Documente Academic
Documente Profesional
Documente Cultură
Models
of
High Performance
Work Systems
The Business Case for Strategic HRM, Partnership
and Diversity and Equality Systems
January 2008
The views expressed in this report are those of the authors and do not necessarily represent
those of the Equality Authority or the National Centre for Partnership and Performance.
Contents
Foreword 5
Authors’ Acknowledgements 8
Executive Summary 10
Part 1
The Search for High Performance
1.1 Introduction 13
Part 2
Research Approach
2.1 Methodology 16
2.2 Sampling 17
Part 3
A Descriptive Overview of Workplace
Policies and Practices in Irish Industry
3.1 Introduction 17
4.1 Introduction 37
Part 5
Conclusions 41
Part 6
References 45
Foreword
managing employee involvement and par- where strategic HRM is integrated into,
ticipation, and implementing diversity and and balanced with, systems for managing
equality strategies, as legitimate concerns for employee involvement and participation,
organisational strategy in their own right. diversity and equality, and flexible working.
The findings demonstrate the powerful and The findings have important implications
synergistic effect of a multi-dimensional on a number of levels, not just for those
model of HPWS, where the net impact with leadership or management responsi-
of combining strategic human resource bilities at enterprise level, but for public
management (HRM) with employee policy makers and for the academic research
involvement and participation systems, community. The findings reaffirm the organi-
equality and diversity systems and flexible sational development framework set out
working systems, significantly exceeds the in the National Workplace Strategy, which
impact of any of these systems in isolation. sees the Workplace of the Future being
In economic terms, the median-sized shaped by concerns including employee
company in this sample (270 employees) involvement and participation, and equality
employing the multi-dimensional model of and diversity strategies. The findings should
HPWS would have performance advantages encourage researchers, practitioners and
> including almost €12,000,000 (or €44,399 the public policy community alike to
per employee) in labour productivity, and confidently redefine the scope of HPWS, and
€556,200 (or €2,061 per employee) in to focus attention on the need for employee
workforce innovation. Such findings mean, involvement and participation, equality and
in other words, that we can only begin to diversity strategies and flexible working
fully understand management systems systems to emerge as mainstream concerns
in high performance companies when we in defining better ways forward for the
think of them as sophisticated systems Irish economy.
foreword
New Models of High Performance Work We are grateful to Professor Flood and
Systems is part of an ongoing joint the research consortium from Dublin City
programme of work by the Equality Authority University, University of Limerick and Kansas
and the National Centre for Partnership University for the quality and expertise of
and Performance to explore the business their work on this research project. We are
case for workplace innovation strategies. also grateful to the team that managed the
It further underpins a business imperative project on behalf of the sponsors – Laurence
for employers to implement employee Bond at the Equality Authority, and Larry
involvement and participation strategies and O’Connell, Cathal O’Regan, Conor Leeson
equality and diversity strategies across all and Julia Kelly at the National Centre for
sectors of the economy. Such strategies could Partnership and Performance.
usefully be supported by public policy and
the further development of the resources and
support infrastructure available to businesses.
<
This report highlights the findings of The research was jointly commissioned by
the National Centre for Partnership and
a detailed survey of medium to large
Performance and the Equality Authority, and
companies in the manufacturing and was carried out during 2006 by a research
consortium from University of Limerick and
services industries in Ireland. The research University of Kansas. Detailed survey data
set out to examine the nature of was gathered from a total of 132 companies,
using two survey instruments targeting both
management and workplace practices in the CEO (or MD) and the HR director in the
sample companies.
Irish-based private sector companies, and
The researchers conducted sophisticated
to explore how such practices are related
multiple regression analyses on the data to
to business performance outcomes. explore a number of alternative models of
Table 0.1
Summary of Multivariate Modelling of High Performance Work Systems
10 >
MODEL 1 MODEL 2
u Partnership
Labour Productivity uG
reater use of SHRM associated with uG
reater use of SHRM and Partnership
increased labour productivity. SHRM associated with increased productivity.
accounts for 12.4% variance (p<.01)
u S HRM accounts for 10% variance
uS
tatistically significant (p<.01)
u Partnership accounts for 3.9% variance
positive relationship between change
of HPWS and change of labour uS
HRM partially mediates between Partnership
productivity (based on comparison of and labour productivity
2004 and 2006 panel data)
Workforce Innovation uS
HRM associated with greater uS
HRM associated with greater workforce
workforce innovation innovation (5% of variance)
uS
HRM also mediates relationship between
partnership and workforce innovation.
Partnership does not have a direct
association, but companies with partnership
are likely to have greater levels of SHRM
Employee Turnover uS
HRM associated with decreased uS
trategic HRM associated with decreased
employee turnover employee turnover (4% of variance, p<.01)
uS
HRM also mediates relationship between
partnership and employee turnover.
executive summary
High Performance Work Systems (HPWS). The practices are clearly associated with
initial model explored the standard set of business performance outcomes, including
factors associated with HPWS, which relate labour productivity, innovation levels, and
to strategic human resource management employee wellbeing. The more novel findings
in the company. However, the researchers relate to the discovery that other factors,
then expanded their analysis to examine including diversity and equality systems, and
factors beyond strategic HRM, including workplace partnership systems, are positively
workplace partnership, diversity and equality and synergistically associated with signifi-
management, and flexible working systems. cantly higher levels of labour productivity,
workforce innovation, and reduced employee
The results of the initial model of HPWS
turnover.
reconfirm what previous research by
the NCPP and others has shown – that The key findings from four alternative models
strategic human resource management of HPWS are highlighted in Table 0.1 below.
< 11
MODEL 3 MODEL 4
uD
iversity and Equality system u F our elements together (SHRM, Partnership, DES,
accounted for 6.5% of variance FWS) account for 14.8% of variance in labour
in labour productivity productivity. While only SHRM is significant, other
three variables are in a positive direction. Total
uN
o significant association
economic value in this sample equates to e44,399 per
between FWS and labour
employee, or almost e12,000,000 in the median sized
productivity
company with 270 employees.
uD
ES accounts for 7.9% of u F our elements together (SHRM, Partnership, DES,
variance (p<.01) FWS) account for 12.2% of variance in workforce
innovation. SHRM and DES are significant, while
uN
o significant association
Partnership and FWS affects in positive direction.
between FWS and workforce
Total economic value in this sample equates to
innovation
€2,061 per employee, or €556,200 in the median-
sized company with 270 employees.
uD
ES accounts for 4.4% variance u F our elements together (SHRM, Partnership, DES,
in employee turnover (p<.01) FWS) account for 7.7% of variance in employee
turnover. Partnership is significant at 4% of variance
uN
o significant association
explained. Total economic value in this sample
between FWS and employee
equates to retention of up to 2 additional employees
turnover
in the median-size company.
new models of high performance
work systems
In this sample of companies, a broad These results challenge public policy makers,
model of HPWS (incorporating strategic researchers, and management practition-
HRM, workplace partnership, diversity and ers to think of high performance work
equality systems and flexible work systems) systems in a more expansive way than has
was found to be associated with 14.8% of been the norm until now. While strategic
variance in labour productivity, 12.2% of human resource management will clearly
variance in workforce innovation, and 7.7% remain a core concern in terms of best
of variance in employee turnover. practices approaches to the management
of companies, it is becoming increas-
While the analyses do not suggest a causal
ingly clear that companies may find
relationship between HPWS and business
competitive advantage through more
performance outcomes, they do make
effective approaches to managing employee
important reading for any company that
involvement and participation, and diversity
is seeking to build competitive advantage
and equality in the workplace. Such issues
through workplace innovation. They
should no longer be considered as issues
demonstrate a strong business case for
to be managed only for the purposes of
building management systems that deal
regulatory compliance, but as organisa-
effectively with issues including strategic
tional factors that can impact significantly
12 > human resource management, employee
on productivity and innovation levels in the
involvement and participation, diversity and
company.
equality management, and flexible working.
Where companies are found to manage these
issues more extensively, higher levels of
business performance can be demonstrated.
Where companies are found to manage
these issues in a more cohesive management
system, even greater effects are found in
terms of business performance.
Part 1
innovation is widely seen as being a key ity and innovation levels also tend to have
more sophisticated, extensive and effective
factor in allowing companies to design and management systems. In examining this
proposition, the concept of High Performance
implement workplace policies and practices
Work Systems (HPWS) provides a useful
that support higher levels of productivity means of describing and explaining the
observed differences in workplace behaviours
and innovation.
between high-performing organisations and
average-performing organisations. Put simply,
HPWS are bundles of work practices and
policies that are found more extensively in
high performing organisations.
1 Flood, P., Guthrie, J.P., Liu, W., and MacCurtain, S. (2005). High Performance Work Systems in Ireland – The Economic Case.
National Centre for Partnership and Performance.
2 Including research from the National Centre for Partnership and Performance and the Equality Authority.
the search for high performance
1.3 Expanding the definition of HPWS The growing body of research on HPWS
enables us to develop a more useful under-
A growing body of research suggests that
standing of the nature of the relation-
the use of a set of HR practices, including
ship between business performance and
comprehensive employee recruitment
management systems. Researchers have
and selection procedures, compensation
examined a range of configurations of
and performance management systems,
HPWS to better understand the relative
information sharing, and extensive employee
importance and synergistic effect of different
involvement and training, can improve the
management and workplace practices.
acquisition, development and retention of
This approach establishes the context
a talented and motivated workforce3. These
for the present report, which sets out to
HR practices are usually referred to as high
develop new conceptual insights into what
involvement4, high commitment 5, or high
constitutes high performance work systems
performance6 work systems.
by looking beyond the prevalent HRM-
Much of the analysis of HPWS originates centred model. The current research seeks to
from the study of strategic human resource examine the business case for new models of
management (SHRM), where researchers HPWS, using empirical evidence to explore
have examined the impact of “bundles” of how a broad set of management practices
< 15
HR practices on organisational outcomes. which includes strategic human resource
The idea that a system of HR practices management, workplace partnership,
may be more than the sum of the parts diversity and equality management, and
gives rise to debate as to the specific con- flexible working might relate to high
figuration of practices constituting a high performing organisations.
performance system. Some work suggests
“universal” HPWS effects7, while other work
suggests that HPWS effects may depend on
conditions such as competitive strategy or
industry8. One way or another, a system or
set of management practices is considered to
be more difficult for competitors to imitate
than individual practices.
3 E.g. Arthur, 1994; Batt, 2002; Becker and Gerhart, 1996; Datta et al., 2005; Guthrie, 2001; Huselid, 1995;
Huselid and Becker, 1996; Jones and Wright, 1992; MacDuffie, 1995; United States Department of Labour, 1993.
4 E.g. Guthrie, 2001.
5 Arthur, 1994.
6 Datta et al., 2005; Pfeffer, 1994, Huselid, 1995.
7 E.g. Huselid, 1995.
8 E.g. Datta et al., 2005.
Part 2
Research Approach
performance metrics.
9 See http://www.businessworld.ie.
research approach
The survey sample was drawn from “The The profile of participating companies is
Irish Times Top 1000 Companies” database,
9
commensurate with the general profile of
which is a representative, multi-industry larger industry in Ireland. Figure 2.1 shows
set of Irish-based operations. The sample approximately one third are in manufactur-
includes both indigenous Irish companies and ing, 27% are in service industries (finance,
foreign-owned companies with operations personal, recreational, health and other
in Ireland. 1005 companies were contacted services) while less than 4% of companies
to participate in the survey, of which 241 are from energy or water industry. As shown
companies responded. Data was utilised in Figure 2.2, 50% of the companies were
from the 132 companies that completed indigenous Irish-owned companies, with the
both the HR and GM surveys, resulting in remaining 50% being subsidiaries of foreign
an overall response rate of 13.2%. This companies, including USA (25.8%), Germany
response rate is in line with typical response (6.8%), and UK (5.3%). Unions represented
rates for research of this nature, ranging 33.7% of participating companies’
from 6% to 20%. employees. The average company had been
established for about 37 years, and the
2.3 Profile of Respondents median number of employees was 270. The < 17
companies were at the higher end of R&D
For the HRM survey, 70% of respondents
activity in Irish terms, with average R&D
were from the HR function, 20% were other
investment equating to 3.89% of annual
senior executives (e.g. Managing Director /
turnover.
CEO), and 10% were other executives (e.g.
Financial Officer, Operating Officer). For
the GM survey, 70% of respondents were
Senior Executives (e.g. Managing Director,
CEO), while the remaining 30% were other
Executives (e.g. HR Officer, Financial Officer,
Operating Officer).
new models of high performance
work systems
Figure 2.1
Industry distribution of participating companies
Agriculture/Forestry/fishing 4.55%
0 5 10 15 20 25
18 >
Figure 2.2
Country of ownership of participating companies
Frequency
70 66
60
50
40 34
30
20 16
9 7
10
0
Country of Ownership
Part 3
3.2 S
trategic Human Resource 3.2.2 Measuring SHRM
Management (SHRM)
In measuring SHRM practices, researchers
looked separately at two categories of
3.2.1 Overview
employees. Group A comprised production,
The first theme examined is strategic human maintenance, service and clerical employees,
resource management (SHRM). This has while Group B comprised executives,
been the traditional focus of HPWS research, managers, supervisors and professional/
and in many instances the term SHRM is technical employees.
used interchangeably with HPWS. SHRM
For this study, 18 survey items were
is generally understood as a set of inter-
compiled to create a SHRM Index,11 which
related HR practices that include staffing,
resulted in each company receiving a single
performance management and remuneration,
SHRM score on the index. The 18-item
training and development, communication
SHRM Index incorporated practices in areas
and participation. The common theme in the
including staffing, performance management
literature on SHRM is a set of practices that
and remuneration, training and development,
provide employees with skills, information,
and communication and employee partici-
motivation and latitude, resulting in a
20 > pation. Using the number of employees in
workforce that is a source of competitive
each occupational group, a weighted average
advantage. Huselid’s (1995) landmark study
for each practice was computed. The SHRM
examined the relationship between the
Index had a Cronbach’s alpha reliability
use of high performance work systems and
rating of 0.85, giving confidence that the
company performance. His main finding was
SHRM Index was a reliable indicator of the
that greater use of these types of SHRM
extent of its SHRM practices at the time
practices was associated with decreased
of the survey, and represents a state-of-
turnover and higher levels of productivity
the-art profile of SHRM in medium to large
and profitability. Similarly, Flood et al. (2005)
companies in Irish industry.
highlighted the economic benefits associated
with high performance work practices in Table 3.1 highlights the 18 items and their
people management, employee involvement, average score for each occupational group.
and training and development.10 The SHRM Index yields an average score
of 48.81% across all companies and both
occupational groups.
10 In their report, Flood et al. (2005) categorised the three main areas as four components in terms of staffing, performance
management and remuneration, training and development, and communication and participation.
11 Based on methodology employed previously by Huselid (1995), Guthrie (2001), Datta et al. (2005), and Flood et al. (2005)
workplace policies and
practices in irish industry
Table 3.1
SHRM Systems in Irish Companies
STAFFING:
What proportion of your employees..... Score
re administered one or more employment tests
A
(e.g., skills tests, aptitude tests, mental/cognitive ability tests) prior to hiring? 24.19%
Are hired on the basis of intensive/extensive recruiting efforts
resulting in many qualified applicants? 57.67%
Hold non-entry level jobs as a result of internal promotions
(as opposed to hired from outside of the organisation)? 34.37%
Hold non-entry level jobs due to promotions based upon merit or performance,
as opposed to seniority? 44.99%
Figure 3.1 to Figure 3.4 illustrates some p The use of SHRM was linked with
interesting findings regarding SHRM: workforce size, with companies with more
than 500 employees being more likely to
p The use of SHRM varies significantly
use SHRM than companies with less than
depending on the nature of the industry.
500 employees (58.01% vs. 45%).
Companies in the personal services sector
reported most extensive use of SHRM p There is no significant difference between
(64.41%), while those working in health the levels of SHRM used in non-unionised
services have the least extensive use of companies and unionised companies.
SHRM (only 35.77%).
p Companies that have implemented a
p The use of SHRM appears to be much partnership policy are significantly more
more extensive in subsidiaries of likely to utilise SHRM.
foreign companies than Irish indigenous
companies (57.29% vs. 38.72%).
Transport/Communications 61.35
Energy/Water 52.57
Agriculture/Forestry 44.98
Building 44.75
0 10 20 30 40 50 60 70 80 90 100
Figure 3.2
Strategic HRM x Country of Ownership
Country of Ownership
0 10 20 30 40 50 60 70 80 90 100
Figure 3.3
Strategic HRM x No. of Employees
Company size
(no. of employees) < 23
Less than 100 44.92
100-500 45.88
0 10 20 30 40 50 60 70 80 90 100
Figure 3.4
Strategic HRM x Level of Unionisation
Level of Unionisation
0% 44.92
70%-100% 58.01
0 10 20 30 40 50 60 70 80 90 100
3.2.3 SHRM Trends 2004–2006 Other changes in the panel companies over
the same period included
The research included a sub-set of paired
(‘panel’) data from 48 companies that had p A significant increase of 11.2% in labour
previously responded to a 2004 survey productivity13
(Flood, P. et al., 2005). A comparison of
p I ncreased levels of R&D investment14
the 2004 and 2006 data on SHRM from
from an average of 3.23% in 2004 to
these companies shows a sizeable positive
3.29% in 2006
increase in the average SHRM Index score,
from 40.55% in 2004 to 45.64% in 2006, as p I ncreased employment growth, up on
illustrated in Figure 3.5, below. average by 11 employees per company
Figure 3.5
SHRM Trends 2004–2006
24 >
Frequency
1.6
1.4
1.2 1.10
1.22
0.8
40 42 44 46
Strategic HRM
40.55 45.64
13 Labour productivity, calculated as the log of sales revenue per employee, increased from a score of 1.10 in 2004 to 1.22 in 2006. The analysis used the
mean of labour productivity scores from both HR and GM surveys.
14 R&D Investment – calculated as a percentage of annual turnover.
workplace policies and
practices in irish industry
Table 3.2
Partnership in Irish Companies
Partnership 3.80
workplace policies and
practices in irish industry
Figure 3.6 to Figure 3.9 shows the use of In terms of company size, companies with
partnership as a function of organisational employee numbers greater than 100 are
type. In terms of country of origin, the more likely use partnership than smaller
subsidiaries of foreign companies reported companies. In general, the effect of unioni-
slightly higher adoption of partnership than sation on the use of partnership is not
Irish indigenous companies (3.94 vs. 3.67). significant.
Figure 3.6
Partnership Usage x Type of Industry
Energy/Water 4,55
Transport/Communication 3,87
Agriculture/Foresty 3,46
0 1 2 3 4 5
Figure 3.7
Partnership Usage x Country of Ownership
Country
of Ownership
Indigenous Irish
Companies 3.67
Multinational 3.94
Corporations
0 1 2 3 4 5
Figure 3.8
Partnership Usage x No. of Employees
Company size
(no. of employees)
28 >
Less than 100 3.65
100-500 3.93
0 1 2 3 4 5
Figure 3.9
Partnership Usage x Level of Unionisation
Level of
Unionisation
0% 44.92
70%-100% 58.01
0 1 2 3 4 5
15 Most of these practices are legislative contents of The Employment Act 1998 and 2004. Note that, when monitoring these matters,
companies must ensure that monitoring is done in a manner that ensures that any information gathered cannot be used to discriminate.
16 Since some items had different response scales, the DES index was calculated as the average Z-score of the 17 items.
new models of high performance
work systems
Table 3.3
Diversity and Equality Practices in Irish Companies
Item Score
To what extent is equality and diversity integrated into overall corporate strategy? 51.49%
Has a senior manager been designated to champion equality and diversity in your organisation? 37.69%
Does this workplace have a formal written policy on equal opportunities? 84.73%
Does this workplace have a formal written policy on managing diversity? 40.00%
Average score
DES 19.35%
workplace policies and
practices in irish industry
Interestingly, the financial services sector reported higher adoption of DES than Irish
appears to have a preference for employing indigenous companies (21.92% vs. 16.74%).
Western but not Eastern Europeans. The The use of DES was linked with workforce
retail and distribution sector appears to have size, with companies with more than 500
a preference for employing Asians and the employees being more likely to use DES than
building and civil engineering sector appears companies with less than 500 employees. In
to have a preference for employing Eastern addition, unionisation has a positive impact
Europeans. on the use of DES, with unionised companies
more likely to use DES than those without
Organisational Characteristics
unions (21% vs. 16%).
Figure 3.10 to Figure 3.13 shows the use
of DES in relation to organisational char- Companies whose diversity and equality
acteristics. While the average of use of DES policies are integrated into overall corporate
is 19.35%, there appears to be consider- strategy tend to be larger multinationals,
able variation depending on the sector that rather than indigenous Irish companies. They
the company is in. In terms of country of also tend to be making a more significant
origin, the subsidiaries of foreign companies investment in R&D, and use employee
partnership practices more extensively.
< 31
Figure 3.10
Diversity and Equality Systems x Type of Industry
Energy/Water 39,91
Building 25,07
Transport/Communication 20,71
Agriculture/Foresty 14,12
0 10 20 30 40 50 60 70 80 90 100
Figure 3.11
Diversity and Equality Systems x Country of Ownership
Country
of Ownership
Indigenous Irish
Companies 16.74
Multinational 21.92
Corporations
0 10 20 30 40 50 60 70 80 90 100
Figure 3.12
Diversity and Equality Systems x No. of Employees
Company size
32 > (no. of employees)
100-500 18.97
0 10 20 30 40 50 60 70 80 90 100
Figure 3.13
Diversity and Equality Systems x Level of Unionisation
Level of
Unionisation
0% 16.35
70%-100% 21.66
0 20 40 60 80 100
Table 3.4
Flexible Working Practices in Irish Companies
Item Score
What proportion of your total employees are afforded job sharing schemes? 11.00%
What proportion of your total employees are afforded ability to change shift patterns? 20.35%
Average score
FWS 16.55%
Figure 3.14
Flexible Work Systems x Type of Industry
Transport/Communications 31.1
Energy/Water 21.3
Agriculture/Forestry 15
Building 12.45
Agriculture/Forestry 10.67
0 10 20 30 40 50 60 70 80 90 100
Table 3.5
Flexible Working Arrangements
Flexi-time 14.59%
Figure 3.15
Flexible Work Systems x Country of Ownership
Country of Ownership
0 10 20 30 40 50 60 70 80 90 100
Figure 3.16
Flexible Work Systems x No. of Employees
Company size
36 > (no. of employees)
100-500 13.26
0 10 20 30 40 50 60 70 80 90 100
Figure 3.17
Flexible Work Systems x Level of Unionisation
Level of Unionisation
0% 44.92
70%-100% 58.01
0 10 20 30 40 50 60 70 80 90 100
17 Tables detailing the multivariate regression analyses are available, on request, from the authors.
18 A log of average of labour productivity from GM and HR surveys was used as the dependent variable in the multiple regression analysis.
new models of high performance
work systems
Employee Turnover rates can be considered A still more compelling correlation emerges
a useful proxy indicator of employee well- through the analysis of panel data19 from
being in the company. In this research, the the 2004 and 2006 surveys. The panel data,
measure of employee turnover rates was drawn from companies which responded
taken from responses to the following survey to the surveys in both 2004 and 2006,
question: “Please estimate your annual allows for a more extensive exploration of
voluntary employee turnover rate (percent the role of SHRM as a factor in company
who voluntarily departed your organisa- performance, by examining the impact of
tion).” This question was asked separately change in HPWS on change in labour produc-
for both categories of employees (Group A tivity. Using multivariate statistical models
comprised production, maintenance, service to control for a range of variables20, the data
and clerical employees; Group B comprised reveals a statistically significant, positive
executives, managers, supervisors and pro- relationship (p<.01) between increased levels
fessional/technical employees). A weighted of HPWS and increased labour productivity.21
average of these separate estimates was
computed to represent the overall average 4.4 HPWS Model 2 –
rate of employee turnover for each company. High Performance through SHRM
and Partnership
38 >
4.3 HPWS Model 1 – In previous studies of partnership, no
High Performance through Strategic
evidence has shown if the observed rela-
Human Resource Management
tionship between partnership and business
The first High Performance Work Systems performance levels (either positive or
model examined is the SHRM model. negative) is based on an environment with
NCPP research data from 2004 has already SHRM practices. Likewise, previous studies
established the association between SHRM of SHRM (and research generally on HPWS),
and outcome measures including profit- have paid very little attention to partnership.
ability, innovation, labour productivity and
As discussed by O’Connell (2003), high-
employee turnover.
involvement or high-performance HR
Similar analyses on the current data again practices are central to the notion of
demonstrate the association between SHRM “partnership”. Partnership denotes a
and higher labour productivity and workforce philosophy of collaboration or mutuality
innovation and lower employee turnover between management and employees for the
rates, with greater use of SHRM accounting purpose of organisational problem-solving
for 12.4% variance in labour productivity and functioning. According to O’Connell,
(p<.01). partnership indicates an “employee-centred”
organisation design. One way to think Partnership was entered first and accounts
of high-performance HR practices is as for 3.9% of variance in labour productiv-
an operationalisation or implementation ity (p<.01). SHRM was entered second and
of the partnership philosophy. Similar to explained an additional 10% of variance,
O’Connell’s description, authors in the SHRM (p<.001). This result shows that greater use
literature (e.g., Guthrie, 2001) also describe of partnership and SHRM is associated with
companies utilising high-performance HR increased labour productivity.
practices as employee-centred organisations.
If we conceive of SHRM as an operationa-
This is because information and decision-
tionalization of a partnership philosophy, this
making power is dispersed throughout the
implies a mediating relationship where the
organisation with employees at all levels
effect of partnership on productivity may
taking on greater responsibility for the
be partially due to the increased likelihood
operation and success of the organisation.
that “partnering” companies will more likely
Clearly, “partnership” and “high performance use SHRM. A formal test confirms that SHRM
HR practices” are closely linked. Research in partially mediates the relationship between
international settings has suggested that, partnership and productivity (Sobel test
as a form of partnership, high performance statistic = 1.649; p =.049, one-tailed).
HR practices can help create and sustain < 39
competitive advantage. This second model 4.4.2 HPWS Model 2
of HPWS examines SHRM practices together (SHRM and Partnership) and
with partnership in relation to labour Workforce innovation
productivity, workforce innovation and After controlling for company age, company
employee turnover. size, R&D investment, unionisation, dif-
ferentiation/ low cost company strategy,
4.4.1 HPWS Model 2
country of ownership, and industry sector,
(SHRM and Partnership) and
our regression analysis shows that greater
Labour productivity
use of SHRM is associated with greater
A multivariate regression analysis was workforce innovation. Partnership is not
conducted to examine the association found to have a direct association here with
between HPWS Model 2 (SHRM and workforce innovation, but does play a role
partnership) and labour productivity. After in that companies that have higher levels of
controlling for company age, company size, partnership will likely have higher levels of
R&D investment, unionisation, differentia- SHRM, which is shown to be associated with
tion / low cost company strategy, country of higher levels of innovation.
ownership, and industry sector, the analysis
showed that greater use of Partnership and
SHRM is associated with increased labour
productivity.
new models of high performance
work systems
DES and DWS) in Model 4 account for 14.8% 4.6.3 HPWS Model 4
of this productivity, or d44,399 per capita. (SHRM, Partnership, DES, FWS)
Extrapolating this value to the median and Employee turnover
company in our sample (270 employees), Our analysis shows that SHRM, Partnership,
would amount to a total annual economic DES, and FWS together can account for
value of d11,987,730 in productivity attrib- 7.7% of variance of employee turnover.
utable to these four management systems. Partnership accounted for 4% of variance in
employee turnover (p< .01). SHRM explained
4.6.2 HPWS Model 4 an additional 1.9% of variance (p< .10), but
(SHRM, Partnership, DES, FWS) does not significantly mediate (alter the
and Workforce innovation impact of) partnership on voluntary turnover.
Our analysis shows that that SHRM, Partnership and DES are also significant, as
Partnership, DES, and FWS together can are Partnership and FWS. Therefore, greater
account for 12.2% of variance of workforce use of SHRM, Partnership, DES, and FWS
innovation. SHRM and DES are significant, is associated with decreased employee
while the effects of Partnership and FWS on turnover.
workforce innovation are also in a positive Average voluntary turnover rates of 5.4%
42 > direction. Therefore, greater workforce suggest that the median sample company
innovation is associated with greater use of from this sample loses approximately 15
SHRM, Partnership, DES and FWS. employees each year. The aggregate affect of
Again, in addition to being statistically the above four practices would lead to the
significant, these results have important retention of an additional 1 – 2 employees
economic benefits for companies. Sample per year. Recent work suggests that
companies (132 larger, high turnover voluntary turnover has substantial negative
companies) generated on average d16,893 in implications for company performance, often
revenue from new products and services per costing as much as 150% of the departing
employee per annum. The combined effects employee’s annual salary (Cascio, 2006).
of SHRM, Partnership, DES and DWS (12.2%
of variance) equates to d2,061 per employee.
Extrapolating this to the median-sized
company in our sample, this would amount
to d556,200 in sales from new products and
services. Since these offerings are new to the
product or service life cycle, this understates
the economic effect since future returns will
also be substantial.
Part 5
Conclusions
Our analysis examined the association Our results clearly indicate that the adoption
of high performance work systems differs
between a range of workplace and between companies depending on factors
management practices (including strategic such as type of industry, country of
ownership, company size and unionisation
human resource management, partnership, rate. To summarise, we found that a
broad management approach involving
diversity and equality systems, and
SHRM, DES, FWS and Partnership is more
flexible working systems) and business extensively used in larger companies, and
more extensively in multinational rather
performance outcomes including labour
than indigenous Irish companies. There is
productivity, workforce innovation and no significant difference between unionised
companies and non-unionised companies
employee turnover.
in terms of their use of strategic HRM and
partnership. On the other hand, unionised
companies do have more extensive diversity
and equality systems. The results for flexible
working systems are mixed. The data will
< 43
require secondary analysis to further explore
the effects of variables such as unionisation
level on business performance outcomes.
Table 5.1
Summary of Multivariate Modelling of High Performance Work Systems
44 >
MODEL 1 MODEL 2
u Partnership
Labour Productivity uG
reater use of SHRM associated with uG
reater use of SHRM and Partnership
increased labour productivity. SHRM associated with increased productivity.
accounts for 12.4% variance (p<.01)
u S HRM accounts for 10% variance
uS
tatistically significant (p<.01)
u Partnership accounts for 3.9% variance
positive relationship between change
of HPWS and change of labour uS
HRM partially mediates between Partnership
productivity (based on comparison of and labour productivity
2004 and 2006 panel data)
Workforce Innovation uS
HRM associated with greater uS
HRM associated with greater workforce
workforce innovation innovation (5% of variance)
uS
HRM also mediates relationship between
partnership and workforce innovation.
Partnership does not have a direct
association, but companies with partnership
are likely to have greater levels of SHRM
Employee Turnover uS
HRM associated with decreased uS
trategic HRM associated with decreased
employee turnover employee turnover (4% of variance, p<.01)
uS
HRM also mediates relationship between
partnership and employee turnover.
conclusions
Table 5.1 summarises the key findings from positive results serve to further corroborate
each of the four models of HPWS examined the importance of HPWS and their
using multivariate regression analysis. association with important organisational
outcomes.
Findings from the analysis of panel data
based on 48 companies that responded to The findings of this research have important
the surveys both in 2004 and 2006 reveals implications for policy makers, managers,
a significant increase in SHRM since 2004. unions, employees, and researchers.
In the same period, labour productivity in
p Work organisation, management policies
these companies also increased by 11%,
and management practices are strongly
while investment in R&D as a percentage of
correlated with business performance
turnover grew from 3.23% to 3.29%. Such
< 45
MODEL 3 MODEL 4
uD
iversity and Equality system u F our elements together (SHRM, Partnership, DES,
accounted for 6.5% of variance FWS) account for 14.8% of variance in labour
in labour productivity productivity. While only SHRM is significant, other
three variables are in a positive direction. Total
uN
o significant association
economic value in this sample equates to e44,399 per
between FWS and labour
employee, or almost e12,000,000 in the median-sized
productivity
company with 270 employees.
uD
ES accounts for 7.9% of u F our elements together (SHRM, Partnership, DES,
variance (p<.01) FWS) account for 12.2% of variance in workforce
innovation. SHRM and DES are significant, while
uN
o significant association
Partnership and FWS affects in positive direction.
between FWS and workforce
Total economic value in this sample equates to
innovation
e2,061 per employee, or e556,200 in the median-
sized company with 270 employees.
uD
ES accounts for 4.4% variance u F our elements together (SHRM, Partnership, DES,
in employee turnover (p<.01) FWS) account for 7.7% of variance in employee
turnover. Partnership is significant at 4% of variance
uN
o significant association
explained. Total economic value in this sample
between FWS and employee
equates to retention of up to 2 additional employees
turnover
in the median-sized company.
new models of high performance
work systems
outcomes. Any public policy or company p The advocacy case for best practice
strategy that seeks to develop competi- approaches to workplace partnership,
tiveness in Irish industry through improved diversity and equality, and flexible working
productivity, improved innovation or has a strong economic argument as well as
improved quality of working life must having a legislative and humanitarian basis.
recognise the importance of organisational The economic argument puts forward clear
factors including management policies and business performance benefits for both
practices. employers and employees.
Part 6
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