{"id":365,"date":"2015-04-05T02:08:50","date_gmt":"2015-04-04T16:08:50","guid":{"rendered":"http:\/\/casestudyhelp.com\/sample-questions\/?p=365"},"modified":"2018-01-29T23:06:24","modified_gmt":"2018-01-29T12:06:24","slug":"horizontal-and-vertical-fit-in-human-resource-systems-assignment-writing-help","status":"publish","type":"post","link":"https:\/\/casestudyhelp.com\/sample-questions\/horizontal-and-vertical-fit-in-human-resource-systems-assignment-writing-help\/","title":{"rendered":"Horizontal and Vertical Fit in Human Resource Systems Assignment Writing Help"},"content":{"rendered":"

Horizontal and Vertical Fit in Human Resource Systems<\/h2>\n

Human resource (HR) management has traditionally focused on how employment-related
\npolicy decisions, such as selection, development, training, compensation, and work design,
\ninfluence organizational effectiveness. Until the last decade or so, effectiveness was almost
\nexclusively studied at the individual level of analysis (e.g., using individual performance ratings
\nas the dependent variable). However, the field of HR has evolved such that significant emphasis
\nis now placed on also understanding linkages between HR practices and effectiveness at the
\naggregate level (Becker & Gerhart, 1996), including facility level outcomes such as cost,
\nproductivity, quality, as well as firm level outcomes such as total shareholder return,
\nprofitability, and survival.<\/p>\n

The term, HR system, refers to the fact that different combinations of individual HR
\npractices are possible and a key question is whether the effects are additive or, as hypothesized
\nby several perspectives, is the effect of any one HR practice dependent on the nature of other HR
\npractices? A second key question is whether the specific effect of any particular HR practice or
\nHR system depends on contextual factors, such as organizational strategy. These two questions
\nhave to do with the issues of horizontal (or internal) fit and vertical (or external) fit, respectively<\/p>\n

\u00a0Although my focus is primarily on the business performance dependent variable, I<\/strong><\/p>\n

recognize that effectiveness can be defined more broadly, for example, using a stakeholder
\nperspective where, at a minimum, shareholder, customer, and employee outcomes are
\nconsidered. Clearly, HR systems can differ in how favorable their consequences are for different
\nstakeholders. Some HR systems may be of the mutual gains nature (Kochan & Osterman, 1994),
\nwhile others may create more of a zero-sum situation. I operate under the assumption that that
\nsome minimally competitive level of business performance is typically good for everyone.
\nWithout it, there will not only be less money to be made by investors and less satisfied
\ncustomers, but also fewer jobs to be had by workers. For a discussion of how HR systems may
\naffect worker outcomes, see Godard and Delaney (2000) and the following comment by Kochan
\n(2000). Several recent empirical studies are now also available (Godard, 2001; Handel &
\nGittleman, 2003; Hunter & Lafkas, 2003; Parker, 2003).<\/p>\n

Our goals in this chapter are to (a) review the conceptual basis and measurement of HR
\nsystems in the literature and their evolution, (b) consider evidence on the consequences for
\neffectiveness of horizontal and vertical fit of HR systems, and (c) provide suggestions for future
\nresearch on these issues, as well as a model of HR systems and business performance. I begin
\n3
\nwith a survey of models and measurement of HR systems and its conceptual basis.<\/p>\n

HR Systems<\/p>\n

Conceptual Basis<\/strong><\/p>\n

As noted, HR systems have been most often defined in terms of policies (e.g., staffing,
\njob design, and so forth) and \u201csystem\u201d refers to the particular array or combination of HR
\npractices in an organization. Typically, an HR system is seen as most directly influencing what
\nmight be termed intermediate employment effectiveness outcomes, such as ability, motivation,
\nattitudes, and performance. (Outcomes such as attraction and retention could also be added.)
\nThese intermediate employment outcomes, in turn, are expected to influence business
\nperformance outcomes. This mediation model, while fundamental to the HR systems literature,
\nis also largely untested.
\nAMO Framework. A general framework for conceptualizing and studying HR systems
\nhas emerged in the recent literature on \u201chigh performance work systems\u201d (HPWs). Although
\nBoxall and Purcell (2003) observe that \u201cthe definition of components of HPWSs is confusingly
\nvaried\u201d (see also Becker & Gerhart, Table 2), they find an increasingly common \u201cvery basic
\ntheory of performance\u201d being used, which they refer to as \u201cAMO theory.\u201d Boxall and Purcell
\nsummarize it as:
\nP = f(A,M,O)
\nwhere P is performance, A is ability, M is motivation, and O is opportunity. In other words, HR
\nsystems will be most effective when they foster abilitiy, motivation, and opportunity to
\ncontribute to effectiveness.
\nThe AMO logic is most clearly spelled out in Appelbaum et al. and Bailey (1993) and
\nearlier by Katz, Kochan, and Weber (1985) [“many theoretical arguments have suggested that
\nindividual worker ability, motivation, and participation in job-related decision making affect
\nboth organziational effectiveness and individual worker satisfaction”, p. 513]. Recent empirical
\nstudies (e.g., Appelbaum et al; Batt, 2002; Huselid, 1995; MacDuffie, 1995) use this conceptual
\nframework or something akin to it.
\nBoxall and Purcell (2003) note that the AMO model is actually an \u201can old rubric.\u201d This
\nis certainly correct in that each of the components has been studied extensively (see below),
\nalbeit with different degrees of emphasis depending on the discipline\/field. However, the clarity
\nand parsimony of the AMO model is helpful, and the equal importance it assigns to the A, M,
\n4
\nand O components in its holistic approach is fairly novel. (Previous literatures have typically
\nfocused on one or two of the components.) Given the multidisciplinary (and thus somewhat
\ndispersed) basis for the AMO framework, a brief review of the basis for each component is in
\norder.<\/p>\n

The A component can be traced most directly to the industrial\/organizational (I\/O)
\npsychology and economics of human capital (HC) literatures. The former provides extensive
\nevidence that individual abilities strongly predict individual job performance (Heneman & Judge,
\n2003; Schmidt & Hunter, 1998). The HR system policy implication is that employee selection
\npractices will be most effective when valid predictors like ability are used and when employers
\nare selective (Brogden, 1949). Human capital theory (Becker, 1964) and research (e.g., Mincer,
\n1974) hold that investments in people (e.g., education, training) make them more productive and
\nthat the choice by individuals and employers to invest depends on their expected rate of return.
\nThe I\/O psychology literature also gives significant attention to training and development (e.g.,
\nNoe, 1999).<\/p>\n

\u00a0The M component is addressed in many literatures (Gerhart & Rynes. 2003). Williamson<\/p>\n

et al. refers to the managerial goal of obtaining behavioral “consumate cooperation.” As Simon
\n(1951; see also Barnard, 1951) pointed out, this depends on workers\u2019 view of their exchange
\nrelationship with the employer: employees provide contributions based on their view of
\ninducements, monetary and otherwise, provided by the employer. Recent work on different
\nforms of the psychological contract (Rousseau & Parks, 1992) and of the employment
\nrelationships (Lepak & Snell, 1999; Tsui et al., 1997) uses a similar logic.<\/p>\n

\u00a0The I\/O psychology literature on motivation includes models such as goal-setting (Locke<\/p>\n

& Latham, 1990), expectancy (Campbell & Pritchard, 1976, Lawler, 1971, Vroom, 1964), and
\nequity theories (Adams, 1965), which focus primarily at the individual level and on the
\npsychological mechanisms that explain motivation (Gerhart & Rynes, 2003). Much of this work
\nis conducted in laboratory settings. Work that is more grounded in the economics literature such
\nas efficiency wage (Yellen, 1984), transaction costs (Williamson, 1975), and agency theories
\n(Fama & Jensen, 1973) typically excludes psychological mechanisms (in empirical work at least)
\nand focuses more on compensation policies in work organizations.<\/p>\n

\u00a0One of the more explicit discussions of the A and M components is found in Vroom<\/p>\n

(1964, p. 203), who states that \u201cthe effects of motivation on performance are dependent on the
\n5
\nlevel of ability of the worker, and the relationship of ability to performance is dependent on the
\nmotivation of the worker.\u201d In other words, \u201cthe effects of ability and motivation on performance
\nare not additive but interactive\u201d (p. 203). Thus, Vroom proposed the following formula:
\nPerformance = f(Ability x Motivation) or P = f(A, M).
\nVroom observed that establishing the validity of this formula had \u201cconsiderable
\nimplications for managerial practice\u201d (p. 203) because \u201cIt would suggest that managerial efforts
\nto obtain and develop persons with skill and ability and to motivate these persons must proceed
\nconcurrently\u201d (p. 203). This is the same logic that characterizes recent HR systems models that
\npropose the importance of horizontal\/internal fit or bundling.
\nThe similarity of the Vroom P = f(A, M) formula to the AMO formula of P = f(A, M, O)
\nis obvious as is the lone difference: the lack of an O component in Vroom\u2019s formula. Like
\nVroom, Campbell\u2019s (1990) I\/O Handbook chapter focused on the A and M components as
\ndeterminants of job performance (e.g., his Figure 3, p. 707) and used the simplifying assumption
\nthat situational effects are \u201cheld constant\u201d (p. 707). This line of work on performance prediction
\n(e.g., as summarized by Campbell, 1990) led Peters and O\u2019Connor (1980, p. 391) to observe that
\nsituational constraints on performance was \u201ca frequently overlooked construct.\u201d Even here, the
\nsituation was seen more as a constraint on M and A, less as an important contributing factor in its
\nown right to effectiveness. Although I\/O psychology (mostly the \u2018O\u2019 part of the I\/O field) has
\ngiven substantial attention to job design (MacGregor; Turner & Lawrence; Hackman and Lawler,
\n1971; Hackman & Oldham, 1976), this literature does not seem to have been strongly linked to
\nthat part of the I\/O literature (mostly the \u2018I\u2019 part) focused on performance as the dependent
\nvariable.<\/p>\n

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