WHY ORGANIZATIONS ADOPT

SOME HUMAN RESOURCE

MANAGEMENT PRACTICES AND
REJECT OTHERS: AN EXPLORATION
OF RATIONALES
MAHESH SUBRAMONY
This article explores reasons why organizations adopt or reject human resource practices. Four theoretical approaches are brought to bear on this issue.
According to the economic approach, organizations adopt HR practices that
are economically beneficial to them. Similarly, the alignment approach views
firms as adopting HR practices if these practices are aligned with strategic objectives. In contrast, the decision-making approach invokes a constrained-rationality model of managerial judgment, and the diffusion approach attributes
the adoption/rejection decision to institutional pressures that encourage imitation. Literature in these areas is reviewed and the implications for HR research and practice are discussed. 2006 Wiley Periodicals, Inc.

s the field of human resource management matures, increasing empirical evidence supports the efficacy
of many human resource practices.
However, scientists and practitioners are concerned that despite the research
evidence, these practices do not show high
rates of adoption (Johns, 1993; Rynes, Colbert, & Brown, 2002). On the other hand,
many HR practices that are not backed up
by empirical evidence seem to have
achieved higher-than-expected rates of
adoption (Carson, Lanier, Carson, & Guidry,
2000). For instance, although a voluminous
literature emphasizes the importance of
structured and behavior-based interviews
(Campion, Palmer, & Campion, 1997), unstructured interviews continue to enjoy

popularity among managers. Contrast this

usage with the current interest in emotional
intelligence tests that have not demonstrated high levels of construct and predictive validity (Davies, Stankov, & Roberts,
1998; OConnor & Little, 2003).
This issue is important to multiple constituencies involved in the adoption of HR
practices. Like other forms of investment,
the adoption and implementation of HR
practices involve costs in the form of money,
organizational resources, and time that
could be devoted to other strategic issues.
Therefore, managers need to be sure that the
decision to adopt a practice is the right
onewould the HR practice benefit the organization, given these costs? For HR departments, a track record of adding value by

Correspondence to: Mahesh Subramony, Department of Psychology, University of Wisconsin at Oshkosh, 800
Algoma Blvd., Oshkosh, WI 54901, Phone: (920) 424-7168; Fax: 424-1204, E-mail: subramon@uwosh.edu
Human Resource Management, Summer 2006, Vol. 45, No. 2, Pp. 195210
2006 Wiley Periodicals, Inc.
Published online in Wiley InterScience (www.interscience.wiley.com).
DOI: 10.1002/hrm.20104

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HUMAN RESOURCE MANAGEMENT, Summer 2006

adopting effective HR practices is likely to

lead to benefits in terms of credibility, visibility, and power; a history of unsuccessful
programs could be detrimental to the departments image among managers and employees (Buyens & De Vos, 2001). Finally, employees are likely to trust managers and HR
departments that demonstrate long-term
commitment to effective HR practices. Constant change in practiceswith one ineffective practice replacing another
is likely to lead to initiative
fatigue and resistance to change
This article aims to
(Abrahamson, 2003).
Although several explanapresent these
tions have been proposed to exvaried explanations plain the issue of adoption/rejection, these vary widely and
by viewing the
typically focus on limited aspects
decision to adopt or of the phenomenon. For instance, the low rates of adoption
reject an HR
of effective HR practices have variously been attributed to the slow
practice as an
diffusion of knowledge from researchers to practitioners (Johns,
outcome of both
1993), managerial perceptions of
rational and
utility (Boudreau & Ramstad,
2003), and the complexity of imnonrational forces
plementation (Pfeffer & Sutton,
2000). This article aims to present
operating in
these varied explanations by
viewing the decision to adopt or
organizations.
reject an HR practice as an outcome of both rational and nonrational forces operating in organizations.
Four theoretical approaches can help us
understand the decision by firms to adopt or
reject HR practices. Each of these approaches
has something unique to contribute to the
discussion and has the potential to limit
such discussion if treated as being self-sufficient. Two of these approaches, economic
and alignment, stem from the emerging field
of strategic human resource management
(Lengnick-Hall & Lengnick-Hall, 1988) and
suggest that close ties between human resource practices and business objectives or
outcomes will increase the probability of
adoption. The diffusion and decision-making approaches, on the other hand, focus on
the nonrational aspects of managerial deci-

sion making (Abrahamson, 1996; March,

1994), and view adoption and rejection decisions as emerging from the interplay between managerial judgment, organizational
constraints, and institutional pressures that
encourage imitation.
These approaches are described, an illustrative case is presented, and implications for
research and practice are discussed in this article.

The Economic Approach

The economic approach attributes acceptance of HR practices to their connection
with the firms financial results. According to
this view, HR practices that help the organization maximize its profits through cost reduction or revenue generation have a better
chance of being accepted than those that do
not obviously provide these benefits. At least
three different research streams address the
economic benefits of HR practices.

Utility Analysis
Utility is typically demonstrated by assigning monetary values to HR practices. A detailed description and review of the utilityanalysis approach can be found elsewhere
(see Boudreau & Ramstad, 2003). However, it
is important to note three characteristics of
most utility-analysis models. First, utilityanalysis modeling requires the calculation of
the expected payoff from using the HR practice. This payoff is a product of its predictive
validity (i.e., the extent to which the practice
predicts future performance) and SDY, the
standard deviation of dollar-valued job performance. Second, the benefits from using
the practice are compared to the monetary
costs of its implementation. In the case of selection, the associated cost would be that of
testing a candidate. Third, the comparison of
the HR practice is with a null situation,
where there is no such practice. For instance,
the utility of a selection device would be the
degree to which its use increases the quality
of applicants selected beyond what would
have occurred if that device had not been
used (Cascio, 1991).
Human Resource Management DOI: 10.1002/hrm

Why Organizations Adopt Some Human Resource Management Practices and Reject Others

Recently, Boudreau and Ramstad (2003)

proposed that HR practices have the highest
utility when they are applied to strategic talent pools or roles characterized by high
strategic value and high variance in valued
performance (SDY). An example of a strategic
talent pool would be the product development roles in a company embarking upon a
product innovation strategy. If performance
variation in this talent pool is high, HR practices that reduce variation and improve performance will have the highest utility. In
other words, HR practices have the most to
contribute in talent pools that are perceived
as critical for the business success of the firm.
Evidence indicates that organizational
decision makers might not consider utility
analysis outputs while making personnel decisions (Latham & Whyte, 1994; Whyte &
Latham, 1997). This omission has been attributed to the complexity of utility models
and questions regarding the underlying assumptions of these models. Boudreau and
Ramstad (2003) suggest that this acceptance
problem could be mitigated somewhat if decision makers and other influential individuals are involved early on in designing utility
models.
A potential limitation of the utilityanalysis approach is that it is concerned
more with the cost savings resulting from
implementing an HR practice than with the
long-term benefits of the HR practice (i.e., increased revenue) that are addressed on the
income side of the company balance sheet.
Like other investment decisions, managers
are required to subject HR practices to a costbenefit or return-on-investment (ROI) analysis to guide their decisions. Unfortunately,
costs are easier to find and calculate, since
they often are incurred at the onset of an intervention. Waiting for long-term benefits is
more difficult. For instance, adopting a rigorous selection process using a multiple-hurdle approach usually involves costs related to
assessing the candidate multiple times, retraining (in-house) assessors, finding/acquiring new selection tools, and gaining organizational buy-in. The key for HR is to
demonstrate that the incremental benefits of
the new HR practice (over and above the preHuman Resource Management DOI: 10.1002/hrm

197

vious practice) clearly exceed the incremental costs of adoption.

Human Capital
The human capital approach attributes the
focus on reducing HR costs to the way intangibles are measured and presented by
firms. It has been observed that intellectual
capital and knowledge are not measured or
reported adequately in income statements
(Stewart, 2001). People-related
expenses such as recruiting, selection, training, and compensa- The human capital
tion are subtracted from the
firms revenue and reflected in approach attributes
the income statement every
the focus on
year. The benefits from hiring,
training, and compensating
reducing HR costs
high-value employees are not reto the way
flected in these statements, except in terms of the ultimate
intangibles are
output measures or lagging indicators, such as sales. The human
measured and
capital approach provides some
alternatives for measuring intel- presented by firms.
lectual capital, which has been
defined as the knowledge that
transforms raw materials and makes them
more valuable (Stewart, 2001, p. 12). One
such measure, knowledge earning, is calculated by subtracting earnings from financial and physical assets from the firms
total earnings. Another measure, Tobins Q,
is calculated by dividing the market value
of the firm by the estimated replacement
value of a companys physical and financial
assets. The logic underlying both these
measures is that the firm is more than just
a physical and financial entityits value is
derived substantially from its intangible assets, the intellectual capital stored in the
people, brands, and relationships.
Although the human capital approach
provides a compelling argument in favor of
investing in people, very few firms have incorporated or paid serious attention to intellectual capital measures in their financial
statements. This oversight may be due to
several factors. First, it is difficult to untangle the people component of intellectual

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HUMAN RESOURCE MANAGEMENT, Summer 2006

capital from other intangible factors, such as

brand perceptions and reputation. Second,
the gap between book value and market
value could vary by industry, with knowledge-based companies (i.e., those requiring
substantial human expertise) clearly possessing fewer physical assets than companies in
capital-intensive industries. Finally, the
measurement and management of knowledge work also appears to have taken a backseat in a struggling economy where the supply of talent, at least in perception, exceeds
its demand, leading to an underinvestment in human resource
interventions focused on increasResearch evidence
ing human capital.
has steadily
accumulated over
the past two

High-Performance Work
Practices

Research evidence has steadily accumulated over the past two

decades
decades demonstrating the positive impact of high-performance
demonstrating the
work practices (HPWPs) on busipositive impact of
ness performance (Huselid, 1995;
MacDuffie, 1995; Subramony,
high-performance
Adams, Webster, & Bentz; Wright,
Gardner, Moynihan, & Allen,
work practices on
2005). Although the specific practices vary across studies, their genbusiness
eral focus is on developing a skilled
performance
and motivated workforce through
the application of sound HR principles, such as rigorous employee
selection, reward for performance, training,
and employee involvement.
It has been proposed that HPWPs are
most effective when they operate together as
a sophisticated and internally consistent system or bundle (MacDuffie, 1995). Firms
adopting these practices, therefore, need to
make a significant investment in realigning
their various HR subsystems to reflect this
high-performance emphasis. In addition, it
has been proposed that in order to be successfully adopted and to provide an inimitable competitive advantage, HPWPs should
be integrated with the firms unique strategy
and structure (Becker & Gerhart, 1996). For
instance, companies utilizing a differentia-

tion strategy that requires employee creativity and discretion might find it easier to
adopt employee involvement initiatives
than firms following a cost-leadership strategy that emphasizes uniformity.
It should be noted that the proposition
of strategy-HPWPs fit has received mixed
support, with some studies demonstrating
an interactive relationship between competitive strategy and HPWPs (e.g., Youndt, Snell,
Dean, & Lepak, 1996) and others not demonstrating this interaction (e.g., Ordiz-Fuertes
& Fernndez-Snchez, 2003). These findings
indicate that the issue of fit between HR
practices and the organizational context is
more complex than has been addressed in
literature. As an example, competitive strategies cannot be neatly characterized as one or
the othera company can aim to build a
strong brand in one product or consumer
segment (e.g., high-end machines) while
being cost-focused in another (e.g., lightbulbs). Also, professed strategies do not shed
light on how well the strategy has been implemented and communicated in the organization (Wright, 2002).
Finally, there is a need to consider fit over
time. Few organizations can afford to overhaul their entire HR system and adopt an internally consistent bundle of practices.
Rather, individual practices might evolve over
time to become assimilated into organizational routines (e.g., objective assessment
tools might be complemented by subjective
fit interviews in organizations that value affiliation), as well as influence the adoption of
other HR practices (e.g., the successful implementation of rigorous selection might motivate the organization to attend to the development of talent, leading to the adopting of a
rigorous performance management process).
Strategic HR researchers have also proposed that environmental characteristics influence the adoption and effectiveness of
HPWPs. This proposition has received support with evidence that industrial characteristics such as capital intensity, annual
growth rate, and product differentiation
(Datta, Guthrie, & Wright, 2005) moderate
the relationship between HPWPs and organizational performance.
Human Resource Management DOI: 10.1002/hrm

Why Organizations Adopt Some Human Resource Management Practices and Reject Others

Despite evidence linking HPWPs with

economic outcomes, a common refrain is
that the knowledge regarding the usefulness
of these practices is not often translated
into action (Pfeffer & Sutton, 2000). Part of
the explanation for this lies in the environmental contingencies previously stated. It
is, however, also possible that findings related to HPWPs and business performance
might be perceived by decision makers as
being too generic, as not invented here,
or not aligned with the firms idiosyncratic
characteristics. The alignment perspective
takes this view and aims to promote adoption by linking HPWPs to business goals
and strategies.

The Alignment Approach

The alignment approach argues that many
managers view the human resources function as being disconnected from the real
work of the organization (Ulrich, 1997, p.
125). According to this view, the HR function traditionally has assumed an administrative or transactional role and is perceived by managers as being distant from
the creation and implementation of business objectives. This distance, in turn, reduces the functions credibility and competence in promoting effective HR practices.
Indeed, there is evidence that HR professionals tend to view their functions contribution to business success more favorably
than do line managers (Wright, McMahan,
Snell, & Gerhart, 2001), and that the latter
continue to view HR as primarily a maintenance or administrative function (Buyens
& DeVos, 2001; Ulrich, Brockbank, &
Yeung, 1989). To address this problem, it
has been proposed that the human resource function should take on a more
proactive partnering role in formulating
and implementing the firms business strategy, and by measuring and tracking HR
outcomes.

Strategic Partnering
A role in strategy formulation requires the
presence of HR representatives at very senHuman Resource Management DOI: 10.1002/hrm

199

ior levels in the firm, and strategy implementation requires the alignment of HR
practices with the firms business objectives. For example, in a firm pursuing a
product innovation strategy, the HR function would need to recruit and select employees who have the potential to create
innovative products, create performance
management systems that reward innovation, and train employees to use
tools and techniques related to
innovation. Although there are
The central notion
several benefits to strategic
alignment, three are particularly
of strategic
important. First, it allows HR departnering is that
cision makers to prioritize their
decisions on the basis of their
the benefits of
perceived impact on the business. Second, prioritization of
maintaining an HR
HR decisions also leads to prioritization of the resources refunction should
quired to implement these deciexceed its costs,
sions (e.g., if it is important to
hire product managers, a suband that HR has the
stantial portion of the HR recruiting budget should be fopotential to
cused
on
attracting
and
selecting candidates for this po- significantly impact
sition). Third, HR decision makthe achievement of
ers can influence the adoption
of HPWPs by aligning these with
business goals.
business objectives, with existing HR practices (e.g., assessment tools integrated with online recruiting). The central notion of strategic
partnering is that the benefits of maintaining an HR function should exceed its costs,
and that HR has the potential to significantly impact the achievement of business
goals. Therefore, the organization needs to
explicate how various HR processes contribute to business success and quantify
this contribution using specific measures.

Measurement of HR Outcomes
The alignment perspective stresses the importance of rigorously measuring employeerelated outcomes and integrating these
measures with business measures. This
process is usually accomplished through the

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design of an HR scorecard integrated with

the firms balanced scorecard (Becker,
Huselid, & Ulrich, 2001; Kaplan & Norton,
1992).
The balanced scorecard, in theory, provides the firm with a way to heighten the
importance of human resources by placing
human resource metrics on an equal footing with operating performance,
customer, and financial measures. HR metrics such as
HR practices might
turnover and employee commitment are considered leading inmeet rational
dicators influencing future
decision criteria
business performance (the lagging indicators). Scorecards can
such as
assist firms in communicating
strategic priorities to employees,
psychometric
balancing financial and nonfisoundness, costnancial goals, and linking financial rewards to effective manageeffectiveness, and
ment practices (Kaplan &
Norton, 1992). The justification
strategy alignment,
for tracking employee outcomes
but nevertheless be as part of the balanced scorecard
can come from displaying the
rejected due to the
logical relationship between employee outcomes, customer outintriguing ways in
comes, and financial outcomes
which managers
in the form of a strategy map
(Kaplan & Norton, 2000) or by
make decisions.
providing actual empirical evidence in favor of these linkages
(e.g., Rucci, Kirn, & Quinn,
1998). In order to establish these linkages,
researchers typically collect employee survey data (e.g., organizational commitment,
quality/customer focus) and correlate these
with measures of business performance
(e.g., sales, customer satisfaction, and failure rates). Results of such research can be
beneficial to organizations because they
pinpoint the HR practices that need to be
improved in order to drive business results
and assist in the prioritization of scarce resources. Also, because these linkage models
are customized to the organization, they
could be perceived as being more credible
than generic models demonstrating linkages between HPWPs and business performance.

Summary of the Economic and

Alignment Approaches
The economic and alignment approaches
present part of the solution to the issue of
adoption by attributing these decisions variously to environmental contingencies, economic utility of the decision, and the presence or lack of alignment between the HR
practice and firm strategy. These perspectives
certainly shed light on the importance of HR
practices. However, it might be beneficial to
consider additional approaches that emphasize the nonrational side of organizational
behavior, as opposed to the rational model
so prevalent in the organizational sciences
(Highhouse, 2002). Two such approaches are
described here.

The Decision-Making Approach

The decision-making approach provides a
psychological or micro explanation for
why organizations adopt or reject various HR
practices. The focus here is not on the organization or the HR function, but on the
process of decision making in which managers engage while deciding whether to
adopt or reject the practice. It is important to
examine this approach because HR practices
might meet rational decision criteria such as
psychometric soundness, cost-effectiveness,
and strategy alignment, but nevertheless be
rejected due to the intriguing ways in which
managers make decisions.
Research on judgment and decision making (JDM) indicates that rational reasoning
and intuition are distinct processes, each
leading to different outcomes for the same
problem-solving tasks (Kahneman, 2003).
While the process of reasoning is slower, effortful, conscious, and deliberate, the process
of intuition is fast, automatic, implicit, and
often emotionally charged. Intuitive decision making often involves the use of heuristics or mental shortcuts that conserve effort
while increasing the chance of error (Tversky
& Kahneman, 1981). Managers are susceptible to judgment and decision-making errors
arising from the use of heuristics because of
the substantial demands on their time and
the need to make decisions under conditions
Human Resource Management DOI: 10.1002/hrm

Why Organizations Adopt Some Human Resource Management Practices and Reject Others

that often are ambiguous and complex

(March, 1994). Heuristics help managers
adapt to their environments by reducing information-processing demands and decisionmaking time (Mintzberg, 1990).
With the proliferation of popular management books and articles, managers are exposed to and influenced by claims made for
practices that have reportedly worked well in
other companies (Abrahamson & Fairchild,
1999). There is also evidence that managers
tend to get their information about effective
practices from business magazines and newspapers, rather than academic sources (Rynes
et al., 2002). Thus, when faced with a choice
between a well-researched practice with little
popular interest and a practice that has more
or less found its home in popular literature,
managers probably will choose the latter.
This set of heuristics reflects the phenomenon of accessibility and refers to the tendency to treat vivid and easily accessible information as commonplace (Kahneman,
2003). These heuristics provide one explanation for why popular authors exaggerate the
claims of efficacy of their pet practicesthese
are more salient and stay in the minds of people, ready to be accessed when the individual
is looking for a solution to a problem.
The odds of adopting a popular practice
increase when the practice is framed by the author as presenting a high chance of success as
opposed to focusing on the negative fallouts of
the practice not working well in the host organization. As an example, consider the practice of top grading, or the forced distribution
of employees on a bell curve. This practice was
advocated in the 1990s by, among others, the
charismatic CEO of a financially successful
Fortune 100 company and seemed to be a
panacea to the problem of low variance in performance evaluations. The business press described top grading as a tough and objective
alternative to other allegedly lenient performance evaluation models (Axelrod, HandfieldJones, & Michaels, 2002). These descriptions
were probably responsible for making it salient
and accessible, and several organizations
adopted or contemplated adopting this practice despite its doubtful psychological and statistical foundations.
Human Resource Management DOI: 10.1002/hrm

201

The reputation of these organizations

also helped in promoting adoption. Briefly,
people tend to correlate unrelated factors
that are available and salient to them
(Hamilton & Gifford, 1976). Thus, an organization that adopts top grading
might also be one that is admired
for creating shareholder value,
The odds of
leading to the belief that adopting the practice will also make the
adopting a popular
imitator more profitable. A more
practice increase
feasible explanation, of course, is
that companies that are large and
when the practice is
profitable have sufficient slack resources and political goodwill to
framed by the
experiment with various management practices, some of which author as presenting
work and others that do not (Dena high chance of
rell, 2005). Although the practice
of top grading received negative success as opposed
attention in the popular press due
to focusing on the
to a reverse-discrimination suit
filed against another Fortune 100
negative fallouts of
company, it does not seem to
have significantly lost momenthe practice not
tum as a management practice
working well in the
(Johnson, 2004).
Another highly researched
host organization.
topic in JDM is prospect theory
(Tversky & Kahneman, 1986),
which argues that additional gains
have less value for people who already have
experienced gains and that response to losses
is consistently much more intense than the
response to corresponding gains (Kahneman, 2003). Thus, people avoid risks to retain
their existing gains and take risks to avoid
losses. There is a great deal of evidence supporting this proposition in behavioral economics and some emerging research in the
context of HR practices. For instance, presenting utility-analysis information in terms of
the losses from not using selection programs
seems to trigger the loss aversion predicted by
prospect theory (Hazer & Highhouse, 1997).
Prospect theory predicts that managers
who do not perceive a significant competitive threat or performance problem are likely
to continue supporting practices that have
doubtful utility or efficacy because they are
risk-averse and because of past investment

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into those interventions, or sunk costs. Conversely, managers who have a real need to
change, or a burning platform, are likely to
accept new practices, perhaps uncritically, in
order to minimize losses. These practices
might be adopted even when they have a
low probability of affecting the problem, due
to decision-maker hubris or overconfidence.
While acknowledging the intention of
decision makers to be rational in their
choices, contemporary JDM research reveals
that in reality, decision makers are constrained by limited cognitive resources and
incomplete or ambiguous information. In evaluating choices,
they select actions that are good
decision makers
enough, as opposed to choosing
the best possible option (March,
are constrained by
1994). This research suggests that
instead of evaluating HR practices
limited cognitive
on many important criteria, decision makers might utilize only a
resources and
few criteria and make premature
incomplete or ambig- decisions to accept or reject these
interventions.
uous information.
The managerial decision-making approach complements the
rational view of adoption and rejection decisions by increasing awareness
about failures of rational judgment in decision making. A similar focus on nonrational
decision making is also assumed by the diffusion approach, which attributes the adoption of management interventions to extraorganizational factors.

The Diffusion Approach

Diffusion has traditionally been defined as
the process by which innovations are communicated through certain channels over
time and among members of a social system
(Rogers, 1962). Innovations are adopted because they are perceived as providing solutions to existing problems in an uncertain
environment (Rogers, 1995). Typically, a few
innovative individuals or firms first adopt
the intervention, and the actual or perceived
efficacy of the intervention prompts imitation among other individuals or firms. Thus,
an S shaped curve characterizes the cumu-

lative rate of adoption of most innovations,

with the number of adopters increasing with
time and then reaching its asymptote.
Much like early decision-making research, early diffusion literature assumed
that rational actors adopted efficient innovations. This assumption has come under criticism in management literature mainly due
to the finding that ineffective innovations
are commonly adopted over efficient ones
(Abrahamson, 1996) and that firms succumb
to bandwagon pressures, as opposed to rationally evaluating the innovations utility
(Abrahamson, 1996).
Several reasons explain why managers
act in this seemingly irrational manner. The
goals of these innovative practices often are
ambiguous, and managers may not understand how or why these practices work. In
addition, limited evidence exists regarding
the short- and long-term impact of these innovations on organizational effectiveness
(i.e., given the presence of multiple influences, how success can be attributed to the
specific practice [Abrahamson & Rosenkopf,
1993]). When faced with such ambiguity,
firms subjectively assess certain practices as
favorable and legitimate if consultants or the
business media persuasively promote them,
or if popular firms or other firms in the same
industry adopt them.
Environmental factors reinforce bandwagons. For instance, regardless of the fact
that many modern management innovations are difficult to implement (Carson et
al., 2000) and often do not lead to superior
economic performance (Staw & Epstein,
2000), firms that adopt them tend to attain
favorable reputations and are admired for
their innovativeness. Similarly, CEO pay is
associated with the adoption of popular
management innovations, possibly because
of favorable evaluations of such decisions by
the board or by investment analysts (Staw &
Epstein, 2000). Arguably, these factors serve
as incentives for senior leaders to adopt practices that are popular as opposed to those
that are not.
According to the diffusion approach, innovations are passed along faster in groups
that are characterized by homophily or simiHuman Resource Management DOI: 10.1002/hrm

Why Organizations Adopt Some Human Resource Management Practices and Reject Others

larity among members on key attributes, and

slower in heterophilous groups where members differ on these key attributes. A recent
study found that CEOs of firms facing similar strategic challenges often seek advice
from other CEOs with similar professional
backgrounds and from friends, as opposed to
sources that are dissimilar or more effective,
leading to homogeneity in firm strategy (McDonald & Westphal, 2003). Thus, what gets
diffused is not best practice, but friendly advice. This homophily might also partly explain the finding that HR professionals lack
high levels of awareness regarding the effectiveness of various interventions (Rynes et
al., 2002). It could be argued that these professionals, when evaluating choices, seek information from peers, consultants, and trade
publications as opposed to behavioral scientists and scientific publications.

Summary of the Decision-Making

and Diffusion Approaches
The decision-making and diffusion approaches present a significant part of the solution to the issue of adoption by attributing

TABLE

203

these decisions to the institutional and psychological processes underlying the decision
to adopt or reject HR practices. These approaches, along with the economic and
alignment approaches, help create a comprehensive picture of the dynamics underlying
adoption/rejection decisions (see Table I).
The following case, based on the experiences of an industrial/organizational (I/O)
psychologist employed as an HR manager at a
Fortune 500 corporation, illustrates how the
four approaches discussed in this article can
assist practitioners in planning and implementing HR practices. Specifically, these approaches are applied to the analysis of a case
where the corporation, a large consumerproducts organization, adopted a survey-feedback program. It should be noted that this
case is not intended to represent how HR
practices typically are implemented in organizations. The same HR practice might or
might not be successful in different organizations due to factors such as resource availability, leadership support, organizational culture
(e.g., emphasis on improving employee work
experiences), and status of the HR function
(administrative versus strategic).

Overview of Literature

Approaches

Literature

Reason for Adoption

Reason for Rejection

Economic

Utility Analysis, HighPerformance Work

Practices, Human
Capital

HR practice delivers economic

value

HR practice perceived as cost

and as delivering inadequate
value

Alignment

Strategic HRM,
Linkage Research

HR practice aligned with

corporate strategy

HR strategies and practices not

aligned with corporate strategy;
HR department not a strategic
partner

Decision
Making

Social/Cognitive
Psychology,
Behavioral
Economics

Decision-making processes
(heuristics, intuitive decision
making, risk taking) that are
conducive to the adoption of
an HR practice

Decision-making processes that

are not conducive to the adoption
of an HR practice (e.g.,
overemphasis on speed leading to
lowered decision quality)

Diffusion

Diffusion of
Innovations,
Bandwagons

HR intervention proven effective

Lack or decrease of interest in
inside or outside the organization; current intervention and
consistent with fads and fashions emergence of interest in another

Human Resource Management DOI: 10.1002/hrm

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HUMAN RESOURCE MANAGEMENT, Summer 2006

Illustrative Case: Adoption of a

Survey-Feedback Program

General Background
Survey-feedback programs (SFPs) have been
in existence in corporations for over six
decades and are accepted as good HR practice by most experts (e.g., Waclawski & Church, 2002). Briefly,
SFPs consist of the following
the successful
broad phases: survey construction, data gathering, action planadoption and
ning, implementation of select
interventions, and evaluation of
implementation of
organizational improvements.
Well-designed and implemented
survey-feedback
survey-feedback programs can
programs frequently benefit employees by providing
them an opportunity to possibly
can be challenging
influence management decisions.
because of the need These programs also help managers by providing them access to
to obtain
much-needed information about
employee attitudes. However, the
organizational buysuccessful adoption and implementation of survey-feedback
in at the onset,
programs frequently can be chalensure rigor during
lenging because of the need to
obtain organizational buy-in at
the process, and
the onset, ensure rigor during the
process, and ultimately produce
ultimately produce
actionable results. The current
actionable results.
case demonstrates how these and
other challenges can be surmounted by utilizing the four approaches discussed in earlier sections.

How the Survey-Feedback Program

Originated
The impetus for the survey-feedback program came from two sources: employees
who expressed the need for a process to communicate their opinions about the companys direction and the HR department that
was charged with the task of including relevant employee-metrics in the companys balanced scorecard. Exploratory interviews with
line and HR leaders revealed an entire spectrum of opinions regarding SFPs, including
opposition (too cumbersome), mild inter-

est (could work if results are meaningful),

and clear support (next step in our evolution as a company). It was also discovered
that past corporate surveys had not enjoyed
popularity mainly because managers and
employees viewed them as being too long,
poorly worded, cumbersome to administer
(paper-pencil), expensive, and not aligned
with company strategy. However, a majority
of stakeholders still appreciated the notion
of an SFP and indicated that they would support a business-relevant, inexpensive, and
actionable process.

Making the Business Case for SFP

Based on stakeholder feedback, a business case was developed to support the adoption of the SFP. This case primarily focused
on issues of business relevance, administrative ease, and action focus. Lessons learned
from the four approaches were followed to
design and communicate the importance of
adopting the SFP. These lessons are outlined
below.
a) Linking HR Practices with Business Outcomes (Economic Approach). In order to
meet a strategic objectiveincreasing
customer loyaltythe company had initiated a significant customer loyalty
measurement effort and was in the
process of communicating this information in the form of causal models to line
managers. This effort was well received
within the organization. Leveraging
managers receptiveness to empirical
data and causal models, a model was designed outlining possible links between
employee engagement and customer loyalty. To support the model, managers
were referred to empirical research relating employee attitudes to business performance (e.g., Harter, Schmidt, & Hayes,
2002).
b) Framing the Problem (Decision-Making Approach). The underlying premise of the
SFP was that measuring and managing
employee engagement would assist the
company in attaining high levels of customer loyalty, primarily because engaged
Human Resource Management DOI: 10.1002/hrm

Why Organizations Adopt Some Human Resource Management Practices and Reject Others

employees are likely to be loyal, exert discretionary effort (above the call of
duty), and empathize with customers.
The costs of low employee engagement
were described in managers own words
(e.g., insufficient employee involvement
in activities related to the strategy), and
the vision of an engaged workforce was
presented (e.g., employees enthusiastically advocating the brands). These linkages were readily endorsed by a majority
of managers. Thus, it was relatively easy
to advocate for an SFP to both assess and
improve engagement levels.
c) Involving Stakeholders Early (Alignment Approach). The preliminary model described
above was discussed and debated in various leadership meetings and forums.
Focus groups were conducted with employees representing various functions,
levels, and ethnic groups to understand
what creates engagement or disengagement in their jobs. Employee input was
also sought via Internet polls. The employee engagement model was finalized
after several weeks of employee and manager input. Both the outcome (the survey) and process of developing the engagement model enabled employees to
have a voice in issues of importance to
them and the organization.
d) Aligning HR Objectives with Business Objectives (Alignment Approach). The HR department adopted improving levels of
employee engagement as one of its four
strategic objectives and aligned this objective to the corporations top strategic
objectives (e.g., increasing customer loyalty). Elevating employee engagement to
the level of a strategic objective gave the
SFP the resources and visibility that it
needed. In addition, all HR managers
were assigned objectives related to improving employee engagement as part of
their formal performance review, thus
formally answering the question of how
do I fit in? Following the lead of HR,
many line managers assigned similar
goals to their teams.
e) Ensuring HR Representation in Key Decision-Making Teams (Alignment Approach).
Human Resource Management DOI: 10.1002/hrm

205

Members of the HR department participated in meetings of key stakeholders

(e.g., various diversity networks, regional
and departmental meetings) and related
the SFP to their objectives (e.g., employees will not be engaged if they do not feel
included and respected for their diversity). The vice president of HR was already represented on the companys top
executive committee and discussed the
SFP in every relevant meeting. With
time, discussions about engagement became more and more common in regional and global executive
team agendas.
f) Managing Costs (Economic and
Decision-Making Approaches). The HR department
A cost-effective model of survey administration was devel- adopted improving
oped. First, exploratory data
levels of employee
collection obtained through
focus groups was outsourced
engagement as
to external consultants to proone of its four
vide objectivity. Next, the survey design was conducted instrategic objectives
house to create a sense of
organizational
ownership,
and aligned this
leverage internal expertise,
objective to the
and save consultant costs. Finally, the survey was implecorporations top
mented using an Internet tool
to ensure process efficiency. strategic objectives.
Employee time away from the
job was minimized by creating a short survey, allowing secure access
to the survey from computers outside the
corporate network, and incorporating
cross-regional action planning into already scheduled business meetings, thus
minimizing travel for the exclusive purpose of action planning.
g) Sharing Best Practices (Diffusion Approach).
Survey practices of other companies were
gathered and shared with managers. Consultants made presentations about employee engagement and its relevance to
business outcomes. Finally, business articles and benchmark reports dealing with
employee engagement were shared with
line and HR leaders (e.g., Buckingham &
Coffman, 1999; Rucci et al., 1998).

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HUMAN RESOURCE MANAGEMENT, Summer 2006

h) Making the Practice Salient (DecisionMaking Approach). The concept of measuring and improving employee engagement gained much interest within the
company due to the use of various communication channels. Beside the common communication vehicles such as
town-hall meetings and newsletters,
several innovative forms of communication were used. Some examples of these communications
were quick polls taken on the intranet, leader-led engagement
the planning and
meetings, and pictures of what
selling phase of
engagement looked like (e.g.,
a jazz artist immersed in his
the SFP took six
artflow). The SFP was
months, but the time contrasted with previous surveys
by focusing on its alignment
and effort
with business objectives and the
company-specific engagement
contributed to its
model. The contrast with other
successful adoption. programs was also made apparent by the support extended to
the SFP by line leaders, who discussed this process in various town-hall
meetings.

Outcomes
The business case for the SFP was presented
to the companys executive team and board
of directors, who unanimously approved it,
and the survey process was successfully implemented within the stated timeline and
budget. Manager and employee reactions to
the survey process were positive, as demonstrated by postsurvey focus groups and high
survey response rates across levels and locations. Action-planning sessions were utilized
in all key corporate locations with the sponsorship of senior leaders. Also, a full day was
devoted to action planning at the companys
annual global strategy meeting. This helped
convey the message to the rest of the organization that instead of being an end in itself,
the survey was an input for reasoned managerial decisions. In all, the planning and
selling phase of the SFP took six months,
but the time and effort contributed to its successful adoption.

Recommendations for Research and

Practice
This article invoked four theoretical explanations for why HR practices are adopted or rejected by organizations. In this next section,
specific recommendations are made to assist
researchers in investigating, and practitioners in managing, the process of adoption.

Future Research

The Economic and Alignment

Approaches
Although there is substantial empirical evidence relating HR practices to business performance, little research exists on how the
knowledge of these findings shapes the
strategic decisions made by managers. Are
some companies and managers more open
to utilizing such findings to implement
HPWPs in their own organizations? If so,
how is such openness connected to business
performance?
There is also a need for more research on
the contextual aspects of HR adoption. Although the research on fit between competitive strategy and HR practices is a good starting point, less is known about strategy
implementation. In addition, how is adoption affected by organizational factors such
as unionization and the organizations experience with implementing HPWPs?
Finally, most of the literature on alignment and the strategic role of HR is prescriptive. Few studies have examined the
process by which HR departments adopt,
negotiate, and maintain their role as a
strategic partner or identified the results of
this process. Similarly, it is necessary to investigate whether managerial attitudes toward the HR function predict adoption/rejection decisions.

The Decision-Making and Diffusion

Approaches
The experimental paradigms utilized in
JDM and related literature could help in rigorously investigating some of the issues
raised in the current article. For instance,
Human Resource Management DOI: 10.1002/hrm

Why Organizations Adopt Some Human Resource Management Practices and Reject Others

controlled studies could be designed to study

how various situational constraints on rationality produce suboptimal decisions related to choosing HR practices. For instance,
constraints on rationality can be introduced
by simulating distractions, work overload,
and tight deadlines. Similarly, policy-capturing studies could help investigate the relative
weights placed by managers on various decision criteria.
Recent research has examined the diffusion of academic knowledge from researchers to HR practitioners (e.g., Rynes et
al., 2002). This body of literature can be extended by exploring not only how the gaps
between these two constituencies arise, but
also by investigating how academic knowledge gets transformed as it reaches the intended audience through the popular press.
Also, most studies of diffusion examine this
phenomenon at the level of organizations or
industries. Future studies could explore how
HR practices diffuse within organizations between departments, functions, and divisions,
and the role played by credible managers
and informal networks in legitimizing these
practices.

The Economic and Alignment

Approaches

Utilize linkage models and summaries of

empirical research relating human resource practices with desired business
outcomes (e.g., Huselid, 1995; Wright et
al., 2005) to help decision makers see the
long-term economic value of these practices.
Involve stakeholders early in the process
of developing the HR practice. Communicate statistical models using terminology familiar to decision makers. Integrate these models with the companys
business models and balanced scorecard.
Ensure that HR objectives are aligned
with business objectives and the HR
function is adequately represented in key
decision-making teams (e.g., executive
team).

Human Resource Management DOI: 10.1002/hrm

Although benefits are critical, costs do

count. It is important to manage program costs and design programs that deliver favorable returns on investments.

The Decision-Making and Diffusion

Approaches

Recommendations for Practitioners

207

In order to motivate the organization to pay attention to

the adoption of progressive
HR practices, frame these In order to motivate
practices as opportunities to
the organization to
gain benefits (e.g., increase
revenue and sales) and avoid
pay attention to the
losses (e.g., decrease employee
turnover). Similarly, reduce
adoption of
the influence of sunk costs by
progressive HR
framing additional investments in a failing program as
practices, frame
a losseven though money
might already have been
these practices as
spent on the program. Continuing to support it leads to opportunities to gain
wasted effort and resources.
benefits (e.g.,
Increase decision makers access to findings from empiriincrease revenue
cal literature. Researchers can
achieve this objective by conand sales) and
tributing to more accessible
avoid losses (e.g.,
communication
channels
(e.g., practitioner magazines
decrease employee
and conferences), disseminating scientific knowledge
turnover).
through consulting practice
(e.g., using validated instruments and educating practitioners about their value), debunking attractive but ineffective practices, and
supplementing academic research findings with credible and relevant benchmarking information.
Focus on the salient aspects of the HR
practice by contrasting it with other
practices and repeatedly exposing decision makers to its benefits.
Ensure that sufficient time is available to
make adoption/rejection decisions, and
that all important characteristics and implications of the HR practice are considered prior to making a decision. Avoid

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HUMAN RESOURCE MANAGEMENT, Summer 2006

prematurely stopping the consideration

of alternatives or overly focusing on one
aspect of the HR practice (e.g., set-up
costs).
Identify early adopters willing to test the
HR practice in their department or business unit and pilot the HR practices in
their unit. Utilize informal networks and
credible managers to communicate the
success stories.

Conclusion
If it is true that scientists and practitioners
practice their trades in different worlds
(Kuhn, 1962, p. 149), the role of scientistpractitioners is, perhaps, to bridge this divide. Is it possible to meet the demands of
the organization and its stakeholders while
maintaining ones allegiance to fact-based
science? This article presents the argument
that it is indeed possible to influence the
adoption of scientifically grounded HR
practices, if both the rational and nonra-

tional forces influencing the adoption

process are understood and harnessed.
Thus, while it is critical that HR professionals demonstrate the economic values of HR
practices and possess credibility as strategic
partners, it is equally essential that they
overcome barriers to the adoption of these
practices arising from constraints on decision makers time and cognitive resources
(e.g., use of heuristics) and the tendency of
organizations to gain legitimacy by following the latest fad or fashion. The skillful
combination of these approaches in research and practice is likely to lend legitimacy and success to the work of scientistpractitioners.

Acknowledgments
I am grateful to Arthur Yeung and the
anonymous reviewers for their valuable feedback. I would also like to thank Gary Adams,
Barbara Rau, and Michele Jayne for their comments on earlier drafts of this manuscript.

MAHESH SUBRAMONY is an assistant professor of psychology at the University of Wisconsin at Oshkosh. His research interests are primarily in the area of strategic human resource management. He is currently intrigued by why effective HRM practices are
adopted or rejected by business organizations, and how these practices impact business
performance. He also conducts research in areas such as customer-oriented climates and
business-process outsourcing. He received his PhD in I/O psychology from Central Michigan University and an MA in applied psychology from the University of Delhi, India.

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