The ‘Suite’ Smell of Success: Complementary Personnel Practices and Firm Performance

Produced for the  Reserve Bank of New Zealand as Reserve Bank of New Zealand Discussion Paper DP2009/13

How do personnel practices affect firm performance?

To examine this issue we use a panel of over 1,500 New Zealand firms, drawn from a diverse range of industries. The panel comprises respondents to official surveys of management practices in 2001 and 2005. These surveys ask a wide range of comparable qualitative questions covering organisational practices including human resource management (HRM). To this panel, we link longitudinal firm performance data from Statistics New Zealand's Longitudinal Business Database.

We find that suites of complementary HRM-related practices impact positively on firm productivity and wages; effects on employee turnover depend on the practices considered.