Section FiveThe second system of motivation practices was made up of the
following:
- Compensation based on performance appraisals
- Use of formal performance appraisals
- Merit-based promotions
- Hiring selectivity^97
This comprehensive study found very strong evidence
that systems of human resource practices have a positive
impact on firm performance. In general, the system of
employee skills was significantly related to increased gross rate
of returns on assets. Thus, firms that use systems of high-
performance skill enhancement practices generally have higher
rates of return. Furthermore, firms that use systems of high-
performance motivation practices generally have higher
productivity (sales per employee) and values of Tobin’s q, a
crude measure of accumulated intellectual capital.^98 Obviously,
a myriad of organizational, technical, economic, environmental,
and temporal variables have influences on different measures
of firm performance. Nonetheless, when the influence of these
variables is controlled, analyses of the impact of systems of
human resource practices clearly indicate increased likelihood
of increased performance for firms that implement them under
the appropriate circumstances.