The impact of HR political skill in the HRM and organisational performance relationship

Transcription

1 546055AUM / Australian Journal of ManagementSheehan et al. research-article2015 Article The impact of HR political skill in the HRM and organisational performance relationship Australian Journal of Management 2016, Vol. 41(1) The Author(s) 2015 Reprints and permissions: sagepub.co.uk/journalspermissions.nav DOI: / aum.sagepub.com Cathy Sheehan, Helen De Cieri and Brian K Cooper Department of Management, Monash University, Caulfield East, VIC, Australia Robert Brooks Department of Econometrics and Business Statistics, Monash University, Caulfield East, VIC, Australia Abstract The first aim of this study was to test empirically the effect of HR political skill on the relationship between high involvement work practices and organisational performance. A second aim was to test empirically whether an HR executive can use their political skill advantageously within strategic decision-making processes in order to affect organizational performance. Survey responses from 180 HR executives in medium to large employers have been analysed and the results confirm that the political skill of the HR executive strengthens the positive relationship between high involvement work practices and perceived organisational performance, and also strengthens the positive effect of HR involvement in strategic decision-making on organisational performance. The research provides evidence that HR political skill is important both in reinforcing the impact of human resource management (HRM) and the opportunity for HR to be part of strategic decisions. JEL Classification: J24, M54 Keywords High involvement work practices, political skill, strategic HRM Corresponding author: Cathy Sheehan, Department of Management, Monash University, P.O. Box 197, Caulfield East, VIC 3145, Australia. cathy.sheehan@monash.edu Final transcript accepted 7 July 2014 by Peter Jordan (Organisation Behaviour).

2 162 Australian Journal of Management 41(1) 1. Introduction The positive relationship between high involvement work practices and outcomes for the organisation is well established (Arthur, 1994; Macky and Boxall, 2008; Searle et al., 2011). High involvement work practices are human resource management (HRM) practices that redesign jobs to enhance worker responsibility and authority (Boxall, 2012: 173). A number of writers, including Bowen and Ostroff (2004), Wall and Wood (2005) and Haggerty and Wright (2010), have commented that, along with the research that has established a connection between the content of HRM practices and organisational performance, more explanation is required about the processes that underpin the link. Haggerty and Wright (2010) argue in particular for the importance of the legitimate authority of the HRM system and its agents. Elsewhere Galang and Ferris (1997) suggest that the political skill of the human resources (HR) professional will enhance legitimacy and enable the HR function to make an impact on organisational performance. However, these ideas have not as yet been tested empirically. Welbourne and Cyr (1999) established that having an HR executive assisted performance in smaller and fast growing firms, but the authors did not investigate why this was the case. In sum, these writers have primarily presented theoretical arguments regarding the impact of the legitimate authority of those who represent the HR function on the relationship between HRM practice content and organisational performance. There is some empirical evidence that the presence of an HR executive is important but, as Welbourne (2012) suggests, there should be more research into the nature of the HR function s contribution in organisations. Addressing that gap, the first aim of the current study was to test empirically the impact of HR political skill on the relationship between high involvement work practices and organisational performance. As well as considering the effect of HR political skill in reinforcing the impact of HRM content, a second aim of the study was to test empirically whether the HR executive can leverage their political skill within strategic decision-making processes, to affect organisational performance. Kelly and Gennard (2001, 2007) argue for the importance of including the HR executive in senior decision-making processes but, again, there is no empirical testing of whether the political skill of the HR executive moderates the relationship between HR involvement in strategic decisionmaking and organisational performance; the present study addresses that gap. The central argument of our research looks beyond the content of HRM practice and posits that professionals working in the HR function can enhance the context within which HRM practices are implemented by generating, through political skill, a shared view of HRM priorities. We define our key terms as follows. In line with the most widely used conceptualisation in the management field (Delaney and Huselid, 1996; also see Shea et al., 2012), we define organisational performance as organisational performance relative to the performance of industry competitors with respect to the quality and development of products and services, the ability to attract and retain employees, customer satisfaction, employee relations and market performance. Political skill is defined as the ability to read and understand people and situations at work to translate that knowledge into goaldirected influence over others (Treadway et al., 2013: , citing earlier work by Ferris et al., 2005, 2007). In their development and refinement of the political skill construct, Ferris et al. (2007) investigated the impact of political skill on both the self and others in organisational contexts. The concept has been adopted by researchers such as Wei et al. (2012) and Wu et al. (2012) who have focused on the importance of the skill in managing personal career success and psychological distress. At the broader organisation level, and specifically regarding discussions of the political influence of the HR function, Ferris and Judge (1991) and Galang and Ferris (1997) note the value of a political influence perspective when analysing how the HR function can promote HR initiatives. However, there has not as yet been any empirical testing: first, of how the political skill of those working within the HR function directly impacts on the relationship between HRM

3 Sheehan et al. 163 practices and organisational performance; or second, of the importance of HR political skill in strategic decision-making processes. The present research addresses these gaps. In testing the political skill concept on the effective delivery of HRM, the research also addresses concerns raised by Guest and King (2004) that HRM interventions are not always well received at the senior management level. The current research argues and shows empirically that political skill can make a difference in these interactions. The research uses the views of the top management team because these individuals are particularly significant in the realisation of high involvement work practice initiatives and are influential in organisational decision-making (Beer and Spector, 1985; Budhwar, 2000; Dyer and Holder, 1988; Enns and McFarlin, 2005; Sheppeck and Militello, 2000). The discussion of HR political influence also focuses on HR executives because they are most likely to be involved in senior decision-making activities. The following discussion first reviews the established connection between high involvement work practices and organisational performance and then presents an argument for the moderating role of the HR executive s political skill in that relationship. The second area of discussion considers the importance of HR involvement in strategic decisionmaking process on organisational performance and an argument is developed for the political skill of the HR executive as a moderator in that relationship. 2. High involvement work practices, organisational performance and HR political skill Since the 1990s macro models of HRM have explored the relationship between HRM and organisational performance. Huselid s (1995) study of high-performance work systems, for example, established a connection between a complementary set of HRM practices and turnover, accounting profits and firm market value. Subsequent to Huselid s research there has been consistent evidence of a link between high-performance work systems and organisational performance (Becker and Gerhart, 1996; Dyer and Reeves, 1995; Wright et al., 2005). Drawing from Appelbaum et al. (2000), Boxall and Purcell (2011: 89) define high performance work systems as reforms to work practices to increase employee involvement in decision-making and companion investments in employee skills and changes to performance incentives to ensure they can undertake these greater responsibilities and want to do so. In his discussion of high performance work systems Boxall (2012) explains that the term refers to the interplay between sets of HRM practices, the systemic effects of synergistic bundling of these HRM practices and organisational performance. Within high performance work systems there have been two primary HRM practice variations: high involvement and high commitment practices. High involvement work practices emerged from Lawler s (1986) concern with high involvement management and, as noted above, are associated with efforts to redesign jobs to enhance worker responsibility and authority (Boxall, 2012). The underlying premise of high involvement work practices is that organisational benefit ensues when employees are encouraged to apply discretionary effort (Arthur, 1994). High commitment practices, on the other hand, emerged out of the employee commitment work of Walton (1985) and focus primarily on employee willingness to stay in an organisation (Boxall, 2012). Boxall and Macky (2009) discuss the relationship between high involvement and high commitment approaches and, drawing from Guthrie s (2001) empirical work, show that not only do high involvement practices develop employee skills through the focus on knowledge acquisition but also that these practices lead to lower employee turnover. In other words, a high involvement approach encourages employee commitment. In addressing the reverse situation of whether high commitment implies high involvement, Boxall and Macky (2009) explain that the relationship does not necessarily hold. For example, there are situations where employee commitment can be

4 164 Australian Journal of Management 41(1) established that tie an employee to the organisation without actually addressing the way that work is performed. Higher pay and loyalty bonuses, or the perception of job security, may keep employees in an organisation but do not reflect attempts to develop the interesting, challenging work associated with high involvement work practices. For that reason, Boxall and Macky (2009) prefer to focus on high involvement work practices and we adopt their logic. Our first hypothesis draws from the literature that has established a direct relationship between HRM practices, and in particular high involvement work practices, and organisational performance: H1: High involvement work practices will be positively associated with perceived organisational performance As noted above, much of the literature that connects HRM practice to organisational outcomes has focused on HRM practice content; yet writers such as Becker and Huselid (2006), Haggerty and Wright (2010), Bowen and Ostroff (2004), Guest (2011) and Townsend et al. (2012) argue that HRM processes that underpin HRM content make a substantial contribution to organisational outcomes by creating an overall strong HRM system in the form of shared meaning about the content. Bowen and Ostroff (2004) explain that HRM content refers to the particular set or bundle of HRM practices whereas HRM process refers to the mechanism or mechanisms by which the HRM content works through the organisation. Bowen and Ostroff (2004: 206) state, By process, we refer to how the HRM system can be designed and administered effectively by defining meta-features of an overall HRM system that can create strong situations in the form of shared meaning about the content. In their discussion of the impact of both HRM content and HRM process Bowen and Ostroff (2004) draw from Lewin (1939) and later Mischel s (1973, 2004) work in the social psychology field on situationism that suggests that social context is a powerful force that directs and constrains behaviour. The focus on the situation is not on the physical or actual situation but rather the perceptions, cognitive maps, schemata, enactments and behaviours in situations (Bowen and Ostroff, 2004). Situational strength can be described as strong when a situation induces conformity. Alternatively, situational strength may be weak when the situation is ambiguously interpreted. In their application of situational strength to HRM Bowen and Ostroff (2004) explain that HRM practice content is viewed as a communication or message between an employer and an employee but for it to be persuasive it must follow a two-step process of reception or comprehension of the content, as well as yielding, or the acceptance of the message. For the HRM message to have its desired impact it must have both reception and yielding. Stronger messages are both heard as was intended and accepted prior to choosing an appropriate response. Drawing from attribution theory, Bowen and Ostroff (2004) refer to the message being heard and accepted as an event effect relationship and argue that the relationship is consolidated by distinctiveness (the event effect is highly observable), consistency (the event effect presents itself the same across modalities and time) and consensus (there is agreement among individuals about the event-effect relationship). When these HRM system features are in place a strong HRM situation exists. Bowen and Ostroff (2004) consider both HRM content and process as aspects of the HRM system yet Haggerty and Wright (2010) argue that the strength of the HRM system rests more on HRM process and less on HRM practice content. Furthermore in their analysis of the relative importance of HRM characteristics that can enhance distinctiveness, consistency and consensus, they argue for the particular importance of one of the distinctiveness features, the legitimate authority of the HRM system and its agents. Legitimate authority refers to situations where the HR function is perceived as having significant and visible top management support. Haggerty and Wright (2010) argue that HR legitimate authority is a condition precedent to the other features of

5 Sheehan et al. 165 distinctiveness: visibility or the degree to which HRM practices are salient and readily observable; understandability or ease of comprehension of HRM practice content, and; relevance of the HRM content to an important goal. A legitimate HRM system also encourages consistency and promotes consensus among groups of employees who are comparing interpretations of messages. In sum, building on Bowen and Ostroff s discussion of HRM system strength, Haggerty and Wright (2010) see HRM practices as messages or signals that management sends to employees. However, the existence of HRM practices is not sufficient in itself to ensure that the HRM practice content is being received and that yielding, or the acceptance of and agreement with the message, is realised. To ensure that the HRM content is being both unambiguously received and accepted in a social context, the distinctiveness, and notably the legitimacy of authority of the HR function, has a primary role in creating HRM strength. Elsewhere, the legitimacy of the HR function has similarly been identified as important in the HRM content and organisational performance link. Boxall s (2012) description of proposed black box links, for example, recognises the importance of the actions of management, line managers and HR professionals in the development of workforce perceptions, attributions and responses that ultimately impact on organisational performance. The suggestion that effective HRM practices should be considered in conjunction with the role played by senior professionals working in the HR function is consistent with the argument that HR requires access to avenues of influence in order to create the necessary shared understanding of its added value (Galang and Ferris, 1997; Sheehan et al., 2007). The organisational context is characterised by a diversity of competing interests and, often, a scarcity of resources. Resultant struggles ensue as organisational members actively engage in influencing events in order to elevate their priorities and access resources. Structural power further exacerbates any inequalities with respect to influence. Farndale and Hope-Hailey (2009) in their useful application of strategic contingency theory analysed how the personnel department in the higher education sector was able to control strategic contingencies on which other departments depend. Compared to other departments, personnel was rated lowest on centrality, or the degree to which its activities are interlinked into the system, and second lowest on its non-substitutability or replaceability. Their results indicated that, in terms of structural power, the personnel department holds a low power position. In view of its low structural power, those actors working in the HR function have to establish other mechanisms to generate support. To explain how actors achieve desired outcomes, Galang and Ferris (1997) draw from social influence theory to show that it is necessary for those working within the HR function to engage in impression management behaviours. The logic that underpins social influence theory is that where an influencer does not possess respected objective characteristics, they need to engage in impression management behaviours in order to create the image consistent with the objective behaviours. Often, objective behaviours that are respected are associated with ownership of expert knowledge. For HR professionals however, their role is increasingly performed by other managers and the result is a drop in non-substitutability of the HR professional s capabilities, because all managers are expected to be HRM-conversant. The influence associated with respected objective behaviours is effectively diminished and HR professionals have been cast into a position of having to influence largely without authority: they are left with the need to create and maintain a perception that HRM is critical and strategically important. Unfortunately the devolution of HRM is often met with line manager resistance and HRM is not prioritised. This is partly because, as McConville (2006) has established, the devolution of HRM responsibilities has increased the already substantial workload of middle managers. McConville also found that in situations of conflict with employees where previously personnel specialists would interact directly with employee representatives, HR representatives now act in an advisory role and middle-level line managers may be brought into direct conflict with their staff (McConville,

6 166 Australian Journal of Management 41(1) 2006). There has been a common reluctance by line managers, therefore, to accept HR responsibilities and this has diminished the uptake of HRM initiatives (See Guest and King, 2004; Hales, 2005; McConville, 2006; Marchington and Wilkinson, 2005). There is also uncertainty about outcomes for investments in HRM compared to other types of investments that have clearer return on investment relationships. It follows then that HR, faced with reduced ownership of expert knowledge and ambiguities around the value added by HRM initiatives may, as Galang and Ferris (1997) argue, find value in relying on social influence and interpersonal power. Pfeffer (2010) has argued, and Treadway et al. (2013) have shown empirically, that political skill represents one of the most effective ways to acquire influence in an organisation. The political skill construct includes a capacity to diagnose situations accurately, and adapt and select appropriate responses. These actions allow the politically skilled to manage shared meanings in organisations and encourage individuals to engage in expected behaviours (Ferris et al., 2007). Treadway et al. (2013), for example, established that politically skilled individuals are effective at signalling and managing the presentation and salience of their own personal success as reported in job performance data. They then use this information to their advantage, to build their interpersonal power base. To apply this discussion to the delivery of HRM practices, previous research has shown that high involvement work practices have the capacity to increase worker satisfaction, increase a sense of employee empowerment, reduce levels of stress and improve work life balance (Macky and Boxall, 2008). However, the reported resistance that HR professionals experience with line managers and also in executive groups (Guest and King, 2004) potentially detracts from the realisation of these benefits. An HR executive who is politically skilled is more likely to manage the presentation of the benefits of such systems, manage shared meaning, manipulate others impressions of the value of the initiatives and strengthen the relationship between HRM practice content and organisational outcomes. The second hypothesis is therefore: H2: The political skill of the HR executive will strengthen the positive relationship between high involvement work practices and perceived organisational performance. 3. HR involvement in strategic decision-making, organisational performance and HR political skill Having established the potential importance of HR political skill in promoting high involvement work practices initiatives for improved organisational performance, the following section investigates whether HR executives can use their political skill to elevate the importance of HRM practices within strategic decision-making processes that have an effect on organisational performance. First, the importance of HR involvement in strategic making arenas is established; and, second, the argument is made that more politically skilled HR executives will enhance the opportunity offered by inclusion in strategic decision-making processes. The strategic value of HR involvement in all stages and aspects of the decision-making process has long been argued in the HRM literature (See Bennett et al., 1998; Dyer, 1983). Buyens and De Vos (2001) have stressed the importance of HR s involvement across the full range of decisionmaking stages, including early involvement in strategy formulation. Kelly and Gennard (2001, 2007), drawing on interviews with HR, finance and marketing directors, established the importance of including HR executive in the formal and informal discussions held by the group of senior executives who make key strategic decisions in organisations. The principal aims of the senior executive group discussions are to formulate the organisation s business strategy; monitor, review and, if necessary, amend the strategy in the light of changes in the organisation s internal and

7 Sheehan et al. 167 external environment; and, finally, to oversee the financial performance of the organisation. These senior executive discussions drive the business decisions made in organisations that ultimately steer the organisation s performance. The earlier the HR executive is involved in the decisionmaking process, the greater will be their potential to have an effect on organisational strategy and performance. Confirming the impact of HR involvement in senior decision-making arenas, Welbourne and Cyr (1999) have established empirically the positive effects of having an HR executive as part of the top management team on two measures of firm performance long-term stock price and earnings performance. The overall pattern of findings suggests that HR executives can have a positive effect on stock price for firms that are growing fast and that they can also have a positive effect on earnings for smaller firms. Following the arguments made by Buyens and De Vos (2001) and Kelly and Gennard (2001, 2007) to include HR executives in key strategic decisions and the positive impact of HRM as part of the top management team on organisational outcomes as established by Welbourne and Cyr (1999) the third hypothesis becomes: H3: HR involvement in strategic decision-making will be positively related to perceived organisational performance As noted above, there is now a greater expectation that HR executives will be included in decision-making forums (Kramar, 2012) and their presence in these arenas increases the likelihood that HR executives are able to elevate HRM priorities in order to affect organisational performance. It could be argued, however, that the mere presence of an HR executive may not be enough to create a shared understanding of HRM priorities. As noted previously, actors in key decisionmaking groups, at times, represent competing interests and vie with others to have their individual agenda heard (Ferris and Judge, 1991). An HR executive who is politically skilled is therefore more likely to have influence in decision-making discussions. In their explanation of political skill, Treadway et al. (2013) draw from Ferris et al. (2007) to describe political skill as being reflective of an interrelated set of social competencies. These competencies include social astuteness, or the capacity to understand social interactions; interpersonal influence, or the capacity to adapt behaviour to situational requirements; networking ability; and apparent sincerity (Ferris et al., 2007). The development of these skills not only allows an actor to develop a capacity for sound self-evaluation, but also gives them power in interpersonal processes. For example, politically astute people are better able to position themselves in social networks with peers. Elsewhere, Swan and Scarbrough (2005), drawing from Lukes s (1974), and later Hardy s (1996: S7) dimensions of power, acknowledge the importance of social networks in accessing process power. Swan and Scarbrough (2005) explain that the process dimension of power resides in organisational decision-making processes and incorporates a variety of procedures and political routines that may be used to prevent subordinates from participating fully in decision-making (Swan and Scarbrough, 2005). If political skills provide an actor with interpersonal power, as Ferris et al. (2007) have argued, it is likely that such a politically skilled individual will have greater access into all decision-making arenas, both formal and informal. Furthermore, an HR executive who has strong interpersonal and political capabilities is more likely to take advantage of their inclusion and position themselves in the social network as a key actor in the decisionmaking network, and become what Swan and Scarbrough (2005: 921) refer to as a passage point. The following, fourth hypothesis reflects the likelihood that political skills will increase the impact that the HR executive has once they are included in strategic decision-making processes.

8 168 Australian Journal of Management 41(1) High involvement work practices H2 H1 H3 Organisational performance H4 HR involvement in strategic decisionmaking HR political skill Figure 1. Model of the proposed impact of HR political skill in the high involvement work practice and organisational performance relationship. H4: The political skill of the HR executive will strengthen the positive relationship between HR involvement in strategic decision-making and perceived organisational performance. The full set of relationships to be tested in the study is depicted in Figure Method 4.1 Sample and procedure The sample comprised HR executives in medium to large employers in Australia. These respondents provide an experienced overview of the HR function and of the connections between HRM and organisational performance. The research used a mail survey piloted with 10 HRM experts including HR executives associated with an Australian professional body for HR executives, the Australian Senior Human Resource Roundtable (ASHRR), as well as HRM academics and HRM consultants. The feedback from the pilot ensured that the survey items were clear, focused and had face validity (De Vellis, 2003; Podsakoff et al., 2012). The finalised survey was mailed to a random sample of 2000 HR executives who were identified through a national mailing list provider. The mailing list included senior HR managers in Australian organisations across the major Australian New Zealand Standard Industry Classification (ANZSIC) categories. Prospective respondents were assured that their responses would be confidential. Questionnaires were returned by reply paid mail directly to the researchers. A follow-up was sent two weeks after the initial mail out to encourage participation, and telephone follow-up calls were made a month later. In total 180 questionnaires were received from HR executives, a response rate of 9%. This response rate is relatively consistent with those obtained in previous studies with senior executives and can be attributed to the difficulties associated with obtaining responses from top managerial level respondents (Cycyota and Harrison, 2006). For example, Hambrick et al. (1993) noted that a response rate of 10 12% was typical for surveys of top executives. Nevertheless, the respondents represent a fair cross-section of groups within the HR profession. Sixty-four per cent of respondents were female and 36% were male. The mean age of the respondents was years (SD = 9.80) and they had been working for an average of 7.48 years in their current organisations (SD =

9 Sheehan et al ). The mean position tenure was 4.63 years (SD = 3.95). The sample covered a wide range of industry groups, including manufacturing, health and community services, and education. The majority (77%) of respondents were employed in the private sector. Thirty-eight per cent of respondents were employed in organisations of 500 or more employees and just over a third (34%) in organisations with fewer than 200 employees. The sample was diverse with respect to the percentage of the organisational workforce unionised: the median percentage of the workforce unionised was 20% (M = 31.67, SD = 28.51). This level of workforce unionisation is consistent with Australian national statistics (Australian Bureau of Statistics, 2011). 4.2 Measures Use of contemporaneous measures. Wall and Wood (2005) have criticised the trend in the HRM and organisational performance literature to use cross-sectional research, in which both HRM practices and organisational performance are measured at the same time on one occasion only. The investigation by Wright et al. (2005) of the relationship between measures of past, concurrent and future performance and measures of HRM found that the impact of HRM practices on future organisational performance was virtually eliminated when controls were included for past and concurrent performance measures. The researchers suggested one reason for this result might be the temporal stability of both HRM approaches and organisational performance. Specifically, HRM practices tend to change slowly, so the HRM practices at one point in time are similar to practices that have existed for a number of years. Similarly, performance is likely to be reasonably stable over time, and this notion was supported with correlations over four time periods. For this reason, and consistent with other studies in the area (Ahmad and Schroeder, 2003; Sun et al., 2007), we asked HR executives to comment on current HRM practices and the structures in which they work, and to provide current estimates of organisational performance Perceived organisational performance. This was measured using the 11-item scale developed by Delaney and Huselid (1996). This measure was selected because it has the benefits of being short and versatile and incorporates items that can be relevant to both sector (e.g., public and private) and industry (e.g., manufacturing). It is also the most widely used perceptual measure of organisational performance in the management field (Shea et al., 2012). Respondents were asked to rate their organisation s performance on the 11 items over the past three years in comparison to that of other organisations in their industry/sector on a 5-point scale ranging from 1 = much worse to 5 = much better. Past research has assumed this measure to be unidimensional (Delaney and Huselid, 1996). However, Shea et al. (2012) used Rasch analysis and found evidence of three internally consistent subscales, labelled thus. Internal performance (ability to attract essential employees, ability to retain essential employees, relations between management and employees, and relations among employees in general). External performance (development of new products, service, or programs; quality of products, service, or programs; and satisfaction of customers or clients). Market performance (marketing, growth in sales, profitability, and market share). A confirmatory factor analysis (CFA) showed that the three-factor model proposed by Shea et al. (2012) had an acceptable fit to the data, χ 2 (df = 41) = 110; RMSEA = 0.09, CFI = 92. It is noted that although the RMSEA was slightly above the commonly used 0.08 threshold, the CFI is known to perform better as a measure of model fit than the RMSEA in samples with N < 250 (Hu and Bentler,

10 170 Australian Journal of Management 41(1) 1999). Scores on each subscale were then created by averaging their respective items (the possible range of scores is 1 to 5), with higher scores indicating greater perceived organisational performance (internal performance α = 0.80; external performance α = 0.77; market performance = 0.83) High involvement work practices. There is a lack of consensus as to which specific HRM practices should be bundled together into a system of high-involvement practices. In view of the current writing in the area that emphasises a focus on employee well-being (see Guest, 2002, 2011), Searle et al. s (2011) measure was adopted because it is designed to capture high involvement work practices that symbolise an organisation s level of care for its employees. The nine items in the measure developed by Searle et al. cover the key areas of high involvement work practices: information sharing, employee participation, job security, performance management, training and family-friendly work practices. Family-friendly work practices are included because they have been shown to contribute to both organisational performance and employee well-being (Guest, 2002). Respondents were asked to rate how many of their employees were currently covered by each of the nine high involvement work practices on a 5-point scale ranging from 1= none to 5 = all. We constructed an index of high involvement work practices by averaging the nine items (α = 0.85). This index has a potential range from 1 to HR involvement in strategic decision-making. Using the 4-item scale developed by Purcell (1995), respondents were asked to rate on a 5-point scale (1 = not at all involved to 5 = highly involved), HR involvement in each of the four stages of a strategic business decision. The four stages were: drawing up proposals; evaluating financial consequences; taking the final decision; and implementation. Principal components analysis of the four items indicated a single factor, thus providing support for the unidimensionality of the scale. The scores on the four items were averaged to form a composite measure (possible range of scores is 1 to 5), with higher scores indicating greater HR involvement in strategic decision-making (α = 0.87) HR political skill. The 18-item Political Skill Inventory (PSI), developed and validated by Ferris et al. (2005), was used to measure political skills of the HR executive. Respondents were asked to rate their own political skills using a 7-point scale ranging from 1 (strongly disagree) to 7 (strongly agree). The 18 items in the PSI cover the following areas: social astuteness; interpersonal influence; networking ability; and apparent sincerity. Following Ferris et al. (2005), the total score of the PSI was used. The total PSI score is widely used and has evidence of construct validity. A CFA showed that a model with the four dimensions loading on to a common factor had an excellent fit to the data, χ 2 (df = 2) =.21; RMSEA = 0.01, CFI = 1.00, further supporting the use of a total scale score. Accordingly, the scores on the 18 items were averaged to form a composite measure (possible range of scores is 1 to 7), with higher scores indicating greater political skills of the HR executive (α = 0.91) Control variables. We controlled for two confounding variables that potentially may influence the HRM performance relationship. First, organisational size affects the strategic role assigned to HRM. Small-to-medium sized organisations in Australia are less likely than larger organisations to have formal HRM practices and a strategically active HRM department (Kotey and Sheridan, 2001; Michelson and Kramar, 2003; Nankervis et al., 2002). Second, organisational sector affects the strategic role of HRM because private sector organisations include the function in a strategic business partner role more often (Teo, 2002). Accordingly, we controlled for organisation size, measured as the total number of employees in the organisation in Australia on a 7-point ordinal scale from (1) representing 50 or fewer, to (7) representing 10,000 or more. A dummy variable was also included to indicate if the organisation was private sector (coded 1) or non-private sector (coded 0).

11 Sheehan et al. 171 Table 1. Means, Standard Deviations, and intercorrelations of study variables. Variable M SD External performance Internal performance * 3 Market performance * 0.58* 4 HIWP * 0.60* 0.34* 5 HR strategic involvement * 0.31* 0.24* 0.30* 6 HR political skill * 0.31* 0.22* 0.31* 0.19* 7 Private sector a Organisation size b * * 0.17* a Correlation cannot be computed as perceived market performance was only asked of private sector organisations. b Coded from (1) representing 50 or fewer to (7) representing 10,000 or more employees. HIWP = High Involvement Work Practices. *p < Method of analysis The hypotheses were tested using OLS regression with perceived organisational performance as the dependent variable. Multiple regression is the method of choice for analyzing general linear models with moderator (interaction) effects (Cohen et al., 2003). Evaluation of regression assumptions of normality, linearity, absence of multicollinearity, and homoscedascity were satisfactory. Following Roth (1994), to avoid the well-documented problems with listwise deletion of missing data, pairwise deletion was used in the regression analyses. As recommended by Tabachnick and Fidell (2013), to reduce problems associated with multicollinearity and to generate correct standardised regression weights in moderated regression, all variables, were z-standardised prior to analysis. When testing models with perceived market performance as the dependent variable we limited our regression analyses to private-sector (for-profit) organisations (n = 137). 5. Results Table 1 presents the means, standard deviations and intercorrelations of the study variables. The strongest correlates of our measures of perceived organisational performance were with high involvement work practices, consistent with a large body of previous research that has found positive correlations between HRM practices and organisational performance (see for example Subramony, 2009; Wright et al., 2005). Interestingly, HR political skill was positively related to our measures of perceived organisational performance, as was HR involvement in strategic decision-making. Because the data were single source, we tested for common method variance using Harman s one-factor test, according to which if common method variance is largely responsible for inflating the relationships among the variables, a single factor should have emerged from a principal components analysis of the scale items. No single dominant factor emerged. Although not a definitive test, the results suggest that common method variance is not present in the data (Podsakoff et al., 2012). As shown in Table 2 (Model 1), high involvement work practices were strongly and positively related to perceived internal performance (β = 60, p < 0.05). Positive, albeit weaker, associations were also found for perceived external performance, (β = 35, p < 0.05), and perceived market performance (β = 0.34, p < 0.05) (see Table 2, Models 5 and 9). Hence, hypothesis 1 was supported. Overall, these models explained 13% 37% of the variance in perceived organisational performance, with most of this variance explained by high involvement work practices.

12 172 Australian Journal of Management 41(1) Table 2. Results of regression analyses predicting perceived organisational performance. Variable Internal performance External performance Market performance b (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) Private sector Organisation size a * * 0.11 HIWP 0.60* 0.60*.35* 0.34* 0.34* 0.32* HR political skill 0.17* 0.25* * HR strategic involvement 0.31* 0.27* 0.34* 0.32* 0.23* 0.23* HIWP X HR political skill 0.09* HR strategic involvement * X HR political skill R ΔR * 0.07* * * a Coded from (1) representing 50 or fewer to (7) representing 10,000 or more employees. b Perceived market performance was only asked of private sector organisations. Standardized regression coefficients reported. *p < 0.05.

13 Sheehan et al Internal Performance Low HR political skill High HR political skill 1 Low HIWP High HIWP Figure 2. Interaction plot between HIWP and HR political skill for perceived internal performance. Turning to hypothesis 2, the interaction between high involvement work practices and HR political skill was statistically significant only for perceived internal performance (β = 0.09, p < 0.05) (see Table 2, Models 2, 6 and 10). To help with interpretation of this interaction effect, we plotted the interaction using the conventional values of 1 SD below the mean and 1 SD above the mean (Aiken and West, 1991). As shown in Figure 2, the relationship between high involvement work practices and perceived internal organisational performance was more positive when the political skill of the HR executive was high (one SD above the mean) rather than low (one SD below the mean). Hence, hypothesis 2 was supported, but only for perceived internal organisational performance. Table 2 (Models 3, 7 and 11) shows that HR involvement in strategic decision-making was positively related to perceived internal performance (β = 31, p < 0.05), perceived external performance (β = 34, p < 0.05), and perceived market performance (β = 0.23, p < 0.05). Hence, hypothesis 3 was supported. Turning to hypothesis 4, Table 2 (Models 4, 8 and 12) show that the interaction between HR involvement in strategic decision-making and HR political skill was statistically significant only for perceived market performance (β = 0.17, p < 0.05). Figure 3 shows that the relationship between HR involvement in strategic decision-making and perceived market performance was stronger when the political skill of the HR executive was high (one SD above the mean) rather than low (one SD below the mean). Hence, hypothesis 4 was supported, but only for perceived market performance. 6. Discussion The first aim of the study was to test empirically the effect of HR political skill on the relationship between high involvement work practices and organisational performance. The second aim was to test empirically whether the HR executive can use to their advantage their political skills in strategic decision-making processes in order to affect organisational performance. The results confirm empirically that HR political skill does indeed enhance the impact of both high involvement work practices and HR involvement in strategic decision-making on organisational performance. Much of the existing literature on the HRM and organisational performance relationship has focused on the importance of HRM content for organisational outcomes (see, for example, Combs et al., 2006; Jiang et al., 2012; Subramony, 2009). Across the research there is consistent evidence

14 174 Australian Journal of Management 41(1) Market Performance Low HR political skill High HR political skill 1 Low HR strg. involve. High HR strg. involve. Figure 3. Interaction plot between HR involvement in strategic decision-making and HR political skill for perceived market performance. of a link despite the variety of approaches used to measure the constellation of HRM practices (Becker and Gerhart, 1996; Dyer and Reeves, 1995; Wright et al., 2005). The present research provides further justification for the importance of HRM practices by confirming a positive relationship between high involvement human resources practices and internal and external organisational performance as well as perceived market performance. Of note in the current study, however, is the inclusion of HRM practices that focus specifically on the well-being of the employee and reinforce the calls to include the worker in the relationship between HRM and organisational performance (Guest, 2002, 2011). High involvement work practices, that build on employee discretion, have been forwarded as appropriate when considering the alignment of organisational and employee goals (Searle et al., 2011). There has been some discussion about whether high involvement work practices benefit the worker as higher levels of worker discretion may also lead to work intensification and job strain (Ramsay et al., 2000). Because workers internalise work goals they choose to concentrate on work outcomes and this can in turn have a negative impact on employee well-being. White et al. (2003), for example, reviewed the effects of a broad set of high performance work practices on negative job-to-home spillover and highlighted a conflict between a high-performance approach and work life priorities. Macky and Boxall (2008) focused specifically on high involvement work systems and established that there are in fact gains for workers in high involvement models of high performance work systems. Not only was there a positive relationship with job satisfaction, the sense of empowerment embodied in high involvement practices was also associated with lower fatigue and stress and the higher rewards were associated with better work life balance. Macky and Boxall (2008) suggest that part of the conflicting findings of White et al. (2003) and Ramsay et al. (2000) may be accounted for by survey designs that do not effectively capture a high involvement model. Searle et al. (2011) have also reviewed the role of high involvement work practices on employee responses and established that these practices have a positive relationship with trust in the employer. The present study adopted Searle et al. s (2011) measure of high involvement work practices that specifically builds in practices, such as family-friendly work practices, that symbolise an organisation s level of care for its employees. Although the current study did not measure intervening employee level responses, the relationship between the employee-focused high involvement work practices and organisational performance indicates that organisational-level

15 Sheehan et al. 175 benefits can be gained by including an employee focus in HRM practice design, in addition to potential benefits for employees. Together with affirmation of the relationship between HRM content and organisational performance, the present study tests empirically and confirms the impact of the role of the HR professional, specifically their political skill, on the way that HRM practices are received in organisations. Wall and Wood (2005), in their critical review of studies in the HRM and organisational performance literature, argue that the research area would benefit from studies that question the universal effect of HRM practices on organisational performance. Our study addresses this issue by confirming empirically that the relationship between HRM practices and internal organisational performance varies when the process that underpins the delivery of HRM content, in this case the political skill of the HR professional, is taken into account. The impact of HR political skill as a moderator in the high involvement work practices and internal organisational performance relationship is conceptually consistent. Proximally, support for HRM practices would most likely be connected with internal organisational performance. As noted by Shea et al. (2012), internal performance refers to the organisation s ability to attract and retain essential employees as well as the quality of employee and management relationships. It is therefore most likely that support for HRM practices would have an impact on these outcomes. However, Shea et al. (2012) have also established a statistically significant positive correlation between the internal organisational performance scale and Tobin s Q, a standard objective accounting a financial measure of organisational performance. An internal organisational performance result therefore also reflects the objective assessment of the organisation s effectiveness in the market. A second aim of the study was to consider the impact of HR executives political skill when they are involved in strategic decision-making processes. HR executive access to senior decisionmaking discussions recognises the authority and legitimacy of the HR function (Kelly and Gennard, 2001) and such inclusion is critical and necessary for the HR professional to be able to steer a people management agenda (Buyens and De Vos). Failure of the HR executive to be part of these senior level discussions creates the risk that people issues are not given primacy and employee problems can ensue. Guest and King (2004) and Sheehan et al. (2007) have confirmed empirically that increased HR involvement in the strategic decision-making process is linked with improved organisational performance. The findings of the present study confirm the importance of HR involvement in strategic decision-making and extend the research to show empirically that the political skill of the HR professional will strengthen the impact of the HR strategic involvement opportunity on the market performance of the organisation, specifically performance with respect to marketing, growth in sales, profitability, and market share. Shea et al. (2012) have positively correlated market performance with the objective organisational performance measures of return on assets and Tobin s Q. These measures of market performance reflect the firm s economic viability; and, as Boxall and Purcell (2011) point out, economic viability is essential in providing investors and lenders with acceptable financial returns that sustain their commitment to the organisation. Overall the key contribution of the present research is empirical support for the importance of the political skill of the HR executive in enhancing the impact of HRM content and the opportunity offered to HR to be part of senior decision-making. In a discussion of the importance of political skill for all managers in organisations Treadway et al. (2013) argue that the interpersonal power that can be derived from political skill is one of the most effective ways to obtain influence and the positive assessment of others. In view of the normal struggles for resources within organisations (Ferris and Judge, 1991) such a competitive edge is extremely valuable. An argument could be made that this skill has particular resonance for the HR executive as those working in the HR function experience unique challenges in being heard within organisational interactions.