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INDl}STR1A..L RELATIONS

CEN'T'RE

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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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