Effects of human resource management practices (IO Psychology)

High performance work practices have impacts on turnover, productivity, and financial outcomes, according to Mark A. Huselid of the School of Management and Labor Relations at Rutgers University. High performance work practices include the following: employee selection, performance management, incentive compensation, job design, grievance procedures, information sharing, attitude assessment, labor-management participation, employee selection, employee training, and promotion criteria.

In this study, these domains were assessed using a measure created and validated for the purposes of this study, and sample items included, “What is the proportion of the workforce who are included in a formal information sharing program (e.g., a newsletter)?” and “What proportion of the workforce receives formal performance appraisals?” This measure was distributed to 968 firms from all of the major industries, and the relationship between the responses to these items and turnover, productivity, and financial outcomes were analyzed. A single item that inquired on the average annual rate of turnover served as the measure of the turnover rate, logarithm of sales per employee served as the indicator of productivity, and measurements of accounting and economic profits were the barometers of financial outcomes.