more proximal measures of performance which seem more likely to be directly
inXuenced by, or an outcome of, worker behavior. Typical here would be employee
turnover and absence, scrap rates, sales per employee, and customer satisfaction.
Harter et al. ( 2002 : 273 ) found that there was a rank ordering in their correlations
between overall employee satisfaction/engagement and measures of performance.
The highest were with customer satisfaction, loyalty, and employee turnover fol-
lowed, in rank order, by safety, productivity, and, lastly, proWtability. Proximal
measures are not without their diYculties. They too need to be adjusted for sectoral
variants. Typical measures of labor management performance like turnover and
absenteeism are highly variable between sectors with nursing and teaching, for
example, exhibiting higher than average sickness rates. RetailWrms and call centers
have higher than average labor turnover, at least in the UK. Useful work in retail
banking involving comparisons between large numbers of branches using identical
HR practices has been done by Gelade and Ivery ( 2003 ) and Bartel ( 2004 ). An
increasing number of largeWrms in sectors where staVare customer related now
collect their own data from surveys of employees and customers mixed with
operational measures andWnancial performance to develop sophisticated models
of HR and performance for their own purposes. The seminal work undertaken in
Sears in the USA in the late 1990 s has been a major inXuence (Rucci et al. 1998 ).
The assumption that proWtability andWnancial performance is (or should be)
the end goal of HRM is a more profound issue. There are a number of reasons for
questioning such a belief. First, as Jacoby ( 2005 ) had shown in his comparison of
US and JapaneseWrms, there are major diVerences of emphasis with the former
dominated by shareholder value and the latter using more of a stakeholder
approach. The work of Paauwe ( 2004 ) leads credence to the view that we need to
take account of ‘varieties of capitalism,’ as noted too by Godard ( 2004 ). The focus
almost exclusively on shareholder value may be a case of ‘US exceptionalism.’ Even
if shareholder value were accepted as the dominant and legitimate end goal for
HRM this use of short-termWnancial indicators may fail to satisfy shareholders in
the longer term. OstroVand Bowen ( 2000 : 216 ) draw attention to ‘the persistent
Wnding that organizational eVectiveness is multi-dimensional.’ Emphasis on organ-
izational agility and the search for sustained competitive advantage places diVerent
requirements on HRM in its contribution to organizational success. Wright and
Snell ( 1998 ) neatly summarize the need for ‘Wt andXexibility’ and note the tensions
between the two. Fit is related to competitive strategy now, and thence toWnancial
performance;Xexibility is building adaptability for future purposes. Increasing
turbulence in the business environment and seemingly growing frequency of
exogenous shocks places a premium on the latter. Boxall and Purcell ( 2003 ) add
a third fundamental goal for HRM, social legitimacy. This can be seeking to be ‘an
employee of choice’ or meeting social expectations enshrined in law and social
practice. While attempts are often made to justify certain HR practices in terms of
their bottom line contributions, the ultimate purpose of some, like diversity
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