The Strategic Value of Selection Practices: Antecedents and Consequences of Firm-level Selection Practice Usage

The expectation that selection practices contribute to organizational performance has been long assumed; however, research on personnel selection has neglected to consider why firms differ in their use of selection practices and whether selection practices relate to organizational performance under different competitive environments. Based on strategic human resource management research, we introduce contingency theory to examine whether external (industry characteristics) and internal (prior firm performance and collective turnover) environments affect the use of selection practices, how the adoption of selection practices relates to subsequent firm performance, and whether the external (industry) and internal (selection stages and collective turnover) environments moderate the selection–performance relationship. Using a sample of 413 firms, we found that firms use more selection practices when there is less collective turnover and when firms are within low-growth and stable industries. The results also show that firms employing more selection practices generated greater productivity but not profit. Positive effects occur when firms have less collective turnover and are within dynamic industries but, surprisingly, the effects of selection on performance can actually be negative in stable industries. These findings provide new insights about the strategic value of personnel selection; one that is sensitive to and contingent upon competitive environments.