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Results from a survey of 87 Omani organisations indicates that high involvement HR management practices boost organisational performance

Will high-involvement human resource management (HRM) practices lead to higher organisational performance? This was the question that we wanted to answer with this study. It is widely accepted that organisational performance depends at least partly on the behaviour of employees and that these behaviours can constitute a source of sustainable competitive advantage. HRM practices affect organisational performance through their effect on employee behaviour. These practices determine the type of employees who are selected, their skills and motivation and the opportunities and incentives that these employees have to design new and better ways of doing their jobs. This set of HRM practices (highly selective staffing, extensive training, performance management practices and employee empowerment) that promotes skill development, motivation and discretionary effort is often labelled as high-involvement HRM practices.


Even though the relationship between high-involvement HRM practices and firm performance is well established, such studies are rare in the Arabian Gulf countries. Unlike most countries where such studies have been done, Arabian Gulf countries are characterised by the presence of a large proportion of expatriate workers.

Expatriates are usually hired on short-term renewable contracts. At least in theory, these contracts are renewed on the basis of performance. These employees may therefore be motivated to perform well even in the absence of sophisticated HRM practices like performance-linked pay. Expatriates are also selected for their skills.

Replacing expatriates is relatively inexpensive for organisations because recruitment costs are often borne by the employees, especially for unskilled and semi-skilled categories. Under these conditions organisations may have no incentive to upgrade skills through training and development activities. It is therefore possible that organisations in the Arabian Gulf countries consider investments in sophisticated high-involvement HRM practices as uneconomical. On the other hand, it is possible that the challenges of competing in a global market are stimulating an interest in HRM practices among Arab business leaders.

Impact on performance

Dimensions of national culture can also moderate the relationship between high involvement HRM practices and organisational performance. Like other Arab Muslim countries, Oman is likely to be high on power distance and uncertainty avoidance.

Power distance is the extent to which the less powerful in a society expect and accept unequal distribution of power. Uncertainty avoidance is the extent to which a society tolerates uncertainty and ambiguity and the extent to which individuals are comfortable with unstructured situations. If we assume that Oman is also high on power distance and uncertainty avoidance like the other Arab Muslim countries, then empowerment practices are less likely to have an effect on performance.

This is because, in high power distance cultures, employees may not assertively express their ideas to their supervisors. Similarly, because of high uncertainty avoidance, employees may not be comfortable with the lack of structure created by broad job descriptions. In such situations, some high involvement HRM practices like opportunities to participate in decision making and flexible job descriptions may not impact organisational performance.


Like other Arab countries, Oman may also score low on individualism. Oman can therefore be described as a collectivistic country with the people having close long-term commitment to the family, extended family or the tribe. In such societies, loyalty is paramount and overrides most other societal rules. Some Arab countries like Egypt and Iran are also high on in-group collectivism.


In such countries, family or tribal relationships may override considerations of merit in HRM decisions. In sum, it is important to test the relationship of HRM practices to organisational performance in Oman because of the unique nature of the labour market and the pattern of cultural dimensions.


Key strategies
Basically there are two different frameworks of HRM practices that organisations can adopt. These are the internal development framework and the acquisition framework. These frameworks correspond respectively to high-involvement HRM and traditional HRM or the commitment-and-control HR systems.

Internal development framework focuses on developing current employees to meet the skill requirements of the organisation. The acquisition framework focuses on buying the required skills from the labour market. While internal development is associated with greater stability of an organisation’s human resources and higher organisational commitment, there are also significant costs. Acquisition framework has the advantage of lower costs and greater flexibility. It is quite possible that if the cultural and labour market conditions are supportive of an acquisition strategy, traditional human resource management practices may be as good as high involvement human resource management practices with respect to their effects on organisational performance.


However, it is likely that utilisation of human resources in organisations is often below optimum levels, because employees rarely perform at their maximum potential. Therefore, organisational attempts to obtain discretionary efforts from employees are likely to provide benefits in excess of costs. So, even in the context of the Arabian Gulf labour market, a positive relationship can be expected between high-involvement HRM and organisational performance subject to constraints of the cultural labour market contexts.

Benefits of high-involvement approach
Three different perspectives are evident in high-involvement approaches to HRM. One is the universalistic perspective which suggests that some HRM practices are always better than others and that these practices will have a positive relationship to organisational performance.

The second approach is the contingency perspective which suggests that effective HRM practices have to be consistent with other aspects of the organisation. Finally, the third is the configuration perspective which suggests that effective HRM practices consist of a pattern of practices that are internally consistent and externally congruent with other organisational characteristics. In reality, these perspectives are not necessarily in conflict, rather, they simply operate at different levels. As a preliminary study of HRM practices and organisational performance in an Arab Gulf country this study took the universalistic or best practices perspective. However, while best practices add value, firms can extract additional benefits by ensuring that these practices are internally consistent and externally congruent.The results indicated that high-involvement HRM practices were positively related to both subjective organisational performance and a quantitative measure of organisational performance, ratio of book value to market value.

This means that organisations that implement highly selective staffing, extensive training, performance management practices and employee empowerment are likely to have higher performance. The ratio of book value to market value is an indicator of how effective the management is in utilising the resources of the firm, including its human resources. It is therefore not surprising that high-involvement HRM practices are positively related to this outcome. High-involvement HRM practices contribute to the effective utilisation of the human capital of a firm.

Results of the study indicate that even in labour markets supportive of traditional HRM practices, high-involvement HRM practices make a difference in organisational performance. These results are encouraging for human resource managers who argue for an internal development approach to managing human resources in the Arabian Gulf. It provides them with evidence to counter the argument in the light of the fact that a significant proportion of the private sector workforce in the Arabian Gulf is expatriates and employers may be reluctant to invest in internal skill development.

From a practical perspective, the results of our study suggest that organisations in the Arabian Gulf can enhance their performance if the managements initiate high-invo lvement HRM practices