In search of mechanisms: How do HR practices affect organizational performance?

Abstract

Prior research in strategic human resource management has consistently shown a positive relationship between high performance human resource (HPHR) practices and organizational performance. However, this research has left the cognitive and behavioral mechanisms underlying this relationship both largely unexplored. I argue that the mechanisms previously proposed (employee skills, commitment, and effort) are necessary and sufficient only when one makes overly restrictive assumptions about employees (effort averse), work (routine and decomposable), and organizational performance (equal to the sum of individual performances). When these assumptions are relaxed, collective sensemaking and coordination become equally critical sources of high performance. In theorizing the HPHR practice---organizational performance relationship I assert that HPHR practices are sensegiving structures by which managers attempt to influence employee sensemaking and behavior. HPHR practices specifically define both the employment relationship and work practice. In defining the employment relationship, HPHR practices signal a strong and long-term investment in employees that engenders employee commitment and discretionary effort. HPHR practices also define expectations for how employees are to carry out their work and to the extent these practice signal an interpersonally safe work climate, they increases the richness of interactions, the system-awareness of action, and the mindfulness of ongoing processes. I empirically test my hypotheses by surveying registered nurses and nurse managers in 99 acute-care hospital nursing units. In analyzing these data I found that HPHR practices are positively associated with respectful interaction, but not with commitment. The cognitive mechanisms were also positively associated with their corresponding behavioral mechanisms and the behavioral mechanisms influenced performance, but not entirely as predicted. Discretionary effort was positively associated with quality of care while mindful organizing was not. Mindful organizing, however, was associated with significantly lower levels of errors and falls, while discretionary effort actually increased medication errors and patient falls. This suggests that in dynamic and interdependent knowledge work, discretionary effort may actually compromise performance when it distracts employees from their core tasks. In sum, my study demonstrates a much more nuanced relationship between HPHR practices and performance than anticipated by the prior literature that depends on the work setting studied and the performance measure examined.