HR Practices and Firm Performance: What Matters and Who Does it?

Produced as MED Ooccasional Paper 07-02 for the Ministry of Economic Development

We examine the impact of human resource practices on firm performance. The analysis uses data from an economy-wide survey to determine whether firms that adopt certain individual HR practices, or that adopt a suite of practices, perform better than their rivals.

We find that adoption of a suite of high performance practices (and adoption of specific practices pertaining to staff training and performance pay) impacts positively on firm outcomes. The strength of the relationships differ by firm size and age, having their strongest impact on small and large firms; curiously they do not appear relevant for mid-sized firms.

The nature of firms that adopt high performance practices varies strongly according to size, age and sector.