Manager and Employee HR perceptions and perceived
performance
an empirical study
Master Thesis
Business Studies- Leadership &Management
Dirk Eykelhoff
10111662
Supervisor
Dr. R.M. Verburg
2 Abstract
The aim of the study is to gain a deeper understanding of the relation between Human
Resource Management (HRM) practices and organizational performance. This study zooms in on the relation between actual HRM practices (practices implemented by a middle manager) and perceived HRM practices (perceived by the employee). Data were gathered at two universities in Amsterdam. The results show that discrepancies between perceived and actual HRM positively impacts performance. Next to this, the transformational leadership style of managers moderate the relation between actual and perceived HRM; i.e. a more
transformational leadership style leads to smaller discrepancies between actual and perceived HRM. A similar effect was found for the impact of communication skills of managers on the discrepancy between perceived and actual HRM. At last, effects of age, education level and sex on the link between actual and perceived HRM were tested. No significant relations were found.
3 Table of Contents 1. Introduction……….………..4 2. Theoretical framework………..……….………...…...6 2.1 HRM level of analysis……….………..6 2.1.1 Intended HR..……….7 2.1.2 Actual HR……….. ..…..………....7 2.1.3 Perceived HR.…..………..………..………...7
2.1.4. Relation actual and perceived……….………...8
2.2 Leadership………..…..10
2.2.1 Transformational leadership……….….10
2.3 Communication ……….…..10
2.4 Individual differences and perceived HR……….13
2.5 Research model………15
3. Method……….………..16
3.1 Context……….………16
3.2 Sample and data collection..……….………....16
3.3 Measures………...17 3.4 Statistical procedure………….……….…………20 4. Results………....22 4.1 Descriptive statistics..……….………..22 4.2 Hypothesis 1……….24 4.3Hypothesis 2………..26 4.4 Hypothesis 3……….26 4.5 Hypothesis 4………..27 5. Discussion………..…28 5.1 Conclusion……….………...28 5.2 Theoretical implications……….………...26 5.3 Practical implications….…….……….………..………...29 5.4 Limitations………30 5.4 Future research………...……...31 Literature……….……….……….………32 Appendix –Questionnaires………36-39
4 1. Introduction
In the current strategic management literature, gaining a (sustainable) competitive advantage is an important goal. Competitive advantages are the organizational advantages that let an organization outperform their competition (Porter, 1985). This concept is further developed by Barney (1991); he added a sustainably aspect to the theory. Barney introduced the term sustainable competitive advantage, and states: ‘a firm has a sustained competitive advantage when it is implementing a value creating strategy which is not simultaneously being
implemented by any current or potential competitors and when these other firms are unable to duplicate the benefits of this strategy’ (Barney, 1991 p. 101). According to this theory,
companies can gain a sustainable advantage by implementing a successful strategy. With this development in business strategy theory, the role of Human Resource Management (HRM) also changed. In the early days of HRM there was a focus on the direct link between HRM practices (like rewarding systems and job selection) and organizational performance. This led to theories on ‘best HR practices’. When these practices are analyzed with for example the VRIO framework (a resource based view), the competitive advantage would not be seen as sustainable (Barney & Wright, 2004). These findings caused the change within the (academic) Human Resource Management; Strategic Human Resource
Management (SHRM) was developed. This broader view on HRM caused a shift from an administrative function towards the role of a strategic partner. In a study of Becker and Huselid (1998) on SHRM, a model was developed that suggested that the design and
implementation of a HRM system can lead to a higher profitability and higher market value. To understand the complex relation between HRM and performance, the authors Wright and Nishii (2006) developed a multi-level approach framework. This multi-level framework attempts to clarify the relation between HRM and performance by zooming in on processes on multiple levels. The authors split this relation in different levels, through which it can be analyzed. First there are the ‘intended HRM practices’, these are the HRM practices on paper, that are supposed to lead to better organizational performance. Then there are the ‘actual HRM practices’, these are the practices that are actually implemented in the
organization. At last, there are the ‘perceived HRM practices’, these are the practices perceived by the employees. All these levels are seen as ‘mediating processes’ which can have influencing variables within, and cause variance in the relation between HRM and performance (Wright & Nishii, 2006). The study of Khilji and Wang (2007) on the link between HRM and performance emphasizes the complexity of the link between intended and implemented HRM. They note that only copying successful HR practices creates no value: the
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implementation process is vital.
The study of Wright and Nishii (2006) focusses on the relation between ‘actual HRM practices’ and ‘perceived HRM practices’. In the relation between ‘actual HRM practices’ and ‘perceived HRM practices’ it was found that the communication skills of the manager, the leadership style and social relations all influence the linkage between ‘actual’ and ‘perceived’ practices. In their study, Bowen and Ostroff (2004) zoomed in on the link between actual and perceived HRM practices. Their study suggests that factors such as leadership and social relations can affect the ‘strength of the situation’. This strength of the HRM system influences organizational effectives (Bowen & Ostroff, 2004). In addition, the study suggests that a discrepancy between actual and perceived HRM can influence organizational performance. A low visibility of HR practices can cause a weaker system, which can negatively influence the organization.
The aim of this study is to open up the ‘black box’ between HRM practices and performance. This will be done by obtaining a better understanding of the link between actual and perceived practices and their effect on performance. This study will be conducted
specifically on two universities. Previous studies on this subject (Den Hartog et al, 2013, Kehoe & Wright 2013) are conducted in private organizations. Due to the different
organizational structure of public organizations, there can be a difference in the way HRM is adopted between the organization types (private and public). This can cause a difference in perception of HRM activities, and thus difference in performance. There are differences found in the way HRM is adopted by employees between public organizations (like universities) and private organizations (Boyne et al. 1999). Due to this difference, this study can contribute by analyzing this link in this specific sector. For the deeper understanding on the link between actual and perceived HRM, the (moderating) role of leadership style and the communication skills of the manager on the relation between actual and perceived HR are tested. The main research question in this study is:
What is the relation between actual and perceived HR practices and which factors influence this relationship?
This study is structured as follows. First, the research literature is reviewed and hypotheses are presented. Next, the methods are described, including the used measures, the sample and the description of the statistical analysis. The findings, implications and
6 2 Theoretical Framework
2.1 HRM Level of analysis
Most studies conducted on the link between HRM practices and performance study the link between these concepts on one level. This way of analyzing revealed some significant
relations between the concepts, but did not give much insight in how this relation exactly can be explained. In the study of Wright and Nishii, conducted in 2006, the relation between HRM practices and performance is analyzed on a more integrated way: a multi-level analysis is conducted. In this analysis the authors provide five levels wherefrom the relation between HRM and performance can be studied. These levels are: ‘intended HR practices’, ‘actual HR practices’, ‘Perceived HR practices’, ‘Employee reaction’ and ‘Organizational performance’. Between these levels, variance can occur. This model is illustrated in figure 1 below.
Figure 1: Levels of analysis (Wright & Nishii, 2006)
According to this model, intended HR Practices can be seen as a product of the HR strategy from an organization. Intended HR Practices are often described in organizational reports and are based on organizational goals. These practices are developed by HR policy makers and other strategic planners within the organization. The actual HR practices are the practices that are actually implemented by the managers. In practice, not all intended HR practices will be implemented. This difference can be caused by, for example, a lack of time, misinterpretation of the intended practices or incapability of the line manager who is responsible for
implementing the practices (Hall and Torrington, 1998). The perceived HR practices are the practices that are subjectively received by the subordinates of the managers (who are
responsible for the actual HR practices). According to the study it is likely that variances between all levels occur, and therefore it must be studied on those levels in order to gain insight of the HRM- performance process (Wright and Nishii, 2006). This study will focus on the variance that can possibly occur between the levels of actual and perceived HR practices. Later on in this theoretical framework these concepts will be defined and operationalized to be used in this study.
Intendend practices Actual Practices Perceived practices Employee reactions Organizational performance
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The model of Wright & Nishii (2006) offers a detailed and integrated way of analyzing the link between HRM practices and performance to discover and localize
inefficiencies in this global link. The different levels can thus offer interesting insights for HR researchers, managers and organizations as a whole. In the next part of this paragraph, the levels Intended, Actual and Perceived HR practices will be explained.
2.1.1 Intended HR
Intended HR practices are the set of practices that are developed by decision makers in an organization, mostly based on the business strategy, aligned with the business goals (Wright and Nishii, 2006). These sorts of HR practices are often formally documented in company policies.
2.1.2 Actual HR
In the study of Wright & Nishii (2006) the actual HR practices are seen as the practices actually implemented by the middle or line managers. Due to the variability of this
implementation (the personal qualities, e.g.: communications skills), variance in the actual HR practices can occur. In practice, there can be a quite difference between the intended HR practices and the actual implemented HR practices. In the study of Purcell and Hutchinson (2007) on the role of (front-line) managers in the HR-performance chain, the importance of the managers and their role in the causal chain between HRM and organizational is analyzed. The study focused on the influence of characteristics of the line managers that can cause differences in the way their employees perceive the practices. It is important to study this relation in detail and learn lessons to improve the quality of skills of the managers that can influence the implementation, the study concludes. In this study actual practices are seen as the practices implemented by the line managers.
2.1.3 Perceived HR
Perceived HR practices are the practices that are subjectively perceived and processed by the employee itself. These practices can differ for each employee in an organization, even when there are similar actual HR practices (Wright and Nishii, 2006). In the past, most studies on HRM practices analyzed the intended practices (practices on paper), rather than the perceived practices (Purcell & Kinnie, 2009). This lack of appropriate analysis was first documented by Wright and Gardner (2003). They stated that the underlying mechanisms in explaining the link between HR practices and performance were unclear (Wright, Dunford and Snell, 2001).
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made the same conclusion by stating that HRM practices exist objectively, but the way these practices are received by subordinates can differ: this is a matter of interpretation. The individual is the one who receives the HR message and his or her interpretation causes what the perceived HR message is. One can say that perceived HRM is the received HRM in the eye of the beholder. Due to this there can be a significant difference between the intended HR strategy of an organization and the perceived effects on their employees as the perception of people on HR is important. The study of Kehoe and Wright (2013) shows that there is a direct relation between employees’ perception of HRM practices and behavior and outcomes. The study emphasizes on a consistent implementation and communication of the HR practices. This is expected to be more effective than an exclusive focus on the selection of a certain HR system. Therefore, it is important that managers implement HRM practices consistently. In short, variance on the level of perceived HR practices can be explained in two ways: first, by the variance caused by the middle manager (see actual HR), and second, by the individual differences between the employees. These differences can be caused by for
example (working) experience, attitude or function of the employees (Wright and Nishii, 2006).
2.1.4 Relation actual and perceived HR
The study of Wright and Nishii (2006) shows that on all levels employee behavior is
influencing the HR process. Different studies show certain characteristics of the line manager can cause differences in the perceived HR by employees. Examples are communication skills, leadership style and diversity within teams. The study of Den Hartog et al. (2013) on the relation of manager rated HRM and employee HRM showed multiple relations between these concepts. First, it was found that manager rated HRM is related to employees’ HRM
perceptions. Also, it was found that Employee rated HRM is a mediator in the relationship between manager rated HRM and perceived unit performance.
Khilji and Wang (2007) examined the role of implementation of HR practices in the effectiveness of HR in achieving a better organizational performance. In their study the terms ‘intended’ and ‘implemented’ HRM (this is comparable to actual and perceived HR practices, as used in study of Wright & Nishii (2006)) are used in examining the link between HRM and organizational performance. They build on the existing literature on High Performance Work Systems (HPWS), but instead of looking to a list of HPWS they analyze the quality of
implementation. If the implementation of the HR practices lacks success, a HPWS could be unsuccessful. The study showed that smaller disparities between intended and implemented HR achieved higher HR satisfaction. HR satisfaction refers to the degree of perceived
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satisfaction with the employees on the HR practices. In another study on this subject (Walton, 1985) a link was found between HR satisfaction and a higher organizational performance. The success of this implementation lies with the managers who implement the HR strategy; they should be capable to intervene in a strategic way. The study shows there is a significant difference in the effects on organizational performance between companies who successfully use their managers as change makers and implement the HR policy effectively, and on the other side companies who merely copy HR practices out of textbooks, or practices seen in other companies.
In the study of Bowen & Ostroff (2004) the HRM practices altogether can be seen as a ‘system’ that communicates and send messages constantly, whereby all employees interpret the practices differently. The strength of this system influences organizational outcomes through employees’ interpretation of the climate. Climate is defined by the perception of formal and informational organizational policies. Following this, they state that HRM practices will play a critical role in determining climate perceptions. The content of the HR system is defined by the (strategic chosen) HR practices that are implemented in the
organization. The success of the HR system depends on the ‘strength’ of the HR system. A ‘strong’ HR system leads to shared perceptions, which lead to a strong climate that matches the intended climate. A climate that emerges (by the employees) that not match the intended climate, can lead to conflicts and poor productivity. The authors state that if there are
differences in experienced HRM practices by the employee, ‘confusion, disillusionment, or other negative reactions will likely result’. From this it expected that a higher variability in employee rated HRM will cause a worse performance. The ‘strength’ of the HR system is conceptualized in terms of effectiveness: distinctiveness, consistency and consensus. For the distinctiveness it is important the visibility of the HR practices is good. The visibility refers to the degree the practices are observed by the employees. According the article this is about how people ‘cognitively organize’ the practices. This can be seen as the HR practices
perceived by the employees. When the HR system contains a lot of HR practices, visibility is likely to be higher. To asses this form of visibility (as indicator of the strength of the HR system), a comparison between the extent of HR practices by the agents that implement the HR practices ( e.g. the line managers) and the indication of the variety of HR practices perceived by the employee would provide a useful measure of a part of HR system strength. A comparison between the practices from managers and employees would give an indication on how visible the HR practices are to the employees. Logically, it follows; more visible HR practices lead to a stronger HR system, which lead to a higher organizational performance.
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If the perceived practices match the indicated practices by the manager, there is a small discrepancy: then the visibility is high. The link between actual and perceived HRM is defined as strong when actual and perceived HRM are rated more similar, which means a smaller discrepancy between actual and perceived HR. When the discrepancy between the perceived practices and the manager rated HR is large: the visibility is low. Based on the theory, it is expected that a big discrepancy (low visibility), will lead to a lower performance.
Hypothesis 1a
The link between actual and perceived HRM is positively associated with performance
Hypothesis 1b
Teams with a smaller discrepancy between actual and perceived HRM score better on performance
2.2 Leadership
In the relation between actual and perceived HR practices, the characteristics of the agent that implements the HRM practices, influences the discrepancy between the two practices. Purcell and Kinnie (2009) state that ‘culture, leadership, line manager behavior, and operational management all need to fall within our area of interest’ (p. 1) when studying the relation between HRM and performance. Bowen & Ostroff (2004) focus on the importance on the alignment between manager and individual goals. Managers have a vital role in the transmission and communication of HR practices and values. Specifically, different
leadership styles influence the climates in organizations, which lead to different behavior in organizations. In the article this is called ‘situational strength’. In the article of Kozlowski & Doherty (1989) the relation between climate and leadership is described. Founded is:
‘Subordinates with high-quality supervisor relations had more positive climate perceptions, exhibited greater consensus on climate, and had perceptions more similar to those of their supervisors than did subordinates with low-quality relations’ (p.546). In the following paragraph the effects of the leadership style of a HR implementing manager is studied
2.2.1 Transformational Leadership and performance
The term ‘transformational leadership’ was used for the first time by James McGregor Burns in 1978. Burns described transformational leadership as a process where leaders and their employees ‘raise one another to higher levels of morality and motivation’ (Burns, 1978, p. 20). Later in time, the concept of transformational leadership has been used in multiple
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studies. In 1990 the concept was further defined by Bass and Avolio (1990). Four components were divided by Bass and Avolio within the concept of transformational leadership:
individualized consideration, idealized influence, intellectual stimulation and inspirational motivation. Individualized consideration describes the capability of a leader to establish a personal relation between the leader and his/her subordinate, and recognize their individual needs (Bass & Avolio 1990b). Idealized influence is the aspect of admiration, loyalty and respect that leaders receive from their subordinates by their behavior and communication. Intellectual stimulation is about the degree on the recognition and stimulation of talents and capacities of the subordinates of the leader. At last, inspirational motivation is about the importance of having an idealized goal and a plan how to achieve these goals, and the degree on how this is supported by their subordinates (Bass and Avolio, 1990).
In 2010 a study was conducted by García-Morales et al. (2012) on the relation between transformational leadership style and organizational performance. The study showed that transformational leadership influences organizational performance positively. They found two phenomena through which this increased organizational performance worked: organizational learning and organizational innovation. The findings show that a transformational leadership style stimulates the sharing and transfer of knowledge (through organizational learning), which lead to a general better organizational performance Also, the study shows a positive effect of transformational leadership on organizational innovation, which at the end can lead to a better organizational performance.
According the study of García-Morales et al. (2012), transformational leadership enhances the presence of a shared vision among the employees who are led. Also, it generates a greater consciousness and acceptance of the mission of the organization. According the theory of Bowen and Ostroff (2004), shared visions, attitudes and behaviors are
characteristics of a strong HR system. ‘Only when perceptions are shared across people organizational climate become a meaningful construct’. The theory states there is a direct link between leadership style and gaining a strong situation. With this theory in mind, it is likely that a more transformational leadership style causes more shared visions under the employees, and also causes a higher agreement on the communicated HR practices by the manager. This means that a transformational leadership style can cause interaction effects in the relation between actual and perceived HRM. When managers show a more transformational leadership style, employees are likely to share the vision on HRM practices with their colleagues and manager, then when a manager has a less transformational leadership style.
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plays a moderating role in the relation between actual and perceived HRM. This means, a more transformational leadership style causes a better alignment between actual and perceived HRM. The strength of the relation between actual and perceived HRM is expected to be partly explained by the leadership style. Therefore, the next hypothesis is conducted.
Hypothesis 2
A transformational leadership style moderate the relationship between actual and perceived HRM
2.3 Communication
Next to the leadership style of the manager, there are more manager characteristics that can influence the discrepancy between actual and perceived HRM. According Wright & Nishii (2006), the link between actual and perceived HRM presents a communication challenge. If the managers are not able to communicate and implement the HR practices, a misalignment can occur. The communication skills can thus influence this discrepancy between actual and perceived HRM.
2.3.1 Communication skills
The communication competences of managers can be of great influence on the way a message is received by their subordinates. A study conducted on the effects of communication on the (managerial) performance showed that there is a significant relation between the quality of the communication skills of a manager and performance (Penley et al. 1991). The managers with poorer communication skills reported they had more problems with making themselves understandable for their subordinates. In the study it is assumed that managers with a lower quality of communication skills are less likely to expose them self to public or individual communication opportunities. Hater and Bass (1998) describe the importance of
communication skills in transformational situations within organizations. To encourage employees to perform on higher levels and to reach the organization goals it is important they understand and feel the urge of the goals. The description and the dimension of these goals are vital in establishing the (strategic) goals.
In the study of Den Hartog et al. (2013) on the link between HR perceptions, communication skills and perceived performance, it was shown that the quality of
communication of the manager moderated the relation between manager and employee rated HRM. It is shown that when the manager and employee rated HRM is more aligned,
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informed, and the manager are more capable to reach the employees on an effective way. What is communication competence exactly and how is the concept used in studies? The typical definition of communications competence is given by Wiemann (1977) with a list of skills and traits. This so called ‘trait-based’ view consists out of traits like empathy,
interaction, social relaxation and attentiveness. Wiemann communication competence as the ability ‘to choose among available communicative behaviors’ to accomplish one's own ‘interpersonal goals during an encounter while maintaining the face and line’ of ‘fellow interactants within the constraints of the situation’ (p. 198). With this competence scale list, Wiemann was the first researcher who quantified communication competences. This has been used many times in multiple studies on measuring the effectiveness of good communication skills.
According the literature, managers with different communication skills, will implement HR practices difficult. The study of Den Hartog et al. (2013) predicted that
managers, who have high rated communication skills, enhance employees to understand their tasks, responsibility and understand organizational goals (Kernan and Hanges, 2002). In contrary, when managers have low quality communication skills, employees are not well informed about organizational issues and their interpretation of the HRM practices may be subjective and purely based on their own perceptions. This acknowledgement of the importance of the communication skills of managers complements with the findings of Bowen and Ostroff (2004) who focus on their model of ‘situational strength’. The agent who implements the HR practices influences the process. Based on the previous studies (Den Hartog et al., 2013) it is expected that the quality of the communication skills of the managers cause an interacting effect in the relation between actual and perceived performance, and thus play a moderating role in this relation. It is expected communication skills of the managers influence the discrepancy between the actual and perceived HR practices. The following hypothesis is set up:
Hypothesis 3
Communication skills moderate the relationship between actual and perceived HRM
2.4 Individual differences and perceived HR
Next to the leadership style and communication skills from the manager, there are more variables that can influence the relation between actual and perceived HRM. According to the study of Wright & Nishii (2006) (cultural) diversity and peoples backgrounds influence the
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way information about HRM practices are perceived and processed. Therefore it is important to understand diversity, and test their effects on perceived HRM practices.
Diversity in teams can influence the way people work together, both positive and negative. In this way, diversity can influence performance on productivity and innovation. According to the study by Harrison et al. (2002), diversity can be effective in cutting down ‘group thinking’ by evoking biases and individual prejudices. But what is a diverse team exactly? Diversity is defined and operationalized in many studies. In the article of Harrison (2002) two kinds of diversity are divided: surface-level diversity and deep- level diversity. The surface-lever diversity is the most common diversity measures used in studies on the effect of diversity are age, sex and race/ethnicity. The categorization of this kind of diversity is mostly based on objective separate demographical factors. This kind of diversity can also be titled as ‘social category diversity’. Deep-level diversity refers to the differences in personal traits, values and attitudes. This kind of diversity is a more subjective form of the categorization of diversity. The differentiation between the two types of diversity (surface and deep layer) is made because of the different constructs through which the diversity influences the team performance. In this study the concept of surface-layer diversity will be used. Diversity is not always helpful for the improvement of productivity and innovation. In the article of Timmerman et al. (2000) on diversity and team performance no evidence was found for the positive effect of diversity on performance.
In the relation between actual and perceived HRM, there are individual factors that can influence variance in the perceived practices. People’s (cultural) background can influence the way people process there information. Past experience, educational background, cultural origin can an all influence the way the employees process the HRM practices they perceive, and how they use this information (Shaw, 1990). Based on this theory, it is expected that there is a difference among diverse groups on the relation between actual and perceived HR.
Hypothesis 4a:
Education level moderate the relation between actual and perceived HRM
4b
15 Research model Actual HRM Perceived performance Leadership style Communic aton skills Perceived HRM
16 3. Method
3.1 Context
Due to the character of the organizational environment in this study (public sector) this study is conducted on two universities in Amsterdam: the University of Amsterdam and the VU University. Until now, most studies on this subject (e.g. Den Hartog et al, 2013, Kehoe & Wright, 2013) conducted empirical research in private organizations. Universities are quite different in structure; they can be classified as (semi-) public organizational. Employees of universities are often highly educated and this can causes differences in the way the
employees perceive the HRM strategy (Boyne, 1999).
3.2 Sample and data collection
The population of this study is formed by the employees on universities. The actual sample of this study is formed by managers and employees of the two universities: UvA and VU. In order to analyze the relation between actual and perceived HRM, data was gathered in
different sets of managers and their employees. Practically, this means that data was collected in different departments, each department with their own manager. Departments like student services, supporting services and private law department participated in this study. Each of the departments had their own set of surveys, in order to test on any differences between actual and perceived HRM, related to each other. Every department had one manager; his or her results on the survey were linked with the results of their employees. In this way not only the discrepancy actual and perceived HR can be calculated, but team scores can be compared. In total, 10 teams were asked to participate, where 7 teams agreed. Two teams on the VU participated, five teams on the UvA.
The data collection procedure started by contacting the (department) managers who are responsible for the practical implementation of the HR practices. They were contacted by email and were asked to participate in the study and asked for permission to request
participation from their subordinates. After this permission was granted, surveys were sent to the team of subordinates of the manager. In total, 10 managers were approached, and 7 managers agreed to participate in this study. Their teams of subordinates consisted out of 6 to 28 persons per manager. In average, 65% of employees in the teams who were approached after the agreement of their manager responded to the survey. In total, 56 respondents within 7 teams participated to this study; this is the managers and the other employees in total. Due to missing data, the survey results of 3 respondents were not usable for statistical test. 62.3% of
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the participants were male, 37.7 % of the participants were female. Most participants were highly educated (76% HBO/WO). 37% of the participants had the age between 31-40 years, 27% was in between 41-50 years.
3.3 Measures
As described in the literature review, five concepts will be used in measuring the relation between HR- and performance. These concepts are actual HRM (only measured at the
managers), Perceived HRM, transformational leadership, communication style of the manager and perceived performance (only measured at the employees). All the measures used in this study are established measures, used before in other studies. This improves the reliability and the internal consistency of the measured concepts. All items were in English, but in order to enhance likeliness of good understanding translated in Dutch by the author of this study (Dutch native speaker). The concepts are measured in a quantitative way, measured with multiple items using a Likert-scale.
All the measures are tested on internal consistency with the use of a reliability
analysis. In this analysis, we will look to the value of Cronbach’s Alpha. This is a direct value for the international consistency of the concept. To ensure the consistency, the value of
Cronbach´s alpha should 0.7 or higher. The value of the Cronbach’s alpha are (Actual HRM = 0.841, Perceived HR = 0.819 Reliability (Cronbach’s alpha) PercPerf = .826, LeadershipStyle = 0.88, commLeader = .729).) See appendix for analysis output. After the reliability check the variables were computed into the concept variables: Actual HR, Perceived HR,
Transformational leadership and communication skills.
Actual HR (10 items).(Cronbach’s α = 0.841)
This concept is measured with the use of an existing scale, developed and used in the study on HRM and performance by Den Hartog et al. (2013). In this study the concept is called
Manager-rated HRM. The measure consists out of 10 items that indicate in which extent HRM practices are present. The items are (1) Training (at different stages) is provided regularly to employees. (2) Jobs and tasks that offer employees the opportunity to learn new things. (3) Employees’ career ambitions and goals are taken into account in this team (4) Employees are informed about the opportunities for development the organization offers.(5) Equal opportunities are offered to employees regardless of gender, ethnicity, nationality, sexual orientation or religion. (6) Employees are allowed to determine the way in which they perform their work. (7) Employees are given room to make decisions in issues relating their work. (8) The employees work as a part of a team. (9) The work demands of the job that
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employees are appraised on are made clear for them. (10) Employees are informed about how their performance on work is rated. The items will be measured using a 5- point Likert scale, ranging from 1 (firmly disagree to 7 (firmly agree).
Perceived HR (10items) (Cronbach’s α = .819)
The concept of perceived HR is also measured with an existing scale, also used in the study on HRM and performance of Den Hartog et al. (2013). The items are: (1) Training (at different stages) is provided regularly to employees. (2) Jobs and tasks that offer employees the opportunity to learn new things. (3) Employees’ career ambitions and goals are taken into account in this team (4) Employees are informed about the opportunities for development the organization offers.(5) Equal opportunities are offered to employees regardless of gender, ethnicity, nationality, sexual orientation or religion. (6) Employees are allowed to determine the way in which they perform their work. (7) Employees are given room to make decisions in issues relating their work. (8) The employees work as a part of a team. (9) The work demands of the job that employees are appraised on are made clear for them. (10) Employees are informed about how their performance on work is rated. The items will be measured using a 5- point Likert scale, ranging from 1 (firmly disagree to 7 (firmly agree).
Transformational leadership (7 items) (Cronbach’s α = .880)
The variable transformational leadership style is measured by an existing seven-item Global Transformational Leadership Scale (GTL), (Carless, Wearing and Mann, 2000). This scale is test on reliability and validity and proves to be an adequate measure for leadership style. High scores on the items of this scale suggest a leader has a rather transformational leadership style. This style of leadership is positively related to ratings of leadership effectiveness (Seltzer & Bass, 1990). This measure consists out of the following items: (1) (The manager)
Communicates a clear and positive vision of the future, (2) (The manager) treats staff as individuals, supports and encourages their development, (3) (The manager) gives
encouragement and recognition to staff, (4) (The manager) fosters trust, involvement and co-operation among team members, (5) (The manager) encourages thinking about problems in new ways and questions assumptions, (6) is clear about his/her values and practices what he/she preaches, and (7) (The manager) instills pride and respect in others and inspires me by being highly competent. Participants responded on a 5-point Likert scale measuring
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Communication style (Cronbach’s α = . 729)
As a moderator measure the concept of ‘Communication’ is used. This concept was assessed by using items from the Communicator Competence Questionnaire, conducted Wiemann (1977). This questionnaire scale is tested as a reliable and validated measuring scale. The nine items used in this study are: (1) My manager interrupts others too much., (2) My manager generally says the right thing at the right time, (3) My manager is "rewarding" to talk to, (4) My manager can deal with others effectively. (5) My manager is a good listener. (6) My manager is easy to talk to. (7) My manager likes to use his/her voice and body expressively. (8) My manager is relaxed and comfortable when speaking. (9) is not afraid to speak with people in authority. The items will be measured using a 5- point Likert scale, ranging from 1 (firmly disagree to 7 (firmly agree).
Perceived Performance (5 items) (Cronbach’s α = .826) (measured with employees)
Organizational performance is a wide-ranging concept. The most used type in studies of performance is the financial performance of an organization. Next to this kind of performance there are many other forms. One could think of operational performance, production quantity performance or customer satisfaction as an indicator for performance. In order to use the differences between employees it is important have a conceptual definition of the concept performance. An often used form of the concept performance in social sciences is ‘perceived performance’. This form of performance measuring is based on the experiences of employees self. Measuring this form of perceived performance can be preferred over for example
financial performance in some studies: there is a difference between actual and perceived performance. In studies related to performance, team performance is an important form of performance. Team performance is influenced by social structures. The Team Diagnostic Survey (TDS), created by Wageman, Hackman and Lehman (2005) is an instrument especially designed to adequately study and evaluate team behavior and performance. The variable Team Performance will be measured with the help of the Team diagnostics survey (TDS). The following items are used in this study to measure the performance of the team. (1) The team’s work is high quality, (2) They are meeting their team objectives, (3) I am happy with my team results (4) Reports on their performance are favorable (5) So far, the team has been a great success. The items will be measured on a 5 points Likert scale.
Diversity / Control-variables
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deep level diversity. In this study the variable diversity is measured in three items: (1) what is your age category, (2) what is your gender, (3) what is your highest level of education
Based on literature certain control variables are selected to be tested. These variables are variables like age and years at the company. These variables can influence the relationship between the dependent and independent variable (Sanders, Dorenbosch & de Reuver, 2008). These questions include what is your gender, age, nationality, years at the company and years at the department.
3.4 Statistical procedure
In this paragraph the statistical strategy will be discussed. In the results section, the analyses will be displayed. Before the data was used, common tests were conducted to check the data on consistency. First, frequencies tables for each item were run, to check on missing data. For only one respondent, on multiple items, data was missing. To ensure the quality of the
statistical analysis, this respondent was deleted from the data-set (case-wise deletion). Next to the directly measured variables, a new variable was calculated that displays the discrepancy between the manager and employee rated performance. In this study, the new variable is called HR Gap. This variable is computed by calculating the difference between actual and perceived HRM per respondent. This results in a value per respondent. This variable is checked on reliability and is used as HR gap in the analysis. All the relations were checked on reliability and internal consistency. The results were presented in the measures section.
To measure differences between the different teams used in this studies, all teams are grouped and a mean is calculated. A new variable is computed with different team scores on GAP: low, medium and high Gap. An ANOVA analysis will be conducted to test on any significant differences on performance.
After that, a correlation test will be conducted. This test shows any relation between the independent and de dependent variable. In this study all the concepts are measured with the use of a Likert scale. Because all the items that were measured on Likert scale were grouped into one concept, data on linear interval level was created. On this way, it was possible to conduct linear tests. The hypothesis (based on the theory) predict a direct effect from the on the other variable. To test this relation, Pearson’s correlation value is used. This test is applicable for measuring the relation between two variables. The value of Pearson can differ between -1 till +1. A positive value of Pearson’s correlation indicates a positive relation, where a negative value indicates an opposite reaction. Also, the level of the
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significance of this relation is important. This value is expressed by the P-value. The P-value can be in between 0 and 1.
Next to the correlation analysis, a regression analysis is conducted. A regression analysis can provide more detailed information on the correlation, for example through the predictive capabilities of the regression. Also, the direction of the relation can be shown (Field, 2008).All assumptions for regression where tested. First, the independence of
observations was tested. According the casewise diagnostics table there were no outliers. Also there is tested for heteroscedasticity. Also, the test for normality of residuals is accepted. All the output in the regression analysis will be presented in tables.
In order to test hypothesis 2 and 3 a moderation analysis is conducted. For this analysis a regression analysis is used to measure any interacting variables. To measure the interacting effects the variables ActualHRMtransformational and ActualHRMcommunication are computed, by multiplying the centers of both variables to each other. Also, the variable actualHRM were centered in order to be used in the moderating variable. These variables are used in a linear regression analysis to test on any interacting effects.
In order to test the hypotheses on diversity, two statistical tests will be conducted. First, an independent T-sample test, for the comparison of the two sex groups (male and female), with HR gap as dependent variables. Second, a two way ANOVA test will be used for the comparison of age groups and education level groups, to test on any significant differences between the groups on the HR gap. On this way the possible interacting effect between the moderating on the relation will be tested.
22 4. Results
4.1 Descriptive analysis
In table 1 the descriptive statistics of all variables are given: the mean, standard deviation and correlations between the factors are given. A total of 56 participants were used in the
statistical analyses. In total 7 managers and 49 employees participated in 7 teams.
The control variables age and sex do not seem to influence any other variables directly (the founded relations were not significant at the .05 level). Contrary to this, the variable highest level of education did seem to influence other variables directly. The founded correlations between the other variables (actual/ perceived HRM, HRM gap, perceived performance, transformational leadership and communications skills), that were significant were rather high. An overview of all the correlations is presented in table 1.
Significant positive relations are found between transformational leadership and perceived performance (.73, p <0.05), and between communications skills and perceived performance (.66 p <0.05). This means that a higher score on transformational leadership style or communications skills is directly linked to performance. This is in accordance with the literature on leadership styles and communication skills.
Other interesting (significant) negative relations are found between the variables perceived performance and gap (-.57 p = <0.05), transformational leadership and gap (-.53, p = <0.05) and communications skills and gap (-.42 p = <0.05). This means that higher scores on the variables cause a smaller score on the gap (discrepancy between actual and perceived HRM). This correlation between gap and transformational leadership style suggests there are possible moderating effects in this relation.
23 Table 1 Descriptive statistics and (Pearson) correlation
Mean SD 1 2 3 4 5 6 7 8 1. Age - - - - 2. Sex - - .25 - - - - 3. Highest education - - -.49 -.11 - - - - 4. Actual HRM 2.26 .433 -.32 -.18 -.52 - - - - - 5. Perceived HRM 2.72 .428 .11 -.25 -.29 .35 - - - - 6. HRM Gap .545 .464 .12 -.10 .16 -.32 .64 - - - 7. Perc. Performance 3.32 .658 .18 .15 .24 -.15 -.73 -.57 - - 8. Transf. leadership 3.29 .665 .14 .10 .33 -.30 -.80 -.53 .73 - 9. Communication skills 3.40 .749 .06 .24 .48 -.33 -.73 -.42 .66 .85 Note: bold stated correlations are significant at the 0.05 level, others are non-significant
24 Hypothesis 1a:
‘The link between actual and perceived HRM is positively associated with performance’
In order to test this hypothesis a regression analysis is conducted between the variables HR Gap and performance. The results of this analysis are displayed in the table.
Dependent variable: perceived performance
The results of the analysis confirmed the hypothesis. When we look at the regression result we see there is a predictive relation between HR gap and performance (β= -.82). The linear regression analysis established that HR Gap could statistically significantly predict Perceived Performance, F(1, 56 = 60.2 p < .05 ). Because the link between actual and perceived is defined as strong when the value of HRM Gap (the gap between actual and perceived HRM) is small, the expected correlations are negative. The results thus confirmed this hypothesis. This means, the higher the score on the variable HR Gap, the lower the perceived
performance.
Hypothesis 1b:
‘Teams with a smaller discrepancy between actual and perceived HRM score better on performance’
The teams are divided in three groups: low gap, medium gap and high gap. Then the groups are tested on significant differences organizational performance. The results show there was significant difference between the different groups on performance F (2, 12.35 = .583, P= .001). In graph 1 this difference is displayed.
Hypothesis Model (n=56) Béta(β) .Sig F change
R square Adjusted R
1. constant 3.755 .00
25 Graph 1: Teams with low/medium/high HR gap and performance
Table 2. Regression analysis, variables HR gap, transformational leadership
Dependent: Performance
Table 3. Moderating regression analysis. Moderators: Leadership style and communication skills.
Dependent: perceived HRM
Hypothesis Model (n=56) Béta(β) .Sig F change R square Adjusted R LeadCentr -.615 .000 2 ActualCente -.253 .000 34.302 .677 .658 Act x lead .261 .115 ActCent -.353 .009 3 Comcentr -.573 .000 28.384 .635 .612 Act x comm .506 .002
Hypothesis Model (n=56) Béta(β) .Sig F change R square Adjusted R 2 1. constant 1.444 .00 Comm. Skills -.264* .00 11.112 .181 .321 3 Transf. Lead. -.372* .00 20.350 .285 .271 0 0,5 1 1,5 2 2,5 3 3,5 4
Low Gap Medium Gap High Gap
Per
for
m
anc
26 Hypothesis 2:
‘A transformational leadership style moderate the relationship between actual and perceived HRM’
To test this hypothesis, a moderating regression analysis is conducted. The moderating regression results (table 2) provide support for this hypothesis. First, a significant interaction effect is found between actual HRM and transformational leadership style (β = .261, p= .000). This means there is a stronger relation between actual and perceived HR when there is a higher score on the variable transformational leadership style. This explains a part of the relationship between actual and perceived, and on this way the transformational leadership style acts as moderator. The hypothesis is confirmed.
Next to the moderation effect, the results of the regression for the relation between transformational leadership and HR gap show there is a predictive relation between Transformational Leadership and HR gap (β= -.372). The linear regression analysis
established that Transformational Leadership could statistically significantly predict HR Gap, F(1, 56 = 20.3 p < .005 ). This means, the higher the score on the variable transformational leadership, the lower the score on HR Gap.
Hypothesis 3:
‘Communication skills moderate the relationship between actual and perceived HRM’
To test this hypothesis, a moderating regression analysis is conducted. The moderating regression results (table 2) provide support for this hypothesis. First, a significant interaction effect is found between actual HRM and communication skills (β = .506, p= .002). This means there is a stronger relation between actual and perceived HR when there is a higher score on the variable communication skills. This explains a part of the relationship between actual and perceived, and on this way the communication skills acts as moderator. This hypothesis is also confirmed.
Next to the moderation effect, a regression analysis shows a relation between the variables communication skills and HR gap. When we look at the regression result we see there is a predictive relation between communication skills and HR gap (β= -.264). The linear
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regression analysis established that communication skills could statistically significantly predict HR Gap, F(1, 56 = 19.2 p < .005 ) A higher score on communication skills, reduces the discrepancy between actual and perceived HR.
Hypothesis 4a:
‘Education level moderate the relation between actual and perceived HRM’ 4b
‘Age moderate the relation between actual and perceived HRM’
A two-way ANOVA was conducted that examined the effect of actual HRM and education level (secondary education, MBO, HBO or WO) on perceived HRM. There was a statistically significant interaction between the effects of actual HRM and education level on perceived HRM, F (2, 43) = 3.178, p = .05. Hypothesis 4a is confirmed.
Also, a two-way ANOVA was conducted that examined the effect of actual HRM and age group(18-30, 31-40, 41-50, 55+) on perceived HRM. There was no statistically significant interaction between the effects of actual HRM and age group on perceived HRM, F (8, 36) = .977, p = .469. Hypothesis 4b is rejected.
Table 4: Two way ANOVA – education level and age group
Dependent variable: perceived HRM
Model df SS MS F. Sig.
control 6 .853 .213 .988 .423
1 (educatxactu) 49 .800 .400 3.178 0.05
28 5. Discussion
5.1 Conclusion
The purpose of this study was to gain insight in how HR practices can lead to a better
organizational performance by analyzing the link between actual and perceived performance. The study investigated this by connecting the discrepancy between actual and perceived performance directly to performance. Data was gathered from 56 employees in 7 departments at the UvA and the VU. The data revealed a relation between actual and perceived HR and performance. The smaller the discrepancy between actual and perceived HRM, the higher the performance. Also, the study revealed some moderating effect of the leadership style and communication style on the relation between actual and perceived performance. Also, an interaction effect between education level on the link between actual and perceived HRM was found. In the next paragraphs the theoretical and practical implications will be discussed.
5.1.1 Theoretical implications
In line with the studies mentioned in the literature review this study found a positive
association between the gap between actual and perceived HR and performance. The founded relationship was a negative relation between the size of the HRM gap and performance. This means that a smaller HRM gap (a stronger link between actual and perceived HRM), leads to a better organizational performance. Although this relation was expected based on the
existing study of Bowen and Ostroff (2004), it contributed to the theoretical field by assessing the link between actual and perceived and performance in this specific organizational field (semi-public organization). The relation seems to be stronger than shown in previous study on this subject. This possibly indicates a stronger effect on the relation between actual and perceived HRM on performance, in this specific sector. HRM strategy in public organizations is less common, but as the article of Boyne et al. (1999) and this study suggests; it affects performance. Other considerations on this finding can be found in the limitations part.
Next to this, the moderating role of transformational leadership is confirmed. This expected relation was based on the study of Purcell and Kinnie (2009) who suggested a closer analysis on the influence of transformational leadership. The results of this study shows that the transformational style acts as a moderator, this means that a more transformational leadership style can strengthen the link between actual and perceived performance. This is a contribution to the existing research on the link between actual and performed, since the moderating influence of the transformational leadership was not studied yet. This finding
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demonstrates that a transformational leadership style enhances shared vision under employees, which can lead to a better performance.
In line with the study of Den Hartog et al. (2013), a moderating role of communication skills on the relation between actual and perceived HRM is found. This result matches the findings but, as stated earlier in this paragraph, the different sector (public sector) makes the founded link unique and contributes to the existing theories.
Contrary to the expectation, there were no differences found between the different age groups discrepancy between actual and perceived HRM. This implicates that diversity factors like age do not influence the relation between actual and perceived performance on their self. Perhaps this effect is only present when measuring deep- level diversity instead of the used surface level diversity (Harrison et al., 2002). On the other hand, there was a significant interaction effect found between the education level of employees and the link between actual and perceived HRM. This means that the level of education has a moderating role.
The study of Bowen & Ostroff (2004) who studied HRM practices on different levels suggested a closer look on the link between manager and employee rated HRM was needed. They suggested a closer look to the effect of the differences between managers and employees perceptions on HRM. This current study contributed to the understanding of the link by the testing of different possible moderators and testing the direct effects of a larger discrepancy between actual and perceived HRM on performance.
5.1.2 Practical implications
Following the theoretical contributions, there some practical implications can be given. First, the role of the manager in the implementation process of HR practices is vital. The characteristics of the leader is associated with the relation between actual and perceived HRM, and this relation is associated with organizational performance. The alignment between the actual and perceived HRM is important. This can justify the training of managers on leadership and communication skills. To enhance a good implementation of the HR practices, the communication skills of the manager should be improved. Also, since a transformational leadership style enhances the relation between actual and perceived HR, a more
transformational leadership style should be promoted. Studies on leadership showed that it is possible to train managers in order to attain a more transformational leadership style (García-Morales et al., 2012).
A second practical implication is the confirmation of the importance of the relation between actual and perceived HRM, specifically for universities. Typically, there is not much
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attention for the effectivity of managers in the higher education sector (contrary to the private sector), despite the study of Boyne et al. (1999). This study suggested that there are
differences in the perceptions of HRM, which can influence the outcomes of HRM policies. The results of this study showed a stronger relation between actual and perceived and performance than found in previous studies. This indicates that the relation between actual, perceived and performance is, similar to private organizations, present when studied. This finding emphasizes on the importance, also in this specific field, to invest in a good
implementation of the HRM practices in the organization. Factors to consider are the qualities of the manager, leadership style and communication styles are important. This can enhance the performance within the organization, which of course can lead to a better organizational performance.
5.1.3 Limitations
The study has a number of weaknesses that can influence the reliability and generalizability of the outcomes. The relations found were notably high. Probably this is caused by one of the following weaknesses. The most influencing weakness in this study is the size of the sample. The total sample group consisted out of 59 respondents, but because of missing data and outliers, some results were removed. This caused that the group of respondents used in the statistical analysis is reduced to 56 respondents. This rather small amount of respondents allows performing the statistical tests, but blocks the possibility to generalize the results to the total population. The smaller amount of respondents can possibly explain the relatively high correlations. A department with a rather high result, related to a high satisfaction level, can influence the results.
Also, due to the smaller amount teams and team members, the comparison between the teams was doubtful. There were 7 teams, with an average of 7 persons per team. This makes a reliable comparison statistically difficult. For this reason most analysis were conducted on individual level. The link between actual and perceived HR and performance were individually calculated and used. On this way the statistical tests were more reliable then comparing teams.
Next to this, a point of attention is the use of ‘perceived’ variables. The variables ‘performance’, ‘transformational leadership style’ and ‘communication style’ of the manager, are all measured as perceived by the employee. The results of the measured variables can be biased. For example: although a manager and employee rate HRM similar and perform (objectively) well, an employee with a personal dispute with the manager can react
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emotionally on the items. A more reliable way of measuring these items could be
(longitudinal) observations, assessing structured performance reports, or testing managers’ qualities in assessments. On this way the reliability of the results will be improved.
Also, the use of convenience sampling through the use of gatekeepers can influence results. This is a form of non-probability sampling that does not allow making generalizations for the whole population. Another point of interest is the use of the Likert-scale by measuring the concepts. Within the academic field there is a discussion on the use of this instrument and analyzing the data. Some see the data gathered with a Likert-scale purely as ordinal data, and therefore not usable for analyses that require continuous data (like regression). But when data from different Likert-items is computed into a new variable, it is accepted that the outcome variable can be used as a continuous variable in the analyses. In this study the new computed variables were seen and used as continuous variables.
The design of the study is a cross-sectional study whereby the situation is measured at one moment in time. This cause the founded data can give some insights in the relations between the variables, but to know more about causal relations, longitudinal and better research is needed. In the paragraph ‘future research’ ideas for this research are given.
5.1.4 Future Research
The results in this study offer some new suggestions for new research. First, the link between manager and employee rated is an interesting subject of research. Due to the lack of reliability or generalizability this concept of this study can be used in a new study, conducted with a larger sample group, including multiple teams and with a wider organizational range. Most studies in this area are focused on either the effect of the manager or employee rated HR separately, but not on the effects of this discrepancy on other variables.
The confirmed role of transformational leadership as a moderator in the relation between actual and perceived performance offers also some new possibilities for future research. It could be interesting to study other leadership styles and their possible moderating role between actual and perceived performance.
Finally, future research should examine the role of (deep-level) diversity on a more thoroughly way. It is expected that the relation between actual and perceived HR will differ in teams were employees perceive HR differently. These differences can be caused by individual differences. A more complex examination to the diversity measures could probably reveal some interesting influencing effects of diversity on the relation.
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