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行政院國家科學委員會專題研究計畫 期中進度報告

人力資源策略、人力資本、員工行為與績效之研究︰跨層次

分析(1/2)

中 華 民 國 95 年 4 月 10 日

A Multilevel Analysis of HR practices and Employee Job Performance: Hairdressing salon in Taiwan

Shyhjer Chen

Institute of Human Resource Management National Sun Yat-sen University

Kaohsiung, Taiwan TEL: +886-7-5252000 ext 4927 Email: [email protected]

Abstract

By collecting data from hairdressing salons from two levels (hairdresser and shop), the study uses hierarchical linear model to unveil the specific mechanisms of employee skill and commitment between HR practices and job performance. In addition, HR strength—measured in terms of consistency in perceptions between employees and owners of shop—at organizational level indicates positive moderation between HR practices and employee commitment and human capital. The results imply that more consistent perception in HR practices between employees and owners increases employees’commitment to organization; that is, HR system and practices communicate clear and direct signals to employees regarding norms and expectations.

In the past decades, a plethora of theoretical and empirical research has devoted to investigating the effect of human resource practices on firm performance (Arthur, 1992; 1994; Delery & Dotty, 1996 Huselid, 1995; Huselid, Jackson & Schuler, 1997; MacDuffie, 1995; Wright & McMahan, 1992). The theoretical background of the connection between HR practices and firm performance is mainly derived from the resource-based view, stating that firms gain a source of competitive advantage over their competitors by developing a set of unique human resources, which are rare, valuable, inimitable, and non-substitutable (Barney, 1991; Wright & McMahan, 1992). Most empirical research in strategic HRM found that high involvement work practices1, such as extensive use of selection mechanism, in-house training, job enrichment, pay for performance and employee empowerment, have positive impacts on organizational performance, measured by various indicators, such as turnover (Shaw, Delery & Gupta, 1998; Batt, 2002; Huselid, 1995), financial performance (Huselid, 1995), and employee productivity (Huselid, Schuler & Jackson, 1997 cf: Huselid, Jackson & Schuler, 1997).

Previous work on HR-performance relationship focused on organization-level analysis. Although theoretical and most empirical research documented the positive relationship between high involvement work practices and organizational performance, critics challenged that there might not exist a direct effect of high-involvement work practices on performance, resulting in a“causalgap”lessunexplored asWright& Boswell(2002)described asa“black box” or “specific mechanism” within the organization. Guest (1998) proposed a psychological contract model, positing that HR practices create an atmosphere of fairness and trust in employment relationship. The fairness and trust further foster employees’ organizational commitment, job satisfaction, organizational citizenship behavior, and reduce employees’intention to quit.Becker& Huselid (1998)specified a causalmodel,including

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employee behavior and strategic implementation as mediating variables between high-involvement work practices and employee job performance. Wright & Snell (1998) proposed a similar model by adding employee human capital to the relationship between HR practices and firm performance. Human capital refers to the knowledge, skills, and abilities employees possess (Becker, 1993). Although human capital was originated in the arena of economics and commonly evaluated in terms of economic values, it is now integrated in the literature of strategic HRM, focusing on how HR strategy helps to increase the stock and level of employees’human capital. The perspective of “black box”or “specific mechanism” in HR-performance relationship implies a multilevel framework (Kozloswski & Klein, 2000) that performance is a joint function of organizational (e.g., HR practices) and individual (e.g., employee organizational commitment, human capital) factors.

HR strategy can be viewed as a social exchange and communications between employers and employees. The communications create an atmosphere of climate which, in turn, affects employee organizational commitment and job performance. Based on Lewin, Pippit & White’s situationism, Bowen and Ostroff (2004) proposed the concept of “strength of HR system,”stating that HR practices perceived by employees would influence their commitment and accumulation of human capital, and then promote employee’s job performance. One important aspect of the strength of HR system is “consistency,”referring to the extent to which HRM message can be encoded and interpreted uniformly among employees and employers. Consistency in HR practices means to create a stronger situation and climate to motivate employee’s behavior and job performance. Ostroff and Bowen (2000) indicated that the strength of HR could play a moderator between HR practices and employee commitment.

This study has two purposes. First, we would like to explore the black box in terms of testing the mediating effects of human capital and employees’organizational commitment

between HR practices and their job performance. The exploration is an attempt to advance strategic HRM knowledge and bridge macro (HR practices) and micro (organizational commitment and job performance) perspectives by developing a multilevel framework in the HR-performance relationship. Second, the strength of HR system, creating an atmosphere of organization, plays an interaction effect and moderate HR practices, and human capital and employee’s organizational commitment. The construct of the strength of HR system at organizational level will be measured in terms of the consistency between employees’and employers’perceptions of HR practices.

We collect data from both hair salon owners and their hair designers in Taiwan. The shops in this study are independent stores and tend to be small-sized. The reason for excluding chain stores of hairdressing salons is due to the factor that it is difficult to differentiate HR practices among stores belonging to the same chain. In addition, the previous studies mainly focused on HR systems in manufacturing industry (e.g. Arthur, 1992; 1994; Delaney & Huselid, 1995; Delery & Doty, 1996 Huselid, 1995). Few studies investigated HR in service sector. Employees in service industry depend heavily on their knowledge, skill and ability. Relative to manufacturing industry, the HR quality in service industry is usually main source of competitive advantage. Whether HR strategy and practices could elicit deserved attitude, knowledge and ability from employees in service industry is one of our research interests.

Theoretical Background and Hypotheses

Conceptualization of Multilevel: HR Practices and Employee Outcomes

How high involvement work practices generate firms’competitiveadvantageovertheir competitors has received much attention from strategic HRM researchers in the past decades. One of the most common theoretical discussions is the resource-based view of the firm. Porter (1980) utilized this view to model how firms focus their resources to sustain

competitiveadvantage.Porter’smodel did not specifically propose HR as a factor increasing competitive advantage of firms. Barney (1991) coined the model and further elaborated that the competitive advantage sustains only if firm can generate heterogeneous and immobile resources over their competitors. He pointed out that there are four criteria for firms to coordinate internal resources to sustain their advantage; that is, the resources of firms must be valuable, unique, imitable and non-substitutable. Wright & McMahan (1992) tried to incorporate the resource-based view to explain how strategic HRM is related to firm performance. They showed that human resources could be valuable, unique, imitable and non-substitutable for firms to increase their competitive edge. The connection has been a strong underpinning for strategic HRM in explaining the importance of human resources in strategic management. In the past decade, researchers and practitioners have believed that the establishment of unique, rare, imitable human resources is one of crucial keys to promoting performance. Most research investigating the relationship between high involvement work practices and firm performance drew the theoretical background from the resource-based view.

Resource-based view emphasized that firms gain their competitive advantage through valuable, unique, imitable and non-substitutable skills, knowledge and ability (SKA) of employees. In contract, Wright & McMahan (1992) pointed out that the behavior perspective turns the attention to the role behavior, instead of SKA, of employees. Miles and Snow (1984) was the pioneer who proposed that different employee behaviors are necessary to be aligned with various strategies in accomplishing organizational achievement. Researchers intended to categorize organizational strategies and then specify the congruence of role behavior with various strategies (Schuler & Jackson, 1987). The behavior perspective assumed that role behavior is a crucial factor (either mediator or moderator) between HR strategies and organizational performance (Wright & McMahan, 1992).

Psychological contract provides the other insightful and valuable linkage in exploring HR practices and employee behavior. Rousseau (1995) and Guest (1998) defined psychological contract as employee’s subjective belief about the reciprocal exchange of employment relations. Anderson & Schalk (1998) pointed out that psychological contract is ableto reduceemployees’insecurity becausenotallaspectsofemploymentcontactcan be addressed in written form; however, the implicit, unwritten contract creates an atmosphere of trust and fairness between employees and employers, increasing employee attachment to organization and employee outcomes. For example, extensive training in the workplace promotesemployee’sskillsand then increases employee productivity. Employment security helps build the mutual trust in employment relations.

In summary, resource-based view and human capital theory emphasized the importance ofirreplaceablehuman resourcesand employees’KSA to sustain the competitive advantage of firms. Furthermore, psychological contract and behavior perspective paid their attentions to employees’ behavior and the congruence between role behavior and HR strategies to increase employee performance. In past decade, most empirical research investigating the relationship between HR strategies and firm performance has failed to explore and recognize the behavior role of employees in the HR practices—firm performance relationship (Wright & Boswell, 2002). Therefore, psychological contract and behavior perspective provide a theoretical foundation for further empirical study in linking the macro (firm level)-micro (individual level) relationship.

In the past decades, employers have implemented high involvement work practices to increase workplace efficiency and performance. These practices include extensive selection, widespread training, reduction in job titles, employee empowerment, pay for performance, employment security, and job enrichment (Appelbaum & Batt, 1994). Instead of discussing the direct relationship between high involvement work practices and performance at

organizational level, how these practices affect employee behavior and then create job performance at individual level has been noticed in past years. Ostroff & Bowen (2000) pointed out that HR practices shape employee attitudes in terms of influencing how employees’ perceive the organizations and how they expect their relationship with the organizations. In addition, Guest (1998) proposed a psychological contract model, stating that HR policies could influence organizational commitment. Psychological contact is an implicit and unwritten contract in employment relations, functioning to reduce the insecurity of employees and to establish the mutual obligation between employers and employees (Rousseau, 1995). The psychological contract perspective provides a connotation of how HR practices help create organizational commitment. Although researchers have urged to link the HIWP, organizational commitment and job performance, past research provides less evidence in this linkage.

Organizational commitment has attracted much attention in organizational research because the topic has associated with employees’ role behavior in organizations. Organizational commitment research mainly focused on its components, antecedents and consequences. Meyer & Allen (1990; 1997) proposed three components of organizational commitment. The affective commitment refers to the employees’ willingness to attach emotionally to and involve in the organizations (want to do). The continuance commitment refers to the calculation of cost associated with leaving the organizations (need to do). Finally, thenormativecommitmentrefersto employees’feelingsofobligation to remain with the organizations (ought to do). There is an increasing consensus among researchers that organizational commitment is a multidimensional construct (Meyer & Allen, 1997; Wasti, 2003). Furthermore, many researchers focused on investigating the antecedents and consequences of organizations (Meyer & Allen, 1997; Mathieu & Zajac, 1990). Meyer & Allen and Mathieu & Zajac (1990) have shown several factors, such as personal

characteristics, job characteristics, group and leader relations, and organizational characteristics, have exerted crucial influences in organizational commitment. The antecedents of organizational commitment reflect the exchange relationship between employees and organizations. In addition to the study on the antecedents, the outcomes of organizational commitment have important implications for organizational practices. These outcomes identified include turnover (Somers,1993), absenteeism (Gelatly, 1995), organizational citizenship behavior (Smith, Organ & Near, 1983) and job performance (Meyer et al., 1989). In contrast, less attention has been paid to examining how HR practices, as antecedents, affect organizational commitment.

How do HR practices affect organizational commitment? Ostroff & Bowen (2000) pointed out that the implementation of HR practices help increaseemployees’identification and commitment to the organization. They proposed several examples: Employee stock ownership programs and performance-based pay tie employees’ reward with their performance and can promote the identification with the firms; internal promotion practice substantially reduces turnover rate because employees can predict their advancement and future in the organizations; no-lay-off practices can give the security of employees to exchange their commitment to the firms; in-housing training provide employees to improve their skills and increase motivation; empowerment is obviously an instrument to bring employees and employers together in terms of participation and voice practices.

Hypothesis 1a: Organization-level HR practices will be positively related to employee commitment.

Hypothesis 1b: Organization-level HR practices will be positively related to employee human capital.

Much research investigates the relationship between commitment and performance at work (Edwards and Wright, 2001). In the past studies, many aspects of performance at work

were assessed, such as attendance at work, in-role job performance, and organizational citizenship behavior, evidencing that appraisal was associated with commitment and commitment promoted performance.

Hypothesis 2a: Employee commitment is positively related to employee job performance. Hypothesis 2b: Employee human capital is positively related to employee job

performance.

A growing number of empirical articles have attempted to examine the contribution of HR practices towards firm performance (eg. Hueslid, 1995; Becker & Huselid, 1998; Delery & Doty, 1996; Cappelli & Newman, 2001; Huselid et al. 1997). Yet a multilevel perspective has not been applied to understanding linkages between HR and performance (Ostroff & Bowen, 2000). HRM study has been weak in linking individual performance with that of unit and company level to know how HRM practices associate with company profit (Guest, 1997). Delery (1998) pointed out focusing on HRM system at job level might provide greater insight into how organizations could gain a competitive advantage through people. Therefore, we intend to examine the contribution of HR practices to individual performance, under controlling the relation between commitment/ human capital and employee performance..

Hypothesis 3: Organization-level HR practices will be positively related to employee performance.

Hypothesis 4: Organization-level HR practices will positively moderate the relationship between commitment/human capital and employee performance so that commitment/human capital and employee performance will be more strongly related when the group conducts better HR practices.

Situation and Strength of HR practices

individual characteristics and behavior and the features of the context employees situated (Schneider, 2000; Schneider, Salvaggio, & Subirats, 2002; Lewin et al., 1939). Situational strength construct, referring to the extent to which employees’behavior and outcome can be induced and explored under the organizational context, is developed from climate strength construct. Schneider et al. (2002) pointed out that situational strength plays a moderating effect between the organizational context and individual outcomes; that is, the interaction of between context and individual outcome depends on the degree of situational strength (Ostroff & Bowen, 2000). They further indicated that strong situations in organizational level are created in which employees perceive and expect the events in the same way and the uniform perception and expectation can lead the most appropriate behavior and desirable performance. In contrast, in weak situations, employees do not perceive the events in the same way and, in turn, the inconsistent expectation results in inappropriate behavior and undesirable outcome. Therefore, the relationship between employees’perception and outcome vary in terms of situational strength.

Based on the theoretical development of situational strength, Bowen and Ostroff (2004) proposed the concept of “strength of HR system,”stating that HR practices perceived by employees would influence their commitment and accumulation of human capital, and then promote employee’s job performance. They indicated that a strong HR strength creates a HR situation or climate, sending clear and unambiguous messages to employees regarding organizational goals. A strong HR situation provides a concrete map that employees could follow in guiding their behaviors. In contrast, a weak HR situation refers to climate that employees perceived ambiguously in terms of HR practices and organizational goals. In weaker HR situation, company’s HR practices have difficulty in shaping employees’ consistent behaviors and leading to a disable outcomes due to inconsistent HR perceptions among employees.

The above discussion implied that one important aspect of the strength of HR system is “consistency,”referring to the extent to which HRM message can be encoded and interpreted uniformly among employees and employers. Consistency in HR practices means to create an unambiguous HR situation and climate which can guide and motivate employee’s behavior, and further provide a concrete organizational goal and employee job performance. Ostroff and Bowen (2000) indicated that the strength of HR plays a moderator between organizational HR practice and employee commitment.

In previous HR-firm performance studies, researchers usually rely on reports from human resource managers or top managers in evaluating the organizational-level HR practices (Huselid, 1995). The measurement procedure obtaining the data from high-order managers has its obvious disadvantages of being criticized single informant problem or perplexing the practices with policies of human resources. In order to conquer the limitation of single informant, one possible alternative way is not only to assess HR practices in terms of HR managers but also employees’perceptions and understandings. One advantage of investigating employee HR perceptions is to evaluate the consistency of perceptions of HR practices among employees and further contrast the differences between HR managers and their employees. The extent of consistency between employees HR perceptions and HR managers’evaluation creates the climate of HR strength at organizational level. If there are more consistent between employees’perception and HR manger, the strong HR situation could send more concrete messages to employees in guiding their behaviors. In other way, inconsistency leads to a weak HR strength, resulting in ambiguous employee behaviors.

Hypothesis 5: HR strength moderates the relationship between organization-level HR practices and employee commitment.

Study 1: Developing and Validating Construct of HR practices Item Generation

In this study, we use survey and interview to develop the scale of HR practices. In previous research, HR practices are investigated at organizational level and researchers have not come to an agreement on how to measure firm’s HR practices. One exception is the study from Zacharatos et al (2005) who surveyed employees’perception ofHR practicesin two manufacturing firms. The items of HR practices in this research are screened and selected mostly based on Zacharatos’s study. Since most previous HR practice research focuses on various types of industries; therefore, HR measures vary to great extent. HR practice items of this study were revised in order to fit the practices of hairdressing salons. Six interviews of shop owners and hair designers have been conducted to generate survey items and resulted in 32-item scale, which is categorized into five major HR practices, including employment security, recruitment and selection, training, compensation and benefit, and participation and employee status. All items were measured in five-point Likert scale (1 strongly disagree, 5 strongly agree). Chinese questionnaires were used in this study; therefore, back translation was to make sure the consistency of meanings.

Participants and Factor Analysis

In doing pre-test of HR practice items, surveys are sent to 125 students in the department of Cosmetology and Styling at Tainan Woman College who are currently working for hairdressing salons. The students are asked to bring the questionnaire back to their shop and to be filled out by the shop owners. The survey is conducted in October 2005. 119 usable questionnaires are returned.

Exploratory factor analysis is used to analyze the underlying 32 items. We come up with nine factors from the initial results, accounting for 66 percent of total variance. In order to arrive at a meaningful factor structure, we applied two criteria to screen items. First, the factor loading on each item must be at least .6 or greater. Second, the item is removed if the cross loading of the item between two factors is less than .3 to make sure a higher

cross-loading. Applying the criteria, we retained 17 items which are grouped into five factors, accounting for 71 percent of total variance. Table 1 present the results of exploratory factor analysis. The factors extracted are named employment security, recruitment and selection, training, employee status, and compensation, which represent five HR subsystems. The subsystems measure the degree to which employees perceive HR practices of their shop. The higher scores of scales indicate high involvement HR systems the shops utilize.

The items in the five HR practices include employment security (3 items), recruitment and selection practices (3 items), training practices (5 items), employee status (3 items), and Compensation and benefit (3 items). Employment security items measure the extent to which respondents perceived their organization ensure their employment. Recruitment and selection practices specify whether respondents perceived their firms are devoted to extensive mechanism to select employees with high skill, good personal interaction, and personal style fitting the shop. Training and development scale investigates the extent to which respondents perceived their organizationsconcentrated theirresourceson thepromotion ofworkers’skills and knowledge. Employee status items focus on the extent to which respondents perceived reduced status distinctions between employers and employees. Compensation practices items indicate that respondents perceived the competitiveness of salary compared to other companies.

(Insert Table 1 here)

Study 2: Hypotheses Testing Data

Data in this study are collected from two levels—individual (hair designers) and shop (hairdressing salons). The shop-level surveys are sent to 160 owners or managers of hairdressing salons in Taipei, Tai-zhong, Jia-yi, Tainan and Koahiung cities of Taiwan to measure the shop-level HR practices. The individual-level questionnaires are filled out by

hair designers in these shops to indicate their perceived HR practices of their shop and their commitment. The selection of these salons is mainly recommended by beauty and hairdressing associations located across different cities in Taiwan. In order to collect multiple level questionnaires, we target sample shops with 3 hair designers or more, and sent questionnaires to 2 to 4 hair designers each shop. The shop owners or managers are asked to appraise 2 to 4 hair designers and cooperate to send envelopes with employee’s questionnaires to those who appraised. After hair designers filled the questionnaires, they sealed envelopes and mailed back. 103 shop-level questionnaires are returned and valid, accounting for 64 percent response rate. 307 hair designer questionnaires are valid and usable with 61 percent response rate. The questionnaires are presented in Appendix.

Variables

HR Practices Strategic human resource management literature has generally categorized HR practices into two dichotomous, contrasting strategies: 1) high involvement work practice is characterized as extensive recruitment and selection methods, performance-based pay, in-house training and development, and employee empowerment; 2) control-based HR system is characterized as high levels of standardization and low level of employee participation in decision making, seniority pay, specific and narrow job assignments, behavior-based performance evaluation and limited training. This study use 17 items extracted from study 1 to measure HR practices, factoring into five HR subsystems (i.e., employment security, recruitment, training, employee status, and compensation). The surveys in this study are sent to both owners of the shop and hair designers. The questionnaire for the owners is to measure shop HR practices. In contrast, we also collect information of perceived HR practices from hair designers.

HR Strength HR strength is to measure the degree of consistency in the perceptions of HR practices between shop owners and their hair designers at shop level. We

first calculate ICC and Rwg coefficients to test if hair designer perceptions of HR practices can be aggregated into shop level. The results show that both ICC and Rwg in the five HR subsystems are satisfactory. After aggregation, we then compute the absolute value differences in HR practices between owner and their hair designers at shop level. The larger absolute value between owner and their hair designers in a shop indicate less consistency in the perceptions of HR practices and vice verse.

Human Capital The human capital scale measures ability, knowledge and skill of hair designers. Despite human capital theory originating from economics and indicating economic values of education and training, it has been increasingly applied in strategic HRM. However, it is still lack of acceptable measurement scale in the field of HRM. Since skill and knowledge vary and are embedded with various types of employees, we develop a nice-item scale to measure human capital of hair designers. Sample questions include “I have sufficient knowledge of professional hairstyling skills;”“My skill on hair perm is better than my colleagues;”“My skill on hair dye is better than my colleagues;”“My colleagues often ask me for advice on professional hairstyling.”

Organizational Commitment Although Meyer & Allen (1997) propose a three component model of commitment—affective, continuance and normative. We focus on affective commitment because affective commitment has been reported in more relation to employee job performance. Meyer & Allen have developed a six-item well-accepted questionnaire. Sample questions in this study are “I am willing to stay at this salon”and “Ido not have a strong attribution for this salon.”

Job Performance Job performance of hair designer is measured in terms of the average amount of money they make per month by service and skill during the past year. We ask the owner or manager of the salon to evaluate objectively performance of the hair designer.

Control Variables Several Control variables are included. There are employees’level of education, their tenure to be hairdresser, and hairdresser license.

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