Research

Research on the impact of HR management policies and practices on firm performance has a long history in the social sciences. For much of this time both scholars and practitioners have focused on assessing the impact of HR function activities. What is new and potentially important in the current environment is a shift in emphasis from assessing the activities performed by the HR function to developing a better understanding of the productive outcomes associated with the workforce. More specifically, the focus has shifted from assessing the levels associated with a particular workforce attribute (e.g., what is our cost per hire?) to understanding the impact of the workforce on the execution of firm strategy (e.g., how might an increase in the quality of our project managers affect our new product cycle time?).

In this section we highlight some of the recent research in the area, and highlight the implications of these studies for the design and implications of workforce analytics.

Books

The Differentiated Workforce: Transforming Talent Into Strategic Impact

Brian E. Becker, Mark A. Huselid, Richard W. Beatty
Harvard Business Press
Published March 2009

In The Differentiated Workforce, they make the case for why the workforce should be managed like an investment portfolio – with disproportionate investments in resources, development opportunities, and rewards for high performers in strategic roles. Based on over two decades of research and hands-on experience, The Differentiated Workforce will give readers the tools to transform their organization's talent into powerful strategic impact.

The Workforce Scorecard: Managing Human Capital to Execute Strategy

Mark A. Huselid, Brian E. Becker, Richard W. Beatty
Harvard Business Press
Published March 2005

The Workforce Scorecard argues that to maximize the strategic contribution of the workforce, organizations must meet three challenges: view their workforce in terms of its potential contribution rather than as a cost to be minimized (the perspective challenge); replace benchmarking metrics with measures that differentiate levels of strategic impact (the metrics challenge); and hold line managers and HR professionals jointly responsible for workforce quality and strategy execution (the execution challenge). To make this happen, our main thesis in The Workforce Scorecard is that managers and leaders need a strategy for the business, a strategy for the workforce, and a strategy for the HR function. As a result, they also need a series of metrics and measures for each; a balanced scorecard, a workforce scorecard, and an HR scorecard, respectively.

The HR Scorecard: Linking People, Strategy, and Performance

Brian E. Becker, Mark A. Huselid, Dave Ulrich
Harvard Business Review Press
Published March 2001

The HR Scorecard argues that HR measurement systems must be based on a clear understanding of organizational strategy and the capabilities and behaviors of the workforce required to implement that strategy. Thus, an HR Scorecard is a mechanism for describing and measuring how people and people management systems create value in organizations, as well as communicating key organizational objectives to the workforce. It is based on a strategy map – which is a visual depiction of "what causes what" in an organization, beginning with people and ending with shareholder or other stakeholder outcomes. The HR Scorecard is built around a series of examples and a process that helps managers to do this work in their own firms – designing an HR architecture that relentlessly emphasizes and reinforces the implementation of the firm's strategy.

Articles

Workforce Analytics for Strategy Execution

Mark Huselid
The Rise of HR: Wisdom from 73 Thought Leaders, 301-315
HR Certification Institute
Published February 2015

The challenges and opportunities associated with managing a workforce and workplace strategically are greater than ever. A key component of this process is enhancing managerial accountability for talent. An important step is to design and implement systems of workforce metrics and analytics that help managers ask andanswer the key questions about the workforce—and then act on these insights!

Bridging Micro and Macro Domains: Workforce Differentiation and Strategic Human Resource Management

Mark A. Huselid and Brian E. Becker
Journal of Management, Vol. 37 No. 2, 421-428
Published 2011

In this article, the authors focus on the challenges and opportunities associated with integrating the macro and macro domains of the strategic human resource (HR) management literature. Their specific focus is on the development of a differentiated HR architecture in support of strategy execution as a key organizing theme. A focus on strategic capabilities and strategic jobs as the focal point of workforce management system design represents a significant potential source of value creation for most firms. But, also, differentiation by strategic capability instead of hierarchical organizational level represents potential implementation challenges for managers, and theoretical and empirical challenges for academics.

SHRM and Job Design: Narrowing the Divide

Brian E. Becker, Mark A. Huselid
Journal of Organizational Behavior, 31, 379-388
Published 2010

This commentary will focus on how the notion of strategic jobs can represent a common ground between the SHRM and job design literatures. We begin with a brief review of the essential elements of SHRM, with particular emphasis on our own recent thinking about the direction of the field. Our work gives particular theoretical prominence to the strategic job, and serves as an appropriate bridge to the job design literature. We highlight several of the acknowledged intellectual trends in the field, though the reader will quickly realize that we are not experts in job design. Nevertheless, we find several opportunities where job design scholars might contribute to SHRM, and hope we have identified several contributions that the SHRM perspective might make to job design as well.

Strategic Human Resources Management: Where Do We Go From Here?

Brian E. Becker, Mark A. Huselid
Journal of Management, Vol. 32 No. 6
Published December 2006

In this article, Becker and Huselid identify the key challenges facing Strategic Human Resources Management and discuss several new directions in both scholarship and practice. They argue for a clearer articulation of the "black box" between HR and firm performance and the importance of integrating strategy implementation in this process. They also highlight the importance of a differentiated HR architecture within firms as well as across them. According to the authors, the practice of HR strategy has moved beyond whether or not there is a significant return to better workforce management – with managers now asking questions like, "What are the key strategic positions in our organization, and how should they be managed?" and "How can we design and implement a workforce management system that helps us execute strategy and create wealth?" They further argue that, although SHRM was initially an HR-centric paradigm, it is rapidly moving out of the hands of HR professionals and into the hands of line managers and senior executives.

"A Players" or "A Positions"? The Strategic Logic of Workforce Management (HBR OnPoint Enhanced Edition)

Mark A. Huselid, Richard W. Beatty, Brian E. Becker
Harvard Business Review
Published December 2005

Companies simply can't afford to have "A players" in all positions. Rather, businesses need to adopt a portfolio approach to workforce management, systematically identifying their strategically important (or "A") positions, supporting (or "B") positions and surplus (or "C") positions, then focusing disproportionate resources on making sure A players hold A positions. This is not as obvious as it may seem, because the three types of positions do not reflect corporate hierarchy, pay scales, or the level of difficulty in filling them. A positions are those that directly further company strategy and, less obviously, exhibit wide variation in the quality of the work done by the people who occupy them.

Improving HR's Analytical Literacy: Lessons from Moneyball

Mark A. Huselid, Brian E. Becker
Chapter 32, The Future of Human Resource Management, 278-284
Published 2005

In this article, Becker and Huselid use the example of the Oakland Athletics baseball team, as described in Michael Lewis' recent bestseller Moneyball, to illustrate their argument about the need for HR managers to become good strategy managers. They describe how senior Oakland Athletics' executives brought a new "analytical literacy" to their strategic decision-making and redefined what matters and how to measure it, giving their organization a sustained performance advantage over its competitors. Becker and Huselid argue that this lesson has a direct application to senior executives (both HR professionals and line managers) attempting to build the workforce and the HR function into a source of competitive advantage.

Measuring HR? Benchmarking is Not the Answer!

Brian Becker, Mark Huselid
Human Resource Magazine
Published December 2003

HR professionals have routinely relied on benchmarked comparisons of cost and other efficiency-based performance outcomes associated with activities of the HR function to justify their contribution to the organization. In this article, Huselid and Becker argue that a reliance on these types of benchmarking measures not only fails to measure HR's important contributions to firm success, it also encourages an approach to human capital management that is counterproductive. Instead, Huselid and Becker make the case that HR professionals should judge their performance relative to their firm's own strategy rather than the HR efficiency of other organizations. While common functional benchmarks are safe and easy, they argue that adopting customized strategic performance measures is where HR can truly demonstrate its value.

The New HR Metrics: Scoring on the Business Scorecard

Richard W. Beatty, Mark A. Huselid, Craig Eric Schneier
Organizational Dynamics, 32, 107-121
Published 2003

This article addresses what and how HR can contribute to the strategic success of firms by transforming itself from a partner (that can be removed or outsourced) to a player-on the field, in the game, with the ability to score. The ability to score necessitates a new understanding of the rules of the game-a new perspective on what HR is to contribute, how its systems enable it to contribute, and how its ultimate deliverables can be measured. The rules of the game mean that HR should only attempt to score on an HR Scorecard integrated with the firm's Business Scorecard.

Human Capital Measurement Systems as A Source of Competitive Advantage

Mark A. Huselid, Jane E. Barnes
Working Paper | April 16, 2003

An increasing reliance on intangible assets – such as human capital – as a source of competitive advantage has led many firms to develop measurement systems to help them better manage these resources. However, the antecedents and consequences of human capital measurement systems (HCMS) such as Becker, Huselid, and Ulrich's (2001) HR Scorecard methodology are not well understood. Drawing from prior work on the Resource Based View of the firm and the Economics of Information, this article describes the primary attributes of HCMS and develops a conceptual model and series of propositions intended to stimulate research on these systems.

Six Key Principles for Measuring Human Capital Performance in Your Organization

Brian E. Becker, Mark A. Huselid, Dave Ulrich
Working Paper | February 2002

Properly valuing human capital starts with understanding how to measure human capital's contribution to the success of the organization. Based on more than a decade of research, we've demonstrated that when organizations enable, develop and motivate human capital, the result is improved accounting profits and shareholder value. While this research provides a compelling business case for managing human capital like a strategic asset, we find that both HR professionals and line managers often have difficulty translating this academic research into practice. Managing human capital performance effectively requires new perspectives and new competencies on the part of both line managers and HR professionals. Drawing on their research and work with senior HR professionals and line managers, Huselid, Becker, and Ulrich develop six key principles for measuring human capital performance so that it can be managed as a strategic asset.

Making HR a Strategic Asset

Brian E. Becker, Mark A. Huselid, Dave Ulrich
Financial Times
Published November 2001

Organizations increasingly rely on intangibles as the source of their competitive advantage. R&D, brands, customer relationships, not to mention more abstract "capabilities" like organizational flexibility, are recognized as sources of value creation. Yet, managing these intangibles as assets, in an environment where conventional accounting standards often measures them as costs, is particularly challenging. The solution outlined in this article is to manage HR (Human Resources) as a strategic asset and measure HR performance in terms of its strategic impact. This requires a new perspective on what is meant by HR in the organization and a new understanding of how HR creates value in the organization. Huselid, Becker, and Ulrich argue that both line managers and HR professionals need to think of HR, not in terms of a function, or set of practices, but rather as an "architecture" that must be properly structured and managed in order to create value.

Overview: Strategic Human Resource Management in Five Leading Firms

Brian E. Becker, Mark A. Huselid
Human Resource Management Journal, Vol. 38, No. 4, 287-301
Published Winter 1999

This article synthesizes findings from five case studies conducted in firms known to be leaders in the management of people. It draws three broad conclusions: 1. The foundation of a value-added HR function is a business strategy that relies on people as a source of competitive advantage and a management culture that embraces that belief, 2. A value-added HR function will be characterized by operational excellence, a focus on client service for individual employees and managers, and delivery of these services at the lowest possible cost; and 3. A value-added HR function requires HR managers that understand the human capital implications of business problems and can access or modify the HR system to solve those problems.

Strategic human resource management at Sears

Steven P. Kirn, Anthony J. Rucci, Mark A. Huselid, Brian E. Becker
Human Resource Management Journal, Vol. 38, No. 4, 329-335
Published Winter 1999

This article describes the HR Management System in place at Sears. Key emphases of Sears' HR management infrastructure include: (1) formulating and communicating a corporate mission, vision, and goals, (2) employee education and development through the Sears University, (3) performance management and incentive compensation systems linked closely to the firm's strategy, (4) validated employee selection systems, and (5) delivering the "HR Basics" very competently. Key challenges for the future include: (1) maintaining momentum in the performance improvement process, (2) identifying barriers to success, and (3) clearly articulating HR's role in the change management process.

High Performance Work Systems and Firm Performance: A Synthesis of Research and Managerial Implications

Brian E. Becker, Mark A. Huselid
Research in Personnel and Human Resources Journal, Vol. 16, 53-101
Published 1998

This paper reviews the theoretical foundations for an HRM-firm performance relationship and focuses particularly on the potential of a high-performance work system to serve as an inimitable resource supporting the effective implementation of corporate strategy and the attainment of operational goals. Special attention is devoted to the methodological challenges inherent in the prior empirical work that has adopted this systems perspective, and what we can learn from research at different levels of analysis. Becker and Huselid summarize the evolution of their own work on the subject and present new findings that bear on the magnitude of the HRM strategy-firm performance relationship. The paper concludes by outlining several possible areas of future research and a discussion of how practitioners might implement the findings throughout their organizations.

HR as a Source of Shareholder Value: Research and Recommendations

Brian E. Becker, Mark A. Huselid, Peter S. Pickus, Michael F. Spratt
Human Resource Management, Vol. 36, No. 1, 39-47
Published Spring 1997

The role of the Human Resource Management (HRM) function in many organizations is at a crossroads. On one hand, the HRM function is in crisis, increasingly under fire to justify itself (Schuler, 1990: Stewart, 1996) and confronted with the very real prospect that a significant portion of its traditional responsibilities will be outsourced (Corporate Leadership Council, 1995). On the other hand, organizations have an unprecedented opportunity to refocus their HRM systems as strategic assets. This article describes the new organizational perspective on the HRM system (shared by the CEO and the chief HR officer) necessary to transform this crisis into an opportunity. At its core, this strategic perspective requires that the CHRO be focused on identifying and solving the human capital elements of important business problems (e.g., those problems likely to impede growth, lower profitability, and diminish shareholder value). The tangible evidence of this focus is an internally coherent, externally aligned, and effectively implemented HRM system.

Technical and Strategic Human Resource Management Effectiveness as Determinants of Firm Performance

Mark A. Huselid, Susan E. Jackson, Randall S. Schuler
Academy of Management Journal, 40 (1), 171-188
Published 1997

In this article, Huselid, Jackson, and Schuler improve upon the prior empirical literature on this topic by focusing on the impact of overall HRM quality on firm performance. They develop the argument that HRM effectiveness, which includes the delivery of high-quality technical and strategic HRM activities, will be reflected in valued firm-level outcomes. They then assert that two types of HRM staff capabilities will have a significant impact on the effective management of firms' human capital. To study the impact of HRM effectiveness and human resources staff capabilities on valued firm-level outcomes — employee productivity and corporate financial performance — they examine a large sample of firms drawn from a wide range of industries. Finally, two important methodological issues that could bias their results are considered: (1) the potential endogeneity of firm profitability and managerial assessments of HRM effectiveness and (2) survey response bias.

The Impact of Human Resource Management Practices on Performance in For-profit and Nonprofit Organizations

John T. Delaney, Mark A. Huselid
Academy of Management Journal, Vol. 39, No. 4, 949-969
Published 1996

This study comprehensively evaluated the links between systems of High Performance Work Practices and firm performance. Results based on a national sample of nearly one thousand firms indicate that these practices have an economically and statistically significant impact on both intermediate employee outcomes (turnover and productivity) and short- and long-term measures of corporate financial performance. Support for predictions that the impact of High Performance Work Practices on firm performance is in part contingent on their interrelationships and links with competitive strategy was limited.

Methodological Issues in Cross-sectional and Panel Estimates of the Human Resource-firm Performance Link

Mark A. Huselid, Brian E. Becker
Industrial Relations, Vol. 35, No. 3, 400-422
Published July 1996

Because companies differ in factors such as management ability that may lead to both high performance work systems and enhanced firm performance, conventional estimates of the effects of human resource (HR) management practices on firm performance may be biased upward. Alternatively, if HR management practices are measured with error, estimates of their effects on firm performance may be biased downward. Huselid and Becker find that, although longitudinal estimates that avoid the first source of bias are substantially smaller than cross-sectional estimates, the former are strongly influenced by errors in measuring HR management practices. Based on independent estimates of the measurement error, they calculate a range of estimates that correct for both biases. They estimate that a one standard deviation increase in their measure of high performance work systems raises the market value of the corporation by approximately $15,000 per employee.

The Impact of Human Resource Management Practices on Turnover, Productivity, and Corporate Financial Performance

Mark A. Huselid
Academy of Management Journal, Vol. 38, No. 3, 635-672
Published 1995

This study comprehensively evaluates the links between systems of High Performance Work Practices and firm performance. Results based on a national sample of nearly one thousand firms indicate that these practices have an economically and statistically significant impact on both intermediate employee outcomes (turnover and productivity) and short- and long-term measures of corporate financial performance. Support for predictions that the impact of High Performance Work Practices on firm performance is in part contingent on their interrelationships and links with competitive strategy was limited.

Direct Estimates of SDy and the Implications for Utility Analysis

Brian E. Becker, Mark A. Huselid
Journal of Applied Psychology, Vol. 77, No. 3, 227-233
Published 1992

Utility analysis suggests that human resources policies can have an economically significant impact on business organizations. Confidence in such conclusions, however, requires an accurate estimate of SDy. This article provides a validity check on prevailing subjective methods of Sdy estimation by directly estimating SDy from unique field data. Using both simulated and field data, Becker and Huselid first illustrate the range of potential bias associated with predictor unreliability y in regression analysis and show how to calculate corrected values. They then discuss the methodological problems of directly estimating SDy with organizational data and provide a range of estimates for SDy. Their direct estimation of SDy yields values ranging from 74% to 100% of mean salary, which are considerably greater than conventional subjective judgments.

The Incentive Effects of Tournament Compensation Systems

Brian E. Becker, Mark A. Huselid
Administrative Science Quarterly, Vol. 37, 336-350
Published 1992

Tournament models have developed into an important component of the theoretical literature on organizational reward systems. However, with one exception there have been no empirical tests of the incentive effects of tournament models in a field setting. Drawing on a panel data set from auto racing, Becker and Huselid show that the tournament spread (prize differential) does have incentive effects on both individual performance and driver safety, that these effects peak at higher spreads, and that controlling for the dollar value of the tournament spread, the prize distribution has little influence on individual performance.

Organizational Commitment, Job Involvement, and Turnover: A Substantive and Methodological Analysis

Mark A. Huselid, Nancy E. Day
Journal of Applied Psychology, Vol. 76, No. 3, 380-391
Published 1991

This study examines the hypothesis that organizational commitment and job involvement interact in the prediction of turnover (Blau & Boal, 1987). Prior work in this area has not incorporated a sufficiently broad definition of commitment, has omitted relevant covariates, and has utilized inappropriate estimation procedures (ordinary least-squares regression [OLS]). The presence of a commitment–involvement interaction was tested in three estimation models with data obtained from 138 supervisors. Models estimated with OLS replicated prior work (Blau & Boal, 1989) irrespective of whether additional covariates were included. Identical models estimated with logistic regression provided no support for the presence of a commitment–involvement interaction. Huselid and Day conclude that results obtained with linear techniques are a function of an inappropriate estimation procedure when the dependent variable is binary. The potential impact of the widespread use of linear estimation procedures in turnover research is discussed.

Human Resource Management Journal

Call for Papers

The Center for Workforce Analytics is supporting the publication of a special issue of the prestigious journal Human Resource Management focused on workforce analytics, edited by Dr. Huselid. Submissions due: December 31, 2015.

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Research

Research

What is new and potentially important in the current research environment is a shift in emphasis from assessing the activities performed by the HR function to developing a better understanding of the productive outcomes associated with the workforce.

Collected Research
D'Amore-McKim

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Center for Workforce Analytics
D'Amore-McKim School of Business
Northeastern University
315B Hayden Hall
Boston, MA 02115
Phone: 609.651.6484
Email: mark@markhuselid.com

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