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res of culture combined with adequate measures of organizational performance at different points in time are necessary to assess questions of causality relating to culture (Siehl and Martin, 2000).
2.6 Human Resource Management (HRM)
2.6.1 Early Impacts on Human Resources
The origins of modern HR are often traced back to the development of the Human Relations approach, which began with the collaboration of the Harvard Business School and the Western Electric Company, in what became known as the ‘Hawthorne Studies’. The desired outcomes were harmony, cooperation and positive attitudes, achieved through communication and social interaction. While some viewed this approach as a means of achieving beneficial outcomes for both employees and management through cooperation and increased employee satisfaction, others have viewed the human relations approach as manipulative and a subversion of legitimate collective action (Boxall, 1993; Leana & Florkowski, 1992). Although the prediction that job satisfaction would lead to productivity has failed to materialize (Levine & Tyson, 1990; Wagner, 1994), Human Relations’ theoretical concerns with employee well-being are still central to many involvement approaches of HR (Lawler, 1986).
The origin of the term ‘Human Resources’ has been attributed to Peter Drucker (Marciano,1995). The focus of the Human Resources approach was on individual development, with benefits accruing to both the employee and the organization. Based on the ‘Theory Y’ view of employees proposed by McGregor (McGregor, 1960), and incorporating growth concepts from early learning and drive theorists, such as Argyris and Maslow, the thinking was that skill development and opportunity would enable employees to fulfil their higher order needs which would, in turn, lead to personal growth and positive work outcomes (Leana & Florkowski, 1992). The theoretical underpinnings of this approach are still influential in involvement/participation, team-based work design, job enrichment, and strategic approaches, such as the ‘balanced scorecard’, that includes both financial and human development components (Harrell-Cook, & Frink, 1999).
2.6.2 Competitive Advantage – Human Resources
For HR to contribute to a firm’s competitiveness, it needs to facilitate improved efficiency or revenue growth (Becker & Gerhart, 1996). In recent years, a number of studies have been published demonstrating significant gains, both perceptual and objective, in areas such as profitability, productivity, employee turnover, product and/or service quality, cost-savings, customer satisfaction, and improvements in sales or customer service (Browne, 2000). Evidence is now emerging that HR practices can have significant effects on profitability (Becker & Gerhart, 1996), market value (Davidson et al., 1996), the survival probability of new firms (Welbourne & Andrews, 1996), quit rates, and organizational performance (Batt, 2002).
Numerous individual practices have been found to relate to performance measures (Jones, 1999). However, individual practices tend to explain only small amounts of variance in outcomes and often produce inconsistent effects. A recent approach to identifying effective HR practices, which allows for estimation of complementarity’s, has been to ‘bundle’ related practices together (Huselid et al., 1997; Vandenberg et al., 1999), but this approach assumes all practices have equal effect, and reduces the abi