Issue No 9: November 2004
Budget cuts but proposal quality rises
Q&A: Monitoring and assessment rules: Update
Web system closes gap between clients and suppliers
Algorithm to help Hong Kong keep competitive edge
Project integrates supplier networks
Cooperative conflicts ‘strengthen decision-making’
Pay-back from staff investment
Human capital needs change as economy opens
Artificial Intelligence helps rostering

Over the last two decades or so, an increasing number of HRM academics and practitioners have recognised the critical role that human resources play in corporate success or failure. Numerous empirical examinations and theoretical treatments of the link between human resource (HR) practices and company performance have been reported. However, the process through which this occurs has not been well understood. Moreover, previous research on the HR practices-company performance relationship focused on the manufacturing sector in developed economies. Based on data collected from hotels in the PRC, PhD candidate, Mr Liyun Sun, under the supervision of Prof Samuel Aryee at Hong Kong Baptist University’s School of Business, tested a model of the processes that underlie the HR practices-company performance relationship.
Researchers now believe HR practices and policies appear to emerge in bundles and bundles of HR practices, rather than single, isolated practices, are requisites for sustained performance.
Following this line of reasoning, the configuration of HR practices examined in Mr Sun’s study consisted of selective staffing, extensive training, internal mobility, employment security, job design, results-oriented appraisal, incentive pay and participation (see graphic). Additionally, he defined company performance in terms of employee turnover, productivity and sales growth. His findings revealed that: HR practices are related to employee turnover and productivity (but not sales growth); and that HR practices are related to these two performance indicators because they (HR practices) lead employees to perceive their organisations as supportive.
Based on the principle of reciprocity, employees reciprocate the organisation’s care and concern about their well-being by engaging in discretionary behaviours that directly lead to reduced turnover and productivity.
The findings suggest that investment in employees pays off in the service sector, and underscores the role of effective HRM as a source of competitive advantage. To serve as a source of competitive advantage, HR practices should be designed to emphasise three critical elements: employee motivation, skills enhancement, and empowerment.

Mr Liyun Sun :