The Effects of Human Resource Management on Small Firms' Productivity and Employees' Wages

Posted: 17 Nov 2009  

Inge Sieben

affiliation not provided to SSRN

Andries de Grip

Maastricht School of Business and Economics; IZA Institute of Labor Economics

Date Written: 2005

Abstract

This paper analyses whether employees and firms differently benefit from particular human resource (HR) practices. The focus is on small firms that may be badly informed on the impact of HR practices on firm performance. In this study on Dutch pharmacies, it is found that firms do not reward employees' skills according to their contribution to firms' productivity, as (1) employees are over-rewarded for their sector-specific skills and under-rewarded for the productivity enhancing effect of their computer skills and (2) employees' work experience positively affects their wages but does not have real productivity effects. Moreover, it is found that training employees in case of vacancy problems seems to be an adequate HR practice, since it increases productivity without affecting the average wage level. The opposite holds for offering higher wages to newly recruited employees. Furthermore, we find that only the employees benefit from performance evaluation interviews, whereas employing many employees by temporary contracts appears to have a negative effect on productivity, without affecting the wage level.(Publisher abstract)

Keywords: Employment policies, Firm performance, Employee benefits, Firm productivity, Pharmaceutical industry, Wages & salaries

Suggested Citation

Sieben, Inge and de Grip, Andries, The Effects of Human Resource Management on Small Firms' Productivity and Employees' Wages (2005). Applied Economics, Vol. 37, Issue 9, p. 1047-10 2005. Available at SSRN: https://ssrn.com/abstract=1506805

Inge Sieben (Contact Author)

affiliation not provided to SSRN

No Address Available

Andries De Grip

Maastricht School of Business and Economics ( email )

P. O. Box 616
Maastricht, NL 6200 MD
Netherlands

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Paper statistics

Abstract Views
451