Personnel department expenditures and labor productivity

Empirical evidence relating personnel department budgets to desired organizational outcomes remains sketchy and inconclusive. An analysis was conducted of the relationship between previous year's personnel department expenditures and total annual output, for 11 large railroads over a six-year period. There was a significant partial correlation between these two variables. However, after controlling for total assets and workforce size, a regression analysis indicated that individual railroads were unable to adjust their personnel department expenditures over time to maximize productivity. Implications for research and practice are discussed.