High

Performance
Working
UKWON Journal

February 2007
 CONTENTS
Page

Introduction 1

Section 1: The High Performance Concept

High Performance Work Organisation – A Driver for the High Skills Vision?
By Caroline Lloyd and Jonathan Payne, SKOPE, University of Warwick 8

High Performance Workplaces – a Trade Union Perspective

By Tim Page, TUC 13

The case for High Performance Working

By John Stevens 15

Section 2: The Employment Relationship

What does employee relations mean for employers?
By Mike Emmott, policy advisor – employee relations, CIPD 18

Right challenge - wrong conclusion

Keith Sisson, Emeritus Professor of Industrial Relations,
Warwick Business School Industrial Relations Research Unit 21

‘Knowledge’ and ‘Enterprise’ and their Implications for Employment Relations

By Professor John Storey, ….. Open University Business School 24

Section 3: Good Work

An Agenda for Work
By David Coats, Associate Director - Policy, The Work Foundation 31

Good Work – An agenda for trade unions and employers

By John Earls, Research Section Head, Amicus 34

Employee Involvement and High Performance

By William Coupar, Director, IPA 42

Section 4: High Performance For Everyone

The High Performance Work System and the Small Firm
By Paul Edwards…. 51

Ireland’s National Workplace Strategy: High performance through partnership:

An examination of the evidence
By Dr. Larry O’Connell, National Centre for Partnership and Performance;
Dr. Wenchuan Liu and Dr. Patrick Flood, University of Limerick. 55
INTRODUCTION
High performance working – creating
a good work economy
An initial glance at the literature suggests a
growing interest in the concept of the high
performance workplace among employers and
policy makers. According to the DTI, the reason for
this is that 'modern, high performance workplaces
build on the simple insight that individuals are
more likely to give of their best if they feel valued
and are given the opportunity to contribute their
ideas; and that people who are well-prepared for
change can help to introduce it and thereby help
secure employment within the business' (DTI 2002:
13).
Labour productivity and employment
The Government’s approach to improving the UK’s
long-term productivity performance has two broad
strands:
• maintaining macroeconomic stability - to enable
firms and individuals to plan for the future, and
• implementing microeconomic reforms - to
remove the barriers which prevent markets from
functioning efficiently.
It believes that labour productivity and
employment growth are the primary routes to
increasing prosperity in a global economy:
a. Labour productivity
The UK’s productivity has historically lagged behind
that of other major industrial countries. This is the
case either when measured on an output per
worker basis (output divided by the number of
people in employment) or as output per hour
(average amount produced in each hour worked).
The simplest measure of labour productivity is
output per worker, as it is easily comparable with
information collected internationally. Increased
1
output per worker might suggest a number of
things, including that workers are: producing more
in the hours they work, working longer hours,
taking fewer holidays or moving from part-time to
full-time employment. The disadvantage of this
measure is that longer hours may mask technical or
managerial improvements that might contribute to
improved productivity.
In contrast, the measurement of output per hours
worked takes account of how effectively those
hours are being used and is less affected by the
total number of hours worked. Its disadvantage is
that this is not measured in the same way in most
countries. The OECD does however produce some
adjusted comparison data.
Recently, the UK appears to have made progress in
narrowing the productivity gap with its
international comparators on both counts. The
Treasury reports that since 1995 the gap as
measured by output per worker has shrunk
between the UK and France (23% to 11%) and
Germany (11% to 0%) and maintained pace with
the US (30% to 27%). The gap in output per hour
worked has also seen similar improvements.
b. Employment
A recent HM Treasury report suggests that
improved output has resulted in higher and more
stable employment growth in the UK, with over
2.3 million new jobs created since 1997. It also cites
the findings of an ILO report, which states that
unemployment has fallen by 517,000 since spring
1997, giving the UK one of the lowest annual
unemployment rates in the G7 . The Government
claims that the UK economy is enjoying its longest
period of sustained growth for 50 years.
The UK also has the highest employment rate in
the G7 with 74.5% of the working age population
in employment (its current target is 80%
participation), compared to 71.2% in the US, 65%
in France and 68.4% in Germany.
Drivers of performance
Labour is just one of many potential factors of
production responsible for this change. Others
include capital, skills, technology, competition,
economies of scale and infrastructure, which
together arguably give a better indication of
overall efficiency and prosperity.
Some measures of productivity take these into
account, however, in terms of creating
international comparators, output per worker or
output per hours worked are considered the most
realistic benchmarks.
In 2004 the Government consulted on moving
towards a focused set of national productivity
indicators in order to benchmark the UK’s
productivity performance against its main
competitors. The consultation document proposed
a set of intermediate indicators of productivity,
based around five drivers.
The drivers focus on:
• strengthening competition to encourage firms
to innovate, reduce costs and provide better
quality goods and services to the consumer;
• supporting science and innovation to harness
the potential of new ideas, technologies and
working practices;
• encouraging investment to improve the UK’s
stock of physical capital in every sector and
industry; and working directly to improve public
service productivity.
• improving the skills base to maximise the
contribution of human capital to growth;
• promoting enterprise to maximise the
contribution of businesses to employment,
productivity, prosperity and social cohesion
The Government clearly sees these as important
steps in maintaining and increasing the UK’s
economic competitiveness. Issues about innovation
and raising skills levels will be resonant for people
2
interested in how raising productivity relates to the
way work is organised.
In particular the issue of skills is likely to become
more important. In December 2006, Lord Sandy
Leitch published the findings of a review of the
UK’s long-term skills needs. The report, ‘Prosperity
for all in the global economy - world class skills’,
sets out an urgent case for raising the level of skills
attainment in the UK by 2020.
"In the 21st Century, our natural resource is our
people - and their potential is both untapped and
vast. Skills are the key to unlocking that potential.
The prize for our country will be enormous -
higher productivity, the creation of wealth and
social justice,” he said.
However, treating social issues as essentially
economic problems is controversial. Not everyone
agrees that this is correct. Some would argue that
the economy should come first, i.e. the argument
that ‘a rising tide raises all boats’. This assessment
assumes that everyone will benefit from economic
growth, and that for instance, rising demand for
new skills will lead to an increasingly skilled
workforce. If this were the case it would be
inappropriate for the Government to intervene in
a way that undermined business competitiveness,
through for example, a training levy, in order to
encourage skills development.
Others would argue that Government intervention
on social grounds, e.g. to limit working time, is
entirely appropriate on the basis of equity and
fairness. Discounting any additional costs resulting
from regulating the excesses of ‘irresponsible
capitalism’, this line of thinking suggests that
businesses would be more than adequately
compensated by benefits in other areas, e.g.
employing a more diverse workforce, lower
workplace stress and fewer absences.
In practice however the Government has had to
tread a fine line between supporting the interests
of business groups (which have generally preferred
the “rising tide favours all boats” argument) and
the trade unions who have traditionally given
greater weight to the equity argument.
The Government’s agenda -
prosperity for all
As the title of the Leitch review also suggests, the
Government’s approach to managing the economic
and social issues of the workplace is premised on a
commitment to prosperity for all. This analysis is
further premised on maintaining economic stability
and high levels of participation in the labour
market; a strategy summed up by one
commentator as “a fair and flexible labour market
underpinned by minimum standards.”
The substance of this has not however been
universally welcomed by business or trade unions.
In particular, the government’s lack of enthusiasm
for European social policy including the Working
Time Directive and rights for agency workers has
put it at odds with the trade unions, while a string
of new rights to protect individuals from
discrimination and low wages, improve work-life
balance and modernise the pension system have
raised objections from business groups.
A recent strategy document sets out the
Government’s commitment to what is increasingly
seen as a twin-pronged approach to implement a
base of minimum employment rights and to
promote leading-edge practice or high
performance working on a voluntary basis:
• Helping individuals by improving access to
skills, eroding barriers of discrimination and
offering more opportunities to work flexibly
• Improving the position of vulnerable workers
and promoting social inclusion
• Facilitating economic and social change by
providing stronger support for business,
employees and trade unions to adapt, respond
and benefit from change
3
• Encouraging “good workplaces” though an
evidence base of good practice in successful
businesses.
If we take the government’s approach, then the
challenge for the proponents of high performance
working is two-fold:
1. To demonstrate that new ways of working
provide good work for the individual as well as
benefit to the employer.
2. To build an environment at national and
European level that promotes a consensus-based
approach to higher performance across the
economy and not just among a few leading
employers.
Good work
The concept of "good work" is more than simply a
matter of ‘middleclass angst’. It is an important
component in answering, at a workplace level,
how high performance working contributes to
both economic and social goals.
Since 1997 the Labour Government has introduced
a range of collective and individual employment
rights, which have apparently neither harmed
employment; Britain has amongst the lowest levels
of unemployment in the European Union; nor
undermined economic performance; indeed it is
corporate tax, not employment rights that excite
concern from Britain’s biggest companies.
What an increasing number of commentators are
arguing is that the government’s approach lacks a
sense of coherence about the role of the state in
using good work as a lever in promoting strong
economic performance. For instance, while the
government has pressed ahead with parental
rights and flexible working, it has refused to put a
maximum ceiling on Britain’s long hours culture
and disappointed many by not agreeing to
compulsory pay audit as part of the Commission
for Women at Work.
Some would also argue that the Government has and the ‘low road’. These are distinguished by
got the regulations it deserved in implementing objectives based on sustained innovation and those
the Information and Consultation Regulations and based on short-term cost driven factors.
that by introducing ‘light touch’ laws it has missed
Naturally, the reality for businesses is often
an important opportunity. Equally it is possible to
somewhere between the two. This is reflected in
argue that the use of regulation to create good
the language of organisational change and the
work by enhancing individual employment rights,
tools they use. What differentiates the high road
antagonises business groups, thereby constraining
from the low road is the use of human skill and
the Government’s freedom to act in the future.
knowledge as well as team working, the
This can be seen in the debate that has sprung up
decentralisation of decision-making, and the use of
about the negative impact of regulatory ‘red tape’
technology.
on business performance.
This creates a challenge for policy-makers in the UK
The reality is that most businesses and most trade
and elsewhere in Europe as they invite
unions recognise the importance of good work to
organisations to adopt high performance working.
creating high performance, but are unclear how to
Given the choice between long-term investment
express this in the workplace. Health and safety,
and uncertain outcomes associated with the high
basic skills and equality are areas where employers,
road and the quick wins (associated with
the trade unions and government have been able
shareholder value) of the low road, it is not
to find common purpose and been successful in
surprising that the former has not been successful.
creating mutual benefit. Whether these remain
It also puts pressure on policy-makers to incentivise
isolated examples or are evidence of a more
organisations in both the public and private sectors
consistent approach to creating good work
and tip the balance towards high performance.
remains to be seen, but these cases suggest that
the Government should not ignore the importance The success of the economy the UK and other

of collective action in the workplace to achieve its Member States in achieving higher levels of

social and economic aims. performance becomes ever more important as

Europe faces a series of challenges to its
competitiveness and social cohesion.
High performance for all
What should work be like in the 21st century? The
The European perspective
concept of high performance has tried to give
meaning and shape to this. Indeed, part of the In March 2000, EU heads of state and government

challenge in selling the concept of the high agreed on an ambitious goal: making the EU "the

performance workplace has been the variety of most competitive and dynamic knowledge-based

approaches developed by researchers and through economy in the world, capable of sustainable

the experience of practitioners. economic growth with more and better jobs and
greater social cohesion". The strategy linked
The high performance workplace has no
economic, social and environmental goals but the
prescriptive form, but it is widely accepted that
slow response of the member states led to a review
high performance work practices have been
of the programme in 2004. As a result, it was
adopted because they contribute to organisational
relaunched in 2005 with renewed impetus on two
objectives. In this practitioners have a choice
goals: delivering a stronger, lasting growth and
between what has been labelled the ‘high road’
more and better jobs.

4
Member States were required to submit national
reform programmes to encourage national
ownership for the reform agenda. The UK
Government, in its response argued that: “Radical
labour market reform aimed at getting more
people into employment is key to delivering
economic growth and ensuring the long-term fiscal
sustainability of the economy. A flexible and job-
creating labour market is especially important for
competing in today’s increasingly global markets.
By boosting productivity and employment, it hopes
to ensure that the gains of economic growth go to
the many rather than the few. The government’s
active labour market policies, tax and benefit
system and skills policies together offer everyone in
society a ladder to self reliance and self
determination.”
European industry and employers federation
UNICE has pointed out that the EU's failure to
make progress, thus far is mainly due to
insufficient economic reform in other Member
States. In response to the collected reform
programmes, a progress report in 2006 stated that
“National programmes must now be implemented
based on a real national consensus. This will not
come overnight. We must explain better to our
citizens why our growth and jobs strategy is the
route to prosperity and social justice in the long
term.” The Commission may believe economic,
social and environmental reforms go hand in hand,
but the ETUC remains worried that ‘growth and
jobs’ does not come at the expense of social or
environmental aims.
Can Europe achieve the high road of sustainable
competitiveness and high levels of employment? In
the UK the government believes that its
combination of measures designed to push people
back into work (through Job Centre Plus), make
work a more attractive option (by introducing the
National Minimum Wage and reforming the tax
and benefit system) and introduce policies that
reduce barriers to work (including education, skills,
5
childcare and training policies) are essential to
create an adaptive, flexible and productive
workforce.
In November 2006 the European Commission
launched a green paper on the review of labour
law and its adaptation to the modern world of
work. It calls for a debate about how labour law at
EU and national level can help the job market
become more flexible, yet ensure that the effects
of new technology and competitive forces of
global capital do not undermine employment
standards or security. Flexicurity, as it is known, will
be an important concept in 2007 and beyond.
Whether the supply of skills and the other push
effect of increasing minimum standards will be
sufficient to encourage more high performance
working remains to be seen. Some trade unions
fear that the issue of flexicurity is ultimately a
debate about the case for lowering expensive
employment standards in an increasingly cost
driven world.
Given this and the current high levels of labour
market participation there is also a question about
what more can be done to promote leading edge
practice for those already in employment in order
to improve economic output. However, the role of
good work in creating high performance is
contested. The challenge is to build an
environment at national and European level that
promotes good work and higher performance
across the economy and not just among a few
leading employers.
Outline
Much has been written about high performance
working. Yet, the economic and social
underpinnings behind it are often taken for
granted or ignored. It is, however, a campaign that
has implications for how everybody will feel about
their work, how it is organised and how
prosperous our economy will be in the future. This
collection of studies from academics and
practitioners is intended to provoke discussion.
Group 1 – High performance working
The first set of papers address long standing issues
with the concept of high performance working.
Caroline Lloyd and Jonathan Payne look at the
essential definition of high performance and ask
whether it is really appropriate to rely on business
to drive skill development and the creation of a
high skill economy.
John Stevens in his response, rallies to the aid of
business. He argues that what is needed is greater
support and encouragement for the work of
practitioners by using good practice at the leading
edge to drive better practice among the rest.
Finally, Tim Page from the TUC argues that while it
is important to support the practitioner, trade
unions are an indigenous source of competitive
advantage that should not be overlooked in
creating the high skill, high performance economy
of the future.
Group 2 – The future of employee
relations
The second set looks inside the workplace to
uncover how high performance working will
impact on the employment relationship as the
priorities of employers, workers and the
organisation of work change. Mike Emmott asks: is
employee relations a concept that has gone out of
fashion? If so, how will employee relations
practitioners deliver improved business
performance? Engaging individuals is now the
critical task, he argues.
In response, Keith Sisson believes that it is precisely
because management ignores the collective part of
6
the employment relationship, that employee
relations is such an important component in the
mix of factors that contribute to high performance.
If we believe that employee involvement and
participation are essential in engaging employees
then we need to learn the benefits that collective
institutions offer in making it sustainable.
Group 3 – Good work
The third batch of papers returns to the theme of
good work and asks what are the key features of
good work in the high performance workplace.
David Coats outlines his views on the components
of good work and how the government should
support those themes. John Earls gives a trade
union perspective on how a campaigning union
seeks to help its members get on as well as get
even with employers.
Finally, Willy Coupar looks at the particular role of
employee information and consultation as a key
component of good work, in supporting the
development of high performance. Using case
studies drawn from a range of organisations, he
considers the common themes that emerge
between the case studies and asks how
organisations can engage the collective and
individual spirit of the workforce.
Group 4 – High performance for all
The fourth and final collection of papers returns to
the theme of whether high performance is for
everyone. Paul Edwards explores the evolution of
HR and ER policy in the small firm environment.
Then Larry O’Connel looks at how the Irish
Government has sought to develop a vision for
good work and high performance.
 SECTION ONE

THE HIGH PERFORMANCE CONCEPT

7
High Performance Work Organisation
– A Driver for the High Skills Vision?
Caroline Lloyd and Jonathan Payne
SKOPE, University of Warwick
Summary
Both academics and policy makers have shown
increasing interest in the topic of the high
performance work organisation (HPWO) as a
means to achieve a ‘high skills’ or ‘learning’
economy. The idea that the HPWO can deliver
mutual gains for both management and
employees is a central part of the attraction, yet its
ability to do so remains deeply contested. This
paper provides a brief guide through some of the
main areas of controversy.
Introduction
Over the last few years there has been much
discussion in academic and policy circles concerning
the phenomenon of what has been variously
labelled ‘high performance’, ‘high commitment’ or
‘high involvement’ work systems. Interest has been
sparked by the claim that the ‘high performance
work organisation’ (HPWO) embodies a ‘new’
approach to the management of employees that is
capable of yielding ‘mutual gains’ for both
employers and employees. The promise has been
one of improved levels of organisational
performance and more participative work systems
which ‘empower’ workers to exercise higher levels
of autonomy, discretion, skill and commitment in
their jobs.
Although such claims remain highly controversial,
they have nevertheless had a strong appeal to
policy-makers in the UK, where the HPWO is seen
as having an important role in improving
competitiveness and tackling the nation’s long-
standing productivity problem (see DTI 2003). The
HPWO has also proved attractive to a number of
commentators on UK skills policy. They argue that
8
the diffusion of the high performance model is
fundamental to the achievement of a high skills
economy where employees have greater
opportunities to exercise higher levels of skill and
learning at work (see, for example, Ashton and
Sung 2002, and for a more critical discussion, Lloyd
and Payne 2004).
The idea that a radical shift is taking place in the
organisation of work and the management of
labour is, of course, nothing new. Numerous
antecedents can be found from the human
relations school of the 1930s through to
motivation theory and socio-technical job redesign,
and more latterly, post-Fordism and sophisticated
HRM (see Harley 2005). Is HPWO simply the latest
in a long line of management ‘fads’ or is it
something genuinely new and different? This issue
paper seeks to provide practitioners and policy
makers with a brief guide through the main
thickets of controversy and poses the question of
whether HPWO can or should be seen as a suitable
vehicle for the high skills project?
What is the HPWO?
The HPWO became a popular concept in the USA
at the end of 1980s, drawing on ideas from
Japanese management practices and North
European concepts of job redesign. A number of
companies were implementing wholesale reforms
of work organisation and the management of
employees, in an attempt to make substantial
improvements to company performance. A body
of academic research has since developed,
particularly in the US and the UK, that has
attempted to explore the links between the
adoption of the HPWO and performance
outcomes. The literature suggests that what is
new and important is not the practices themselves,
but the combining together, or ‘bundling’ into a
mutually reinforcing or coherent system (Pil and
MacDuffie 1996). While, on their own, such
practices may have only a limited impact on
company performance, bundling them together is Workplace Employee Relations Survey (WERS) (see
claimed to offer powerful multiplier effects. Cully et al 1998) are a case in point. Using a list of
16 practices, Bach and Sisson (2000:23) found that
The HPWO, however, has been haunted from birth
only 20% of companies had half or more of these
by the problem of definition that extends even to
practices, and only 2% had more than 10. By
the very name itself (high performance,
contrast, Wood and colleagues used the same data
involvement, commitment etc.). The constituent
but different thresholds to suggest that 26% of UK
practices that make up the HPWO are meant to be
workplaces had a ‘high involvement orientation’
forms of human resource management policies and
(Wood et al 2002:28).
methods of work organisation that engender
employee involvement, the maximisation of effort,
initiative and commitment. The difficulty is in The Impact on performance
defining a common set of practices that everybody
Much of the literature on HPWO has been
can agree should be included. Less controversial
concerned to explore the links with improved
are practices such as team-working, staff briefings,
organisation performance. There is now a body of
problem-solving groups and appraisal schemes.
research to support the view that a positive
Beyond these, other practices may either be in or
correlation exists between HPWOs and enhanced
out according to individual preferences - job
business performance using measures such as
security guarantees, performance-related pay,
productivity and profitability and drawing upon
profit sharing, job rotation, multi-skilling, to name
studies across a range of countries and industries
but a few. It has even gone so far that the UK’s
(see Ashton and Sung 2002, Harley 2005). Even if
Sector Skills Development Agency has adopted a
you discount the issue that different criteria are
completely different definition that is about good
used for identifying the HPWO, there remains a
leadership and management, innovation, the
problem that virtually all these studies show only
application of information technology, and
an association and do not prove that HPWOs cause
customer handling and communication skills.
improved business performance. Indeed, some
Therefore, not only is there no agreement on what
commentators have suggested that organisations
the HPWO might be, each individual practice is also
with superior performance may simply have more
open to considerably variation in interpretation.
money available to spend on costly HR practices.
While some consider self-managed teams with
common objectives, and responsibility for It is also important to point out that the empirical

allocating and organising work as central to the evidence focuses mainly on manufacturing firms.

HPWO, for others any sort of team will do - even if This had led some to question whether HPWOs

it is just a re-labelling of a former work group. may be more appropriate to certain sectors and
types of firm, in particular those that are more
These definitional problems make it extremely
technologically advanced and which compete in
difficult to gauge the extent of HPWOs within a
higher quality product markets, and whether the
national economy. Depending upon which
model can be equally applied to the mass service
practices are included and how high one chooses
sector. Finally, the mechanism through which
to set the qualifying bar, one can arrive at very
performance gains may be achieved also remains
different estimates of the proportion of the UK
unclear. For example, is this achieved through
workplaces that might be said to be HPWOs. The
cutting costs (including labour reductions),
wide range of interpretations that have been
employees working harder or by making more
placed on data generated by the DTI/ESRC
efficient use of existing resources?

9
The impact on skills
Is the HPWO a mechanism to drive up skills? A key
part of the model is that these forms of work
organisation are a means to tap the skills and
abilities of all employees, while team-working and
forms of employee involvement actually require
workers to gain additional skills to be effective.
Evidence, however, on the actual impact on skills is
surprisingly thin on the ground. Research tends to
focus on whether HPWOs provide more training to
their employees, rather than on whether there are
increased demands for skill. In addition, the
measures used are extremely crude, often simply a
case of ‘is training available - yes or no’, rather
than how much and what type.
The strongest evidence of a link with skills comes in
the form of the 1997 and 2001 UK Skills Surveys,
which involve detailed face-to-face interviews with
individuals about perceptions of their skills (see
Felstead and Ashton 2000; Felstead and Gallie
2002). Both surveys found that skills increased with
the use of practices associated with high
performance working. However, the 1997 survey
was limited in the types of practices included, for
example team-working was not used. The 2001
survey indicated that high involvement working
had a positive and very significant relation to
problem-solving, peer communication and
checking skills, but not to the other skill sets
examined. Once again, the research deals with
association, leaving the suggestion of any causal
link unproven. In short, while much has been made
of the links between HPWO and skills, the current
evidence base may, as yet, be too limited and
fragile to support such claims.
Mutual gains
A key feature of the HPWO is claimed to be the
ability to deliver mutual gains in the form of
improved organisational performance, alongside
enhanced wages, greater employment security and
10
increased job autonomy for employees. However,
there is considerable debate about whether this is
the case, with some commentators arguing that
these organisations can be characterised by work
intensification and increased insecurity and stress.
As most studies have focused mainly on the link
with business performance rather than employee
outcomes, the evidence base for testing such claims
remains limited and provides, at best, a mixed
picture.
Drawing upon US studies, Osterman (2000: 195),
for example, concludes that ‘HPWOs do not seem
to have lived up to their promise of “mutual
gains”, given that they are positively associated
with lay offs and have no relationship to pay
gains.’ By contrast, Appelbaum et al (2000) find
that workers earn more than in traditional
workplaces and that where employees have
greater levels of autonomy, they tend to
experience higher levels of trust, commitment,
intrinsic rewards and job satisfaction.
Some commentators, however, have argued that
HPWOs might have ambiguous or even
contradictory outcomes. In this case, employees
might experience increased task discretion
together with additional stress as management
deploys more distant forms of control such as
performance management, targets and other
employee relation techniques (see Edwards 2002).
Finally, it is worth remembering that in contrast to
the ‘work humanisation’ movement of the 1970s,
current changes in production systems are being
driven by managerial objectives rather than any
explicit concerns with employee needs. Whether
employees benefit indirectly remains, therefore, an
empirical question to which there is still no
definitive answer.
Final thoughts
Much ink has been spilled in examining claims that
the HPWO constitutes a radical and new approach
to the management of labour which embodies
‘win/win’ gains for both employers and employees.
Current research suggests that such claims need to
be treated with caution. While many of the
individual practices, associated with the HPWO can
be found in significant number of firms, take-up of
the full-blown model remains patchy and limited.
The latest WERS findings suggest that not only
does the HPWO remain a minority sport in the UK
but that there has been no significant increase in
penetration since 1998 (Kersley et al 2005). A key
question has become why - if HPWO is so good –
are more organisations not adopting it either in
the US or Europe?
However, focusing on the ‘diffusion problem’ may
be avoiding some central concerns about the
concept. While there is some evidence that HPWO
can, in some circumstances, be linked with
performance, the mechanism through which such
gains are achieved remains unclear. Evidence that
employees benefit in terms of skills or wider
outcomes remains very weak and inconclusive.
Perhaps, the greatest problem has to do with
definitional ambiguity. Until there is a much clearer
understanding of what the HPWO is, it will be
difficult to fully assess any of these claims, let alone
decide whether it should be seen as key element in
the development of a high skills economy.
References
Appelbaum, E., Bailey, T., Berg, P. and Kalleberg, A.
(2000) Manufacturing Advantage, Ithaca: Cornell
University Press.
Ashton, D. and Sung, J. (2002) High Performance
Work Practices: a Comparative Analysis on Issues
and Systems, Geneva: ILO.
Bach, S. and Sisson, K. (2000) ‘Personnel
management in perspective’, in S. Bach and K.
Sisson (eds) Personnel Management, Blackwell.
11
Cully, M., O’Reilly, A., Millward, N., Forth, J.,
Woodland, S., Dix, G. and Bryson, A. (1998) The
1998 Workplace Employee Relations Survey: First
Findings, DTI.
DTI (2003) Innovation Report: Competing in the
global economy the innovation challenge, London:
DTI.
Edwards, P., Geary, J. and Sisson, K. (2002) ‘New
forms of work organization in the workplace:
transformative, exploitative, or limited and
controlled,’ in G. Murray et al. (eds) Work and
Employment Relations in the High-Performance
Workplace, Continuum.
Felstead, A. and Ashton, D. (2000) ‘Tracing the link:
organisational structures and skill demands’,
Human Resource Management Journal, 10,3, 5-21.
Felstead, A. and Gallie, D. (2002) ‘For better or
worse? Non-standard jobs and high involvement
work systems’ SKOPE Research Paper 29, Coventry:
SKOPE, University of Warwick.
Harley, B. (2005) ‘Hope or hype? High performance
work systems’ in B. Harley et al (eds) Participation
and Democracy at Work. Palgrave MacMillan.
Kersely, B., Alpin, C., Forth, J., Bryson, A., Bewley,
H., Dix, G. and Oxenbridge, S. (2005) Inside the
workplace: first findings from the 2004 Workplace
Employment Relations Survey, London: DTI.
Lloyd, C. and Payne, J. (2004) ‘Just another
bandwagon? A critical look at the role of the high
performance workplace as a vehicle for the UK
high skills project’, SKOPE Working Paper No. 49
Pil, F. and MacDuffie, J. (1996) ‘The adoption of
high-involvement work practices’, Industrial
Relations, 35, 423-55.
Osterman, P. (2000) ‘Work reorganization in an era
of restructuring: trends in diffusion and effects on
employee welfare’, Industrial and Labour Relations
Review, 53,2, 179-196.
Wood, S., de Menezes, L. and Lasaosa, A. (2002)
‘Quality Time’, CentrePiece, Spring, 26-29, LSE.

For further information on SKOPE’s work see the

web site:

www.economics.ox.ac.uk/skope

12
High Performance Workplaces
– a Trade Union Perspective
By Tim Page, TUC
Today’s world presents enormous challenges. If the
UK – all of us, our government, our businesses, our
workers and our trade unions – are to meet those
challenges, it is essential to take stock of where we
are and consider where we are going. On some
issues, we may find ourselves swept along by
global change; on others, our responses will be
crucial and decisive.
The twenty-first century, it is argued, will be
dominated by the rise of China and India. Our
Prime Minister, often reminds us of the scale of the
challenge: Gordon Brown told last year’s TUC that
China and India are producing more engineers,
scientists and university graduates – four million
per year – than Europe and America combined.
The only response, as he correctly pointed out, is
the upgrading of our skills, our science and our
technology.
We know the old problem of the UK’s productivity
deficit. This must be overcome if we are to hold
out any hope of remaining a serious player on the
global economic stage. Poor skills, low investment,
bad management and underachievement simply
cannot go on if we wish to meet the challenges of
the modern world.
Central to meeting the challenge is the
development of more high performance
workplaces. Last year, as part of the UK’s
presidency of the EU, the DTI held a seminar on
high performance workplaces,. At that seminar, Dr
Ed Lawler of the University of Southern California
argued that organising and managing people in
such a way as to increase skills at both the higher
and lower levels of the organisation will bring
about competitive advantage for firms. Strong
leadership is also critical.
Dr Enrique Fernandez Macias told the seminar
that Scandinavian countries and the Netherlands
13
come closest to the ‘classic’ high performance
workplace system, as they feature a high degree of
employee participation in decision-making
processes and a high level of productivity. From a
trade union point of view, involving, consulting,
delegating and trusting employees is perhaps the
most important feature of any high performance
system.
To argue that employees perform better when
they are involved, consulted, empowered and
trusted seems like a statement of the obvious. So
obvious that one wonders why not all companies
do this? Yet high performance workplaces are
currently the exception, rather than the norm.
According to the Work Foundation’s second Work
and Enterprise Business Survey, there are five broad
areas that illustrate what high performing
businesses are doing and what low performing
businesses are not:
• Encouraging people by rewarding employees
for their service to customers, innovative ideas
and good citizenship, as well as overall
performance;
• Facilitating and encouraging people to be
innovative and to network outside the confines
of the businesses;
• Engaging stakeholders and understanding their
‘reason to be’;
• Using investment analysts as a strategic
soundboard, to understand the value of a
business beyond short-run returns;
• Focusing on the external face of the business by
looking towards customers and markets.
The Work Foundation says that low performing
businesses have employees with little concept of,
or interest in, where their work fits into the
business as a whole and whose relationships with
stakeholders are transactional and with whom they
are not fully engaged.
The government, according to the Work
Foundation, should encourage businesses to invest
in people, through skills and staff development,
and in innovation, R&D and knowledge.
Management should build high trust relationships
with other businesses and between employers and
employees.
What is the role of trade unions? Through our
relationships with management, we are in a key
position to support the development of those
practices which short-termists might dismiss as
luxuries but which longer-term players know
provide value and, ultimately, profitability. In so
many of these areas, our motivations are different
but our interests are the same.
This could be why the OECD has argued that,
working together, government, employers and
unions can bring about a “virtuous circle of new
work practices, new technology and productivity”.
However, such outcomes depend on “workers
being given sufficient voice in the firm. Institutions
which allow a closer contact between management
and staff can indeed build a high-skill, high-trust
enterprise climate.”
We know that companies which recognise unions
enjoy better health and safety records than
companies which don’t. The interests of trade
unions in good health and safety stems from a
practical defence of the wellbeing of our members:
to put it crudely, we have historically protected the
sight, the hearing, the limbs and the lungs of
welders, engineers, miners, construction workers
and millions of people in other professions. The
fact that good health and safety is productive and
good for the company balance sheet is a happy
coincidence. The conclusion is that trade unions are
good for workers and good for their companies.
Similarly, companies which recognise trade unions
have better training and development than those
which don’t. In this global age, workers no longer
expect a job for life. Trade unions support training
14
and development in part because, if the worst
happens, a more skilled employee will find
themselves more employable than a less skilled
one, and partly because more skills means more
variety, more challenge, less monotony and a
better work experience. Once again, the fact that
high quality training and development is good for
the company means the interests of the company
and those of the union are at one.
Trade unions will fully endorse the
recommendations of the Work Foundation, calling
on the government to encourage more investment
in skills, R&D and innovation. However, whilst the
best companies will respond to that call, not all of
them will. How do we reach the rest?
There is no simply answer to this question. As part
of its recently published industrial strategy, the
TUC called for an inquiry into the failure of
voluntarism in the UK. We understand that many
employers are sceptical of levies and regulation,
but assuming that companies will always act from
enlightened self-interest is proving to be a costly
mistake.
At the workplace level, trade unions negotiate
over issues like training. Our growing network of
union learning reps are also helping to promote
better skills development. And, historically, we
have sometimes simply cajoled management into
doing the right thing, rather than the quick or easy
thing.
Trade unions often have established, deep rooted
and, occasionally, tough relationships with
employers. We don’t always agree, but with can
disagree with mutual respect. Many business
studies, including from the respected Harvard
Business School, have noted that a counterweight
to the power of management can lead to better
long-term decision-making. In high performance
workplaces, trade unions can find themselves
playing that essential role.
The Case for High Performance
Working
By John Stevens
Over the last decade I have spent quite a lot of
time talking and thinking about what I call high
performance work practices. What do I mean by
this? As we said in a case study-based report
written last year for the Wales Management
Council (WMC), they ’promote high levels of
adaptability, flexibility and involvement and enable
people at all levels within organisations to
participate in the development of processes,
products and services. They involve the promotion
of teamworking, and learning processes and
practices that move away from the tradition of
‘command and control’, to achieve constant
incremental improvement and step changes in
performance’.
Wow! How could anyone, employer or employee,
not want HPW or doubt that it can lead to better
performance? Caroline and Jonathan make that
case: first, that it is difficult to prove the hypothesis
and second that the use of these techniques can
turn out to be a thinly veiled way of increasing the
pressures on people to perform. Clearly, they are
right in both regards. But does that destroy the
case for HPW?
Let’s start with the definition of HPW. If there are
problems with the ‘definition’, they are in the
minds of those who wish to study HPW practices,
not of those who want to use them. Practitioners
take that which is appropriate for their
organisation from the battery of practices and
introduce, tune and adapt the ideas to their needs.
This is why we should emphasise the importance of
HPW as a mind-set and an approach to people
management and development, not an end state.
HPW is not like double entry accounting; there are
as many permutations of HPW practices as there
are organisations that use them.
Of course this makes it difficult to study the
phenomenon. It makes it difficult to measure the
15
application of HPW practices and these days
measurement is increasingly important. It is said
that we cannot manage that which cannot be
measured and we crave an evidence base for
policy. So, academics who want to influence policy
are driven to measure (sometimes over-
simplistically) rather than describe (emphasising
complexity and nuance).
A survey of 294 companies by the CIPD in 2004
used three bundles of thirty five separate practices
and reached some interesting conclusions, showing
that different sectors make use of different
bundles of practices to achieve different results.
But the survey used practitioner assessments of
outcomes rather than before and after, control-
compared measurement. There must be doubts
whether it is possible to carry out research on
anything as complex as the use of HPW and
establish the benefits of its general application to a
standard that would satisfy a critical statistician.
And even were it possible to establish causality in a
particular case or cases, it still be impossible to
argue that HPW is the answer to every
organisation’s prayers.
Think about one of the HPW practices identified in
the CIPD survey, ‘work-(re)design for improved
performance’, almost a touchstone of the HPW
approach and one adopted by (only?) 49 per cent
of their respondents. What would a tick in this
box mean? What proportion of jobs had changed,
and if so by how much? Did the jobs change in
ways that cut costs or added value? And then the
sorts of questions our researchers would
reasonably want to ask: were the new jobs more
interesting, did they increase pressures on
employees, did they design the changes
themselves?
In one of the WMC case studies, a cross-
departmental ‘environmental task force’ had found
out how to change from an organic to a water-
based adhesive to attach covers to office seats. As
a result, the company saved tens of thousands of
pounds, the job changed and was safer and one of
the operatives changed jobs and moved into the
quality team. But this was achieved because the
management had built a sufficient level of trust
and the expectation that people would be involved
in housekeeping and process improvement
activities.
They did not buy an ‘off-the-peg’ suit of HPW
practices; they grew them over a number of years.
In some organisations it would simply not be
possible to establish an environmental task force.
In some this could be done but the results would
be uncertain because the attitudes and skills of
those involved would be inappropriate. All this
shows that to get results, “it ain’t what you do but
the way that you do it.” People will put up with a
lot of pressure in their jobs but a supportive no-
blame culture is an important factor in the
equation and one that is probably impossible to
measure.
Why did the office seating company run down this
road? Because a decade ago its new managing
director turned his face against squeezing the
assets, including the people, and led the
organisation through a management buy-out and
a gradual and inexorable process of improvement
involving people in the business. They have a
works council that acts as a sounding board for
employee opinion. The process of change has
been professionally led but it started with a
particular mind-set. Command and control, using
people as if they were machines to be turned on to
do something simple and repetitive and turned off
or out when the job was over just seemed
unacceptable, and commercially wrong, given the
need for flexibility and co-operation among the
workforce.
Of course, there is a huge difference between the
application of HPW practices in organisations that
have and those that have not operated on Taylorist
lines. Where people have been working
mechanistically, employers have to have a vision of
16
the way that greater freedom and the opportunity
could provide a potential benefit to the
organisation and, ultimately its customers. Where
people already have wide discretion in their jobs
more emphasis will be given to creating a
supporting environment and ensuring that people
are using their initiative in ways that are
appropriate to the needs and objectives of the
organisation.
None of our case study organisations thought they
were using HPW practices. They did what seemed
natural for them. By any definition, HPW practices
are not widely used by the sorts of UK
organisations covered in major statistical studies,
and this has to be because HPW would be
inappropriate for the product and service sectors in
which they are engaged, or managers have no
concept of the benefit they could get from HPW
and/or do not know how to manage their
introduction. But the variety of sectors covered by
the WMC study suggest that HPW could be widely
adopted and so I am driven back to the conclusion
that the major problem relates to managerial
short-sightedness and over-reliance on command
and control culture.
So, while I appreciate and applaud the scepticism
of my academic colleagues about definitional and
measurement issues, I hope that their natural
caution will not detract from increasing interest in
the use of HPW practices. The label is used in a
variety of ways, to emphasise different aspects of
practices that increase the engagement and
contribution of people at work. It focuses
attention on work organisation issues but needs
requires interpretation in terms of the
requirements of particular sectors and
organisations. I hope that sectoral organisations,
principally the sector skills councils, will ask the
right questions about the contribution HPW could
make and the HPW mind-set of managers in their
industries. That would be a considerable step
forward.
 SECTION TWO

THE EMPLOYMENT RELATIONSHIP

17
What does employee relations mean their attention to the issues that will make a real
for employers? difference to business performance?

By Mike Emmott, Policy Adviser – Employee There is a consensus among HR practitioners that
Relations, CIPD the climate of employee relations has changed
significantly since the ‘90s. Many companies
How important is “employee relations” for HR
want to build a new relationship with trade
professionals today? Is this the language of the
unions. Public sector respondents were more
workplace and in any case what does it mean?
likely to describe a recognisably “industrial
Do the answers matter? The Chartered Institute
relations” environment. However employers
of Personnel and Development (CIPD) undertook
who continued to deal with unions were largely
a series of interviews with senior HR professionals
adopting a flexible partnership-style model, with
to try and find out.
less emphasis on “managing the frontier”.
Although most of those interviewed were in the
Practitioners emphasised that employee relations
private sector and the findings are not necessarily
is now about managing in a more complex, fast-
representative of UK workplaces as a whole,
moving environment in which the political, trade
some common themes emerged. Few managers
union and legislative climate are all shifting.
used the term “employee relations” in talking to
There is more emphasis on direct communication,
colleagues. Most organisations had no
on managing organisational change and on
employee relations department or function as
involving and motivating staff. Many managers -
such, but identified a number of specialist posts
particularly in manufacturing and the public
such as “partnership co-ordinator” or “employee
sector - still have to negotiate with unions on a
communications”. Several people pointed out
range of issues. On the other hand employee
that line managers have an important role to
relations is generally seen to be more about
play in managing the employment relationship.
building relationships and developing trust.
Many respondents had difficulty explaining how Issues about work-life balance and the war for
employee relations differed in practice from the talent reflect a changing workforce with
whole field of HR: the two can hardly be changing expectations.
synonymous but the boundaries are clearly fluid.
Finally we asked if an employee relations
Some believed that employee relations had a
practitioner should be an “employee champion”.
more strategic role than other parts of the HR
Nearly all respondents said not. People felt that
function and that “achieving strategy through
employee relations was there for the company:
people” distinguished employee relations from
they clearly hesitated to accept a role that might
routine personnel work.
appear to isolate them from other managers or
One important conclusion is that in possibly place their loyalties in doubt. Some
organisational terms employee relations seems to pointed out that it was not in the employer’s
suffer from a degree of “invisibility” since its interest to upset employees and that the HR
boundaries are unclear and no single function or department might have to play the part of
individual has specific responsibility for managing “honest broker” or be the “conscience” of the
it. organisation. But survey evidence confirms

This is not just an issue about language. A key employees feel relatively low levels of trust in

issue for managers is focus: are they directing their employer.

18
A key conclusion is that, if employers want
increased employee engagement, they need to
reflect this more wholeheartedly in their
management structures, in their employment
practices and in the language they use. The
term “employee relations” still suggests for many
the old collectivist framework in which the
outcomes of collective bargaining linked directly
to profitability and communications with
employees were routed largely through trade
unions. But this is not the world in which most
managers now live.
The change can be measured on a number of
different dimensions. Critical among these is
union membership which has fallen from a peak
of some twelve million plus to some seven million
today. The coverage of collective agreements has
also contracted significantly and the range of
issues over which bargaining takes place has
shrunk. WERS 98 found that union officials spent
most of their time not on negotiating pay and
conditions but in supporting grievances on behalf
of individual members. Even where collective
bargaining continued, its impact on the exercise
of management discretion was greatly
diminished.
We are forced to conclude that the outlook is for
a continued decline in union authority. The
statutory union recognition provisions introduced
in 1999 have had only a small impact and it
remains to be seen if the information and
consultation regulations will be any more helpful
in this respect. With declining union resources
and membership, trade unions will be largely
dependant on others – particularly governments
– if they are to find a new role. It seems likely
that trade unions now have more influence on
the political process than they do in the
workplace and the third Labour term may see
some limited experiment in the area of social
partnership in response to the “Warwick”
agenda.
19
A crucial issue for employers is how to manage
the employment relationship so as to deliver
improved business performance. The framework
of industrial relations – essentially collective
bargaining - used to provide the context in which
answers were sought. Across much of the
economy, this framework is largely irrelevant or
no longer exists. As the trade union presence in
the workplace has declined, managers have made
more use of direct communication methods with
individual employees. The regulations on
employee information and consultation, with
their focus on collective representation, have
made little impression on most workplaces so far.
Is this a problem? The evidence for the impact of
collective relationships on business performance
is somewhat mixed. Research suggests that a
combination of direct and representative
arrangements, rather than relying on either
alone, is likely to have positive benefits. It seems
plausible to suppose that, where unions work
together with management to implement a
“partnership” agenda, this will reinforce the
credibility of management communications.
However the recent findings from WERS5 show
that levels of mutual trust between management
and non-union representatives are significantly
higher than those between management and
trade unions.
On the other hand, the evidence for a link
between involvement, engagement and
performance at the level of the individual
employee is fairly unequivocal. There is strong
evidence that a positive psychological contract
based on fairness and trust between
management and employees will be reflected in
employee commitment and superior
performance. The management agenda has
shifted irreversibly from the collective
relationship to the individual. From an
organisational perspective, trade unions add
value insofar as they support the legitimacy of
management communications and enhance
employees’ trust and sense of fairness.
But where does managing the psychological
contract figure in the list of management
priorities? Although the concept is increasingly
used by HR professionals, the responses to a CIPD
survey in 2003 suggest that managing the
relationship between organisations and
employees does not come near the top of their
priorities. Only one in two respondents placed
employee involvement among the top 5 priorities
for the HR function in their organisation. We can
only assume it ranks lower still in the priorities of
other managers. So it is hardly surprising that
the proportion of employees saying that they
20
feel involved in workplace decision-making has
fallen in recent years.
One message seems clear: it’s high time to
abandon the language of “employee relations”
and adopt a new mindset. Our present models
of the employment relationship are not
calculated to help managers focus on what they
need to do to increase performance – the
language has echoes of a historical era that
offers few insights into contemporary issues or
practice. The challenge is to secure and maintain
employee commitment and engagement in order
to promote positive relationships in the
workplace and underpin high performance.
Right challenge - wrong conclusion major countries in the productivity stakes.
Moreover, this is true of services as well as
By Keith Sisson, Emeritus Professor of Industrial
manufacturing. Strip out the long hours that
Relations, Warwick Business School Industrial
many UK employees work and the position
Relations Research Unit
worsens.
I find myself both agreeing and disagreeing with
Staying with international comparisons, work
Mike Emmott’s ‘What does employee relations
organisations are increasingly seen as a major
mean for employers?’ I agree that the main
source as well as beneficiary of ‘social capital’,
challenge facing ER/HR managers is employee
with important implications not just for
engagement. Indeed, I think it’s a bigger
workplace performance, but also anti-social
challenge than Mike suggests. I disagree with his
behaviour, crime and participation in civil society.
conclusion, namely that it is time to abandon the
Here the key international measure, i.e. the level
“language of employee relations” because it has
of trust, puts the UK in the bottom half of both
“echoes of a historical era that offers few insights
OECD and EU member countries’ league tables.
into contemporary issues or practice”. I believe
that it’s because UK management isn’t heeding Looking to the future, intensifying international
“employee relations’” insights that they have a competition in a global market place means that
major problem of engagement. UK manufacturers won’t be able to compete on
the basis of low costs. Put bluntly, they won’t
survive if they don’t go up market, requiring
The challenge of engagement
much greater levels of engagement. International
Let me begin with engagement and my reasons competition may be less in services, although very
for saying that the challenge is bigger that Mike important in sectors such as finance and ICT. But
suggests. The UK is supposed to be heading for the increasing demands of domestic customers for
‘knowledge economy’ status. ‘Hour glass’ higher standards of service as well as greater
economy would be more appropriate – lots of availability and extended opening hours make up
low paid, low skilled and low productivity jobs, for this. Especially critical is the relational nature
but few high paid, high skilled and high of service work. Employee engagement can make
productivity ones. Surveys suggest that many or break a business.
people are dissatisfied at work, with even greater
It isn’t only changes in demand that are
numbers reporting that they have little discretion
important, however. The implications of changes
and scope to exercise their initiative. ‘Organised’
in supply are no less radical. Demographic
conflict may have declined, but ‘unorganised’
changes mean that UK management faces the
conflict is widespread. Employment Tribunal
prospect of a very different labour market from
applications have topped the 100,000 mark in
the one they have been used to. Instead of labour
recent years. Absence and staff turnover are also
surplus, there will be labour scarcity. The
telling indicators. It’s difficult to believe, but fifty
increasing diversity of the workforce – more
times as many days have been lost through
women, ethnic minority, disabled and older
absence in some recent years as through strikes.
workers – also has profound implications.
Absenteeism, the CBI reckons, costs around £12.2
billion each year.

International comparisons rub salt into the

wounds. The UK continues to lag behind other

21
Closing the ‘knowing-doing’ gap
Turning to Mike’s conclusion, I couldn’t disagree
more. I appreciate that the “language of
employee relations” makes many managers feel
uncomfortable. The decline of trade unions and
collective bargaining doesn’t change the
fundamentals it highlights, though. It is realistic
to see the employment relationship as having not
just an economic dimension, but also significant
psychological, social, legal and political ones –
most of us want a job that gives opportunities for
personal development as well as being relevant,
interesting and fairly paid. It is also realistic to see
the employment relationship as one joining two
parties of very unequal power that involves
incompleteness and uncertainty – this explains
why the potential for conflict is ever present and
why ‘negotiation’, i.e. consensus building and
‘give-and-take’, is critical to putting management
decisions and employment rights into effect,
whether or not trade unions are present.
Furthermore, what matters day-to-day are the
specific substantive and procedural institutions or
‘rules’ dealing with the ‘what’ and the ‘how’ of
the employment relationship (i.e. its
‘governance’). Critical here are the legitimacy
employees accord these ‘rules’ and the extent to
which they are involved in their making and
administration – from involvement comes
ownership and from ownership commitment.
My conclusion is that engagement is not going to
come about without a significant shift in practice
that recognises the force of these arguments. If
the UK economy is suffering from anything, it is a
‘failure’ of workplace institutions. Any number of
attempts at ‘re-branding’ or ‘attitudinal
structuring’ isn’t going to remedy this. Major
reforms are needed starting with work
organisation, embracing management structures
and employee ‘voice’ mechanisms, and going on
to companies’ social responsibilities.
22
I’ve spelt out the issues I see facing ER/HR
managers in a longer response to Mike. This can
be found on www.employmentrelations.info.
Here I would like to summarise some cross-cutting
recommendations:
A joined up approach. Organisations that
maintain a ‘Berlin wall’ between the ‘individual’
and the ‘collective’ dimensions of ER/HR shouldn't
be surprised if they have problems with
engagement. Fragmentation is a contributory
factor. Arguably, the most effective way to ensure
a joined-up approach, as well as raise the profile
of the function, is to bring things together under
a CSR portfolio.
Stop trying to do the wrong things better. If
the objective is to maximise engagement, ER/HR
managers must stop trying to adjust people to
alienating ‘command and control’ structures.
Much of today’s performance management
practice – especially individual performance pay –
should go into Paul Merton’s ‘Room 101’ bin.
Re-think management. Meaningful team-work
and individual self-management should be the
priority. Many UK organisations are awash with
‘managers’. These are an expensive overhead and
their numbers, perks and pretensions a major
barrier to engagement. Numbers need to be
reduced and spans of control widened-with those
left becoming ‘enablers’ and ‘developers’ rather
than ‘commanders’ and controllers’.
Encourage new institutions. Three suggestions
here: in-house mediation schemes to help tackle
the issue of ‘unorganised’ conflict and halt the
slide into legal dependency; effective
representative machinery to help maximise the
opportunity for employee ‘voice – individual
arrangements can’t do the job on their own; and
support for sector forums to deal with some of
the issues facing both employers and employees
in low pay, low pay sectors that large
organizations are helping to create through issue. First, the league tables are consistent with
outsourcing. the key features of employment relations in
different countries. It’s the Scandinavian
Support 'soft' regulation. UK management’s
countries, characterised by extensive social
blanket opposition to ‘regulation’ does it no
dialogue arrangements and widespread
favours engagement-wise. The government also
autonomous work systems (Sweden has only a
has no alternative but to transpose initiatives via
quarter of the numbers involved in management
legislation, fuelling the slide into legal
as the UK), that have the highest trust scores.
dependency. ‘Good’ employers have much to gain
Second, the Scandinavian economies’ relative
from backing compulsory audits, codes, social
economic success is evidence for the long-
reporting and the like, which could encourage
standing “employee relations” message -
the development of local dialogue and
employee involvement and participation are the
underpinning structures.
key to engagement and higher levels of
performance. Regrettably, as Mike reports, UK
Improving the quality of working life management doesn’t seem to be listening – which
and performance are not mutually is why, rather than being switched off, the
exclusive message needs to be trumpeted.
If this sounds utopian, I’d like to make two final
points that take us back to the ‘social capital’

23
‘Knowledge’ and ‘enterprise’ and
their imlications for employment
relations
By John Storey, Open University Business School
The twin notions of the ‘knowledge economy’
and the ‘enterprise culture’ have been two of
the most powerful and pervasive ideas in recent
years. Numerous assessments of the state of the
macro-economy, of international competition, of
corporate strategy and of the changing nature
of work take the primacy of ‘knowledge’ as their
platform. At the same time, the critical
importance of ‘enterprise’ as a paramount value
has been a ubiquitous message in the public and
private sectors alike.
The idea that ‘knowledge’ has become the most
critical of resources is now one of the most well-
established notions in management, business
and economic discourse. For example, it has
been described as: ‘the most important factor in
economic life… intellectual capital – not natural
resources, machinery or even financial capital –
has become the one indispensable asset of
corporations’ (Stewart 1997). Likewise, Spender
contends that it is an organisation’s knowledge
and its ability to generate knowledge, which lies
at the core of …a sound theory of the firm’
(Spender 1996, p. 46). And Drucker argued that
the new emphasis on knowledge management
constituted the third great change in the
emergence of the corporation and that new
business organisations would be: ‘knowledge-
based, an organization composed largely of
specialists who direct and discipline their own
performance through organized feedback from
colleagues and peers.
The implications of these assessments have
mainly been confined to examinations of the
importance of ‘knowledge management’ – that
is the organisation-based attempts to more
systematically capture, store and share
24
knowledge. Rather less well explored have been
the implications for patterns of employment
relations. In this article an attempt is made to
examine the interconnections. In so doing, it will
consider the way in which analysts of human
resource management have attended to the
issues of knowledge and enterprise and it will
then move on to consider where this leaves
industrial relations. On this final point, the
debate between Mike Emmott and Keith Sisson
is brought into perspective.
The human resource management
implications?
In so far as the people management aspects
have been considered at all, the main thrust has
been upon the human resource management
policies required for ‘managing knowledge
workers’. The agenda, from this perspective, is
one of training, empowering, rewarding
knowledge and encouraging people to learn.
The objective is to ensure these individuals and
teams are ‘willing’ to contribute their
knowledge and to use shared knowledge.
In what follows the latest thinking about how
the management of human resources needs to
adapt to the knowledge agenda is described and
then I ask where this leaves industrial relations
as conventionally understood.
The nature of knowledge work and
the implications for HR
Human resource management can itself be seen
as part of the product of the same evolutionary
economic forces as has produced the knowledge
economy thesis. In essence, the suggestion is
that there has been a transition from industrial
age procedures and labour-management
inspired negotiated ‘temporary truces’ /
agreements, to a post-industrial age doctrine
which recognises ‘labour’ as a potential source
of competitive advantage - a resource rather
than a nuisance and a cost. Thus, while HRM can
be used to facilitate ‘knowledge management’ it
is simultaneously itself part of the phenomenon
which it is being used to manage. The shift can
be seen as a part of the wider transformation to
a new competitive landscape. In other words,
HRM can be viewed as a management theory
and technology which emerged as part of the
knowledge economy.
Figure 1 summarises the set of knowledge work
‘requirements’ and how these are secured
through a constellation of HR sub-systems.
Knowledge work requirements
Knowledge work requirements are based around
a set of behaviours, capabilities, and
motivations. People working in knowledge-
intensive environments can be expected to, and
will be required to, behave differently from
workers in traditional industrial settings. To a
considerable extent, management are in fact
wanting and requiring the converse of the
behaviours instilled and learned under Taylorism.
Instead of compliance with instructions from the
top and repeat routine behaviours there is a
need for creative solutions and self-starting
behaviour. Workers in these environments will
usually be expected to come with a body of
25
knowledge (both formal knowledge and
experiential). Thus educational qualifications
supplemented by relevant experience is normally
expected. Equally important, if not even more
so, is evidence of ability to learn anew. Such
workers need to behave in ways which allow the
organisation to access new knowledge, to adapt
knowledge, to share it and to apply it in new
innovative ways.
Beyond the individual level, there is a need for
capabilities located within organisational
routines. This implies the importance of
complementary capabilities distributed across
the organisation. A further capability is to
actively shape customer expectations and not
merely respond to expressed demand. Capability
per se is not of course sufficient. People in
knowledge work environments need to be
motivated enough to seek out opportunities and
to design their work and their priorities for
themselves – often with little or no instruction.
Values, culture, climate and
management style
Values, culture and organisational climate are
organisation-level attributes. Few if any
organisations will be able to sustain competitive
edge simply by relying on a few talented and
motivated individuals. Even these individuals will
find it hard to make any significant impact
without the complementary support of myriad
other organisational members. Thus, if the
organisation is to work together as a team then
it must have and must live a set of relevant
values.
A distinction has to be made between actual,
lived, values and culture and aspired-to values
and culture. Most of the writing about cultures
for knowledge intensive organisations addresses
mainly the latter – i.e. they are prescriptive but
they often imply they are also descriptive.
Numerous reports however about prevailing
cultures in knowledge-intensive firms reveal
patterns of behaviour and cultures which are
dramatically contrary to many of the
prescriptions. For example, reports from a series
of industrial tribunal cases involving
international banks, computer companies and
other work situations where high performance
and high commission are expected, point to
aggressive rather than ‘sharing’ work cultures.
For instance, a senior female manager at the UK
headquarters of Oracle Computer company won
an award of £98,000 in December 2004 for
discrimination and unfair dismissal arising from
what the tribunal chairman found to be a ‘male
oriented culture’. Her boss was reported to have
said that his team members had to be ‘young,
virile, with plenty of debts, holidays and flash
cars’ (Evening Standard 2312/04; Daily Telegraph
23/12/04 p4.). In May 2004 another high-ranking
female investment banker received £1million for
wrongful dismissal from Deutsche Bank in the
City of London after exposing a culture of
sexism. In America in May 2004 Merrill Lynch
settled a ten-year battle with 1,000 of its female
brokers who claimed it had a culture of bias
against women.
Management style might be considered as a sub-
set of culture. The way managers behave and
the way they enact and mediate policies can be
absolutely critical for the way the behaviours at
the core of the figure are impacted. Studies have
shown that even where companies have clear,
uniform policies, the way these are enacted
differs considerably and, moreover, that these
differences matter.
Staffing
Staffing refers to the set of HR policies and
practices related to HR planning, recruitment
and selection. Its relevance to the knowledge
work debate stems from the increased
26
importance of human capital in knowledge work
organisations. While work in general in a
knowledge economy may require increased
applications of knowledge, nonetheless, it is
argued that knowledge intensity is unequally
distributed. Thus as argued by (Lepak and Snell
2003)p. 127. : ‘whereas all people may
contribute knowledge, innovation, creativity and
the like, not all employees are equal in their
knowledge-based contributions.’ Firms, they
contend, will be constituted by portfolios of
individuals with varying degrees of different
types of knowledge: generic, industry,
occupational and firm-specific. Part of the HR
staffing task is to exploit these different profiles
to the optimum degree. Issues of mobility arise
(especially when knowledge of the non-specific
types are involved). Human capital theory
suggests that firms are more likely to invest in it
when it is not transferable (Becker 1964). So
employees are generally expected to invest in
their own transferable/generic skills.
Workers do not remain passive in this context.
One tendency is for employees to position
themselves more as free-agents prepared to sell
their capabilities to the highest bidder. While the
rumoured use of agents for these employees
may be exaggerated, there are some signs that
knowledge workers are able to ‘reverse-use’
‘headhunters’ as part of their external market
positioning. That is, talented individuals are
sometimes able to place themselves on the
books of certain headhunters in case push and
pull factors align at some point in the future.
Work and organisation design
Because of the dynamic nature of environments
and the need to adapt, it is usually advised that
structures and forms should not be fixed for too
long. This principle was uppermost in the minds
of chief executives in the most innovative firms
studied by Storey and Salaman (2005). For
example the chairman of Nortel (Europe) told Developing for knowledge work
the authors that it was his policy to ensure that
‘Development’ includes all aspects of training,
the fixed structures were periodically disturbed –
learning, personal development and career
indeed he referred to his policy to ensure that
management. Most specialists in the field
they were ‘smashed’ from time to time in order
recommend that special attention is paid to tacit
to avoid complacency and too many settled
as well as explicit knowledge. Examples of
routines. The designer of organisational forms
critical tacit knowledge include knowledge
needs to be sensitive to the dynamic elements of
about customers, competitors, and the
knowledge work.
organisation’s own business processes. To this we
When organisational goal and means were can add knowledge about new opportunities,
meant to be in the hands of management then a threats and supply chain potential. To leverage
hierarchical organisational structure was this knowledge there will frequently be a need
assumed; the job design that accompanied this to transfer it to relevant business units and staff.
was of limited discretion. The initial idea was to This transfer can itself be a form of development
divide labour and routine it and strip it of for those involved.
discretion as far as was possible. But with the
Beyond learning through constructive
socio-technical work design perspective,
controversy, a related development opportunity
proponents advocated wider job roles and team
especially relevant to knowledge workers is the
based working with some team autonomy.
learning through action process Cook and Brown
Conventional structures under the industrial age (1999). The role for HR from this perspective
were ‘functional structures’ – ie groupings based would be to lend support for the creative ways
on specialised knowledge (finance and in which knowledge-intensive work groups
accounting, purchasing, engineering and so on). operate.
They were designed to maximise efficiency; they
are perhaps lee adept at permitting flexible
Performance management
responses, being receptive to change or allowing
cross-functional learning. Performance management includes the whole
cycle of agreeing goals and objectives (which
Divisional structures which organised on the
may vary in their degree of specificity), providing
basis of product or service types can overcome
feedback, offering coaching and advice and
this cross-functional limitation but possibly at
motivating staff to perform at a high level. The
the price of building-in inflexibility around new
reward system must be sufficient also to assist in
product categories because of their designated
the staffing goal discussed above – i.e. to attract
mandates and domains of operation and their
and retain the necessary human capital.
set targets.
Traditional organisations often rewarded
To overcome these top-down structural
employees for the size of their job (measured for
limitations, flattened structures have been
example by the number of direct reports a
recommended for knowledge-age circumstances.
manager had and/or their length of service). But
These devolve knowledge, power and decision
knowledge based organisations require new
making to individuals and groups closer to the
priorities and new incentives. Knowledge
customer interface. Network forms represent
workers may have few direct reports and the
one type of devolved, flatter structure.
length of their job tenure may be considered of

27
less importance than was the case in traditional
work settings when remuneration was indeed
often largely based on tenure. Conversely, they
are likely to give high value to personal growth
and to personal development opportunities at
work because they realise that this is how they
will grow their human capital.
With regard to the reward aspect of
performance management, there are three main
ways of rewarding employees: paying the rate
for the job; paying for competences and paying
for performance. The first of these three is
conventionally the most used. It allows market-
based comparisons using job evaluation
techniques. But, from a knowledge work
perspective, it has certain drawbacks. Job based
payment systems do not, for example, reward
learning from lateral moves. Unless the
organisation needs more managers, this
vertically-biased system may not lead to optimal
behaviour especially if the organisation structure
is flat.
Implications for industrial relations?
The knowledge management movement and the
associated human resource management support
mechanisms seem to leave little scope for the
playing-out of industrial relations as
conventionally understood. Likewise, the allied
notion of ‘enterprise’ reinforces the seeming
alternative paradigm. The discourse of enterprise
massively promoted under Thatcher has
continued to hold extensive sway. Rose (1990)
conceives of it as reaching deep into people’s
self-identity, shaping self-worth and amounting
to a ‘governing of the soul’. New Labour’s
modernising agenda has meant a reinforcement
of the entrepreneurship mission. Crucially, from
an employment relations point of view,
employees are re-imagined as entrepreneurs.
28
Against this backcloth the Emmott-Sisson debate
(this volume) can be seen as a product of its
time. As Sisson rightly notes, there is currently
very much a ‘battle of ideas’. But there also
some reportable developments. Mike Emmott
describes some of these: for example, he
(presumably accurately as an insider) records the
‘shift’ in the CIPD employee relations portfolio
‘from industrial relations to employment
legislation and employee engagement in
response to the strong demand for work in these
areas’. In other words, the CIPD employee
relations team are responding to what they
experience as current demand from their
customers (CIPD membership). It may well be
that the practitioner membership are some
respects missing other important points but the
description of the changing nature of ‘employee
relations’ activity as understood and practised by
personnel managers within many private sector
firms seems broadly reflective of current reality.
The points Emmott makes about the adequacy
or otherwise of much academic analysis is an
entirely different matter.
Sisson says that IR is defined by its arena and its
subject matter. The arena he says is the work
organisation; the subject matter is about
employment relations and the governance of
such relations – with special focus on rules and
rule-making. Neither protagonist delves deeply
into changes in both these regards but it is a
matter of record that the setting within which
much work now takes place is considerably
different than in the past when traditional
industrial relations was at its zenith. There are
smaller workplaces and the boundaries of work
organisations have become much more blurred
as people who contribute to the value chain
through their work are often not employees of a
major firm. They may be contractors or
consultants or agency staff or, in the media
industries, even ‘interns’ who are willing for a
time to work for nothing. On the second of the senior manager at Oracle. With regard to
dimension – governance – we noted earlier how the rather less privileged segments of the new
this has often become much more subtle as the workforce, Richard Sennett (1998) examined the
‘enterprise culture’ impels self-discipline and self- ‘corrosion of character’ as he tracked the
governance. personal consequence of work under the new
capitalism. Others would point to damage to the
As a result of such material changes
social (and political) fabric. There have clearly
underpinned as they are with a significant
been winners and losers. Proponents of the
ideological shift, workers own interpretations of
‘enterprise culture’ emphasise the positives and
their situation and what might be done to effect
tend to argue that the downsides are either
improvements have seemingly altered. Fewer
transitionary adjustments or a price worth
evidently perceive membership of a trade union
paying. Proponents of the ‘knowledge economy’
to be an effective solution. They may have
suggest a necessity deriving from globalisation.
recourse to law or they may be absent from
Both positions carry far-reaching implications for
work. Even well-paid members of the knowledge
industrial relations however widely or narrowly
workforce are likely to encounter problems at
this term may be defined.
work – as noted for example above in the case

29
SECTION THREE

GOOD WORK

30
Good work – An agenda for trade
unions and employers
By John Earls, Research Section Head, Amicus
With employment in the UK at record levels there
is a need to consider the quality of work
experienced by those in employment. Work is likely
to become more central to people’s lives and ‘good
work’ needs to be at the centre of employers and
trade union agendas.
Fulfilling employment has a major part to play in
the quality of our lives, the effectiveness of our
organisations and the economic performance of
the nation. Work is likely to become more central
to people’s lives and ‘good work’ needs to be at
the centre of the policy and negotiating agendas.
This is why Amicus has published An Agenda for
Better Jobs as part of our ‘good work’ campaign.
Job satisfaction
Most people are satisfied with their job. However,
significant numbers of workers are dissatisfied with
their jobs and the problem seems to be getting
worse. Evidence from the Working in Britain survey
suggests that levels of job satisfaction are declining
with workers less satisfied with work today than
ten years ago, especially in the areas of pay,
prospects and training.
Findings from the most recent Workplace
Employment Relations Survey (WERS 2004) show
employee job satisfaction can vary and
‘involvement in decision-making’ and ‘pay’ have
remained unchanged since 1998. WERS also
examines workers’ job-related well-being. Against
a general picture of satisfaction, one in five
employees (19%) reports that their job makes
them feel tense most or all of the time and 47%
say that their job makes them feel worried some,
most or all of the time.
Some clear themes stand out when considering
workers’ dissatisfaction with their jobs. Firstly, they
31
feel that they have less control over their working
experience. Secondly, workers say that they have to
work harder. Finally, large numbers of workers also
feel insecure in their jobs.
Organisational change
There is no question that organisations are subject
to increasing pressure through intensified
competition, developing technology and
globalisation. How they respond to these has very
real implications not just for the health and
welfare of their employees, but for their own
organisational success.
Trying to squeeze more from workers through
greater command and control is not the way
forward. It makes for sick and less productive
workers and sick and less productive organisations.
Rather, good work organisation and job design,
along with effective channels for employee
engagement, such as trade unions, are the best
way to cope with the pressures facing the
workplace.
What is ‘good work’?
It doesn’t take long to identify things that might
make for a ‘bad job’: unsafe working conditions,
poverty pay, bullying and harassment, no training,
lack of respect, monotonous and repetitive work to
name but a few.
There is also little disagreement about the effects
of ‘bad jobs’ on people’s health. Workers in ‘bad
jobs’ are more likely to suffer from mental and
physical illness. Evidence also shows the importance
of work organisation and job design on workers’
health.
From here it is not too difficult to start to map a
vision of ‘good work’.
‘Good work’ is rewarding, fulfilling and in balance
with the rest of our lives. For employees it can
improve overall well-being and performance. For
employers it can increase productivity and attract
and retain talent. For government it has a vital role
to play in key policy agendas such as ‘high
performance workplaces’ and ‘health, work and
well-being’.
The Amicus Agenda for Better Jobs identifies five
key elements that need to be considered in the
pursuit of improving the quality of people’s
working lives. These are now explored in more
detail.
A safe and healthy workplace
Everyone wants to work in as healthy and safe a
working environment as possible. Workplace
safety, sickness absence and health promotion are
important issues. But it is vital that consideration of
work and health goes further and looks at work
organisation, job design and management
standards.
These are important because there is a ‘social
gradient’ in health whereby workers in lower
status jobs experience worse health and lower life
expectancy than workers in higher status jobs – a
phenomenon known as ‘status syndrome’. This is
not just about the type of work people do. Status
syndrome exists within employment grades.
Workplace factors are important because they
influence perceptions of status, not least in respect
of the control people have in their working
environment. Workers with different amounts of
control and autonomy display different rates of
disease.
Control over the working
environment
People feel that they are losing control over their
working experience. WERS 2004 reports that only
38% of employees declared themselves ‘satisfied’
or ‘very satisfied’ with their level of involvement in
decision-making. And while 57% are content with
32
the ‘influence they have over their job’, over two-
in-five are not (with 14% saying they were
dissatisfied or very dissatisfied). Workers also say
that they have to work harder. Increasing numbers
are saying that they are “working under a great
deal of tension” and that their job requires them
to “work very hard”.
Giving employees autonomy and influence over
their work reduces stress. One key area of concern
is working time. UK full-time employees work
among the longest weekly hours in the EU and
workers are increasingly dissatisfied with their
working hours and are finding it difficult to reach
a proper work-life balance.
However, the problem is not just about the
number of hours worked. It is also about the way
they are structured. Recently announced
improvements to flexible working regulations and
maternity and paternity provisions are to be
welcomed. But there also needs to be a change in
organisational culture and business practice.
Secure and interesting work
A survey by the Organisation for Economic Co-
operation and Development found that 41% of
workers in the UK said that they were unsure
about the future of their job even if they
performed well. WERS 2004 also finds just 63% of
employees satisfied with their job security, with
38% either neutral or dissatisfied.
On average, the length of time people spend in a
job, has hardly changed in the last 15 years. But
feelings of insecurity can be associated with the
rapid pace of change and once in employment,
people want security. Insecurity adds to feelings of
stress, anxiety and detracts from organisational
commitment.
Much has been made of the supposed shift from ‘a
job for life’ to ‘employability for life’. But
confidence in employability requires access to
appropriate development and support. It has also
been noted that ‘employability for life’ can be a
poor substitute if it lacks the wider benefits
associated with ‘employment for life’ such as a
reasonable income, a secure pension and the
support of a trade union.
If one of the characteristics of a ‘bad job’ is
monotonous and repetitive work, then one of the
most obvious ways to support people’s working
experience is to ensure that they are equipped
with the appropriate skills to do the job. Lack of
appropriate training not only adds to the pressure
that employees feel but organisations that tap into
the employees’ experience and expertise will
benefit from improved individual performance
through greater job satisfaction.
Skills also provide part of the security that workers
need to respond to the changes of modern
economic life. This includes access to retraining for
workers who face the biggest disruptions from
structural change. Workers should be assisted in
developing their employability and not abandoned
in economic hard times.
Fairness and dignity at work
An essential element in feeling valued at work is
being treated with respect. People should not be
discriminated against on account of their gender,
race, sexuality, disability or age. Workplaces should
be free from bullying, harassment and
intimidation, which cannot only have a devastating
effect on individuals, but is bad for business.
WERS 2004 reports that pay is one of the things
that employees are least satisfied with in their job.
But this is not just about earning more money. It is
also about fairness. 35 years after the Equal Pay
Act, the gender pay gap persists with women still
earning less than men. In addition, pay inequality
between the highest and lowest earners has grown
in the UK. Spiraling executive remuneration also
33
fuels concern about the imbalances in the effort-
reward bargain.
A trade union voice for workers
Positive social relations can help protect people
from crises, uncertainty and low status. That is why
access to social support networks (sometimes
known as social capital) is important. In the
workplace, trade unions are a valuable source of
social capital giving workers a ‘collective voice’.
They can both unite workers in solidarity and
provide an independent link with their employer.
Research has found a positive association between
the presence of trade unions in the workplace and
fairer pay, better health and safety, and the
presence of equal opportunity and family-friendly
policies. This collective ‘sword of justice’ is clear
evidence that trade unions make a difference.
The new regulations on information and
consultation of employees also recognise the
importance of high levels of employee involvement
in delivering ‘high performance workplaces’.
Proper consultation is essential if change is to be
managed successfully and be seen as legitimate by
employees.
Conclusion
Trust is the cement that not only pulls many of
these constituent elements together but makes
them sustainable through difficult times. People
are more likely to feel a greater sense of control,
confidence and motivation where there are high
trust relationships between employers, workers
and their representatives. And high trust relations
can lead to improvements in job satisfaction and
productivity.
Good Work: An Amicus Agenda for Better Jobs is
available on the ‘campaigns’ section of the Amicus
website (www.amicustheunion.org)
An Agenda for Work
David Coats, Associate Director - Policy, The Work
Foundation
Introduction
Work consumes much of our adult lives. It is the
place where we find satisfaction, friendship and
even romance. Yet while many of us would agree
that we should work to live rather than live to
work, nobody is indifferent about their
experience of employment. How we work, when
we work and how long we work determines our
overall quality of life and can affect our general
health and life expectancy.
The need to develop a story about work is vital
at a time when trust in the political process is at
an all time low. Demonstrating that politics can
make a genuine difference to peoples' working
lives is vital to rebuilding faith in our institutions.
The challenge for all politicians is to reflect on
the trends in the world of work, identify the
major challenges faced by workers and employers
and present a policy response that resonates with
the electorate.
The present government has done a great deal to
improve the working lives of those at the rough
end of the labour market. The National Minimum
Wage, the social chapter rights, tighter dismissal
rules and tax credits are significant achievements.
Yet a critic could point to a lack of enthusiasm
for European social policy, an unwillingness to
embrace the modest regulation of working hours
required by the Working Time Directive and
outright opposition to the protection of the
rights of agency workers.
Overlaid on this discussion is a growing concern
with work-life balance, the ability to reconcile
work and caring responsibilities and the wider
position of women in the labour market. But the
discussions about work-life balance and labour
34
market regulation proceed on divergent tracks,
with the government endorsing the view that
parents should be able to choose to vary their
hours and, at the same time, refusing to place
any kind of ceiling on the maximum hours that
might be worked.
The result is confusion. Is government in favour
of giving workers more rights at work? Do they
believe that regulation is essential to establish
minimum standards or that regulation is "red
tape" that holds back job creation and damages
economic performance?
The government could reply that the policy
objective is clear: a fair and flexible labour
market underpinned by minimum standards. But
this is little more than a mantra and endless
repetition of the party line is no substitute for
the development of straightforwardly expressed
policies that directly address the experience of
most people at work.
The Work Foundation's goal is to cajole, provoke
and inspire our politicians to take work seriously
and to develop a more coherent view about
regulation and performance. We have set out to
identify the most pressing problems facing
employers and employees today and encourage
policy makers to reinstate work as a central issue
in the national conversation.
This is important because questions about the
quality of work for the majority have not
featured on the political agenda for some
considerable time. In part this is because the
quantity of employment is always more
important than the quality of employment when
the jobless total is high and rising. But politicians
also find it hard to talk about "good work"
because they face the accusation that they are
interfering in the process of wealth creation,
about which it is said they know little, and
heaping "burdens on business" to make the UK
less competitive.
Political parties need to do two things to fill the
policy gap. First they must have a clear view
about the constituent elements of "good work”
that allow people to flourish fully as human
beings. Second, they need to have a keen
understanding of and a well developed response
to the trends in the world of work, the problems
currently faced by workers and employers and a
sophisticated understanding of the challenges
likely to emerge over the next decade.
Can we define "good work"?
It is important to try to define what we mean by
“good work” not least to respond to the
objection that one person's "good job" is
another's vision of exploitation. That argument
suggests that people will have such varying views
about what constitutes "quality" employment
that it is a counsel of perfection to produce a
definition on which all can agree.
In the absence of robust evidence to the contrary
this would be fatal to the case for a "good work"
narrative. However, we do have evidence
showing a strong relationship between the
quality of work and good mental or physical
health. We also know that work is superior to
worklessness. Unemployment has a corrosive
effect; it can be devastating to personal
confidence and damaging to relationships. The
unemployed are more likely to fall ill too.
Getting all those without jobs who want to work
back into employment must be the top priority
for any government.
But we can also say with confidence that "bad
jobs" have a damaging effect on health. This is
not simply a matter of exposure to hazardous
substances or technologies. Work organization,
job design, good management and a supportive
organisational culture are important too.
Workers with "bad jobs" are more likely to take
time off sick and more likely to suffer from
35
mental illness, coronary heart disease, musculo-
skeletal and gastro-intestinal disorders. Those
who spend their working lives at the bottom of a
status hierarchy are also likely to have shorter life
expectancies.
The workplace factors that increase the risk of
developing these medical conditions are also well
understood:
• A lack of control over the pace of work and
key decisions that affect the workplace;
• Limited task discretion and monotonous or
repetitive work;
• Inadequate levels of skill to cope with periods
of intense pressure;
• An imbalance between effort and reward; and
• Limited "social capital" - whether informal
friendship networks or formal associations like
trade unions - which make workers more
resilient in the face of the vicissitudes of their
working lives.
An understanding of these factors can be used to
inform a radical agenda for the improvement of
working life. Health is a primary good essential
to any conception of human flourishing since
without good health individuals are less able to
act purposively and their life chances are
diminished. Government has an interest in
promoting healthier workplaces and in
encouraging employers to offer high quality well
designed jobs.
Of course, it is not possible for governments to
legislate for high quality employment. What
government can do however is "make the
weather", shape the terms of the debate and
provide a range of business support and other
services to encourage the innovation needed to
deliver healthier workplaces. Most importantly,
government can, through bodies like ACAS and
the Health and Safety Executive, set standards,
provide support or advice to employers and
unions and set the pace in changing the culture.
What then might a vision of "good work" look
like? What are the conditions that need to be
met before individuals can flourish fully in the
world of work? Some possibilities are set out
below. Inevitably this proposal will be contested,
but it is important to make the effort, not least
because it is only through an exchange of this
kind that we can ever reach a sustainable
consensus about “good work”:
• Full employment - defined as the availability
of jobs for all those who wish to work
• Fair pay (including equal pay for work of
equal value)
• The absence of discrimination on the grounds
of race, gender, sexuality, disability or age
• Secure and interesting jobs that employees
find fulfilling, which contribute to the
achievement of high performance and
sustainable business success
• A style and ethos of management that is
based on high levels of trust and recognises
that managing people fairly and effectively is
crucial to skilled work and high performance
• Choice, flexibility and control over working
hours
• Autonomy and control over the pace of work
and the working environment
• Statutory minimum standards to protect the
most vulnerable workers against exploitation
• Voice for workers in the critical employer
decisions that affect their futures.
It is important to understand that this does not
demand a return to "jobs for life" or a model of
industrial democracy where employers cannot
make any decisions at all unless they have
secured the agreement of their workers. The
purpose is to give workers a sense of security
based on the confidence that they will be treated
with respect, that their employers will consult
them at the early stages of any initiative and that
investment in training and skills will be matched
by an obligation to demonstrate commitment to
36
the organisation. Our model is rooted in the
notion that change is a constant in open market
economies but that change must be justified and
legitimized, otherwise the sustainability of a
market system is under threat.
At the heart of this vision is the belief that high
quality jobs are not just conjured out of thin air
or legislated into existence. Quality employment
can only be created by employers that are
successful in offering a range of goods and
services that people want to buy. There is no
value in offering the perfect package of
employment conditions if the firm has no long-
term future. Economic stability and sustainable
business success are necessary conditions for
quality employment. But business success can
only be sustained if organisations offer jobs that
meet the "good work" criteria and unleash the
talents and creativity of all employees. Quality
jobs and high performance are two sides of the
same coin.
This has profound implications for policy. Any
government concerned about the quality of
employment needs to look inside the "black box"
of the firm and identify where public action is
needed to encourage business models that
promote "good jobs". There is strong evidence to
show that too many British businesses are
competing on the basis of low pay, low skills and
low productivity.
Any discussion of "good work" also demands
some consideration of the notion of "the good
business". What kind of organisations are best
able to offer "good work"? And this raises
questions about the conception of the
corporation and models of governance. As John
Kay has observed, despite the obsession with
shareholder value in the American business
model, most successful US businesses operate
according to different principles. Effective and
efficient companies have a clear sense of mission
or purpose; they grow through innovation, build
their capacities and develop resilience in the face
of difficult processes of change.
Trends and challenges
Developing a "good work" narrative depends
too on a sophisticated understanding of the
problems and trends confronting employers and
employees. The debate today is still shaped by
half-understood myths about more frequent job
change, the devastation likely to be wreaked by
globalisation and a belief that we will all be
knowledge workers in the future.
In reality job tenure (the length of time people
spend on average in each job) has been stable
over the last decade. Low skill occupations have
grown as fast as (or faster than) some high skill,
high tech occupations. Some developing
countries have grown richer at the same time as
prosperity has increased in the developed world.
Nevertheless, change is taking place in the world
of work. These changes are profound and are
just as transformational as some of the myths:
• there will be more women at work in the
future
• the percentage of those in professional,
associate professional and managerial jobs is
set to increase
• employment in services will grow
• the workforce is ageing
• the integration of product and capital markets
is likely to continue.
The "knowledge economy" effect will impact on
all sectors of the economy and should not simply
be seen as relevant to ICT or biotechnology. This
does not mean that there will be no bad jobs in
the future, but that employers will find the scope
has been significantly reduced to adopt business
models that depend on low quality employment.
If the reader is in sympathy with the argument so
far, then you will also embrace the belief that
37
making progress towards "good work" demands
a willingness to confront the following
challenges:
• globalization
• demography
• the demand for improved productivity and
performance
• flexibility and security at work
• employee voice
• enhancing opportunity for all people at work.
Responding to “globalisation”
Policy makers need to make the principled case
for free trade. So far the arguments have been
poorly presented and globalisation is mainly seen
as being associated with job losses in the UK or
exploitation in the developing world.
The important point is that the process must be
managed. Structural change in the UK should be
anticipated - with critical roles being played by
Regional Development Agencies and Sector Skills
Councils. Workers and their representatives
should be informed and consulted about
structural change, to legitimise the process and
shape employers' thinking.
The challenge of globalisation should not be
overplayed - only two or three percent of jobs in
developed countries will be open to offshoring
by 2020. Equally, there is an offsetting trend of
"localisation" with a far larger proportion of
what is produced in a city or region being
consumed in that city or region.
The demographic squeeze
Policy makers face two significant challenges.
One is the need to reconfigure pensions systems
to cope with an ageing population. The other
will be handling an increase in managed
migration to offset shortfalls in labour supply as
the number of people of working age falls.
Meeting the pensions challenge will demand a
combination of the following:
• increased private saving
• increased taxation
• later retirement and policies for "active
ageing".
A failure to address these problems today will
lead to significantly higher levels of personal and
corporate taxation in twenty-five years time. It is
welcome therefore that the government has
taken these realities right to the heart of
pensions policy. Current legislation envisages
both a higher level of compulsory saving and
somewhat longer working lives.
The unavoidable demographic facts suggest that
a higher level of managed migration will be
needed in the future too. Many politicians are
failing to explain this case today, preferring to
concentrate on raising the level of anxiety about
asylum and immigration. Unless this situation
changes it will be difficult to convince the public
of the irresistible case for an increase in the
number of economic migrants as the UK tackles
the problem of the ageing population. Many
migrants today make a valuable contribution to
the UK economy and experience extreme
exploitation. Action must be taken to stamp out
any abuses.
Improving organisational
performance
The UK has lower productivity than France,
Germany and the USA. The reasons for this
relatively poor performance are well understood:
• Lower levels of investment and capital stock
• Difficulty in applying and reaping the benefits
of best practice
• A poor record on innovation and investment
in research and development, with the notable
exceptions of aerospace and pharmaceuticals
38
• Problems with workforce skills - in particular
intermediate skills, although policy over the
last eight years has begun to fill some of the
gaps.
Unless the UK can address these problems
successfully then our continued prosperity - and
the ability of businesses to offer quality
employment – will be under threat.
Government cannot legislate for high
productivity and high quality employment but it
can improve the supply of and the demand for
skills. It can also use regulation to drive
performance improvement and offer effective
business support, invest in the science base and
encourage innovation. Finally it can promote an
agenda that links high quality work and good
job design to high performance.
Flexibility and security at work
Too many British workplaces are characterised by
a "trust deficit". Employees report falling job
satisfaction, even though levels of overall
satisfaction remain quite high. Working time is a
particular problem – with people reporting work
intensification and problems with work-life
balance.
Most workers lack strong influence over the
issues that affect them directly at work.
Implementing the Information and Consultation
(I&C) regulations with enthusiasm is essential if
we are to rebuild trust in British workplaces and
promote high performance.
Another priority for the government must be to
develop a coherent approach to work-life
balance alongside the objective of eliminating
excessive hours working from the UK economy. A
simple and straightforward measure would be to
remove the so-called "individual opt-out" from
the Working Time Regulations. This would help
to promote a change in culture and business
practice. Likewise, government should extend
rights to reduced hours working for parents and
carers.
Nevertheless, government should recognise that
the law is a blunt instrument and that negotiated
solutions in the workplace are often preferable
for both employers and employees.
The question whether workers should have
“voice” in the workplace has been a matter of
long running controversy. But in the recent past
the discussion has been viewed almost exclusively
through the lens of “efficiency” – however this
contested concept is conceived. If “voice” adds
value to business it is acceptable, if it does not
then there is no case for voice.
However, there is a broader case for voice not
based solely on efficiency or indeed power
relationships at work. It is rooted in a an
understanding of what individuals need to
flourish in the world of work – autonomy,
control, possibilities for self-actualisation, as well
as free speech and expression.
We therefore need to rethink the goals of the
employment relationship around efficiency and
equity and voice. Performance is important, but
it has to be balanced and reconciled with other
objectives.
Employers in the UK have found it difficult to
accommodate these arguments, largely because
their thinking is influenced by the “unitarist”
belief that conflict can be eliminated from the
world of work if effective leaders and managers
apply enlightened people management practices.
“Pluralism” – the view that conflict and
differences of view are inherent in the
employment relationship – is the best frame of
reference for understanding the argument for
voice at work. Furthermore, there is strong
evidence to suggest that innovative working
39
practices are associated with pluralist approaches
and collective voice institutions.
Of course, it would be hard to make the case for
collective representation and voice if all the
performance effects were negative; indeed,
contrary to the case made so far, we might even
take the view that voice ought not to be a
fundamental value. However, the important
economic point for our purposes is that in the
right climate – high trust relationships between
unions or works councils, running in parallel with
individual employee involvement initiatives –
voice seems to have a big positive effect on
productivity.
Employers must therefore understand that
individual employee involvement and collective
voice are mutually reinforcing practices. Applying
either one or the other does not deliver optimal
performance. It is the independence of the
collective voice institutions (whether trade unions
or statutory works councils) that creates an
environment in which individual workers are
more willing to innovate and embrace change.
The explanation is persuasive. Innovative
practices demand a higher level of social capital,
such as networks, shared knowledge, willingness
to share and discretionary effort in the
workplace. Such a level of social capital is
developed and sustained by collective voice.
Developing the discussion about voice further
will demand that we answer a new set of
questions about the world of work. In particular,
all parties to the debate must clearly articulate a
vision of how individuals can flourish in the
workplace and how the competing goals of
efficiency, equity and voice are to be balanced.
In principle this recasting of the objectives of the
employment relationship has advantages for
government (rebuilding social capital and
improving health outcomes), employers (a
framework for engaging workers in initiatives to
improve organisational performance) and
workers (opportunities for meaningful
participation).
Government has a role to play in enabling all
participants to develop the skills they need to
secure the “mutual gains” that might emerge
from the process. The role of government is to
act as a facilitator, working with business to
equip managers with the skills they need to
secure a well-motivated and engaged workforce.
It also requires unions to take on a different role
and appeal to a broader membership.
The Union Modernisation Fund is important
because it could do much to enable unions to
make a positive contribution to improving
organisational performance at the same time as
they protect the interests of their members.
Enhancing opportunity
Turning now to the final set of challenges facing
policymakers, what would a labour market look
like that offered opportunity to all those at
work?
A straightforward starting point is that all those
who want to work should have the opportunity
to work. In other words, opportunity is an
illusion without a clear commitment to the
policies that can deliver and sustain full
employment.
This means in turn that the tax and benefits
system should be configured to remove any
disincentives to work and that barriers to
participation by older workers, lone parents and
the disabled should be eliminated. On the other
hand, workers in disadvantaged groups need to
be confident that they will not be penalised if
they return to work and find employment
difficult to reconcile with the other challenges
they face.
40
Workers from ethnic minorities are more likely to
experience unemployment than the majority of
white workers. An opportunity labour market
would be characterised by no significant
differences in unemployment rates between
ethnic groups. Black workers would not be faced
with institutional racism or other forms of
discrimination.
A labour market that guaranteed opportunity for
all would enable individuals to make the most of
their natural endowments by offering state
funded training up to level 2. Beyond this there
would need to be a sharing of responsibility for
funding between employers, workers and the
state. In particular, the state might consider
incentives (through a government match to an
employee’s contribution) to encourage learning
to level 3 and beyond. Workers would be able to
make progress in their careers according to their
talents. Obstacles based on social position would
be removed – in other words social mobility
would increase.
The gender pay gap would be eliminated to
secure pay equality between women and men.
Women and men would have equal
opportunities to advance in organisations, the
“glass ceiling” would have disappeared and there
would be more women in senior positions in
both public and private sectors.
In turn this means that all organisations would
have policies in place enabling workers to
reconcile work and their caring responsibilities –
whether for children or elderly relatives. Flexible
working would be equally available to women
and men.
Measures would have been taken by employers –
consistent with the recommendations in the
Improving Performance section of this paper –
which would have reduced the number of low
paid workers and led to much less reliance on the
national minimum wage as an instrument to
combat low pay. By abandoning the “low road”
more employers would be able to pay rates
above the NMW, would be able to recruit and
retain more highly skilled workers and would
achieve higher performance.
A properly enforced floor of rights would protect
those workers at the bottom end of the labour
market. Trade unions would play a role in
organising these workers and in ensuring that
employers respected the statutory protections
that had been enacted. Migrant workers would
no longer operate at the margins of the economy
but would enjoy full employment rights and the
public would generally understand their
contribution to the economic well being of the
nation.
Expressed in this way a cynic might say that the
vision looks like a counsel of perfection, a
utopian daydream of no practical relevance. Yet
this would be to dispose of the argument too
quickly. Articulating the vision in this way shows
how far we must travel to deliver genuine
opportunity for all – to create a labour market
that is consistent with a comprehensive notion of
human flourishing. Most importantly, identifying
where our current performance is deficient can
lead to a practical programme of action.
Sometimes a degree of speculation is necessary if
we are to see reality with fresh eyes.
An agenda designed to widen labour market
opportunities would therefore focus on:
• getting the unemployed and inactive back to
work
• equalising the chances of black and white
workers in the labour market
• enhancing social mobility by widening access
to skill development
41
• determined action to close the gender pay gap
and improve the position of women at work
• protection for the most vulnerable in the
world of work, with effective enforcement of
elementary employment rights.
A final word
There is still a tendency in today’s conversation
for policy makers to sound as if they are speaking
at employees rather that for employees. Yet at
the heart of the argument presented here is the
belief that all stakeholders must begin to talk
very differently about the world of work –
reflecting the problems that people experience in
their daily lives instead of threatening them with
the challenges of “globalisation”, “the rise of
India and China” and the demands of the
“knowledge economy”. The political task is not
to terrify the electorate but to create an
environment where workers both know that
change is a constant and have confidence that
they can influence the pace and direction of
change. In other words, that we are not victims
of circumstance, helpless in the face of the
awesome power of events. We must revive the
idea that policies and institutions matter. Markets
may be good servants but they are bad masters
and experience shows that different countries
have proved equally able to achieve a high level
of productive efficiency whilst tolerating very
different levels of poverty and income inequality.
Applying this principle to the world of work
means that we can choose to have higher quality
jobs and more productive workplaces. It is
primarily a matter of determination, imagination
and political will.
Employee Involvement and High
Performance
By William Coupar, Director, IPA
Introduction - current debate on
workers participation
There is much interest in the UK about how you
create participatory corporate cultures in the
workplace. That there is a link between
innovation and the participation of workers is
widely recognised. What is less clear is how best
to achieve these outcomes. In their study called
Maximising employee potential and business
performance 2003 the EEF and the CIPD reviewed
key evidence for the importance of worker
participation in creating value for businesses.
They identified four main categories
• employee autonomy and involvement in
decision making
• training, development and support for
employee performance
• rewards for performance
• sharing of information and knowledge
They also argue that high performance working
benefits employees too.
“The evidence base points HPW leading to
greater job satisfaction. In addition autonomy
over task level decision-making, membership of
self-directed teams and communication with
people outside the workgroup are associated
with trust. Trust and intrinsic rewards in turn
feed into a positive impact on organisational
commitment and job satisfaction.”
Maximising employee potential and business
performance, EEF CIPD 2003
The employer’s organisation CBI also argues for
employee involvement as a key catalyst for
success.
Employee involvement in change, it says leads to:
42
• a heightened appreciation of the importance
of product quality and customer needs
• increased willingness to embrace change
• a better flow of ideas for improving
productivity
• reduction in staff turnover and absence
• increased commitment to the organisation’s
long-term success
Achieving competitive advantage through
change at work CBI UKWON 2003
The Involvement and Participation Association
(IPA) is the UK’s leading body focusing on
information, consultation, involvement and
participation in the workplace. Its work in the UK
Work Organisation Network (UKWON) is focussed
on the performance of organisations, with
innovation, effective deployment of skills and the
management of change. It is also focussed on the
quality of working life with workplace
involvement, equal opportunities and motivation.
Its members amongst the employer and union
communities bring first hand experience of what
makes effective workplace involvement within
the UK.
Policy-makers also emphasise the link between
people, innovation and performance. In its
publication Achieving Best Practice in your
business – high performance through people
(2005) the Department of Trade and Industry
argued that management who build good
relations with their workforce, and involve them
in important decisions create a more energised
and productive work environment. This it claimed
enhanced financial performance and led to
greater creativity and innovation.
Structures are needed to enable continuous
improvement, and help to generate motivation
and commitment. The work of the UK Work
Organisation Network focuses on how to achieve
these two vital but complementary outcomes,
organisational performance and job satisfaction.
In its report Work Organisation – UKWON
guiding principles and practice 2004 it says
“Employers need a more participative approach.
They must understand that organisational culture
is important and that culture is largely
determined by the behaviours of managers. The
need for a workplace that rewards innovation
and encourages risk taking should be borne in
mind when strategic decisions are made.”
There is however disagreement about how this is
best achieved. How do you ensure that there are
frameworks which can sustain a culture of work
organisation which deliver maximum
performance in terms of customers and
employees? A major theme concerns the balance
between unitarist and pluralist approaches to
involving employees.
Alongside these trends there are important
changes in the way that people work. Flexible
working has risen, e.g. the growth of seven day a
week working in the retail sector or the
mushrooming of call centres. As well as more
flexible work patterns, there have been
important changes in the nature of the
employment contract. Part-time working has
grown and there are many more workers
employed on temporary contracts or as agency
workers.
The high performance workplace
High performance demands a vision based on
differentiation and continuous improvement in
the quality of goods or services provided to
customers. It takes a strategic approach to
people management, work organisation and
employee involvement. The DTI put it this way:
“Modern, high performance workplaces… build
on the simple insight that individuals are more
43
likely to give of their best if they feel valued and
are given the opportunity to contribute their
ideas; and that people who are well-prepared for
change can help to introduce it and thereby help
secure employment within the business” (DTI
2002: 13).
High performance organisations share similar
characteristics. These include well-informed,
flexible, innovative staff who are knowledgeable
about the business and accept the need for
change; involved employees who take a pride in
their work; team-working; joint problem-solving;
harmonious industrial relations; and a
managerial style which supports staff, rather
than tries to control them.
HPWO’s use a wide range of high performance
work practices. A survey for the Society of British
Aerospace Companies identifies over 30 such
practices, falling into three distinct but related
groups:
• high involvement practices creating
opportunities for employee involvement
• human resource practices, which help build
skill levels, motivation and ability
• employee relations practices, which help build
trust, loyalty and identity with the
organisation (Mark Thompson, 2002: 6).
He found that coping with change in a global
economy requires new forms of work
organisation which actively challenge the role of
managers, demand job redesign, teamworking
and leave little option other than for employers
and employees to become engaged and involved
in sharing information and consultation. A high-
level group on the economic and social
implications of restructuring in the EU put the
argument succinctly: ‘Good forward planning and
dialogue allow more effective management of
industrial change’.
High performance Working – an IPA
View
High performance working (HPW) is built on the
basic proposition that people management, work
organisation, learning and employee involvement
help to engage people. As a result the delivery of
products and services are more effective. The IPA
is interested in two strands of HPW in particular;
• the impact of employee voice
• the dimensions of employee engagement and
its effect
Involving and consulting employees has an
important role in enabling and encouraging high
levels of performance. It helps employees
understand how the business works and the
problems it faces. It provides employers with a
means of tapping into employee knowledge and
potential for innovation for the benefit of the
organisation. It demonstrates that employees’
views are taken seriously, which boosts
commitment and engagement. Together they
produce the well motivated and well informed
employees that all organisations need if they are
to meet the challenge of competitiveness and
change.
Employee consultation and
organisational performance
In 2004 the IPA researched ten organisations in
the private manufacturing and services, public
and not-for profit sectors, to assess the part
employee voice and consultation plays in
improving performance. Arrangements varied
widely in the ten organisations – which include
two in the top 15 of the Financial Times’ 100 Best
Workplaces UK. Despite this diversity, all report
good outcomes from consultation and employee
involvement. Eight dimensions to involvement
and consultation activities were examined to
identify whether they were associated with
improved employee commitment. These were:
44
• improved knowledge and understanding
• acceptance of change
• employee feedback – my voice is heard
• increased participation in change
• reputation both internally and externally
• problem-solving at all levels
• team development
• reducing conflict
Key findings
A. Improved knowledge and understanding
• Information and consultation on a regular
basis enhances employee representatives’
knowledge and understanding of the business.
• The fact that employee representatives
understand organisations’ goals and strategies
serves to reassure the rest of the workforce
who more readily cooperate with new ways of
doing things. The employees are more likely
instead to be given information directly by
employers than from representatives
B. Acceptance of change
• As a result of information and consultation
processes with representatives’ involvement
the change process is legitimized.
• This helps organisations to change more
quickly, as employee representatives are
always up to speed with management
thinking and can react quickly to any new turn
of events.
C. Feedback – my voice is heard
• Regular informal consultation keeps everyone
more in the picture than set-piece consultation
processes.
• Staff concerns are also identified through
informal, day-to-day consultation, outside the
information and consultation process. It
enables things to be dealt with quickly and at
the lowest possible level.
D. Increased participation
• All employee participation increases as a result
of involvement and consultation.
• This helps to create a culture which broadens
the agenda for employee involvement in
change. This is however not easy to quantify.
E. Reputation – this is a good place to work
• Organisations which involve and consult their
staff have lower staff turnover and higher
rates of job application than others in their
sector.
• These organisations also have high proportions
of staff who say that they are proud to work
for their employer
• In turn this also impacts on how the
organisation is seen in its community
F. Joint problem-solving
• Joint problem-solving on non-HR subjects
takes place at local level and is management
led.
• Joint problem-solving approaches are enabled
within organisations by dialogue and
consultation processes which offer legitimacy.
• At higher levels joint problem-solving
techniques tend to be used to address HR
issues and HR policy
G. Team development
• Employee relations are frequently conducted
on a team basis by organisations which set an
employee relations culture in place which
reflects this.
H. Reducing conflict
• Regular and ongoing consultation and
dialogue reduces conflict not least because it
seeks to ensure that there are no surprises.
Pluralism versus unitarism
Within the broader debate about high
performance working there is also disagreement
about the relative merits of unitarist or pluralist
models of the workplace and the role of
representative bodies, like trade unions, in
achieving this.
Closely linked is the role of the social partners at
the workplace, a contentious issue in the UK,
which can only be understood by reference to
these competing approaches to employee
involvement.
Collectivism has declined and individualism been
strengthened. Joint regulation of the workplace,
a key element of a pluralist approach has been
much reduced. Unitarism has been in the
ascendancy both within organisations and in
government policy. This has emphasised
alignment of workers with the organisational
norm as well a strong emphasis on shared values,
learning and communication. Most private
business in sectors like services or the knowledge
sector are firmly wedded to an individualistic
view of relations at the workplace.
The CBI has argued that direct relationships with
an emphasis on communication between the
employer and the individual is more effective
than consultation with representatives. It says
that:
“employee involvement is only one of a number
of people management practices which are
identified as improving business performance,
job design and employee development are
equally important. Effective employee
involvement mechanisms can only be achieved by
ensuring employers have the flexibility to
introduce structures which are appropriate for
their firm.”
CBI HPW Workplaces - the role of Employee
Involvement in the Modern Economy 2003

45
Pluralist models of employee Unions are in decline, with membership hovering
involvement around the 7 million mark, down from a post
war peak of almost 13 million. Private sector
Under a pluralist framework, employee voice is
union membership stands at 17% with union
seen as a right. Enshrined in recent years within a
strength highest amongst engineering, chemicals
framework of legislative entitlement such as the
and pharmaceuticals, utilities, transport and
I&C directive it is not dependent for its validity
elements of the financial services sector.
on any business benefit. The voice of the
workforce is independent and does not need to
be beholden to the employer. Unitarist models of employee
involvement
It may be more or less aligned with corporate
goals and values but its legitimacy does not Within a unitarist framework, the validity of
depend on that alignment being observed. In these processes is derived from the fact that they
the view of one commentator, it is about add value to the organisation. Informing or
recognising their right to be heard at their place consulting with staff either directly or through
of work and their entitlement to an intelligent representatives is seen as valuable because it
response (Coats 2003: 6). adds an extra dimension to the workplace, as a
more effective way to manage change.
A voice at the workplace means that workers
have the opportunity and indeed the right to: Most workplaces already adopt a range of direct
information-sharing practices. In most cases the
• have ideas proposals and policies explained to
good communication is taken as a given. Direct
them
arrangements are more widespread than
• ask questions and get answers to those
representative forms. It is widely agreed that
questions
there are business benefits from a well-informed
• are entitled to have explanations about
workforce who have good two-way
particular courses of action or decisions
communication with their employer. Activities
including those where the answer is no
such as task groups or joint problem-solving,
• influence potential outcomes and in particular
which enable employees to have an effective
where those outcomes will have some direct
impact on how work is organised, are valued
impact on them
because they create better solutions and get
As citizens, the views of employees are legitimate more buy-in to outcomes.
both when they are aligned with those of the
Many employers also believe that the
employer and when they are divergent. It is
arrangements which work best are the ones
argued that ‘Workers continue to be citizens
which organizations work out themselves. Hence
even after they have crossed the employer’s
the widespread view amongst business and
threshold’ (Coats 2003: 2).
government that regulations should be little used
The framework through which this has been and, if applied, a light touch should be applied.
delivered, the UK system of industrial relations,
Employee engagement is an approach to direct
was built up from decades of custom and
employee involvement which sets out to achieve
practice. Since the 1980s this model has been in
performance improvement through a
retreat, much of the structure no longer operates
combination of employee surveys and employee
and the key institutions are losing influence.
involvement techniques. It promises significant

46
performance improvement across the business
through HR policies which inspire employees and
make them feel valued and treated fairly. The
Institute of Employment Studies (IES)
characterises the engaged employee as one who
is:
• positive about the job
• believes in, and identifies with, the
organisation
• works actively to make things better
• treats others with respect, and helps
colleagues to perform more effectively
• can be relied upon, and goes beyond the
requirements of the job
• sees the bigger picture, even sometimes at
personal cost
• keeps up-to-date with developments in his/her
field
• looks for, and is given, opportunities to
improve organisational performance.
Employers are interested in employee
engagement approaches because they set out
clear measures by which the effectiveness of
involvement policies can be assessed
Nationwide Building Society has established that
committed employees stay longer, have greater
experience and skills and a positive service
attitude. These attributes result in higher
customer satisfaction scores, higher levels of
customer commitment and retention, and ever
increasing customer sales. Surveys have identified
policies which give measurable results in terms of
boosting organisational commitment;
• recruitment and retention
• greater understanding of employee
commitment
• transparency and flexibility of reward
• first line management development and
coaching/mentoring
• promotion of recognition and ad
hoc/spontaneous celebrations of success
47
• development of an organisational culture
where managers and employees are
emotionally committed to and demonstrate
the right behaviours
It is not, therefore, the case that managers are
failing to understand the contribution that
employees might make. On the contrary, many
managers do engage workers in the wider
business agenda but they tend to do so by direct
involvement at local level.
The role of employee dialogue and
consultation in improving
performance
In successful organisations unitarist and pluralist
practices often go together. The most effective
involvement and participation arrangements
involve a mix of both direct and indirect
mechanisms. The Chartered Institute of Personnel
and Development says that a combination of
arrangements “is more commonly associated
with various enhanced and positive measures of
perceived organisational performance” (CIPD:
2003).
Employee involvement and consultation with
staff and their representatives improves
knowledge and understanding of business issues,
and facilitates change. The full potential of
consultation however is not always fully realized
if it is not being used to make employees fully
aware of the challenges that the organisation
faces. Employers understand the contribution
that employees might make and many managers
do engage workers in the wider business agenda
e.g. the need to improve product quality or
customer service through initiatives such as
continuous improvement. However, they tend to
do so by direct involvement at local level. It
seems that management and employee
representatives have not yet fully developed a
role for collective representation in improving
effectiveness. It can be argued, however, that
high-level joint approaches to the industrial
relations agenda makes possible direct
involvement activities. The direct involvement
agenda is very broad, covering all areas where
people can make a difference. Consultation with
employee representatives assures that employee
concerns are being taken into account employees
might be less ready to co-operate with managers
to improve efficiency. As the head of
manufacturing at one large employer explained:
‘We needed a cultural change. We did not want
it to be a formal arrangement involving only
senior managers and union officials, which we
would have to drive down through the
organisation’ (IPA 2002b).
Over 200 autonomous continuous improvement
groups were then set up. These are co-
ordinated by local facilitators and the multi-
tiered framework of arrangements extend up to
the board and trade unions at company level.
Staff buy in has been widespread - the success of
the bottom-up approach has moved the culture
ahead of the supporting structures. These
findings also coincide with the views of the CBI-
TUC Productivity Challenge Best Practice Working
Group, who reported that:
‘Involving individual employees or teams in
decisions which affect the day-to-day
organisation of their work helps create a culture
of autonomy and responsibility. And systems for
encouraging employee feedback and suggestions
are key to innovation and building commitment
to continuous improvement.
Collective voice is important in building a climate
of trust where individual employees are
confident that their contribution will be valued.
Equally valuable is its role in helping to identify
shared objectives and resolve conflict. The
involvement of employees’ representatives can
create the sense of mutuality that is essential for
48
the sustainability of new working practices - the
belief that both the employer and workers are
reaping real benefits from improvements in work
organisation’ (CBI – TUC 2001)
Employee relations and
organisational performance
Developing an I&C culture which enhances
performance
Too much attention can be given to the
structures and processes of worker involvement
and participation, and not enough emphasis
placed on the necessary organisational culture.
The practice of worker involvement has the
potential to replace traditional command and
control ways of working with a more open and
engaging culture in which teamwork, problem-
solving and learning prosper.
The 1998 IPA survey, the Partnership Company,
identified that joint commitment to a series of
principles (commitment to the success of the
enterprise, respect for the legitimate interests
and building trust) were essential to give the best
outcomes. They also need to be accompanied by
matching practices to put the commitment into
practice. These practices include flexible job
design, quality-related practices, direct
participation in work-related decisions and
representative participation in wider policy
issues. Together they offer a link between
partnership principles and practices, employee
attitudes and behaviour, on the one hand and
evidence of internal organisational performance
and external criteria of sales and profits on the
other.
The IPA has carried out a number of case studies
over the last decade focussing on how changes in
culture are achieved at the workplace. They
demonstrate how employee involvement and
representative dialogue work together to achieve
effective management of change. Examples
included studies in the private sector, Abbey and
Egg (financial services) B & Q (retail), Lafarge
Cement (construction), BMW (vehicle
manufacture), BP (petrochemicals), Scottish
Power and Westinghouse (utilities), the Scotch
Whisky Sector (drinks) and School Trends
(clothing). Public sector studies have included
AWE (defence), Nottingham Health care NHS
Trust (health), Scottish Prison Service (custodial
services), and in the voluntary sector, UWHA,
Bromford Housing and Peabody Trust (all
housing).
The IPA study has however shown that the UK
approach continues to place much greater
emphasis on direct involvement and an
individualistic model of workplace relations. The
case studies demonstrate that in practice
representative and direct methods of
participation are often complementary not
contradictory.
The IPA studies on high performance are all
focussed on how a pluralist culture can best
deliver organisational success. Dialogue with
workforce representatives is a key part of how
these organisations have succeeded. In all these
studies direct involvement and representative
consultation and dialogue are seen to be
complementary. The aim of this work is to try to
move the UK debate away from a simplistic view
where such forms of involvement and
participation are too readily seen as “red tape,” a
cost and constraint on business rather than an
opportunity for innovation and growth. It is
worth quoting the report written by the UK
Social Partners CBI (Confederation of British
Industry) and the TUC (Trades Union Congress) in
2001
49
“The research evidence is very clear. It suggests
that new forms of work organisation, effective
management and leadership, a culture that
encourages innovation, employee involvement
and development, tailored to organisational
needs are all necessary conditions for adaptable
high performance workplaces. A central feature
in the mix is the adoption of an inclusive
management style which encourages workers at
all levels in the organisation to contribute.
Effective management, leadership and employee
involvement are all complementary features of
the high performance/high commitment model.”
Although representative consultation has been
shown to encourage higher levels of
performance, it is largely confined to facilitating
changes in HR policies and practices. It is
associated with unionised environments and as a
result, it is viewed in a limited way, a means of
dealing with problems. The challenge is to pull it
into the mainstream of performance
improvement. Employee consultation has a role
in encouraging employees to understand how
the business works and the problems it faces.
Information and consultation also provides
employers witha means of tapping into employee
knowledge and potential for innovation for the
benefit of the organisation. It demonstrates that
employees’ views aretaken seriously, which
boosts commitment and engagement. Employers
are helped to operate more effectively by
workplace dialogue not just by facilitating
change but also by removing confrontational
approaches to dispute resolution. This kind of
dialogue is as important as employee
engagement in producing well motivated and
well informed employees.
 SECTION FOUR

HIGH PERFORMANCE FOR EVERYONE

50
Ireland’s National Workplace Strategy: levels of workplace innovation and the factors
High performance through partnership: influencing take-up and adoption.
An examination of the evidence Working practices in Ireland
By Dr. Larry O’Connell, National Centre for Ireland has seen some quite extensive
Partnership and Performance; Dr. Wenchuan Liu experimentation in new work practices, particularly
and Dr. Patrick Flood, University of Limerick
in larger companies. Research carried out for the
Introduction Forum among a nationally representative sample
of 1,498 employers in 2003 indicated that many are
In 2003, the Irish Government requested that the
involving their employees in decision-making and
National Centre for Partnership and Performance
problem solving, developing their staff and
establish a Forum on the Workplace of the Future.
implementing employee-oriented policies. By
The Forum’s purpose was to assess how well
contrast, other practices such as team working,
Ireland’s workplaces are equipped to meet the
multi-tasking and employee financial involvement
challenges of the twenty-first century and to chart
remain more limited, as does the use of explicit
a course for their future development. The Forum’s
partnership arrangements. In particular, the take
activities provided an unprecedented opportunity
up of these practices among small business (0-9
to address issues and implications of workplace
employees) is low. For example, just 1 in 5
change in a comprehensive, forward-looking way
reported that they have new work practices such
and to develop a guiding vision for Ireland’s
as team working/multi-tasking/quality circles.
workplaces.
The Forum also supported research on the
The Forum undertook a wide-ranging evaluation
organisational practices of Ireland’s Top 1000
of how the world of work is evolving and the
companies. Specifically, the research examined the
challenges facing organisations and their
use of particular practices and the factors which
employees in the emerging knowledge society. Its
influenced their usage. There were 165
activities enabled extensive consultation, debate
organisational participants in the survey. The
and research on workplace change.
median firm had 234 employees and 75 million in
The Forum developed, and agreed among the annual sales.
social partners, an ambitious vision for Ireland’s
workplaces which would support the development
Country of origin
of dynamic outward-looking, customer-focused The research found significant differences between
and agile organisations. The vision argues that this foreign owned companies and indigenous
will require internal systems and processes which companies in their use of high performance work
are knowledge-intensive, employee-responsive, practices (Table 1). The results show that in
highly productive, learning-orientated and pro- Ireland, foreign-owned companies make relatively
actively diverse. greater use of high performance work systems. In
areas such as staffing, training, performance
To support this vision, the Forum developed
management, communication and participation,
Ireland’s first National Workplace Strategy. One of
the proportion of employees who can avail of
its key strategic priorities is workplace innovation
specific HR practices is significantly higher in
and in this context the Strategy recommends
foreign-owned companies. Summing across the
improvements in benchmarking and research in
practices, the average proportion of employees
relation to the organisational practices associated
covered by these activities is 53 per cent in foreign
with high performance. This article outlines the
owned versus 41 per cent in indigenous companies.
research which has helped highlight the current

51
Table 1: A comparison of HRM practices – Indigenous and foreign-owned companies

%
HRM practices Indigenous Foreign-
owned

1. Staffing: What proportion of your employees.

Are administered one or more employment tests

(e.g., skills tests, aptitude tests, mental/cognitive ability
tests) prior to hiring? 19 40

Are hired on the basis of intensive/extensive recruiting

efforts resulting in many qualified applicants? 47 64

2. Performance Management & Remuneration;

What proportion of your employees...

Routinely receive formal performance appraisals or

evaluations? 57 73

Receive compensation partially contingent on group

performance (e.g., profit-sharing, gainsharing,
team-based)? 29 54

3. Training & Development: What proportion of

your employees...

Have received intensive/extensive training in

company-specific sills (e.g., task or firm-specific
training) 57 76

Have received intensive/extensive training in generic

skills (e.g., problem-solving, communication
skills, etc)? 26 43

4. Communication & Participation: What

proportion of your employees...

Are involved in programmes designed to elicit

participation and employee input (e.g., quality
circles, problem-solving or similar groups)? 30 41

Are provided relevant operating performance

information (e.g., quality, productivity, etc)? 66 80

Are provided relevant financial performance information 49 67

Are provided relevant strategic information (e.g., strategic

mission, goals, tactics, competitor information, etc.) 52 74

Are routinely administered attitude surveys to identify and

correct employee morale problems? 23 45

Have access to a formal grievance/complaint resolution

procedure? 84 97

5. HPWS Index 41 53

52
Unions and high performance
The research found that firms having greater
workforce unionisation are less likely to utilise
HPWS. In particular, in unionised companies
there is less use of routine performance
appraisals, multi-source feedback, skill-based pay
and team-work. There is also reduced
communication of information on operating
performance and strategic plans.
However, the research provides interesting
insight into the rationale behind this link as the
influence of unions depends significantly on the
degree of employment security provided to
employees. The research showed that stronger
employment security provisions will increase
employee and union acceptance of HR
innovations. The findings showed that there is
less likely to be resistance among unions to the
introduction of new HR practices the more
managers agreed that, firstly, employees could
expect to stay with the organisation as long as
they wish; secondly, the company is committed to
a goal of long-term employment security; and,
thirdly that when facing economic problems,
employee downsizing would be the last option
used.
This suggests that for companies to realise the
productivity and performance gains identified in
this study, and summarised in the next section, a
real sense of partnership must be evident. There
is further evidence to support this conclusion in
the study. The research asked managers a
number of questions linked to partnership
around issues such as information and
consultation, employee financial participation,
skills development and opportunities for
employees. The results showed that where
management perceived that a partnership
climate or philosophy existed that there was
greater penetration of HPWS.
53
Workplace innovation: the economic
case
The research showed that the choice of high
performance work systems can have a significant
effect on firm performance. These HR practices
can make a meaningful difference to a firm’s
bottom line. Greater use of high performance
work systems is associated with higher sales per
employee, higher levels of innovation and lower
employee turnover.
The main effects were very robust and
economically significant. All else being equal
(level of R&D, industry, firm size and age) each
one standard deviation increase (e.g. moving
from average to above average usage) in the use
of high performance HR practices increases per
employee sales productivity by 16 per cent. For
the median sample firm, this represents an
additional 50,032 in revenue per employee. This
aggregates to an additional 11,707,488 for the
median sized firm due to increased labour
productivity.
The companies that were above average in their
use of these HR practices were also more
innovative. They had a significantly higher
percentage of sales from new products (17 per
cent) and new product sales per employee
increased by 22 per cent.
The research also shows a strong statistical
relationship between the use of HPWS and
increased employee retention. An increase of
HPWS from the average to above average usage
of these high performance practices decreased
employee turnover nearly 16%.
Conclusion
This paper outlined the economic benefits
associated with HPWS practices and highlighted
the cost of not making investments in HR,
revealing up to a 16 per cent difference between
the average user of HPWS and the below-
average user. A critical challenge for the new
National Workplace Strategy will be to ensure
that all companies across all sectors are aware of
this potential.
The paper shows that these high performance
practices are more common in larger businesses
and particularly so in foreign-owned companies.
However, developing these practices, for
example, more training, formal staff reviews,
team working and employee financial
involvement is something that all companies,
including small companies, can do.
Nonetheless, the Forum on the Workplace of the
Future recognised that a catalyst may be required
and has therefore recommended the
establishment of a Workplace Innovation Fund.
The Fund will be used to support and mainstream
54
new ideas and best practice models of workplace
innovation across various sectors of the Irish
economy.
Finally, the paper highlights the underlying
complexities associated with workplace
innovation. The need to carefully understand
the concerns of all stakeholders is reflected in the
findings around the role of unions. This suggests
that to deliver real and sustainable business
benefits, workplace innovation needs to be
responsive to the needs of employees.
A key challenge is not to simply encourage
organisational change but to encourage and
support new ways of working that will sustain
the long term prospects of companies and
employees. The paper suggests that what is
needed is innovation in organisational thinking
not just organisational change.
The High Performance Work System
and the Small Firm
By Paul Edwards
The High Performance Work System (HPWS) and
the small firm are both central to efforts to
improve the number of jobs and the
competitiveness of the economy. The HPWS has
been advocated by the DTI and in joint
statements by the CBI and TUC. The importance
of small firms was a central feature of the EU
Lisbon jobs strategy of 2000 which saw such firms
as ‘the main engine of job creation’.
Few direct efforts have, however, been made to
connect the two issues. This is because the idea
of the HPWS, which is essentially a large firm
concept, has not been translated into terms
suitable for small firms. It also needs to be
recognized that small firms are a very broad
category and that the HPWS model will apply to
only a minority. In particular, the bulk of small
firms are in relatively unsophisticated sectors such
as hotels and catering. There is a huge gap
between the rhetoric of the HPWS (high skills
and high performance) and the realities of many
small firms. This does not mean that the model is
irrelevant. But specific and targeted approach is
needed if its undoubted potential is to be
realized.
The HPWS
The core idea of the HPWS is not new. It is that
employees need to be given the ability to
contribute to the performance of the firm,
together with the means and the incentive to do
so. This principle can be found in the Quality of
Working Life movement of the 1960s, and indeed
earlier. What is new is the combination of three
things.
First, there is a systematic set of practices under
each of the three components. ‘Ability’ embraces
55
skills and training. ‘Means’ includes team work
and other ways of promoting participation.
‘Incentives’ include greater job variety and pay
linked to performance. Second, these practices
are linked to the wider strategy of the firm.
Third, there is substantial research evidence
claiming that a HPWS leads to improved
performance, yielding returns to firms and
workers alike.
Yet a firm of any size would need to think hard
before concluding that a HPWS will necessarily
improve its performance. The components of the
model are not agreed. Some studies see
performance-related pay as important, while
others do not. Nor are the mechanisms linking
high performance practices to concrete outcomes
well-understood. And it appears that good
performance allows the practices to be
introduced at least as much as the reverse. Most
importantly, use of a HPWS is an indicator or
concomitant of a managerial approach; simply
putting in elements of the model without any
changes in wider approach is unlikely to be
effective, and is indeed likely to be
counterproductive in generating resentment at
initiatives that have no real purpose. The HPWS is
a useful model to think through ways of
improving performance; it does not in itself offer
specific tools that can be employed directly.
The small firm
The importance of the small firm is now stated as
a matter of routine. The Lisbon jobs strategy
gives ‘special attention’ to ‘new and innovative
businesses’, in particular small firms; and it
commits member states to be responsive to the
needs of such firms.
Yet a study of employment in small firms across
old and new EU states finds at best patchy
results.
• Most small-firm employment is still
concentrated in low-wage and traditional
sectors.
• Evidence on the take-up of high performance
practices is limited, and the general picture is
of limited use of these practices. One study in
the UK for example had measures of means
and incentives to participate. One indicator of
means is the use of team briefings where
employees can give their views; these were
present in only 16 per cent of small-firm
workplaces. As for incentives, the same
proportion used performance-related pay.
• Public policy tends to focus on the removal of
alleged ‘barriers’ or the provision of very
generic business start-up advice rather than
the encouragement of good practice. It seems
to be assumed that small firms will naturally
flourish. UK evidence again points to many
generic schemes but little targeted assistance,
even though small firms increasingly operate
in distinct market niches and thus need very
specific advice.
And the links
As its name implies, the HPWS model is a system
of formal practices. These may have little
purchase in small firms. A good example is the
Investor in People standard, introduced in 1991
and now affecting 29 per cent of UK workers. Yet
its focus is documented procedures. Not
surprisingly, it is rarely used in small firms (in 14
per cent in the study mentioned above). Even
where it is used, it is not associated with high
levels of training (a key component of ‘ability’ to
participate). And it is largely targeted at basic
and generic standards rather than higher levels
of skill development that are connected to
specific business needs. Small firms also lack
specialist managers to run formal systems such as
IiP.
56
It is not, however, the case that small firms are
simply bad at training. European and UK surveys
repeatedly show that training is practised, but
that it tends to be informal and undocumented.
As for incentives, structured performance-related
pay schemes, and indeed structures of any kind,
are rare in small firms. There are few hierarchies,
job specifications are inexact, and the pay-
performance link is managed through face-to-
face discussion and ad hoc rewards rather than
detailed systems. Systems to measure and reward
performance would be seen as cumbersome and
bureaucratic.
This is not to say that the principles, as distinct
from the specific practices, of the HPWS are
irrelevant to small firms. Indeed, the problem
with many small firms is a tendency to run away
from anything that looks formal and structured.
This is particularly so in relation to the
management of people: small firms may happily
formalize their business processes while feeling
that personnel management requires the
personal touch.
There is also the basis to adapt the idea of high
performance. Surveys show that on indicators
such as job satisfaction workers in small firms
tend to score higher than their counterparts in
large organizations. Workers may thus be open
to ideas that make further use of their potential.
Tailoring the ideas
Recent research is building on the observation
that small firms are highly varied to identify
specific types of firm. The traditional family firm,
for example, operates in an established niche,
relies on family members, has few technical
experts, and has limited growth aspirations. The
high performance model is likely to be largely
irrelevant to such firms. Holding them up against
an idealized best practice model may be counter-
productive, and offering advice based on it is
unlikely to be a good use of resources.
Then there are firms in low-skill niches. They are
less restricted in their approach than pure family
firms, but may also find high performance
models of little value. In parts of manufacturing,
firms have clear niches, and the relationship
between such things as employee skills and
business success is far from direct. Where
products are reasonably standardized, high skills
and high involvement may not be necessary.
Large numbers of small firms also operate in the
service sector in low-wage areas such as hotels
and cleaning services. It is not that skills are
irrelevant, and there is plenty of spaced for firms
here to think about how they motivate their
staff. Employee management is often handled by
default, and ‘informal’ can often mean
‘unprofessional’. The introduction of the National
Minimum Wage led some small firms to think for
the first time about their payment systems, and
to clarify why they paid some workers more than
others. The high performance model does not
speak to such basic but important issues.
A more relevant target is the modern firm, which
is less embedded in family relationships or
limited niches and more driven by ideas of
growth and investment. Yet even here high
performance ideas need to be put in context.
New firms are unlikely to have the resources to
think in terms of employee training and
development, and such issues start to arise once a
firm has reached a certain age and size. Once this
stage has been reached, moreover, what is
relevant will depend on context. Formal training
57
and development systems may be less relevant
than finding ways for staff to take responsibility
for a given area. The generic issues of human
resource management – allowing employees to
learn and to develop skills while also retaining
discipline and focus – arise here as they do in
larger firms. But ways of handling them need to
be flexible and suited to the face-to-face and
informal approach of small firms.
There are also distinct issues facing small firms.
Developing employee skills runs the risk that
there will be nowhere for the newly skilled
worker to go. But this problem is not universal
firms. Growing firms need to develop their
talent. And there is a tendency for those who
have started a business to believe that only they
have the ideas to run it. They need to be willing
to relinquish some direct control, and doing so
may mean that they are more able to grow than
if they remained limited to the original vision. It
is not that the ability to grow is determined
solely be the external market. The deployment of
internal resources is at least as important.
The HPWS speaks to the resources that any firm
possesses. The idea of ability, means and
incentives is a useful device for any kind of firm
to think systematically about what resources it
has and how it can develop them. In large firms,
there is no standard model. This is even more
true of small firms, which are more diverse and
more driven by individual idiosyncrasy. None the
less, if the high performance idea contributes to
systematic thinking, it will have performed a
useful service.
 Involvement & Participation Association
42 Colebrooke Row, London N1 8AF
Tel: 020 7354 8040 Fax: 020 7354 8041
E-mail: involve@ipa-involve.com Website: www.ipa-involve.com
ISBN No. 978-1-902922-30-0

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