Summary This paper discusses the relative impact of recruitment/selection, training, and development for organizational effectiveness. First, recruitment and selection is discussed. Job analysis is very important in the selection process because it provides a realistic job preview and it identifies relevant traits and abilities needed for the job. Furthermore, predictive validity of several selection methods are discussed from which work samples, GMA, tests, and structured interviews are appeared to be the best predictors of future job performance. Second, the impact of training on organizational effectiveness is discussed.
Training design issues are discussed, and it is argued that training can increase organizational effectiveness although the effects of training are hard to assess. In addition, training is linked to recruitment and selection in which it is argued that the two HR practices are interdependent. Third, the concept development is discussed in which a distinction has been made between team and organizational development. The success of development is highly dependent upon employees’ support.
Moreover, the concept strategic human resource management is introduced.
This concept entails linking HR practices to the strategic management processes and emphasizing coordination or congruence among different HR practices in order to increase the effectiveness of HR policies. Finally, three different theoretical perspectives on SHRM are discussed; the contingency, the configurational, and the universalistic approach. ? Introduction Competition, globalization, and continuous change in markets and technology have caused a transformation in the role of human resources (HR) from a traditional administrative to a more strategic role (Beer, 1997).
Human resource management (HRM) has become a part of the firm’s strategy and has to be minimized as a cost and maximized as value-adding component (Rogers & Wright, 1998). However, the added value of HRM has been subject of debate. Although latest empirical research showed that HRM has an positive effect on performance, the relationships are often weak and the results remain ambiguous (Paauwe & Boselie, 2008). So, there seem to be some indistinctness on what impact human resource practices actually have on organizational performance and effectiveness. This paper will go into this
issue and discuss the relative impact of recruitment and selection, training, and development for organizational effectiveness. First, the concerning concepts will be defined and discussed. Furthermore, the impact of the three separate HR practice on organizational effectiveness will be discussed. Finally an attempt will be made to integrate these HR practices and their effect on organizational effectiveness. Organizational effectiveness In order to discuss the impact of the three HR practices, the concept organizational effectiveness needs to be defined which is a very broad, vague concept and therefore hard to define.
Effectiveness refers to the output while taking into account the preset objectives, it is clearly a goal oriented measure (Rogers & Wright, 1998). This definition of effectiveness remains very broad since there are multiple ways to assess or measure outcomes. In this paper the typology of Dyer and Reeves (1995) will be used, who distinguish between four measures of organization outcomes; human resource outcomes (turnover, absenteeism, job satisfaction), organizational outcomes (productivity, quality, service), financial accounting outcomes (return on assets, profits), and capital market outcomes (stock price, growth, returns).
Logically, they argue that HR strategies were most likely to have an impact on HR outcomes, followed by organizational outcomes whereas the other two outcomes are more indirectly related. Recruitment and Selection Job analysis and recruitment The first HR practice that will be discussed is recruitment and selection, which is quite essential for organizations since it all starts with recruiting and selecting the right employees. An appropriate selection system starts with a job analysis in which the duties a job requires and what skills are needed to perform these duties is being analyzed (Fisher, Schoenfeldt & Shaw, 2003, chapter 4).
Job analysis can provide a realistic job preview about what the job will be and therefore reduces early employee dissatisfaction and turnover (Fisher et al. , 2003). Job analysis is also important for the assessment of job performance in for example 360 degree feedback since a job analysis can set performance criteria. In this feedback subjective measures are used which are vulnerable to measurement rating errors like halo-effects (Viswesvaran, Schmidt & Ones, 2005).
Nevertheless, subjective measures might be very useful to assess organizational effectiveness, especially in relation to HR practices since subjective measures are mainly used to assess HR or organizational outcomes which are more directly related to HR practices (Dyer & Reeves, 1995). Objective measures involve actual percentage figures for sales growth or profitability which measure financial and capital market outcomes and these are more distal and indirectly related outcomes (Dyer & Reeves, 1995).
Once applicants with realistic job expectations are recruited the actual selection process starts. Selection is the process of choosing from a group of applicants the individual best suited for a particular position and organization (Mony, Noe & Premeaux, 2002, p. 175). The recruitment process is very important for this because recruiting the right employees with realistic job expectations has a significant impact on the quality of the selection decision (Mony et al. 2002, chapter 7).
Making right hiring decisions is one of the best ways to improve productivity. Therefore, majority of managers recognize employee selection as one of their most difficult and most important business decisions (Mony et al. , 2002). The selection process starts with choosing the right selection instrument. Job analysis is also highly relevant for this since job analysis can identify relevant and specific traits and abilities needed for the job which saves time by not measuring irrelevant traits or abilities (Voskuijl, 2005).
The goal of the selection process is to select those applicants who are likely to perform the best on the future job. Therefore, the selection methods used in the selection process need to be valid, especially high predictive validity and/or incremental validity are relevant. Predictive validity refers to observing employee performance over a period of time to determine whether the selection method has differentiate the successful and less successful employees (Mony et al. , 2002).
Incremental validity refers to whether the instrument can explain anything additional beyond other instruments. Selection methods Schmidt and Hunter (1998) performed a meta-analysis of 85 years of research in personnel selection presenting the validity of 19 different selection procedures for predicting job and training performance. They also assessed the incremental validity of selection procedures beyond the predictive validity of general mental ability in order to assess which combinations of methods show the highest validity for job performance.
Their results revealed that work sample tests (0,54), GMA tests (0,51), and structured interviews (0,51) show the highest predictive validity for job performance. Schmidt and Hunter (1998) state that GMA can considered to be the primary personnel measure for hiring decisions. More recent findings of Schmidt and Hunter (2004) confirmed this and state that GMA is of critical importance. Salgado et al. (2003) found similar results and argue that there is validity generalization and large operational validities in different occupational groups for predicting job performance and training success with GMA measures.
Salgado et al. (2003) found job complexity to be a moderator; the more complex the job is, the more GMA matters. Regarding the incremental validity above GMA tests, Schmidt and Hunter (1998) conclude that the best combination of selection methods would be the GMA test plus a work sample test (0,63), or plus integrity test (0,65), or plus a structured interview (0,63). Unstructured interviews show a lower predictive validity as well as lower incremental validity above GMA tests compared to structured interviews.
According to a meta-analysis of Huffcutt, Conway, Roth and Stone (2001) the most frequently rated construct in interviews in general are basic personality and applied social skills. They also distinguish between unstructured interview and structured interview and found that structured interviews focus more on constructs that have a stronger relationship with job performance like job knowledge and skills, whereas unstructured interviews focus more on general intelligence and education (Huffcutt et al.
, 2001). So, it seems that unstructured interviews mainly measure general mental ability; intelligent people tend to do better on unstructured interviews. Nevertheless, many organizations in the United States rely solely on unstructured interviews (Schmidt & Hunter, 1998) since they have a high face validity; they are transparent and people feel like they have some influence over the results. Although the results of Schmidt and Hunter (1998) show that there are more valid methods available. Since people, as
well as the applicant as the recruiting organization, seem to have a preference for unstructured interviews, they should be used at the end of a selection process where their potential harm is minimalized since only suitable candidates are left. Another selection method which employers often use and believe to be a useful predictor whereas academics believe that they have little predictive validity, is grade point average (Roth, BeVier, Schippmann & Switzer, 1996). The meta-analysis of Roth et al. (1996) however, shows that GPA could be a more valid predictor of job performance than many academics thought.
Taking a look at personality inventories as selection tools, Dudley, Orvis, Lebiecki and Cortina (2006) conclude that they are becoming increasingly popular and most researchers agree personality is important for predicting job performance. The five-factor model is the most used method to assess personality, the most important factor for predicting job performance is conscientiousness (Dudley et al, 2006). Schmidt and Hunter (1998) found a predictive validity of 0,31 for conscientiousness tests. Conscientiousness is also a construct that is often measured in interviews, as Huffcutt et al.
(2001) have found that conscientiousness is the single most rated construct in structured interviews and is a good predictor of job performance. Schmidt and Rader (1999) argue that different approaches of structured interviews all measure facets of conscientiousness and GMA which have a known generalizable validity. There is some dissent whether facets of a broad trait like conscientiousness are also relevant to consider in the prediction of job performance. Research shows that narrow traits or facets show incremental validity above and beyond global conscientiousness (Dudley et al.
, 2006). Moreover, Schmidt and Rader (1999), and Huffcutt et al. (2001) argue that facets of conscientiousness like responsibility, dependability, initiative, and achievement orientation are important in predicting job performance. So, recruitment and selection have quite some impact on organizational effectiveness provided that the selection system first recruits the right employees and then, in turn the right and relevant selection methods are used to select the best suited applicants for the position.
Job analysis is important in this process because it both enables providing a realistic job preview as it identifies the traits and abilities needed for the job, selection methods can be chosen based on that. The selection methods with the highest predictive validity are work samples, GMA tests, and structured interviews in which conscientiousness is a frequently rated construct. However, the predictive validity of these selection methods refers to job performance of that particular job on individual level rather than organizational performance or effectiveness.
Nevertheless, choosing the right selection methods and selecting the best employees will probably also increase organizational effectiveness. Training Training design Training and employee development can be defined as ‘a systematic approach to learning and development to improve individual, teams, and organizational effectiveness’ (Kraiger & Ford, 2007, p. 281). Thus, the goal of training is to improve organizational defectiveness. The effectiveness of training programs is often hard to assess, especially at the organizational level where many other factors might interfere and influence the outcomes.
Therefore, the training should be designed in such a way to make evaluating effectiveness possible. First, training criteria should be set, without these you cannot determine if the goals were met. Training criteria are classified into two levels: training level and performance level, the latter is most important for assessing the impact of training on organizational effectiveness because performance-level criteria are concerned with the person’s performance on the job rather than in the training setting (Spector, 2006, p. 181).
Spector (2006, chapter 7) however, states that one should include criteria at both levels to thoroughly evaluate effectiveness, although some studies show that training is effective at the training level but not at the performance level. In order to assess the criteria a proper design should be chosen. The two most popular designs are: pretest-posttest and control group (Spector, 2006). Pretest-posttest design is intended to evaluate how much participants gained from the training by testing the performance criteria before, and after the training (Spector, 2006).
In the control group design, participants are tested only once after the training and are compared with equivalent employees who have not been trained (Spector, 2006). In practice however, the most used design is the post-test with only self-report measures, which is obviously not sufficient for evaluating effectiveness because there is not comparison possible. Besides, self-report measure might not be a valid predictor of performance, as Dysvik and Martinsen (2008) show in their study that student’s subjective reactions to teaching and their consequent performance were not correlated.
On the other hand, assessing training effectiveness at organizational-level is also very hard when the control group or pretest-posttest design are used. For the control group design is it hardly impossible to find an equivalent organization in order to make comparison possible. When using the pretest-posttest design another problem might occur; other factors might emerge during the training process causing increased organizational effectiveness. In an ideal situation the trained entity should be isolated in order to exclude spurious effects, obviously this is hardly impossible too.
Furthermore, Spector (2006) points out some factors that should be taken into consideration when designing a training program in order to maximize the transfer of training. Ignoring these factors might result in an training program that does not affect behavior on the job (Spector, 2006). These factors are for example; feedback, training should be as identical to real job situations as possible, and overlearning which refers to giving the trainee practice beyond what is necessary to reach the criteria (Spector, 2006). Effectiveness of training programs
According to the previous paragraph training can have quite a big impact on organizational effectiveness, provided that the right criteria, design, and design factors are formulated. There are however, different views on the effectiveness of training programs. On the one hand there is the ‘best practice’ view that states that firms that investigate in training and development efforts outperform those who do not. On the other hand, Wright and Geroy (2001) state that ‘the belief that training leads to improved employee and firm performance is myth that equates training with goodness’ (p.
586). Campbell and Kuncel (2001) support the best practice view by stating that ‘training is a critical component of effective human resource management’ and that its importance for both individuals as organizations can probably not be overstated. A point of critique to the best practice view is the issue of reverse causality, since already successful organizations tend to invest more in training and development (Tharenou, Saks & Moore, 2007).
Moreover, there are studies that argue that the effectiveness of training is dependent on several individual, contextual, and situational factors that might mediate or moderate the relationship between training and organizational effectiveness. Colquitt, LePine, and Noe (2000) attempt to develop an integrative theory of training motivation using a meta-analytical approach. They summarized literature on training motivation including its antecedents, situational and personality variables, and its relationship with training outcomes like declarative knowledge, skill acquisition, and transfer.
They argue that more proximal variables, like motivation to learn and transfer of training, mediate between the more distal variables (in this case individual and situational characteristics) and job performance (Colquitt et al. , 2000). Findings of this study indicate that individual characteristics like locus of control, conscientiousness, anxiety, cognitive ability, job involvement, and self-efficacy are significant predictors of training motivation.
Also the situational factor climate, which refers to trainee’s perceptions about characteristics of the work environment that influence the use of training content on the job, was a significant predictor of training motivation (Colquitt et al. , 2000). Blume. Ford, Baldwin and Huang (2010) performed a similar meta-analysis in exploring the impact of predictive factors on the transfer to training, though they examined these effects in different tasks and contexts.
They found that predictor variables like motivation and work environment had stronger relationships to transfer when the focus of training was on open as opposed to closed skills (specific skills) (Blume et al. , 2010). Furthermore, their results confirmed the meta-analysis of Colquitt et al. (2000) by finding positive relationships between training transfer and cognitive ability, conscientiousness, motivation, and a supportive work environment (e. g. climate). Especially cognitive ability is a valid predictor of training success (Schmidt & Hunter, 1998; Salgado et al.
, 2003; Colquitt et al. , 2000). The main difference between these two meta-analysis is that Colquitt et al. (2000) focus on the difference between distal and proximal variables in which training motivation is a more proximal variable, and therefore indicated as a mediating variable. Whereas Blume et al. (2010) do not distinguish between distal and proximal variables, and consider individual characteristics and training motivation to be both predictors of transfer of training. What these two meta-analyses do not show it the eventual impact of training on organizational outcomes.
Tharenou, Sasks and Moore (2007) examined this in a meta-analysis from 67 studies. They distinguish between human resource (employee attitude, behavior, and human capital), organizational performance (performance and productivity) and financial outcomes (profit and financial indicators). The results of their review suggest that training is positively related to HR outcomes and organizational performance outcomes, though the effect is small caused by other variables that influence employees attitudes (Tharenou et al. , 2007). In addition, training was only very weak related to financial outcomes (Tharenou et al.
, 2007). This partly confirms the previous mentioned research of Dyer and Reeves (1995) since Tharanou et al. (2007) suggest that the outcomes more proximally related to training show the strongest correlations. Training and Recruitment & Selection So, one can conclude that training has quite some impact on organizational effectiveness although but this effectiveness is dependent on several variables. Tharenou et al. (2007) for example suggest that the relationship between training and firm performance is mediated by employee attitudes and human capital.
Employee attitude is something that can be influenced at the workplace, by for instance creating a supporting work environment, whereas human capital is much harder to directly influence. Human capital refers to workforce knowledge, skills, and abilities (KSAs). Some of these KSAs however, can be indirectly influenced by adapting the recruitment and selection process to select employees with characteristics that predict training success. Conscientiousness and general mental ability are the most mentioned individual characteristics that have shown to be good predictors of training success (Salgado et al.
, 2003; Blume et al. , 2010; Schmidt & Hunter, 1998; Colquitt et al. , 2000). Schmidt and Hunter (1998) argue that when employers are using GMA test to select employees, that employee will have a high level of performance as well as he or she will learn the most from job training programs and will acquire job knowledge faster from experience. This also works the other way around, Connerley (1997) suggests that one of the strategies to attract better employees is to improve the quality of recruiters by training them.
This, and the earlier mentioned issue of adapting recruitment to select employees that are more likely to benefit from training, shows the interdependency between recruitment and selection, and training in relation to organizational effectiveness. Development The last HR practice discussed in this paper is development which is highly connected to training. Employee development has already been discussed in the previous section about training, therefore this section will mainly focus on team and organizational development. Team development
The changing nature of work has led to an increasing shift towards the use of teams which has implications for how teams should be designed to enhance both individual and team performance (DeShon, Kozlowski, Schmidt, Milnerz & Weichmann, 2004). Kozlowski and Ilgen (2006) define team development as ‘an informal process by which group members attempt to create effective social structures and work processes on their own’ (p. 105). They conceptualize team effectiveness as performance evaluated by others, member satisfaction and viability (Kozlowky & Ilgen, 2006).
Furthermore, several factors that enhance team effectiveness are pointed out; unit and team climate, team mental models and transactive memory, collective learning, team cohesion, team efficacy and potency, and team regulation skills (competencies, functions, and dynamic adaption) (Kozlowky & Ilgen, 2006). Adair, Hideg and Spence (2013) support the view that team climate, cohesion, and collective learning are important by pointing out the importance of developing shared values in teams. Furthermore, DeShon et al. (2004) examined the role of feedback towards individual and team goals and how this affects resource allocation decisions.
They found that teams receiving individual and team feedback were most committed to the team goal (DeShon et al. , 2004). So, these studies mainly point out the importance of team development for team effectiveness. Castka, Sharp and Bamber (2003) go even further by stating that the use of teams is an important means in organizational change and continuous improvement (innovation activities) and that the organizational ability to mobilize their employees in teams for problem solution matters not only to managers, but also to investors (p. 29). Investors attach great importance to use of teams and might base their decision to invest based on this (Castka et al. , 2003). Castka et al. (2003) introduce two arguments why organizations can gain from teamwork development. First, organizational teams can improve organizational performance through involvement, learning, and increased communication. Second, as pointed out before, organizations that develop their teamwork and improve their performance due to this increases its value for investors (Castka et al. , 2003).
Thus, according to these authors, team development might also have effects on the organizational level and might even affect financial outcomes by referring to investors. Organizational development Weick and Quin (1999) argue that ‘from the perspective of organizational development, change is a set of behavioral science-based theories, values, strategies, and techniques aimed at the planned change of the organizational work setting for the purpose of enhancing individual development and improving organizational performance, through the alteration of organizational members. on-the-job behaviors’ (p. 363).
So, according to them organizational change and development can enhance individual development as well as improving organizational performance by altering organizational members on the job behaviors. As argued before, these behaviors might be enhanced by training or by recruiting and selecting the employees that are most likely to behave in a way that enhances organizational development and performance. Other ways to alter employees’ on-the-job-behavior is using interventions like job rotation, job enrichment, and teambuilding which lead to better organizational outcomes (Buchanan & Huczynski, 2010) and it motivates employees.
Piderit (2000) argues that successful organizational change is highly dependent on generating support and enthusiasm from employees for the purposed change. Grant (2011) proposes that end users can imspire and motivate employees by deliviring convincing testimonials of their experiences with the organization, whereas when leaders are the sole source of inspiring messages, they are considered as being uncredible. Organizational development is thus aimed at improving organizational performance, the effectiveness of this aim is to a large extent dependent on employees’ acceptance and support for the development.
However, there is some critique on organizational development that it mainly focus on soft attitudes and values, rather than on the hard operational and financial results (Buchanan & Hyczynski, 2010). In addition, the difficulties in assessing and measuring the effectiveness that applied to training programs might also aply to organizatioanl development. Strategic Human Resource Management Although there are some conditional factors that need to be taken into account, the three HR practices discussed in this paper can have quite some impact on organizational effectiveness.
The problem often is that it is very hard to assess the sheer effectiveness of these practices on organizational effectiveness. Nevertheless one can conclude that the HR practices mainly have their effect on proximal human resource and organizational outcomes like turnover, job satisfaction, and productivity which in their turn might have effects on financial outcomes. This is seen from a micro or tradition HRM perspective, which covers the sub functions of HR policy and practice.
The growing importance of HR for organizational success however, has led to an increasing interest in making HRM a more integral, strategy-driven activity in organizations (Perry, 1993, p. 59). This is called strategic human resource management which can be defined as ‘an interdependent bundle of planned or emergent human resource activities that are intended to achieve positive organizational outcomes’ (Maler & Fisher, 2013, p. 23 ). These interdependent bundles of HR practices should be aligned in such a way to complement and strengthen each other (Gruman & Saks, 2011).
This is a macro-orientated view of HRM, it differs from traditional HRM on two dimensions, as argued by Wright and McMahan (1992). The first is the vertical dimension which entails the linking of HR practices to the strategic management process of the organization. The second dimension is horizontal, which emphasis the coordination or congruence among the different practices (Wright & McMahan, 1992). An example of this, is the congruence of selection and training as earlier discussed in this paper. So,
an internal fit between the HR practices of an organization can lead to a higher added value than when the HR practices are considered as separate. Theoretical perspectives Behavioral perspective focuses on employee behavior as a mediator between HR practices and firm performances (Wright & MCMahan, 1992). So, this perspective can explain that although some HR practices might not have a direct impact on organizational effectiveness, they do enhance employees’ behavior (e. i. motivation and commitment) which on its turn affects firm performance.
The bahavioral perspective has its roots in contingency theory. Contingency theory entails that an organization’s HR practices must be consistent with other aspects of the organization in order to be effective (Delery & Doty, 1996). Two other theories that are distinguished, are the configurational and universalistic theory. Configurational theories are concerned with how the pattern of multiple independent variables is related to a dependent variable rather than with how individual independent variables are related to the dependent variable (Delery & Doty, 1996, p. 804). The SHRM perspective is a form of configurational theory because it is an integrative perspective which argues that patterns of HR activities, as opposed to single activities, are necessary to achieve organizational outcomes (Gruman & Saks, 2011). SHRM is also a form of the contingency perspective, because the vertical dimension of Wright and McMahan (1992) entails the linking of HR practices to the strategic management process of the organization.
On the other hand, there is the universalistic approach, which is the earlier mentioned best-practice view which states that some single HR activites are always the best choice to achieve organizational outcomes. The earlier mentioned meta-analysis of Thanerou et al. (2007) found support for both the contingency and universalistic perspective. On the one hand, they found that training appeared to be stronger related to outcomes when it was matched with organizational capital intensity and business strategy (contingency), whereas on the other hand, they found training to be related independently to organizational outcomes (Tharenou et al. , 2007). Also other studies discussed in this essay show support for both perspectives, GMA for example is found by Schmidt and Rader (1999) to be a generalizable factor , since it is always a good predictor of job performance and training succes. Salgado et al. (2003) however, found job complexity to be a moderator. Finally, Delery and Doty (1996) assessed the theoretical foundation of the SHRM literature, and concluded that each of the three perspectives can be used to structure theoretical arguments in order to explain significant levels of variation in financial performance.
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