By Richard Potter and Anna Sutton
HR professionals and managers often find themselves in the unenviable position of trying to balance the needs of the employing organisation against the needs of the employees. Ideally, our HR practices should aim to increase both organisational performance and employee well-being, and there is reliable evidence that well-being is an important contributor to overall performance. But it is not certain that all HR practices will achieve good outcomes all round. Some may boost organisational performance but diminish employee well-being while others could increase well-being but have no effect on performance. So, with my colleague Carol Atkinson from MMU Business School, we examined the extent to which HR practices influence both individual well-being and organisational performance.
Our results showed HR practices are a mixed bag! Pay-related practices (such as profit-related pay) negatively influenced employee well-being and thereby, organisational performance. On the other hand, employee involvement (for example, employees having control over the pace or variety of their work) directly improved organisational performance but had no effect on employee well-being. Perhaps most interestingly, performance management practices (such as linking appraisals to training or pay) had both positive and negative effects. It directly increased organisational performance but also, by reducing employee well-being, had an indirect negative effect on performance.
These findings indicate that HR practices may need to be refined in order to maximise both organisational performance and employee well-being. Increasing our understanding of these issues may mean HR professionals are better able to promote the interests of workplaces and workers, rather than trading those interests off against each other.