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.

HRM practices for managerial and hourly employees in service organizations

A large literature addresses the nature of the managerial position. According to this literature, the jobs of managers comprise several roles. Mintzberg (1973), for example, described 10 managerial roles clustered into three categories: interpersonal, informational and decisional. While allowing for differences in situations, taken together, these 10 roles characterize the job of manager as being linked with others, taking some risks, focusing on results and process, managing the activities and jobs of others, dealing with unpredictable events and monitoring the environment of the group or unit being managed. Jacques' (1989) concept of the time span of discretion adds another distinguishing feature to this picture of managerial jobs. The time span of discretion refers to the length of time it takes for results of a contribution to become known. For managers, this time span is usually relatively long. Using the Mintzberg role distinctions and Jacques' time span of discretion, managerial jobs can be compared and contrasted with hourly or nonmanagerial jobs. While managerial and non-managerial jobs are similar in that both are remunerated and are important to organizational effectiveness, managerial jobs are generally filled with more unpredictability, risk-taking, results-orientation, interdependence and a longer time span of discretion, in comparison to hourly jobs. These differences may diminish, however, as service organizations reduce layers of management, decentralize and push more responsibility down to lower organizational levels.

Organizations use their HRM practices to encourage the behaviors needed to successfully carry out the managerial role. Given that the managerial role is different from the roles of lower-level employees in organizations, it is reasonable to expect that organizations would use somewhat different human resource management practices for the two groups of employees. Specifically, given the nature of the managerial role as previously described, it is probable that compared to hourly employees in service-based organizations, managers would be more likely to be influenced by the following practices:


Jobs with greater skill variety and responsibility;
Performance appraisals that focus on results;
Performance appraisals that focus on projects that takes a longer period of time;
Compensation schemes based on company-wide bonuses;
Training that is provided for longer-term and broader skill development; and more training hours per year.

HRM practices for managerial and hourly employees in service based and manufacturing ferms

The U.S. economy can be carved into a large number of industry sectors, but
the distinction between manufacturing-based and service-based industries is
one of the most basic. Service organizations have been described as differing
from manufacturing organizations in three ways: (1) their "products" are
intangible rather than tangible; (2) customers are actively involved in the
production of services; and (3) the consumption of services occurs
simultaneously with their production (Bowen and Schneider 1988; Daft 1986;
Mills and Margulies 1980; Mills and Moberg 1982; Larsson and Bowen 1989).
The intangible nature of services means that performance is difficult for
supervisors to monitor directly, so employees must be trusted to monitor their
own performance. The fact that customers are actively involved in the service
production process means service providers must be sensitive to clients' needs;
they must monitor these needs and use the cues they receive from clients to
guide their job behaviors. Because of these characteristics of service jobs, service
organizations should be more likely than manufacturers to include both
employee input and client input as sources of performance appraisal
information (Mills and Morris 1986).
The simultaneity of the production and consumption processes also has
implications for HRM practices (Schneider and Schecter 1991). For example,
quality control cannot be achieved by the inspect-and-correct method
commonly used in manufacturing plants. Instead, quality control occurs at the
point of service delivery (Gronroos 1990; Heskett, Sasser and Hart 1990). In
order to maintain control over quality, service organizations are likely to seek
ways of controlling the process of service production rather than the outputs
(Mills and Moberg 1982). They may invest more resources to train new recruits,
with the objective of socializing them to be effective monitors of their own
service production behaviors (Bowen and Schneider 1988). They could also
revise their personnel selection system (Schneider and Schecter 1991). Another
way to gain more control over performance would be to use performance
appraisal results in making compensation decisions. Job design practices could
also be used to enhance service quality. Enriched jobs should encourage selfmonitoring
because employees then feel a greater sense of responsibility for
their performance and they are more aware of their significance to the firm
(Hackman and Oldham 1980).
This line of reasoning implies that the following practices would be more
prevalent in service-based firms:

Job designs that are "enriched," in that they are characterized by
autonomy, variety and interdependence;
Employee input into performance appraisals;
Client input into performance appraisals;
Use of performance appraisal results to assess training needs;
Extensive training of new employees, with emphasis on performance on
their current jobs; and
Use of performance appraisal results in determining compensation.
It should be noted here that in comparing service-based and manufacturing
firms, these predicted differences would be found for both managerial
employees and lower-level employees. However, the differences are likely to
be greater for lower-level employees whereas differences in the tasks performed
by service-based employees and manufacturing employees are particularly
pronounced.

A role theory perspective for understanding and guiding HRM practices

Role theory has served as a valuable conceptual and theoretical framework
for the study of individual behavior in organizations (Kahn et al. 1964; Katz
and Kahn 1978). Roles have been seen as the boundaries between individuals
and organizations. More specifically they have been viewed as conveyors of
information to individuals in the organization.
Role theory research has often focused on the dysfunctional nature of roles.
In particular, roles that are ambiguous and roles that create conflict for the
role receiver have been shown to be dysfunctional to both individuals and
organizations (Kahn et al. 1964; Rizzo, House and Lirtzman 1970; Jackson
and Schuler 1985). Corresponding to this line of research has been a heavy
reliance on extremely general measures of role characteristics, primarily the
measures of role conflict and ambiguity developed by Rizzo et al. (1970). In
contrast, Naylor, Pritchard and Ilgen (1980) and Dougherty and Pritchard
(1985) have conceptualized more specific role measures in their theory of
behavior in organizations. According to their theory, the basic unit of behavior
is an act. Because the time and effort put into an act are not always observable,
the critical unit in the theory is the product, the result of the act. The products
most central to the theory are those evaluated by an observer, e.g., a role sender
such as a supervisor or customer. The evaluation in turn results in outcomes,
positive or negative. The magnitude of the outcomes reflects the importance
(relevance) of the products.

Alternative perspectives for understanding the impact of organizational conditions on HRM practices

Alternative perspectives for understanding the impact of organizational conditions on HRM practices
In their description of organizational determinants of selection and hiring
practices, Cohen and Pfeffer (1986) described four perspectives for explaining inter-organizational differences in HRM practices: the technical, control,
institutional and political perspectives. A fifth perspective, economic, has also
been invoked to explain variations in HRM practices (Kochan and Chalykoff
1987). Each of these perspectives focuses researchers' attention on somewhat
different aspects of organizational phenomena, and each can contribute to an
improved understanding of HRM practices and organizational behavior.
Until recently almost all HRM research was dominated by the technical
perspective. The technical perspective presumes that organizations wish to
plan, staff, appraise, compensate, train and develop their employees in , order
to ensure that the right people (skill-wise) are in the right place (job) at the
right time (Collins 1979). The technical perspective leads to research designed
to develop techniques for maximizing the match between employees'
knowledge, skills and abilities on the one hand and the demands of the jobs
on the other (Schneider 1985). The presumed result of good matching is
organizational effectiveness, from which individual employees and the
organization as a whole both benefit.
The control perspective views HRM practices as a means for organizations
to ensure the predictability and reliability of social interactions. The goal is
to ensure that employees behave as solid citizens, living according to
organizationally approved norms and values (Noland and Bakke 1949;
Hollingshead 1949; Bowles and Gintish 1976; Edwards 1976; Collins 1979).
This perspective recognizes that organizations attempt to govern social
performances in addition to job performance. Desirable social behaviors
presumably include getting along well with others and acting as a good citizen
who shows concern for the organization's functioning.
The institutional perspective posits two major explanations as to why
organizations use particular HRM practices: organizations copy the practices
they see being used by others, and/or they adopt practices to gain legitimacy
and acceptance (Meyer and Rowan 1977; Zucker 1977; Meyer 1980). The
institutional perspective assumes that legitimacy and acceptance are important
objectives for most organizations because constituencies have the power to
offer and withhold resources which, in the long run, may determine the firm's
economic performance.
The political perspective holds that HRM practices reflect the distribution
of power in an organization. For example, having an extensive set of HRM
practices implies a powerful personnel department upon which others must
depend when making personnel-related decisions (Osterman 1984; Pfeffer and
Cohen 1984). But existence of other powerful groups-such as unions or
competitors who minimize their labor costs-may act to countervail or
suppress the expression of the personnel department's wishes (Doeringer and
Piore 1971).
As suggested by Kochan and Chalykoff (1987) the economic perspective can
also explain variations in HRM practices. Relatively affluent conditions in an organization permit it to pay higher wages. This in turn enables an organization
to attract more job applicants and be more selective. Higher selectivity (lower
selection ratios) diminishes the need to train employees. Furthermore, the
attraction of more highly qualified individuals may lead to conditions that give
more power and discretion to the employees, thus reducing the attractiveness
to them of collective bargaining. The reverse scenario holds under less affluent
economic conditions (Osterman 1984).
Each of the five perspectives previously presented helps explain some of the
variation and similarity in HRM practices across organizations although
additional variation and similarity remain to be explained (Jackson, Schuler
and Rivero 1989). In presenting another perspective, the role theory behavior
perspective, the authors of this article hope to contribute in a theoretical and
empirical way to this growing body of research. The desired goal is to develop
a framework that can be used to explain individual behavior in and across
organizations by providing an explanation for inter-organizational variations
in the HRM practices that presumably shape behavior.

HRM PRACTICES IN SERVICE-BASED ORGANIZATIONS:
A ROLE THEORY PERSPECTIVE

INTRODUCTION
Human resource management (HRM) practices are being increasingly treated
as dependent rather than independent variables. Whereas in the past
researchers focused almost exclusively on how changes in HRM practices affect
employee performance or satisfaction, researchers are now beginning to ask
how organizational conditions shape HRM practices (e.g., design, staffing,
performance appraisal, compensation, and training and development).
Examples of organizational conditions hypothesized to impact HRM practices
include strategy (Hambrick and Snow 1987; Snow and Hrebiniak 1980; Olian
and Rynes 1984; Lawler 1984; Hambrick and Mason 1984; Gupta and
Govindarajan 1984a, b; and Miller, Kets de Vries and Toulouse 1982),
organizational life cycle stage (Kochan and Chalykoff 1987; Kerr 1982, 1985),
technological change, union presence, internal labor markets and even whether
or not an organization has a personnel department (Osterman 1984; Pfeffer
and Cohen 1984; Cohen and Pfeffer 1986). Consistent with this line of research
investigating the relationship between organizational conditions and HRM
practices, this article focuses on HRM practice in service-based organizations.
The role behavior theory perspective (Naylor, Pritchard and Ilgen 1980)
provides useful insights for understanding and explaining inter-organizational
differences in HRM practices and consequent organizational behaviors.
Application of the perspective is built on two fundamental assumptions: (1)
HRM practices are a primary means for defining, communicating and
rewarding desired role behaviors and (2) desired role behaviors are a function
of organizational characteristics.
To illustrate the research agenda suggested by the role behavior theory
perspective, empirical tests of several specific hypotheses about service-based
organizations using data collected from 267 companies are presented. These
data indicate that a role behavior theory perspective holds promise as an
explanation for HRM practices used in service firms. To provide richer detail
for the role theory perspective, an example of its application is described in
an intensive case study. While providing many implications for practical
application, the case study, along with the survey results, reveals that more
research is needed to develop and refine understanding of the linkages between
organizational conditions, roles, HRM practices and employees' behaviors.