HRM’s financial value from obtaining more star performers

| August 9, 2021

article image
We assessed the financial value of human resource management (HRM) as a function of obtaining more star performers. Specifically, we implemented utility analysis procedures on 206 samples of individual performance (i.e. output) encompassing 824,924 workers. We found that HRM adds greater financial value by obtaining more stars. Our results also offer several specific contributions to HRM theory. First, regarding how HRM produces greater value by obtaining more stars, our evidence points to a nonlinear model of HRM’s value, where HRM generates significant yet diminishing returns by increasingly obtaining the most productive ones. Second, regarding when, our results show that diminishing returns from HRM are stronger when output differences among top stars are relatively small. Third, regarding why, our study explains that small output differences among top stars may create various costs which diminish the returns from obtaining the most productive stars. Our explanation of HRM’s nonlinear pattern contributes to the star literature by helping integrate a variety of specific explanations for stars’ curvilinear influence discussed in past research. Regarding HRM practices, we highlight the need to use utility analysis procedures that more fully consider the existence of stars.

Our overall empirical finding was that HRM creates greater financial value by obtaining more stars. We also offered several theoretical contributions to HRM and the star literature. First, our results offered a nonlinear model of HRM’s value, where HRM produces significant yet diminishing returns by increasingly focusing on obtaining the most productive stars. Second, regarding when, we provided evidence that diminishing returns from HRM are stronger when output differences among top stars are relatively small. Third, regarding why, we explained that small output differences among top stars may create various costs which diminish the returns from obtaining the most productive stars. Fourth, our explanation of HRM’s nonlinear pattern also contributed to the star literature by helping integrate a number of specific explanations for stars’ curvilinear influence proposed in past research. From a practical view, we highlighted the need to use utility analysis procedures that more fully consider the presence of stars because extant procedures often significantly underestimate the value brought by obtaining more stars. By considering stars more fully, valuations of HRM are more accurate and also comparable with valuations of other business areas that recognize the reality that often few products and services contribute disproportionately to a firm’s bottom line. In closing, we hope our article will stimulate HRM research and applications that fully consider the prevalence of stars and their relative value to firms.

Spotlight

Bob Murray & Associates

Bob Murray & Associates brings a personal approach to providing quality executive recruitment services. Clients include cities, counties, special districts and other governmental organizations, both large and small. Success is achieved by working as a partner with their clients to identify their specific needs and to recruit outstanding candidates for their consideration.

OTHER ARTICLES

What are HR Tech Buyers Researching?

Article | August 30, 2021

“HR Should be the digital transformation leader because, in reality ‘digitalization challenges’ are work culture challenges.” - Jane McConnell, Thought Leader Over a year or so, there has been massive transformation across HR technology. Today the business leaders have become significantly more digitalized to remain competitive. In addition, the pandemic has drastically changed the way companies have adapted pace to purchase and implement new technologies. The traditional way of office-based work was replaced with a virtual workforce, prioritizing efficiency and value-creation. Rapid development in fast-paced, low-cost, modernized, and automated HR Tech solutions transforms the global hiring process. This article will guide HR Tech buyers through new technologies and help you alleviate the HR process. Trending HR Tech Features Buyers Want To scale and ease the HR process, companies have started investing in technologies. As a result, many HR Tech companies have come up with easy-to-use and implement solutions to optimize your HR processes and maximize business output. Following are the trending features that businesses are looking forward to when buying an HR Tech solution for their organization. Recruitment In the past year, a lot has happened around the recruitment process. HR professionals focus on achieving higher-value objectives like keeping staff happy and engaged, improving retention, and support recruitment strategies. Recruitment professionals can use Artificial Intelligence-powered tools for applicant sourcing, assessment, and screening. Moreover, Artificial intelligence can also help improve the candidate experience. Virtual Reality (VR) technology can be a worthful tool for recruiting and training employees. Benefits & challenges As an employer, a hybrid workforce and flexible working hours come with many challenges. Allowing remote teams with flexible working hours will help companies attract suitable candidates for the role. However, to adopt an effective remote work, companies need to ensure a secured network, cloud sharing needs to be seamless, and all the necessary software must be successfully managed. Cyber-security is one of the biggest concerns’ companies face, which can be resolved with trusted solution providers. Learning & development Learning and development have become even more important than ever. With workforces such as millennials and Gen Z are craving diversity and inclusion programs from their employers. Challenges HR Tech buyers faced are creating an employee-friendly work culture, easy ways to onboard and train, and offering the right compliance training tool. HR Tech buyers are researching technologies that are easy to implement and roll out a successful HR management program. Talent & People Management The future of the workplace has changed drastically. Talent management and people management in a remote work environment has become even more challenging. Managers and HR are constantly trying to keep the staff motivated, nurturing talent, and empowering them to improve and update holistically is becoming the top priority. Companies will recognize, develop, and retain talent for better team-building with the right technology and collaborative efforts. Leadership Development Businesses need to focus on leadership development. Millennials are confident to take over the workforce soon. However, 63% of these young workforces feel their employers are not fully developing their leadership skills. Complementary leadership includes pairing leaders with balanced skill sets so that they can share responsibilities. This leadership style helps teams remain active and well-organized. Meanwhile, HR can learn how employee performance varies and create a pool of employees recruited for leadership roles. Challenges and buying process The process of buying or investing in new technology may vary between organizations. However, a basic understanding can help build and establish prospects in the pursuit of a digital transformation. Commonly faced challenges in an organization in buying HR technology may be due to the number of decision-makers involved; stakeholders may have pre-notion views, backed by their research, and set of potential solutions are often overwhelming. Following are the steps for a business to considering while buying an HR Tech:- Identifying the problem areas and prioritize Figuring out requirement areas and uncompromised and need for process development Listing down solutions and exploring all the available options, hands-on Selecting an easy to implement, adapt, and process solution Associate with a trusted solution provider Agreement and approval of funding Final Thoughts Investing in the latest HR Tech solution doesn't necessarily be overwhelming or complicated. All the digital solutions companies are expanding to meet the demands of the changing landscape. It's no longer pioneering to have the latest and innovative technology; instead, it's becoming a widely accepted norm. FAQ's Q. Who is an HR Tech buyer? A. HR Tech buyers are the top decision-makers in any organization. They need to anticipate the future of the work environment and provide solutions to build an adaptive and flexible environment for a hybrid workforce. Q. What is new in HR technology? A. Due to a hybrid work environment, employee training and development are moving to the digital realm. This shift has given rise to the development of new and innovative solutions. Some of the latest innovative technologies are using gamification, AI, and AR/VR { "@context": "https://schema.org", "@type": "FAQPage", "mainEntity": [{ "@type": "Question", "name": "Who is an HR Tech buyer?", "acceptedAnswer": { "@type": "Answer", "text": "HR Tech buyers are the top decision-makers in any organization. They need to anticipate the future of the work environment and provide solutions to build an adaptive and flexible environment for a hybrid workforce." } },{ "@type": "Question", "name": "What is new in HR technology?", "acceptedAnswer": { "@type": "Answer", "text": "Due to a hybrid work environment, employee training and development are moving to the digital realm. This shift has given rise to the development of new and innovative solutions. Some of the latest innovative technologies are using gamification, AI, and AR/VR" } }] }

Read More

4 steps to a growth mindset for teams

Article | August 30, 2021

Having a growth mindset is a fundamental tool to navigating the pandemic. As organisations go through changes to how they operate including potentially letting employees go and restructuring, teams and individuals will need a growth mindset to settle into their new roles. For the sectors where COVID-19 has meant a rush in sales, their teams too will need a growth mindset as they learn how to manage new supply chains and fast-paced work in an uncertain climate. Carol Dweck, a leader educational psychologist, defines a growth mindset as a set of beliefs and attitudes which encourage people to seek out challenges and use failures as lessons to be learnt from. People with a growth mindset are open to change, an attribute which shouldn’t be undervalued during a pandemic.

Read More

Why do people put data at risk? Exploring the psychology behind your data breaches

Article | August 30, 2021

Even with all of the changes in technology over the years, understanding human behaviour is still key to controlling data breaches within your organisation. Mistakes can happen in any situation, so risks will always be present – especially as humans are prone to acting unpredictably at the best of times. Lisa Forte, Social Engineering & Insider Threat Expert Cyber Security Speaker and Vlogger, sat down to share her insights with Egress’ CEO Tony Pepper in a recent webinar (watch the session here). Together, they broke down some of the common characteristics of why employees cause data breaches, as well as explored some strategies to tackle them. Here’s our round up of our highlights from that discussion – watch the full webinar to find out more.

Read More

Design Tips For More Interactive Employee Onboarding

Article | August 30, 2021

While User Experience (UX) design for employee onboarding has lagged a bit behind best practices for web design, innovative learning designers have picked up on a few tricks. To be effective, the learning experience needs to excite and engage employees. Much of that can be accomplished through careful training content strategies, but UX design is just as important. So, let's discuss a few key UX strategies.

Read More

Spotlight

Bob Murray & Associates

Bob Murray & Associates brings a personal approach to providing quality executive recruitment services. Clients include cities, counties, special districts and other governmental organizations, both large and small. Success is achieved by working as a partner with their clients to identify their specific needs and to recruit outstanding candidates for their consideration.

Events