They found that “the results of these analyses show that differences
in HR practices are associated with rather large differences (approximately
30%) in financial performance.” However, whether the banks benefited
from the specific types of HR practices (such as employee participation, results-
oriented appraisals, and internal career opportunities) depended on the type of
bank, and on what it was trying to achieve strategically (cut costs, boost quality,
expand geographically, or something else). A study of 97 manufacturing plants
in the metalworking industry similarly concluded that HR practices did affect
plant performance.
However, how you design the HR practice has to fit the company’s strategy and what the company wants to achieve.
For current and future managers, the best advice seems to be to learn as much
as possible about the HR practices we’ll discuss in the following chapters, and
then design a practice that’s consistent with what your company wants to
achieve. The corollary is that flexibility is advisable: You may have to modify an
HR practice (such as a compensation plan) as competitive conditions cause you to
modify your firm’s business strategy.