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High involvement management and human resource line sustainability

Paul J. Gollan

Paul J. Gollan is currently an Associate Fellow in the Department of Industrial Relations and Visiting Research Associate at the London School of Economics and a Fellow of the Labor-Management Studies Foundation, Division of Economic and Financial Studies, Macquarie University. He can be reached at P.J.Gollan@lse.ac.uk

Organizational reform in Australia has resulted in a greater focus on relations between management and employees at organizational and workplace level. The stimulus has been the search for greater efciency and productivity. Leaders in government, business and unions have agreed that improved human resource management (HRM) is pivotal, but such views have not necessarily been matched by the commitment of management attention, time and resources to HRM at the workplace. Evidence suggests that high-quality employee participation and involvement at the workplace constitutes a HIM approach leading to greater organizational productivity and effectiveness. It is also acknowledged that a high-performance workplace approach through the application of HIM strategy highlights a number of opportunities. However, such an approach also poses a number of challenges and dangers that need to be addressed.

High-involvement management
Firms are facing an increasing struggle to gain competitive advantage in a much larger and more demanding marketplace. Markets stretch across international boundaries, trade barriers have crumbled and distribution channels have become more efcient. State intervention in many markets has diminished and many organizations confront an unequalled number of competitors. In addition, consumers demand higher quality products and services than before, delivered faster, and at a lower price (Flood and Olian, 1995; Gollan, 1995). As a means to confront these challenges, a greater focus has been placed on management strategies to increase organizational productivity and efciency at the workplace. A plethora of terminology has been created to refer to aspects of more highly developed HRM approaches or high performance work systems (HPWS) (Becker and Huselid, 1998). These strategies have been labelled high performance workplaces, high commitment management (HCM) and more lately, HIM (Lawler et al., 1995; Wood and Albanese, 1995; Wood and De Menezes, 1998; Wood, 1998). Equally important is guaranteeing employees access to due process and providing a means to be heard (Walton, 1985, pp. 79-80). Above all, the HIM strategy involves policies that promote mutual inuence, mutual respect and mutual responsibility (Wood, 1996, p. 514).

This article outlines a number of issues for organizations to consider when pursuing sustainable high performance workplace outcomes through high involvement management (HIM) initiatives. It identies those outcomes that reinforce corporate protability and corporate survival, as well as those that satisfy employee aspirations and needs in the workplace.

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HIM is premised on the belief that it will have positive effects on key performance variables: increased labor productivity, lower labor turnover and less absenteeism, greater output and a generally improved and exible workplace culture. Wood (1998) suggests a contingency hypothesis stating that environmental and strategic factors will moderate the relationships between a system of HIM and performance variables (Wood, 1998). The other important aspect of this relationship is strategic integration of work practices and HIM and a strategic alignment with total quality management (TQM) (Beaumount, 1993, p. 40; Kochan and Osterman, 1994). In essence, the HIM approach involves an examination of the extent to which high involvement practices tend to co-exist and the managerial attitudes that are associated with their application. HIM also emphasizes high-trust relations between management and employees. In particular, it is based on the assumption that employees can be trusted to make important workplace decisions. In addition, employees can develop their knowledge and skills to make important decisions about the management of their work activities, resulting in greater productivity and effectiveness (Wood, 1998; Lawler et al., 1995; Osterman, 1994). The HIM approach can be seen as a management initiative based on relationships between management and employees in the organization through employee involvement and participation, with the objective of increasing organization performance and protability. What has emerged from recent changes in the workplace is the importance of employee involvement and participation in achieving successful organizational change. Creating and developing an organizational culture that provides a foundation for positive organizational change may involve a considerable investment of management time and resources. But the link between such change and employee involvement arrangements is clear from a number of studies (Fernie and Metcalf, 1995; Geary and Sisson, 1994; Gollan and Davis, 1997). Where there is a lack of participation structures, especially in the growing non-unionized sector, a greater emphasis is placed upon management's ability to implement change processes. Underlying such processes are management attitudes. Some studies have also identied managerial attitudes as key to the existence of highly developed employee involvement practices (Fenton-O'Creevey et al., 1998; Kessler, Jennings and Undy, 2000; Millward et al., 2000; Wood and Albanese, 1995; Wood and De Menezes, 1998). They suggest that underpinning such practices is a relationship based on a high-level of trust between management and employees. It is assumed that employees can be trusted to make important workplace decisions that will result in greater productivity and

`` The HIM process emphasizes the inuence of organizational culture


and the impact of the external environment on organizational outcomes.

''

effectiveness. Employees are therefore given the opportunity to develop their knowledge and skills so that they can make these decisions. Such an integrated approach incorporates employee involvement and participation in all aspects of the organization's planning and implementation processes. Other research suggest that such integrated approaches need to be embedded in the workplace culture of an enterprise, and that this culture dictates the way that employees are consulted (Gollan and Markey, 2001).

High involvement management and organizational performance


There is considerable evidence to suggest that an integrated approach to employee participation can achieve higher levels of performance (EPOC Research Group, 1997; Fernie and Metcalf, 1995; Gollan and Davis, 1997, 1998; Guest and Peccei, 1998; Knell, 1999). In addition, research shows that comprehensive employee involvement and participation in employee relations' policies and practices have the potential to make an important contribution to organizational competitiveness. The problem for many organizations is that human resource managers and professionals often nd it difcult to convince senior management executives that progressive HR strategies make a difference due to the intangible nature of the benets of many HR programs and the long timeframe for any efciency gains to become apparent (Dunphy et al., 2003). As Dunphy and colleagues suggest that the contrast is often expressed in terms of short-term cost efciencies but medium to long-term negative impact (as in the case of downsizing) versus short-term increased costs (such as in training and development) and medium to long-term benets (Dunphy et al., 2003). However, evidence now demonstrates that companies that do invest in people, rather than just talk about it, show positive nancial outcomes. For example a comprehensive study by Patterson et al. (1997) in the UK has reconrmed the importance and linkage of good people management practices to productivity and prots. The study showed that the management of people had a greater effect on a business's performance than the combined effect of its strategy, product or service quality, manufacturing technology and expenditure on R&D.

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These results demonstrate the importance of the relationship between employee attitudes and company performance and as such indicate the more satised workers are with their jobs, the better the company is likely to perform in terms of protability and particularly productivity. However, the study's most important nding was the linkage between ``good'' human resource management practices and productivity. The report suggested that overall, HRM practices (i.e. appraisals, training and development) and in particular, employee involvement through team working, etc. explain 18 percent of differences in productivity between companies and within organizations. As the researchers state, this is the most convincing demonstration in the research literature of the ``link between the management of people and the performance of companies'' (Patterson et al.,1997). A follow-up study of 5,000 employees in 42 UK manufacturing companies conducted by Patterson and West (1998, p. 2) also suggest a strong link between employee satisfaction and productivity and protability. In fact they indicate that aggregated job satisfaction within a company predicted up to 25 percent of the variation between companies in performance and 12 percent of protability one year later. They argue that no other factor (such as competitive strategy, technology, market share, TQM or R&D strategy) could so effectively predict company performance (Patterson and West, 1998, p. 3). Research highlighting the link between HR practices and mortality rates in the UK National Health Service (NHS) also reinforces the potential outcomes of HIM practices (West, 2002). In a study of 61 hospitals in the UK there was a strong link between the extent and sophistication of appraisal systems in hospitals and lower mortality rates. In addition, there were also links between the quality and sophistication of training and high levels of employee involvement by the number of staff trained to work in teams. This research suggests that these measures enhance productivity by improving the knowledge, skill, motivation and performance of employees. Importantly, HR policies such as selection and training are associated with improved job performance. It was suggested that by changing and enhancing employee behaviour, a more cooperative and helpful approach to colleagues develop and makes better team workers (West, 2002).

environment increased job satisfaction producing lower sickness absence rates (West, 2002). The research found that the employee involvement through the extent of team working lowered patient mortality. Importantly, these ndings allowed for differences in size, regions and socio-economic status. For example, an association was found between team working and deaths following emergency surgery, with 25 percent more staff working in teams able to produce 275 fewer deaths per 100,000 admissions or 7.1 percent of the total (West, 2002). The researchers conclude:
If you have HR practices that focus on effort and skill; develop people skill; encourage co-operation, collaboration, innovation and synergy in teams for most, if not all, employees, the whole system functions and performs better. Another striking nding from the research is that when HR directors are members of the board of the hospital, the association between HR practices and lower patient mortality are even stronger . . . The resource implications are considerable. The magnitude of returns for investments in HR practice can be substantial (West, 2002).

High involvement management and human resource sustainability


HIM has also been viewed in terms of human resource sustainability, dened as the capacity of organizations to create and regenerate value through the sustained application of participative policies and practices (Dunphy and Grifths, 1998; Gollan, 2000a, b). This entails investment in human knowledge through continuous learning, and the application and development of such knowledge through employee information and consultation processes. The people management and development policies and practices need to be integrated for sustained business performance and positive employee outcomes of equity, personal development and well-being. Figure 1 represents the major factors, inuences and outcomes of HR sustainability in organizations. While not intending to be exhaustive, it identies ve major factors in the debate about HR sustainability. Essentially, the model denes HRs sustainability in terms of the capacity of organizations to create value, thereby, having the ability and capacity to regenerate value and renew wealth through the application of HR policies and practices. This will entail investment in human knowledge through continuous learning, and the application and development of such knowledge through employee participation and involvement. In addition, the model identies four main drivers for organizations trying to achieve corporate HR sustainability and examines their impact on employee satisfaction and commitment and on the traditional organizational objectives of increased productivity and prots. Importantly, the model

Self-managing teams create more cooperation


Interestingly, the research also revealed greater employee participation and involvement by the introduction of self-managing teams created more cooperation and better inter-departmental communication, with workers reporting that they felt involved in the decision-making process. As a consequence, workers stated that the increase in professional and emotional support gained as part of a team

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Figure 1

suggests that for HR sustainability to be achieved, the HR policies and practices need to be integrated for sustained business performance and positive employee outcomes of equity, development and well-being. Overall, the sustainability of high performance work systems is predicated on organizations by acknowledging the importance of employee satisfaction and commitment through the development of integrated employee consultation, organizational change, work and life policies, workplace institutions and comprehensive career development programs, will the organization achieve greater efciency, and productivity. Figure 2 presents an integrated model of the HIM process, emphasising the inuence of organizational culture and the impact of the external environment based on HRs capabilities and sustainable organizational outcomes. It presents a model of organizations pursuing a human resource sustainable approach. It emphasizes the inuence of organizational

culture and the impact of the external environment on sustaining outcomes. The model shows that improved performance and productivity are predicated on the need for managers to use situational attuned approaches to ensure that the potential of the organization is contributing to desired organizational aims. Thus, there is no one best way for all organizations, only organic processes based on situational characteristics that satisfy the aims and objectives for the organization and its employees in a sustainable way.

The challenges and limitations


A recent critical assessment of the high performance literature and research by John Godard (2004) has raised a number of limitations on the effects of the high performance workplace and HIM agenda. He concludes that: ``compared to what has been thought of as good management practice, claims that these systems yield superior performance outcomes may be unwarranted, and their implications for both workers and

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Figure 2

unions are at best uncertain'' and instead advocates an alternative paradigm that promotes legal and institutional reforms (Godard, 2004, p. 349). Godard (2004) suggests that while there is little reason to doubt that such practices are potentially highly effective in some workplaces and the adoption of at least some of these practices may yield increase performance, it is likely that proponents not only overestimate the positive effects but also underestimate the costs. As a result, full adoption of HPWS approach may yield little or no advantage over traditional good personnel practices, and in some workplaces result in more negative organizational outcomes.

Godard argues this may also provide a further explanation as to why full adoption of a HPWS approach is relatively rare and difcult to sustain. ``That is, because of high levels of pressure, and hence stress, experienced by employees, the gains associated with high levels of adoption are even more difcult to sustain'' (Godard, 2004, p. 368). Moreover, Godard (2004) advocates that greater regulation and state intervention in the labor market would address problems of distrust and conict that arise out of the inherent conictual nature of the employment relationship, and the associated cost of the full adoption of an HPWS approach. This would also provide a minimum benchmark that all organizations would have to adhere to reducing the possibility of shirking or opting out by some rms to avoid the associated cost of implementing a comprehensive HIM and HPWS agenda.

High benets assure success


Godard (2004, p. 368) concludes that because the costs of an involvement approach can be high, it is necessary for employers to ensure high benets if the program is to be a success. Even when employers do not follow a high intensication approach, it may in ``many cases be necessary to create a high-pressure environment if the performance gains needed to justify a high level of adoption are to be achieved''. He goes on to say ``Workers may therefore be subjected to considerable pressures to work still harder, even if through norms enforced by peers rather than from direct employer pressures''.

Conditions for high involvement management


Importantly, the current evidence suggests that there are a number of necessary conditions when implementing HIM processes and approach: rst, a critical element in any approach is the ability of managers to provide leadership and be facilitators for greater employee consultation and involvement. However, evidence in management education suggests serious weaknesses in management's ability to

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implement, facilitate and maintain productive employee relations (Midgley, 1995, p. 1431). Midgley (1995) suggests that these skills relate to the culture of the organization. He argues that there is little point enhancing people management skills if there is no commitment on the part of companies to provide the environment in which they can be applied. Thus, senior managers rst need to assess the future skills they need in their workers and managers, as well as the cultures and systems they will need to develop these skills (Midgley, 1995, p. 1431):
At present, it seems to us that management development is largely uncoupled from corporate strategy and, as a consequence, receives little sustained effort or priority within a great number of companies . . . Those that master the process are more likely to prosper in the next century and it is time more Australian corporate leaders grasped this nettle . . . (Midgley, 1995, p. 1432).

commitment and ensure corporate coherence (Worrall and Cooper, 1998, p. 3).

The opportunities and role for the HR function


A recent Australian survey of high performance work practices indicated the importance of the HR function in the successful adoption of HIM and HPWP practices (Murphy and Southey, 2003, p. 75). This research suggest that the strategic HR practitioner as part of the HR function has the potential to be a pro-active agent of change with the ability to develop, plan and implement a wide range of organizational activities linked to rm performance (Murphy and Southey, 2003, p. 75). In particular, the research indicated that central to the success of the implementation of such practices were the important practitioner dimensions of networking skills, HR group climate and the role of the HR group, and organizational leadership (Murphy and Southey, 2003, p. 85). Regarding networking skills, practitioners who recognise the need for and possess the ability to use a wide variety of networking skills are able to develop productive relations with key elements within organizations (Murphy and Southey, 2003, p. 85). The researchers also suggested that HR practitioners recognising the value of innovation conducive climates are more likely to devote greater resources to creating and maintaining them and thus more likely to be open to the adoption of new practices, to actively engage in adoption behaviours and successfully adopt appropriate HPWPs (Murphy and Southey, 2003, p. 86). Importantly, Murphy and Southey (2003) also highlighted the signicance of organizational leadership. The evidence would suggest that while there continues to be difculty for the HR function to assert their inuence in organizational decisionmaking, the issue of legitimacy and justifying their role in the application process is critical to the success of HPWPs initiatives.

Second, there is the issue of employee involvement and participation in workplace decision-making. The research suggests management should inform, train and equip shopoor employees to make decisions at their workplace and share ownership in the process (Gollan and Davis, 1998). Patterson and West's (1998) research into satisfaction and productivity suggests that encouraging know-how and locating information at the lowest levels of the hierarchy gives employees the expertise to manage their own work, recognise problems and generate solutions. Third, the process of organizational change requires extensive consultation and other supporting arrangements such as training, otherwise as suggested by Godard (2004), the shopoor could see the exercise merely as an intensication of workload rather than the enhancement of skills and experiences. As stated earlier, it would be advantageous to allay fears and anxiety about the introduction of any new process by developing a set of guiding principles in conjunction with a group of employees (Curtain and Mortensen, 1994, p. 10), through consultation and involvement at the embryo stage of the project. The research also demonstrates that involvement of trade unions at an early stage of the change process facilitates greater communication and employee involvement. To support this point, a recent survey in the UK into the quality of working life for managers by Worrall and Cooper (1998) suggested that when respondents were asked about the one piece of advice they would give to the board or top team of their organization, the vast majority of comments referred to the poverty of organizational communication and consultation strategies. The authors argue that this evidence reafrms the fundamental importance of effective communication strategies that can help ease organizational change, generate

Ways to encourage new HR practice


The researchers cited three areas where organizational leaders can encourage new HR practice. One, leaders can determine the role of the HR function, have a signicant impact on ``innovation friendly'' cultures, and provide a clear focus and direction for the development innovative activity (Murphy and Southey, 2003, pp. 86-7). Linked to this is the importance of the HR function being represented within the higher levels of the organizational hierarchy and the strategic role within the organization and thus the degree of political power that the HR function then possesses. The researchers conclude that practitioners developing legitimacy within the organization are more likely to be involved in the successful adoption of HPWPs (Murphy and Southey, 2003, pp. 86-7).

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Dave Ulrich (1998) has suggested four ways which HR function can deliver organizational excellence. First, by the HR function becoming a partner with senior and line managers in strategy implementation by forming the link between boardroom decisions and the marketplace. Second, by providing relevant expertise in the way work is organized and executed thus ensuring administrative efciency. Third, representing employees' concerns to management while simultaneously giving employees the capacity to increase their contribution to organizational decision-making. Finally, the HR function should be an agent of change, shaping processes and culture that together improve and enhance an organization's capacity for change (Ulrich, 1998, pp. 124-5). In particular, managers need to reassess the role and level of the HR function, specically its role in persuading organizations to adopt practices that support a sustainable approach (Hunt, 1999). This requires devolved decision-making emphasising medium to long-term sustainability rather than the short-term horizons characteristic of more traditional, centralised corporate HR or personnel management approaches. The advocates of corporate level human sustainability issues and practices need to be political movers and leaders putting forward a HR agenda to support sustainability. At lower levels HR advocates need to be coordinators, mentors and integrators, linking and integrating human capabilities into organizational structures, technologies and practices of organizations (Hunt, 1999).

that high`` Evidence suggestsparticipation quality employee

and involvement at the workplace constitutes a HIM approach leading to greater organizational productivity and effectiveness.

''

In summary, too little attention has been paid in practice to the implementation of integrated HIM approaches. The evidence also suggests that the sustainability of high performance work systems is predicated on organizations recognising the needs of employees and implementing sustainable policies and practices to reinforce its values and principles through greater employee involvement and participation. Only by acknowledging the importance of employee satisfaction and commitment through the development of integrated employee consultation, organizational change, work and life policies, workplace institutions and comprehensive career development programs, will the organization achieve greater efciency, and productivity. Overall, what can be drawn from the research is that high quality communication and consultation between management and employees at the workplace is essential in achieving HIM and improved organizational performance and sustainable outcomes for organizations and employees. J

Conclusion
The evidence presented suggests that the implementation of HIM programs can be linked to improved organizational performance. Company performance will usually benet from the integration of HRM and product and market strategies, improved understanding of the needs of employees at the workplace, and better use of their skill and ingenuity. Strategies designed to achieve a more comprehensive use of employees' human potential, desire to learn, exibility and personal responsibility would appear capable of delivering higher levels of performance. So if HIM approaches are positive and worthwhile, why do more rms not embrace this more readily? Three main issues can be highlighted from the research. First, it can sometimes be difcult to prove the link between good employee involvement and consultation practices and organizational performance. Second, the time period can be an important dimension with employee consultation normally requiring short-term costs for achieving long-term rewards. Third, perhaps the most difcult obstacle is that effective employee consultation requires a change in culture for managers and employees, which may involve considerable leadership skills, vision, time and resources.

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