HRM practices and establishment performance: an analysis using the European Company Survey 2009, Eurofound 2011

Introduction. The way an enterprise is managed has been proven to impact on the performance of companies. It is generally assumed that less rigid forms of work organisation are required to cope with more dynamic market conditions and product developments. To a greater extent than before they are intended to accommodate the requirements of a more knowledgeintensive and learning workforce. These practices have been introduced primarily to improve performance and thus mirror the move from personnel to human resource management. More recently, they have been closely related to the concept of high performance workplaces and the use of innovative workplace practices, often abbreviated as HRM (human resource management) policies, have been researched since the beginning of the 1990s. These multidimensional policies are introduced in order to make companies more efficient, by introducing new recruitment procedures, training opportunities for the workers, giving them more responsibility over the production process and also the possibility to participate in the success of operations via financial incentives. If companies are successfully managed, they can lower turnover rates, boost satisfaction of their staff which motivates them to work better and harder and align their pay with the company’s success. It also increases the quality of products in line with customer’s expectations using new modes of product development, design and innovations. This is a winwin situation for workers as well as for companies. HRM practices certainly improve the competitiveness of companies on their product markets and, by analogy, labour productivity for whole national economies. However, many countries in Europe still do not make enough use of HRM policies. A more comprehensive introduction of such innovations would render Europe more competitive and strengthen the position of the EU in the world economy.