Beyond Incentive Pay: Insiders' Estimates of the Value of Complementary Human Resource Management Practices

Abstract

Do human resource management (HRM) practices, such as incentive pay, teamwork, training, and careful screening practices, raise productivity, and if so, under what conditions does productivity rise? Recently, this question has been a central focus in organizational and personnel economics. We emphasize the value of a new research approach – an approach we label “insider econometrics”–that is aimed going deep inside businesses to obtain data and insights into the ways in which HRM practices affect specific production processes. We conclude that sets of complementary HRM practices appear to raise performance, but that some firms, such as those that make complex products or those that are starting up brand new facilities, benefit more from these practices.