Human Resource Management, Complementarity and Hospital Performance: Evidence From the English NHS

ABSTRACT

This study investigates the role of complementary clusters of human resource management (HRM) practices in explaining the persistent productivity variations across English NHS hospitals. While prior research has highlighted the importance of individual HRM practices, their impact is often indeterminate. A critical gap remains in the systematic analysis of complementarity, non‐linearity, and the interdependencies between these practices. To address this gap, we draw on complementarity theory to propose and test a novel framework. This framework posits that hospital performance is shaped by three distinct effects: indeterminacy, where isolated practices have an inconsistent impact; non‐linearity, where practices are effective only above a certain intensity threshold; and complementarity, where synergies between practices amplify their collective impact. We use this framework to explain the significant productivity dispersion observed across hospitals. Using panel data from English NHS hospitals, we employ machine learning techniques to identify distinct HRM clusters and test their significance using correlated random effects models. Our findings confirm that individual HRM practices often have no significant effect until their intensity surpasses a critical threshold. Crucially, we identify several distinct complementary clusters involving incentives, workplace flexibility, training, team quality, and job design. High‐performing hospitals are distinguished by their adoption of these synergistic bundles—such as combining job design, team quality, and incentives—whereas persistent low performance is linked to the adoption of incomplete clusters. For instance, workplace flexibility or training only boosts productivity when supported by an effective incentive system, underscoring the powerful non‐linear and interdependent effects at play. This study advances the HRM and healthcare management literature by systematically demonstrating the non‐linear and complementary nature of HRM practices and by introducing data‐driven methods for their analysis. The key implication for policymakers and hospital administrators is the need to prioritise bundles of complementary practices and holistic organisational change over isolated, piecemeal initiatives.