2 Forthcoming in Life Insurance : An Industry in Flux

The potential for human resource management to enhance the competitiveness of U.S. life insurance companies has received little attention in the past. Our evidence suggests that U.S. life insurance firms give little attention to consciously aligning their human resource systems with the requirements of their competitive strategies. We also find evidence suggesting that care in preserving relationships with employees during downsizing may create conditions that will lead to greater post-downsizing organizational productivity. Additional analyses imply that human resource practices which reward specific kinds of employee behaviors in "back office" functions have strong positive relationships with the efficiency of life insurance firms. The importance of these human resource practices underscores the need for performance appraisal and compensation practices to be informed by firms' strategic goals in order to align back office employees' behaviors with the needs of strategy.