Human Resource Policies and Company Performance: A Quantitative Approach Using Longitudinal Data

Abstract

The organization of employment is often seen as a means to attain or retain competitive advantage in current product markets. High committment organizations and flexible specialization workplaces are some of the new labels of such modem human resource policies (Osterman 1994), the shaping of which should result in high performance. From an outsider's perspective, for instance that of an investor or a banker, such an assumption raises two important sets of questions: - The first concerns the main features of these supposed high-performance work systems and their true association with economic performance indicators. These questions relate to a better understanding of new human resource management (HRM) models in order to understand the effects of HRM on the performance of the firm. - The second set of questions concerns the ability of outside actors to analyze and truly understand these HRM models, about which they often have only poor and piecemeal information. In the event of a negative answer, investors and other outside actors might well be tempted to ignore or distort HRM issues. The latter set of questions is rarely considered by recent research. It is more often the case that investors and financial markets do not fully consider human resource management issues because of speculation and the short-term pressures which are seen to dictate their decisions. Such pressures surely exist, but the main problem might relate more to analytical and informational problems. In this respect, the paper suggests that the French Company Personnel Report could be a useful document. Its published data may enable investors to understand HRM issues more fully and to evaluate their impacts on the performance of the firm. Empirical results are thus presented which reveal some interesting and significant correlations between profitability or productivity ratios and HRM indicators. The two major conclusions are that (a) training expenses may have some important effects on immediate and future economic performance; and (b) some recovery effects of dismissals can also be identified.