Centre for Innovation and Structural Change, Galway – 21 November 2002
Sustaining the People Management and Performance Link John Purcell Professor of Human Resource Management University of Bath
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Does ‘Fit’ Make a Difference? $ Change in Market Value per Employee
Source: Huselid
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HR and profit per employee
Source: Guest
Profit per employee (ÂŁ)
4000
3000
2000
1000 0 to 4 Source: FoW (N=297)
5 to 7
8 to 10
11+
Number of HR practices
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Sector studies reveal more on HRM and performance Thompson
-
aerospace
Batt
-
telecommunications
Arthur
-
steel mini mills
Bailey
-
clothing
Hunter
-
Banking
West
-
hospitals
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Death rates (mortality) in hospitals and HRM Strong relationship between HRM practices and patient mortality: • Appraisal has the strongest relationship with patient mortality •The extent of teamworking in hospitals is also strongly related to patient mortality. •Sophistication of training policies is linked to lower patient mortality. •HR Director on the Board associated with lower mortality Source: Michael West People Management 21 February 2002
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How do we explain HRM - Performance How does people management impact on business performance? CIPD ‘flagship’ project 2000-2002 12 case studies of organisations trying to make the link Full report in 2003 - but some initial findings already Work and Employment Research Centre
Detailed case studies One NHS Trust Two major retailers, both highly successful Three knowledge based companies major consultancy tele bureau specialist software designer Two finance companies Three manufacturing companies One after sales service organisation Work and Employment Research Centre
Employee Attitude Survey Total of 900 respondents, 40 + in each company, repeated in the second year Face to face interviews Employee experience and value attached to aspects of people management Direct comparison with a national survey (WERS 98) Unique research – we talk to employees! Work and Employment Research Centre
A little theory … Dimensions of Human Resource Management Practices • Skill Enhancing HR Practices: Function to improve the knowledge, skills and abilities of the collective work group through prehire selection and post-hire training
• Motivation Enhancing HR Practices: Function to affect the motivational forces that energise, sustain and direct work behaviour.
•Empowerment Enhancing HR Practices: Function to facilitate employee contributions of knowledge, skills and abilities to work-group and organizational success.
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The Bath People and Performance Model Training and Development
Recruitment
Performance Appraisal
Motivation/ Incentive ---------------------Opportunity to participate
Job challenge/job autonomy
Teamworking
Job security
Ability/skill ----------------------
Pay satisfaction
Career opportunity
Line management behaviour, respect, encouragement trust, leadership
Organisation commitment
--------------
Discretionary Behaviour
Motivation
-------------Job satisfaction
Involvement Communication
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Performance outcomes +
What makes a difference Commitment and Satisfaction in a large accountancy/consulting partnership Commitment
Job satisfaction
Training
√ √
√√
Performance Appraisal
√
√√
Career Opportunity
√
√√
√ √
√
Job Security Pay Satisfaction Job Challenge Team Work
√√
Involvement
√
Communication
√
Management behaviour
√
Respect from manager Climate of employee relations
√
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What makes a difference Commitment and Satisfaction in leading retail store: Selfridges, Manchester – sales staff Commitment
Job satisfaction
Training Performance Appraisal Career Opportunity
√
Job Security
√
Pay Satisfaction
√
Job Challenge
√
Team Work
√
Involvement
√√
√√
Communication
√
√√
Management behaviour
√
√
Respect from manager
√
√
Climate of employee relations
√
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Employee Discretion in Omega Location
A
D
% %
B %
C %
Generally, how much influence do you have over how you do your job? A lot
64
64
27
50
Some
27
36
36
40
A little
9
27
10
None
9
How satisfied are you with the amount of influence you have over your job? Satisfied
82
Neither satisfied nor dissatisfied
9
Dissatisfied
9
82 18
36 46 18
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100
Job Satisfaction at Omega A B C % % %
D %
64 27 9
73 9 18
64 18 18
80 10 10
55 27 18
46 46 9
36 40 18 40 36 10 9 10
How satisfied are you with the sense of achievement you get from your work? Satisfied Neither satisfied nor dissatisfied Dissatisfied How motivated do you feel in your present job? Very motivated Fairly motivated Not very motivated Not at all motivated
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Management Behaviour at Omega Location A B C D % % % % How good are mgrs at responding to suggestions from employees? Good 27 82 18 60 Neither good nor poor 46 9 46 40 Poor 27 9 27 To what extent does your line manager provide coaching & guidance to help improve your performance To a great extent 46 55 27 40 To some extent 27 45 36 40 To a limited extent 27 9 20 Not at all 27 How good do you feel the co. is at sharing & exchanging knowledge & experience? Good 64 82 18 Neither good nor poor 27 18 64 Poor 9 18
70 20 10
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OMEGA PERFORMANCE DATA (2000/01) (Based on averages for 12 month period Feb 2000 – Feb 2001) Percentage variation from regional average (20 sites) Location A
Availability
-0.1
Waste/known loss
-5.5
Shrinkage/unknown loss
5.4
Operating expenses as % of sales
2.4
Waiting to be served
2.4
Payroll costs as % of sales
-4.3
Profit Contribution
B
C
D
0.6
-0.8
0.3
4.7
-11.8
7.1
63.5
-59.5
44.6
2.4
-28.2
-11.7
-6.9
-0.6
-3.3
14.8
4.3
0.1
21.4
-33.7
-0.1
71.1
48.2
54.8
-13.0
NB Data has been corrected to ensure that positive figures reflect better than average performance Turnover ÂŁm 42.6 and negative figures show worse than average performance
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IMPLICATIONS (A) Performance Performance measures at the operational level are key – not profit. Performance measures which allow comparisons are particularly valuable. All performance measures are political
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(B) Strategic HR Strategy is about delivery – implementation as much as the big vision. Good HR policies are vital esp - Job design for challenge and autonomy - Appraisal - Teamworking - Involvement But needs/motivators vary
- professionals - non-managerial - front line managers
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(C)
What next? So you have all the key HR policies for AMO? Bringing policies to life: (a) Vision and Values – partnerships (b) HR integration e.g. balanced score card? (c) HR for front line managers – the behaviour you want is discretionary too Work and Employment Research Centre