The Development of Management and Leadership Capability and its ...

(Pfeffer, 1998). One of his seven high performance management practices impacting
the bottom line was high expenditure on training.
In these HRM-performance studies, training is often measured in very simple ways, most
often training spend or proportion of employees receiving training. Sometimes measures are
included for both training for new staff and for experienced employees. Although this
evidence points to a possible positive link between employee training and organisational
performance, training is not often the employment practice most strongly associated with
performance in these macro studies. Practices around work organisation and performance
management usually come out more strongly. These studies also show association rather
than causal links between HRM and organisational performance.
Contingency models of HRM
Other researchers have become more interested in the idea that the range of HRM practices
which will affect performance depends on the type of business and HR strategies being
adopted. They tend to distinguish between ‘low road’ strategies that rely on cost reduction
and ‘high road’ strategies that focus on quality, variety or service. The empirical evidence
here is interesting but less substantial than for the universal 'best practice' approach.
• A longitudinal study of 388 manufacturing organisations in Florida collected data
about the age, sales, export performance, life-cycle stage and markets of each
organisation, and asked each CEO to judge the degree to which the human resource
strategy of his or her company supported international activities (Gomez-Meija,
1988). It was found that the most significant predictor of success in exports, as
measured 30 months later, was the human resource strategy of the organisations
sampled. For instance, if an organisation gave substantial rewards to those who
undertook international activities, emphasised this when recruiting and promoting
managers, supported training and development in international business and included
this as a dimension of any review of performance, then its exports were more likely to
be successful.
• Youndt et al. (1996), in a study of manufacturing plants, found HR practices aimed at
enhancing the employee skill base to have the largest impact on productivity in those
plants pursuing a quality rather than cost strategy. Banker et al. (1996) found that
outcome-based pay schemes were more effective in supporting a customer-focused
service strategy where competition was intense and customers more demanding. They
also found that such schemes were more likely to result in performance improvements
in firms with lower levels of staff supervision.
• Arthur (1994) studied the business performance of Steel U.S. mini-mills. The HR
strategies of 30 mills were compared and characterised as 'commitment systems'
where attempts were made to shape employee behaviours and attitudes by forging
links between organisational and employee goals, or 'control systems' where the goal
of HR was to reduce direct labour costs, or improve efficiency by compliance with
specified rules and procedures and by basing employee rewards on measurable output
criteria. The mills with higher commitment systems (including a higher level of
employee involvement in managerial decisions, formal participation programmes,
training in group problem-solving etc.) had higher productivity, lower scrap rates and
lower employee turnover than those with control systems.
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