rethinking high-performance work systems
TRANSCRIPT
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CURRENT ISSUES SERIES
Rethinking High-Performance Work Systems
Pradeep Kumar
IRe PRESS
Queen's University
Executive Summary
In response to increased international pressures human
resource managers have turned to hig11-performance work
processes as the key to maintaining global competitiveness.
While a large body of research has demonstrated the positive
impact of high-performance practices on the financial perfor
mance of organizations, the impact on the well-being of work
ers is less well known. But the limited evidence that is avail
able suggests that productivity gains have come at the expense
of workers and that the adoption of high-performance prac
tices has been accompanied by a deterioration in the quality of work environment is a fundamental problem for the sustain
ability of high-performance systems. If they are to be stable
and enduring, managers must learn to strike a balance
between organizational imperatives for irr1proved productivity
and workers' needs for a healthy, challenging, and satisfying work environment.
• The survey evidence suggests that workplace change in Canada has been pervasive and that the pace of change has been rapid i11 recent years. However, large organizations
have been more likely to adopt high-performance practices,
and the incidence of change has been greater in manufacturing.
• High-performance practices have a posItIve effect on the economic and financial performance of organizations. They can improve productivity, and they have significant, economically important effects on business performance. There
is no evidence to indi~ate that a firm is likely to suffer by adopting a well-planned high-performance system.
• However, there is some evidence to suggest that the work
environment and the well-being of workers may have suffered as a result of the new work systems. The heavy
emphasis on downsizing and organizational restructuring has created insecure, stressful environments. Far from
empowering workers, the new systems have led to a loss of
control and autonomy and have placed a wide range of increased demands on workers.
Contents
Introduction / 1
Why the Growing Interest in W,?rkplace Change? / 2
What Are High-Performance Work Systems? / 3
How Prevalent Are High Performance Work Practices? / 5
What Are the Effects of HighPerformance Work Systems? / 11
Conclusions / 16
References / 18
About the Author Pradeep Kumar is a Professor in the School of Industrial Relations, Queen's University. This paper was prepared for the Third Seminar on Incomes and Productivity, organized by the Commission for Labor Cooperation, North American Agreeement on Labour Cooperation (NAALC), Mexico City, February 24-26, 2000.
iv
• The lack of a supportive and committed organizational environment continues to be the most in1portant barrier to a wider diffusion of high-performance practices. Moreover, in view of the way they are being implemented, the results so far raise serious questions about whether l1igh-performance systen15 are sustainable in the lang fun. The key problem for managers is ta try to design systems that benefit all parties, systems that are capable of realizing their mutual gains potential.
Introduction
Over the past two decades, workplaces in the United States and Canada have experienced a \Vide variety of formal and informal changes in the organization of work. The pace of
change appears to have quickened in the 1990s. New forms of work organization, popularly labeled (high-performance work systems' in the academic and business literature,
underscore flexible job designs and work arrangements, team or group work, greater information sharing and employee involvement in decision making, and cooperative labour-management relations to foster a participatory enterprise culture. They signify a
strategic approach to human resource development and utilization, emphasizing the need to develop a highly skilled, highly flexible, and highly motivated work force and a human resource management system that promotes creativity and initiative among employees. By
making better use of employee skills and knowledge, the new approach is intended to
help organizations to become lean, cost efficient, and flexible, and more responsive to
changing markets and technologies. At the same time new systems of work and rewards promise workers challenging, satisfying, and more secure jobs higher wages, and opporj
tunities for greater control, autonomy, and participation. VVhile the nature and scope of these systems vary by firm size, industry, management strategy, and union status, they are
most prevalent in manufacturing environments with lean production systems characterized by just-in-time and synchronous production, continuous improvement, and total quality management, and by a focus on 'core competencies,' outsourcing, and subcon
tracting. There is a voluminous theoretical and empirical literature on the positive effects of
high-performance work practices on the economic and financial performance of organizations. Their impacts on workers and work environments are less well known. The purpose of this paper is to critically assess the rationale, extent of diffusion, and effects of high-performance work systems (HPWS), highlighting the limited survey and case study
evidence from Canada, which indicates that the introduction of high-perfonnance work practices in a lean production environment is generally associated vvith downSizing, increased work loads, long hours, a higher pace of work, and a loss of control and auton
omy. The evidence suggests that far from empowering employees and creating challenging and rewarding work for them, high-performance work systems have created insecure and stressful work environments leading to a deterioration in the quality of work life and
increased health and safety risks. The Canadian evidence, together \vith similar conclusions from a limited number of studies from the United States, calls for a rethinking of
the potential of high-performance work systems to improve the well-being of workers. To be stable and enduring, these work systems need to be redesigned to balance the needs of workers for a safe, healthy, and challenging work environment with organizational imperatives for improvements in productivity and product quality. The absence of systematic and longitudinal information about organizational and worker outcomes also emphasizes the necessity of regular surveys of organizational change, including surveys of new forms of work organization and of wages and working conditions in the, three NAFTA countries, along the lines of the surveys undertaken by the European Foundation for the Improvement of Living and Working Conditions. Perhaps the North American Agreement on Labour Cooperation (NAALC) could be persuaded to take an initiative in this area.
1
The Canadian evidence calls
for a rethinking of the potential of highperformance work
systems.
-The current wave of workplace change is
dintinguished from past efforts by the
broad-based support for reforms of work processes and
relationships that exist.
Why the Growing Interest in Workplace Change?
Interest in new forms of work organization and their effects on employee welfare and orga
nizational performance has a long history going back to the early twentieth century (Bailey
1992: Appelbaum et a1. 2000: Cappelli and Neumark 1999). The current wave of work
place change is distinguished from past efforts by the broad-based support for reforms of
work processes and relationships that exist among workers, unions) employers and gov
ernments. Also, unlike the earlier experiments that were motivated by the desire to
humanize work, the current wave is driven by economic and financial performance con
siderations (Osterman 1999). Nevertheless, many of the high-perfonnance work practices
listed in the literature are 'ostensibly humanistic, representing aspects of a workplace that
would be considered key components of a good work environment' (Baker 1999).
The widespread interest in and heightened awareness of the need for workplace change
in Canada and the United States can be attributed to four interrelated developments:
1 unprecedented and interconnected changes in the economic, labour-market, public
policy, and technological environments which have exerted tremendous pressures on
organizations to become more efficient, flexible , and innovative, in order to respond
effectively to changing markets and new technology~
2 poor relative productivity performance since the n1id-1970s, which has affected inter
national competitiveness and living standards~
3 the growing realization that the current system of work organization based on Tayloristic
norms of hierarchy, controL and power, with a rigid separation of conception, planning,
and execution of tasks, is a source of inefficiencies, rigidities, and unnecessary conflicts
that have adverse effects on productivity and quality performance~ and
4 the superior economic performance of Japanese organizations and their transplants, in
terms of productivity and product quality, based on lean production practices and
employee-centered work organization.
The cumulative effect of these four interrelated factors has been a new focus on human resource management emphasizing 'the optimum use of human resources as the key' to
international competitiveness. The new human resource strategy underscores the need for
developing a highly skilled, highly trained, highly motivated, highly adaptable, and high
ly involved workforce, along with an innovative approach to managing that promotes cre
ativity and initiative among employees. The new approach envisions a system of work
organization that
rejects the traditional dichotomy between thinking and doing with a redistribution of
decision-making authority from nlanagement to teams of workers~
2 redesigns jobs to include a greater variety of skills and tasks with expanded opportu
nities for training in exercising discretion, solving problems, and using communica
tions and team skills:
3 flattens out the management structure by reducing management layers and replacing
supervisors with a team leader to enable workers to be self-managed and responsible
for their own performance~
4 promotes worker involvement in decision-making at all levels through infonnation
sharing and advance notice and consultation on change~ and
5 seeks an equitable distlibution of the gains by transfonning the organization of work
with a 'promise ' of higher incomes and greater employment security.
2
In summary, the current widespread interest in workplace change and the emergence of high-perfonnance work systems are rooted in pressures arising from unprecedented changes in the external environment and dissatisfaction with the current system of work and workplace relationships. The vision of workplace change that will ll1ake organizations more productive, flexible, and innovative, in order to more effectively compete in world
markets, centres around the identification of human resource policies and practices that can provide workers with information, skills, incentives, and responsibility to help them make decisions that contribute to innovations, quality in1provement, and a rapid response
to change. Although there appears to be a recognition that there are no 'one or two magic bullets' or a universal set of best practices and that adoption and implementation of highperformance work practices depend on their complelnentarity and organizational environn1ents, it is widely held that firms that adopt these practices 'outperform others that do not.' Ostennan (1999) provides four reasons behind this perception:
high-performance work organizations do a better job of tapping into the ideas and creativity of workforce;
2 the participation high-performance organisations generate might increase the commit
ment of the workforce~
3 the adoption of group work and the redistribution of decision making might save costs
as firms are able to eliminate supervisors and other redundant employees; and 4 people might work harder because of the increased peer pressure that emerges from
being a men1ber of the team.
Ichniowski et al. (1996) elaborate on why organizations that adopt 'innovative' work practices may be more productive, leading workers to work more efficiently. According to them, workers often have information that higher management lacks, especially about how to make their jobs more efficient. Greater participation permits a variety of views to be aired and in many cases contributes to a better coordination of workers' efforts. Work groups may encourage workers to work harder and smarter, while cross-training and flex
ible job assignment can reduce the cost of communication. Working in teams not only reduces the number of supervisors and middle managers but also improves communication. Training in problem-solving, statistical process control, and computer skills can
increase the benefits of new information technologies. FinallYl worker and union involvement in decision making can reduce grievances and other sources of conflict, thereby improving operating efficiencies.
What Are High-Performance Work Systems?
As Ostennan has noted in his recent book, Securing Prosperity (1999), there is no unambiguous way of defining a high-performance work system and knowing whether or not the establishment is following the path (emphasis added to distinguish between rhetoric and reality and the wide gap between what is perceived to be desirable and what is actually feasible). The term 'high-perfonnance' is used to describe new forms of work organization, a new human resource management approach, or a set of practices that have the potential to achieve substantially enhanced economic performance. It is used interchangeably with various metaphors such as lemployee empowerment,' 'high commitment,' 'high involvement,' "mutual gains enterprises,' 'the learning organizations,' 'the strategic human resource management,' and so forth. The underlying theme is the same
3
Worker and union involvement in decision
making can
reduce grievances and other sources
of conflict.
The gap between 'talk and action' is
particularly wide in
the case of worker empowerment initiatives and
training.
whatever the label. All labels refer to 'similar ideas about how to obtain profits through
people' (Pfeffer 1998). The menu of human resource policies and practices-sometimes described as 'innovative'-that contributes to higher productivity, greater flexibility, and
stronger financial performance of organizations is also large, diverse, ambiguous and
unsettled. There is also a gap betw~en what is described as important or 'critical for survival,' (or as best practices or successful human resource strategies and practices for organizational effectiveness) and the actual incidence of the practice or the nature and scope
of its implementation. The gap between 'talk and action' is particularly wide in the case of
worker empowerment initiatives and training, which reflects a lack of serious commitment. What is common in the diverse range of practices that are considered important or
that have actually been implemented is that they profess to depart from the traditional
TayloristIFordist work systems, which are characterized by 'tightly defined jobs vvith asso
ciated rates of pay, clear lines of demarcation separating the duties and rights of workers
and supervisors, decision-making powers retained by management and communications
and conflicts channeled through formal chains of command and grievance procedures'
(Ichniowski et al. 1996). They also seek greater organizational and worker flexibility and
adaptability to changing market conditions. The 'loosely defined model' of high-performance work organizations incorporates some
or all of the follovving 'strategic, structural and behavioral features' (HRDC 1997):
• more job complexity, multi-tasking, and multi-skilling,
• increased employee qualifications, • ongoing skill fonnation through enterprise training,
• a minimum of hierarchy, • greater horizontal communication and distribution of responsibility (often through teams),
• compensation incentives for performance and skill acquisition,
• increased focus on 'core activities', and • more horizontal inter-firm links for subcontracting and outsourcing.
This list, which is included in a report prepared for an OEeD conference on strategies
for workplace change, highlights the fact that workplace change initiatives simultaneously attempt to enhance numerical or external flexibility (through downsizing, flexible worktime arrangements, the use of ,part-time/temporary/contract workers 1 and/or sub
contracting and outsourcing), and functional flexibility (by changing the organization of
work through less hierarchical structures, more fluid job designs, team/group work,
multi-taskinglmultiskilling, information sharing, cross-training/job rotation, and so forth).
The OEeD analysis also emphasizes the complementarity that exists in the adoption of
work practices in large organizations and the interdependency bet\veen high-performance work practices and technological change. The OECD list is consistent with the diverse array of human resource strategies, policies, and practices cited in the literature (see
Becker and Huselid 1998), including the seven basic dimensions of high-performance work arrangements (i.e., employment security, selective hiring, self-managed teams and decentralization of decision making, contingent compensation, extensive training, reduced status distinctions, and extensive sharing of information) promoted by Pfeffer
(1998).
Many studies distinguish between lean practices that are designed to enhance numeri
cal flexibility (practices such as downsizing, re-engineering, and outsourcing), and work reorganization initiatives that are centred around changes in job design, delegation of authority, and participatory mechanisms such as teams (GECD 1999). The studies make
4
this distinction on the grounds that the main objective of lean practices is to change the type, quantity, and/or pace of work. But the distinction is ambiguous and inconsistent, since in fact the purpose of both sets of practices is to achieve lean, flexible, efficient, and responsive organizations. As Appelbaum and Batt (1993) observe, the two sets of practices
overlap considerably, because they rely on similar applications of information technology
and similar quality tools and techniques to improve organizational performance. The two approaches, in their view, appear to differ in 'the extent to which they locate the source of
continuous improvement in their front-line workforce, degree of employee participation,
employment security, and autonomy in sharing of performance gains.' The differences are
not always clear-cut and depend more on the organizational environment (e.g., the nature of the union response to work organization, product demand) rather than on the preva
lence of lean production practices. Moreover, as Cappelli and Rogovsky (1994) have shown, most of the high-perfonnance work practices cited in the literature (e.g., employee empowerment and participation in decision making, teamwork, job rotation and cross
training, and such supportive personnel practices as contingent compensation, employment security, and training in communications and interpersonal skills) are closely associated with lean production systems. They also note that the lean production system is
more productive than other systems, although (or because) the work practices associated
vvith the system offer workers less individual autonomy and involve highly regimented
tasks that demand more from workers in the \vay of effort and work pace. The close asso
ciation between lean production and so-called high-perfonnance work practices is high
lighted in case studies of lean manufacturing enterprises in the United States. The 'success factors in becoming lean' sumn1arized by Liker (1998) on the basis of these case studies include 'intense communication, focused training, bottom-up involvement, positive employee relations, employment security, and building trust.' Indeed, the elements of lean production are indistinguishable from high-performance human resource and labour relations practices and are cited as the key organizational and managerial practices that contribute to competitiveness (UNCTAD 1996).
How PrevalentAre High Perfonnance Work Practices?
In the absence of comprehensive and systematic surveys of organizational change, it is hard
to precisely measure the incidence of high-performance work practices. An OECD report prepared for an international conference on workplace strategies in 1996 noted that it was difficult to gather 'good empirical evidence' on the diffusion of organizational innovation,
due to problems of unambiguously defining and measuring organizational change (HRDC
1997). Much of the available information comes from ad hoc industry and/or national surveys and studies conducted by government agencies, academic researchers, and labour and business groups. Estimates of the incidence of change vary as a result of different definitions, methodologies, and measurement of practices (see Baker 1999; Becker and Gerhart
1996: Ichniowski et al. 1996; Cappelli and Neumark 1999; Becker and Huselid 1998~ and
Gerhart 1999 for measurement and methodological issues). In most cases the data are
cross-sectional, making it difficult to determine the sustainability of the practices. Moreover, the estimates based on employee or union leader surveys differ from those derived from surveys of management officials. It is difficult to link the data from the two kinds of surveys. Similarly, the sets of work practices and performance measures included in the surveys vary markedly. Very rarely do they include all aspects of organizational change-changes in both the size and quality of workforce~ the pace of working, as well as the way work is organized~ organizational performance; and worker well-being and the
5
It is hard to precisely measure the incidence of highperformance work
practices.
Business strategies are
also an important factor in the adoption of high-performance
"vork systems.
work environment. The lack of comprehensive information is an important barrier to an analysis of the synergies among various work practices and of the contradictions between
workplace change and change resulting from such organizational restructuring practices as downsizing, outsourcing, and the use of contingent employment. In the same vein, in the
absence of systematic information on both organizational performance and employee-relat
ed outcon1es, it is difficult to explore the relationship between productivity improvements, workers' economic well-being, and the workplace environment.
The Survey Evidence
The survey evidence for Canada and the United States appears to suggest that the current
wave of workplace change began in the early 1980s, expanded in the late 19805, and picked up momentum in the 1990s. Recent reviews in the two countries agree almost
unanimously that the pace of workplace change, in terms of both the extent of its adop
tion and of employee coverage, has been quite rapid in recent years (Cappelli et al. 1997;
Appelbaum et al. 2000; GEeD 1999~ Kumar 1995; Osterman 1999; Betcherman 1999: Kumar, Murray, and Schetagne 1998: Cappelli and Neumark 1999: Statistics Canada
1998). The evidence further indicates that the extent, nature, and scope of change varies considerably by size of the workplace) industry, and management strategy. Thus, larger organizations and workplaces are more likely to have adopted high-performance work practices than are medium-sized and small workplaces, and the incidence of change has been greater in manufacturing than in services. Business strategies are also an important factor in the adoption of high-performance work systems. Organizations with strategies
that focus on new products or services, the application of new technology, and expanding
markets and that demand a more skilled and flexible workforce are more likely to intro
duce new work practices than those that are primarily engaged in cost-cutting strategies.
Product development strategies are also highly correlated with human resource strategies. Intensive users of these strategies are more likely to introduce 'innovative' or 'flexible' work practices than are organisations whose human resource strategies are not an impor
tant element of their business strategies. In the manufactUring sectoT, many of the highperformance work practices are introduced as a part of the lean production system emphaSizing total quality management, continuous flow, a just-in-time supply chain, and
a core-competency orientation encouraging outsourcing and subcontracting. It is also
noteworthy that changes in work organization in the 1990s have followed organizational
restructuring and rationalization involving increased use of information technology,
downsizing, and contingent employment.
The Diffusion of High-Performance Workplaces in the United States
The recent evidence on the diffusion and penetration of high-performance workplaces in the United States comes from the two national surveys of private sector establishments
conducted by the Bureau of the Census, first in 1994 and then again in August 1997 (see Cappelli and Neumark 1999), the surveys of private sector establishments undertaken by Paul Osterman (1999, 2000) 'of MIT in 1992 and 1997, the 1993 BLS survey of employ
er-prOvided training (see Gittleman et al., 1998), survey of Fortune 1000 firms conduct
ed by Lawler et al. (1992), and a nationally representative sample survey of employees by Freeman and Rogers (1999).
Although the reported incidence of high-perfonnance \vork practices varies between the surveys, the results indicate that:
6
=
1 the incidence of such practices as quality circles, problen1 solving groups, self-managed work teams, job rotation and/or cross training, total quality management, and other employee involvement programs is quite high, with one-third to over one-half of the firms reporting their prevalence:
2 the intensity of employee coverage, where 40 percent or more employees are involved
in the practices, is significantly lower than the reported incidence of some employee involvement;
3 both the incidence and the intensity of use has increased significantly for practices
such as problem-solving groups and total quality management, but not for self-directed
teams~
4 the complementarity of work practices appears to be growing, with nearly 80 percent
of organizations reporting the use of three or more practices involving at least half their
core employees in 1997, compared with 14 percent in 1992 ~
5 the incidence of high-perforn1ance practices is higher in manufacturing, although their extensive implementation is limited~
6 the ability to sustain high-performance work practices is quite high, even in the face of lay-offs;
7 downsizing, outsourcing, and the use of contingent employment have been key fea
tures of restructuring in high-performance work organizations, although workplaces
with more intensive use of new work practices make marginally less use of outsourc
ing and contingent employment (Osterman 1999).
The Canadian Experience
Workplace change in Canada is very similar to change in the United States both in nature
and in scope. In a recent survey conducted by the American Society for Training and Development (ASTD) covering firms in the United States, Canada, Japan, and Europe
(reported in OEeD 1999), a maj ority of both small (100-999 employees) and large (1000 workers or more) firms in the two countries reported an almost similar incidence of the
use of job rotation or cross-training, self-directed work teams, taskforces, problem-solv
ing groups or quality circles, employee involvement, and total quality management. However, the incidence of workplaces with at least 50 percent of the workforce involved
in the practices was Significantly less in both countries. The survey discovered that while
large firms in the United States were more likely to have a greater depth of use of highperformance work practices than firms in Canada, small Canadian firms reported higher incidence and depth of their use than the small United States firms. The results suggest that either small firms in Canada are more innovative than their U.S. counterparts or that
the ASTD survey had a sample selection bias in the distribution of finns by size group. A similar pattern of change in the two countries, despite a different institutional environ
ment, has been noted in other studies as well (see Kumar 1995). Recent studies of workplace change in Canada include a new pilot survey by Statistics
Canada, called the Workplace and Employee Survey eWES), and a first attempt in Canada
to initiate a longitudinal, large-scale linked employer-employee survey of organizational change (Statistics Canada 1998)~ the Workplace Training Survey conducted by Ekos Research Associates in 1995 (Betcherman, Lecki, and McMullen 1997~ Betchennan
1999)~ Human Resources Deveopment Canada's Survey of Innovations and Change in Labour Organizations in 1997, which included a number of questions on the incidence and impacts of workplace change (Kumar, Murray, and Schetagne 1998): and a volume of case studies of major firms in Canada (Verma and Chaykowski 1999). The WES is a
7
Workplace change in Canada
is very similar to change in the United States both in nature
and in scope.
The survey found a very low incidence of high-performance
work practices overall.
unique longitudinal survey which 'aims to shed light on the relationship between com
petitiveness, innovation, technology use and human resource management on the
employer side, and technology use, training, job stability and earnings on the employee
side.' Employers and employees are selected from within the sampled establishments.
Because of the breadth of information it provides on organizational change in the context
of technology adoption, innovation and business strategies, the survey makes a significant
contribution to the study of restructuring and to our understanding of the role and sig
nificance of high-perfonnance work practices.
The Workplace and Employee Survey
The Statistics Canada Workplace and Employee Survey, conducted in 1997, asked respon
dents to report on the incidence of thirteen organizational changes over the past three years,
their significance in tenns of the number of employees affected, and the reasons for the
change. The thineen changes included both internally and externally oriented changes that
aimed to increase either numerical flexibility (e.g,. dovvnsizing, the use of temporary/part
time workers, outsourcing) or functional flexibility (e.g., re-engineering, management delay
ering, decentralized decision making) or both. The survey particularly sought information on
human resource management practices that were designed to enhance flexibility (i.e.,
employee suggestion programs, flexible job deSigns, information sharing, quality circles/prob
len1-solving teams, joint labour-management committees, and self-directed groups).
The survey revealed that organizational change was widespread in Canada. The excep
tions were very small establishments employing less than twenty workers, where almost
half the establishments reported no change. Nearly nine-tenths of workers were affected
by organizational change. One-quarter or more of the establishments reported downsiz
ing, re-engineering (defined as 'redesigning processes to in1prove perfonnance and cost'),
increased integration among different functional areas, and greater reliance on functional flexibility, affecting over half the workers. Close to one in five establishments also report
ed outsourcing and the adoption of flexible hours. The organizational change was highly
con1plementary and particularly marked among large (500 or more employees) establish
ments where over 95 percent of the respondents reported some organizational change.
Between three-fifths and four-fifths of the large establishments were involved in do\VIlsiz
ing, re-engineering, functional integration, delayering, functional flexibility, and out
sourcing. A majority had increased their reliance on part-time workers and overtime. One
third had increased the use of temporary workers (Ekos 1998). Downsizing, re-engineer
ing, and functional flexibility were the most significant aspects of restructuring within
fiIDlS. Among the functional-flexibility initiatives, quality circles and problem-solving teams were the most important change initiatives: they were reported by 6 percent of the
establishments surveyed, but they affected more than one-third of the \vorkers. In gener
al, the survey found a very low incidence of high-performance work practices overall,
although the medium-sized and large sized establishments were more likely to initiate
these changes than the small workplaces.
The survey also revealed that cost reduction, technology adoption, and product quality
improvement imperatives were the major forces driving the change process. Reducing
costs was the most frequently cited objective of organizational change and was the domi
nant reason for downsizing and re-engineering. According to the survey, one-third of the
establishments, representing 63 percent of employment, combined an organizational
change with either technology adoption or innovation. Business strategies also appear to
playa significant role in the adoption of high-performance work practices. The survey
8
results showed that one in five establishments emphasized human resource management as crucial to their overall business strategy The proportion was highly correlated with establishment size, with close to half the medium-sized and large establishments reporting intensive use of human resource strategies. A significant majority of these establishments described their organization's focus on developing new products or services and/or expanding into new geographical markets. Establishments where human resources are
considered very important, according to the survey) were more likely to place greater
emphasis on reorganizing the work process, enhancing labour management relations,
increasing employee skills and employee involvement, and implementing total quality
management programs than were those where human resource strategies were not highly
valued. These establishments also reported a significantly higher incidence and an
expanded employee coverage of such high-performance work practices as employee sug
gestion programs, flexible job designs, information sharing with employees, quality circles and/or problem solving groups, joint labour management committees, self-directed teams, fonnal vocational training, alternate work arrangements, formal perfonnance appraisals,
and formal/informal grievance procedures. Over one-third of such establishments were unionized. Manufacturing, communications and utilities, and finance and insurance were
SOllie of the key industries with strategic emphasis on human resources.
The Workplace Training Survey and the HRDC Survey of Unions
The Workplace Training Survey (\VIS) and the HRDC survey of unions largely confirm the findings of WES, although they point towards a much higher incidence of high-perfor
mance work practices than the Statistics Canada survey. The WTS, while focusing on training activities, collected information on selected human resource practices as well as infor
mation on the organizational environment, business strategies, and performance trends. The survey revealed that among the selected human resource practices, the incidence of formal communication or information sharing was the highest: it was reported by twothirds of the survey respondents. A majority of the establishments surveyed also had team
based work systems, job rotation, and cross-skills training. Formal employee involvement
in decision-making through such mechanisms as labour management committees and quality circles was reported by 46.7 percent of the respondents. More than two-fifths (41.8
percent) indicated that they provide fannal training (Betcherman 1999). The least fre
quently cited practice was variable compensation~ it \vas cited by only 28 percent of the
respondents. The survey, which over-sampled manufacturing finns, further revealed that the incidence of high-performance work practices, including training, increased with establishment size and was positively correlated with the adoption of new technology, market focus, and 'people-centered' business strategies (Betcherman 1999). The survey appeared to confinn the conclusions of earlier studies of workplace change in Canada which found
that 'high performance systems are most prevalent among firms operating in environments where success is largely determined by product and service differentiation and where tech
nological association is a key source of competitive advantage' CBetcherman 1999).
The Survey of Innovations and Change in Labour Organizations in Canada, conducted
by the Workplace Infonnation Directorate of the HRDC in 1997, similarly discovered that 'workplace change appears pervasive across Canada' (Kumar) Murray, and Schetagne
1998). When asked, 'Over the past three years, has your union been faced with any workplace change/work reorganization initiative?' nearly nine out of ten respondents answered in the affirmative, and there was little variation in union response by sector and membership size. The survey results showed that 'downsizing/restructuring' was the most com
9
The incidence of high-performance
work practices increased with
establishment size.
Workplace change was a central element of the restructuring within organizations.
mon and pervasive workplace change faced by unions. Other workplace change initiatives
reported by a majority of unions included changes in job classification or job tasks, the intro
duction of new technology, team or group work, changes in work scheduling, outsourc
ing/contracting out, and the introduction of continuous improvement/total quality manage
mentlISO standards. Variable compensation arrangements, such as profit sharing, knowledge-based pay, and employee stock ownership plans were the least common change initia
tives cited by unions. Except for downsizing, which was uniformly reported by all unions, private sector unions were more likely than public sector unions to report workplace change involving the adoption of new technologies, team/group work, and outsourcing/contracting out. The change initiatives were interrelated and were associated with increased downsizing and management emphasis on cost-reduction, according to the union respondents. The union perceptions of workplace change highlighted in the HRDC survey support the WES
findings that workplace change was a central element of the restructuring within organizations and was intended to integrate new technologies and reduce costs.
Case Studies ofMajor Canadian Firms
The publication Contract and Commitment: Employment Relations in the New Economy 1 a vol
ume of case studies of major Canadian £inns in such key sectors as auto, steel, mining. aluminum, telecommunications, and railways and postal services, provides an additional perspective on the restructuring process and workplace change in Canada (Verma and Chaykowski: 1999). The pressures for restructuring within all the firms studied were associated with increased competition due to globalization, deregulation, anclJor privatization, 'overlaid with a revolution in production technologies.' The editors of the volume con
cluded that while there was no dominant set of practices and no single workplace model
adopted by the finns studied, there were several common themes, including increased flexibility in work organization, increased employee and union involvement, the intro
duction of performance-based pay, and greater training-all of which were deSigned to enhance flexibility and/or reduce costs. Betcherman (1999), a contributor to the volume, cited the following commonalities running through the restructuring of firms:
1 the explicit adoption of a differentiation-based business strategy with a focus on production innovation and quality, together with a rationalization of business activities;
2 the transition to a strategic approach to HRlIR;
3 technological change and a reorganization of the work process as drivers of HRlIR inno
vation~
4 HR innovation falling more into the 'lean' model than the behavioural modet
5 a new emphasis on skills training; 6 a reorganization of the labour-management relationship initiated by management; and 7 a recognition that innovation will require negotiation with the union, essentially
accommodating more job security for greater operational flexibility
Betcherman argues that the dual approach-implementing high-performance work practices such as employee involvement, skills training) variable pay, and flexible job designs in tandem with a rationalization process involvjng re-engineering, downsizing,
outsourcing, and greater reliance on contingent employment-may be a rational strategy
for an effective response to the immediate demands of new production systems and
changing markets and technology but that it may be less useful in the long run than in the
short run, since it carries many risks.
10
What Are the Effects of High-Performance Work Systems?
There is a voluminous literature that examines the effects of high-performance work sys
tems on organizational performance and labour market outcomes. But only a limited
number of studies have systematically analyzed their effects on worker well-being and/or
the work environment. The evidence comes from national and industry surveys, case
studies and surveys of workers and union leaders.
The Economic and Financial Performance of Organizations
Notwithstanding the measurement and methodological issues, there appears to be a wide
spread consensus that high-performance work practices, regardless of how they are
defined , have a positive effect on the economic and financial performance of organiza
tions. Ichniowski et al. (1998), sum up this consensus in an analysis based on a thorough
review of a broad set of studies that employ different research designs:
In short, the empirical evidence from case studies, samples of plants within specif
ic industries, and broad national samples of industries tell a consistent story:
Conclusion 1: Innovative human resource management practices can improve business productivity, primarily through the use of systems of related work prac
tices designed to enhance worker participation and flexibility in the design of
work and decentralization of managerial tasks and responsibilities.
Conclusion 2: New systems of participatory work practices have large economi
cally important effects on the performance of the businesses that adopt the new
practices.
A more recent review of the literature on the relationship between high-performance
work practices and organizational financial performance (Baker 1999) echoes these con
clusions:
Most of the studies consistently associate the adoption of HPWPs [high-perfor
mance workplace practices] with strong, or at worst, neutral financial perfonnance.
Although it is difficult to conclude unequivocally that Finns can cause improved
performance by adopting HPWPs, the powerful message that emerges from this
body of literature is that there is virtually no evidence indicating that a firm is likely
to suffer by adopting a well-planned set of HPWPs and employment practices.
The positive e~fects of high-performance work practices on firm perfonnance have been
further corroborated by Cappelli and Neumark (1999), Osterman (1999), Cappelli et al.
(1997), and Becker and Huselid (1998). However, despite the strong empirical support
for HPWPs and firm performance relationships, many questions remain. Becker and
Huselid (1998), for example, are not quite sure how and in what configuration the high
performance work system affects the firm performance and how the practices are embed
ded within the large in1plementation process. Implementation issues relating to the 'right'
combination of practices, difficulties in achieving consensus, and the lack of wholeheart
ed acceptance and commitment to change still loom large.
11
There appears to be a Widespread
consensus that high-performance work
practices have a positive effect on the
economic and financial performance of organizations.
A key issue concerning mutual gains is
the close association between the adoption of high-performance work systems and
layoffs or downsizing.
The Work Environment and the Well-Being of Workers
Another question, perhaps a more important one for the sustainability of high-performance work systems, is the question of mutual gains, 'the extent to which the value cre
ated by a HPWP or other relevant organizational innovation is shared with employees'
(Becker and Huselid 1998). As mentioned, there is very little systematic research on the employee outcomes of high-performance work systems (Osterman 1999). The limited evidence for the United States appears to indicate that the level of training is higher among establishments Vlith two or more high-performance work practices. Wage and benefits growth also appears to be high among high-performance work organizations, although there is a problem Vlith attributing causality, since the incidence of high-performance work organizations is higher among industries that pay above average wages and have better benefits.
Based on an employee survey, Freeman and Rogers (1999), suggest that HPWPs with
advanced human resource practices improve worker well-being, judging by the evidence of high levels of worker satisfaction with labour management relations and by employee perceptions of management sensitivity to their concerns. Their survey revealed that
nonunion/nonmanagerial participants in employee involvement programs have more positive attitudes toward their work and toward management. These employees reported that they had more influence over how they did their job and that they had benefited from an increase in pay. Findings far unionized workplaces are mixed. While some studies report positive worker perceptions of their work environment and \-vell-being) others find the work environment more rigid, controlled, and regimented under highperformance work systems. The positive outcomes are most persuasively highlighted by Applebaum et al. (2000). They studied industries involved in the production of steel, apparel, and electronic medical instruments and imaging devices. From employee sur
veys, interviews with managers and union officials, and site visits, they found that highperformance work organizations were not only more productive but also more worker friendly and were associated with greater job satisfaction and commitment among
employees. They found no evidence 'that high performance \-varkplace practices amount to a "speed-up 11 that negatively affects worker stress. Workers who have the opportunity to participate are no more likely than other workers to report that they regularly have
[more} demands on their time or more vvork than they can handle.' However, a major
problem \vith the results that was cited by author ,is that the firms participating in the survey were 'better than average' employers paying higher wages, providing more inten
sive benefit coverage, and reporting greater worker satisfaction. A different view is provided by a number of studies of auto plants in the United States that found a diversity of outcomes for workers, including increased workloads, heightened stress, on increased pace of work, long hours, and greater health and safety risks (see Nunez and Babson 1998~ Babson 1995).
A key issue concerning mutual gains, that is, whether high-performance work systems are as good to workers as they are to firms, is the close association bet\veen the adoption of high-performance work systems and layoffs or downSizing. As Pfeffer (1998) notes, employment security is a critical element of high-performance work systems. It is difficult to generate trust, motivation, and commitment among employees if they are afraid and insecure about their jobs. 'One of the most widely accepted propositions in the HPWS literature is that innovations in work practices designed to improve productivity or other aspects of firm performance are not likely to be sustained over time when workers fear that by increasing productivity they Vlill work themselves out of their jobs.' The depth and
12
breadth of downsizing in the United States (as well as Canada) during the 1990s has been
alarming (Cappelli et al. 1997~ Conference Board of Canada 1997). Osterman (1999) pro
vides the most convincing evidence when, after controlling for industry and firm size, he
finds that 'an employer that had in place a high-performance work system in 1992 was more likely than others to have a layoff in 1995-97.' He concludes that 'these results cer
tainly do not support the idea that the gains of HPWOs Ihigh-performance work organi
zations] are shared 'With the labour force' (he also does not find evidence of wage gains
under HPWOs). Similarly, in their review of new work practices Cappelli et al. (1997) note
the 'contradictions and internal problems facing the evolving model of work organization.'
They point to the criticism 'that must be taken seriously [thatl the transformed systems
are simply a speed up and that the greater productivity is due to increased effort that in
turn is generated by fear of job loss rather than by any beneficial effects of new approach
es to management. l They believe that in view of these criticisms, which need to be
addressed in a more systematic manner, the new work systems would appear to be more
fragile.
The Mixed Results in Canada
The Canadian evidence on the nature of organizational change and the mixed effects of
high-perfonnance work systems in lean manufacturing environments is even more com
pelling. Analyses based on surveys and case studies in Canada support the positive rela
tionship between high-perfonnance work practices and organizational economic and
financial perfonnance. 'These relationships remained statistically significant in economet
ric modeling where other potential performance determinants were controlled'
(Betcherman 1999). The Workplace and Employee Survey (WES), the comprehensive pilot survey of orga
nizational change mentioned earlier, asked respondents directly about the impacts of var
ious organizational changes on a number of establishment performance measures and on the workforce. Drawing on the survey results, a study by Ekos Research exan1ined the
impacts of five most frequently cited 'most significant organizational changes' (Le., re
engineering, downSizing, flex-hours, functional fleXibility, and functional integration).
The study also explored the impact of clustering by dividing establishments into two cat
egories, those that reported very little organizational change and those where a \Vide vari
ety of changes were introduced over the previous three years to enhance both numerical
and functional flexibility The change cluster included a significantly higher incidence of
such high-performance work practices as employee suggestion programs, flexible job
design, infonnation sharing, quality circles/problem solving groups, self-directed teams,
joint committees, and formal vocational and non-vocational training, as well as variable compensation plans. The change cluster was also characterized by higher wages, better
benefit coverage, and greater unionization rates, as well as by higher rates of adoption of,
and participation in, technological change. The study found that the mean revenue growth
of establishments in the organizational change cluster was almost twice the average for
establishments with little or no organizational change. The analysis showed that organi
zational change had a general positive impact on establishment performance, in terms of increasing quality and redUCing costs. The perceived impacts were most noticeable in the
areas of product/service differentiation and product/service quality. Also, organizational change had a more positive impact on various aspects of establishments than on the workforce (Ekos 1998).
Another study based on the WES revealed that:
13
The Canadian evidence on the nature of
organizational change and the mixed effects of high-performance work
systems in lean manufactUring envi
ronments is even more compelling.
On the impacts of the change process,
the survey respondents indicated that it
had led to a deterioration
in the quality of the worklife oj their
members.
1 organizational change that centred around numerical flexibility (e.g., downsizing) was
negatively correlated with wages;
2 employee involvement programs were not correlated with either wages or hours
worked;
3 business strategies related to internal flexibility (e.g., total quality management,
improved labour-management relations) had positive and significant effects on wages
and hours of work;
4 training had a positive effect on wages; and
5 changes related to external flexibility (e.g., outsourcing), while positively related to
establishment performance, had a negative association vvith wages (Weber and Verma 1998).
The WES did not collect information on worker attitudes and/or work environments,
and therefore did not contribute much to an exploration of the impacts of organizational
change on worker well-being and the workplace climate. However, since information was
collected on new hires, it provided a valuable perspective on the growing gap in working
conditions between new entrants to the labour market and employees \vith long service,
in particular with regard to income and employn1ent stability.
The impacts of workplace change and the adoption of high-performance work practices
on workers and work environments are highlighted in the national survey of union perceptions of workplace change (Kumar, Murray, and Schetagne 1998) and the surveys of
working conditions in the auto industry (CAW 1995, 1996: Lewchuk and Robertson
1996, 1997 1998) and in other industries CLewchuk 1997). The national survey of unions, which covered 99 labour organizations representing
2.34 million workers, nearly 60 percent of the total union membership in Canada, asked
respondents about their perceptions of the incidence, nature, sources, methods of imple
mentation, and impacts of workplace change on workers, unions, and the work environ
ment over the past three years. As indicated earlier, the survey revealed a vvidespread inci
dence of workplace change and a diverse range of human resource policies and practices.
Union respondents reported that downsizing was the most common and pervasive change
associated with the implementation of new technologies, outsourcing, and the increased
use of temporary and part-time workers, as well as with the adoption of TQM, tearn/group
work, multi-taskinglmulti-skilling, and changes in work scheduling, job classification,
and job tasks. On the impacts of the change process, the survey respondents indicated
that it had led to a deterioration in the quality of the worklife of their members. More
specifically, they reported an increase in workload, job insecurity, and health and safety
concerns and a decline in work influence on the job and trust and confidence in man
agement. However, the survey responses revealed contradictory trends in labour-n1anage
ment relationships: there was more conflict but also increased cooperation, despite a
marked increase in employer bargaining power and demands for concessions (Kumar,
Murray, and Schetagne 1998). A similar pattern of worker outcomes is revealed in employee surveys of work reorga
nization, working conditions, and the quality of worklife in the unionized automobile sec
tor, and in industries producing clothing and textiles, boxes, paper, aluminum, and elec
trical and electronic products. The survey outlined in Lewchuk and Robertson (1996,
1997, 1998) covered nine of the ten assembly plants of Ford, General Motors and
Chrysler, the car and truck assembly plants of CAMI, a joint venture of General tvlotors.
and Suzuki, and the six engine and transmission plants of Ford and General Motors. All the plants followed lean production practices, to varying degrees. They had a diverse
14
range of high-performance work practices. Team/group work was prevalent, whether in a
formal or an informal manner. All plants had made changes in work scheduling, work
arrangements, job classification, and job tasks. Two plants had job rotation. The incidence
of formal and informal training in various' aspects of work organization was 'high.
However, because of union opposition, none of the plants had introduced age-based or merit-based pay systems, profit sharing, or individual or group bonus schemes.
The survey assembled worker perceptions of their workloads, the pace of work, moni
toring, control and autonomy over jobs, and so forth. The results showed a diverse range
of worker perceptions, with workers complaining most about their heavy workloads, the
increased pace of work, constant monitoring, and a decline in control and autonomy in
plants where 'work reorganization had proceeded the farthest.' The survey found little evi
dence that (new fonns of \tvork organization resulted in working smarter but not harder'
(Lewchuk and Robertson 1998~ see also Lewchuk and Robertson 1996, 1997). A similar
survey of sixteen independent auto parts plants conducted by the two authors in 1995
found that workers reported, in varying proportions, increased workloads, higher physi
cal and emotional stress, an intensified work effort, and greater health and safety risks
reported by workers in varying proportions (CAW 1995). The poor working conditions,
according to the survey results, were characteristic of companies that had instituted lean
production or that were in the process of reorganizing production by introducing just-in
time production, continuous improvement, area teams, reductions in indirect labour, and
policies and practices designed to promote the 'blurring of boundaries between manage
ment and production workers.'
In the surveys of workers in the non-auto industries, which were designed to examine
Ithe impacts of new models of work organization and investment on new technology on
the quality of work life,' a similar pattern of worker and work environment outcomes was
revealed (Lewchuk 1997). The surveys, covering twenty-four small and medium-sized
finns in clothing, textiles, box manufacturing, paper, aluminum, and electrical and elec
tronic products industries, discovered troubling perceptions of workers with regard to
health and safety, workloads, the work environment, and job control. In the area of health
and safety, one-third of the workers surveyed reported 'working in pain at least half the
days in the month, 40 percent [reported] working in awkward positions at least half the
day, nearly one-half [reported] 'dust' as a problem, and more than one-half [reported] that
they were tense and wound up at work.' In the area of workload, more than two-fifths
reported that their current job was overloaded, more than one-third reported that the
work pace was too fast, and one-quarter reported that their workload was too heavy. In
four of the seven sectors, the likelihood of workers reporting poor working conditions was well in excess of these averages. In the area of job control, a majority of workers reported
that it would be difficult to change. things they did not like about their jobs, that they had little scope to vary their work pace, and that at least half the time they had to work as fast
as they could to keep up. On the degree of monotony and the frequency of crises at work,
two-fifths of the workers surveyed reported that their work was boring at least half the
time, over one-quarter reported that there was a crisis at work at least every other day, 40
percent reported that half the time they felt distaste at going to work, and more than 70
percent were concerned about losing their jobs.
The survey report concluded that 'workplace reorganization and new investment may
secure employment, raise productivity and improve competitiveness, but for most workers
there are hidden costs including heavier workloads, a loss of control over working conditions, and health and safety problems. While, in the short run, these costs are borne mainly by industrial workers, in the longer run they are likely to have a larger social impact in
15
In the area of job control, a majority
of workers reported that it would be
difficult to change things they did not like
about their jobs.
The limited evidence suggests that the wellbeing of workers and the work environment
may have suffered as a result oj the new
work systems.
the form of lost productivity and higher health care costs' (Lewchuk 1997). Similar con
clusions were reached in surveys of USWA locals in Ontario conducted in 1993 (Ekos 1993)
and of local unions affiliated with CSN in Quebec, carried out in 1994 (tvlurray et al. 1996).
Further evidence of deterioration in worker well-being and the work environment is
provided by occasional surveys of the health of Canadians conducted by Statistics Canada.
For example, two surveys conducted in 1991 and 1994 revealed that perceived worker
stress from the threat of layoffs and job losses has been on the increase and that the per
centage of workers reporting stress from risk of accident and injury has risen. A lower pro
portion of workers believe that they have autonomy and control over how they should do
their work, and more workers complain of too many demands on their time and poor inter
personal relations at work Oackson and Kumar 1998). Data from Statistics Canada also
suggest that overtime hours in major manufacturing industries with a high incidence of
new work systems (auto assembly, auto parts, aerospace, paper, and primary metals indus
tries) have increased in the 19905, and real earnings have lagged behind the productivity
growth, suggesting that workers have not shared in productivity gains dUring the 19905.
In summary, the effects of high-performance work systems, in both Canada and the
United States, have been mixed. While there is considerable evidence that organizations
have benefited from work reorganization, new technology, and changes in methods of
operation in terms of their economic and financial perfonnance, as well as in their flexi
bility and the quality of their products and services, very little is kno\vn about how work
ers have faired. The limited evidence suggests that the well-being of workers and the work
environment may have suffered as a result of the new work systems. Due to their heavy
emphasis on downsizing and organizational restructuring to enhance numerical and func
tional flexibility and reduce costs, the workplace changes have created insecure, stressful
environments. Far from empowering workers, they have led to a loss of control and auton
omy and placed a wide range of increased demands on workers. They have generated
improved organizational performance, but they have done so with speedups and other
forms of work intensification. The quality of work life issues raised by these outcomes
emphasize the need for a more systematic analysis of the effects of high-perfonnance work
systems. In the absence of comprehensive and longitudinal infonnation to link various
work practices with establishment performance, worker well-being, and work environ
ment indicators, it is difficult to rigorously assess the sustainability of these new work sys
tems and to determine whether and to what extent their potential to simultaneously
enhance productivity and worker standards of living is being realized.
Conclusions
It is apparent that a new model of employment relationship, popularly described as a
high-performance work system, is emerging in Canada and the United States. It is a prod
uct of nearly two decades of restructuring of production and management systems
through a reorganization of work and work relationships in response to changing markets
and technology. The system centres around a loosely defined set of human resources poli
cies and practices that aims to provide workers with the infonnation, skills, incentives,
and responsibility that will enable them to make decisions that contribute to greater flex
ibility and efficiency in the production and delivery of goods and services. Because of its
focus on job redesign and en1ployee involvement in workplace decision making, the high
performance system has the potential to provide mutual gains, in the form of enhanced
productivity, product/service quality, and flexibility for organizations and challenging and
rewarding jobs for employees.
16
Productivity Gains at the Expense of Workers?
Although the adoption of the system remains limited and uneven, with higher than aver
age rates of adoption in manufacturing and in industries facing intense competitive pres
sures~ the lack of supportive and commited organizational environments continues to be a
barrier to a \Vider diffusion of high-performance practices. Furthennore the initial out1
comes raise serious questions about whether the system, in the view of the way it has been
implemented, is sustainable in the long run and capable of realizing its mutual gains poten
tial. There is a widespread acceptance that, notwithstanding measurement and method
ological issues, high-perfonnance work practices, reinforced by the adoption of new technology and changes in production systems, have had positive effects on the economic per
fonnance of organizations. The extent to which they have contributed to worker well-being
is not certain. Indeed, there is some evidence, albeit ad hoc and unsystematic, that oppor
tunities for training and employee feedback have improved and that workers in a few large
unionized organizations have made marginal gains in wages and benefits. It is also evident
from many studies that ·productivity gains have come at the expense of workers and that
the adoption of high-performance work practices has been accompanied by insecure and stressful work environments created by waves of downsizing, an increased reliance on outsourcing, and a wide range of heavy demands placed on workers, (an increased pace
of work and a rigid, highly controlled and regimented pattern of work in the new system).
The Canadian evidence, in particular, is compelling on these effects, indicating that the lean production orientation in the adoption of high-performance work practices has had
adverse effects on the physical and social work environment, leading to increased health
and safety risks and a deterioration of the quality of work life.
The Sustainability of High-Performance Systems
The work environment is clearly a central issue in the wider diffusion and sustainability of the high-performance work system. A safe, healthy, secure, challenging, and satisfying work environment is strategic to achieving sustained productivity growth. Workers~ discre
tionary efforts are more likely to be forthcoming when conditions of work are safe, the pace of work is comfortable and trust, fairness, and respect are components of workplaceI
industrial relations (Bruton and Fairris 1999). A positive work environment is also a major
element in employee well-being and the quality of work life. There is a growing body of
research linking the physical and social environment with employee health, job satisfac
tion, and other aspects of the quality of employment. Unfortunately there has been far too
much emphasis in the literature on economic aspects of employment, to the neglect of nonmonetary, qualitative aspects of work. Recent research has shown that while high incomes
and opportunities for training and promotion are important, the social conditions of work and a good job content are the significant determinants of how workers feel about their jobs
and have a major influence on their workplace behaviour (Clark 1998).
The work environment, because of its impacts on employees' mental and physical health and family life has many externalities. Its improvement therefore c0l!stitutes a public good. While in the short run the cost of poor working conditions is borne by work
ers, the wider society and social welfare are affected in the long run by lost productivity
and increased health care costs that result. Thus) not Simply organizations but also the
wider society have an interest in promoting a work environment that is conducive to
sustained productivity growth and improved employee well-being and the overall quality of worklife.
17
The lack of supportive and commited organizational environn1ents
continues to be a .barrier to a wider
diffusion of highperformance practices.
18
A first step in the recognition of a public interest in sustainable high-performance work
practices that balance the needs of workers and organizations should be the collection of systematic, longitudinal information on multi-dimensional aspects of organizational change
and both economic and non-economic indicators of organizational perfonnance and the
quality of employment. The absence of this information is an important barrier to a rigor
ous analysis of an acceptable definition of a high-performance work system, the synergies
and contradictions between various best practices, the role of differing workplace envi
ronments, and the relationships between organizational perfonnance, employee well
being, and the work environment. Given its interest in productivity growth and improved
living standards, perhaps the North American Agreement on Labour Cooperation could be
persuaded to take an initiative in this area by sponsoring a regular survey of organization
al change and working conditions on the lines of a similar undertaking by the European
Foundation for the Improvement of Living and Working Conditions. The two European
surveys conducted by the foundation in 1991 and1996 (MerUie and Paoli 2001) have cer
tainly stimulated much public interest and discussion on the potential impact on the vvork
environment of work reorganization, restructuring, and technologies.
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