Modes of theorizing in strategic Human Resource management: test of universal, Contingency

and Configuration performance prediction

Delery, John E; Doty, D Harold

Academy of Management Journal; Aug 1996; 39, 4; ABI/INFORM Global pg. 802

PerspectiveUniversalistic perspective

Relation between a given independent variable and dependent variable is universal across organization populations; best practice i.e. participation, empowerment, incentive pay, employment security, promotion from within, training and skill development, job rotation, TQM, etc.

Contingency perspective

Relation between relevant independent variable and dependent variable (will be different for different level of the critical contingency variable, such as organizational strategy which is based on product, service, innovation rates); consistency to the other organizational aspects i.e. consistent with different strategic positions and relate to firm performance

Configuration perspective

a configuration (non linier synergistic effects and higher-order interaction as ideal type of theoretical construct) or pattern of HR practice to maximize the horizontal fit and link to alternative strategic configuration to maximize the vertical fit. Pattern of multiple independent variables is related to a dependent variable, i.e. HR deployment plan pattern enable to achieve organizational goals

HR practices(Osterman, 1987; Sonneferd, peiperl 1988; Kerl, Slocum 1987, Miles and S

now 1984)

1. internal career opportunities

2. formal training systems

3. appraisal measures

4. profit sharing

5. employment security

6. voice mechanisms

7. job definitions

HRM Practice on employment system (Sonneferd, peiperl 1988; Kerl, Slocum 1987, Miles and Snow 1984)

Market Type Internal System

internal career opportunities

hiring from outside organization

extensive socialization

formal training systems

providing little training extensive training

appraisal measures

evaluation performance through the use of result measure

behavior performance

profit sharing rewarded by individual performance

Based on development performance appraisal

employment security

little employment security rather high employment security

voice mechanisms little employment voice provide great deal of voice

job definitions jobs are broadly define job define tightly

Strategic type characteristics(Doty

et. al., 1993)

• Prospectors– Constant search for new product and markets

• Analyzer– Operate in both stable product domain and change

product domain

• Defender– Narrow and stable product market– Makes major adjustment in technology and structure– Get better and more efficient to produce the product

or service on defending market– Does little research and development

Strategic of HR on employment system (Miles and Snow 1984; Doty et. al., 1993)

Prospector Defender

internal career opportunities

Few internal career opportunity

Internal career opportunity

formal training systems

Lack of formal training system

Formal training system

appraisal measures Output based appraisal Behavior based appraisal

profit sharing Profit sharing system Hierarchy based compensation, little profit sharing

employment security

Little employment security

Employment security

voice mechanisms Little employee voice Employee voice

job definitions Broadly define jobs Tightly define jobs

Ideal Type(Govindsrajan, 1988; Sagev, 1998; Doty and Glick 1994)

Article objective

• Articulating the differences among 3 perspectives: Universalistic perspective, Contingency perspective and Configuration perspective

• Testing hypothesis of ‘HR practice’ with Universalistic perspective, Contingency perspective and Configuration perspective

HypothesisUniversalistic perspective

H1 HR practice related to organizational performance

Contingency perspective

H2 Human resource practice relation on organizational performance contingent by organizational strategy

Configuration perspective

H3 The greater the similarity to the ideal type employment system that is most similar to an organization’s employment system, the higher the financial performance

Configuration perspective

H4 Employment system’s similarity to the ideal type employment system that is appropriate for organizational strategy will be positively to financial performance

Configuration perspective

H5 Employment system’s similarity to the one hybrid employment system that is appropriate for organizational strategy will be positively to financial performance

METHODS

• Samples: in a single industries (1.050 bank)• Participant: Senior HR Manager (HR Practice)

and President of the bank (organizational Strategy)

• Measure: – HR Practice– Organizational Strategy (Segev, 1989)– Performance: ROA, ROE– Control variables: Call reports, Sheshunoff bank

search database– Ideal profile (Doty & glick, 1994, Sagev, 1989,

Govindarajan 1988

Participants

• 216 usable questionnaires (21% response rate), 12.24 years old, 5.32 years occupied; 114 usable president questionnaires (53% response rate), 5.89 years president occupied,

ResultUniversalistic perspective

H1 HR practice related to organizational performance

Supported

(table 3-4)• result of oriented appraisal, employment security, profit sharing related to ROA & ROE

• HR Practices explain 12.55 (13) % ROA and 9% ROE

ResultContingency perspective

H2 Human resource practice relation on organizational performance contingent by organizational strategy

Unsupported

(table 5)

• only appraisal-strategy interaction have significant interactions.

• Prospector banks had higher ROA and ROE when using result-oriented appraisal.

• Mean effect on ROA & ROE of having HR practice consistent with Strategy was estimated

ResultConfiguration perspective

H3

The greater the similarity to the ideal type employment system that is most similar to an organization’s employment system, the higher the financial performance

Unsupported

The ideal type measure of fit did not add significantly to the explained variation in ROA and ROE analysis (R2 & F <<)

ResultConfiguration perspective

H4

Employment system’s similarity to the ideal type employment system that is appropriate for organizational strategy will be positively to financial performance

Unsupported

it was enable to be explained in a significant amount of variance in ROA and ROE (R2 & F <<)

ResultConfiguration perspective

H5

Employment system’s similarity to the one hybrid employment system that is appropriate for organizational strategy will be positively to financial performance

Unsupported

It did not explain a significant amount of variance in ROA and ROW. because too many ideal employment system were included. (R2 & F <<)

Discussion

The result provided relatively strong support for universalistic perspective and some support for contingency and configuration perspectives

• Profit sharing, result oriented appraisal and employment security had relatively strong universalistic relationships with accounting measure performance.

• Different HR Practice are associated with difference financial performance. HR Practice estimate financial performance, approximately 30% higher for above mean deviation bank

Discussion

• Contingency result provide support for strategic focus of the SHRM Literature

• Contingency relationship between strategy and participation, result oriented appraisals and internal career opportunity explain a significant portion of the variation in the same performance measure, as contingent on strategy

• Bank align their HR practices with strategy estimate 50% higher ROA and ROE

Discussion

• The Configuration result suggest that some configuration of HR practice are better than others.

• Employment system was also positively related to firm performance Managing HR as prescribed by each of the different perspectives enhances organizational performance.

Conclusions

• The result indicates that each of perspectives is viable and leads to different assumptions about the relationship among HR practice, strategy and organizational performance.

• This study contribute links characteristics of employment system to organizational performance

• Organization adopt best HR Practices can generate greater returns

Limitation

• Banking industry may different to others on HR practice

• Job limitation used may different to other occupations on HR practice

• Small set of HR practice population

• Cross sectional research design effect on indicate performance