BUREAUCRACY VERSUS HIGH PERFORMANCE: A STUDY OF WORK REORGANIZATION IN

EMERGING MARKETS

Song YangAssistant Professor

Department of Sociology and Criminal Justice211 Old Main

University of ArkansasFayetteville, AR 72701

Email: yangw@cavern.uark.edu

Work Reorganization

• Previous research lacks consensus on what constitute High Performance Work Systems (HPWS)

• Is HPWS a decentralized workplace with job training, performance-base compensation, and FIRM (Kalleberg and Moody 1996)?

• Or is HPWS a self-directed work unit encompassing job rotation, quality control, and statistical process control (Osterman 1994)?

Work Reorganization

• Theoretically bureaucracy contradicts high performance as organizations transform (Cappelli 1997; Appelbaum and Batt 1994)

• But empirically, a set of bureaucratic practices such as personnel evaluation and grievance procedure (Marsden, Cook, and Kalleberg 1996) are used to indicate HPWS (Huselid 1995)

Where to Focus?

• Contradictions between the two work systems also occur in two dimensions

• In production mode, bureaucratic mass production contradicts to high performance lean production

• In human resources policies, bureaucratic formalization and classification contradict to high performance flexibility and teamwork.

My Research• This study uses a national organizations

survey (NOS 1996-1997; PI: Arne Kalleberg, David Knoke and Peter Marsden) to investigate three issues with regard to human resources policies

• What constitute HPWS?• What is the relationship between

bureaucratic work systems and HPWS?• What drives organization to adopt

bureaucratic work systems or HPWS?

Human Resources ManagementsHRM

• Bureaucratic HRM

• Formalization: document procedures and processes in all areas of HRM

• Fine-grained workforce classification: lateral classification and vertical differentiation

• Three empirical indicators: formalization, departmentalization and hierarchical levels

High Performance HRM• In contrast to bureaucratic HRM, HPWS

utilizes new technologies to achieve swift response to idiosyncratic customer needs.

• Empirical researchers diverge on what constitutes HPWS, but theorists tend to agree on a set of essential practices that identify HPWS.

• Those practices are elimination of hierarchy, flexion of rigid job definitions, increased job discretion of low echelon workers, constant skill upgrading, and performance-based reward systems.

ID HPWS

• HPWS is indicated by four essential components

• Teamwork

• Skill upgrading

• Work empowerment programs

• Performance based pay structures

Work Systems Adoption

• Market competition is the driving force behind adoption of high performance practices (Osterman 1994)

• Companies under competitive environments face tremendous pressures to outperform their competitors

• International competition also exposes American companies to innovative work practices alternative to bureaucratic mass production

Work Systems Adoption

• Market competition also decreases bureaucratization

• Companies are increasingly competing on customer satisfaction and quality control.

• U.S. companies are increasingly aware of alternative work practices to bureaucratic controls

Data• 1996 National Organizations Survey (NOS)

(Kalleberg, Knoke, and Marsden 1999).

• It has 1,002 establishments

• Data collection by MCSR (Minnesota Center for Survey Research)

• A sample of establishments selected from Dun and Bradstreet (D&B) information service

• D&B selected sampled organizations with probability proportional to size (PPS)

1996 NOS

• MCSR interview attempts 1,835. Completed by phone 880. Completed by mail 128. Totally 1,008 with 6 duplicates. Result cases 1,002

• A median of 9 attempts to complete an interview

• The median for the length of interview is 47 minutes

• 11% establishments need two persons per interview

Measuring Bureaucracy

• Formalization Do each of the following documents exist at org? 1. Written job description. 2. Written record of job performance Employment contracts. 3.Documents about doing personnel evaluation. 4.Documents outlining hiring/firing procedure

• Levels How many levels are there between a first-line supervisor and the top official in your organizations?

• Departmentalization Is there a separate department for the followings? 1. Personnel and labor relations. 2.Health and safety. 3. Equal opportunity or affirmative action

Measuring HPWS

• Teamwork Does your organization have established committees made up of workers and managers who meet regularly to deal with New technology? Quality improvement? Production or service delivery? Health and safety? Do workers meet by themselves without management to discuss issues related to production or service delivery?

• Skill Are core workers cross-trained, that is, trained in skills for more than one job? Are core workers involved in job rotation? How often core workers transfer to another job family?

Measuring HPWS

• Autonomy How much choice do core workers have concerning the best way to accomplish their assignments (no choice =1; small amount= 2; a moderate amount = 3; a large amount = 4; complete choice = 5)? Which best describes how closely core workers are supervised as they do their work (no supervision = 1; small supervision = 2; moderate supervision = 3; large supervision = 4; complete supervision = 5)?

• Compensation Are core workers paid using group incentives such as gainsharing? Do core workers participate in a profit-sharing or bonus program?

• CFA

FIGURE 1. Confirmatory Factor Analysis of a Two-Factor Model of Seven Organizational Structural Indicators (2 = 49.02; df = 13; p = .000; GFI = 0.996; AGFI = 0.967; RMSEA = 0.053)

.74

Formalization

1.29

Hierarchy

3.11

Departmentalization

.61

Skills I I I IncEnha

.40

Compensation

.96

Teamwork

.33

.54 .72 .19 .93

BUREAUCRACY

-.27

HPO

Autonomy III IncEnha

.08 .18

.12

• Table

Table 3: Unstandardize Coefficients from Regressions of Organization Adoption of Bureaucratic and High Performance Practices

Independent Variables Bureaucracy

(OLS) Team (Negative Binomial)

Skill (Negative Binomial)

Compensation (Negative Binomial)

Autonomy (OLS)

Constant -.833*** (.170)

.890*** (.132)

.537** (.190)

3.532*** (.130)

-1.351*** (.325)

Market competition -.093** (.032)

-.025 (.024)

-.061 (.037)

.001 (.025)

.214*** (.066)

Foreign market competition

.043 (.031)

-.002 (.024)

.064** (.024)

-.017 (.024)

.056 (.052)

Performance pressure-quality .004 (.044)

.027 (.034)

.065 (.051)

.016 (.034)

.009 (.079)

Performance pressure-new product -.128*** (.035)

.090*** (.027)

.004 (.040)

.048* (.023)

.040 (.063)

Performance pressure- worker -.003 (.033)

.027 (.026)

.003 (.039)

.054* (.026)

.027 (.060)

Performance pressure- satisfaction -.013 (.042)

-.043 (.033)

.045 (.049)

.013 (.032)

.104 (.078)

Control variables

Size .266*** (.013)

.093*** (.011)

.032* (.015)

-.016 (.010)

.013 (.024)

Market area at region/national/international

.075 (.061)

-.032 (.048)

.033 (.071)

-.056 (.047)

.294** (.110)

Age -.030 (.029)

.036 (.023)

-.050 (.032)

-.010 (.022)

.014 (.052)

Manufacturing

-.187* (.079)

.051 (.059)

.276*** (.082)

-.096 (.060)

.164 (.125)

Independent

.231*** (.059)

.061 (.045)

.005 (.067)

.002 (.045)

-.036 (.106)

Model 2 (df=11) 65.32*** 170.84*** 43.34*** 12.57*** 51.85***

Model R2 51.9% 14.5% 16.0% 13.8% 11.4%

Number of Establishments 679 763 773 785 785

Numbers in parentheses are standard errors. *p .05 ** p .01 *** p .001

Discussions• HPWS can not be defined with quantitative

indicators of teamwork, training, innovative pay, and worker empowerment.

• Substantively it suggests that American work restructures may take place in segment.

• Work places can not be simply dichotomized into Bureaucracy versus High Performance. Instead, a hybrid form encompassing an assortment of work practices is most common in contemporary American work organizations

Market Competition

• Domestic market competition reduces bureaucratization and increases worker empowerment, whereas international market competition stimulates skill enhancement programs

• Although market competition decreases bureaucratization, it does not necessarily increase many high performance practices