The importance of HR practices in directing employee behavior is in little doubt, however employees’ perceptions of HR practices, such as pay for performance, can often differ considerably, making it difficult for companies to predict how they will influence behavior. Examining the variability in employees’ perceptions of HR practices, a study of employees in the Insurance and Public sectors found that employees’ perceptions of HR practices were closely related to managers’ and coworkers’ perceptions of HR practices, with those more demographically similar to employees having the greatest influence over their perceptions of HR practices.
Key Topics: Perceptions of HR practices; Demographic similarity
Title of Reviewed Article: Understanding Employees’ Perceptions Of Human Resource Practices: Effects Of Demographic Dissimilarity To Managers And Coworkers
Researchers: Kaifeng Jiang (University of Notre Dame), Jia Hu (University of Notre Dame), Songbo Liu (Renmin University of China), and David P. Lepak (Rutgers University).
Publication: Human Resource Management, 2017, Vol. 56 No. 1, pp. 69–91.
Setting the Scene
Numerous studies in recent decades have substantiated the idea that companies can direct employee behaviors through the use of HR practices (such as performance-based pay, internal promotions, training), and as such these HR practices can be central to companies achieving strategic objectives (e.g., Jiang, Lepak, Hu, & Baer, 2012; Messersmith, Patel, Lepak, & Gould-Williams, 2011). Among other outcomes, HR practice have been shown to improve employee competence, motivation, and performance (e.g., Delery & Doty, 1996; Guthrie, 2001).
How HR practices are perceived by employees has been receiving growing attention (Lepak & Boswell, 2012; Paauwe, Wright, & Guest, 2013), with studies suggesting that it is employees’ perceptions of HR practices rather than actual HR practices that are most closely linked to employees’ behavior (e.g., Kehoe & Wright, 2013), and researchers have highlighted the need for companies to understand the variations in employees’ perceptions of HR practices.
Prior studies suggest that coworkers and managers can have an influence over employees’ perceptions of HR practices. For example, Messersmith et. al. (2011), found employees in the same team more likely to share perceptions of HR practices, while other studies have indicated a strong link between the perception of HR practices by managers and employees (Den Hartog et al., 2013; Jensen et al., 2013).
Despite these close links, researchers have found moderating factors at the individual, job, and group level which may cause differences in employees’ perceptions of HR practices, among which those with closer demographic similarities (e.g. age, gender) appear more likely to exert a stronger influence on employees’ perception of HR practices (Nishii & Wright, 2008).
To investigate this research area in greater detail, the researchers examined four hypotheses:
Hypothesis 1 – “Managers’ perceptions of HR practices will be positively related to employees’ perceptions of HR practices.”
Hypothesis 2 – “Coworkers’ perceptions of HR practices will be positively related to employees’ perceptions of HR practices.”
Hypothesis 3 – “The positive relationship between managers’ perceptions of HR practices and employees’ perceptions of HR practices will be moderated by dyadic dissimilarity such that the positive relationship will be stronger when the dyadic dissimilarity is low than when it is high.”
Hypothesis 4 – “The positive relationship between co-workers’ perceptions of HR practices and employees’ perceptions of HR practices will be moderated by employee demographic dissimilarity to coworkers; such that the positive relationship will be stronger when demographic dissimilarity is low than when it is high.”
How the research was conducted
The study hypotheses were examined across two sub-studies. Study 1 tested all the hypotheses using an employee sample from an insurance company, while Study 2 tested all the hypotheses using an employee sample from a governmental agency.
Data was collected from a large Chinese insurance company. Branch managers and sales agents working in those branches provided information relating to the use of HR practices for sales agents, in addition to providing demographic information relating to gender, age, education level, and organizational tenure. Information was collected from 29 branch managers and 591 sales agents.
To assess managers’, employees’, and coworkers’ perceptions of HR practices, High-Performance Work Systems (HPWS) were measured using 13 items from prior studies (e.g., Chuang & Liao, 2010; Lepak & Snell, 2002), and included questions relating to factors such as compensation, recruitment, training, performance management, career advancement, and flexible working.
Data was collected from a Chinese governmental agency tasked with promoting economic growth. 1,133 administrative employees and 141 branch managers were surveyed.
Employees were asked to rate their perception of HR practices relating to staffing and training, performance appraisal and compensation, and work design. Completing the same survey, branch managers evaluated the use of HR practices applied to administrative employees.
As with Study 1, demographic information was collected on respondents.
Key Research Findings
Coworker perceptions of HR practices and manager perceptions of HR practices were positively related to employee perceptions of HR practices. As such, Hypotheses 1 and 2 were supported.
Hypothesis 3 predicted that employees’ demographic dissimilarity to managers would moderate the relationship between manager-perceived and employee-perceived HR practices. However, the results did not find a moderating effect of age, gender, education, or tenure dissimilarity and so Hypothesis 3 was not supported.
Hypothesis 4 predicted that employees’ demographic dissimilarity to coworkers would moderate the relationship between coworker-perceived and employee-perceived HR practices. Age and tenure were found to be moderating factors, while gender and education were not. Therefore, Hypothesis 4 was partially supported.
Study 2 replicated the findings of Study 1. As with Study 1, the results of Study 2 supported Hypotheses 1 and 2, but not Hypothesis 3. Study two also found partial support for Hypothesis 4, finding significant moderating effects of age dissimilarity and organizational tenure dissimilarity.
This study helps in addressing the question of: what factors shape employees’ perceptions of HR practices? The results indicate that the perceptions of HR practices held by managers and by coworkers influence how employees perceive HR practices. With the influence of coworkers appearing to be greater when employees are more similar to the age and organizational tenure of coworkers.
The finding that managers HR perceptions matter to employees’ HR perceptions regardless of any demographic dissimilarly is interesting, as the influence of coworkers’ HR perceptions was limited to those coworkers of similar age and organizational tenure. These results suggest that those in powerful positions, such as management, have a strong influence over how employees interpret company HR policies and practices.
The results also demonstrate the shared understanding of HR policies and practices that can develop, which may facilitate a strong organizational climate where employees and managers have a shared understanding of the expected and rewarded behaviors.
Organizational and Reward Implications
This study highlights the need for companies to not only manage and monitor actual HR practices, but also the perceptions of those practices by employees and managers, in order to better understand and manage employee behavior. Companies should focus on adequately explaining HR practices to employees rather than assuming that they understand them in the way the company intends them to.
The results also indicate the importance of key influencers, namely coworkers and management, in shaping employees’ perceptions of HR practices, and in turn employees’ attitudes and behaviors toward organizations. This suggests that companies should facilitate open communication between management and employees and amongst employees so that they can develop a common understanding of HR practices, which is consistent with the company’s understanding of these HR practices.
This study contributes to our understanding of the factors that shape employees’ perceptions of HR practices, and in particular the important influence that managers and co-workers can have in shaping employees’ perceptions of HR practices. Future research on other potentially influencing factors would be valuable in helping us better understand how employees’ perceptions are shaped and how these perceptions influence subsequent behavior.
Source Article: Jiang, K., Hu, J., Liu, S., & Lepak, D. P. (2017). Understanding Employees’ Perceptions of Human Resource Practices: Effects of Demographic Dissimilarity to Managers and Coworkers. Human Resource Management, 56(1), 69–91.
Published by: Wiley Periodicals, Inc.
For further details and access to the full journal article Click Here (subscription or payment may be required).
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