High Performance Work Organizations: Payoffs to Participation

1
High Performance Work Organizations Payoffs
to Participation?

• Arne L. Kalleberg
• Department of Sociology,University of North
  Carolina at Chapel Hill
• November 17, 2003
• Dublin, Ireland

2
Components of a High Performance Work System

• High Performance Work Organizations seek to
  elicit the discretionary effort of workers by
  giving them
• Opportunity to Participate in Decisions
• Autonomy, self-directed teams, offline teams,
  communication structures
• Training and Skills
• Formal and informal training, education,
  employment tenure
• Incentives and Motivation
• Pay for performance, employment security,
  promotion opportunities

3
Research Questions

• How widespread are High Performance Work
  Organizations (HPWO)?
• What are the correlates of HPWOs?
• What are the consequences of HPWOs for
  organizations and individuals?
• What are the mechanisms by which HPWOs generate
  these consequences?
• What are the barriers to adoption of HPWOs?

4
Studying High Performance Work Organizations

• National Surveys of Organizations
• National Organizations SurveyII (1996-7) and III
  (2002-3)
• Surveys of Employers and Their Employees
• National Organizations Survey-I (1991) Data on
  U.S. Establishments linked to General Social
  Survey
• Three Industry Study (Steel, Apparel, Medical
  Electronics)(1995-7)(Reported in Manufacturing
  Advantage)
• Surveys of Union Members
• Panel Study of International Association of
  Machinists

5
National Organizations Study-II

• Data were collected from 1,002 establishments in
  1996-7
• Information obtained from human resource managers
  via telephone interviews in most cases some
  chose to fill out abbreviated mail
  questionnaires. Two or more informants were used
  in 11 of the cases
• Response rate was 55 percent
• Establishments were sampled with probability
  proportional to size from Dun and Bradstreet
  Information Services lists
• Distributions of establishments by size and
  industry closely resemble national distributions
• 68 of establishments were independent
  organizations the rest were part of larger firms
• Data were collected on several occupations core
  and support (clerical)

6
U.S. EstablishmentsUse of High
Performance Work Components NOS-II Survey

• Self-Directed Teams 4 indicators (Use teams at
  all Teams decide on tasks/methods Teams meet to
  solve problems Teams choose own leaders)
• About 60 had no items 8 had all four
• Multi-skilling Practices 3 indicators (Any
  cross-training Any job rotation Often or very
  often transfer to other job family)
• About 25 had no items 13 had all three
• Offline Committees 4 types of worker-management
  committees, used for implementing new
  technology quality control/improvement, other
  production problems, health and safety
• About 40 had no items 18 had all four
• Performance Incentives 3 indicators (Group
  incentives such as gain sharing Pay for learning
  new skills Profit-sharing or bonus program)
• About 60 had no items 4 had all four

7
Correlates of High Performance Work Organizations
in the United States NOS-II Survey

• Larger establishments use more of all four HPWO
  dimensions
• Manufacturing establishments are more likely than
  those in service industries to use offline
  committees, performance incentives and
  multi-skilling practices Service establishments
  are more likely to use self-directed teams
• Public sector and non-profit establishments are
  more likely than for-profit establishments to use
  self-directed teams and offline committees
  For-profit organizations are more likely to use
  performance incentives and multi-skilling
  practices
• Unionized establishments are less likely to use
  teams and performance incentives
• Establishments are more likely to use
  self-directed teams and performance incentives in
  core occupations as opposed to support occupations

8
Impacts of Participation on Organizational and
Worker Outcomes

• Organizational Performance
• Objective measures (vary by industry)
• Subjective benchmarking measures
• Worker outcomes
• Intrinsic rewards
• Wages
• Job satisfaction
• Stress
• Characteristics of the Employment Relationship
• Trust
• Organizational Commitment

9
Three Industry Study (Manufacturing Advantage)
Sample

• Visits to 40 manufacturing facilities in the
  steel, apparel, and medical electronics
  industries in the U.S. from 1995-1997.
• Telephone survey of 4,109 non-supervisory
  workers. Response rate was 68 percent.
• 37 percent female
• 46 percent graduated from high school
• 14 percent are college graduates
• 44 years old is the average age

10
Impacts of Participation on Performance Evidence
from the Three Industry Study

• In Steel, use of HPWO increased average uptime
• In Apparel, organization of work in modules (as
  opposed to the traditional bundle system) reduced
  throughput time without increasing unit labor
  costs.
• In Medical Electronics, the opportunity to
  participate scale was highly correlated with
  value added per dollar of costs.

11
Impacts of High Performance Work Organizations on
Workers Evidence from the Three Industry Study

• Workers who have greater opportunities to
  participate in decisions
• Report that they receive higher intrinsic
  rewards from their jobs (especially when they
  have more autonomy and communicate more with
  other workers)
• Are more satisfied with their jobs
• Earn more (especially in the steel and apparel
  industries)

12
Impacts of Participation on Stress at Work

• Role overload
• No effect in the total sample or medical
  electronics
• Extensive Communication increases overload in
  Steel
• Offline team increases overload in Apparel
• Required overtime
• Autonomy has a negative effect on required
  overtime in each industry but steel
• Offline team has a positive effect on required
  overtime in apparel and medical electronics
• Co-worker conflict
• Autonomy, self-directed team, and communication
  have no effect or a negative effect on co-worker
  conflict
• Offline team has a positive effect in the total
  sample and in medical electronics
• Job stress
• Only communication has a positive effect on job
  stress in the total sample and in the steel
  industry
• All other components of the opportunity to
  participate scale are insignificant

13
Determinants and Outcomes of Trust
Worker Attitudes
HPWP
Trust
Organization Performance
X
14
Measuring Trust

• To what extent do you trust management at this
  company? (1Not at all, 4To a great extent)
• Most of the time, supervisors in this department
  treat workers fairly. (1False, 4True)
• In general, top management treats workers at
  this plant fairly. (1False, 4True)
• In general, how would you describe relations in
  your workplace between management and employees?
  (1Very bad, 5Very good)
• TRUST SCALE Reliability (Cronbachs Alpha) .79

15
Determinants of Trust Results

• Regression Analysis of Trust scale on High
  Performance Work Practices (scale and
  components), for total sample and each industry.
• Equations control for Industry (Medical,
  Apparel), Occupation (Blue-Collar vs.
  White-Collar), Union status, Formal and Informal
  Training, Company seniority, Employment security,
  Company competitiveness, Whether company shares
  information, Work intensification, Education,
  Gender and Race
• High performance work practices enhance trust
  (especially autonomy and communication) in each
  of the three industries.

16
Effects of Trust on Perceived Performance Results

• Regression Analysis of Perceived Performance on
  Trust scale and Opportunity to Participate scale,
  for total sample and each industry.
• Equations control for Industry (Medical,
  Apparel), Occupation (Blue-Collar vs.
  White-Collar), Union status, Formal and Informal
  Training, Wages, Pay for performance, Company
  seniority, Employment security, Company
  competitiveness, Whether company shares
  information, Work intensification, Education,
  Gender and Race
• Trust is positively related to perceived work
  group/team productivity in steel and medical
  electronics, and to perceived quality of work in
  steel.
• Trust is also positively related (p lt .10) to an
  objective measure of performance (average uptime)
  in the steel industry.
• Opportunity to Participate in Decisions is
  positively related to the two measures of
  perceived performance in steel and medical
  electronics.

17
Effects of Trust on Worker Attitudes Results

• Regression Analysis of Work Attitudes on Trust
  scale and Opportunity to Participate scale, for
  total sample and each industry.
• Equations control for Industry (Medical,
  Apparel), Occupation (Blue-Collar vs.
  White-Collar), Union status, Formal and Informal
  Training, Wages, Pay for performance, Company
  seniority, Employment security, Company
  competitiveness, Whether company shares
  information, Work intensity, Education, Gender
  and Race
• Organizational commitment and Job satisfaction
  are positively related to trust, in each of the
  three industries.
• Opportunity to Participate in Decisions is
  positively related to commitment and satisfaction
  in the steel industry, and to satisfaction in
  medical.

18
Survey of the International Association of
Machinists

• Data were collected via telephone interviews with
  840 members of the International Association of
  Machinists in 2002.
• Response rate was 71 percent.
• The IAM is the largest labor organization in
  North America in the air transportation and
  aerospace industries and represents over 750,000
  people, with collective bargaining agreements
  with about 5,000 collective bargaining agreements
  covering small, medium and large employers. The
  IAM represents a diverse array of workers in 6-7
  broad occupations and in 25 broad industry groups

19
HPWOs, Trust, and Organizational Citizenship
Behaviors among the Machinists

• Union members who have more autonomy are more
  likely to trust their managers those who work in
  self-directed teams are less likely to trust
  their managers
• Union members who participate in decision-making
  and who work with others to solve problems are
  more likely to share their knowledge with
  co-workers
• Union members who are more likely to trust their
  managers and to share knowledge with their
  co-workers are more likely to engage in
  organizational citizenship behaviors (e.g., to do
  work beyond that which is required, such as to
  work overtime, volunteer for difficult tasks)
• Union members who have more autonomy, who are
  able to participate in decision-making, and to
  work with others to solve problems are more
  likely to engage in organizational citizenship
  behaviors

20
Why Arent High Performance Work Organizations
More Common?

• Costs to managers
• Investments in training
• Require sharing of power
• The business case for HPWO practices may not be
  convincing
• Need to establish causality (e.g., do HPWOs
  create trust, or does trust lead to adoption of
  HPWO? Does participation generate positive work
  attitudes or vice versa?)
• Organizations often adopt pieces of these systems
  (e.g., participation) but not others (e.g., skill
  and training, incentives)