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HighPerformanceWorkingUKWON Journal

February 2007


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CONTENTSPage

Introduction 1

Section 1: The High Performance Concept

High Performance Work Organisation A Driver for the High Skills Vision?By Caroline Lloyd and Jonathan Payne, SKOPE, University of Warwick 8

High Performance Workplaces a Trade Union PerspectiveBy Tim Page, TUC 13

The case for High Performance WorkingBy John Stevens 15

Section 2: The Employment Relationship

What does employee relations mean for employers?By Mike Emmott, policy advisor employee relations, CIPD 18

Right challenge - wrong conclusionKeith Sisson, Emeritus Professor of Industrial Relations,Warwick Business School Industrial Relations Research Unit 21

Knowledge and Enterprise and their Implications for Employment RelationsBy Professor John Storey, .. Open University Business School 24

Section 3: Good Work

An Agenda for WorkBy David Coats, Associate Director - Policy, The Work Foundation 31

Good Work An agenda for trade unions and employersBy John Earls, Research Section Head, Amicus 34

Employee Involvement and High PerformanceBy William Coupar, Director, IPA 42

Section 4: High Performance For Everyone

The High Performance Work System and the Small FirmBy Paul Edwards. 51

Irelands National Workplace Strategy: High performance through partnership:An examination of the evidenceBy Dr. Larry OConnell, National Centre for Partnership and Performance;

Dr. Wenchuan Liu and Dr. Patrick Flood, University of Limerick. 55


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INTRODUCTION

High performance working creatinga good work economy

An initial glance at the literature suggests a

growing interest in the concept of the high

performance workplace among employers and

policy makers. According to the DTI, the reason for

this is that 'modern, high performance workplaces

build on the simple insight that individuals aremore likely to give of their best if they feel valued

and are given the opportunity to contribute their

ideas; and that people who are well-prepared for

change can help to introduce it and thereby help

secure employment within the business' (DTI 2002:

13).

Labour productivity and employment

The Governments approach to improving the UKs

long-term productivity performance has two broad

strands:

maintaining macroeconomic stability - to enable

firms and individuals to plan for the future, and

implementing microeconomic reforms - to

remove the barriers which prevent markets from

functioning efficiently.

It believes that labour productivity and

employment growth are the primary routes toincreasing prosperity in a global economy:

a. Labour productivity

The UKs productivity has historically lagged behind

that of other major industrial countries. This is the

case either when measured on an output per

worker basis (output divided by the number of

people in employment) or as output per hour

(average amount produced in each hour worked).

The simplest measure of labour productivity is

output per worker, as it is easily comparable with

information collected internationally. Increased

output per worker might suggest a number ofthings, including that workers are: producing more

in the hours they work, working longer hours,

taking fewer holidays or moving from part-time to

full-time employment. The disadvantage of this

measure is that longer hours may mask technical or

managerial improvements that might contribute to

improved productivity.

In contrast, the measurement of output per hours

worked takes account of how effectively those

hours are being used and is less affected by the

total number of hours worked. Its disadvantage is

that this is not measured in the same way in most

countries. The OECD does however produce some

adjusted comparison data.

Recently, the UK appears to have made progress in

narrowing the productivity gap with its

international comparators on both counts. The

Treasury reports that since 1995 the gap as

measured by output per worker has shrunkbetween the UK and France (23% to 11%) and

Germany (11% to 0%) and maintained pace with

the US (30% to 27%). The gap in output per hour

worked has also seen similar improvements.

b. Employment

A recent HM Treasury report suggests that

improved output has resulted in higher and more

stable employment growth in the UK, with over

2.3 million new jobs created since 1997. It also citesthe findings of an ILO report, which states that

unemployment has fallen by 517,000 since spring

1997, giving the UK one of the lowest annual

unemployment rates in the G7 . The Government

claims that the UK economy is enjoying its longest

period of sustained growth for 50 years.

The UK also has the highest employment rate in

the G7 with 74.5% of the working age population

in employment (its current target is 80%

participation), compared to 71.2% in the US, 65%

in France and 68.4% in Germany.


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Drivers of performanceLabour is just one of many potential factors of

production responsible for this change. Others

include capital, skills, technology, competition,

economies of scale and infrastructure, which

together arguably give a better indication of

overall efficiency and prosperity.

Some measures of productivity take these into

account, however, in terms of creating

international comparators, output per worker oroutput per hours worked are considered the most

realistic benchmarks.

In 2004 the Government consulted on moving

towards a focused set of national productivity

indicators in order to benchmark the UKs

productivity performance against its main

competitors. The consultation document proposed

a set of intermediate indicators of productivity,

based around five drivers.

The drivers focus on:

strengthening competition to encourage firms

to innovate, reduce costs and provide better

quality goods and services to the consumer;

supporting science and innovation to harness

the potential of new ideas, technologies and

working practices;

encouraging investment to improve the UKs

stock of physical capital in every sector andindustry; and working directly to improve public

service productivity.

improving the skills base to maximise the

contribution of human capital to growth;

promoting enterprise to maximise the

contribution of businesses to employment,

productivity, prosperity and social cohesion

The Government clearly sees these as important

steps in maintaining and increasing the UKseconomic competitiveness. Issues about innovation

and raising skills levels will be resonant for people

interested in how raising productivity relates to theway work is organised.

In particular the issue of skills is likely to become

more important. In December 2006, Lord Sandy

Leitch published the findings of a review of the

UKs long-term skills needs. The report, Prosperity

for all in the global economy - world class skills,

sets out an urgent case for raising the level of skills

attainment in the UK by 2020.

"In the 21st Century, our natural resource is ourpeople - and their potential is both untapped and

vast. Skills are the key to unlocking that potential.

The prize for our country will be enormous -

higher productivity, the creation of wealth and

social justice, he said.

However, treating social issues as essentially

economic problems is controversial. Not everyone

agrees that this is correct. Some would argue that

the economy should come first, i.e. the argument

that a rising tide raises all boats. This assessmentassumes that everyone will benefit from economic

growth, and that for instance, rising demand for

new skills will lead to an increasingly skilled

workforce. If this were the case it would be

inappropriate for the Government to intervene in

a way that undermined business competitiveness,

through for example, a training levy, in order to

encourage skills development.

Others would argue that Government intervention

on social grounds, e.g. to limit working time, is

entirely appropriate on the basis of equity and

fairness. Discounting any additional costs resulting

from regulating the excesses of irresponsible

capitalism, this line of thinking suggests that

businesses would be more than adequately

compensated by benefits in other areas, e.g.

employing a more diverse workforce, lower

workplace stress and fewer absences.

In practice however the Government has had totread a fine line between supporting the interests

of business groups (which have generally preferred


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the rising tide favours all boats argument) andthe trade unions who have traditionally given

greater weight to the equity argument.

The Governments agenda -prosperity for all

As the title of the Leitch review also suggests, the

Governments approach to managing the economic

and social issues of the workplace is premised on a

commitment to prosperity for all. This analysis is

further premised on maintaining economic stability

and high levels of participation in the labour

market; a strategy summed up by one

commentator as a fair and flexible labour market

underpinned by minimum standards.

The substance of this has not however been

universally welcomed by business or trade unions.

In particular, the governments lack of enthusiasm

for European social policy including the Working

Time Directive and rights for agency workers hasput it at odds with the trade unions, while a string

of new rights to protect individuals from

discrimination and low wages, improve work-life

balance and modernise the pension system have

raised objections from business groups.

A recent strategy document sets out the

Governments commitment to what is increasingly

seen as a twin-pronged approach to implement a

base of minimum employment rights and to

promote leading-edge practice or high

performance working on a voluntary basis:

Helping individuals by improving access to

skills, eroding barriers of discrimination and

offering more opportunities to work flexibly

Improving the position of vulnerable workers

and promoting social inclusion

Facilitating economic and social change by

providing stronger support for business,employees and trade unions to adapt, respond

and benefit from change

Encouraging good workplaces though anevidence base of good practice in successful

businesses.

If we take the governments approach, then the

challenge for the proponents of high performance

working is two-fold:

1. To demonstrate that new ways of working

provide good work for the individual as well as

benefit to the employer.

2. To build an environment at national andEuropean level that promotes a consensus-based

approach to higher performance across the

economy and not just among a few leading

employers.

Good work

The concept of "good work" is more than simply a

matter of middleclass angst. It is an important

component in answering, at a workplace level,how high performance working contributes to

both economic and social goals.

Since 1997 the Labour Government has introduced

a range of collective and individual employment

rights, which have apparently neither harmed

employment; Britain has amongst the lowest levels

of unemployment in the European Union; nor

undermined economic performance; indeed it is

corporate tax, not employment rights that excite

concern from Britains biggest companies.

What an increasing number of commentators are

arguing is that the governments approach lacks a

sense of coherence about the role of the state in

using good work as a lever in promoting strong

economic performance. For instance, while the

government has pressed ahead with parental

rights and flexible working, it has refused to put a

maximum ceiling on Britains long hours culture

and disappointed many by not agreeing tocompulsory pay audit as part of the Commission

for Women at Work.


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Some would also argue that the Government hasgot the regulations it deserved in implementing

the Information and Consultation Regulations and

that by introducing light touch laws it has missed

an important opportunity. Equally it is possible to

argue that the use of regulation to create good

work by enhancing individual employment rights,

antagonises business groups, thereby constraining

the Governments freedom to act in the future.

This can be seen in the debate that has sprung up

about the negative impact of regulatory red tapeon business performance.

The reality is that most businesses and most trade

unions recognise the importance of good work to

creating high performance, but are unclear how to

express this in the workplace. Health and safety,

basic skills and equality are areas where employers,

the trade unions and government have been able

to find common purpose and been successful in

creating mutual benefit. Whether these remain

isolated examples or are evidence of a more

consistent approach to creating good work

remains to be seen, but these cases suggest that

the Government should not ignore the importance

of collective action in the workplace to achieve its

social and economic aims.

High performance for all

What should work be like in the 21st century? The

concept of high performance has tried to give

meaning and shape to this. Indeed, part of the

challenge in selling the concept of the high

performance workplace has been the variety of

approaches developed by researchers and through

the experience of practitioners.

The high performance workplace has no

prescriptive form, but it is widely accepted that

high performance work practices have been

adopted because they contribute to organisationalobjectives. In this practitioners have a choice

between what has been labelled the high road

and the low road. These are distinguished byobjectives based on sustained innovation and those

based on short-term cost driven factors.

Naturally, the reality for businesses is often

somewhere between the two. This is reflected in

the language of organisational change and the

tools they use. What differentiates the high road

from the low road is the use of human skill and

knowledge as well as team working, the

decentralisation of decision-making, and the use of

technology.

This creates a challenge for policy-makers in the UK

and elsewhere in Europe as they invite

organisations to adopt high performance working.

Given the choice between long-term investment

and uncertain outcomes associated with the high

road and the quick wins (associated with

shareholder value) of the low road, it is not

surprising that the former has not been successful.

It also puts pressure on policy-makers to incentiviseorganisations in both the public and private sectors

and tip the balance towards high performance.

The success of the economy the UK and other

Member States in achieving higher levels of

performance becomes ever more important as

Europe faces a series of challenges to its

competitiveness and social cohesion.

The European perspective

In March 2000, EU heads of state and government

agreed on an ambitious goal: making the EU "the

most competitive and dynamic knowledge-based

economy in the world, capable of sustainable

economic growth with more and better jobs and

greater social cohesion". The strategy linked

economic, social and environmental goals but the

slow response of the member states led to a review

of the programme in 2004. As a result, it was

relaunched in 2005 with renewed impetus on twogoals: delivering a stronger, lasting growth and

more and better jobs.


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Member States were required to submit nationalreform programmes to encourage national

ownership for the reform agenda. The UK

Government, in its response argued that: Radical

labour market reform aimed at getting more

people into employment is key to delivering

economic growth and ensuring the long-term fiscal

sustainability of the economy. A flexible and job-

creating labour market is especially important for

competing in todays increasingly global markets.

By boosting productivity and employment, it hopesto ensure that the gains of economic growth go to

the many rather than the few. The governments

active labour market policies, tax and benefit

system and skills policies together offer everyone in

society a ladder to self reliance and self

determination.

European industry and employers federation

UNICE has pointed out that the EU's failure to

make progress, thus far is mainly due to

insufficient economic reform in other Member

States. In response to the collected reform

programmes, a progress report in 2006 stated that

National programmes must now be implemented

based on a real national consensus. This will not

come overnight. We must explain better to our

citizens why our growth and jobs strategy is the

route to prosperity and social justice in the long

term. The Commission may believe economic,

social and environmental reforms go hand in hand,

but the ETUC remains worried that growth and

jobs does not come at the expense of social or

environmental aims.

Can Europe achieve the high road of sustainable

competitiveness and high levels of employment? In

the UK the government believes that its

combination of measures designed to push people

back into work (through Job Centre Plus), make

work a more attractive option (by introducing the

National Minimum Wage and reforming the taxand benefit system) and introduce policies that

reduce barriers to work (including education, skills,

childcare and training policies) are essential tocreate an adaptive, flexible and productive

workforce.

In November 2006 the European Commission

launched a green paper on the review of labour

law and its adaptation to the modern world of

work. It calls for a debate about how labour law at

EU and national level can help the job market

become more flexible, yet ensure that the effects

of new technology and competitive forces of

global capital do not undermine employment

standards or security. Flexicurity, as it is known, will

be an important concept in 2007 and beyond.

Whether the supply of skills and the other push

effect of increasing minimum standards will be

sufficient to encourage more high performance

working remains to be seen. Some trade unions

fear that the issue of flexicurity is ultimately a

debate about the case for lowering expensive

employment standards in an increasingly costdriven world.

Given this and the current high levels of labour

market participation there is also a question about

what more can be done to promote leading edge

practice for those already in employment in order

to improve economic output. However, the role of

good work in creating high performance is

contested. The challenge is to build an

environment at national and European level that

promotes good work and higher performance

across the economy and not just among a few

leading employers.

Outline

Much has been written about high performance

working. Yet, the economic and social

underpinnings behind it are often taken for

granted or ignored. It is, however, a campaign that

has implications for how everybody will feel abouttheir work, how it is organised and how

prosperous our economy will be in the future. This


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collection of studies from academics andpractitioners is intended to provoke discussion.

Group 1 High performance working

The first set of papers address long standing issues

with the concept of high performance working.

Caroline Lloyd and Jonathan Payne look at the

essential definition of high performance and ask

whether it is really appropriate to rely on business

to drive skill development and the creation of a

high skill economy.John Stevens in his response, rallies to the aid of

business. He argues that what is needed is greater

support and encouragement for the work of

practitioners by using good practice at the leading

edge to drive better practice among the rest.

Finally, Tim Page from the TUC argues that while it

is important to support the practitioner, trade

unions are an indigenous source of competitive

advantage that should not be overlooked in

creating the high skill, high performance economy

of the future.

Group 2 The future of employeerelations

The second set looks inside the workplace to

uncover how high performance working will

impact on the employment relationship as the

priorities of employers, workers and the

organisation of work change. Mike Emmott asks: is

employee relations a concept that has gone out offashion? If so, how will employee relations

practitioners deliver improved business

performance? Engaging individuals is now the

critical task, he argues.

In response, Keith Sisson believes that it is precisely

because management ignores the collective part of

the employment relationship, that employeerelations is such an important component in the

mix of factors that contribute to high performance.

If we believe that employee involvement and

participation are essential in engaging employees

then we need to learn the benefits that collective

institutions offer in making it sustainable.

Group 3 Good work

The third batch of papers returns to the theme of

good work and asks what are the key features ofgood work in the high performance workplace.

David Coats outlines his views on the components

of good work and how the government should

support those themes. John Earls gives a trade

union perspective on how a campaigning union

seeks to help its members get on as well as get

even with employers.

Finally, Willy Coupar looks at the particular role of

employee information and consultation as a key

component of good work, in supporting thedevelopment of high performance. Using case

studies drawn from a range of organisations, he

considers the common themes that emerge

between the case studies and asks how

organisations can engage the collective and

individual spirit of the workforce.

Group 4 High performance for all

The fourth and final collection of papers returns to

the theme of whether high performance is foreveryone. Paul Edwards explores the evolution of

HR and ER policy in the small firm environment.

Then Larry OConnel looks at how the Irish

Government has sought to develop a vision for

good work and high performance.


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SECTION ONE

THE HIGH PERFORMANCE CONCEPT


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High Performance Work Organisation A Driver for the High Skills Vision?

Caroline Lloyd and Jonathan Payne

SKOPE, University of Warwick

Summary

Both academics and policy makers have shown

increasing interest in the topic of the high

performance work organisation (HPWO) as a

means to achieve a high skills or learningeconomy. The idea that the HPWO can deliver

mutual gains for both management and

employees is a central part of the attraction, yet its

ability to do so remains deeply contested. This

paper provides a brief guide through some of the

main areas of controversy.

Introduction

Over the last few years there has been much

discussion in academic and policy circles concerning

the phenomenon of what has been variously

labelled high performance, high commitment or

high involvement work systems. Interest has been

sparked by the claim that the high performance

work organisation (HPWO) embodies a new

approach to the management of employees that is

capable of yielding mutual gains for both

employers and employees. The promise has been

one of improved levels of organisationalperformance and more participative work systems

which empower workers to exercise higher levels

of autonomy, discretion, skill and commitment in

their jobs.

Although such claims remain highly controversial,

they have nevertheless had a strong appeal to

policy-makers in the UK, where the HPWO is seen

as having an important role in improving

competitiveness and tackling the nations long-

standing productivity problem (see DTI 2003). TheHPWO has also proved attractive to a number of

commentators on UK skills policy. They argue that

the diffusion of the high performance model isfundamental to the achievement of a high skills

economy where employees have greater

opportunities to exercise higher levels of skill and

learning at work (see, for example, Ashton and

Sung 2002, and for a more critical discussion, Lloyd

and Payne 2004).

The idea that a radical shift is taking place in the

organisation of work and the management of

labour is, of course, nothing new. Numerous

antecedents can be found from the human

relations school of the 1930s through to

motivation theory and socio-technical job redesign,

and more latterly, post-Fordism and sophisticated

HRM (see Harley 2005). Is HPWO simply the latest

in a long line of management fads or is it

something genuinely new and different? This issue

paper seeks to provide practitioners and policy

makers with a brief guide through the main

thickets of controversy and poses the question of

whether HPWO can or should be seen as a suitable

vehicle for the high skills project?

What is the HPWO?

The HPWO became a popular concept in the USA

at the end of 1980s, drawing on ideas from

Japanese management practices and North

European concepts of job redesign. A number of

companies were implementing wholesale reforms

of work organisation and the management of

employees, in an attempt to make substantial

improvements to company performance. A body

of academic research has since developed,

particularly in the US and the UK, that has

attempted to explore the links between the

adoption of the HPWO and performance

outcomes. The literature suggests that what is

new and important is not the practices themselves,

but the combining together, or bundling into a

mutually reinforcing or coherent system (Pil and

MacDuffie 1996). While, on their own, such

practices may have only a limited impact on


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company performance, bundling them together isclaimed to offer powerful multiplier effects.

The HPWO, however, has been haunted from birth

by the problem of definition that extends even to

the very name itself (high performance,

involvement, commitment etc.). The constituent

practices that make up the HPWO are meant to be

forms of human resource management policies and

methods of work organisation that engender

employee involvement, the maximisation of effort,

initiative and commitment. The difficulty is in

defining a common set of practices that everybody

can agree should be included. Less controversial

are practices such as team-working, staff briefings,

problem-solving groups and appraisal schemes.

Beyond these, other practices may either be in or

out according to individual preferences - job

security guarantees, performance-related pay,

profit sharing, job rotation, multi-skilling, to name

but a few. It has even gone so far that the UKs

Sector Skills Development Agency has adopted a

completely different definition that is about good

leadership and management, innovation, the

application of information technology, and

customer handling and communication skills.

Therefore, not only is there no agreement on what

the HPWO might be, each individual practice is also

open to considerably variation in interpretation.

While some consider self-managed teams with

common objectives, and responsibility for

allocating and organising work as central to the

HPWO, for others any sort of team will do - even if

it is just a re-labelling of a former work group.

These definitional problems make it extremely

difficult to gauge the extent of HPWOs within a

national economy. Depending upon which

practices are included and how high one chooses

to set the qualifying bar, one can arrive at very

different estimates of the proportion of the UK

workplaces that might be said to be HPWOs. Thewide range of interpretations that have been

placed on data generated by the DTI/ESRC

Workplace Employee Relations Survey (WERS) (seeCully et al 1998) are a case in point. Using a list of

16 practices, Bach and Sisson (2000:23) found that

only 20% of companies had half or more of these

practices, and only 2% had more than 10. By

contrast, Wood and colleagues used the same data

but different thresholds to suggest that 26% of UK

workplaces had a high involvement orientation

(Wood et al 2002:28).

The Impact on performance

Much of the literature on HPWO has been

concerned to explore the links with improved

organisation performance. There is now a body of

research to support the view that a positive

correlation exists between HPWOs and enhanced

business performance using measures such as

productivity and profitability and drawing upon

studies across a range of countries and industries

(see Ashton and Sung 2002, Harley 2005). Even ifyou discount the issue that different criteria are

used for identifying the HPWO, there remains a

problem that virtually all these studies show only

an association and do not prove that HPWOs cause

improved business performance. Indeed, some

commentators have suggested that organisations

with superior performance may simply have more

money available to spend on costly HR practices.

It is also important to point out that the empirical

evidence focuses mainly on manufacturing firms.

This had led some to question whether HPWOs

may be more appropriate to certain sectors and

types of firm, in particular those that are more

technologically advanced and which compete in

higher quality product markets, and whether the

model can be equally applied to the mass service

sector. Finally, the mechanism through which

performance gains may be achieved also remains

unclear. For example, is this achieved through

cutting costs (including labour reductions),

employees working harder or by making more

efficient use of existing resources?


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The impact on skillsIs the HPWO a mechanism to drive up skills? A key

part of the model is that these forms of work

organisation are a means to tap the skills and

abilities of all employees, while team-working and

forms of employee involvement actually require

workers to gain additional skills to be effective.

Evidence, however, on the actual impact on skills is

surprisingly thin on the ground. Research tends to

focus on whether HPWOs provide more training to

their employees, rather than on whether there are

increased demands for skill. In addition, the

measures used are extremely crude, often simply a

case of is training available - yes or no, rather

than how much and what type.

The strongest evidence of a link with skills comes in

the form of the 1997 and 2001 UK Skills Surveys,

which involve detailed face-to-face interviews with

individuals about perceptions of their skills (see

Felstead and Ashton 2000; Felstead and Gallie2002). Both surveys found that skills increased with

the use of practices associated with high

performance working. However, the 1997 survey

was limited in the types of practices included, for

example team-working was not used. The 2001

survey indicated that high involvement working

had a positive and very significant relation to

problem-solving, peer communication and

checking skills, but not to the other skill sets

examined. Once again, the research deals withassociation, leaving the suggestion of any causal

link unproven. In short, while much has been made

of the links between HPWO and skills, the current

evidence base may, as yet, be too limited and

fragile to support such claims.

Mutual gains

A key feature of the HPWO is claimed to be the

ability to deliver mutual gains in the form ofimproved organisational performance, alongside

enhanced wages, greater employment security and

increased job autonomy for employees. However,there is considerable debate about whether this is

the case, with some commentators arguing that

these organisations can be characterised by work

intensification and increased insecurity and stress.

As most studies have focused mainly on the link

with business performance rather than employee

outcomes, the evidence base for testing such claims

remains limited and provides, at best, a mixed

picture.

Drawing upon US studies, Osterman (2000: 195),

for example, concludes that HPWOs do not seem

to have lived up to their promise of mutual

gains, given that they are positively associated

with lay offs and have no relationship to pay

gains. By contrast, Appelbaum et al (2000) find

that workers earn more than in traditional

workplaces and that where employees have

greater levels of autonomy, they tend to

experience higher levels of trust, commitment,

intrinsic rewards and job satisfaction.

Some commentators, however, have argued that

HPWOs might have ambiguous or even

contradictory outcomes. In this case, employees

might experience increased task discretion

together with additional stress as management

deploys more distant forms of control such as

performance management, targets and other

employee relation techniques (see Edwards 2002).

Finally, it is worth remembering that in contrast tothe work humanisation movement of the 1970s,

current changes in production systems are being

driven by managerial objectives rather than any

explicit concerns with employee needs. Whether

employees benefit indirectly remains, therefore, an

empirical question to which there is still no

definitive answer.

Final thoughts

Much ink has been spilled in examining claims that

the HPWO constitutes a radical and new approach


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to the management of labour which embodieswin/win gains for both employers and employees.

Current research suggests that such claims need to

be treated with caution. While many of the

individual practices, associated with the HPWO can

be found in significant number of firms, take-up of

the full-blown model remains patchy and limited.

The latest WERS findings suggest that not only

does the HPWO remain a minority sport in the UK

but that there has been no significant increase in

penetration since 1998 (Kersley et al 2005). A keyquestion has become why - if HPWO is so good

are more organisations not adopting it either in

the US or Europe?

However, focusing on the diffusion problem may

be avoiding some central concerns about the

concept. While there is some evidence that HPWO

can, in some circumstances, be linked with

performance, the mechanism through which such

gains are achieved remains unclear. Evidence that

employees benefit in terms of skills or wider

outcomes remains very weak and inconclusive.

Perhaps, the greatest problem has to do with

definitional ambiguity. Until there is a much clearer

understanding of what the HPWO is, it will be

difficult to fully assess any of these claims, let alone

decide whether it should be seen as key element in

the development of a high skills economy.

ReferencesAppelbaum, E., Bailey, T., Berg, P. and Kalleberg, A.

(2000) Manufacturing Advantage , Ithaca: Cornell

University Press.

Ashton, D. and Sung, J. (2002) High Performance

Work Practices: a Comparative Analysis on Issues

and Systems , Geneva: ILO.

Bach, S. and Sisson, K. (2000) Personnel

management in perspective, in S. Bach and K.

Sisson (eds) Personnel Management, Blackwell.

Cully, M., OReilly, A., Millward, N., Forth, J.,Woodland, S., Dix, G. and Bryson, A. (1998) The

1998 Workplace Employee Relations Survey: First

Findings, DTI.

DTI (2003) Innovation Report: Competing in the

global economy the innovation challenge, London:

DTI.

Edwards, P., Geary, J. and Sisson, K. (2002) New

forms of work organization in the workplace:

transformative, exploitative, or limited andcontrolled, in G. Murray et al. (eds) Work and

Employment Relations in the High-Performance

Workplace, Continuum.

Felstead, A. and Ashton, D. (2000) Tracing the link:

organisational structures and skill demands,

Human Resource Management Journal, 10,3, 5-21.

Felstead, A. and Gallie, D. (2002) For better or

worse? Non-standard jobs and high involvement

work systems SKOPE Research Paper 29 , Coventry:

SKOPE, University of Warwick.

Harley, B. (2005) Hope or hype? High performance

work systems in B. Harley et al (eds) Participation

and Democracy at Work . Palgrave MacMillan.

Kersely, B., Alpin, C., Forth, J., Bryson, A., Bewley,

H., Dix, G. and Oxenbridge, S. (2005) Inside the

workplace: first findings from the 2004 Workplace

Employment Relations Survey, London: DTI.

Lloyd, C. and Payne, J. (2004) Just anotherbandwagon? A critical look at the role of the high

performance workplace as a vehicle for the UK

high skills project, SKOPE Working Paper No. 49

Pil, F. and MacDuffie, J. (1996) The adoption of

high-involvement work practices, Industrial

Relations, 35, 423-55.

Osterman, P. (2000) Work reorganization in an era

of restructuring: trends in diffusion and effects on

employee welfare, Industrial and Labour Relations

Review, 53,2, 179-196.


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Wood, S., de Menezes, L. and Lasaosa, A. (2002)Quality Time, CentrePiece , Spring, 26-29, LSE.

For further information on SKOPEs work see the

web site:

www.economics.ox.ac.uk/skope


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High Performance Workplaces a Trade Union Perspective

By Tim Page, TUC

Todays world presents enormous challenges. If the

UK all of us, our government, our businesses, our

workers and our trade unions are to meet those

challenges, it is essential to take stock of where we

are and consider where we are going. On some

issues, we may find ourselves swept along by

global change; on others, our responses will becrucial and decisive.

The twenty-first century, it is argued, will be

dominated by the rise of China and India. Our

Prime Minister, often reminds us of the scale of the

challenge: Gordon Brown told last years TUC that

China and India are producing more engineers,

scientists and university graduates four million

per year than Europe and America combined.

The only response, as he correctly pointed out, is

the upgrading of our skills, our science and ourtechnology.

We know the old problem of the UKs productivity

deficit. This must be overcome if we are to hold

out any hope of remaining a serious player on the

global economic stage. Poor skills, low investment,

bad management and underachievement simply

cannot go on if we wish to meet the challenges of

the modern world.

Central to meeting the challenge is thedevelopment of more high performance

workplaces. Last year, as part of the UKs

presidency of the EU, the DTI held a seminar on

high performance workplaces,. At that seminar, Dr

Ed Lawler of the University of Southern California

argued that organising and managing people in

such a way as to increase skills at both the higher

and lower levels of the organisation will bring

about competitive advantage for firms. Strong

leadership is also critical.Dr Enrique Fernandez Macias told the seminar

that Scandinavian countries and the Netherlands

come closest to the classic high performanceworkplace system, as they feature a high degree of

employee participation in decision-making

processes and a high level of productivity. From a

trade union point of view, involving, consulting,

delegating and trusting employees is perhaps the

most important feature of any high performance

system.

To argue that employees perform better when

they are involved, consulted, empowered and

trusted seems like a statement of the obvious. Soobvious that one wonders why not all companies

do this? Yet high performance workplaces are

currently the exception, rather than the norm.

According to the Work Foundations second Work

and Enterprise Business Survey, there are five broad

areas that illustrate what high performing

businesses are doing and what low performing

businesses are not:

Encouraging people by rewarding employeesfor their service to customers, innovative ideas

and good citizenship, as well as overall

performance;

Facilitating and encouraging people to be

innovative and to network outside the confines

of the businesses;

Engaging stakeholders and understanding their

reason to be;

Using investment analysts as a strategicsoundboard, to understand the value of a

business beyond short-run returns;

Focusing on the external face of the business by

looking towards customers and markets.

The Work Foundation says that low performing

businesses have employees with little concept of,

or interest in, where their work fits into the

business as a whole and whose relationships with

stakeholders are transactional and with whom theyare not fully engaged.


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The government, according to the WorkFoundation, should encourage businesses to invest

in people, through skills and staff development,

and in innovation, R&D and knowledge.

Management should build high trust relationships

with other businesses and between employers and

employees.

What is the role of trade unions? Through our

relationships with management, we are in a key

position to support the development of those

practices which short-termists might dismiss asluxuries but which longer-term players know

provide value and, ultimately, profitability. In so

many of these areas, our motivations are different

but our interests are the same.

This could be why the OECD has argued that,

working together, government, employers and

unions can bring about a virtuous circle of new

work practices, new technology and productivity.

However, such outcomes depend on workers

being given sufficient voice in the firm. Institutions

which allow a closer contact between management

and staff can indeed build a high-skill, high-trust

enterprise climate.

We know that companies which recognise unions

enjoy better health and safety records than

companies which dont. The interests of trade

unions in good health and safety stems from a

practical defence of the wellbeing of our members:

to put it crudely, we have historically protected thesight, the hearing, the limbs and the lungs of

welders, engineers, miners, construction workers

and millions of people in other professions. The

fact that good health and safety is productive and

good for the company balance sheet is a happy

coincidence. The conclusion is that trade unions are

good for workers and good for their companies.

Similarly, companies which recognise trade unions

have better training and development than those

which dont. In this global age, workers no longer

expect a job for life. Trade unions support training

and development in part because, if the worsthappens, a more skilled employee will find

themselves more employable than a less skilled

one, and partly because more skills means more

variety, more challenge, less monotony and a

better work experience. Once again, the fact that

high quality training and development is good for

the company means the interests of the company

and those of the union are at one.

Trade unions will fully endorse the

recommendations of the Work Foundation, callingon the government to encourage more investment

in skills, R&D and innovation. However, whilst the

best companies will respond to that call, not all of

them will. How do we reach the rest?

There is no simply answer to this question. As part

of its recently published industrial strategy, the

TUC called for an inquiry into the failure of

voluntarism in the UK. We understand that many

employers are sceptical of levies and regulation,

but assuming that companies will always act from

enlightened self-interest is proving to be a costly

mistake.

At the workplace level, trade unions negotiate

over issues like training. Our growing network of

union learning reps are also helping to promote

better skills development. And, historically, we

have sometimes simply cajoled management into

doing the right thing, rather than the quick or easy

thing.

Trade unions often have established, deep rooted

and, occasionally, tough relationships with

employers. We dont always agree, but with can

disagree with mutual respect. Many business

studies, including from the respected Harvard

Business School, have noted that a counterweight

to the power of management can lead to better

long-term decision-making. In high performance

workplaces, trade unions can find themselves

playing that essential role.


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The Case for High PerformanceWorking

By John Stevens

Over the last decade I have spent quite a lot of

time talking and thinking about what I call high

performance work practices . What do I mean by

this? As we said in a case study-based report

written last year for the Wales Management

Council (WMC), they promote high levels of

adaptability, flexibility and involvement and enable people at all levels within organisations to

participate in the development of processes,

products and services. They involve the promotion

of teamworking, and learning processes and

practices that move away from the tradition of

command and control, to achieve constant

incremental improvement and step changes in

performance.

Wow! How could anyone, employer or employee,

not want HPW or doubt that it can lead to betterperformance? Caroline and Jonathan make that

case: first, that it is difficult to prove the hypothesis

and second that the use of these techniques can

turn out to be a thinly veiled way of increasing the

pressures on people to perform. Clearly, they are

right in both regards. But does that destroy the

case for HPW?

Lets start with the definition of HPW. If there are

problems with the definition, they are in the

minds of those who wish to study HPW practices,not of those who want to use them. Practitioners

take that which is appropriate for their

organisation from the battery of practices and

introduce, tune and adapt the ideas to their needs.

This is why we should emphasise the importance of

HPW as a mind-set and an approach to people

management and development, not an end state.

HPW is not like double entry accounting; there are

as many permutations of HPW practices as there

are organisations that use them.

Of course this makes it difficult to study the

phenomenon. It makes it difficult to measure the

application of HPW practices and these daysmeasurement is increasingly important. It is said

that we cannot manage that which cannot be

measured and we crave an evidence base for

policy. So, academics who want to influence policy

are driven to measure (sometimes over-

simplistically) rather than describe (emphasising

complexity and nuance).

A survey of 294 companies by the CIPD in 2004

used three bundles of thirty five separate practices

and reached some interesting conclusions, showingthat different sectors make use of different

bundles of practices to achieve different results.

But the survey used practitioner assessments of

outcomes rather than before and after, control-

compared measurement. There must be doubts

whether it is possible to carry out research on

anything as complex as the use of HPW and

establish the benefits of its general application to a

standard that would satisfy a critical statistician.

And even were it possible to establish causality in aparticular case or cases, it still be impossible to

argue that HPW is the answer to every

organisations prayers.

Think about one of the HPW practices identified in

the CIPD survey, work-(re)design for improved

performance, almost a touchstone of the HPW

approach and one adopted by (only?) 49 per cent

of their respondents. What would a tick in this

box mean? What proportion of jobs had changed,

and if so by how much? Did the jobs change in

ways that cut costs or added value? And then the

sorts of questions our researchers would

reasonably want to ask: were the new jobs more

interesting, did they increase pressures on

employees, did they design the changes

themselves?

In one of the WMC case studies, a cross-

departmental environmental task force had found

out how to change from an organic to a water-

based adhesive to attach covers to office seats. As

a result, the company saved tens of thousands of


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pounds, the job changed and was safer and one ofthe operatives changed jobs and moved into the

quality team. But this was achieved because the

management had built a sufficient level of trust

and the expectation that people would be involved

in housekeeping and process improvement

activities.

They did not buy an off-the-peg suit of HPW

practices; they grew them over a number of years.

In some organisations it would simply not be

possible to establish an environmental task force.In some this could be done but the results would

be uncertain because the attitudes and skills of

those involved would be inappropriate. All this

shows that to get results, it aint what you do but

the way that you do it. People will put up with a

lot of pressure in their jobs but a supportive no-

blame culture is an important factor in the

equation and one that is probably impossible to

measure.

Why did the office seating company run down this

road? Because a decade ago its new managing

director turned his face against squeezing the

assets, including the people, and led the

organisation through a management buy-out and

a gradual and inexorable process of improvement

involving people in the business. They have a

works council that acts as a sounding board for

employee opinion. The process of change has

been professionally led but it started with a

particular mind-set. Command and control, using

people as if they were machines to be turned on to

do something simple and repetitive and turned off

or out when the job was over just seemed

unacceptable, and commercially wrong, given the

need for flexibility and co-operation among the

workforce.

Of course, there is a huge difference between the

application of HPW practices in organisations that

have and those that have not operated on Taylorist

lines. Where people have been working

mechanistically, employers have to have a vision of

the way that greater freedom and the opportunitycould provide a potential benefit to the

organisation and, ultimately its customers. Where

people already have wide discretion in their jobs

more emphasis will be given to creating a

supporting environment and ensuring that people

are using their initiative in ways that are

appropriate to the needs and objectives of the

organisation.

None of our case study organisations thought they

were using HPW practices. They did what seemednatural for them. By any definition, HPW practices

are not widely used by the sorts of UK

organisations covered in major statistical studies,

and this has to be because HPW would be

inappropriate for the product and service sectors in

which they are engaged, or managers have no

concept of the benefit they could get from HPW

and/or do not know how to manage their

introduction. But the variety of sectors covered by

the WMC study suggest that HPW could be widelyadopted and so I am driven back to the conclusion

that the major problem relates to managerial

short-sightedness and over-reliance on command

and control culture.

So, while I appreciate and applaud the scepticism

of my academic colleagues about definitional and

measurement issues, I hope that their natural

caution will not detract from increasing interest in

the use of HPW practices. The label is used in a

variety of ways, to emphasise different aspects of

practices that increase the engagement and

contribution of people at work. It focuses

attention on work organisation issues but needs

requires interpretation in terms of the

requirements of particular sectors and

organisations. I hope that sectoral organisations,

principally the sector skills councils, will ask the

right questions about the contribution HPW could

make and the HPW mind-set of managers in their

industries. That would be a considerable stepforward.


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SECTION TWO

THE EMPLOYMENT RELATIONSHIP


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What does employee relations meanfor employers?

By Mike Emmott, Policy Adviser Employee

Relations, CIPD

How important is employee relations for HR

professionals today? Is this the language of the

workplace and in any case what does it mean?

Do the answers matter? The Chartered Institute

of Personnel and Development (CIPD) undertook

a series of interviews with senior HR professionalsto try and find out.

Although most of those interviewed were in the

private sector and the findings are not necessarily

representative of UK workplaces as a whole,

some common themes emerged. Few managers

used the term employee relations in talking to

colleagues. Most organisations had no

employee relations department or function as

such, but identified a number of specialist posts

such as partnership co-ordinator or employee

communications. Several people pointed out

that line managers have an important role to

play in managing the employment relationship.

Many respondents had difficulty explaining how

employee relations differed in practice from the

whole field of HR: the two can hardly be

synonymous but the boundaries are clearly fluid.

Some believed that employee relations had a

more strategic role than other parts of the HRfunction and that achieving strategy through

people distinguished employee relations from

routine personnel work.

One important conclusion is that in

organisational terms employee relations seems to

suffer from a degree of invisibility since its

boundaries are unclear and no single function or

individual has specific responsibility for managing

it.

This is not just an issue about language. A key

issue for managers is focus: are they directing

their attention to the issues that will make a realdifference to business performance?

There is a consensus among HR practitioners that

the climate of employee relations has changed

significantly since the 90s. Many companies

want to build a new relationship with trade

unions. Public sector respondents were more

likely to describe a recognisably industrial

relations environment. However employers

who continued to deal with unions were largely

adopting a flexible partnership-style model, with

less emphasis on managing the frontier.

Practitioners emphasised that employee relations

is now about managing in a more complex, fast-

moving environment in which the political, trade

union and legislative climate are all shifting.

There is more emphasis on direct communication,

on managing organisational change and on

involving and motivating staff. Many managers -

particularly in manufacturing and the publicsector - still have to negotiate with unions on a

range of issues. On the other hand employee

relations is generally seen to be more about

building relationships and developing trust.

Issues about work-life balance and the war for

talent reflect a changing workforce with

changing expectations.

Finally we asked if an employee relations

practitioner should be an employee champion.

Nearly all respondents said not. People felt that

employee relations was there for the company:

they clearly hesitated to accept a role that might

appear to isolate them from other managers or

possibly place their loyalties in doubt. Some

pointed out that it was not in the employers

interest to upset employees and that the HR

department might have to play the part of

honest broker or be the conscience of the

organisation. But survey evidence confirms

employees feel relatively low levels of trust in

their employer.


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A key conclusion is that, if employers wantincreased employee engagement, they need to

reflect this more wholeheartedly in their

management structures, in their employment

practices and in the language they use. The

term employee relations still suggests for many

the old collectivist framework in which the

outcomes of collective bargaining linked directly

to profitability and communications with

employees were routed largely through trade

unions. But this is not the world in which mostmanagers now live.

The change can be measured on a number of

different dimensions. Critical among these is

union membership which has fallen from a peak

of some twelve million plus to some seven million

today. The coverage of collective agreements has

also contracted significantly and the range of

issues over which bargaining takes place has

shrunk. WERS 98 found that union officials spent

most of their time not on negotiating pay and

conditions but in supporting grievances on behalf

of individual members. Even where collective

bargaining continued, its impact on the exercise

of management discretion was greatly

diminished.

We are forced to conclude that the outlook is for

a continued decline in union authority. The

statutory union recognition provisions introduced

in 1999 have had only a small impact and itremains to be seen if the information and

consultation regulations will be any more helpful

in this respect. With declining union resources

and membership, trade unions will be largely

dependant on others particularly governments

if they are to find a new role. It seems likely

that trade unions now have more influence on

the political process than they do in the

workplace and the third Labour term may see

some limited experiment in the area of socialpartnership in response to the Warwick

agenda.

A crucial issue for employers is how to managethe employment relationship so as to deliver

improved business performance. The framework

of industrial relations essentially collective

bargaining - used to provide the context in which

answers were sought. Across much of the

economy, this framework is largely irrelevant or

no longer exists. As the trade union presence in

the workplace has declined, managers have made

more use of direct communication methods with

individual employees. The regulations onemployee information and consultation, with

their focus on collective representation, have

made little impression on most workplaces so far.

Is this a problem? The evidence for the impact of

collective relationships on business performance

is somewhat mixed. Research suggests that a

combination of direct and representative

arrangements, rather than relying on either

alone, is likely to have positive benefits. It seems

plausible to suppose that, where unions work

together with management to implement a

partnership agenda, this will reinforce the

credibility of management communications.

However the recent findings from WERS5 show

that levels of mutual trust between management

and non-union representatives are significantly

higher than those between management and

trade unions.

On the other hand, the evidence for a linkbetween involvement, engagement and

performance at the level of the individual

employee is fairly unequivocal. There is strong

evidence that a positive psychological contract

based on fairness and trust between

management and employees will be reflected in

employee commitment and superior

performance. The management agenda has

shifted irreversibly from the collective

relationship to the individual. From anorganisational perspective, trade unions add

value insofar as they support the legitimacy of


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management communications and enhanceemployees trust and sense of fairness.

But where does managing the psychological

contract figure in the list of management

priorities? Although the concept is increasingly

used by HR professionals, the responses to a CIPD

survey in 2003 suggest that managing the

relationship between organisations and

employees does not come near the top of their

priorities. Only one in two respondents placed

employee involvement among the top 5 priorities

for the HR function in their organisation. We can

only assume it ranks lower still in the priorities of

other managers. So it is hardly surprising that

the proportion of employees saying that they

feel involved in workplace decision-making hasfallen in recent years.

One message seems clear: its high time to

abandon the language of employee relations

and adopt a new mindset. Our present models

of the employment relationship are not

calculated to help managers focus on what they

need to do to increase performance the

language has echoes of a historical era that

offers few insights into contemporary issues or

practice. The challenge is to secure and maintain

employee commitment and engagement in order

to promote positive relationships in the

workplace and underpin high performance.


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Right challenge - wrong conclusionBy Keith Sisson, Emeritus Professor of Industrial

Relations, Warwick Business School Industrial

Relations Research Unit

I find myself both agreeing and disagreeing with

Mike Emmotts What does employee relations

mean for employers? I agree that the main

challenge facing ER/HR managers is employee

engagement. Indeed, I think its a bigger

challenge than Mike suggests. I disagree with hisconclusion, namely that it is time to abandon the

language of employee relations because it has

echoes of a historical era that offers few insights

into contemporary issues or practice. I believe

that its because UK management isnt heeding

employee relations insights that they have a

major problem of engagement.

The challenge of engagement

Let me begin with engagement and my reasons

for saying that the challenge is bigger that Mike

suggests. The UK is supposed to be heading for

knowledge economy status. Hour glass

economy would be more appropriate lots of

low paid, low skilled and low productivity jobs,

but few high paid, high skilled and high

productivity ones. Surveys suggest that many

people are dissatisfied at work, with even greater

numbers reporting that they have little discretionand scope to exercise their initiative. Organised

conflict may have declined, but unorganised

conflict is widespread. Employment Tribunal

applications have topped the 100,000 mark in

recent years. Absence and staff turnover are also

telling indicators. Its difficult to believe, but fifty

times as many days have been lost through

absence in some recent years as through strikes.

Absenteeism, the CBI reckons, costs around 12.2

billion each year.International comparisons rub salt into the

wounds. The UK continues to lag behind other

major countries in the productivity stakes.Moreover, this is true of services as well as

manufacturing. Strip out the long hours that

many UK employees work and the position

worsens.

Staying with international comparisons, work

organisations are increasingly seen as a major

source as well as beneficiary of social capital,

with important implications not just for

workplace performance, but also anti-social

behaviour, crime and participation in civil society.

Here the key international measure, i.e. the level

of trust, puts the UK in the bottom half of both

OECD and EU member countries league tables.

Looking to the future, intensifying international

competition in a global market place means that

UK manufacturers wont be able to compete on

the basis of low costs. Put bluntly, they wont

survive if they dont go up market, requiring

much greater levels of engagement. Internationalcompetition may be less in services, although very

important in sectors such as finance and ICT. But

the increasing demands of domestic customers for

higher standards of service as well as greater

availability and extended opening hours make up

for this. Especially critical is the relational nature

of service work. Employee engagement can make

or break a business.

It isnt only changes in demand that are

important, however. The implications of changes

in supply are no less radical. Demographic

changes mean that UK management faces the

prospect of a very different labour market from

the one they have been used to. Instead of labour

surplus, there will be labour scarcity. The

increasing diversity of the workforce more

women, ethnic minority, disabled and older

workers also has profound implications.


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Closing the knowing-doing gapTurning to Mikes conclusion, I couldnt disagree

more. I appreciate that the language of

employee relations makes many managers feel

uncomfortable. The decline of trade unions and

collective bargaining doesnt change the

fundamentals it highlights, though. It is realistic

to see the employment relationship as having not

just an economic dimension, but also significant

psychological, social, legal and political ones

most of us want a job that gives opportunities for

personal development as well as being relevant,

interesting and fairly paid. It is also realistic to see

the employment relationship as one joining two

parties of very unequal power that involves

incompleteness and uncertainty this explains

why the potential for conflict is ever present and

why negotiation, i.e. consensus building and

give-and-take, is critical to putting management

decisions and employment rights into effect,

whether or not trade unions are present.

Furthermore, what matters day-to-day are the

specific substantive and procedural institutions or

rules dealing with the what and the how of

the employment relationship (i.e. its

governance). Critical here are the legitimacy

employees accord these rules and the extent to

which they are involved in their making and

administration from involvement comes

ownership and from ownership commitment.

My conclusion is that engagement is not going to

come about without a significant shift in practice

that recognises the force of these arguments. If

the UK economy is suffering from anything, it is a

failure of workplace institutions. Any number of

attempts at re-branding or attitudinal

structuring isnt going to remedy this. Major

reforms are needed starting with work

organisation, embracing management structures

and employee voice mechanisms, and going onto companies social responsibilities.

Ive spelt out the issues I see facing ER/HRmanagers in a longer response to Mike. This can

be found on www.employmentrelations.info.

Here I would like to summarise some cross-cutting

recommendations:

A joined up approach. Organisations that

maintain a Berlin wall between the individual

and the collective dimensions of ER/HR shouldn't

be surprised if they have problems with

engagement. Fragmentation is a contributory

factor. Arguably, the most effective way to ensure

a joined-up approach, as well as raise the profile

of the function, is to bring things together under

a CSR portfolio.

Stop trying to do the wrong things better. If

the objective is to maximise engagement, ER/HR

managers must stop trying to adjust people to

alienating command and control structures.

Much of todays performance management

practice especially individual performance pay should go into Paul Mertons Room 101 bin.

Re-think management. Meaningful team-work

and individual self-management should be the

priority. Many UK organisations are awash with

managers. These are an expensive overhead and

their numbers, perks and pretensions a major

barrier to engagement. Numbers need to be

reduced and spans of control widened-with those

left becoming enablers and developers rather

than commanders and controllers.

Encourage new institutions. Three suggestions

here: in-house mediation schemes to help tackle

the issue of unorganised conflict and halt the

slide into legal dependency; effective

representative machinery to help maximise the

opportunity for employee voice individual

arrangements cant do the job on their own; and

support for sector forums to deal with some of

the issues facing both employers and employeesin low pay, low pay sectors that large


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organizations are helping to create throughoutsourcing.

Support 'soft' regulation. UK managements

blanket opposition to regulation does it no

favours engagement-wise. The government also

has no alternative but to transpose initiatives via

legislation, fuelling the slide into legal

dependency. Good employers have much to gain

from backing compulsory audits, codes, social

reporting and the like, which could encourage

the development of local dialogue and

underpinning structures.

Improving the quality of working lifeand performance are not mutuallyexclusive

If this sounds utopian, Id like to make two final

points that take us back to the social capital

issue. First, the league tables are consistent withthe key features of employment relations in

different countries. Its the Scandinavian

countries, characterised by extensive social

dialogue arrangements and widespread

autonomous work systems (Sweden has only a

quarter of the numbers involved in management

as the UK), that have the highest trust scores.

Second, the Scandinavian economies relative

economic success is evidence for the long-

standing employee relations message -employee involvement and participation are the

key to engagement and higher levels of

performance. Regrettably, as Mike reports, UK

management doesnt seem to be listening which

is why, rather than being switched off, the

message needs to be trumpeted.


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Knowledge and enterprise andtheir imlications for employmentrelations

By John Storey, Open University Business School

The twin notions of the knowledge economy

and the enterprise culture have been two of

the most powerful and pervasive ideas in recent

years. Numerous assessments of the state of the

macro-economy, of international competition, of

corporate strategy and of the changing natureof work take the primacy of knowledge as their

platform. At the same time, the critical

importance of enterprise as a paramount value

has been a ubiquitous message in the public and

private sectors alike.

The idea that knowledge has become the most

critical of resources is now one of the most well-

established notions in management, business

and economic discourse. For example, it has

been described as: the most important factor in

economic life intellectual capital not natural

resources, machinery or even financial capital

has become the one indispensable asset of

corporations (Stewart 1997). Likewise, Spender

contends that it is an organisations knowledge

and its ability to generate knowledge, which lies

at the core of a sound theory of the firm

(Spender 1996, p. 46). And Drucker argued that

the new emphasis on knowledge management

constituted the third great change in the

emergence of the corporation and that new

business organisations would be: knowledge-

based, an organization composed largely of

specialists who direct and discipline their own

performance through organized feedback from

colleagues and peers.

The implications of these assessments have

mainly been confined to examinations of the

importance of knowledge management thatis the organisation-based attempts to more

systematically capture, store and share

knowledge. Rather less well explored have beenthe implications for patterns of employment

relations. In this article an attempt is made to

examine the interconnections. In so doing, it will

consider the way in which analysts of human

resource management have attended to the

issues of knowledge and enterprise and it will

then move on to consider where this leaves

industrial relations. On this final point, the

debate between Mike Emmott and Keith Sisson

is brought into perspective.

The human resource managementimplications?

In so far as the people management aspects

have been considered at all, the main thrust has

been upon the human resource management

policies required for managing knowledge

workers. The agenda, from this perspective, is

one of training, empowering, rewardingknowledge and encouraging people to learn.

The objective is to ensure these individuals and

teams are willing to contribute their

knowledge and to use shared knowledge.

In what follows the latest thinking about how

the management of human resources needs to

adapt to the knowledge agenda is described and

then I ask where this leaves industrial relations

as conventionally understood.

The nature of knowledge work andthe implications for HR

Human resource management can itself be seen

as part of the product of the same evolutionary

economic forces as has produced the knowledge

economy thesis. In essence, the suggestion is

that there has been a transition from industrial

age procedures and labour-management

inspired negotiated temporary truces / agreements, to a post-industrial age doctrine

which recognises labour as a potential source


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of competitive advantage - a resource ratherthan a nuisance and a cost. Thus, while HRM can

be used to facilitate knowledge management it

is simultaneously itself part of the phenomenon

which it is being used to manage. The shift can

be seen as a part of the wider transformation to

a new competitive landscape. In other words,

HRM can be viewed as a management theory

and technology which emerged as part of the

knowledge economy.

Figure 1 summarises the set of knowledge work

requirements and how these are secured

through a constellation of HR sub-systems.

Knowledge work requirements

Knowledge work requirements are based around

a set of behaviours, capabilities, and

motivations. People working in knowledge-

intensive environments can be expected to, and

will be required to, behave differently from

workers in traditional industrial settings. To a

considerable extent, management are in fact

wanting and requiring the converse of the

behaviours instilled and learned under Taylorism.

Instead of compliance with instructions from the

top and repeat routine behaviours there is a

need for creative solutions and self-startingbehaviour. Workers in these environments will

usually be expected to come with a body of

knowledge (both formal knowledge andexperiential). Thus educational qualifications

supplemented by relevant experience is normally

expected. Equally important, if not even more

so, is evidence of ability to learn anew. Such

workers need to behave in ways which allow the

organisation to access new knowledge, to adapt

knowledge, to share it and to apply it in new

innovative ways.

Beyond the individual level, there is a need for

capabilities located within organisational

routines. This implies the importance of

complementary capabilities distributed across

the organisation. A further capability is to

actively shape customer expectations and not

merely respond to expressed demand. Capability

per se is not of course sufficient. People in

knowledge work environments need to be

motivated enough to seek out opportunities and

to design their work and their priorities for

themselves often with little or no instruction.

Values, culture, climate andmanagement style

Values, culture and organisational climate are

organisation-level attributes. Few if any

organisations will be able to sustain competitive

edge simply by relying on a few talented and

motivated individuals. Even these individuals will

find it hard to make any significant impact

without the complementary support of myriad

other organisational members. Thus, if the

organisation is to work together as a team then

it must have and must live a set of relevant

values.

A distinction has to be made between actual,

lived, values and culture and aspired-to values

and culture. Most of the writing about cultures

for knowledge intensive organisations addressesmainly the latter i.e. they are prescriptive but

they often imply they are also descriptive.


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Numerous reports however about prevailingcultures in knowledge-intensive firms reveal

patterns of behaviour and cultures which are

dramatically contrary to many of the

prescriptions. For example, reports from a series

of industrial tribunal cases involving

international banks, computer companies and

other work situations where high performance

and high commission are expected, point to

aggressive rather than sharing work cultures.

For instance, a senior female manager at the UKheadquarters of Oracle Computer company won

an award of 98,000 in December 2004 for

discrimination and unfair dismissal arising from

what the tribunal chairman found to be a male

oriented culture. Her boss was reported to have

said that his team members had to be young,

virile, with plenty of debts, holidays and flash

cars (Evening Standard 2312/04; Daily Telegraph

23/12/04 p4.). In May 2004 another high-ranking

female investment banker received 1million forwrongful dismissal from Deutsche Bank in the

City of London after exposing a culture of

sexism. In America in May 2004 Merrill Lynch

settled a ten-year battle with 1,000 of its female

brokers who claimed it had a culture of bias

against women.

Management style might be considered as a sub-

set of culture. The way managers behave and

the way they enact and mediate policies can be

absolutely critical for the way the behaviours at

the core of the figure are impacted. Studies have

shown that even where companies have clear,

uniform policies, the way these are enacted

differs considerably and, moreover, that these

differences matter.

Staffing

Staffing refers to the set of HR policies and

practices related to HR planning, recruitment

and selection. Its relevance to the knowledge

work debate stems from the increased

importance of human capital in knowledge workorganisations. While work in general in a

knowledge economy may require increased

applications of knowledge, nonetheless, it is

argued that knowledge intensity is unequally

distributed. Thus as argued by (Lepak and Snell

2003)p. 127. : whereas all people may

contribute knowledge, innovation, creativity and

the like, not all employees are equal in their

knowledge-based contributions. Firms, they

contend, will be constituted by portfolios ofindividuals with varying degrees of different

types of knowledge: generic, industry,

occupational and firm-specific. Part of the HR

staffing task is to exploit these different profiles

to the optimum degree. Issues of mobility arise

(especially when knowledge of the non-specific

types are involved). Human capital theory

suggests that firms are more likely to invest in it

when it is not transferable (Becker 1964). So

employees are generally expected to invest intheir own transferable/generic skills.

Workers do not remain passive in this context.

One tendency is for employees to position

themselves more as free-agents prepared to sell

their capabilities to the highest bidder. While the

rumoured use of agents for these employees

may be exaggerated, there are some signs that

knowledge workers are able to reverse-use

headhunters as part of their external market

positioning. That is, talented individuals are

sometimes able to place themselves on the

books of certain headhunters in case push and

pull factors align at some point in the future.

Work and organisation design

Because of the dynamic nature of environments

and the need to adapt, it is usually advised that

structures and forms should not be fixed for too

long. This principle was uppermost in the minds

of chief executives in the most innovative firms

studied by Storey and Salaman (2005). For


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example the chairman of Nortel (Europe) toldthe authors that it was his policy to ensure that

the fixed structures were periodically disturbed

indeed he referred to his policy to ensure that

they were smashed from time to time in order

to avoid complacency and too many settled

routines. The designer of organisational forms

needs to be sensitive to the dynamic elements of

knowledge work.

When organisational goal and means were

meant to be in the hands of

Documents

High Performance Working1