The Effects of Human Resource Management Practices on Productivity

56 Pages Posted: 1 Jul 2000 Last revised: 24 Sep 2010

See all articles by Casey Ichniowski

Casey Ichniowski

Columbia Business School - Management; National Bureau of Economic Research (NBER)

Kathryn L. Shaw

Stanford Graduate School of Business; National Bureau of Economic Research (NBER)

Giovanna Prennushi

World Bank - Poverty Reduction and Economic Management Network (PRMVP)

Date Written: November 1995

Abstract

Increasingly, firms are considering the adoption of new work practices, such as problem-solving teams, enhanced communication with workers, employment security, flexibility in job assignments, training workers for multiple jobs, and greater reliance on incentive pay. This paper provides empirical evidence to address the question: do these human resource management practices improve worker productivity? For this study, we constructed our own data base through personal site visits to 26 steel plants which contained one specific steelmaking process, and collected longitudinal data with precise measures on productivity, work practices, and the technology in these production lines. The empirical results consistently support the following conclusion: the adoption of a coherent system of these new work practices, including work teams, flexible job assignments, employment security, training in multiple jobs, and extensive reliance on incentive pay, produces substantially higher levels of productivity than do more 'traditional' approaches involving narrow job definitions, strict work rules, and hourly pay with close supervision. In contrast, adopting individual work practice innovations in isolation has no effect on productivity. We interpret this evidence as support for recent theoretical models which stress the importance of complementarities among a firm's work practices.

Suggested Citation

Ichniowski, Bernard E. (Casey) and Shaw, Kathryn L. and Prennushi, Giovanna, The Effects of Human Resource Management Practices on Productivity (November 1995). NBER Working Paper No. w5333. Available at SSRN: https://ssrn.com/abstract=225397

Bernard E. (Casey) Ichniowski

Columbia Business School - Management ( email )

3022 Broadway
New York, NY 10027
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Kathryn L. Shaw (Contact Author)

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Giovanna Prennushi

World Bank - Poverty Reduction and Economic Management Network (PRMVP) ( email )

Washington, DC 20433
United States

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