XXXXXXXXXX Human resource management practices and workers’ job satisfaction Alina Ileana Petrescu Lancashire Business School, University of Central Lancashire, Preston, UK, and Rob Simmons Department...

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108511 651..667 Human resource management practices and workers’ job satisfaction Alina Ileana Petrescu Lancashire Business School, University of Central Lancashire, Preston, UK, and Rob Simmons Department of Economics, The Management School, Lancaster University, Lancaster, UK Abstract Purpose – The purpose of this paper is to investigate the relationship between human resource management (HRM) practices and workers’ overall job satisfaction and their satisfaction with pay. Design/methodology/approach – The paper uses British data from two different cross-sectional datasets. It estimates probit models with overall job satisfaction and satisfaction with pay as subjective dependent variables. Findings – After controlling for personal, job and firm characteristics, it is found that several HRM practices raise workers’ overall job satisfaction and their satisfaction with pay. However, these effects are only significant for non-union members. Satisfaction with pay is higher where performance-related pay and seniority-based reward systems are in place. A pay structure that is perceived to be unequal is associated with a substantial reduction in both non-union members’ overall job satisfaction and their satisfaction with pay. Although HRM practices can raise workers’ job satisfaction, if workplace pay inequality widens as a consequence then non-union members may experience reduced job satisfaction. Research limitations/implications – The data sets used in the analysis are cross-sectional, presenting a snapshot of impacts of HRM practices on job satisfaction at a particular point in time. Dynamic effects are therefore not captured. Originality/value – The paper adds to the empirical literature on effects of HRM practices, focussing on impacts on both overall job satisfaction and satisfaction with pay. A novel feature of the paper is the use of two separate data sets to develop complementary empirical results. Keywords Job satisfaction, Human resource management, Human resource strategies, Trade unions, Pay policies Paper type Research paper 1. Introduction The past two decades have witnessed a burgeoning literature on the economics of job satisfaction[1]. There is also a large human resource management (HRM) literature that emphasises the influence of so-called “high-performance workplace practices” on job satisfaction and hence employee performance. The HRM literature can be sub-divided into empirical studies, which in the case of the UK are primarily based on the Workplace Industrial Relations Survey (WIRS) series, and a considerably larger number of studies that typically rely on case study analyses[2]. Relatively few attempts have been made to combine the job satisfaction and HRM literatures. A primary objective of this paper is to present new empirical evidence on the impact of HRM practices on workers’ overall job satisfaction and their satisfaction with their pay. The current issue and full text archive of this journal is available at www.emeraldinsight.com/0143-7720.htm Workers’ job satisfaction 651 International Journal of Manpower Vol. 29 No. 7, 2008 pp. 651-667 q Emerald Group Publishing Limited 0143-7720 DOI 10.1108/01437720810908947 It is possible that HRM practices are a substitute for unionisation. If HRM policies raise overall job satisfaction, and (especially) satisfaction with pay, then the motivation to join unions could be reduced. A second objective of this paper is thus to investigate whether HRM practices have a different impact on the job satisfaction of union members as opposed to non-union members. There is a longstanding interest by economists in the role played by pay and reward structures in determining worker effort, performance and job satisfaction. However, the focus of this literature has tended to be on the impact of workers’ own pay or their comparison wage. Little is known beyond particular cases about the impact of the distribution of pay within a firm on worker performance. This is intriguing because there is a growing literature, which advocates the implementation of contingent, and implicitly variable, pay structures that encourage wage dispersion[3]. As such, a third objective of this paper is to analyse the impact of perceived pay inequality on workers’ job satisfaction. To investigate these issues we analyse two British datasets, the “Changing Employment Relationships, Employment Contracts and the Future of Work Survey” (CERS), conducted in 2000, and the 1998 Workplace Employment Relations Survey (WERS). The CERS and WERS datasets differ and complement each other in that the former has a larger proportion of workers from small firms (i.e. those with less than ten employees), whereas WERS excludes establishments with fewer than ten employees. This means that WERS excludes 73 per cent of the 1.3 million establishments in the UK (Cully et al., 1999). However, WERS covers 82 per cent of employees, making it representative at the employee level, whereas CERS is representative of establishments. These differences in coverage mean that our two datasets can thus be seen as complements in the analysis. To allow a comparison of the findings from the two datasets we construct a set of covariates that are as consistent as possible. In terms of HRM practices, we identify the following sets of variables: work organisation, supervision, employee involvement/voice, recruitment and selection, training and learning, and pay practices. In addition, we include variables for the workers’ perception of pay inequality in the workplace and whether it is unionised. Note that our comparison of the two datasets can only be performed with respect to the workers’ satisfaction with their pay, since the WERS dataset does not include a variable for overall job satisfaction. We construct dependent variables in a simple binary form to ease interpretation of results. The remainder of the paper is broken down as follows. In section 2 we briefly review the theoretical and empirical literature on job satisfaction and then discuss the literature on the impact of HRM practices on worker performance. The issue of pay inequality is also introduced. Section 3 describes the two datasets used in the analysis together with our econometric methodology. In section 4 we discuss the findings of our analysis of the impact of HRM practices on workers’ overall satisfaction with the job and satisfaction with pay. This section also examines the differences in outcome between union and non-union members, followed by a discussion of the impact of pay inequality. Our conclusions follow in section 5. 2. Job satisfaction and HRM practices: theory and literature Various theories of job satisfaction have been developed by psychologists and management scholars. They tend to assign different degrees of importance to sources IJM 29,7 652 of satisfaction[4], which can be classified as either intrinsic or extrinsic. Intrinsic sources depend on the individual characteristics of the person, such as attitudes. Extrinsic sources are situational, and depend on the environment, such as workplace climate. Theories which rely on extrinsic sources are more typically adopted by economists, albeit by reference to a different terminology, whereas intrinsic sources are more commonly associated with other social sciences (Luchak, 2003). Traditionally, economists have embraced job satisfaction with “professional suspicion” (Freeman, 1978 p. 135) because it is a subjective variable. In 2000, it was still possible to state that the study of job satisfaction by economists is “still in its infancy” (Blanchflower and Oswald, 2000, p. 8)[5]. However, the empirical analysis of job satisfaction either implicitly or explicitly draws on the theoretical models discussed above, and in so doing job satisfaction is specified as a function of several individual and job characteristics, and ultimately interpreted as a utility function (Clark and Oswald, 1996; Easterlin, 2001). Some studies show that certain HRM practices, such as working in teams, greater discretion and autonomy in the workplace and various employee involvement and pay schemes, do motivate workers and hence generate higher labour productivity (Cully et al., 1999; Boselie and Van der Wiele, 2002). However, overall job satisfaction need not increase if effort is a “bad” and the aim of workers is to maximise the returns from the exerted effort. In terms of the relationship between pay and job satisfaction, Clark and Oswald (1996) show that a workers’ reported level of well-being is weakly correlated with their income, whereas Belfield and Harris (2002) find no evidence of such a relationship for those working in higher education. There is mounting research into the weakness of the link between income and life satisfaction, as in the happiness studies of Layard (2003, 2006) and Clark (2005) showing that despite rising wages there are stagnant levels in job satisfaction. Other studies show that it is relative income, rather than own income, that matters for job satisfaction (Clark and Oswald, 1996). Still, some studies contest the importance of relative income at lower pay levels (e.g. McBride, 2001), or highlight the importance of real income (Greene and Nelson, 2007). A wider literature exists on the effects of introducing new pay practices in companies (see, e.g. Black and Lynch, 2004; Booth and Frank, 1999; Cappelli and Neumark, 1999; McCausland et al., 2005; Lazear, 2000). Yet, empirical evidence is lacking on the relationship between such practices and job satisfaction. There are also very few studies that seek to examine the relationship between the pay distribution within a firm, including the perception of that distribution by a worker, and individual worker performance or their job satisfaction[6]. An exception is Bloom and Michel (2002), who discuss the advantages and disadvantages of dispersed and compressed “actual” pay structures. Dispersed pay structures may induce higher levels of performance as employees have to work harder to move up the pay ladder. This is consistent with the notion of promoting the “star” workers in a competitive environment and the provision of compensating differentials for high-risk jobs. However, consistent with the prediction of tournament theory (Bloom and Michel, 2002), dispersed pay systems may also be linked to workforce instability and higher turnover. On the other hand, compressed pay promotes team effort and cooperation by creating a more egalitarian workplace, which tends to reduce turnover (Beaumont and Harris, 2003). However, it may discourage effort above a certain minimal necessary Workers’ job satisfaction 653 level, and may be perceived as unfair, not least because of free-rider problems. Hence, it is usually difficult to accurately identify the effect of the pay distribution within a firm on workers’ job satisfaction. 3. Data and methodology We use two British datasets for our empirical analysis. The CERS was commissioned by the Policy Studies Institute as part of the Future of Work research programme. The data were collected between July 2000 and January 2001, and the main aim of the Survey was to identify and describe the key changes in British employee relations. Two data collection methods were used: interviews and self-completion questionnaires. The one-hour interviews were personal, paper-based, conducted in the home, and totalled 2,466 responses. Self-completion questionnaires were returned by 2,349 respondents, representing a 95-per cent response rate. Once we omit respondents with missing values on key variables and the self-employed (334), the sample size reduces to 1,518. The WERS contains a much larger sample of workers (19,890 after allowing for missing data), and has the advantage that responses are obtained from both employees and their managers. The CERS
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Answer To: XXXXXXXXXX Human resource management practices and workers’ job satisfaction Alina Ileana Petrescu...

Jose answered on Nov 17 2021
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What was new or surprised you?
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m the article I understand that there is strong connection between the HRM practices and employee’s satisfaction. For improving the overall satisfaction level of the employees we have to introduce effective HRM practices and policies. HRM practices can raise workers’ job satisfaction, this statement in the article surprised me and it provides an option for companies design effective HRM practices
What do you agree or disagree on?
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