Strategic HR System Differentiation between Jobs: The Effects on Firm Performance and Employee Outcomes
Schmidt, J., Pohler, D., & Willness, C. (accepted) Strategic HR System Differentiation between Jobs: The Effects on Firm Performance and Employee Outcomes. Human Resource Management.
Does treating employees differently based on the job they perform affect firm performance and employee attitudes? We found that while organizations may benefit from treating employees differently, employees who were recipients of lower HR investments perceived the organization to be less fair and were more likely to leave.
The purpose of this research was to understand whether firms apply different human resource management systems to different occupations within the same organization (HR differentiation) and how the extent to which they do so may influence firm and employee outcomes. We conducted two studies pertaining to these questions. The first study was based on data collected from managers, and the results suggest that firms differentiate their HR investments based on the strategic value of occupations to the firm, which was further associated with the human capital of those occupations. Differentiation in human capital was also associated with firm performance. The second study was based on data obtained from nonmanagement employees. The findings indicated that employees who were recipients of less HR system investment had lower fairness perceptions, which were further associated with higher turnover intentions and lower organizational citizenship behavior. Although the evidence from these studies suggests that firms may realize benefits from strategic HR system differentiation, managers should carefully consider how to balance the effects of differentiation on firm performance and employee well-being before implementing such systems.