professional services 0.134*** 0.092** 0.077 0.041 0.152*** 0.110**
Strong fl uctuations in order position (yes) –0.142*** –0.112*** –0.122*** –0.094** –0.153*** –0.117***
Pressure of competition –0.043 –0.030 –0.014 –0.007 –0.043 –0.019
Endowment of HR department 0.041 0.030 0.048 0.041 0.027 0.019
Strategic orientation of HRM (yes) 0.071* –0.026 0.080* –0.007 0.056 –0.016
Differentiated HRM (yes) 0.076* 0.040 0.068* 0.039 0.064 0.025
Existence of employee represen- tation (ref. none)
Works council and other forms –0.017 –0.013 –0.003 0.000 –0.037 –0.019
Works council only 0.019 0.006 0.019 0.012 0.004 0.000
Other forms only 0.081* 0.028 0.109** 0.060 0.027 –0.015
Collective bargaining agreements (commitment to or orientation on
collective bargaining agreements) –0.001 –0.033 0.016 –0.009 0.002 –0.030
HRM system strength Visibility 0.024 –0.022 0.082*
Clarity 0.116** 0.139*** 0.080*
Acceptability 0.138** 0.145*** 0.120***
Consistency of administration 0.082* 0.096** 0.039
Effectiveness of administration 0.130*** 0.135*** 0.085**
Internal consistency 0.152*** 0.090** 0.188***
Intensity 0.062 0.055 0.085*
Number of important HRM tar- gets 0.040
Number of important attitudinal HRM targets 0.057
Number of important availability and effectiveness HRM targets –0.092**
Adjusted R2 0.056 0.278 0.037 0.224 0.054 0.229
Note: Standardized coeffi cients; levels of signifi cance: *5%; **1%; ***0.1%.
Human Resource Management DOI: 10.1002/hrm
HRM SYSTEMS STRENGTH AND HRM TARGET ACHIEVEMENT 725
For a comprehensive
understanding of
HRM system effects,
both communication
and functional
properties of HRM
systems must be
taken into account.
and functional properties of HRM systems must be taken into account.
Closely related to this is our second contribu- tion related to measuring HRM system strength. In the meantime, Delmotte, de Winne, and Sels ( 2012) have developed reliable and valid scales to measure HRM system strength, and other researchers may follow their example, in order to better test HRM system strength’s effects. Against the background of our study, we suggest including both the communication and functional proper- ties of HRM systems in future measurement mod- els in order to develop a comprehensive picture of HRM system strength. Thereby, it should be considered that the functional properties of HRM systems might only be assessable on an aggregated level. In other words, individual employees might not know if an HRM system is fully implemented or if the practices do as intended. Furthermore, HRM system strength refers to meta-features of HRM sys- tems. Measures of HRM system strength should therefore be easy to apply in different settings ( Delmotte et al., 2012; Sanders et al., 2014). For instance, references to specific HRM practices (e.g., internal promotion, performance-oriented pay) should be avoided because it is not guar- anteed that firms actually use these practices.
Third, we were able to show that the achievement of HRM tar- gets partially depends on the num- ber of HRM targets. In Hypothesis 4, we assumed that the number of HRM targets might be of influence because a broad spectrum of HRM tar- gets as well as potential conflicting targets might hinder HRM target achievement. This assump- tion was supported for the achievement of impor- tant availability and effectiveness targets but not for the achievement of attitudinal targets. Given this result, we conclude that attitudinal targets might be easier to integrate than availability and effectiveness targets. Concerning the latter, Osterman (1987) has already pointed out that some HRM goals might conflict, and our results further support the notion that this could indeed be the case. Given the recent calls for a broader, multiple-stakeholder conceptualization of HRM and performance (e.g., Paauwe, 2009), this is a nontrivial aspect: HR executives might find them- selves confronted with contradictory demands. Ultimately, this could lead to weak HRM systems, since it is impossible to configure HRM systems to simultaneously maximize a wide variety of tar- gets ( Chadwick, 2010; Delery, 1998). The pursuit
strength. To date, the process perspective has largely focused on the question of how employ- ees understand and respond to HRM ( Sanders et al., 2014). However, our findings have shown that HRM systems not only serve to communicate orga- nizational goals and expectations but also have an additional functional impact. Understanding the psychological processes through which employ- ees give meaning to HRM is crucial to assess the effects of HRM systems ( Guest, 2011). However, to fully capture how HRM systems influence per- formance, we need to consider the functional effects, too. These functional effects are grounded in the long-debated content-oriented perspectives of strategic HRM research ( Delery & Doty, 1996; Martín-Alcázar et al., 2005). Here, our findings have shown that the strongest effect on overall tar- get achievement stems from internal consistency in HRM practices, supporting the notion of syner- gistic effects within HRM systems (e.g., Guthrie, Flood, Liu, & MacCurtain, 2009; Subramony, 2009; Lepak et al., 2006). The process-oriented perspective also focuses attention on whether all practices are uniformly applied, do as designed, and are actually in place. All these aspects have shown a significant impact on at least one of our indices, which supports their relevance.
To disentangle the communication and func- tional effects, we hypothesized that an HRM sys- tem’s elements of strength related to employees’ knowing, understanding, and accepting HRM would impact more strongly on the achievement of targets related to employee attitudes than on other HRM targets (Hypothesis 2). In contrast, we expected that the elements of HRM system strength relating to consistency and full imple- mentation would impact more strongly on the achievement of employers’ nonattitudinal effec- tiveness and availability targets (Hypothesis 3). Both hypotheses were only partly supported. Since we did not hypothesize that the effects are exclu- sive but only differ in their magnitude, a possible explanation for these findings is that the effects of the different components of HRM system strength are more interrelated than expected.
Bowen and Ostroff (2004) have pointed out that aspects such as internal consistency among the HRM practices and validity are necessary in order to avoid ambiguous communication. Accordingly, communication not only depends on employees’ knowing, understanding, and accepting of HRM. In contrast, structural and operational efficiencies of HRM systems—that is, the more functionally orientated effects of HRM system strength—might also depend on employee attitudes. Thus, for a comprehensive understand- ing of HRM system effects, both communication
726 HUMAN RESOURCE MANAGEMENT, SEPTEMBER–OCTOBER 2017
Human Resource Management DOI: 10.1002/hrm
of selected targets might thus be favorable in terms of HRM system strength and HRM target achievement.
Our findings have some clear practical impli- cations. First, our findings highlight the influence of HRM system strength on key attitudinal tar- gets. Thus, if firms intend to achieve attitudinal change through measures of HRM, they should ensure that all employees know, understand, and accept the various HRM practices. Thereby, the employees’ knowing and understanding could for instance be increased via regular information about new practices via e-mail, intranet, or direct communication. However, most important for an attitudinal change is the actual acceptance by employees, which requires a high degree of empa- thy and sensitivity for employees’ values and goals. In contrast, to achieve availability and effec- tiveness targets, firms should pay special attention to internal consistency, because HRM systems can only be effective if there are no substitutive and counteractive effects among HRM practices. A high degree of effectiveness also requires that all necessary practices are implemented and do as designed. Both aspects might be challenging: the implementation of HRM practices requires time, effort, and resources; and the actual effects might only be revealed after HRM practices are imple- mented. Overall, our results indicate that the dif- ferent components of HRM system strength are closely interrelated. Accordingly, firms should keep a close eye on all the aspects of HRM system strength in order to achieve attitudinal changes or important availability and effectiveness targets. Finally, we have also pointed out that too many targets might affect overall target achievement. Accordingly, firms should also pay attention to the questions, which targets they are actually pur- suing and how these targets are related to each other.
Our results and conclusions should be inter- preted against the background of some limita- tions, which also point to possible avenues for future research. The analyses are based on inter- views with chief executives and HR managers. Thus, we cannot for instance determine the actual acceptance of HRM practices among employ- ees but must rely on our respondents’ subjective assessments. This could be an issue, especially for those HRM system strength items that represent employee-related characteristics of strength (i.e. employees’ knowing, understanding, and accept- ing of HRM practices). Additionally, answers could be influenced by social desirability. Accordingly, future research should also integrate employees’
perceptions. Thereby, a multilevel and multiper- son approach in data collection seems promising, given the multidimensional nature of HRM sys- tem strength ( Wright & Boswell, 2002; Wright & Nishii, 2013).
Furthermore, we used only single items to measure the different dimensions of HRM system strength. This seems justifiable for a first attempt to analyze the relationships between HRM system strength and HRM target achievement, since we focus on single components that are fairly con- crete rather than abstract (for a discussion on single-item vs. multi-item measures, see, e.g., Bergkvist & Rossiter, 2007; Sarstedt & Wilczynski, 2009). However, future research should improve on this aspect. Regarding the measurement of HRM targets, we only captured how important different targets are and to what extent each tar- get was achieved. As the issue of conflicting tar- gets seems to be important for overall HRM target achievement, future research could benefit from analyzing more deeply which HRM targets are indeed conflicting and how the pursuit of con- flicting HRM targets effects overall target achieve- ment. Furthermore, some control variables were measured fairly simply (e.g., HRM’s strategic ori- entation). Future research should thus incorpo- rate more sophisticated measures to account for different contexts.
Finally, we asked a large number of firms about the characteristics of one of their HRM systems. Our results thus relate to fairly different HRM systems and are not confined to a special HRM system type. However, we cannot exclude the possibility that the relationship between HRM system strength and HRM target achievement depends on HRM system content (see Katou et al., 2014; Mossholder, Richardson & Settoon, 2011). Thus, future studies should also integrate the con- tent perspective and its influence on HRM target achievement.
In conclusion, our study highlights the importance of HRM system strength for HRM tar- get achievement. By addressing a great variety of HRM targets, our analyses substantiate a broader conception of HRM system strength. HRM systems not only serve to communicate, but also have important functional effects which also depend on the processes of HRM systems. Thus, a holis- tic understanding of HRM system effectiveness can only be achieved if both communication and functional properties of HRM systems are consid- ered. In addition, we have also pointed out that a large number of important HRM targets might lower the degree of HRM target achievement.
Human Resource Management DOI: 10.1002/hrm
HRM SYSTEMS STRENGTH AND HRM TARGET ACHIEVEMENT 727
SVEN HAUFF is a postdoc researcher at the University of Hamburg. His main research
interests are in the interrelationships between the design of human resource management
and its effects on employees and organizational performance. Most recently, he has worked
on HRM systems, job quality, job satisfaction, work values, and culture. His scientifi c works
have been published in journals such as Human Resource Management Journal, the Inter-
national Journal of Human Resource Management, Journal of International Management,
and International Business Review, among others.
DOROTHEA ALEWELL is full professor of human resource management at University of
Hamburg. Her longtime research interests are in human resource management systems
and their effects on employees and organizational performance as well as on the economic
analysis of labor law. Recently, she has been working on gender stereotypes and HRM.
Currently, she is working on the interrelationships between religion, spirituality, and man-
agement. Her research results have been published in journals such as the International
Journal of Human Resource Management, International Journal of Manpower, Human
Resource Management Journal, Personnel Review, International Review of Law and Eco-
nomics, and Comparative Labor Law and Policy.
NINA KATRIN HANSEN is an Associate Professor in HRM & Organization Studies at the
School of Management, University of Bath. Based on a multilevel approach, her research
focuses on the question of how human resource management systems infl uence intellec-
tual capital architectures, organizational capabilities, and fi rm performance, especially in
the fi eld of Professional Service Firms. Her research results have been published in leading
international journals such as Human Resource Management Journal and the International
Journal of Human Resource Management, as well as in leading academic textbooks such as
the Oxford Handbook of Professional Service Firms.
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HRM SYSTEMS STRENGTH AND HRM TARGET ACHIEVEMENT 729
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11 0 .4
1 0
5 . C
la ri
ty 3
.4 7
0 .8
2 0
0 .4
9 5
0 .3
9 7
0 .3
6 4
0 .3
6 5
0 .3
5 7
6 . A
c c e p
ta b
il it
y 3
.6 4
0 .7
3 9
0 .3
2 8
0 .3
2 6
0 .3
5 2
0 .3
0 9
7. C
o n
s is
te n
c y o
f a d
m in
is tr
a ti
o n
3 .7
6 0
.9 1 5
0 .3
2 5
0 .3
6 3
0 .3
0 0
8 . E
ff e c ti
v e n
e s s o
f a d
m in
is tr
a ti
o n
3 .5
8 0
.7 0
5
0 .3
4 6
0 .3
3 4
9 . In
te rn
a l c o
n s is
te n
c y
3 .2
8 0
.8 3
4
0 .4
3 0
1 0 . In
te n
s it
y 3
.3 2
0 .9
2 3
N o
te : A
ll c
o rr
e la
ti o
n s a
re s
ig n
ifi c
a n
t a t
th e 0
.1 p
e rc
e n
t le
v e l.
