Supervisor feedback as a strategic HR practice to improve organizational performance

Table of Contents

List of Abbreviations

List of Figures

List of Tables

1 Introduction

2 Theoretical background
2.1 Definitions
2.2 Strategic HRM and Strategic Performance Management
2.3 How does SHRM impact performance
2.3.1 Content-based Approach
2.3.2 Process-based Approach
2.4 Supervisor feedback as HR practice

3 Practical application

4 Discussion

5 Conclusion

6 Bibliography

Appendix

List of Abbreviations

Abbildung in dieser Leseprobe nicht enthalten

List of Figures

Figure 1 Conceptual framework on how SHRM influences organizational performance. Own illustration based on (Messersmith, et al., 2011) 6

List of Tables

Table 1 Correlation analysis in STATA with p < 0,01 13

1 Introduction

In times of fast changing work environments and demanding tasks for employees it is highly important to take actions and adjust the organization’s strategy to still secure a competitive advantage and high-performance outcome especially when competing in a market with strong competitors. Further, employees’ mindsets have changed over the last years and social criteria in their work environment are now more important than financial rewards (Wong, 2017). This is why the relationship between supervisor and employee is of increased importance and more and more employees yearn for personal development and responsibility to satisfy their individual needs. Based on Maslow’s Hierarchy of Needs prestige and the feeling of accomplishment is the last step before an individual demands self-fulfilling needs and can achieve one’s full potential (Maslow, 1954). Hence, organizations should pay attention to satisfy this need in order to allow employees reaching the top level and add the highest value to the organization.

Based on that, researchers within Strategic Human Resource Management (SHRM) have been encouraged “to explore whether and how Human Resource practices […] affect employee attitudes and behaviors in ways that may further business strategy” (Storey, 2007, p. 173). SHRM provides guidance on how key issues of HRM can be managed strategically in the sense that they support the realization of the company’s goals. This relationship between bundles of Human Resource (HR) practices, also called High-Performance Work Systems (HPWS), and behaviors is influenced by various employee attitudes(Jiang, et al., 2012, p. 1264).

As mentioned before, prestige and the feeling of accomplishment are important needs based on Maslow’s Hierarchy of Needs. Further, the relationship to an individual’s supervisor is an important issue which organizations should pay attention to, to secure their performance and fulfill their business strategy. One HR practice that influences the sense of an employee for his performance and achievements is feedback from the supervisor, which Crawford et al. defined as giving employees direct and specific information about the effectiveness of their work (Crawford, et al., 2014).

For all companies it is important to be sure whether this HR practice can be seen as a way to improve a company’s overall performance. This study will examine this relationship empirically on a selected case to find out, whether supervisor feedback can be seen as a suitable means to improve business performance. Accordingly, the research question for this paper is the following:

How can organizational performance be influenced by the relation between supervisor feedback and employee behaviors and attitudes?

2 Theoretical background

The main idea is that HR practices (one of them is supervisor feedback) as HPWS influence employees behavior and attitudes such as engagement including satisfaction, commitment and empowerment, and that these behaviors have an impact on the organizational performance (based on (Messersmith, et al., 2011; Armstrong, 2017)).

Abbildung in dieser Leseprobe nicht enthalten

Figure 1 Conceptual framework on how SHRM influences organizational performance. Own illustration based on (Messersmith, et al., 2011)

As Messersmith et al. (2011, p. 1106) theorized that the relationship between HPWS and employee behavior is mediated by attitudes such as job satisfaction and commitment, which are further linked to organizational citizenship behaviors (OCB), the relationship between feedback and these constructs will be investigated. Based on a model of engagement by the Institute for Employment Studies satisfaction, commitment and OCB are highly related to employee engagement, which is a valid indicator for the behavior of employees (Armstrong, 2017). Therefore, it will also be included in the following analysis. If people receive feedback on their behavior and performance, they appreciate the discrepancy between what they are doing and what they are expected to do and take corrective action to overcome the discrepancy.

2.1 Definitions

Supervisor Feedback is a performance review between supervisor and employee that intends to ensure that subordinates understand how management evaluated their performance, what they have achieved, encourages future development and creates a sense of a fair relationship (Greller, 1998). It is recognized as a crucial part of performance management.

The dimension of engagement describes a willingness of the workforce to work beyond contract obligations and to express themselves physically, cognitively, and emotionally during job performances (job engagement). It is about feeling positively about doing a good job and the identification with the organization as a whole (organizational engagement) (Armstrong, 2017).

Locke defined job satisfaction as “a pleasurable or positive emotional state resulting from the appraisal of one’s job and job experiences.” (Locke, 1976, p. 418; Armstrong, 2017). It is an antecedent of work engagement.

Furthermore, Appelbaum et al. state, that commitment reflects an employee’s identification with the company (loyalty), intention to stay, and willingness to expend effort on the organization’s behalf. It is a key dimension for many organizations because it can result in performance but also in self-worth and psychological involvement (Appelbaum, et al., 2017).

In addition, empowerment is described as an increasing accountability of individuals for their own work and granting them with additional authority and freedom. Further it is characterized by new and more difficult as well as more specific and specialized tasks, enabling the employee to become an expert (Armstrong, 2017).

The concept of Organizational Citizenship Behavior explains an employee behavior that goes beyond an organization’s expectations such as giving assistance to co-workers and being conscientious, and that contributes to the organizational performance. Little and Little further described it as “outcome of attitudes of job satisfaction and organizational commitment.” (2017, p. 418).

In the aggregate, the HR practices are all linked to the departmental and organizational performance. Organizational outcomes in this case are based on a pluralistic view and include not only financial outcomes (e.g. growth, return on investment), but also HR outcomes (e.g. turnover, needed skills/knowledge) and operational outcomes (e.g. productivity, innovation), whereas the latter two further influence the financial performance (Jiang, et al., 2012, p. 1280).

2.2 Strategic HRM and Strategic Performance Management

As many studies found out, Human Resource Management (HRM) has a positive impact on the organizational performance when implemented strategically. Strategic HRM was defined as “A set of activities aimed at building individual and organizational performance” by Boxall & Purcell (2008). It has been described by Jackson et al. as “the study of HRM systems […] and their interrelationships with other elements comprising an organizational system, including the organization’s external and internal environments, the multiple players who enact HRM systems, and the multiple stakeholders who evaluate the organization’s effectiveness and determine its long-term survival.” (2014, p. 2). Wright & Boswell (2002, p. 250) stated in their Typology of HRM research that SHRM concentrates primarily on organizational performance and include individual performance only in regard to how it pays in to the organizational outcome.

Since performance is described as behavior that accomplishes results, Strategic Performance Management (SPM) as part of SHRM can therefore be defined as a combination of strategic planning and performance management by creating an organizational structure based on strategies, aligning resources with this structure, addressing human capital and productivity, and establishing performance measures (Armstrong, 2017; Redding & Layland, 2015). The company’s SPM strategy as well as all other HRM strategies need to be aligned with the overall business strategy (vertical fit) but also be consistent internally between various aspects of HR (horizontal fit) (Storey, 2007).

2.3 How does SHRM impact performance

Based on Jackson et al., “explanations for how and why HRM systems contribute to firm effectiveness must address the behaviors of individual employees.” (2014, p. 22). There is a variety of theoretical frameworks which describe the relation how SHRM influences organizational performance. Some of them emphasize the content of the SHRM system, others concentrate on the psychological process by which SHRM impacts performance and how employees understand SHRM (Sanders, et al., 2014).

2.3.1 Content-based Approach

One framework that explains the link between HR practices and performance and which is a basic principle of SHRM is the Social Exchange Theory. When employees perceive a fair treatment by their employer and supervisor and view HR as being positive, they most likely want to give something back and respond with high levels of performance. Positive exchanges as for example good, constructive feedback and performance appraisals as well as the perception that their employer values their contribution, lead to enhanced, positive behaviors and higher levels of engagement of employees to repay the organization (Gould-Williams, 2018; Armstrong, 2017).

A similar approach was studied by Wright et al. (2003), who agreed that HRM can impact the attitudes of employees which in turn will impact their behaviors and organizational outcome. They based their study on the job performance theory of Campbell (1990) and found that employees’ attitudes influence organizational performance through three categories of job behavior: behavior expected of employees (in-role behavior), behavior exceeding the requirements (extra-role behavior) and the counter-productive behavior which consists of activities implicitly aimed at harming the organization (dysfunctional behavior). Their results revealed a clear impact of HR practices on operational performance and profitability.

2.3.2 Process-based Approach

More and more studies concentrate on the psychological process of how SHRM impacts performance. This approach emphasizes how employees understand and interpret strategic HRM practices and how they attach meaning to it (Sanders, et al., 2014). It is also known as the attribution theory, since employees make attributions about the rationale behind the practices (Nishii, et al., 2008). Assuming that HRM practices can motivate employees to adopt specific behaviors needed to reach organizational goals, the main emphasis of this approach is on employees’ perceptions. If employees perceive HRM as distinctive, consistent, and consensual, they will gain a sense of behaviors and attitudes that are expected, appropriate and rewarded by the management of an organization (Sanders & Yang, 2016). Perceiving HRM practices as distinctive, consistent and consensual is positively related to commitment and further links to OCB and therefore an increasing level of engagement (Nishii, et al., 2008).

This approach focuses on how HRM systems need to be designed to create an environment that fosters a shared perception and meaning about HR practices to enhance performance.

2.4 Supervisor feedback as HR practice

One of the above-mentioned HR practices to influence employees’ behavior and attitudes is supervisor feedback. As mentioned by Armstrong, performance feedback is one component of HPWS and it is one element of the performance management cycle (Armstrong, 2017). Further, one underlying theory for performance management is the control theory, which is described as focusing on feedback as a means of shaping employee behavior.

Supervisor feedback contributes to the HRM system by making management intentions and expectations more understandable and can develop employees in a direction that they behave in ways which are instrumental to the implementation of a particular business strategy. Supervisor feedback as an HR practice functions as means of communicating from employer to employee (Bowen & Ostroff, 2004). If leaders have clear expectations, are fair and endorse good performance, they have a positive effect on employees and their engagement by engendering a sense of attachment to the job. By providing continuous feedback, making employees aware of their strengths and valuing their contribution, supervisors build trust in their employees and their success, what leads to a more positive behavior (Armstrong, 2017). This relationship was also elaborated in the Hawthorne Studies, which found that the quality of leadership, the relationship to the supervisor and therefore the intrinsic motivation influenced employees’ job satisfaction. Receiving feedback also reinforces effective behavior and directly impacts the motivation of employees, which was shown by Latham and Locke (1979), Thorndike (1911) and Skinner (1953) (Armstrong, 2017).

Within the Social Exchange Theory, employees perceive feedback from their supervisor as investment in them. They feel obligated to respond with a better behavior and attitudes towards the organization, meaning OCB and an increased level of engagement. They will deliver extra effort to give something back as an exchange (Alfes, et al., 2013).

In the perspective of the process-based approach a standardized feedback process can help the management to convey distinct, consistent and consensual messages about what behavior is appropriate, and employees can understand clearly what is expected of them. The perceived value of this communication within supervisor feedback and how that supports the employee’s understanding of the organization’s expectations, influences their behaviors and attitudes (Armstrong, 2017).

Together with the concepts defined and explained above, this leads to a hypothesis which will be tested in the following section in order to approach the research question for this paper:

H1: There is a positive relation between supervisor feedback and employee behaviors and attitudes.

3 Practical application

As the relationship of employee behaviors and attitudes towards organizational performance has been tested in multiple studies (Armstrong, 2017; Wright, et al., 2003; Gould-Williams, 2018) this investigation concentrates on the impact feedback as one strategic HR practice has on employees’ behaviors and attitudes. To do so, the case of Arla Foods amba (Arla) has been chosen, which is an international organization and the largest producer of dairy products in Scandinavia. It was founded in 2000 and employs over 18.500 employees (Arla, 2018). In a yearly employee engagement survey, designed by an external provider, the overall engagement as well as leadership performance is assessed (Arla, 2018). The questionnaire consists of 43 items covering 23 themes which are key drivers of Arla’s Organizational Health (Engagement, Strategic Alignment and Agility) and 20 additional questions on Arla’s Leadership principles and an internal change program (Arla, 2018). All questions were provided by the professional supplier, who had been validating these items through years of research, which is why it can be assumed that they are measuring the intended dimensions. The data used for the analysis contains responses of both Blue and White-Collar employees, working within the supply chain business unit. The responses are assumed to be representative since they cover a large part of Arla’s workforce which further has the most diverse population regarding in example functions, educational backgrounds and age.

The data sets used for this study include questions testing the above explained constructs to examine the relationship between feedback and employees’ attitudes and behavior. The latter is measured by the following variables: engagement, satisfaction, commitment, and empowerment, which will be described in the following section.

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