Age‐related differences in the relations between individualised HRM and organisational performance: a large‐scale employer survey

• Published date: 01 January 2015
• Author: Luc Dorenbosch,P. Matthijs Bal
• DOI: http://doi.org/10.1111/1748-8583.12058
• Date: 01 January 2015

Age-related differences in the relations between

individualised HRM and organisational

performance: a large-scale employer survey

P. Matthijs Bal, School of Management, University of Bath

Luc Dorenbosch, TNO | Research Institute for Work and Employments

Human Resource Management Journal, Vol 25, no 1, 2015, pages 41–61

The current study aimed to investigate the relationship between individualised HRM practices and

several measures of organisational performance, including the moderating role of employee age in these

relationships. A large-scale representative study among 4,591 organisations in the Netherlands showed

support for the relationships between individualised HR practices with organisational performance.

Employee age moderated the relationships between the use of individualised practices and sickness

absence and turnover, such that organisations with a high percentage of older workers benefited from

work schedule practices, and organisations with high percentage of younger workers benefited from

development practices.

Contact: P. Matthijs Bal, School of Management, University of Bath, Bath BA27AY, UK. Email:

p.m.bal@bath.ac.uk

Keywords: individualised HRM practices; organisational performance; employee turnover;

sickness absence; older workers

As organisations increasingly stress the importance among employees to be responsible

for their own careers (Greenhaus et al., 2010), a growing number of employees have

begun to negotiate individual work arrangements with their employers (Rousseau,

2005). Moreover, this trend of individualisation has occurred along with a decrease in collective

agreements for employees (De Leede et al., 2004; Glassner and Keune, 2012). Accordingly,

academic interest has begun to focus on how employees proactively shape their careers and

negotiate individual agreements (Rousseau, 2005; Grant and Parker, 2009; Bal et al., 2012).

Studies on idiosyncratic deals, or i-deals, have shown that individuals who proactively

negotiate individual agreements become more highly motivated, committed and performing

(e.g. Hornung et al., 2008; Anand et al., 2010; Rosen et al., 2013). However, research from an

organisational perspective on the increasing individualisation of work is lacking (Taskin and

Devos, 2005). This is surprising, given the strong increase in interest on outcomes of individual

employee negotiation. It is currently unknown whether this individualisation of HRM actually

improves organisational performance.

Studies on the effects of individualisation on the employee level have shown that

relationships with outcomes are inconsistent and differ greatly among studies (Hornung et al.,

2008, 2010; Bal et al., 2012). We argue that individualisation is primarily beneficial when it is in

line with other aspects in the organisation (Delery and Doty, 1996; De Leede etal., 2007), and

in particular the number of older workers in an organisation is crucial in determining the effects

of individualisation of HRM (Bal et al., 2012, 2013; Kooij et al., 2013). Because workforces are

aging throughout the world (Wang and Shultz, 2010), the need for retention of older workers

in organisations has become a prominent area of research (Wang and Shultz, 2010). At the same

time, it has become more difficult to retain older workers (as well as their expertise and

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doi: 10.1111/1748-8583.12058

HUMAN RESOURCE MANAGEMENT JOURNAL, VOL 25 NO 1, 2015 41

© 2014 John Wiley & Sons Ltd.

Please cite this article in press as: Bal, P.M. and Dorenbosch, L. (2015) ‘Age-related differences in the relations between individualised HRM and

organisational performance: a large-scale employer survey’. Human Resource Management Journal 25: 1, 41–61.

knowledge) because many older workers leave the workforce early (Wang and Shultz, 2010).

Because of the increasing age diversity in the workplace (Schlick et al., 2013), it is imperative

that organisations implement practices that allow older workers to maintain their productivity,

as performance may be decreasing after the age of 40–45 (Ng and Feldman, 2008).

Individualised HRM may facilitate younger and older workers to negotiate individualised

agreements to increase or maintain their performance, and hence contribute to overall

performance of the organisation.

The objective of this study is to test the effectiveness of individualisation on organisational

performance, specifically whether the effectiveness of individualisation depends on the age

composition of the organisation. First, we investigate whether the availability and actual use of

individualised HRM contributes to organisational performance. Second, the study aims to

determine the conditions under which individualisation has the greatest effect on

organisational performance by investigating the moderating role of employee age in the

organisation. Based on the notion that older workers have different work-related needs from

younger workers, we expected differences in the relationships of various types of

individualised HRM with organisational performance (Bal et al., 2012; Kooij et al., 2013).

This study contributes to research on individualisation of work arrangements by being the

first to investigate the effects of individualisation on organisational-level rather than on

individual-level outcomes (Hornung et al., 2008). Demonstrating that individualisation

contributes to the bottom line not only furthers our understanding of individualised HRM, but

it also investigates the effects of individualisation in a society where collective agreements are

slowly disappearing (De Leede et al., 2004). Moreover, the study contributes by investigating

the conditions under which individualisation is most effective. We look at the role of the age

composition within the organisation, and through this we open up new pathways for research

on HRM. Finally, this study contributes to previous research on individualisation through the

investigation of a large-scale employer sample (including numerous organisations in different

sectors) and thereby obtaining a comprehensive perspective on how individualised HRM

influences organisational outcomes.

THEORY AND HYPOTHESES

The individualisation of HRM has become increasingly common in organisations as a result of

globalisation, the information economy and the democratisation of the workplace (Taskin and

Devos, 2005). Employees are becoming more proactive in looking for opportunities to negotiate

individual agreements with their employers (Rousseau et al., 2006; Grant and Parker, 2009),

while at the same time organisations are also expecting employees to become more proactive.

Consequently, organisations increasingly provide employees with the individual opportunity to

negotiate agreements about work arrangements. This differs from the traditional HRM

approach, which is fundamentally based on equal treatment of all employees (Boxall and

Macky, 2009).

Research on effectiveness of HRM has focused primarily on the universalistic outcomes of

high-performance HRM (Delery and Doty, 1996; Boxall and Macky, 2009), based on the

assumption that HR practices have a universal effect on motivation and performance among all

employees. This high-performance approach to HRM (e.g. Kehoe and Wright, 2013) postulates

that the more HRM is available in organisations, the higher firm performance will be. However,

as Kaufman and Miller (2011) argued, this statement may be oversimplified. A contingency

approach, which stresses the idea that HRM should be in line with the goals and the context

Individualised HRM and organisational performance

HUMAN RESOURCE MANAGEMENT JOURNAL, VOL 25 NO 1, 201542

© 2014 John Wiley & Sons Ltd.