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Delery, John E; Doty, D Harold

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1 Delery, John E; Doty, D Harold
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

2 Perspective Universalistic perspective Contingency 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

3 HR practices (Osterman, 1987; Sonneferd, peiperl 1988; Kerl, Slocum 1987, Miles and Snow 1984)
internal career opportunities formal training systems appraisal measures profit sharing employment security voice mechanisms job definitions

4 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

5 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 Defenders have narrow and relatively stable product-market domains. Top managers in this type of organization are highly expert in their organization's limited area of operation but tend to search outside of their domains for new product opportunities. As a result of this narrow focus, these organizations seldom need to make major adjustments in their technology, structure, or methods of operation. Instead, they devote primary attention to improving the efficiency of their existing operations. Defender characteristics include a limited product line; single, capital-intensive technology; a functional structure; and skills in production efficiency, process engineering, and cost control. • Prospectors continually search for product and market opportunities and regularly experiment with potential responses to emerging environmental trends. These organizations often are the creators of change and uncertainty to which their competitors must respond. However, because of their strong concern for product and market innovation, ihese organizations are usually not completely efficient. Prospector characteristics include a diverse product line; multiple technologies; a product or geographically divisionalized structure; and skills in product research and development, market research, and development engineering. • Analyzers operate in two types of product- market domains — one relatively stablethe other changing. In their stable areas, these organizations operate routinely and efficiently through use of formalized structures and processes. In their more innovative areas, key managers watch their competitors closely for new ideas, and then they rapidly adopt those that appear to be the most promising. Analyzer characteristics include a limited basic product line; search for a small number of related product and/or market opportunities; cost-efficient technology for stable products and project technologies for new products; mixed (frequently matrix) structure; and skills in production efficiency, process engineering, and marketing

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

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

8 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

9 Hypothesis Universalistic perspective Contingency perspective
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 H4 Employment system’s similarity to the ideal type employment system that is appropriate for organizational strategy will be positively to financial performance H5 Employment system’s similarity to the one hybrid employment system that is appropriate for organizational strategy will be positively to financial performance

10 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

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

12 Result H1 HR practice related to organizational performance
Universalistic 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 (13) % ROA and 9% ROE

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15 Result Contingency 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

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17 Result 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 Unsupported The ideal type measure of fit did not add significantly to the explained variation in ROA and ROE analysis (DR2 & F <<)

18 Result 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 Unsupported it was enable to be explained in a significant amount of variance in ROA and ROE (DR2 & F <<)

19 Result 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 Unsupported It did not explain a significant amount of variance in ROA and ROW. because too many ideal employment system were included. (DR2 & F <<)

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21 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

22 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

23 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.

24 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

25 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


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