MASTER THESIS
Lydia Rongen
University of Amsterdam Faculty of Economics and Business Student number: 10475648 Degree: MSc Business Studies Specialization: Leadership and Management 1st supervisor: Dr. C.T. Boon 2nd supervisor: Dr. W. van Eerde Date: April 12th 2015
How do HR practices influence employees’ HR attributions
and perceptions and
how do these attributions and perceptions influence
performance in the form of OCB?
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Statement of Originality
This document is written by Student Lydia Rongen, who declares to take full responsibility for the contents of this document. I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it. The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.
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Table of contents
Summary 5
Introduction 6
Chapter 1 Literature review 10
1.1. HR practices and performance (the HR system) 10
1.2. The HR process 14
1.3. The relationship of HR and HR perceptions 17
1.4. The relationship of HR and HR attributions 19
1.5. The relationship of HR attributions/perceptions and OCB 23
1.6. The research question and theoretical contribution 24
Chapter 2 Methods 27 2.1. Research design 27 2.2. The company 29 2.3. The interviews 30 2.4. Analysis 32 Chapter 3 Results 34
3.1. HR attributions and perceptions 34
3.2. The antecedents on which the HR attributions and perceptions are
based 37
3.2.1. Role of the Managing Director 37
3.2.2. Culture of the company 38
3.2.3. HR department 39
3.2.4. Communication 40
3.2.5. HR practices 41
3.3. The relationship between HR attributions and perceptions and OCB 43
Chapter 4 Discussion 46
4.1. The typology of HR attributions 46
4.2. HR content matters 48
4.3. The strength of the HR system 51
4 4.5. The limitations 57 4.6. Further research 58 4.7. Managerial implications 59 Chapter 5 Conclusion 61 Acknowledgment 62 References 63 Appendices 74
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Summary
Considering the acknowledged important role of employees’ HR attributions and perceptions in the relation between HR practices and performance, this study is conducted on the question how these attributions and perceptions are formed and how these have an impact on performance. This master thesis describes the results of this study, based on semi-structured interviews with 19 employees of a multinational organization in the Netherlands. The findings reveal that employees’ attributions and perceptions of the HR practices have five antecedents: The role of the Managing Director, the culture of the company, the HR department, communication about the intended HR and HR practices, and the content of the HR practices itself. This study adds to current literature by its findings about the shortcoming of the used typology of attributions, the importance of making distinctions in HR content, putting leadership and organizational climate at front as an important aspect of the strength of the HR system, and finally its finding of the importance of perceived organizational support as a moderator for the impact of HR attributions and perceptions on OCB.
With these findings this study contributes to more insight in the processes that take place in the causal chain of HRM to performance.
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Introduction
During the last decades there has been a concentration on research about the effect of strategic human resource management (SHRM) on the performance of organizations. The meta-analysis of Combs et al. (2006) of 92 empirical studies conclude that the influence of HRM on performance is significant. Specific bundles of distinct but interrelated HR practices, called HR systems, lead to performance. The AMO model (Appelbaum et al., 2000) existing of three independent work system components, such as ability, motivation and opportunity, shape individual and aggregate employees’ behaviors and thereby contribute to the performance of the organization. For example, HR practices which enhance employees’ competencies (ability) and motivation goes along with a lower employee turnover (Huselid, 1995) and higher labor productivity (Datta, Guthrie & Wright, 2005).
Finding the answer to how different HR practices relate to organizational performance, researchers have also tried to explain what is in the ‘black box’ that connects SHRM with organizational performance (Boselie et al., 2005). A better understanding of the role of employees in how SHRM links to firm performance becomes more and more subject of research (Guest, 1999; Batt, 2002). Wright and Nishii (2007) present an HR process model explaining the HR-performance linkage as follows: intended HRM (developed HR policies) influence actual HRM (implemented HR practices), employees perceive these practices (perceptions of HRM) and react to them (employee outcomes), and these employee outcomes result in organizational performance. Purcell and Hutchinson (2007) found out that the linkage of HRM goes via employees’ perceptions of HR to employees’ attitudes resulting in specific behavior leading to the organizational performance. Bowen and Ostroff
7 (2004), focusing on the HR process as an explanation for performance, describe the existence of a ‘strong HR system’, meaning that shared and consistent employee perceptions of HR practices, lead to intended attitudes and behaviors of employees, finally resulting in performance. They describe three features that determine the strength of the HR system, such as distinctiveness, consistency and consensus of HR practices. They suggest more research is needed to delineate how this process influence the attributes of the work situation as perceived by employees.
So the effect of actual HR practices on performance is not only determined by those practices themselves (HR systems) but also by the way perceptions of those practices come about (HR process). The latter is tried to be answered by Nishii et al. (2008), coming up with another aspect in the chain between SHRM and performance, namely the way HR practices are attributed, to define as the perception of the actual purpose (‘the why’) of HR practices. They found out that employees react differently to the same HR practices in terms of satisfaction and commitment, depending on their HR attribution about organizations’ purpose of implementing the actual HR practices. The question which rises on base of their theory, is the way or how these HR attributions come about. Finding this answer helps to get insight in the process of linking HR attributions to employee perceptions and further to employee outcomes, ultimately resulting in organizational performance.
Therefore it is interesting to dig deeper into the mechanism described by Nishii et al. (2008) of how HR practices influence HR attributions and perceptions, descending from research of objective existing HR practices at organizational level (meso) to subjectively perceived and interpreted HR practices on individual level (micro). Wright and Nishii (2007) have argued that existing theory and research in SHRM has ignored the understanding of individual
8 variance and processes for HR practices to impact organizational performance. They call for the need for research on cognitive processes and social information processes on individual level to understand this phenomena. Nishii et al. (2008) suggest further research on this matter e.g. on the influence of individual factors, such as personality, goals, needs, past experiences or expectancies, and the influence of organizational factors such as the culture of the company or organizational practices. Sumelius et al. (2014) call for more qualitative work on determinants of individual perceptions by exploring drivers of employee perceptions of specific HR practices, in terms of the process features suggested by Bowen and Ostroff (2004). When examining influences on individual perceptions, they suggest to be clear about what employees are providing perceptions of. Some HR practices drive perceptions of HRM systems to a greater extent than others. So they bring in the perspective of the influence of HR practices on the way perceptions are made.
So far as to be seen there is no research done on the antecedents of the HR attributions and perceptions, combining the HR process approach (in how these attributions and perceptions come about) with the HR system approach (the effect of separate HR practices on these attributions and perceptions). And oddly enough, the linkage of HR attributions and perceptions, as antecedents for organizational performance, has been also less subject of research. One of the few examples of research on this matter is done by Frenkel et al. (2012). They found out that HR policies that are perceived by employees as just, both in terms of outcomes and procedures, are likely to increase organizational identification, leading to discretionary effort and co-worker support, aspects of Organizational Citizen Behavior (OCB). Frenkel et al. (2012) gave some direction to the question how these perceptions influence performance, measuring OCB. This question can be more explored,
9 using OCB as a logical performance indicator when diving into the individual employees’ perspective of behavior, as is an HR related employee outcome (Boselie et al., 2005).
So more exploration of the linkages in the HR process and linkages with the HR system model is needed. This can be explored by qualitative research, unraveling the HR model of Nishii et al. (2008). Contributing to a better understanding of the HR process, the research question in this thesis will be:
How do HR practices influence employees’ HR attributions and perceptions and how do these attributions and perceptions influence performance in the form of OCB?
To get more insight in this relationship, an explorative qualitative study is done through conducting 19 semi structured interviews in a company in the Netherlands. This paper first starts with the literature review in chapter 1, describing the highlights of research on the HRM-performance relationship, followed by describing the relationship between HR practices and HR perceptions and attributions, and subsequently their relationship with performance. Chapter 2 describes the methodology used for this study and in chapter 3 the results of the interviews will be presented, on the basis of the analysis of the data. Chapter 4 discusses the results, the theoretical and managerial implications, as well as limitations of this study and suggestions for further research. And finally, chapter 5 contains the conclusion of this study.
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Chapter 1 Literate review
In this chapter, the most important subjects related to the research question, will be explored on the basis of academic literature, looking at the actual insights on these subjects and defining the gap in what is needed to be more examined. The structure of this chapter will be as follows: first the relationship between HR practices and performance (HR system) will be described, second the way HR is related to performance (HR process). Diving deeper into details, the relationship of HR practices with HR perceptions and HR attributions is the third subject. Finally elaborating on this, by describing the relationship between HR perceptions and attributions with performance in the form of OCB. The structuring of these subjects leads to the formulated research question.
1.1. HR practices and performance (the HR system)
As mentioned in the introduction, research on the influence of strategic HRM (SHRM) on performance has really taken off the last two centuries. For a good reason, because it has led to the insight that SHRM improves organizational performance. A few meta-analyzes mapped the whole field of this SHRM- performance chain (e.g. Subramony, 2009; Jiang et al., 2012). Many researchers (e.g. MacDuffie, 1995; Combs et al., 2006)) have confirmed that when HR practices are combined as “bundles” (sets of HR practices), those provide stronger synergic effects on performance. So the influence of HR practices (as in bundles of practices) is stronger if the HR practices are related. This notion developed further into research on specific bundles of HR practices, resulting in a pluralism of terminology in the literature
11 about the definitions and content of these. But all these HR systems encompasses management of some work domains and management of the employees who do the work in question. Thus, HR systems involve two broad types of HR practices: work practices and employment practices. Work practices are to do with the way the work itself is organized, for example job descriptions, supervised group work, self-managing teams, quality circles and team meetings). Employment practices include all the HR practices used to recruit, deploy, motivate, develop and retain employees. Every HR system works through its impact on knowledge and motivation of individual employees, their willingness to work, and their opportunities to use their talents in their work. Also the HR systems affect a range of variables on a more collective level, helping to build organizational capabilities, and influencing the organizational culture and social and psychological climate in which employees can work, ultimately contributing to positive employee behaviors and organizational effectiveness (Boselie et al., 2005, Becker & Gerhart, 1996).
Some call these HR systems or bundles of HR practices ‘High Performance Work Systems’ (HPWS) (Huselid, 1995; Pfeffer, 1998) focusing on people management, emphasizing the superior performance the work system can bring. HPWS as a set of HR practices aimed at increasing employees’ abilities, motivation and opportunity (AMO) to participate in work. Others define a set of HR practices as a ‘High Commitment Work System’ (HCWS) focusing on commitment-oriented people management (Becker & Gerhart, 1996), highlighting the fact that the organizations’ work system can enhance the commitment of employees and so improving performance. Still others define a bundling of HR practices as a ‘High Involvement Work System’ (HIWS) (Guthrie, 2001; Batt, 2002), highlighting the self-programming and
12 self-managing nature of the workforce, emphasizing the active participation of employees in the work process through self-managed teams and problem-solving groups.
Boselie et al. (2005) acknowledged the fact that the different HR systems have mostly some HR content in common, such as training and development, contingent pay and reward schemes, performance management (including appraisal) and recruitment and selection. In this thesis the used specific bundle of HR practices (in terms of a fixed set of HR practices) is connected to this acknowledgement. The focus will be on a few specific (though general) HR work and employee practices, such as development, work conditions and appraisals, which can be general for all kind of HR systems.
A growing body of research (e.g. Patterson et al., 2004) provides strong support for the correlational relationship between HR systems and various positive outcomes for employees and the organizational performance. Putting HR practices and their influence on employees’ attributions and perceptions, central in the research question, the focus is automatically on the individual employee. So consequently the focus of the effects on the outcome of employees’ individual performance, is measured in the way employees behave, ultimately influencing the organizational performance. In this paper the HR-related employee outcome (Boselie et al., 2005) such as Organizational Citizenship Behavior (OCB), is chosen to be focused on.
Research in the field of HRM suggests that three independent work system components shape individual and aggregate employees’ behaviors as in Organizational Citizenship Behavior (OCB) and thereby contribute to the performance of the organization. This well-known mechanism is called the AMO model (Appelbaum et al., 2000). This model suggests employees can do their job because they possess the necessary knowledge and skills
13 (Abilities); employees will do the job because they want to and are adequately energized and motivated (Motivation); employees’ work environment provides the necessary support and avenues for participation (Opportunity). Other research has also shown empirically that HR practices are related to employee performance through human capital (Ability), psychological empowerment (Motivation) and POS, perceived organizational support (Opportunity), which in turn influence performance (Liao et al., 2009). When all three components of AMO are present, then AMO leads to discretionary behavior, which is in line with ‘Organizational Citizenship Behavior’ (OCB), which in turn leads to organizational performance (Elorza et al., 2011).
Late in the eighties Organ (1988) defines OCB as “individual behavior that is discretionary, not directly or explicitly recognized by the formal reward system, and that in the aggregate promotes the effective functioning of the organization". Organ distinguishes five aspects of OCB: altruism, courtesy, conscientiousness, civic virtue and sportsmanship, to be proven empirically to be the most robust and distinct factors in assessing OCB. Later on Williams and Anderson (1991) defined the construct of OCB into two different types of OCB based on whom the behaviors were directed at. Organizational Citizenship Behavior–Individuals (OCBI) include behaviors that are aimed at other individuals in the workplace, such as altruism and courtesy, leading to actions aimed at other employees. Organizational Citizenship Behavior-Organizational (OCBO) include behaviors directed at the organization as a whole, such as conscientiousness, civic virtue, and sportsmanship, leading to the benefit of the organization as a whole. More and more studies focus on the effects of HRM on employee behaviors, including OCB. Examples of these are studies of HR practices and their effect on employee turnover or leaving rates (e.g. Batt, 2002) and absenteeism (e.g. Lowe et
14 al., 1997) or job satisfaction (e.g. Guest, 1999) and commitment (e.g. Tsui et al, 1997) or OCB (Podsakoff et al., 2000; Organ et al., 2006).
Continuing on the linkage between HRM and performance one cannot avoid going deeper into the mechanism of this linkage. This leads to the question how HR practices exactly influence performance, in the form of OCB. HRM does not directly lead to performance. Most researchers agree on this point and describe the existence of a ‘black box’ (Boselie et al., 2005), something what mediates the effect of HRM practices on performance. This means that the attention not only goes to the HR systems literature that focuses on the content of HR as in HR practices, but more and more to the HR processes as a factor of explaining the performance in an organization.
1.2. The HR process
Although several macro-level studies showed the existence of the relation between HRM and organizational performance (Paauwe, 2009), this gives no explanation of how HRM leads to better performance (Wright et al., 2003). Truss (2001) argued that in many studies, examining the link between HRM and performance, the focus is only on formal HR systems (HR policies). There could be a discrepancy between HR intentions (as in formal systems) and practices, in the way HR is functioning. Here starts the insight that there is a difference between intended HR practices and implemented actual HR practices, bringing the perspective of the employee into the discussion. Hereby filling in a piece of the puzzle of the ‘black box’, the underlying HR processes that take place to relate HR practices with performance (Guest, 2011). Wright and Nishii (2007) came up with a process model of HRM explaining the HRM-performance linkage as follows: intended HRM (developed HR policies) influence actual HRM (implemented HR practices), employees perceive these practices
15 (perceptions of HRM) and react to them (employee outcomes), and these employee outcomes result in organizational performance. In order to investigate the impact of HRM, a distinction should be made between HR policies and HR practices (Gerhart et al., 2000; Huselid & Becker, 2000; Wright & Nishii, 2007). HR policies are the HR programs as intended by organizations’ senior management or HR departments and these are designed to influence the employee attitudes and behaviors. HR practices are the HR programs that are actually implemented, processed and enacted in the organization and experienced by the employees (Wright & Boswell, 2002).
Wright and Nishii (2007) argued that intended HR policies and actual HR practices are not the same because of the difference in execution of the HR practices by managers or HR executives, which will give variance in actual HR practices across an organization, depending on their roles in this process. For example, Bos-Nehles (2010), found out that the execution of HR practices done by first line managers differ, depending on their motivation and competences. Purcell and Hutchinson (2007) support the reasoning of difference in intended and actual HR practices, though from an employee perspective. They describe the people management-performance chain, zooming in on the perception, attitude and behavior of employees regarding the HR practices.
Bowen and Ostroff (2004) already have argued that HR practices only have desired influences on employees’ behaviors only to the extent that they are consistently experienced and perceived by employees in intended ways. They brought ‘perceptions of HR practices’ into the ‘black box’ discussion about the linkage between HRM and performance, as an antecedent of how employees actually behave and act in an organization. HR practices ‘can be understood idiosyncratically, whereby two employees interpret the same practices differently’ (Bowen & Ostroff, 2004). They describe the importance of a ‘strong HR system’
16 as a vehicle for emerging shared employee perceptions, leading to employee actions which subsequently lead to improvement of performance (Bowen & Ostroff, 2004). A strong HR system is distinctive, consistent and consensual in its relationship between HR policies and actual HR practices, sending signals to employees that motivates them to adopt desired attitudes and behaviors to enhance organizational performance.
Den Hartog et al. (2013) suggest the need to take both content and implementation into account when ‘sending signals to employees’. They argue that good quality of communication is needed to effectively implement HRM content, which is in line with the meta-features of a strong HR system, described by Bowen and Ostroff (2004), such as understandability of the HR content, fairness of HR practices, consistency of the HR messages, relevance of the HR system to the strategic goal and agreement among HR decision makers. Den Hartog et al. (2013) found out that when managers are able to communicate accurate and useful task and organizational information to the employees, employees’ sense making of the reasons of the organization to do so grows and uncertainty limits (Kernan & Hanges, 2002). High quality communication helps employees to understand their task and what is expected of them, to see what is offered by the organization (e.g., policies, practices), and to understand reasons behind organizational decisions and enacted procedures.
The way actual HR practices are perceived and how they are experienced by employees, is influential on employees’ behavior. When employees are provided with accurate and useful task and organizational information, this reduces uncertainty and aids employees’ sense making, knowing what is expected of them, and seeing what is offered by the organization (e.g., policies, practices), understanding reasons behind organizational decisions and enacted procedures (Kernan & Hanges, 2002). The reason why employees differ in perception of HR
17 practices is a recurring object of research. The next paragraph addresses this subject with more detail.
1.3. The relationship of HR and HR Perceptions
The term ‘perception’ can be defined as follows: “Perception is a process by which people translate sensory impressions into a coherent and unified view of the world around them. Though necessarily based on incomplete and unverified (or unreliable) information, perception is ‘the reality’ and guides human behavior in general.” (Business Dictionary, n.d.) The response to HR practices depends on the employees’ individual interpretation of the practices. The question is why these individual perceptions of HR practices differ. Research has shown that several antecedents for this relationship can be pointed out. For example, Rousseau (2001) argues that people’s past experiences with HR practices influences the way that they perceive and interpret HR practices in their current organization. He argued that since actual HR practices are filtered by perceptions before they turn into a corresponding behavior, it is expected that the mismatch between the objective information in the form of actual HR practices and the resulting behavior occurs, due to the perception of every employee. Accurate perceptions make that employees interpret what they see and hear in the workplace effectively to do their tasks, cooperate and make decisions. Faulty perceptions can lead to problems in an organization, such as employees erroneously making assumptions. When interpreted the organizations’ HR policies and practices favorably, employees selectively incorporate the organizations’ attributes into their own self concepts, to fulfill their emotional needs for security, belongingness and self-definition (Ashforth & Mael, 1989; Pratt, 1998). Employees are then proud to define themselves as an organization
18 member and to promote the organizations’ norms. So this can be linked to the strength of the HR system (Bowen & Ostroff, 2004). The way HR practices are communicated and perceived as distinctive, consensual and consistent, is an important antecedent for the relationship between HR and the perceptions of it.
According to Frenkel et al. (2012), HR policies that are perceived by employees as just, both in terms of outcomes and procedures, are likely to have an effect on their increased organizational identification, resulting in discretionary effort and co-worker support. This is in line with desirable OCB. Also Zhang and Agarwal (2009) showed that particular HR practices (empowerment, communication and psychological contract fulfillment) are related to employees’ perceptions and have a positive, though varying effect, on OCB. Another example is shown by Shipton and Escriba-Carda (2013). They found out that there is a positive and significant relationship between employee perceptions of HPWS and employee innovative behaviors, fully mediated by job engagement. Expanding on employee perceptions, Edgar and Geare (2014) suggest there can be a difference in employees’ perceptions about experiences of actual HR practices and their perceptions about the utility of experienced HR practices with regard to their attitudes (job satisfaction and affective commitment).
Seeking for other antecedents for the relationship of HR practices with HR perceptions, Sumelius et al. (2014) find out that employees’ perceptions of the performance appraisal process, are driven by a number of influences such as top managements’ internalization of performance appraisal; the formal system design of performance appraisal; the supervisor capability/commitment and the attitudes of colleagues. Although employees’ perceptions of HR practices can be translated directly into the belief that it influences performance, an
19 interesting subject for research is to investigate whether this is the case or if perceptions of HR practices work more indirectly, through some other mechanisms. Searching for the answer to the question how HR practices influence perceptions, it is important to directly assess employees’ individual experiences with HR systems and processes. Looking at the antecedents set till now, they can be divided into 3 categories: the HR system (the influence of the HR practices itself), the HR process (the way the HR practices are brought, communicated and aligned), and, thirdly, the way individual employees are formed themselves with earlier experiences. This last antecedent has also effect on the way employees attribute HR. The next paragraph dives deeper into the mechanism of HR attributions.
1.4. The relationship of HR and HR Attributions
Perceptions and attributions are closely related. As shown above, perceptions of HR practices involve the way people filter, organize and interpret information, as attributions involve identifying the cause of behavior. The attribution theory of Kelley (1971) describes attribution “as the process by which individuals explain the causes of behavior and events”. Kelley answered the question why people attribute behavior to these causes, by theorizing that people need specific information to make a valid judgment about a cause and its effect, depending on the degree of distinctiveness, consistency, and consensus of the information. The process of inferring and assigning a cause to a behavior is called the attribution process. One of the first steps in the attribution process involves deciding whether the cause of a behavior is internal or external. It is called internal or personal attribution when the cause of behavior is linked to factors within the control of or “inside” a person, such as personality,
20 values, ability, and motivation. External or situational attributions are attributions linked with factors “outside” the person as the cause of behavior. These are factors such as the task difficulty, luck, the organizational culture, the presence and behavior of other people. For example, if an employee does not receive a bonus and tries to understand why, the employee can ascribe this to an external attribution (“my manager does not like me”) or an internal attribution (lack of own abilities). The attribution process described by Kelley (1971) zooms in on the way people judge information. As mentioned above, there are three types of information which influences an individual’s attribution. These are: (1) distinctiveness: the way the individual’s behavior is dependent on the situation, and (2) consistency: the degree of stability in behaving in certain situations, and (3) consensus: the degree people around the individual act in a similar situation. If it is comparable to behavior of others, the individual’s behavior has a high level of consensus. When individuals can interpret situations as distinctive, consistent and consensual, they can make solid attributions about the cause-effect relationships and can better understand the situation. This process Kelley (1971) describes, is related to the HR model of Bowen and Ostroff (2004). They describe the strength of an HR system by its distinctiveness, consistency and consensus in ‘sending signals to employees influencing the shared perceptions of employees that motivates them to adopt desired attitudes and behaviors’. Applying the three degrees of cause and information perception, (Kelley, 1971) to HR practices, distinctiveness represents the perceived relevance of HRM to attain a certain goal; consistency refers to the internal consistency or the internal alignment among HR-practices; and consensus in HR practices concerns the agreement among policy makers about the event-effect relationships (Bowen & Ostroff, 2004; Sanders et al., 2008). Some employees may think that HR practices (e.g. performance payment) are used with the aim of employee development, whereas others may think that
21 these HR practices are used for employee exploitation. Nishii et al. (2008) found out that employees may not respond directly to HR practices, but instead recognize, perceive, judge, and reason about HR practices in mental processes before taking action (Colagoklu et al., 2010). Nishii et al. (2008) elaborated on the process model of Wright and Nishii (2007) and brought in the perspective of employees’ attributions of management’s purpose of implementing the actual HR practices. They focused on the locus of causality: why management adopts and implements HR practices. Employee attributions are different from employee perceptions in the possibility for employees to share perceptions based on the experienced HR practices, but to disagree about why those HR practices were put into place (Nishii et al., 2008). Through conceptual and empirical work, they validated three types of subjectively HR experiences, called ‘HR attributions’, two internal and one external (i.e., union compliance). The two internal types are commitment-focused or control-focused HR attributions. The two main themes used by Nishii et al. (2008) to differentiate between the types of HR attributions, involve first the strategic or business-related goals that underlie HR practices (service quality or cost reduction), and second the underlying employee-oriented philosophy held by management (employee well-being or exploitation). Well-being and service quality HR attributions (commitment-focused) could be defined as the extent to which employees interpret the HR practices to be based on the underlying business goals of the company, to maximize service quality with an underlying employee-oriented principle attempting to maximize employee well-being. In line with social exchange principles, employees who perceive that the intended goals of HR practices are to improve work quality and employee well-being, connote positive consequences for them, who are then likely to feel the obligation to reciprocate in positive and beneficial ways (Torka et al., 2005).
22 Cost reduction and exploiting HR attributions (control-focused) could be described as the extent to which employees explain the HR practices in terms of underlying business goals attempting to reduce costs with an underlying employee oriented principle aiming at exploiting or getting the most out of employees. When employees perceive that the intended goals of HR practices connote lower levels of concern for employees and a more cost-driven control-focus (i.e. cost reduction and exploiting employees), negative outcomes are likely to be the result, such as lower levels of commitment (Nishii et al., 2008).
In this thesis the concentration will be on the two internal HR attributions, because the external type (union compliance) is not applicable in this case study. The question of how HR practices influence HR attributions is still not be answered satisfactorily and will be addressed in this thesis. Research till now searched along the line of the attribution theory of Kelley (1971), suggesting that the combination of the three dimensions of HR practices (consensus, consistency and distinctiveness) results in different information patterns that lead to one of the general classes of causation of the event-effect relationship, such as stimulus or entity, person, and context and time specific attributions (Sanders & Yang, 2014). Their findings support the idea that, to realize stronger positive effects of High Commitment Work Systems (HCWS), employees need to be able to interpret HRM as it is intended by management. If employees do not understand the intention of management and instead attribute HRM to other sources such as the context or person associated with HRM activities, their findings suggest that the effectiveness of HCWS in stimulating employees’ innovative behavior and affective commitment to the organization, can be diminished or even eliminated. This finding advocates the integrated HR system and process approach, as
23 the way to look for the answer on the question of how HR practices influence HR attributions.
1.5. The relationship of HR attributions/perceptions and OCB
The focus on employee attributions/perceptions is important for explaining ‘the black box’ because it can help understand some of the causes of employees’ behavior. And employees’ behavior is aligned with Organizational Citizenship Behavior. Spontaneous employees’ behaviors may go beyond their formal work requirements, and are necessary for accomplishing organizational goals. So the relationship between HR practices and employee attitudes and behaviors, and ultimately organizational performance, may depend on the attributions employees make about the motives of the organization for using specific HR practices and the perceptions they have about HR. Sanders et al. (2008) and Li et al. (2011) confirmed in their studies that the more employees perceive HR as distinctive, the more they show positive employee outcomes. Also Sanders and Yang (2014) showed that when employees perceive HRM as highly consistent highly distinctive, and highly consensual (attribution to management), the relationship between HCWS on one hand and employees’ innovative behavior and their affective commitment on the other hand, is stronger than when employees attribute HCWS in another way. Baluch et al. (2013) argued that studies in various manufacturing and service branches show, for example, that employees’ perceptions of HR practices in terms of their fairness, availability, effectiveness and visibility, are critical for understanding employees’ attitudes and behaviors (Nishii et al., 2008). Nishii et al. (2008) focused in their study on the relationships between HR attributions and satisfaction and commitment (as determinants of OCB) at the individual level of analysis. According to social
24 attribution theory, employees attach different meanings to social stimuli (Fiske & Taylor, 1991) such as HR practices, and based on the way that they process these HR practices, their attitudinal and behavioral responses to that information will differ. This crucial link in the causal chain between intended practices and performance outcomes in the form of OCB, is based on the principle of social exchange, whereby perceived organizational support (POS) is reflected in attitudes and reciprocated through OCB. Fiske and Taylor (1991) propose that even though satisfaction and commitment are individually measured, they still become shared among employees through a number of social processes, influencing OCB. These social processes can be defined as POS. They concluded that attributions of well-being have a positive influence on affective commitment. Fontinha et al. (2012) applying this to an IT outsourcing context, support the idea that commitment-focused HR attributions are positively associated with affective organizational commitment, which leads to desirable OCB. In contrast, control-focused HR attributions showed a significant negative relationship with affective organizational commitment. So HR attributions and perceptions influence behavior leading to a form of OCB.
1.6. The research question and theoretical contribution
Not much research has paid attention to the employees’ attributions about the reasons of existence of specific HR practices (Bowen & Ostroff, 2004), though these attributions are which upon the attitudinal and behavioral reactions of employees are based. Most research is conducted on the linkage of HR perceptions with attitude and behavior (e.g. Boselie et al, 2005; Den Hartog et al., 2013; Alfes et al., 2013). How a combination of these HR attributions and perceptions of actual HR practices influence OCB is even more unclear. A
25 reason why only a few studies have examined the process approach and focused on employees’ attributions and perceptions, is the complexity in terms of both theory, the multilevel relationships in the HR process (Guest, 2011) and the research methodology (Sanders & Yang, 2014). The suggested research in this thesis contributes to the existing body of knowledge of the underlying mechanisms in the SHRM – performance chain by doing qualitative research. Although more research is done on the process model of SHRM (Wright & Nishii, 2007), this thesis will try to give an answer to how the mechanism is of the linkage of HR practices with HR attributions and perceptions, and how these influence the employees’ performance in the form of OCB, linking the HR system approach (HR practices) with the HR process approach, using the determinants of a strong HR system, as Bowen and Ostroff (2004) described.
Besides, research on the linkage of HRM and performance has mostly neglected theories of individual differences in attributions and perceptions of HR, as influencing factors of this linkage. A better understanding of these individual-level attributions and perceptions of the HRM process constitutes an essential step in explaining this linkage. Edgar and Geare (2014) described that, after reviewing the models over Nishii et al. (2008) and Purcell and Hutchinson (2007), there is still some ambiguity around the interpretation of what is meant by ‘practices as experienced’ and ‘employee reactions’ and about the exact nature of this relationship.
These research gaps described above give rise to this current study. This study will give insight in how many aspects need to be considered that might take an influence on attributions and perceptions themselves. Also it is the aim of this thesis to reveal possible factors that might improve the attribution and perception of employees regarding HR
26 practices. The goal is to find explanations for how these attributions and perceptions influence performance in the form of OCB. Finally, this study will help to depict the conditions under which HR practices lead to certain HR attributions and perceptions and how this lead to performance.
So managing employee attributions and perceptions of HRM may be beneficial for firms, as employee attributions and perceptions influence attitudes and behaviors, which can affect firm performance. So the formulated research question will be:
How do HR practices influence employees’ HR attributions and perceptions and how do these attributions and perceptions influence performance in the form of OCB?
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Chapter 2 Methods
In this chapter the research strategy and methods of this study will be described. Subjects that are be treated are the actual research, including the company studied, the interviews, data coding and analysis (Gibbert & Ruigrok, 2010).
2.1. Research design
Being a complex phenomenon, the influence of HR practices on HR attributions and perceptions, and the influence of HR attributions and perceptions on performance, is an appropriate subject to study, using a case study approach (Yin, 2013). Miles and Huberman (1994) abstractly define a case study as ‘a phenomenon of some sort occurring in a bounded context’. As Gephart (2004) noted, one reason qualitative research is important for management studies is that “it can provide thick, detailed descriptions of actual actions in real-life contexts”. Using a case study in this particular context is because of three components. First, the research question is explanatory in nature and is not focused on getting quantitative outcomes, but rather on an explanation of a certain phenomenon. The insights from these often context-rich descriptions, can provide important hints about how context directly shapes particular outcomes or relationships. (Bamberger, 2008). The second reason for using a case study is the fact that the research question doesn’t require control over behavioral events, and the third reason is that the study focuses on contemporary events rather than on events that happened in the past (Yin, 2009). Besides that, former research methods on the relationship between employees’ HR attributions and perceptions
28 and employee outcomes are mostly quantitative, studying different kinds of moderating or mediating variables (e.g. Chen & Wang, 2014; Fontinha et al. 2012).
This qualitative case study will make it possible to explore the research area with great freedom and it allows issues to emerge. A qualitative research method also enables to find out the “how” of the research question. For this case study semi-structured interviews are being set up, which is a common instrument to build theory, to improve explanations or predictions, and to make recommendations about practice (Miles & Huberman, 1994). The case study is conducted in a Dutch company, using this company as the context for the research and interviews. Although a single case study has the disadvantage of a lack of external validity, the advantage of this kind of research is that it enables to investigate the research question in an environment where the HR practices are the same for all respondents. This enables to review the antecedents of the perceptions and attributions in an environment where the intended HR policies and the actual HR practices are the same for all respondents. In order to make a separation between HR policies and HR practices and the moderating factors between them (Wright & Nishii, 2007), this case study complies with the fact that there is a separate HR department where the policies are developed, while line management execute the HR practices. The approach to measure employee attributions differs from that of Nishii et al. (2008), because they conducted a survey with pre-determined options for the different categories of HR attributions. In this current research open-ended questions are used. Interviewees were asked what they thought the underlying companies’ vision behind the HR policy was. This way, interviewees were forced to come up with their own ideas, which are likely to represent their attributions more accurately than providing them with pre-determined categories.
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2.2. The company
This study is conducted in a Dutch company, a subsidiary of a French company in wholesaling office supplies and furniture, packaging and handling products. The whole company employs 1.800 staff members around 25 subordinates in 19 European countries. In the Dutch subsidiary work around 250 employees in different units, such as the distribution center, marketing department, sales department, replenishment and several staff departments as finance, facilities, HR and communication. The Dutch company has her own HR department that is responsible for translating the intended HR policies into actual HR practices for the Netherlands, adjusted to the local situation, using the guidelines from the French headquarter.
Unfortunately the business results are declining since 2008. That is why the company has recently undergone a change of the name of the brand (in line with the French Corporate) and an introduction of a new vision (all over the subsidiaries). This new vision is about enterprising for a better world, putting employees’ sincerity, responsibility, autonomy in the heart of all the employees’ actions, striving to enable everyone to progress. This vision on doing business differs significantly from how the company was managed before as a firm where productivity and efficiency were leading. So the proposition to the customers, aligned with the new vision of the company is drastically changed. Customers will experience a unique and tailor-made relationship and service approach by the employees of the company. In addition to the products on offer, the primarily focus is on building honest relationships of trust with the customers. The target markets are more than just simple customers - they are partners with whom a two way relationship is forged. This way of thinking and acting is new to the organization. Implementing the vision and this new way of doing business led also to restructuring of the organization; redefining the product categories and centralization of
30 different functions with the French headquarter. Parallel with these processes, the employees were offered a various scale of unorthodox interventions to enable them to develop their competences of sincerity, responsibility and autonomy. For example in France as well in the Netherlands, sport accommodations and programs were implemented, such as yoga (for getting more in contact with yourself), boxing (for experience your own power), archery (to learn to be more focused). Also training programs and individual coaching were offered to empower people and bring them in contact with their own passions. Means as gardening, watching movies, discussing literature, making arts, were also offered to develop the members of the company. Some of these practices are still available and actual at the company in the Netherlands. Other practices were just used to give a boost to implementing the new vision. This vision and these concrete HR practices give unique context for doing a case study.
2.3. The interviews
The data in this case study will be collected by semi structured interviews, to get a broad range of explanations of how the process of perceptions and attributions of HR practices work and how this can be influenced in order to gain performance. The interview questions are drawn around core themes, examined in the literature review of chapter 1 (Appendix 1). Based on a reflexive and recursive process of iterating between the initial theoretical insights and the emerging interview data, the interview protocol was adapted during the time span of the interviews (Yin, 2009). The interviews all started with an introduction of the subject, explanation about the goal of the interview and confirmation of confidentiality. The interview guide starts with demographic questions, followed by questions about the different topics and questions to get more detailed information (Berg, 2009). The first open
31 question was focused on the interviewee’s perception of the overall HR policy in the company in order to get information about the features of the strong HRM system as defined by Bowen and Ostroff (2004). This exploratory first question also gives an idea of which HR practices would be mentioned spontaneously and thus might be important for employees. The semi structured way of interviewing allows the interviewees also to elaborate or add any relevant information and insights (Eisenhardt, 1989) during the interview.
In total there are 19 interviews done. The recruit of these interviewees was done randomly. By sending a mail to all employees of the company asking them to participate in this research, finally 19 persons have agreed to participate. In this group of 19 persons are 13 employees and 6 managers. The interviewees have an average age of approximately 46 years, the youngest being 35 and the oldest being 55. The educational background is very diverse, from LBO to HBO+, even as the functions and departments people work in. The length of services for the company differs between 2 and 31 years. Most of the interviewees have a tenure of more than 10 years. Based on previous literature, a distinction in perceptions and attributions could be expected for employees with different first line managers, different tenure, different functions and from different departments (Bowen & Ostroff, 2004; Nishii et al.,2008; Bos-Nehles, 2010), so sufficient employees should be selected to represent these different groups. Looking at these aspects, one could say that this randomly established group of interviewees is representative for the diversity in workforce of the Dutch company.
All interviews were conducted in Dutch, in the native language of the interviewees. To increase reliability and to reduce observer bias by selective remembrance of the content of the interviews and subjective interpretation, all interviews were recorded with the
32 interviewees’ permission and then fully transcribed. The average time span of the interviews was almost 41 minutes, where the duration of the shortest one was 25 minutes, and the duration of the longest one was 83 minutes.
2.4. Analysis
In this case study content analysis is used, with a combination of deductive and inductive approach. Though literature suggests terms of objects to study, e.g. antecedents for behavior or perceptions, this thesis is also conducted to gain new insights as a result of data analysis.
Content analysis assumes a coding frame based on a set of preconceived categories for which the evidence is sought in the data (deduction), whereas grounded theory assumes that the explanatory framework is developed through analysis without a priori defined codes (induction). A coding frame is a hierarchically organized collection of codes in which similar codes are grouped together to produce more general higher-order codes. Higher-order codes give an overview of the interviews, whereas detailed lower-order codes capture more nuances in the data. When building up the coding framework for this case study, several codes were set up to analyze the data on basis of the literature review, such as the use of the HR attribution model of Nishii et al (2008) regarding the commitment or cost focused splitting of HR attributions, as well as the use of the OCB five-factor model of Organ (1988), consisting of altruism, courtesy, conscientiousness, civic virtue, and sportsmanship. Also the antecedents of a ‘strong HR system’ (Bowen & Ostroff, 2004), such as distinctiveness, consistency and consensus are used as starting codes.
All the data, gained by the interviews, were analyzed by reference to the coding scheme, using the analyzing program NVIVO-10. Using this program has the advantage that coding
33 can take place in a structured way. All coded fragments are represented by the same code and no fragments are missed in the analysis. Also NVIVO-10 gives a clear overview of the minor and major subjects, or how often the respondents say something about a particular topic.
On the basis of the initial code scheme the first five interviews were coded. As a result codes about the implementation process of HR and codes about felt emotions were added. Possible relationships and interfaces that were identified during the coding process were noted in memos. Then the remaining fourteen interviews were coded. Next, for each code the underlying texts and statements were analyzed. In this iterative process the coding was adapted when necessary (Gibbert & Ruigrok, 2010). That process led to examining which codes were rare and could be clustered and which codes should be split up further. For example the five codes of OCB were clustered in the two dimensions of OCBI and OCBO. During the analysis of the transcripts, new nodes were created, when a new theme emerged, such as the role of the Managing Director. This led to a fine tuning of the coding scheme. Furthermore, in the analysis of all transcripts and codes, all possible relationships and themes were checked through various queries of data in NVIVO-10, for example the relationship between HR attributions and OCB. Therefor is looked at how often codes and relationships are remarked, which patterns could be revealed and what similarities with theories were to determine. During the analysis phase, actively sourcing at evidence or examples that just overturn a conclusion (Miles & Huberman, 1994), proved essential. Furthermore, in all the activities during the analysis phase - as in the phase of data collection – the research question has always been leading.
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Chapter 3 Results
In this chapter the findings of this case study are presented. To structure the acquired insights, the findings will be divided into three major themes which are derived from the research question: the HR attributions and perceptions themselves; the antecedents that determine these HR attributions and perceptions; and the influence of these HR attributions and perceptions on OCB.
3.1. HR attributions and perceptions
This present study shows that when asking interviewees how they would describe the HR policy of the company (intended HR), as a steppingstone to elaborate on their attributions and perceptions of HR, nine of them come up with the companies’ general vision and strategy on human resources, and four come up with the description of the activities of companies’ HR department. Some of the interviewees do not have an answer to this question.
The company has recently introduced a new vision on how it wants to interact with its staff (bringing together a group of women with passion for their business and possibilities to make progress) and how employees interact with the customers (putting sincerity and responsibility at the heart of all our actions). So it is not strange that interviewees come up with general answers about the vision in which the role of Human Resources is clearly present. Examples of quotes about employees’ descriptions of intended HR:
“It is about the aspect that we want people to develop themselves, that they take responsibility, that they are pro-active, that is the vision-story of the company.”
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“I think it is very diverse, when you look at what happens with regard to communication and sports and so on.” (employee 2)
“What the organization would like to achieve, self-responsibility, responsibility for your own work, taking initiatives. That you yourself dissolving problems. Uh, I think that's, in my opinion a bit of, um, that should be an effect of the vision we have here regarding the policies we have here.” (employee 5)
“When I look at what this company through HR would like to achieve for the staff, then there is one important item coming up, that is personal development.”
(employee 7)
“If you look at what we really propagate: take your own responsibility, transparency, sincerity, eh that's very important.” (employee 11)
When asking the interviewees for their perception of HR practices, their answers also referred mostly to the designed HR policies related to the new vision in the company.
Some specific questions in the interview protocol refer to the attributions of employees regarding HR policies and practices. Asking them what they believe is the reason why this company has this vision on Human Resources and has these HR policies and practices, yields the answer to the question what kind of attributions the employees make. No one gives an answer which involves explicit and exclusive cost reduction focused attributions. Many of them give commitment focused attributions as answer to this question.
“It is just a kind of community, and that you like it here, and therefore, even better perform and are motivated.” (employee 2)
“... that everyone works here with pleasure, that everyone is also prepared to do their upmost, continues to develop, and is more conscious about their work, health, and
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own life ... and if you are all doing as an organization, ultimately the organization is much more sustainable.” (employee 12)
The vision itself seems determinant for employees in having an overall positive attribution to HR policies and practices, probably because of the central focus on employee well-being and development, mentioned in this vision. Overall, most of the interviewees seem to have a nuanced view on why they think the organization has the intended HR and the HR practices mentioned. The answers they give suggest a mix of attributions which have aspects of commitment and control focused attributions as well, such as well-being, exploitation, service quality.
“And on one hand targets are imposed, whereon people are judged, so that might not be something of the vision. But on the other hand, I think it can really motivate people. Uh, even if it's not intrinsic, but an extrinsic incentive eh indeed, but I think that can be very strong.” (employee 2)
“Of course it's important to keep your staff healthy, because that costs the organization less. It's not only fun, it is also reasonable.” (employee 5)
“As an employee I make use and as a manager I try to encourage my team as much as possible to make use of it, because I believe that no matter how busy you are, by a sports hour or a yoga hour, you feel better. Then you have as a company and as an employee benefit of it.” (manager 4)
“I also think the loading of our brand with “all you need, with love”, how we want to treat our customers, that is not only a commercial story, it should put in your DNA, otherwise you can never do that.” (manager 4)
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“With the new vision the ‘human resources’ came more up front, but at the end sales is leading, so then the vision is still there, but goes to the background, that is normal in an organization.” (employee 9)
“The organization itself also benefits from it, because people who are in a learning process get a lot of inspiration and this also snowballs to other people, giving people more impulses, so they can go for new business. And eventually they might go away, but then you also have room for new growth.” (employee 11)
3.2. The antecedents on which HR attributions and perceptions are based
In this paragraph the antecedents are presented, that play a role in how HR attributions and perceptions are constructed by employees. The following questions are asked: “How come you experience or perceive HR in the way you describe?” and “How come you think that your employer has [reason mentioned by the interviewees] to have this mission and HR policy?” The qualitative data collected in this study indicate that employees make their attributions and perceptions of HR practices mostly through the role of the Managing Director (MD); the companies’ culture and background; the role of the HR department; the role of communication about the intended HR policies and HR practices; and the content of the HR practices itself.
3.2.1. Role of Managing Director
In the interviews most employees refer to the role of the Managing Director (MD) as the reason why they think the company has a vision of putting employees’ sincerity, responsibility and autonomy in the heart of all the employees’ actions, striving to enable
38 everyone to progress. The MD aligns these policies with the exposed vision of the organization. Quotes about the role of the MD in forming the HR attribution and perceptions of employees:
“I said to the MD, when I was allowed to go to the conference, I was very happy with the fact that she also invited people of the floor to go along. I felt very thankful, but at the same time I thought it's very smart of the MD because it creates goodwill on the floor….there I see really the benefits for the company.” (employee 7)
“The MD is an example, I think. She is talking with everyone.” (manager 1) “…sometimes I went with the MD and that give me more insight.” (employee 9) “I think the MD and the board have very often tried to explain what we are doing and what the vision is.” (employee 11)
“And how she (MD) tries to involve the departments, asking people to do presentations on a staff meeting and eh everyone gets the chance… that I think, gives opportunities to people.” (manager 6)
It seems that employees see that the MD personifies the mission and guides the organization through inspiration and being a role model. Employees also see she enhances the motivation and job performance of employees through connecting their sense of identity to the collective identity of the organization, and she challenges employees to take greater ownership for their work. This description of her leadership style applies to the definition of Transformational Leadership (Bass, 1985).
3.2.2. Culture of the company
Another antecedent of how HR attributions and perceptions come about, seems to be the perception of the culture of the company. Because the company has a long history and, in
39 general, the employees have a long tenure at the company, there is loyalty to the firm and understanding of the current situation in which the company is, such as market circumstances and the decreasing turnover of the company. People experience the company as a family in which one looks after each other. These perceptions are based on the facts that employees are paid well, their pension plan is lucrative, and the personal care is present. The companies’ shared culture seems decisive for the way employees attribute the existence of the HR policies striving to enable everyone to progress.
“I think it's still a family feeling... Yes, a way of feeling together within this company. …. I think people are involved in what they do. There are not many people who say, I come here just to make money.” (employee 3)
“It's an older organization, so I think that on average, older staff walks around and ….are used to their role or something, that, I do think, is a bit of influence on how something grows or how it goes.” (employee 4)
“That the people in the company cooperate better, and uh huh people perform better and that ultimately this will lead to more profit.” (employee 6)
3.2.3. HR department
Answers to questions about the antecedents of attributions and perceptions of HR policies and HR practices also consist of how the HR department is seen.
“I see that the HR department is a component of the vision of the company… and that the HR department decides what to do with training for the group.” (employee 4) “I feel two things: HR is always busy and always with too few people. On the other hand there is a MD who is very closely related to what should or should not happen at HR, so also in terms of personnel and everything. I think if you really like HR in the
