A multilevel examination of skills‐oriented human resource management and perceived skill utilization during recession: Implications for the well‐being of all workers

• Author: Belgin Okay‐Somerville,Dora Scholarios
• DOI: http://doi.org/10.1002/hrm.21941
• Published date: 01 March 2019
• Date: 01 March 2019

ORIGINAL ARTICLE

A multilevel examination of skills-oriented human resource

management and perceived skill utilization during recession:

Implications for the well-being of all workers

Belgin Okay-Somerville

1

| Dora Scholarios

2

1

Adam Smith Business School, University of

Glasgow, Glasgow, Scotland, UK

2

Department of Work, Employment and

Organisation, University of Strathclyde

Business School, Glasgow, Scotland, UK

Correspondence

Belgin Okay-Somerville, Adam Smith Business

School, University of Glasgow, Gilbert Scott

Building, Glasgow, G12 8QQ, Scotland, UK.

Email: belgin.okay-somerville@glasgow.ac.uk

This article examines whether organizations can enhance employee well-being by adopting

human resource management (HRM) practices strategically targeted to improve skill develop-

ment and deployment in a recessionary context. Employee skill utilization is proposed as the

mediating mechanism between HRM practice and well-being. The role of workplace skill compo-

sition is also examined as a boundary condition within which HRM differentially impacts

employee outcomes. Using a nationally representative survey of UK workplaces (Workplace

Employment Relations Survey 2011) and matched management and employee data, the analysis

focused on organizations that had implemented some recessionary action following the

2008–2009 global financial and economic crisis. The findings show that human capital enhanc-

ing HRM and enriched job design positively influenced both job satisfaction and work-related

affective well-being through increased employee skill utilization. Organizations with predomi-

nantly high-skilled workforces were more likely to adopt these skills-oriented HRM practices.

Nevertheless, the effects of HRM on employee outcomes via skill utilization applied across orga-

nizations, regardless of workforce skill composition. The findings demonstrate employee skill

utilization as a driver of HRM outcomes and the sustainability of “best practice”HRM arguments

across all skill levels, even in the face of recession.

KEYWORDS

best-fit HRM, best-practice HRM, employee well-being, enriched job design, human capital

enhancing HRM, job satisfaction, recession, skill utilization, strategic HRM, workforce skill

differentiation

1|INTRODUCTION

Policymakers have advocated for investment in workforce skills as a

route to building resilience and aiding recovery following economic

recession (e.g., OECD, 2012). Nonetheless, the most common

employer responses following the 2008–2009 global financial and

economic crisis were to freeze wages and recruitment, reduce work

hours, or restructure and downsize (Freyssinet, 2010; Kondilis et al.,

2013). In this recessionary climate, it is not surprising that some

workers were likely to experience skill underutilization (Sum, Khati-

wada, & Palma, 2010). For instance, between 10% and one-third of

employees were reported to be overskilled or overqualified in their

jobs (Bell & Blanchflower, 2011; ILO, 2014).

This article aims to understand (a) the efficacy of skills-oriented

human resource management (HRM) practices for improving

employee skill utilization and well-being in recessionary climates; and

(b) whether the outcomes of such HRM investment are sustained

across organizations with workforce skill differentiation. “Progressive”

HRM, whether in the form of high-performance work systems, high-

involvement management, or high-commitment management, has

been associated with improved human capital and employee skill utili-

zation (Payne, 2013), notably through bundles of skill-enhancing HRM

practices (Jiang, Lepak, Hu, & Baer, 2012). Further understanding of

skills-related pathways in the “black box”between HRM and

employee outcomes is clearly important for organizational perfor-

mance (Bryson, Forth, & Stokes, 2017). When organizations take

DOI: 10.1002/hrm.21941

Hum Resour Manage. 2019;58:139–154. wileyonlinelibrary.com/journal/hrm © 2018 Wiley Periodicals, Inc. 139

recessionary action affecting their human resource (HR) strategy,

these pathways take on additional significance given the potential

threats for the employment relationship and well-being (Guest, 2017).

Our second aim considers skills-oriented HRM alongside argu-

ments for HR system differentiation (Lepak & Snell, 2002; Lepak, Tay-

lor, Tekleab, Marrone, & Cohen, 2007). Resource-based theory holds

that organizations will invest according to the value and uniqueness of

their workers' knowledge, skills, and abilities (Becker & Huselid, 2010)

with differential HRM practices according to the strategic value of a

worker's skills. Such differentiation is likely to become a more salient

driver for employers during an economic crisis (Datta, Guthrie,

Basuil, & Pandey, 2010); for example, investment in noncore staff may

be a target of cost cutting. In such conditions, questions arise about

“best practice”or universalistic notions of HRM (Pfeffer, 1994), which

argue for consistent positive effects of HRM practice across organiza-

tional contexts.

Our approach integrates several strands of literature within HRM

concerned with skill utilization—notably, strategic HRM concerns

about the role of human capital, both individual and collective (Boon,

Eckardt, Lepak, & Boselie, 2018), and interest in how to stimulate

employer demand for skills; for example, through work organization or

upskilling (Ashton, Lloyd, & Warhurst, 2017). We chose skill utilization

as the integrative concept through which to explore the effects of

HRM practices on employee well-being during a recession as this is

recognized as a dimension of intrinsic job quality, which increases with

progressive approaches to HRM (Felstead, Gallie, Green, & Hen-

seke, 2016).

By bridging strategic HRM, skill utilization, and job quality litera-

ture, this article makes several noteworthy contributions. We develop

and test a multilevel model considering the impact of employer-side

skills-oriented HRM interventions on individual-level reports of skill

utilization and well-being. Such multilevel data that also control for

competing explanations of the efficacy of HRM on employee out-

comes, such as the reverse causation hypothesis (Katou & Budhwar,

2010) and the conflicting outcomes argument (Wood, Van Veldhoven,

Croon, & de Menezes, 2012), are rare in the skill utilization literature.

Conceptually, in examining investment in skill utilization at the work-

place level, we inform debates about whether, during recession, orga-

nizations can actively sustain policy visions of a “high skills, high

wages”economy, built on human capital perspectives to improving

competitiveness (Hanushek, 2013). Our individual-level conceptualiza-

tion of skill utilization also goes beyond the more commonly studied

measure of perceived skills mismatch at work and has implications for

managerial interventions. Furthermore, the study's focus on employee

well-being as an outcome in its own right, rather than as a vehicle for

increasing organizational performance, responds to calls from HRM

scholars for renewed focus on the quality of working lives (Grote &

Guest, 2017).

We also inform debates concerning “best-practice”versus

context-specific perspectives of HRM adoption and its outcomes,

while taking into account the effects of recession. The Great Reces-

sion has caused most employers to retreat from investment in HRM

that develops or empowers their employees and to adopt more short-

termist coping strategies to deal with economic and financial uncer-

tainties (OECD, 2012). Empirical research shows the detrimental

effects of such strategies on employee outcomes (Wood & Ogbon-

naya, 2016). Our study provides evidence for the sustainability of

“best practice”skills-oriented HRM, its effects on employee well-

being for different workforces, and its potential role in building resil-

ient workforces within recessionary contexts.

This article begins by considering the contribution of HRM prac-

tices to skill utilization and introducing our conceptualization of

employee-perceived skill utilization as the explanatory focus for

understanding the effects of HRM on well-being. The argument for

skills-based contingencies is then introduced, establishing a rationale

for examining our model across different workforces in the context of

recession. The study is based on a nationally representative survey of

UK workplaces (Workplace Employment Relations Survey 2011),

which provides matched management and employee data. We draw

conclusions about the efficacy of skills-oriented “best practice”HRM

in the face of recession, and its sustainability across varying organiza-

tional contexts of workforce skills.

2|HRM AND SKILL UTILIZATION

“Progressive”HRM approaches are generally based on the principles

that people perform well when they have the abilities to do the job;

they are motivated to do so; and their work provides support and

opportunities for performance (Appelbaum, Bailey, & Berg, 2000).

Combinations of managerial and work practices appropriately “bun-

dled”together are thought to provide mutual gains for both

employees (e.g., greater job satisfaction and organizational commit-

ment) and employers (e.g., organizational performance). Overall,

empirical evidence across diverse contexts shows a positive impact of

progressive HRM on both employee and organizational outcomes

(e.g., Fu et al., 2017; Katou, Budhwar, & Patel, 2014; Shen, Benson, &

Huang, 2014). Although skill utilization is assumed to play a consider-

able role in the black box of how HRM influences outcomes (Payne,

2013), this assumption is seldom explicitly tested (see Boxall, Hutchi-

son, & Wassenaar, 2015 for an exception).

We focus on HRM practices that can be strategically targeted to

improve skill development and deployment. Skill development focuses

on skill formation and acquisition, while skill deployment is concerned

with opportunities to fully utilize skills at work (James, Warhurst, Tho-

len, & Commander, 2013). At the organizational level, both strategies

can be realized by investments in employee human capital and

empowerment that enable agency for skill utilization. In fact, human

capital and psychological empowerment are key mediators of the rela-

tionship between high performance work systems and organizational

performance (e.g., Liao, Toya, Lepak, & Hong, 2009; Takeuchi, Lepak,

Wang, & Takeuchi, 2007). Grote and Guest's (2017) recent call to

revive interest in quality of working life also identified the develop-

ment of human capacities and proactivity through jobs that promote

decision latitude as core to this movement.

Consistent with this vision, we examine two aspects of HRM,

which focus on skill development and deployment: human capital

enhancing (HCE) HRM and enriched job design (EJD). First, HCE HRM

(also referred to as skill-based/knowledge-based HRM [Lepak & Snell,

2002]) is a distinctive approach to skill acquisition and development

140 OKAY-SOMERVILLE AND SCHOLARIOS