hrm effectiveness in professional non-profit sport
TRANSCRIPT
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FACULTY OF ECONOMICS
UNIVERSITY OF LJUBLJANA
Ivašković Igor
DISSERTATION PROPOSAL:
HRM effectiveness in professional non-profit sport organizations:
Case of basketball clubs in South-Eastern Europe
Ljubljana, September 2011
ii
TABLE OF CONTENTS
1 TITLE ............................................................................................................................................... 1
2 THE DISSERTATION TOPIC AREA AND THE ISSUES IT ADDRESSES ......................... 1
3 DISSERTATION’S CONTRIBUTION TO THE FIELD OF KNOWLEDGE ........................ 5
3.1 RESEARCH AIMS .................................................................................................................... 5
3.2 RESEARCH QUESTIONS AND PRESUMPTIONS ............................................................... 6
4 PROPOSED METHODOLOGICAL FRAMEWORK ............................................................... 9
4.1. CONCEPT AND TOOLS ......................................................................................................... 9
4.2 OBJECT OF OBSERVATION AND SAMPLE ...................................................................... 11
4.3. WORKING PHASES .............................................................................................................. 12
5 STRUCTURE OF DISSERTATION .......................................................................................... 14
6 LITERATURE .............................................................................................................................. 15
6.1 REFERENCES USED IN PROPOSAL ................................................................................... 15
6.2 PROPOSED LITERATURE FOR DOCTORAL DISSERTATION ....................................... 19
7. APPENDIXES .............................................................................................................................. 28
Appendix 1: Indicators used in previous studies for HRM effect assessment ............................... 28
Appendix 2: Specifics of measuring HRM effect in sport organizations ....................................... 29
Appendix 3: Strategic human resources management in sport organizations ................................ 31
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1 TITLE
English title: HRM effectiveness in professional non-profit sport organizations: Case of basketball
clubs in South-Eastern Europe
Slovenian title: Učinkovitost ravnanja z ljudmi v profesionalnih neprofitnih športnih organizacijah:
primer košarkarskih klubov v Jugo-vzhodni Evropi
2 THE DISSERTATION TOPIC AREA AND THE ISSUES IT ADDRESSES
The phenomenon of the organization and relations within it is still in focus of studies in all areas of
business and organizational science. If we pursue definition that defines the organization as
relationships, which arise as a result of relations between members of the organization (Lipovec,
1987, p. 35), we can conclude that the existence and effectiveness of an organization depends
primarily on the ability of these relationships to respond to all needs and challenges of the
environment, in which context the organization operates. The nature of these relationships is largely
determined by the interpersonal relations between people in the context of their position in the
organizational structure. The importance of human resources management (HRM) processes is
therefore obvious from the very definition of the organizational essence. Increased importance of
human resources also emerges from the process of decreasing of industrial economies and the
increased share of service activities in the developed economies.
In the last three decades there has been increased attention to intangible elements that determine the
success of the organization. Compared with traditional factors (such as structures, systems,
technology, manufacturing processes) human resource is a factor which is by nature the most
dynamic, unpredictable, consequently the most difficult to imitate and as such the potential key to
sustainable competitive advantage. Only people are capable of learning, growth and can contribute
to improvement of other elements of the organization, which can be bought on the market (similar
to the Fitz-enz, 1995, p. 45). If we take into account the nature of sport product, its intangibility,
heterogeneity and production indivisibility from the consummation (Buswell, 2004), huge
investments and the adoption of sophisticated systems in HRM field are understandable.
The role of sport has dramatically changed in societies of ex-socialist countries, which have
readopted capitalism. In this part of the world the vast majority of sport clubs preserved non-profit
legal status. If we are aware of the fact that those non-profit sport clubs compete with their profit-
oriented counterparts, preservation of that legal form fascinates. Besides rivalry on sport field, they
also compete for inputs (e.g. for athletes) in organizational process, so they are forced to obey the
rules of profit and to operate on market principles. The consequence is so called dual nature of East-
2
European sport clubs, which is the root of many strategic dilemmas for managers in those
organizations. There is still ongoing discussion about pros and cons of sport clubs‘ non-
profitability.1
Every activity of organizational process should have positive impact on organizational results. The
assumption that organization‘s performance is influenced by the set of HRM practices has already
been empirically proven in several researches (Huselid, Becker, 1996; MacDuffie, 1995; Arthur,
1994; Huselid, 1995). On one side we can say the consensus regarding increased relevance of the
attracting, selecting, training and rewarding athletes and its vast influence on organizational success
has been reached, but on the other side we can detect much greater disparity between opinions,
which strategy to pursue to achieve success. From the strategic point of view, higher probability for
long-term success can be achieved, if organizational management assures coherence of strategy,
politics, programmes and HRM activities.2 The third approach prefers contingency theory (Storey,
2001, Huselid, 1995), where HR system should be adapted to contingent factors that affect
organization.3
Strategic contextualization of HRM4 has been achieved thru its placement in the context of limited
resources theory. Competitive advantage based on resources arises from the proposition that
maintaining profitable market positions depends on the organization's ability to acquire and
preserve the priority access and use of resources that are essential for the production and
distribution (Conner, 1991). The latter is thus based on the assumption of market failure that
prevents the exploitation of resources for all under the same conditions. In order to gain a source of
competitive advantage, organizational source must be rare; it shouldn‘t have perfect substitutes and,
of course, it should enable the creation or maintenance of some value, which is higher than the costs
of exploitation of this source (Barney, 1991). However, the meaning of strategic HRM is not only
1 Supporters of transformation to profit legal forms deny the public good nature of organized sport activities and
advocate full transparency of sport organizations, which are often subject of so called disguised profit-making. On the
other side, the main argument of non-profitability guardians is inability of many sport organizations to survive without
funds, which are provided from non-profit sector donors and their incapacity to fulfil all profit-organizations‘ tax
requirements. 2 Cook & Ferris (1986) even suggested a simple unifying approach designed to align the HRM with business strategy.
In contrast, many authors (eg. Pfeffer, 1998) stand on the position, which arguments more autonomy for HRM system
and advocates the setting of universal rules or so called ―best practices‖. 3 These approaches have been tested several times in the past decade by researches in various fields. Galang (2004)
tried to refute the theory of "best practices", while Truss (2001) added a new component of the study - the coordination
of formal and informal human resource organizational processes. Eventhought none of those approaches prevailed,
during the last two decades, the perception of HRM has shifted from the functional (micro) to the strategic (macro)
perspective. The latter focuses on the fit of organizational strategies and HR practices, so as to improve organizational
relevant outcome such as productivity and profitability (Arthur, 1994; Bae & Lawler, 2000; Delery & Doty, 1996;
Huselid, 1995; Youndt et al., 1996). 4 Among HRM professionals, the term ―strategic HRM‖ is used broadly to signal the view that HRM activities should
contribute to business effectiveness. Included under the broad umbrella of HRM activities are the development and
articulation of an HRM philosophy, the design of HRM policies that reflect the firm‘s overarching philosophy, as well
as the implementation and evaluation of specific HRM practices (e.g. planning, recruitment, training, compensation,
etc.) (Jackson, Schuler, Lepak, 2011).
3
planning the exploitation of human resources and activities designed to achieve organizational goals
(Wright, McMahan, 1992), HRM is also an activity designed to develop and maintain competitive
advantage of organization (Wright, McMahan, McWilHams, 1994).5 Delery and Shaw (2001)
explained that strategic HRM practices have influence on the human capital of a firm, which may
be generated within an organization or acquired from sources external to the organization. In this
context the function of human resource management is making certain strategic decisions that
significantly affect the outcome of entire organizational process on long term perspective.
In previous two decades many authors searched for the most effective HRM practices and tried to
identify best practice and high performance work systems (Applebaum et al., 2000; Huselid, 1995;
Purcell, 1999). However, studying sport clubs requests consideration of some specifics a particular
organizational type. Despite the intensive process of globalization, the first thing we have to take
into account is the fact that sport clubs constitute a specific segment of sport organizations, which is
strongerly attached to its own local environment than other types of organizations. That is the
reason why imitation of HRM systems often doesn‘t lead to desired effect (Purcell, 1999). Besides,
conducted researches clearly exposed the complexity of that kind of sport organizations. There are
still numerous sport clubs with dual nature of organization that directly affect the HRM activity.
Another complexity factor arises from mixed organizational structure composed of professionals
and volunteers (Boxall and Purcell, 2000). Consequently it is difficult to clearly categorize sport
organizations in different structure types as has tried Slack (1997).
Non-profitability implies significant differences in process of strategic management. Usually it
imposes philanthropic objectives. Therefore, non-profit organization (NPO) should not have profit
at the top of its hierarchy of goals and should be more inclined towards increasing quality and
quantity of provided services. However, maximizing organizational income for the benefit of other
non-profit organizational cause is appropriate as the intermediary goal. Organizational
administration is indeed obligated to reinvest the surplus funds or to keep them inside the
organization and exploit them in a way, which will maximize the NPO‘s present and future
efficiency. We can assume that the latter also imposes differences in human resource management
and on assessment of successfulness of HRM function.
Although there are numerous studies about human relations in sport organizations, sport clubs and
even in basketball clubs, considerably less studies have examined relationship between HRM and
organizational strategy in sport industry.6 Moreover, most of those studies lacked business strategy
5 It is important to notice the differentiation between technical and strategic HRM activities. While technical are used to
select high-ability employees, whose talents is rare and to train employees so they have unique skills, strategic HRM
activities help organization to ensure that its human resources are not easily imitated (Huselid, Jackson and Schuler,
1997). 6 For example, Wright, Smart and McMahan (1995) tried to examine the relationships among strategy, human
resources, and performance.6 They demonstrated the existence and efficacy of the link between strategy and human
resources, thereby providing additional support for potential of strategic human resource management to influence
4
analysis, focusing only on the connection of basketball ―game-strategy‖, HR and performance,
which was expressed with basketball statistical characteristics. On the other hand, still only a few
sports organizations use systematized approaches for evaluation of strategic elements in the
organizational process and their impact on the success of the organization.7 Partly, due to
difficulties of expressing and translating the effects to the unit used to measure performance of the
whole organization. Another part of the problem probably hides in fact that sports organizations
measure their success with various indicators.
Successfulness of an organization is usually evaluated from different perspectives of those who
directly or indirectly participate in organizational activities and have certain benefit from its
existence. According to Kaplan and Norton‘s concept of Balanced score card these perspectives are
typically labeled "Financial", "Customer", "Internal Business Processes", and "Learning and
Growth".8 According to them nonprofitability imposes slightly different ―perspectives‖ of success,
which can be used for evaluation of non-profit sport clubs.
1. Customers (local community) perspective
2. Financial (fiduciary) perspective
3. Internal (sport) perspective
4. Learning and growth perspective
Kaplan and Norton (2004) suggested modified hierarchy in NPOs. While financial perspective is set
at the top of profit oriented organizations, their NPO counterparts rather strive to satisfy their
customers‘ needs, since NPO‘s vision and mission are usually tightly attached to that aspect of
organizational purpose. Financial perspective has ―only‖ fiduciary role, although it is far from being
secondary, because it enables organizational existence. Internal perspective of success should
capture business processes that NPOs must be good at in order to satisfy their customers and
financial donors. From sport club‘s aspect customers and donors emphasize sport results as the most
important factor (this perspective is greater than just number of team‘s wins). The last segment of
organizational success is learning and growth perspective, which constitutes indicators of
organizational improvements for vision achievement on a greater scale. Similar has been proposed
by Medina-Borja, Triantis and Pasupathy (2003) who distinguished fund-raising, capacity building,
service delivery and customer impact as four perspectives of NPO's success.
organizational performance. Research expanded the link between human resources and strategy beyond top
management. The results indicated that strategies may determine the types of human resources sought and that the types
of human skills available might influence the strategy chosen. 7 That has been confirmed by some empirical findings (eg. Taylor and McGraw, 2006).
8 Kaplan, Norton: Strategy Maps: Converting intangible assets into tangible outcomes, Harvard Business, 2004.
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3 DISSERTATION’S CONTRIBUTION TO THE FIELD OF KNOWLEDGE
3.1 RESEARCH AIMS
Literature review indicates a lack of studies, which measure impact of HRM on non-profit sport
clubs performance. The purpose of proposed dissertation is development of model, which would
enable measurement of impact that HRM strategy and its implementation (HRM practices) have
from four different perspectives of success. Similar models were developed in last two decades
mostly among profit organizations, where scholars have used different indicators to measure
successfulness of HRM function from different aspects (see Appendix 1). The indicators for
proposed dissertation will have to be adapted for several reasons (see Appendix 2). The focus of
proposed study is going to be on developing the methodology, which will be useful for evaluation
of correlation between strategy, implementation and effects from different four aspects, and will
consequently enable quantification of HRM impact in particular segment of NPOs. Consequently,
the effects of the proposed research can be divided into two branches. On the theoretical level, the
aim is critical analysis of strategic management issues in sport organizations in conjunction with the
performance. From practical point of view, the contribution of the research should be creation of
platform for multiple regression model of human resource process in basketball industry. The
analysis will therefore provide diagnose for each basketball club included in proposed research,
whether their results reflects their ambitions declared in club‘s statute and organizational mission.
This will be presented thru balanced scorecard, modified for non-profit sport clubs, which will
hopefully be a handy tool for evaluation of strategic plan realization and will have a function of
―milestone‖ for NPO managements‘. Moreover, after successfully conducted empirical analysis, the
development of a model which will be useful for evaluation of HR potential in particular sport team
is expected.
Besides the essence of proposed study, the research should contribute to field of knowledge from
two more aspects. It is expected to capture the impact of non-profitability and level of competition
on HRM process. In other words, the results of proposed research should provide identification of
differences between profit-oriented and non-profit sport (basketball) clubs, as well as identification
of the impact that breakthrough into higher level of competition has on non-profit organization‘s
business model.
The research will not primarily focus on identifying causal links between HRM activities and the
relationship among team members, as well as on attitude to the team or to the organization as a
whole. The latter has been the most common object of already conducted researches. However, it
would be impossible to evaluate human resource related strategic decisions and their effect, if the
latter is totally ignored. Although individual and team attitude are often not visible to outside
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observers, it is often crucial mediator between HRM practices and results (Appendix 3). HRM
process has direct impact on the business results of a sport club. On the other hand, HRM activities
also have influence on the behavior and attitude of the organizational members. Therefore, HRM
indirectly affect the final organizational performance and results. However, it would be pretentious
to set as the research aim discovering all effects that duality has on strategic HRM, especially
having in mind that HRM effectiveness is a broad construct which, conceptually, should reflect
diverse needs and desires (Huselid, Jackson, Schuler, 1997). Proposed study will rather try to stay
focused on discovering quantitative differences that particular strategic decision has from four
perspectives among observed basketball clubs. Nevertheless, particular indicators from consumer
and sport perspective will be compared between clubs in first, second and third quality level.
Hopefully, that will enable capturing the impact of professionalization on clubs‘ strategy. On the
other hand, results from the highest quality level will be compared to selected European clubs‘
results, which will provide the data for evaluation of non-profitability effect. This will hopefully
enrich statistical analysis and will add the qualitative touch to proposed comparative research.
3.2 RESEARCH QUESTIONS AND PRESUMPTIONS
The proposed research will be conducted thru three stages of analysis (Figure 1) with focus on
identification of:
Formalized strategies and strategic goals related to HRM field;
Process of implementation (HRM activities);
HRM effects on individual, team and organizational level from four aspects.
Figure 1: Three stages of analysis
Source: own work
Identification of effect that HRM related policies, strategies and practices has on four dimensions of
organizational success in basketball clubs is the main contribution to the field of knowledge and is
therefore the most important aim of proposed dissertation. If we manage to achieve it thru proposed
research, we will be able to give an answer on fundamental question (primary research question -
PRQ): How does certain policy, strategy or activity affect the organizational performance from
four aspects (consumer, sport, financial and learning&growth)?
ORGANIZATIONAL
STRATEGIES AND
STRATEGIC GOALS
IMPLEMENTATION:
HRM ACTIVITIES
FOUR ASPECTS OF
ORGANIZATIONAL
PERFORMANCE
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Due to described diversity of sport organizations, it is not expected that the proposed model would
be applicable to all of them. However, it will serve as practical tool to non-profit basketball clubs
and will hopefully contribute to better understanding of HRM importance.
In order to evaluate non-profitability and quality of competition impact on HRM process, the first
step of proposed work-plan will be identification of HRM related mission statements and strategic
goals declared in clubs‘ statutes. This part of proposed study should help us to reveal answers on
secondary research questions:
Is strategic human resource planning present in SEE basketball clubs?
Do non-profitability and quality of competition influence mission statements in basketball
clubs’ statutes?
Service nature of sport activities usually increases the importance of HRM. However, the objective
of that function is not always directed towards attraction of the best individuals on market. That
happens when objective of great sport result achievement is subordinated to another goal in
organizational hierarchy and arises from statements in sport club‘s mission, especially if the
organization has a non-profit legal status. Therefore, it is expected that most of sport organizations
have defined their strategies and strategic goals on HRM field. Non-profitability of sport clubs,
even when they produce huge incomes, is a socialistic heritage. Sport clubs‘ managements are
aware that non-profitability benefits to members of organization, due to many reasons. In order to
satisfy the condition for non-profitable legal framework, they usually formally declare their
environmental-oriented purpose. Therfore, first presumption is: Non-profit basketball clubs
emphasize more environmental related HRM strategies. Strategic aims which benefit to local
community are higher in their hierarchy of goals.
Second presumption arises from the fact that lower-quality and lower-income organizations have
less administrative staff and they usually lack in managerial knowledge: Basketball clubs which
compete in lower quality leagues have less goals related to HRM field.
Objective of the second stage of analysis is to identify position of HRM function in organizational
structures and actual HRM process in observed basketball clubs. This should provide an answer on
following research question: Do non-profitability and level of competition influence the role of
HRM function in organizational structures of basketball clubs?
We expect that the existence of organizational differences regarding HRM function and its
integration in organizational structure between clubs in different quality level and between non-
profit and profit organizations as well. Due to less income, less administrative employees and larger
percentage of volunteers, our next set of presumptions is:
Higher quality level increases complexity of organizational structure.
8
Higher quality of competition positively influences on higher level of professionalization.
Higher quality of competition positively influences on higher level of formalization.
Profit-orientation presumably pushes sport organizations to strive for profit growth. Quality of
service and sponsor attractiveness becomes more important than local community inclusion,
although those are not totally opposite concepts. This part of research will enable us to test the
following presumptions:
Profit-orientation positively influences on higher level of professionalization.
Profit-orientation positively influences on higher level of formalization.
Identification of differences in HRM practices among observed basketball clubs will follow the
analysis of personnel structures. The objective of this part is to find answers on following questions:
How do level of competition and non-profitability reflect on complexity of HRM process?
How do level of competition and non-profitability reflect on HRM process regarding
inclusion of local population?
Proposed study has potential to find answers on many questions regarding differences between non-
profit and profit sport clubs on one side and differences in HRM approach between clubs from
lower quality segment and those which compete in top class competitions:
Complexity of HRM process decreases with lower quality level of competition. 9
There are no significant differences in complexity of HRM process between profit and non-
profit sport-clubs, which compete at the same qualitative level.
Profit-oriented clubs have greater level of internationalization.10
Higher-quality clubs have greater level of internationalization.
Once we manage to test all given presumptions, we will be able to argue whether non-profit legal
frame is appropriate for sport clubs in the highest quality range and answer on question: Is non-
profit legal framework of sport clubs in Eastern Europe justifiable?11
9 Presumption regarding complexity is quite obvious. Lower financial sources lead to smaller organization, which
means simpler organizational structures and processes. 10
If non-profit sport club competes with profit-oriented basketball clubs in same league, it will try to adapt to new
circumstances. This refers primary to club‘s actions regarding athletes‘ market. At their beginning sport organizations
are usually managed by local sport enthusiasts with passion to make breakthrough into higher rank of competition. In
this phase HRM policy usually relies mainly on the local workforce. At the individual level, the research objective is to
reveal the connection between strategic HRM and individual statistics, as well as finding an answer to question: ―Does
the policy and practice produce results on final individual stage – who, considering statistics, contributes more;
―homemade‖ or ―market‖ athletes? As an organization manages to make step forward into higher-ranked competition,
the more effective use of athletes‘ market opportunities becomes necessary. The latter assumption doesen‘t include
management‘s attitude toward administrative staff. 11
Study will show us, whether non-profit legal frame of sport organizations on the highest quality level is justified in
ex-socialist countries. Justification of latter evolves from higher level of local population inclusion in club‘s sport
activities and from practices of financial management, which are synchronized with non-profit mission statements and
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4 PROPOSED METHODOLOGICAL FRAMEWORK
4.1. CONCEPT AND TOOLS
Study will combine two methodological concepts, namely theoretical and empirical. The first will
be based on scientific methods of description and historical analysis. The findings will form the
basis of theoretical analysis and empirical research. The second (empirical) part will be conducted
in three stages. In order to assess HRM practices in basketball clubs, proposed study will use the
mixed approach, shown in Figure 2.12
Figure 2: Illustration of a methodological framework for empirical part of research
Source: own work
For HRM practices assessment descriptive one-time research will be used. Although this method
has its weaknesses, mainly due to lack of ―depth‖, it is appropriate as a starting point when we try to
assess certain problem on the industry level.13
One time descriptive research will also be used for
should benefit to society more than financial practices in profit organizations. On the other hand, the second set of
comparisons will hopefully provide data for assessment, when the transformation from non-profit to profit organization
should be made. 12
When doing research on human resource field, we can choose between two main approaches; the audit approach
(with two major subjects, personnel indices/key indicators and user-reaction measures) or the analytic approach (with
two general alternatives, experimental design and cost–benefit analysis) (Tsui, Gomez-Mejia, 1988 and Pološki Vokić,
Vidović, 2008). 13
Wei and Lin analysed in 2007 HRM - firm performance studies from methodological point of view. They concluded
that most of them reported positively significant on the relationship of HR practice-performance and some relations had
stronger effects than others. However, they expressed concern that some research results may be misleading, due to
methodological problems (Levine & Tyson, 1990; Wagner, 1994). Disparity in the strength of various relationships
could, in their opinion, be the result of errors in measurement methods, sample characteristics or special research
context. The longer interval between the measurements of the two variables (i.e., HR practices and firm performance)
the weaker the relationship will appear to be (Cohen, 1993). Also, the narrower the analytic level, the more easily real
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evaluation of organizational performance from four aspects. This will be verified trough other
(objective) sources of data.14
For data collection two methodological tools will be used, survey and interview. The first will help
us to collect quantitative facts about organizations, while interview should provide qualitative
information on HRM activities and practices in those basketball clubs. Profit-oriented basketball
clubs, included in research, will participate in proposed study only thru survey. Familiarity with
practices in basketball industry influenced the decision about research tools. Questionnaire and
interview questions will be formed according to similar HRM research (Pološki-Vokić, 2004; Fey,
Bjorkman, Pavlovskaya, 2000; Wan, Ong, Kok, 2000) and adjusted for examination of basketball
organizations. For the purpose of proposed study questionnaire will be pretested and improved on
the basis of five scholars‘ opinions, which were selected among well known experienced coaches
and managers, who understand human-resource issues in basketball field.
Questionnaire on quantitative HR related indicators will encompass seven sets of questions,
namely:
1) Organizational mission;
2) Organizational structure;
3) Demographic characteristics of employees, volunteers and athletes;
4) Perception of importance of certain HRM activity;
5) HRM activities;
6) Indicators of HRM effectiveness;
7) Indicators of club‘s successfulness.
Questions for interview with person responsible for HRM for collecting qualitative data will be
formed in five sets, namely:
1) Questions concerning HR department and HR in general (position in organizational
structure, process of HRM);
2) Questions on organizational characteristics (shareholders, history-tradition);
3) Questions concerning HRM functions (planning, job analysis, recruitment and selection,
performance appraisal, compensations and benefits, training and development, career
management, and other HR services);
4) Budgeting among HR activities;
5) The HR manager‘s (sport director, coach, president) background characteristics
(experiences, formal education, and perception of importance of HRM activities).
observations may be obtained (Delery & Doty, 1996). Finally, we often cannot be sure of the reliability of our collected
data, owing simply to the position of the informant (Huselid & Becker, 2000). 14
Data will be acquired from state statistic offices and ―head‖ organizations in basketball industry (FIBA, ULEB, ABA
- Adriatic Basketball Association).
11
4.2 OBJECT OF OBSERVATION AND SAMPLE
The research will be carried out among basketball clubs on three quality levels from six countries
(Slovenia, Croatia, Bosnia and Herzegovina, Montenegro and Serbia). Considering the proportion
of population it involves, basketball15
is for sure one of the most popular team sports in selected
area, outnumbered only by soccer. Thus, the research should be representative for sport clubs in
selected area, which has a tradition of non-profit sport clubs on professional level.
Sample consists of clubs from Adriatic league and basketball clubs that compete in lower ranked
competitions (first national leagues and second division national leagues). Hopefully that will
provide us with data for evaluating impact of professionalization on HRM process. On the other
hand, the study will also include selected profit-oriented basketball clubs from Euro League, Euro
Cup and Euro Challenge Cup which will represent control sample for evaluating the differences
between profit and non-profit sport clubs (Figure 3). This will enable a sufficient number of units
(more than 200 with expected return of at least 25%16
) and the research will at the same time
remain within the boundaries set by researcher‘s abilities.
Figure 3: Four sample groups
Source: own work
15
The decision for choosing basketball clubs as units of research was largely influenced by the fact of the twelve active
amateur and professional years engaged in basketball, in which I met with different approaches to strategic HRM
issues. 16
The size of the pool of respondents significantly influences the reliability of collected data, which was confirmed in
HRM studies (Gerhart et al., 2000). Researches on HRM practices usually have return rate from 18 to 30%, for
example: Huselid (1995) 28%, Delery, Doty (1996) 11%, Youndt, Snell, Dean, Lepak (1996) 19%, Becker, Huselid
(1998) 18%, Pološki-Vokić (2003, 2004) 28%.
SELECTED
EUROPEAN (PROFIT)
CLUBS
12
4.3. WORKING PHASES
Proposed dissertation should be conducted thru nine phases:
I. The first part of proposed dissertation is intended to provide theoretical background, as well as
historical review of Eastern-European basketball clubs development, which will explain the
pros and cons of their dual nature. First phase of work on dissertation will therefore consist of
reading, summarizing and analyizing proposed literature.
II. Empirical part of study will start with obtaining real data about basketball clubs‘ missions.
Usually the statutes of sport organizations can be found on particular club‘s web page. The
objective is to discover variety of possible strategic orientation in sport organizations with
special emphasis on strategic HRM decisions. I will try to describe the statements regarding
strategic directions on human resource field and about inclusion of local population. That will
be the starting point for evaluation, how successful basketball clubs are considering
implementation of formalized strategic HRM orientation.
III. Basketball clubs will be contacted (thru e-mail or/and telephone). The purpose of this contact is
to collect information about HRM managers and to notify them about importance of study,
followed by explanation that participation is not anonymous, however all results will be
published in aggregate form, which means the result for particular organization will stay secret.
On the other hand, every participant will get individual results in six to nine months.
IV. Afterwards Questionnaires will be sent with a brief cover letter, which will explain purpose and
importance of the research to HRM managers and to management boards (presidents). Once
again it will be emphasized anonymity of particular participant. Sport directors (as most
knowledgeable and informed regarding HR practices) will be asked to coordinate
questionnaires‘ fulfilment.
V. Interview with sport directors‘ (or other function responsible for HRM) will be conducted after
the pool analysis. Particular interview will not last more than two hours. This part of study will
also be a test, whether those who are responsible for implementing the organizational strategic
goals really understand the non-profit nature of organization.17
VI. Data obtained in the survey will be processed with SPSS software pack for processing
quantitative and qualitative social science research, which enables simple, systematic and
17
Human factor usually brings some deviation between formalized statements and real objectives, which are ―written‖
only in heads of their pursuers. Moreover, formalized strategies are often totally ignored in NPOs, not because
managers are not capable of implementing them, but due to the fact the environment changes so rapidly that formalized
initial goals often become obsolete.
13
precise processing of large amount of data. Analysis will base on correlation and inter-
correlation linkage of variables.
VII. The findings based on multivariate analysis and links between variables will help us to develop
regression models of HRM effect on the performance of sports organizations. Success
indicators will form set of dependent variables while other characteristics and practices will
represent independent variables.
VIII. In the next phase, models for each group of observed sport clubs will be developed. They will
represent the platform for comparative analysis between professional and amateur basketball
clubs on the one hand and profit vs. non-profit clubs on the other hand
IX. The ninth phase of research will be qualitative analysis of HRM practices and their effects in
professional non-profit basketball clubs. Findings will base on data collected through
interviews with HRM managers in Adriatic Basketball League clubs. Qualitative part of
dissertation will include presentation of two innovative indicators, built specially for sport
studies:
a. Using so called ―face-building‖ approach we will try to quantify individual impact18
in a
way, so the sum of individual indicators on a team level will enable comparison of
―internationalization‖ level among clubs.19
b. Second innovative indicator, which we will try to estimate, is the potential of particular
player as well as the structure of each team according to its players‘ potential.20
We
selected a simple k-means clustering.21
This indicator can be used as a guideline for
management, whether organizational structure has a long term perspective or it will need
change in near future.
18
Due to injuries and activities on athletes' market during the season the number of players which play for a team is
usually around 15-20. However, some of them get very little playing time during games. In order to eliminate these
players from the analysis, I adopted cut off rules, which were suggested by Manley (1988) and Ghosh, Steckel (1993).
To be included, a player must have played in at least 12 games for one team with minimum 10 minutes per game (avg). 19
The objective is to discover, whether there is a linkage between internationalization of a team and team‘s success. We
can paraphrase it in greater perspective: If we know that HRM strategy influence on distribution of playing time and
statistical effectiveness of individual athlete, can we evaluate which strategy is better (strategy of local base
development or strategy of internationalization)? 20
Since every player in sample averaged at least 10 minutes per game, we can say that everyone of them plays
significant role in team‘s playing strategy. However, the coach and team management have to bring a decision after the
season, which player is going to play more in the next season. The latter decision is important from at least two aspects.
On one hand, usually teams strive for competitive advantage which will last for a longer period. Therefore, younger
players should get more opportunity to play. On the other hand, considering non-profit nature of basketball clubs in
NLB Adriatic League, team management should take into account inclusion of local population into team success. The
consequence of larger proportion of ―domestic‖ players is easier identification with the local club. So, the ―home made‖
players will on the long run get some kind of protection. On the other hand the effectiveness of individual player is the
most important factor which determines his playing time, at least on the short run. 21
A specific non-hierarchical clustering method, which divides elements from the sample into k clusters in which each
observation belongs to the cluster with the nearest mean.
14
5 STRUCTURE OF DISSERTATION
1. Introduction
2. Sport organizations
2.1. Typology
2.2. Legal frame of sport clubs
2.3. Transition and dual nature of sport clubs in Eastern Europe
2.4. Specifics of basketball clubs
3. Strategic perspective of HRM effect measurement in sport organizations
3.1. Role of HRM in contemporary sport organizations
3.1.1. Process of HRM in basketball club
3.1.2. Source of competitive advantage
3.2. Measuring effectiveness of HRM in sport organizations
3.2.1. Classification of approaches and methods of HRM effectiveness measurement
3.2.2. Measuring organizational success of sport (basketball) club
3.2.3. Measuring HRM effectiveness in basketball club
4. HRM effectiveness model development – quantitative analysis
4.1. Research facts
4.1.1. Goals
4.1.2. Methodological framework
4.2. Results
4.2.1. Organizational strategies and strategic goals
4.2.2. HRM activities
4.2.3. Four aspects of organizational performance
4.3. HRM effectiveness models
4.4. Discussion
5. Professional non-profit sport organizations – qualitative analysis
5.1. Research facts
5.1.1. Goals
5.1.2. Methodological framework
5.2. Strategies and strategic goals
5.2.1. Non-profit vs. profit basketball clubs
5.2.2. Professional vs. amateur basketball clubs
5.3. Organizational structures analysis
5.3.1. Non-profit vs. profit basketball clubs
5.3.2. Professional vs. amateur basketball clubs
5.4. Success indicators
5.4.1. Sport aspect
5.4.2. Financial aspect
15
5.4.3. Environmental aspect
5.4.3.1. Level of internationalization
5.4.4. Organizational aspect
5.4.5. HRM potential
5.5. Propositions for professional non-profit basketball clubs
6. Thesis verification
7. Conclusion
8. Literature
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7. APPENDIXES
Appendix 1: Indicators used in previous studies for HRM effect assessment
a) Work efficiency, percentage of waste, fluctuation (Arthur, 1994);
b) Public image, goodwill, sales growth rate, income growth rate, quality of products, long-
term profitability, financial power, productivity (Bae and Lawler, 2000);
c) Quality (percentage of defected products), productivity (products/time used for production)
(Banker, Field, Schroeder and Sinha, 1996),
d) ROA, ROE (Delery and Doty, 1996),
e) HRM results: Fluctuation, absenteeism, work satisfaction; organizational results:
productivity, quality, helpfulness; financial results: ROA, profitability; Capital market
results: share value, growth, ROI (Dyer and Reeves, 1995),
f) Market share, sales growth, profitability, quality of product or service (Fey and Bjorkman,
2000)
g) Year sales volume, year profit, year percentage of changed sales, etc. (Gomez-Mejia, Tosi
and Hinkin, 1987),
h) Gross rate of return on capital, Tobin‘s q, return to shareholders (Huselid, 1995),
i) Productivity per employee (Huselid, Jackson and Schuler, 1997),
j) Operational costs, labour costs, profitability, productivity (Jalette, 1997),
k) Five-year growth of sales, five-year growth of profit, five-year growth of dividends, five-
year growth of profit per share, five-year growth of capital, price/profit per share, profit ratio
for last year (Kravetz, 1988),
l) Productivity, quality (MacDuffie, 1995),
m) Sales growth rate, market share, operative profit, profit/sales, cash flow, ROI, development
of new products, market development, research & development activities, programmes for
costs reduction, development of employees, political and public affairs (Martell, Carroll,
1995),
n) Sales, profit after taxation, development of new products, work satisfaction, retention of key
employees (Ngo, Turban, Lau & Lui, 1998),
o) HRM successfulness: fluctuation; organizational successfulness: productivity, quality,
satisfaction of customers; financial successfulness: ROA; financial market evaluation: share
price, Tobin‘s q (Rogers, Wright, 1998),
p) HRM successfulness: number of HRM boards, day for fulfilment of workplace, days needed
for responding on clients‘ questions, absenteeism, number of complaints, number of women
promoted, number of minorities‘ members promoted (Tsui, 1990),
q) Financial successfulness: long-term profitability rate, sales growth rate, financial power;
HRM successfulness: work satisfaction, loyalty, public image, goodwill, quality of
services/products, productivity of employees (Wan, Ong, Kok, 2002).
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Appendix 2: Specifics of measuring HRM effect in sport organizations
It is often thought that the sport result can be simply measured with number of wins in particular
competition, but that is far from being sufficient to evaluate impact of HRM strategy and practices
on sport result. Sport organizations, despite common beliefs, often replace competitive sport
achievements in favour of other sport ambitions which are more compatible to their missions. For
example, we cannot say that sport club, which doesn‘t have the highest number of wins in
competition, but on the other hand it produces large number of players who participate in national
teams, reach high value on athletes‘ market (and therefore club has huge surplus from trading
players), is not successful. It only has different HRM strategy and is focused on achievement of
different goals from the sport perspective. Moreover, the assumption that non-profit sport clubs
have wider spectrum of sport goals (which are not strictly oriented towards winning the
competition) than their profit counterparts seems to be logical.
From the costumer perception local population inclusion is often one of priorities in non-profit sport
clubs‘ missions. However, inclusion of local population is not always easy to evaluate. In order to
do so, we have to determine what kind of inclusion is going to be measured. Passive/active
inclusion is the simplest division of local community participation. Local population can participate
passively as spectators on competition events or they can be actively included in the organization;
as an athlete or as a member of organizational staff. This is by far not the only aspect of costumers‘
satisfaction. Local community usually expects more from NPOs. Therefore, non-profit sport club
should invest more in development of local sport infrastructure and should strive to enable to the
local population active participation in sport activities, even when the risk that they will never
become a member of a club is high.
Analysis of costumers‘ perspective could have the highest practical relevance in defining sport
club‘s implementation strategy and its coherency with organizational formalized mission.
Breakthroughs to the higher levels of competition often discourage sport clubs to behave according
to their initial strategy. Top sport result demands athletes with greater capabilities, which does not
implicate only larger investments in human resources, but also investment in another sources of
potential athletes. In other words, even if organizational management is capable of acquiring more
funds, the local population in club‘s environment often doesn‘t offer enough athletes with desired
competences. Consequently the conflict of objectives may arise; top sport results vs. active
inclusion of local population and other ―non-profit‖ goals. Top sport result doesn‘t imply only
prestige; usually it brings new funders for the next sport season. So, behind the decision to strive for
top achievements on sport field it is often hidden the motive for increasing the budget, which is
basically a profit-oriented motive. In that case, organization should conduct a formal transformation
into a profit-oriented legal form.
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Many sport clubs in European ex-socialist countries still have difficulties with defining the mission
or the purpose of their existence. The latter usually includes already emphasized decision, whether
the primal purpose of organization is social inclusion of locals or the organization will emphasize
the ambition for top competitive achievements. As practice shows many of sport organizations
include both goals as their priorities, which can cause significant problems later in the process of
organization growth.22
Therefore, one of the most problematic choices management board of every
sport organization will eventually have to face with, is to decide, whether organization should built
competitive advantage on its own human resource base or to somehow outsource HR development
and try to utilize better scouting and market-analyzing capabilities. This could be easily evaluated
by observing the process of budget division or so called budgeting, which indicates sport club‘s
strategy on the human resource field. However, it is somewhat more difficult to assess the impact of
latter decision, as well as finding an answer, how non-profitability influences on that decision, and
when the non-profit legal form should be abandoned.
Financial perspective, as mentioned, is important as fiduciary aspect of club‘s successfulness, which
guarantees long-term existence of an organization and is imperative condition for success on sport
field.23
One of the most common indicators of NPO‘s success from the financial point of view is
budget growth, which indicates the potential for increasing the organizational scope or quality of
product/service. The impact of organizational budget growth on the strategic decision-making
within the sport organizations has already been confirmed by numerous studies (Kikulis, Slack,
Hinigs, 1995a, 1995b, 1995c, Slack, Hinings, 1992, 1994, Thibault, Slack, Hinings, 1991; McClam,
Spicuza, 1988). However, these studies were focused on the effects of the internal relations. Thus,
for example McClam and Spicuza in 1988, Kikulis in 2000, Cuskelly, McIntyre and Boag in 1998,
Doherty and Carron in 2003 examined the relationship between volunteers and professionals,
changes in organizational structures (also examined by Hoye and Cuskelly in 2003 and Inglis in
1997) and the impact on motivation (Coleman, 2002; Cuskelly, 2004; Metzer, 1996, Taylor et al.,
1996). Interestingly, there have been less studies, which have examined, how the professionalism
reflects on the HRM strategy and ultimately on the success of organization. We should probably
search the reason for latter in US origin of conducted researches. Across the Atlantic the
professionalization process of sport organizations is not noteworthy research topic, because it
considers only a small amount of sport organizations. The proposed study has the ambition to
capture the budget effect as well. However, based on experiences in professional sport, difficulties
are anticipated in process of collecting data which include sums of money. Budget of a sport club is
unfortunately in this part of the world still quite delicate information and managements are usually
22
It often manifests as the pressure from local parents, which feel that their children do not get enough attention from
club management or they feel endangered by increased influx of foreign athletes. 23
Budget growth and sport results usually go ―hand in hand‖. Long term successfulness in the highest-quality
professional sport competitions is impossible, if there is a lack of funds in sport club.
31
reluctant to give that information away. Despite that, the expected data, even if there won‘t be
budget included, will offer enough possibilities to get economically significant results.
The last perspective in proposed version of balanced score card for non-profit sport club represents
wider organizational aspect, which mainly includes two segments; namely organizational
effectiveness and organizational growth. First component is tied to the process of learning inside of
club, which enables reduction of costs and higher rates of players‘ effectiveness growth.
Organizational growth on the other side discovers the scope of club‘s activities, which enables
acquiring more funds, inclusion of more members and providing its services on a larger scale.
Appendix 3: Strategic human resources management in sport organizations
Source: own work