Full Length Research Paper
ABSTRACT
Because human resource management is a challenge for mostorganizations, many companies seek practices that will enable them to compete with other companies. In our work, we examine the study of training and career development and their consideration as high-performance practices by considering the universal and contingency approaches for a sample of 560 companies. If practitioners know the effects of these practices, they can apply it in their firms. The results show that both training and career development can be considered to be best practices and that they influence organizational performance either as isolated practices or as practices that are aligned with other best practices. Thus, we conclude that both approaches can be used in a complementary manner, depending on the nature of the investigation.
Key words: Training, development, high performance, configurational, universal approach.
Abbreviation: JEL: J28, M12, O15.INTRODUCTION
Interest in human resource management-related activities has increased in recent decades amongst both researchers and practitioners (Wright et al., 2001; Becker and Huselid, 2006). This interest is largely due to the influence of people management on organizational success (Becker and Gerhart, 1996; Becker and Huselid, 1998; Huselid, 1995; Bhattacharya et al., 2005).
Increasing attention within human resources is paid to training and new practices of employee development; and organisations currently devote significant effort and investment to these areas. Undoubtedly, training and career development are an important contribution to the success of an organization by strengthening the competitive advantages that are supported by human resource management (Gurav and Mudalkar, 2011; Barba, 2002; Fernández et al., 1997, Núñez-Cacho et al., 2012). Therefore, investments in training have a clear, positive effect on individuals and organizations and are considered strategic activities for companies.
A substantial amount of literature exists regarding the investigation of high-performance practices or “best practices,” but the results of this research lack a consensus. Therefore, the goal of this study is to examine the literature to determine which human resource practices are considered by researchers to be high-performance practices and to determine whether training and career development can be considered as such.
With regard to the structure of this paper, we first conduct an analysis of the question to determine the theoretical approaches that are most commonly used when investigating human resource practices. Sub-sequently, we explore whether we can consider training and career development to be high-performance practices by establishing the hypotheses, the research problem, and the methodology. Finally, we present the discussion and conclusion.
Theoretical background and hypotheses
Thus far, human resource management research has followed a primary direction in which authors have endeavored to analyze the relationships between various human resource practices and organizational perfor-mance (Chand and Katou, 2007).
There is little literature that directly relates training and new practices of employee development practices to companies’ performance. Moreover, current research is advancing slowly and sometimes produces confusing results. Research has generally been made in single industrial sectors or activities, or a single type of business, and few studies have been cross-sectional and examined various sectors or family businesses. In addition, many of the previous studies have introduced methodological inconsistencies that make it difficult to ensure the causality of the relationship between training, employee development, and organisational performance. These factors emphasize the need to make further studies in this area.
The foundation of this line of research is the existence of a direct effect between human resources practices (both individually and internally consistent with a company’s human resource system) and organizational performance (Schuler and Jackson, 1999). To investigate this topic, researchers have primarily utilized two theoretical approaches that will be examined below: the universal and contingency approaches.
The universal approach indicates that there always exists a set of practices that is superior to other sets of practices and that influences organizational performance, irrespective of other internal and external factors, and these practices are known as “high-performance practices” or “best practices” (Pfeffer, 1994; 1998; Huselid, 1993; Ostermann, 1994; Terpstra and Rozell, 1993). The universal approach is based on two premises.
The first premise concerns the existence of direct relationships between human resource practices and organizational performance and is supported by theories that include resources and capabilities theory and human capital theory (Youndt et al., 1996). According to the second premise, the effect of these practices on organizational performance is independent of the strategy that is adopted by a company (Arthur, 1992; Pfeffer, 1994; Huselid, 1995; Chand and Katou, 2007, Núñez-Cacho and Grande, 2012).
Thus, the logical questions that are posed using this approach are as follows: what are the high-performance practices in the field of human resources, and do these practices include training and career development? To answer these questions, we analyzed the existing literature on this subject and found a lack of consensus regarding which practices can be considered to be high-performance practices, as shown in the studies of Pill and McDuffe (1996), Walton (1985), White (1986), Schuler and Jackson (1987), Pfeffer (1998), and Ordiz (2002). This lack of consensus is one of the most criticized aspects of the universal approach.
Table 1 illustrates that training (shown in column 6) and career development (shown in column 4) are high-performance practices according to numerous authors. Therefore, from the perspective of the universal approach, training and career development practices will influence the development of companies.
In contrast, the contingency approach is based on structural contingency theory and assumes that the effect of human resource practices on organizational perfor-mance is determined by the alignment of these practices with business strategies (Miles and Snow, 1987; Delery and Doty, 1996). Moreover, there is not a single manner by which to efficiently organize these practices; rather, there are multiple organizational methods that relate to the variables or critical factors that have a major effect on organizations (Schuler and Jackson, 1987; Gómez-Mejía and Balkin, 2001; Huselid, 1995).
Thus, for a particular practice to be effective, it must conform to these critical contingency factors. First, an external adjustment must be maintained (i.e., a human resources strategy must be aligned with a particular environment).Second, there must be an internal fit (i.e., the practices that are developed must be consistent with one another) (Bonache and Cabrera, 2004). This notion of a fit between resources and strategy is also included in the resource and capability-based theories (Barney, 1991; Barney and Hansen, 1994; Leiblein, 2011; Molloy et al., 2011), and this interaction has been highlighted for its positive effect on organizational performance (Hitt et al., 2001).
Independent of the approaches that are used to analyze human resource practices, the majority of researchers, including researchers who adopt either the universal or contingency approaches, have accepted the existence of a relationship between “best practices” and organizational performance. However, the empirical verification of this relationship is complex, and there is not a unanimously accepted approach in this regard. Therefore, we found studies in which this relationship is considered positive: Arthur (1992); McDuffie (1995); Huselid et al. (l997); Delery and Doty (1996); Huselid (1995); and Guthrie (2001). Other studies concluded that this influence depends on aspects that include strategy (Youndt et al., 1996; Guthrie et al., 2002; Ordiz, 2003), culture (Bae et al., 2003), capital intensity in an industry (Koch and McGrath, 1996), company size (Way, 2002), or technology used (Larraza-Kintana et al., 2004). Finally, some authors, such as Fey et al. (2000) have not discovered any such relationship.
The consideration of training and career development as high-performance practices
We must emphasize the scarcity of research on the relationship between training and career development practices and organizational performance. Because published works have generally pertained to a single industrial sector, a single activity, or a particular type of company, transversal and intersectional studies are scarce. Furthermore, few empirical studies have been conducted in Spanish (Hernández and Peña, 2008). These limitations in the existing research indicate the need to undertake new studies that link human resource practices, especially those of training and career develop-ment, with performance. Such research will enable us to ascertain the status of training and career development as high-performance practices that will undoubtedly contribute to the advancement of human resource research (Westhead and Cowling, 1998) and will justify the development of the current research topic.
Based on the given definitions and the dimensions that were identified by Garcia-Tenorio and Sabater (2004), we define company training as the process that begins with the study of worker needs and includes plans to increase and improve the attitudes and skills of employees and their adaptation within an organization. All of these elements are designed to facilitate the goal of improving individual performance. Figure 1 illustrates this definition graphically.
The influence of training on performance has been documented by numerous authors, and its effect on organizational performance has been recorded in studies such as the work of Salinero and Muñoz (2007), who consider training to be a high-performance practice and emphasize its specific weight within organizations. Similarly, Uysal (2008) notes the effect of training programs on organizational performance and posit that training can also increase the quality of processes and the innovation capabilities of companies.
Further, Siswo (2004) states that training is one of the most relevant practices within an organization, especially concerning its effects on technological activities. Akdere and Schmidt (2007) indicate that training enables the staff within an organization to gain knowledge and skills that will assist in improving a company’s position in the market. In a similar vein, Birdi et al. (2008) highlight the existence of a relationship between the introduction of training practices and the improvement of performance measures, such as productivity, and they claim that employee training is the second-most important management practice. Similarly, Schultz (1997) provides empirical evidence of the influence of training on organizational performance, employee productivity, and economic performance. Hansson (2007) states that investment in training is one of the most important factors in determining the profitability and efficiency of an organization.
Therefore, consistent with the observations of the universal approach, we intend to test whether training practices, when independently applied, influence a company’s performance (i.e., whether the effectiveness of training practices is independent of the context in which they are applied) (Ordiz, 2003). Consequently, we formulate the following hypothesis:
H1: Training can be considered a high-performance practice
Employee career development is one of the greatest challenges of human resource management (Reid and Adams, 2001). A career development system is a planned effort within an organization that includes investments in structures, activities, and processes that result from mutually coordinated efforts between employees and organizations (Leibowitz and Schlossberg, 1982). Career development is considered a high-performance human resource practice because its use affects organizational performance. Therefore, greater policy-making investments in this area will lead to better outcomes and will assist companies in creating sustainable competitive advantages (Tadic and Barac, 2009). Similarly, Lai (2007) indicates that career development policies create more competent and productive employees and thus improve companies’ performance. Consistent with these approaches, Azmi (2009) designed a conceptual frame-work that enabled him to test the effect of human resource development on organizational performance.
Additionally, Bambacas and Bordia (2009) indicate the existence of relationships between organizations, career development, and positive perceptions of employees that enhance their loyalty and commitment, thereby contri-buting to the success of a company. Hassan (2007) notes that human resource development practices assist in creating competitive advantages for companies and identify the potential of employees and their needs. According to Hatch and Dyer (2004), these practices assist in creating and sustaining competitive advantages; therefore, using the resource and capabilities approach, these authors discovered that these practices affect organizational performance.
Accordingly, Vloeberghs et al. (2005) suggest that career development policies are likely to create competitive advantages because they add value to an organization and contribute to its success. Therefore, career development policies may constitute crucial investments that are relevant to the survival of a company, and the planning of these policies must be emphasized. Hassan et al. (2006) relate the application of career development practices with productivity and organizational performance and observe a direct, positive effect in their research. Furthermore, Sánchez (2004) states that employee career development is among the practices that contribute to improve organizational performance. According to observations from the universal approach, we propose that career development influences organizational performance regardless of the alignment of this practice with other business practices. Based on these approaches, we intend to test the following hypothesis:
H2: Career development is a high-performance practice
Moreover, many researchers who advocate the contingency approach in human resource management argue that there is complementarity between the various practices in this area such that the influence of these practices should be coordinated (Schultz, 1997; Huselid, 1995; MacDuffie, 1995). In this view, the coordination of human resource management practices causes the effect of such practices on organizations to be more pronounced than the sum of the effects of each of these practices independently (Milgrom and Roberts, 1994). When programs are implemented collectively, their mutual reinforcement contributes to achieving the objectives of an organization. Therefore, the development and implementation of these practices produces a greater effect on the attainment of the strategic objectives of companies compared with the implementation of such practices in isolation (Schultz, 1997; Ichniowski et al., 1996).
Baird and Meshoulam (1988) indicate that practices are organized in a functional manner in human resource systems, and their strategic coordination will create additional effects on an organization that will be specific to this coordination. Furthermore, Schuler (1992) affirms that the strategic performance of an organization can be improved by implementing consistent human resource practices whose coherence encourages employees to achieve the objectives of an organization.
Thus, the human resources literature suggests that high-quality human resource practices positively affect company’s performance, and efficiency will be increased if such complementary practices function together (Arthur, 1992; Huselid, 1995; MacDuffie, 1995; Ichniowski et al., 1997; Singh, 2003). As a result, we seek to consider the proposals of the contingency approach to determine whether the alignment of training and career development practices has a combined effect on organizational performance. To test for this effect, we designed a second model to measure the unique, joint effect of both dimensions on business performance. According to the contingency approach, the hypothesis to be tested is as follows:
H3. When employed together, training and career development can be considered high-performance practices
METHODS
The empirical component of the research begins with the description of the target population, which consists of Spanish companies. After determining the sample size, we proceed to the selection of the sample under investi-gation, which includes 560 companies. We collected information using a questionnaire that employs a Likert scale and from the balance sheets and profit and loss accounts of companies. After defining the target popula-tion, we explain below how we have operationalized the variables that are involved in the model. We used items employees in previous studies for the construction of the model, and we have adapted it to the specific context of this study. We have grouped these different constructs or dimensions as presented in Table 2.
Following the presentation of our research model, we will now examine our hypotheses and address any research questions that arise. We will begin by describing the target population, then the method used to obtain information and, finally, we will describe the variables used.
Selection of target population
The study population was composed of medium size firms. The sample belong to various economic sectors and the average size was 188 employees and the average age of the companies was 41. The sampled companies have an average productivity of 4.8%. The variables of firm age, number of workers, and generation were used as control variables. The information was gathered using a telephone survey as this method enabled us to obtain accurate and completed questionnaires and a high response rate. We achieved a response rate of 32% obtained from 560 completed questionnaires from different Spanish family businesses. The sample size enabled us to use any method of estimation while maintaining the stability of the covariance structure, as proposed by Tanaka (1987).
Measurement of variables
In the development of the variable measurement scales we took previous works as a reference and adapted the content to the specifics of our research. The groupings used are shown in Table 2.
Scales validity
To analyze whether training and development can beconsidered high-performance practices, we used measurement scales that have been validated by Núñez-Cacho (2010) and whose dimensionality we have analyzed through an exploratory factor analysis (Table 3). appropriateness of the grouping of the variables with respect to the corresponding dimensions or constructs.
With regard to the reliability and validity of the measurement scales, we offer two indicators (Cronbach’s α coefficient and the composite reliability index of each construct, which identifies the internal consistency of a construct measurement), for which values are recommended to be above 0.7. In the results that are shown in Table 4, we observe that both Cronbach’s α coefficient and the composite reliability index (CRI) are consistent with the recommendations offered by Bagozzi and Yi (1988).
Analysis of the results and estimation of the SEM model
Following an analysis of the reliability and validity of the measurement scales we note that the Kaiser–Meyer–Olkin(KMO) index values justify the application of the exploratory factor analysis, and the factor loading in each case (the weight of each variable observed in the corresponding dimension) is above 0.5. In addition, the results of Bartlett’s test of sphericity and the explained variance emphasize the measurement scales we can confirm their scientific validity and test the hypotheses. For this purpose, we propose the corresponding causal model, through structural equation model, which includes the effects of employee training and new development practices on the performance of family businesses, and we continue with the methodological stages of the structural equations. Once specified, we proceed with identification and estimation by calculating unique values for the parameters included in the model relationships. The result of the estimate, once the model has been re-specified, is shown in Figure 2 and Table 5.
The second causal model is responsible for determining the joint effect of both practices on performance. With this estimation, we intend to obtain the objective that we proposed in relation to the joint, positive effect of training and development on the performance of family companies (that is, the test of H3). To confirm this hypothesis, we proposed the causal model that is shown in Figure 3 and Table 6, in which we introduced a new factor that explains the combined effect of training and development on performance.
DISCUSSION, CONCLUSION AND FUTURE PROSPECTS
The aim of our study was to determine which human resource practices are considered by the literature to be best practices and to empirically test whether training and career development can be included in these practices. We have supported our theoretical argument based on the universal and contingency approaches and compared the outcomes. The literature review showed that selective recruitment, internal promotions, career development, training, contingent compensation, promotion and cooperation among employees, and the use of teamwork are considered by researchers to be high-performance practices for human resource management.
With regard to training and career development, the causal model results have permitted us to confirm the first hypothesis. We concluded that human resource training can be considered a best practice because of its influence on organizational performance, regardless of whether training is aligned with other business practices. The second hypothesis concerned the relationship between career development and performance. Based on these results, we can conclude that there is a direct and positive causal relationship between the implementation of career development and performance; therefore, we can include this practice in the high-performance group. Both hypotheses have been tested by a theoretical model based on the universal approach, and the influence of these practices on performance remains clear, regardless of other business practices that are utilized.
A third hypothesis was also tested to examine the existence of a combined effect of training and career development practices on organizational performance. The theoretical model that supported this hypothesis was based on the contingency approach, which was used to measure the effect of the combined implementation of these practices.
Therefore, the results enable us to confirm that both the universal and contingency approaches are useful and complementary, in accordance with the arguments offered by Youndt et al. (1996); thus, research maybe supported based on either approach, depending on the specific hypotheses that are proposed by the research. Therefore, we must consider that the universal approach will justify general or intersectoral cases and that the contingency approach will more accurately analyze specific situations that are unique to each sector and organizational type (Ordiz, 2003). Sánchez (2004) also examines both complementary approaches and concludes that both isolated human resource practices and joint practices that are internally consistent with one another can influence organizational performance. Sánchez also emphasizes that the influence may be greater when these practices are aligned with a business strategy and that, although the universal approach assists in documenting the benefits of human resources practices in all settings, the contingency approach assists in elucidating the phenomenon and provides more specific recommendations for management practices.
This paper has certain limitations. The use of questionnaires for gathering information implies the specific constraints arising from the subjectivity implied in using this tool. When using questionnaires, the researcher does not directly approach the phenomenon under study and respondents have a margin of freedom of interpretation that may distort the objective set. Furthermore, the answers of respondents may reflect their own biases as many items are based on the perception of the respondent. To circumvent this problem, we turned to secondary sources of data on organisational performance. Another limitation originates in the horizontal nature of the research. The information was gathered at one point in time, except for certain performance indicators. It would be worthwhile analysing the effect of training and development on the performance of organisations from an evolutionary perspective. Such an approach would use extended periods to isolate temporal phenomena that could distort the outcome.
The limitations and the depth of the study have led to a series of future research proposals that are set out below. We believe it would be interesting to analyse the influence of training and new practices of employee development, not for a specific moment in time, but over a broader period of time and using longitudinal analysis to observe the evolution of the variables. We specifically consider it worthwhile measuring the impact of training and development on business performance in the medium to long-term. We have also considered the possibility of integrating variables into the model that moderate the impact of training and development practices on performance. This suggestion was raised by Becker and Huselid (2006), when discussing the integrated implementation of variable moderators between human resource systems and performance.
CONFLICT OF INTERESTS
The authors have not declared any conflict of interests.
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