Research Briefings are a service from BC HRMA’s research group. Our aim is to make it easier and quicker for HR professionals to find and apply the latest and best people management insight to their challenges and projects.

The goal of every HR department should be to enhance the productivity of their organization. One of the long standing questions is how best to do this and which practice or practices make the most difference. A recent study of HR practices and employee exits provides clear evidence that in order to enhance productivity HR needs to focus on the performance side of HR practice.

The prevailing view in academia has been that there is no single HR practice which can make a difference as a standalone. In the late 90s and early 2000s, research identified that clusters of HR practices working together were the only way in which HR could impact an organizational outcome. Also, there was no one prescribed configuration of these practices; it was very much a “fit for purpose” approach that was required depending on the organization, its goals and its culture.

Recent research has taken this view one step further and broken this cluster of practices into two sub sets. These are termed “Inducement practices” and “Expectation practices”. Inducement practices are things like benefits, vacation, salary, career progression that are common to all employees within an organization and make up the foundation of what “induces” an employee to work for and stay with the organization. Expectation practices are related to the setting of goals, the allocating of performance bonuses or merit increases, the awarding of development or new role opportunities based on performance and contribution. Performance management would form the foundation of the cluster of Expectation practices.

What the research found is that organizations that have a high focus on Inducement practices and are very clear and even-handed in how they award inducements will have lower overall employee exits. More people will stay as they feel well rewarded. Organizations that have a high focus on Expectation practices will actually have a higher level of overall employee exits. However this increase in turnover will come from the voluntary exits by low performing staff. Those who do not meet expectations will choose to move on to somewhere they can be more successful. The research makes clear that you cannot focus on expectations at the expense of inducements, however it is not possible to “buy” performance. Hence, if you want to improve the productivity of your organization, your focus should be on ensuring that the expectation setting elements of your HR practices are well-designed and effectively implemented.

The full research briefing provides more details about the study, the findings and the implications for HR practitioners.