HRM practices for managerial and hourly employees in effective and ineffective service based firms

The general hypothesis that predicts major differences in human resource practices used in the manufacturing and service industries follows from a deterministic view of the relationship between environments and organizational forms (Hannan and Freeman 1977). Thus, for example, population ecologists would point to the different niches that are the relevant environments for these two industry sectors and argue that the characteristics of the two environments dictate the forms of the organizations that populate them (Aldrich 1979). Models that emphasize the role of managerial decision-making and choice represent an alternative perspective for generating hypotheses about how organizations are likely to differ in their management practices. The strategic choice perspective assumes that organizations face numerous design options and that the form of management an organization adopts represents decisions made by management. These may be made within some constraints, however, such as the constraints related to operating within the manufacturing or service industry (see Hrebiniak and Joyce 1985). A strategic choice perspective recognizes that multiple design options are often available to organizations, but does not necessarily assume that all options are equally effective within a given environment (e.g., Porter 1980, 1985). Thus, inappropriate managerial decisions can create organizational practices that are less than optimal, in which case organizational effectiveness is likely to suffer. When applied to the issue of human resource management systems, this view of organizational adaptation leads to the prediction that when organizations operating within a given industry sector are compared, those that are more effective will be the organizations that have adopted HRM practices consistent with the demands of the industry. Based on the previous discussion and the literature, several differences would be expected between the human resource practices in more effective service firms in comparison to less effective service firms. Specifically, the more effective the service firm the more likely that-


Job designs will be characterized by skill variety and autonomy;
Employees will have input into their performance appraisals;
Clients will have input on appraisals; ,
Performance appraisal results will be used in determining training needs;
There will be a great deal of training of new employees; and
Performance appraisal results will be used in compensation decisions.