Aaron Shannon

MC# 543

Issue 17: Do Human Resource Management (HRM) Practices (Such as Selection, Training,
Performance Management, and Compensation) Contribute to Increased Firm Performance?
The HRM leader of Google, Lazlo Bock, believes HRM practices have greatly improved
the performance of the company. First of all, Google puts its employees first. One may believe a
company should put its customers first. This is true in the sense that if a company does not
have a product or service which customers want, then a company will quickly go out of
business. Assuming an organization is offering a wanted product or service, it makes sense to
follow Googles lesson of putting your employees first. Why? If employees are unable to
efficiently and effectively provide products and services to customers, as well as continuously
improving these offerings, then customers will turn elsewhere. In other words, we are putting
our customers first through the means of putting our employees first. This concept is Systems
Thinking or Systems Intelligence (SYQ). John Mackey, the co-CEO of Whole Foods Market coauthored a book titled, Conscious Capitalism and the following is an excerpt on SYQ:
Conscious leaders are natural systems thinkers. They can see the bigger
picture and understand how the different components of the system
interconnect and behave over time. They can anticipate the immediate as
well as long-term consequences of actions. Given their intuitive
understanding of systems, conscious leaders are excellent organizational
architects. They understand the roots of problems and how the problems
relate to organizational design, and they devise fundamental solutions
instead of applying symptomatic quick fixes.

Aaron Shannon
MC# 543

SYQ is putting all major stakeholders first in order to maximize the value for all the
stakeholders. There is an interconnection between them all. HRM practices should not be
reactive, but proactive in maximizing customer and employee satisfaction. The long-term action
of mediocrity in managing human resources will result in problems later which would need to
be solved with symptomatic quick fixes (reactive HRM practices). Anticipating employee
needs through statistics, psychology, and seeking the ideas and concerns of employees is a
proactive HRM practice resulting in greater job satisfaction, creativity, and innovation. Such
practices contribute to increased firm performance.
Secondly, Googles HRM department consists of hundreds of employees with three main
areas of expertise, namely the normal HR employees, business consultants, and detail-oriented
experts. The department implemented a self-nominating system which encourages employees
to nominate themselves when they are convinced they are ready for a promotion. The
company will evaluate them to determine the exact promotion applicable, if any. The system
gives employees initiative and more control over their career.

The HR group developed

questions for job applicants which they found to assist in forecasting the applicants success
within the company. HRM practices obviously contributed to Googles profits and growth.
Keith Hammonds, a former executive editor of the magazine Fast Company believes
HRM practices do not have any significant effect on company profits and growth. He addresses
many weaknesses of HR and implicitly suggests ways of improving HR to convert the
weaknesses to opportunities. Problems are meant to be addressed through corrective action in
order to improve an idea or process. Critics are very useful in this way, thus Keith Hammonds
paves the way for HR professionals and business organizations to improve HRM practices.
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Aaron Shannon
MC# 543

Keith believes HR professionals should be strategic business partners, but they fall very
short of the duty and responsibility. He says, Most human-resources managers arent
particularly interested in, or equipped for, doing business. HR people need to understand
strategic management and company objectives in order to work with and help management
carry out corporate strategies. HR often speaks of their activities but do not link the activities to
the performance of the company. The example given of the HR employee who spoke of 80% of
the employees doing 40 or more hours in classes was not linked to business performance. What
outcome does this training produce? In dollars, for example, how much additional profit does
each employee add to the company as a result of these classes? This summarizes the two
arguments for why HRM practices do not presently contribute to firm performance, namely the
lack of business acumen and the lack of proper measurements in order to link the HR metrics to
overall company strategy, growth, and profit. Keith does not appear to be arguing HR is
worthless and has absolutely no significant effect on firm performance, but he is emphasizing
the weaknesses of HR which need to be addressed so the HRM department can provide solid
numbers to convince stakeholders of its success in increasing competitive advantage for
companies.

Aaron Shannon
MC# 543

Works Cited
Rao, P. (2013). Do Human Resource Management (HRM) Practices Contribute to Increased Firm
Performance? In Taking sides (2nd ed., pp. 272-289). New York, NY: McGraw-Hill.
Mackey, J., & Sisodia, R. (2013). The Qualities of Conscious Leaders. In Conscious capitalism: Liberating
the heroic spirit of business (p. 186). Boston, MA: Harvard Business Review Press.