Human resource management, employee engagement, and nonprofit hospital performance

• Author: Morgen S. Johansen,Jessica E. Sowa
• DOI: http://doi.org/10.1002/nml.21352
• Published date: 01 June 2019
• Date: 01 June 2019

RESEARCH ARTICLE

Human resource management, employee

engagement, and nonprofit hospital performance

Morgen S. Johansen

1

| Jessica E. Sowa

2

1

Public Administration Program, University of

Hawaii, Honolulu, Hawaii

2

College of Public Affairs, University of

Baltimore, Baltimore, Maryland

Correspondence

Jessica E. Sowa, College of Public Affairs,

University of Baltimore, 1420 North Charles

Street, Baltimore, MD 21201.

Email: jsowa@ubalt.edu

Human resource management (HRM) has been shown to

impact organizational performance, but more research is

needed on particular human resource (HR) practices in

nonprofits and their effect on performance. In this article,

we explore one HRM practice argued to influence perfor-

mance, employee engagement in decision-making, exam-

ining whether involving staff at different levels of a

nonprofit affects nonprofit organizational performance.

Drawing on data from a 2011 study of nonprofit hospitals,

we find employee engagement has a positive influence on

managerial and stakeholder perceptions of organizational

performance. Employee engagement in decision-making

is also related to objective nonprofit performance mea-

sures, although the effects are less consistent. We con-

clude by discussing the implications of these findings for

nonprofit research and practice.

KEYWORDS

human resource, performance, United States

1|INTRODUCTION

The question of how to improve the performance of organizations in the nonprofit or voluntary sector

continues to challenge scholars and practitioners (Forbes, 1998; Herman & Renz, 1998, 1999, 2008;

Kaplan 2001; Letts, Ryan, & Grossman, 1999; Mitchell, 2013, 2015; Sowa, Selden, & Sandfort,

2004; Thomson, 2010). In considering what contributes to nonprofit performance, scholars have

highlighted a number of factors, including but not limited to the diversity and level of financial

resources invested, the nature of the service technology employed when interacting with clients, the

governance of the nonprofit, the complexity of the environment or community in which the nonprofit

is embedded, and how well nonprofits manage their relationships with important environmental

stakeholders (Balser & McClusky, 2005; Brown, 2005; Chikoto & Neely, 2014; Liket & Maas,

2015; MacIndoe & Barman, 2013; Mayer, Wang, Egginton, & Flint, 2014; Mitchell, 2013; Packard,

2010; Selden & Sowa, 2004).

Received: 9 August 2017 Revised: 23 December 2018 Accepted: 9 January 2019

DOI: 10.1002/nml.21352

Nonprofit Management and Leadership. 2019;29:549–567. wileyonlinelibrary.com/journal/nml © 2019 Wiley Periodicals, Inc. 549

While these factors are important, scholars acknowledge performance is deeply tied to the human

capital of an organization; the people who undertake the core operational tasks and management of

the organization can significantly influence performance (Macky & Boxall, 2007, 2008; Messer-

smith & Guthrie, 2010; Pfeffer, 1998; Posthuma, Campion, Masimova, & Campion, 2013). As such,

an organization's human capital can be a fundamental competitive advantage and worthwhile to per-

formance if there is serious investment in the quality of human capital and its effective management

over time (Messersmith & Guthrie, 2010; Pfeffer, 1998; Posthuma et al., 2013). This acknowledge-

ment has led to a growing focus on understanding the particular human resource management

(HRM) practices of nonprofits (see Akingbola, 2013; Meyer & Leitner, 2018; Ridder & McCandless,

2010; Ridder, Piening, & Baluch, 2012; Walk, Schinnenburg, & Handy, 2014), but there are continu-

ing questions on how commonly used HRM practices work in the nonprofit context and how these

practices relate to nonprofit performance.

This article contributes to the continuing dialogue on HRM in nonprofits. To understand the rela-

tionship between HRM and performance, HRM scholars have started isolating what are commonly

referred to as high performance or high involvement work practices (HPWPs). It is argued that these

human resource (HR) practices individually, or as a bundled set of practices (referred to as high per-

formance work systems), should harness the competitive advantage provided by an organization's

human capital to improve overall performance (Kehoe & Wright, 2013; Messersmith & Guthrie,

2010; Messersmith, Patel, Lepak, & Gould-Williams, 2011; Mostafa, Gould-Williams, & Bottomley,

2015; Posthuma et al., 2013; Selden & Sowa, 2015). In this article, we explore how one such prac-

tice, employee engagement, may affect nonprofit performance.

1

HPWPs that involve opportunities to engage or involve employees can have an impact on various

organizational outcomes, including performance (Black & Gregersen, 1997; Kalleberg, Marsden,

Reynolds, & Knoke, 2006; Riordan, Vandenberg, & Richardson, 2005; Spector, 1986; Spreitzer &

Mishra, 1999). Specifically, employee engagement as an HRM strategy encompasses different mech-

anisms that give employees meaningful ways or opportunities to participate and feel included in their

organizations, including information sharing, participation in teams, involvement in decision-making,

and other empowerment or engagement practices (Gardner, Wright, & Moynihan, 2011; Kalleberg

et al., 2006; Subramony, 2009; Way, 2002).

In nonprofits, including and engaging employees may be a valuable HRM strategy to gain the

most value out of their employees since employees are critical to the production of outputs and thus

can directly influence how well those outputs are translated into outcomes through the service provi-

sion or delivery process. Moreover, with the pressures on nonprofits to keep spending on manage-

ment and “overhead”low (Bowman, 2006; Gregory & Howard, 2009; Hager & Flack, 2004; Wing &

Hager, 2004), employee engagement strategies could be a cost-effective strategy to leverage perfor-

mance gains with low sunk costs. Drawing on data from a 2011 study of nonprofit hospitals, we ask:

Does employment engagement of physicians and other staff in decision-making impact the perfor-

mance of these nonprofit hospitals? Nonprofit hospitals offer an ideal venue in which to explore the

use of employee engagement strategies, as these nonprofits deliver services directly to clients and

therefore need to be concerned with the quality of these service exchanges (Benjamin & Campbell,

2015; Kalleberg et al., 2006).

This article has four sections. The first section reviews the research on the relationship between

HRM and performance in nonprofits, including why HRM is important for nonprofits and why

employee engagement through involvement in decision-making could be a particularly meaningful

and useful HRM practice for managers to improve performance in nonprofits. The second

section presents the data and measures used to examine the relationship between employee

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