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Development of Hrm Systems

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Development of HRM systems!

Two different business strategies are proposed: 1) focuses on competing on a cost price basis and 2) focuses on competing on knowledge intensive operations. For the first strategy an HR system is proposed that is very similar to the control HR system (Lepak, Liao, Chung & Harden, 2006). Main goal of this system is to improve efficiency and productivity by enforcing and monitoring compliance of the employees using specific rules and procedures. Employees are rewarded based on quantifiable performance measures and receive minimal training, therefore they are highly interchangeable to ensure flexibility in up- or downscaling the workforce. These practices reduce employment costs and ensure employee productivity. For the second strategy a high performance work system (Lepak et al., 2006) is proposed which focuses on investment in employees and elements of high commitment approaches. Within this system the practices focus on the growth of knowledge and skills of employees, high employment security and empowerment, such as offering intensive training and internal career opportunities. These practices can contribute to employee turnover decrease, the development of an internal knowledge base of the organization and retaining specific knowledge within the organization (Delery and Doty, 1996). The main difference between these systems is the perceived value of employees. In the first system, employees are seen as means to an end, in the second system employees are an important asset contributing to the competitive advantage of the organization. Delery and Doty (2006) hypothesize that some HR practices will always have a positive influence on firm performance, while others depend more on the environment in which they are applied. The study suggests that especially results-oriented appraisals, profit sharing and job security have positive effect

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