In this chapter, we move on to examine what drives the introduction of high performance working practices. Our main question is why, if these new forms of work organization are so effective in enhancing performance, have not most organizations adopted them? In an attempt to answer this, we explore the main triggers which lead to the introduction of these practices. Are they driven by technological change or are there other forces at work? Why is it that some firms introduce them and not others? Perhaps one of the disincentives is that they are difficult to introduce. We ask what are the problems managers and workers face in implementing them. What do we know about the factors that lead to successful implementation? This is a broad range of questions which we seek to answer, using both quantitative and qualitative data.
What drives the introduction of these practices? What are the specific triggers?
In Chapter 1, we argued that, with the intensification of competition in world markets, these new forms of organization offer the prospect of providing a step change in the levels of productivity and crucially in the quality of the product or service they could deliver. In this sense, they represent new, more efficient ways of organizing human labour. In many respects, because these HPWOs have been able to make significant improvements in productivity and quality, they have changed the rules of the game, putting pressure on other organizations to adopt these practices to achieve the same levels of performance. However, these competitive pressures face all organizations; their mere existence does not explain why some adopt HPWPs at one point in time and others do not. Here our knowledge is thin and reliant largely on data from case studies, but we have sufficient knowledge to understand some of the main triggers.
Results of quantitative studies
Pil and MacDuffie1 used a longitudinal study of motor vehicle assembly plants to test a series of hypotheses concerning the factors that affect the introduction of what they term high involvement work practices (HIWPs) (e.g. job rotation, use of teams and suggestion schemes). They focus on high involvement working practices because they argue that such practices are more difficult to change than the complementary HR policies (e.g. new training, contingent compensation, status differentials and flexible automation) because the work practices are more intimately bound up with core business processes and coordination requirements of the organization.
The authors of the study found that plants are more likely to increase their use of high involvement work practices when they already have implemented complementary HR practices, supporting the notion that these practices are bundled. This is a finding in line with those presented from the research by the Centre for Labour Market Studies presented in Chapter 6. Pil and MacDuffie also found only weak support, in a statistical sense, for the hypothesis that the worst-performing plants would be more likely to introduce HIWPs. They did find that higher levels of managerial tenure have a positive and statistically significant association with greater increase in the use of HIWPs, suggesting that longer-term relationships provide a possible basis for greater trust. Company actions that reduce employee trust, such as management layoffs, production-worker layoffs and early retirement programmes, have no statistically significant association with the introduction of HIWPs, perhaps because on the one hand they can reduce the necessary "trust but on the other they "unfreeze" resistance to change, with the two having the effect of cancelling each other out. There was some evidence that plants with traditional practices are more likely to undertake downsizing. The introduction of new automotive models was also associated with the introduction of HIWPs but not plant expansions.
Many plants in the United States and Canada retain traditional practices for the following reasons: management and unions are ambivalent about the value of work reform, and the competitive crisis is not necessarily viewed as requiring major change in the internal organization. Organizational learning both within and outside the organization is not always very effective. Most of the plants are focused on building single models at high volume and therefore are seen as having less to gain from the introduction of more flexible practices.
| Pil and MacDuffie's qualitative findings
The quantitative field work which was also part of this study revealed other factors which were important in explaining why companies adopted HIWPs. Companies that moved rapidly toward adopting HIWPs in the period 1989-93-94 typically shared the following characteristics. They faced a serious competitive crisis in the period, and their senior personnel perceived the crisis as internal rather than external, in that it was perceived to be a result of problems with organizing production according to traditional mass- production principles. These perceptions were then validated by external benchmarking. Senior personnel reached the conclusion that lean production principles should be introduced. The companies had little previous experience with work reform. Company and plan-level managers (and union officials) held neutral or positive views about the value of work reform as a means of improving performance. Companies found effective ways of cultivating organizational learning across functional boundaries within the organization. Companies had access to some learning models with other companies already using these principles. |
In developing countries, Pil and MacDuffie found that companies use HIWPs but not automation. They found that plants in newly industrialized countries introduce new training, performance-based pay, elimination of status differences, and more selective recruitment and hiring practices rather than capital investments in robotics, as in these locations the volume of production is low as well as the wages. This would explain why in the statistical analysis they did not find a significant association between the use of HIWPs and flexible automation.
Results of qualitative evidence: Problems in the market
Case study evidence, including that presented here, suggests that the main trigger for the introduction of HPWPs in the private sector is a problem in the market. This problem often takes the form of a threat to the continued viability of the organization, but the precise form it takes differs from one company to another. Some of the pioneers of HPWPs, including companies such as Xerox, introduced these practices in response to the competition they faced from the Japanese in the 1980s. Like other leading US companies such as Ford in the motor industry, Xerox's competitive benchmarking noted significant improvements in customer satisfaction and productivity created by Japanese team-based organizations in their market for copiers. To remain competitive, Xerox had to increase significantly its responsiveness to customers while at the same time reducing costs. It did this by reorganizing the work of 13,000 US field-service employees around the world into empowered work teams. The result was a progressive reorganization of this aspect of the company over a 15-year period2.
Other researchers report that it is the pressures from the market which usually trigger the introduction of HPWPs such as teamworking. Mason3 found this to be the case among American and European manufacturing companies. Lloyd4 reports a similar finding in the case of one UK pharmaceutical company which introduced team working for production workers as a result of the need to cut costs and improve the poor state of industrial relations. She also noted that this had been a long slow process as the company went through "three years of structural and emotional change".
In the case studies reported in the previous chapter, SAB faced the problem of suddenly having to make itself competitive in a world market from which it had previously been insulated by the protectionist economic policies of the apartheid Government. If it was to survive in this new arena, let alone increase its share of the world market, the company had to learn very fast how to improve productivity and quality. Similarly, Thorn, Ltd. had to confront the challenge of a stagnant or declining market share if it was to survive. What is common here is the threat to the continued survival of the company.
When the survival of the organization is at stake, then fears about the consequences of disclosing information to trade unions and introducing radical change into working procedures become less significant when placed against the possible collapse of the company and subsequent loss of jobs. In these circumstances, awareness of the interdependence of all sections of the organization is increased, while the external threat provides the opportunity to mobilize resources in a way that is not often possible under more "normal" circumstances. However, not all our case studies faced the threat of closure. In the case of Comfort Driving Centre, the Mandarin Hotel and the Laiki Bank, the pressures were those to achieve or sustain a position as market leaders. However, what did characterize all our case study companies was an attempt to differentiate their products or services from those of their competitors on the basis of quality. This was part of a strong customer focus.
While these are factors evident in our own case studies, the literature suggests that they are not exhaustive. Sometimes the introduction of new technology provides the trigger for a more radical change in working practices. However, it is clear from our existing knowledge that there is no invariant relationship between the introduction of new technology and the introduction of HPWPs, as is evident from the case of Dutton Engineering, a small manufacturing enterprise in the United Kingdom. There, the opposite was the case. The introduction of HPWPs enabled that company to make major advances in both the quality of its products and the profitability of the enterprise with its old technology5. In other instances, the introduction of HPWPs is linked to the actions of the parent company; thus, the use of HPWPs in SSS was a result of the decision by the parent company to tackle problems of low morale and productivity by sending in a new manager.
Other research6 suggests that foreign ownership is also linked to the use of HPWPs, suggesting that these practices are sometimes introduced by MNCs. This is certainly the case in the automobile industry, as the research by Pil and MacDuffie discussed in Chapter 6 testifies.
In the public sector, the impetus, as one would expect, has to come from the politicians. In the absence of a threat or command from above, system inertia ensures that existing practice continues. In the case of the United States SSA, it was the pressure from President Clinton and Vice-President Gore that initiated the change. In the United Kingdom, the attempts to introduce market principles into the delivery of public health services may be having the same effect by providing management with greater discretion over the running of its organizations. Our own research into SMEs7 has uncovered instances of group medical practices in the UK health service which have introduced HPWPs in an attempt to improve the quality of client care.
Triggers in the developing economies
In the developing economies, there are two important triggers at work. One is the spread of MNCs. As these companies start to use HPWPs in the parent organization and the benefits are established, they then implement them in their subsidiaries in the developing world. This was the case with Proctor and Gamble in China, another one of our case studies.8 There the company has introduced HPWPs into its plants which manufacture a variety of products, ranging from paper sanitary products to hair shampoos. Again, this company made considerable efforts to ensure that all the staff share the same company values. Job rotation, multi-skilling and teamworking are central organizing principles when it comes to work design, with each team being a focus for workplace learning centred around the continuous improvement of the product. Performance measures have been established across a range of areas which are closely linked to the reward system. While it has taken a little longer to introduce these into the Chinese plants because of the need to replace expatriates with Chinese managers, the company reports few other differences in the rate at which these practices are being introduced into the Chinese plants when compared with those in other countries.
The other trigger which is helping spread these practices in the developing world is the growing use of international standards such as the ISO 9000 series. These are increasingly being used by companies operating in world markets as a guarantee of quality from suppliers located in the developing world. A recent ILO study of SMEs in Thailand revealed that one of the major triggers for reform in working practices and the training which supports the new working practices is the demand by customers for ISO 9000 certification. While ISO 9000 is no guarantor of the quality of HRD practices, it does place demands on companies for improvements in quality control and in the documentation of their internal procedures which can then lead to the introduction of HPWPs.
| HPWPs as "sensible management"
At this stage, it is worth reminding ourselves that the introduction of these practices is not necessarily seen by the management at the time as a conscious attempt to establish HPWPs. The label has been an invention of business academics and consultants trying to make sense of the new practices. For example, when they were introduced into the Nissan plant in Sunderland in the United Kingdom (now the most productive in Europe) the management responsible for them saw these as just good management practices9. Some of these practices had been learned from the parent company, but others were introduced and modified in response to the everyday problems facing the company. Similarly in SSS Singapore, when the general manager introduced these practices he did not see them as HPWPs but as a way of managing that would enable him to overcome the problems of low morale and productivity which the company faced in the early 1990s. Only now do we refer to them as HPWPs. However, those larger companies which have introduced them more recently are starting to refer to them as HPWPs, as was the case with Proctor and Gamble in China. However, for most SMEs the concept is still unknown. Where these practices have been introduced in SMEs, it is usually because the owner/manager has either introduced them as "sensible" practices which make the most of the workforce or as a result of knowledge of "effective" practices which he or she has discovered elsewhere, perhaps through a benchmarking exercise. |
How extensive is the use of these practices within organizations? Are some workers always excluded?
There is little systematic evidence on which to base an answer to this question. In most of the case studies, the use of these practices is all encompassing; all employees are involved. However, there are also examples of companies which use HPWPs only for management and white-collar employees in the "core" labour force. Additional flexibility is then built in through the use of part-time workers, temporary workers and in some instances through the use of subcontractors. For these "peripheral" workers, work is organized on traditional Taylorist lines. This is the flexible labour force that can be hired and fired in accordance with fluctuations in demand. Just how widespread this practice is we do not know.
Another possibility is that these practices can be introduced only for certain departments or groups within the organization. This was the case in one of the companies visited as a possible case study in East Asia. The company had previously sold computers, telephones and copiers through different departments. However, in response to market pressures and in an attempt to differentiate itself from its competitors, it decided to offer its customers a "total office information solution". This meant multi-skilling the sales staff and organizing them as teams to provide the total solution. This in turn meant changing their own procedures. The whole process took many months to implement, and the company underestimated the time and resources needed to put the practices in place. As a result, it was having second thoughts on whether to multi-skill the maintenance engineers required to provide customer support and to apply the same working practices to them. At the time of the interview, the company was uncertain as to whether the benefits would outweigh the costs.
Results of research by Pil and MacDuffie10 in the automobile industry and by Mason11 in various types of industry also suggest that many companies make partial use of HPWPs. Thus, in some companies teamworking is not used for all workers; neither is job rotation or problem-solving groups. The results of their studies show many firms making some use of HPWPs, but particularly important is their observation that in many companies HPWPs are only used for groups at the centre of the production process. As Mason12 also notes, in cookie manufacture those doing the baking are organized along high performance lines while those doing the wrapping and packing have their work organized along Talylorist lines.
As with any set of management practices, they can clearly be applied to sections of the labour force. However, for the employees to gain the maximum benefit, it is important that they are applied to all employees, both full-time and part-time. However, it is more difficult to apply them in the case of temporary staff. This is because the practices require time to implement and a good knowledge of the organization on the part of the employees to enable them to contribute effectively to the problem-solving and decision-making activities of the work group. This can be done for part-time workers, provided they are in permanent jobs.
Why are more companies not using these practices ?
Other business strategies can deliver enhanced profits and productivity in the short term
From what little research evidence we have, the short answer would be that there are other strategies that can be used to deliver enhanced profits in the short term13. Lloyd14, cited earlier, identifies four such strategies adopted by companies in the UK pharmaceutical and aerospace industries. The first is the ability of firms to produce substantial savings by reducing the terms and conditions of non-core workers or outsourcing production and service functions such as catering and cleaning. Second, new technology is used to reduce the number of employees and de-skill them, thereby reducing costs. This sometimes involves the use of "lean" manufacturing to standardize the work process, reduce the skills required and ensure faster throughput. A third strategy is to pay relatively high wages and benefits as the central mechanism for recruiting, motivating and training employees. For professional engineers, career prospects, pay, working on new projects and broad job experiences are seen as the means of keeping them, in the same way that they are for research and development staff in the pharmaceutical industry. For sales staff, performance-related pay on its own appears to do the trick. In the short term, all these three are cheaper solutions than introducing HPWPs. In the fourth case, mergers and acquisitions are used to maintain competitiveness. These enable companies to buy in new products, increase the economies of scale and enter new markets and crucially to cut staff costs.
HPWOs may be more suitable for some product markets than for others
Another reason for companies not adopting HPWPs is that these practices may not be suitable for all companies and organizations. The OECD 15 suggests that their use may be linked to Porter's typical product market strategies for competitive advantage16, being especially suitable for a strategy of quality enhancement and innovation. As we have seen, many of the case studies were pursuing a strategy of differentiating their products or service from competitors on the basis of quality and service17. Indeed, much of the current literature points in the same direction. Osterman18 found those employers most likely to adopt them are in sectors exposed to international competition, employing more advanced technology and pursuing strategies which blend quality and service. Weinstein and Kochan19 also found that innovative work practices are likely to be found in greenfield sites, larger firms and in high value-added industries.
Ichniowski et al.20 suggest that innovative work practices may not be appropriate in industries where labour turnover is high and the employers cannot recoup their investment in training or in industries where technology determines the output, leaving little in the way of value-added to be produced by problem-solving groups. Alternatively, it may be that where employers are operating in markets where the products are labour intensive and low value-added in nature and the determinant of sales is cost, then there may be little to be gained through the use of these practices. It may be that Taylorist forms of management are more appropriate for companies operating in those markets. This is an argument that Mason21 makes very strongly. On the basis of research in Europe and North America, he argues that HPWPs are not appropriate for companies operating in mass-production, low value-added markets, such as the cookie market in the United States. There, Taylorist forms of mass production are seen as reaping higher profits and productivity than the use of HPWPs. HPWPs are seen as more appropriate for the smaller more differentiated product markets which are more characteristic of many northern European countries
Surveying this literature, Boxall and Purcell22 conclude "overall, the US research suggests that high-commitment practices are most popular in those sectors where the firm competes through quality and service and can only remain viable through exploiting advanced technology (as in complex manufacturing) or through a highly skilled interaction with clients (as in professional services)". Of course, this does not mean that they are only to be found in those sectors, as our case studies have shown. In Singapore, Comfort DC and SSS are not in general using complex technology but are nevertheless delivering a high quality of service.
Betcherman's23 evidence from Canada also suggests that high-commitment practices can also be used to deliver better performance among companies in more traditional, stable product markets. Thus, while HPWPs may be more appropriate for certain types of product market, they are certainly capable of improving the performance of many companies with more traditional technologies, as Betcherman's work suggests. Clearly, the short answer is that our existing knowledge just does not provide a clear answer on this point. The relationship between the use of these practices and the product market is an area where further research is urgently needed.
Another reason for not implementing HPWPs is what Ichniowski refers to as system inertia24. This refers to the fact that once organizations have become established they can develop a strong resistance to change. It is therefore a particularly difficult problem in organizations on "brownfield sites", those sites where the company is already established and where organizational practices and culture have become embedded, for example at Thorn, Ltd. and SSS. For those in "greenfield sites" , where the company is setting up the establishment and where there was no prior organization such as Comfort DC in Singapore or the Nissan company plant in the United Kingdom25, they start with a clean sheet and therefore the introduction of these practices is seen as easier. However, as both these examples illustrate, the establishment of HPWPs still requires substantial vision and effort from the leadership. However, the system inertia that Ichniowski refers to would help explain why many established organizations do not take up these new practices.
Ichniowski et al. cite three reasons for this inertia. First, research by Levinthal26 has shown that firms tend to get "locked into" their initial choice of practices. Once a company has settled on a set of practices, these generate their own vested interests. Change will then threaten the interest of one group or another, whether these are managers or workers or both. In these circumstances, it may take a threat to the survival of the whole organization before that resistance can be overcome. A second reason is that companies may experiment with individual workplace innovations and when they see no improvements then discard them as a failure and give up attempting further change27. As we have seen, individual practices do not produce the results; what is required is the introduction of bundles of practices. Thus, many employee-participation and quality-circle initiatives are abandoned after a few years28.
A third reason cited by Ichniowski et al. is that for some firms the switch to new work practices may also mean adopting an entirely new set of production and distribution technologies if major improvements in productivity are to be achieved. For example, Dunlop and Weil29 show how, in the clothing industry, the adoption of a modular production system required that the companies also invest in information and order-tracking technologies to streamline distribution channels if they are to achieve significant improvements. This may mean that the costs involved extend well beyond those spent in introducing the new working practices, as a substantial investment in new technology may also be required. Some companies refuse to make that investment. However, as our case studies have shown (SSS and Mandarin), an investment in additional technology is not always required. The introduction of HPWPs is not invariably linked to the introduction of new technology.
Mistrust between management and employees prevents the introduction of HPWPs
What our case studies do illustrate is the difficulty of introducing HPWPs in organizations in which there is a high level of mistrust between management and employees. Ichniowski et al.30 cite examples from some of the traditional steel mills they studied in the United States where worker participation schemes were seen as management tricks by the employees. They report that US unions see one of the major barriers being the behaviour of employers who ostensibly seek cooperation and partnership in existing unionized facilities while at the same time engaging in union avoidance practices at other sites31.
Pil and MacDuffie32 provide an interesting set of findings in this area. The quantitative analysis of their automobile company data revealed that downsizing and measures which might undermine employee trust does not have an adverse impact on the introduction of HPWPs. Yet their analysis of the resistance put up by the Canadian Auto Workers' Union on the basis of their mistrust of management suggests that this had a major impact in reducing the use of HPWPs in the Canadian auto industry. However, as our case studies illustrate, a number of companies introduced HPWPs on the back of substantial downsizing, but this did not necessarily result in heightened mistrust between the managers and workers, providing management put in place measures to sustain the development of trust. SAB provides a good example of how this was done.
In some instances, management has tried to introduce variants of HPWPs to marginalize unions by excluding them from the change and seeking instead to develop direct lines of communication with the workers. As Lloyd33 points out, individual appraisal, merit pay, team briefings, and individual forms of employee involvement can operate in competition with union forms of communication and representation. Moreover, unions are inevitably concerned when the introduction of new working practices is associated with downsizing and increased employee insecurity. Nevertheless, recent work has found that new working practices are more likely to be adopted in unionized plants in the United Kingdom34. Bacon and Blyton35 also found that within the UK steel industry union attitudes do not provide an important obstacle to the introduction of teamworking, although union representatives are more critical where managers seek to introduce teamworking for narrow economic reasons. However, formal agreements protecting workers, involving job security and redundancy provisions, do encourage cross-functional working and teams adopting more responsibilities.
Within the United Kingdom, further analysis of the Chartered Institute of personnel and Development (CIPD) Training and Development Survey for 2001 revealed a significant association between the use of certain HPWPs and union involvement in policy decisions and implementation. In short, where trade unions are involved in training policy at the level of the work establishment, there is greater likelihood that the company will make use of staff attitude surveys, workplace consultative committees, job rotation, mentoring, train-the-trainer programmes and quality circles. In terms of the bundles we identified earlier, union involvement in training policy at the level of the firm is associated with the use of the work-design/employee-involvement bundle, the support-for-performance bundle, and the communications bundle. However, here it is only involved with some practices and not others; for example, trade union participation in training policy at the level of the firm is not associated with the use of peer review/360 per cent appraisals, personal appraisals and personal development plans. These are the individual-based practices which may threaten union-based forms of representation. The only practices for which there is a negative association with union involvement in training policy are in the use of profit-sharing and share-ownership rewards. Where these practices are in place, unions are less likely to be involved in training policy matters at the level of the firm. In general, however, this shows a more extensive involvement of trade unions in the introduction of HPWPs in the United Kingdom than has been generally recognized.
At the European level, evidence from a survey of ten European countries revealed that Works' Councils and union representatives are in most cases "agents of change" rather than barriers to worker participation36. If the workers' representatives have a degree of trust in the management, then forms of representation such as Works' Councils can be a powerful agent of change.
Overcoming problems of implementation
Once a decision has been made to introduce these practices, our case studies suggest that there is far more involved in establishing trust than just securing the acquiescence of the unions. Almost all the case studies above suggest that managers must actively engage in capturing the hearts and minds of all employees and gain their commitment to the core values and objectives of the organization. This is also one of the major findings of the New Forms of Work Organization in Ireland Programme, a programme designed to help companies introduce HPWPs. The evaluators of that Programme report that "...the Programme demonstrates convincingly that effective and sustainable change, including competitiveness improvement, can best be achieved through dialogue built on trust and cooperation"37.
The building of trust and cooperation requires a fairly fundamental shift in the balance of power within the organization if it is to be effective. Unless employees are directly involved in the decision-making processes, the introduction of these practices is unlikely to achieve its objectives. Lowe38 provides a series of examples of companies which have introduced some HPWPs without securing effective worker participation, thus producing high levels of dissatisfaction among the employees. The following example is cited by Lowe.
| The need to secure employee support: The case of CAMI in Canada
CAMI is a joint production venture, between General Motors and Suzuki, to produce small utility vehicles in Ontario, Canada. CAMI selected 2,300 recruits and trained them in the values of empowerment, open communications, continuous improvement and team work. Initially union-management relations were harmonious as the workers settled in. However, over time the workers lost their trust in management. "Flexible use of labour came to mean using the fewest workers possible; multi-skilling (acquiring a range of skills through training and performing a variety of tasks over time) became multi-tasking (doing several tasks at once). Job rotation became a way of having team members cover for absent or injured co-workers by doubling up on jobs. Repetitive strain injuries became a frequent symptom of work speed-ups in pursuit of reduced production costs. For CAMI workers, hopes of having a say in making their jobs more interesting evaporated. As one team leader put it, beyond the language of a new work philosophy, workers came to view CAMI as "just another auto plant"39. The result was the first workers' strike at a Japanese plant in Canada, endorsed by 98 per cent of the workers. After five weeks, the workers negotiated changes in team organization, work pace, health and safety provision and provision of relief workers. |
Lowe cites two other Canadian examples of instances where HPWPs have been introduced and where employees have experienced work as repetitive and stressful. Getting the full involvement of workers in the decision-making process is not easy, and there is a real danger that HPWPs can lead to work intensification with little or no benefit to the employee.
Overcoming managerial resistance
The other major barrier to the introduction of HPWPs frequently mentioned in the literature is the resistance from managers. The shift from command and control organizations usually involves a major redistribution of authority in the organization, especially if self-managed teams are introduced. Inevitably, these latter changes remove authority from the manager. For managers who have been promoted into such jobs on the basis of seniority or technical skills and where they rely on privileged access to information and the authority invested in the position to maintain their control over the workforce, these new practices are very threatening. Not only are they seen as being deprived of their authority; they also have to relate to subordinates in a very different manner - they have to win their consent and support as a leader rather than a commander. In view of this, it is no surprise that managers can be one of the main sources of resistance to the implementation of HPWPs. Lloyd40 cites the concerns of a senior technical manager in one pharmaceutical company which had delayered the organization and then had difficulty in finding appropriate managers, having to move specialists from other departments such as quality control into first-line management (called supervisory positions in this firm).
"Supervisors' level of skill is poor, the level of training is poor, the level we've trusted them is poor. Getting them involved in change is difficult? One big problem is incestuousness. A lot (of managers) have seen nothing else but this site. It is difficult to get empowerment and involvement, they have had no experience of that and there is an unwillingness to look outside. They believe we are at the leading edge"41.
In some cases, those managers who are resistant are replaced. In others, the companies or organizations have to use extensive training to enable the managers to acquire the behaviours appropriate to their new role.
Upskilling the HR directors (and trainers)
Another major impediment to the introduction of these practices is the capabilities of HR managers42. The effective implementation of these practices requires that the HR director acts with the head of the organization as a partner in strategic change. The problem is that many HR directors do not have the requisite business acumen and knowledge of strategy and change management. In the United States, the expertise of many HR managers is restricted to the delivery of traditional HRM activities; they are limited in terms of their abilities to translate the firm's strategy and operational goals into actionable HR goals and then to implement those goals. They are good administrators43. The same findings have emerged from research in the United Kingdom44. There, Guest reports that many CEOs and managing directors see the link between business strategy and HRD as important but have not done anything about implementing it because they feel their senior HRD personnel do not have the requisite skills. In the absence of this knowledge and expertise residing in the HR manager, the CEO and managing directors are severely handicapped in attempts to introduce these practices.
Another problem to be overcome is the lack of knowledge about these new working practices and the impact they are capable of generating in terms of enhanced performance. This requires publicity, and here the professional HRD institutes and government departments can play a role, as well as the providers of continuing professional development. In the absence of this, companies are left to their own devices. In view of this, it is not surprising that many of the companies which were among the first to introduce HPWPs had links with Japanese companies, either as subsidiaries or direct competitors. Thus, in the case of Nissan UK, it had access to the parent company in Japan and knowledge of leading-edge developments among UK and US automobile manufacturers. In the case of the Laiki Bank, many of its practices were adapted from those of the HSBC which had an interest in the Laiki Bank.
Where these kinds of links are absent, companies use benchmarking exercises to identify best practices, as in the case of SAB and Xerox. In the auto industry, Pil and MacDuffie report that "lead plant" approaches perform a similar function. Efforts are concentrated in creating change in one plant with the lessons learned being used to implement change in other plants. The authors report that this works well when the two plants are in different parts of the world and not seen to be competing for resources. In other instances, plants are assigned by the parent company to a "sister plant" to learn HIWPs. At the level of the individual establishment, some plants bring in "champions", people with experience of introducing these practices, to advise on the introduction of HIWPs. However, the problem here is that the changes are far too complex for one individual to be able to provide all the requisite expertise.
Benchmarking enables the company to compare aspects of its systems and processes with best practice elsewhere and so identify the tasks to be undertaken. Benchmarking also has important motivational consequences, especially if employee representatives participate in benchmarking visits. There are numerous reports that once employees see what is possible and what the benefits are in terms of enhanced productivity, job satisfaction, potential income and job security, then the natural fear of change is overcome. These trips frequently result in the employees "buying in" on the project.
When Thorn Lighting became independent from Thorn-EMI in 1993, the senior management team set out to identify new strategies and operations for competing in world markets. A programme of "exploration" was activated to find and learn from best practices in world-leading companies and to compare those practices with the status quo inside Thorn. Project teams were set up to review the existing internal processes and challenge their effectiveness in contributing to business performance by comparing the internal situation with external, equivalent processes. Each project team was asked to focus upon an area of the business that asserts maximum leverage on overall performance. A major transition then began to take place for shifting the culture from relative "introversion" to "customer focused and outward looking". This process is common among organizations which have successfully implemented HPWPs.
Hackman et al.45 conceptualize this process as an inversion of the traditional management triangle. The traditional concern of management is to coordinate workers in order to produce specific goods or services which are then delivered to the customer. In HPWOs, this is inverted: the customer is the focus of all activities, work teams are there to ensure customer satisfaction and the manager's role is to support work groups in the delivery of the product or service.
The significance here is that the introduction of new working practices such as those described above almost always involves fairly extensive training. The use of teamworking involves more extensive training in the German pump manufacturers, whether that is technical training for semi-skilled workers to make them multi-skilled or in communication and management skills for the skilled workers to make them effective members of self-managed work groups. The case studies introduced in Chapter 2 all involved a substantial investment in training in order for the new practices to become embedded. Once the new practices are established, the process of learning and training does not stop there. Skills constantly need upgrading, and new problems facing the employees in their everyday activities necessitate further learning. Any attempt to change the culture of an organization usually involves intensive training. In the case of SSS in Singapore, an organization which bridges the public and private sectors, we witness the extensive use of training to help change the company culture and to introduce and sustain new working practices.
In view of this, it is not surprising that the research findings from large-scale surveys show an association between the use of HPWPs and more extensive training within the organization46. Those organizations with HPWPs tend to exhibit higher levels of training. This is a feature of HPWOs that we discuss in more detail in Chapter 4. Here it is sufficient to point out that it is the introduction of the new practices that creates the demand for training. It is not that the firms start to increase their level of training and that produces the new practices; rather, the causal sequence is the other way round. In this sense, the demand for training is a derived demand.
Another area that frequently requires attention with the introduction of HPWPs is the selection process. Not only does it require a good grasp of basic skills but also the personality that will facilitate its "buying in" to the philosophy of the organization. The general manager of Comfort deliberately recruited young people because it is easier to mould them into the company's way of thinking, its values and behaviour patterns. Similarly, when Proctor and Gamble introduced HPWPs in its plants in China it also deliberately recruited young graduates for the same reason. The Laiki Bank also targeted young graduates. For other companies where this tactic may not be realistic, considerable resources are devoted to recruitment and selection in order to select only those with a personality and values appropriate to the demands of the organization. Pil and MacDuffie47 report that Japanese transplants in the United States selected only one in 25 of all applicants.
What do we know about the factors that lead to successful implementation?
Commitment from the leadership
Research from both the United States and the United Kingdom suggests that a strong and active commitment from senior management is essential for successful implementation of HPWPs48. This is understandable, as the use of HPWPs involves a substantial change from the command and control approach of traditional management, with its reliance on hierarchy, narrow job specifications and unquestioned acceptance of authority. This is evident in the case of all the private sector case studies we cited above where senior management is invariably committed to the introduction and use of HPWPs.
This kind of leadership is difficult to identify through the use of survey questionnaires. Nevertheless, Wood et al.49 have used the UK Workplace Employee Relations Survey (WERS) data set of 2,191 cases to investigate the possibility that senior management plays a crucial role in the introduction of what it terms high involvement management practices. Using a latent variable approach with the high involvement or high performance working practices as manifest indicators, they found evidence of a strong underlying "high involvement orientation".50 This is defined as "an underlying managerial orientation towards the development of a particular role orientation on the part of employees so that they are flexible, are expansive in their perceptions and willingly contribute proactively to innovation. Its ultimate aim is for employees to behave (adapting a phrase from a practicing manager) as if they have two jobs: one to execute tasks, the other to think of better ways of doing them". This manifests itself in the use of core high involvement (performance) practices which the authors call task oriented (e.g. teamworking,51 quality circles) and individual-level supports (e.g. training in human relations skills, team briefing). In short, the implementation of these practices is the manifestation of an underlying management philosophy. It is not just a question of aggregating individual practices over time.
Change in the basis of control
The successful introduction of HPWPs also requires a radical change in the basis of control within the organization, with less reliance on external pressures and more on the internal commitment of employees to organizational objectives. Rather than being told what to do, managers and workers have to determine their own behaviour in the light of their knowledge of the organization and its objectives and values. In the jargon of modern management textbooks, the workers become self-empowered. Peter Wickens52, the former director of Nissan UK, attempts to capture this through the phrase "Energize your Enterprise", a phrase he uses to point out how ordinary employees feel good when everyone contributes towards the improvement of performance and where everyone is valued for helping make the enterprise a better place to work in. It is a phrase he uses to talk about the dramatic changes in the level of commitment which can be achieved on the part of workers when these practices are effectively introduced.
These changes are clearly not a one-off activity. Our case studies illustrate the fact that in many organizations it takes years to bring them about. Moreover, once they are introduced they require continuous refinement, as changes in areas such as the product market, company ownership and technology generate the need for constant change. In the case of Xerox, Hackman et al.53 speak of a journey over 15 years (which is still continuing) to introduce empowered work teams. They point out, on the basis of very thorough research, that teams require a vision of where they are going, responsibilities have to be structured, reward and communication systems have to be implemented and personnel have to be skilled in the process of coaching and team development.
The introduction of these practices involves substantial costs, not least in the time and effort of those involved. It requires increased coordination, but Hackman et al. 54 also point out that communicating goals and objectives is always fraught with difficulties, while market pressures can undermine team stability. Moreover, high-quality team-based reward and recognition systems are difficult to design and implement. Even the acquisition of new skills takes time; the relevant knowledge has to be acquired and new skills have to be practiced before they are embedded in the workforce. Finally, teams need time to absorb the relevant business information and then learn how to use it to solve problems.
From the individual employee's point of view, such changes are also not without their costs. The emphasis on commitment to the organization's values and going beyond the immediate call of duty is not an attitude that everyone is comfortable with. Peer-group pressure can easily lead to the intensification of work. Work in HPWOs can be stressful if it is not managed carefully. Moreover, because of the emphasis on teamwork, workers who are uncomfortable with this can easily disrupt the morale of other employees. Therefore, while there is always considerable emphasis on the importance of incentives and workers "internal" motivation, managers usually move rapidly to deal with employees who do not "buy in" to the values of the organization and who do not work effectively in a group or team context. Although this problem is rarely confronted in the academic textbooks, "successful" managers' accounts of the process of implementation are replete with reference to the use of "the stick as well as the carrot" or to "terrorists" in the ranks. One way or another, these employees have either to buy into the change or leave.
| The American Society for Training and Development
(ASTD) critical
success factors
The ASTD, using a combination of experienced practitioners and consultants, identified the following as critical success factors that can make or break a high performance work system55:
|
Finally, it is important to note that once HPWPs are established this is merely the start of the process, because with continuous changes in the organization's environment and in its internal processes, there is always a constant need to realign practices. At any one point in time, it is easy for the team, functional and organizational goals to move out of alignment with each other. As we saw in the case of Thorn, Ltd., the company was reluctant to reward team performance lest the team members lose sight of the fact that it is the collective organizational performance that is crucial. There is always the fear that by placing teams in competition with each other, the teams' immediate goals may displace those of the organization as a whole. Each organization has to find its own solutions to these problems but the potential rewards, when they get it right, are substantial.
We started this chapter asking why more organizations have not adopted HPWPs. The answer is in part due to the fact that they are not easy to introduce. They tend to emerge as one response to crisis situations. They may be more appropriate in some industries and in some markets than in others. However, perhaps the most important factor is the sheer difficulty in implementing them when there are other routes that employers can adopt to increase profits and performance in the short term. Nevertheless, once implemented, there are substantial benefits for both employers and employees. One of the secrets is securing the effective collaboration and cooperation of the two parties.
As for the question as to whether there is a magic set of best practices which can then be implemented, it is clear that the answer is a resounding no. All work practices are embedded in a wider set of institutional structures which are shaped by the national history and politics. HPWPs are no exception; the way they are introduced is conditioned by the pre-existing organizational characteristics and the wider labour market and training infrastructure as we saw in Germany. It means that each senior management team or CEO has to feel his/her own way in how to introduce the practices. We have attempted in this chapter to provide some guidance as to the main pitfalls and how they may be avoided.
All this points to the fact that investment in HPWPs represents a long-term commitment on the part of both senior managers and workers. Therefore, broader institutional arrangements, such as the form taken by the financial infrastructure and the political framework, have a crucial role to play in determining whether the HPWOs is a viable option. If all the emphasis is on the push for short-term profits, this is not a fertile ground for the spread of HPWOs. Even if the practices are in place, changes in ownership bringing an owner concerned with increasing profits in the short term can threaten the continued viability of HPWOs, as in the case cited in the previous chapter. At the same time, as Heckscher and Schurman56 have pointed out, labour-management cooperation can easily run into problems because of pressures from outside the organization. As we have argued, implementing and sustaining HPWPs is not easy but the rewards for both parties are certainly worth it.
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