High Performance Human Resource (HP-HR) (HPPractices: 20 years of experience

and Shaw: Innovative Human Resource Practices Colvin and Keefe: High Commitment Human Resource Practices and Fang: High Involvement Human Resource Practices
Verma Batt, Inchniowski

High Performance Human Resource (HP-HR) (HPPractices: 20 years of experience

Production

problem solving teams that maximize horizontal information flows Job rotation to build flexibility, team communication Careful screening of workers down the job ladder to identify team skills Job security used to build incentives to invest in firms future Training in problem solving, team skills Incentive pay
Ichniowski

and Shaw (2003)

High Performance Human Resource (HP-HR) (HPPractices: 20 years of experience

Compare to Traditional Human Resource Practices Wage and salary only loosely tied to performance Narrowly defined jobs Limited screening for nonmanagerial jobs Tight supervision Little training Layoffs in slack times Osterman (2000) reports that between 1992-1997 1992Proportion

using at least one HP-HR practice rose from 65% to 85% HPProportion using multiple HP-HR rose from 38% to 71% HP-

High Performance Human Resource (HP-HR) (HPPractices: 20 years of experience Group pay incentives have free rider problems Use smaller groups to foster peer pressure, mutual monitoring Train on workplace norms Combine with stronger screen on team work at hiring =>Multiple HP-HR methods make incentive HPpay more successful

High Performance Human Resource (HP-HR) (HPPractices: 20 years of experience

Fostering

worker ideas to raise productivity

job security, or workers may fear job loss from suggestions Flexibility in job assignments makes commitment to job security more credible. Commitment to training makes commitment to job security more credible.

Requires

=>Multiple HP-HR methods make HPdecentralized decision-making more successful decision-

High Performance Human Resource (HP-HR) (HPPractices: 20 years of experience

When

employees are expected to multitask

combination of fixed compensation for routine tasks More complex compensation for innovatrive activities

Requires

=>Multiple HP-HR methods make multiHPmultitasking more successful

High Performance Human Resource (HP-HR) (HPPractices: 20 years of experience

Ichniowski,
Examine

Shaw and Prennushi (1997) American American Economic Review

use of alternative HR practices in the steel industry
Innovative

HR system: labor productivity 6.7% higher High teamwork: labor productivity 3.2% higher High communication: labor productivity 1.4% higher Reference is traditional HR Note: Individual HR practices had no effect in isolation isolationonly in combination
Does

this mean profits higher with innovative HR?

High Performance Human Resource (HP-HR) (HPPractices: 20 years of experience

Ichniowski

and Shaw (2003) review evidence from several studies. Higher returns from HP-HR also HPfound in
Nonluxury

auto assembly Apparel manufacturing Metalworking and machine shops Customer service in communications Scientists in Pharmaceuticals
BUTnot BUT

all studies find positives If positives not realized, companies change practices practicesselection These are not plug-in solutions plug-

High Performance Human Resource (HP-HR) (HPPractices: 20 years of experience

Where

are innovative HR practices more common?

complex production processes (more scope for returns) New or newly reopened plants (more costly to convert ongoing operations) May be complementary with information technologies
Trace

More

sales back to team Track efficiency, quality Enhance accountability

Prevalence

in new plants makes it difficult to disentangle HP-HR effects from other technologies HP-

High Performance Human Resource (HP-HR) (HPPractices: 20 years of experience NUMMI: New United Motor Manufacturing, Inc. GM plant built in Fremont CA, 1962 High absenteeism Poor quality Closed in 1982

High Performance Human Resource (HP-HR) (HPPractices: 20 years of experience

NUMMI: New United Motor Manufacturing, Inc. Reopened in 1983: joint Toyota-GM venture Toyota85% of former workers HPHP-HR practices (teams, training, job flexibility, decentralized decision-making, ) decisionConsidered one of the most productive automobile plants in the U.S. (my Toyota) Is it HP-HR, new production methods, new management, HPshock of plant closing, .?

High Performance Human Resource (HP-HR) (HPPractices: 20 years of experience

Do

workers work differently in innovative HR plants?

of workerswhom do you communicate or workers interact with?
In

Surveys

innovative HR plants, workers Interact with more workers, managers on their own line Interact with more workers, managers on other lines

Broadened communication links appear to be a major feature of HP-HR plants HP-

HPHP-HR Practices with Unions

Role of unions in productivity
Shock Exit-Voice ExitUnion

Tradeoff

representation allows worker dissatisfaction to be addressed, lessens turnover

Are

teams another voice mechanism?

they lower turnover?

Do

Batt, Rosemary, Alexander J. S. Colvin and Jeffrey Keefe. Employee Voice, Human Resource Practices, and Quit Rates: Evidence from the Telecommunications Industry. Industrial and Labor Relations Review 55 (July 2002): 573-594. 573Grievance mechanism (good sign) vs. Grievance use (bad sign) Endogenous? Alternative HR practices: Reengineering vs. HP-HR HP-

Batt, Batt, Rosemary, Alexander J. S. Colvin and Jeffrey Keefe. Employee Voice, Human Resource Practices, and Quit Rates: Evidence from the Telecommunications Industry. Industrial and Labor Relations Review 55 (July 2002): 573-594. 573-

VOICE: presence

VOICE: rate

HP-HR

QUITS

Reengineering

Batt, Rosemary, Alexander J. S. Colvin and Jeffrey Keefe. Employee Voice, Human Resource Practices, and Quit Rates: Evidence from the Telecommunications Industry. Industrial and Labor Relations Review 55 (July 2002): 573-594. 573Table 2: Relationship between Union and use of HR mechanisms
less likely to have HP-HR system HPMore likely to have grievance procedure More likely to use grievance procedure
Unions

Table 3: Empirical Model of Quits

HP-HR HP-

lowers quit rate Union lowers quit rate even more Pay lowers quit rate Reengineering raises quit rate
Table 4: Grievance rate does not significantly affect quits

Verma, Anil and Tony Fang. Workplace Innovation and Union Status: Synergy or Strife? IRRA 55th Annual Proceedings. (2003):189Proceedings. (2003):189198.

Table 2: HPHP-HR raises pace of both product and process innovations Unions do not alter pace of innovations

Rubinstein, Saul A. The Impact of Co-Management on Quality CoPerformance: The Case of the Saturn Corporation. Industrial and Labor Relations Review 53 (January 2000): 197-218. 197-

Do unions enhance or limit HP-HR implementation? HPBecause unions foster communication among workers, they may foster implementation of HP-HR programs HP-

Rubinstein, Saul A. The Impact of Co-Management on Quality CoPerformance: The Case of the Saturn Corporation. Industrial and Labor Relations Review 53 (January 2000): 197-218. 197-

Union Leadership

Union Membership

Off-line

Labor Management Committees

(Decision Rings)

Problem Solving Teams

(Problem Resolution Circles)

On-line

Partnering:
(Operating and Middle Management)

Self-Directed Work Teams

Rubinstein, Saul A. The Impact of Co-Management on Quality CoPerformance: The Case of the Saturn Corporation. Industrial and Labor Relations Review 53 (January 2000): 197-218. 197-

Implementation at Saturn New plant: Prior agreement to set up HP-HR between HPUAW and GM
5,500

employees in about 700 Work teams Teams organized into departments of ~100 employees each Each department has two advisors, one from union and one from management 1,100 union members have some sort of leadership responsibility

Rubinstein, Saul A. The Impact of Co-Management on Quality CoPerformance: The Case of the Saturn Corporation. Industrial and Labor Relations Review 53 (January 2000): 197-218. 197-

Implementation at Saturn Assignments

All

decisions by consensus Union is a full partner in all business decisions Joint management at al levels, department to corporate

20% of union members in some form of leadership position, are horizontal and vertical information flows enhanced?
With

Rubinstein, Saul A. The Impact of Co-Management on Quality CoPerformance: The Case of the Saturn Corporation. Industrial and Labor Relations Review 53 (January 2000): 197-218. 197-

Hypotheses
1.

2.

3.

4.

Information flows will differ between union and nonunion managers Quality will be improved in union managed sectors due to improved communication, coordination and problemproblem-solving Quality enhanced when there is a balance between people and production management Quality enhanced when union and nonunion managers share common goals

Rubinstein, Saul A. The Impact of Co-Management on Quality CoPerformance: The Case of the Saturn Corporation. Industrial and Labor Relations Review 53 (January 2000): 197-218. 197Hypotheses
1.

2.

3.

4.

Information flows will differ between union and nonunion managers (data on communications network) Quality will be improved in union managed sectors due to improved communication, coordination and problem-solving problemQuality enhanced when there is a balance between people and production management (time use survey of managers) Quality enhanced when union and nonunion managers work more closely (degree of agreement on goals between advisors)

Rubinstein, Saul A. The Impact of Co-Management on Quality CoPerformance: The Case of the Saturn Corporation. Industrial and Labor Relations Review 53 (January 2000): 197-218. 197Hypotheses
1.

Information flows will differ between union and nonunion managers

Figure 2: Union advisors had denser communication networks Union advisors spent more time on people problems, Nonunion advisors spent more time on production problems Better performing units devoted considerably more time to quality issues vs other issues

Rubinstein, Saul A. The Impact of Co-Management on Quality CoPerformance: The Case of the Saturn Corporation. Industrial and Labor Relations Review 53 (January 2000): 197-218. 197-

Hypotheses 2-4 2Table 4: Note small sample size! Balance is ratio of time spent managing production vs people. Measure reflects closeness to 0.5? Alignment, union communications are tied to improved quality, less so to initial quality level

Kleiner, Morris M., Jonathan S Leonard, and Adam M. Pilarski. How Industrial Relations Affects Plant Performance: The Case of Commercial Aircraft Manufacturing. Industrial and Labor Relations Review 55 (January 2002): 195-218. 195In defense of traditional HR. Large airplane manufacturer LongLong-time traditional (adversarial and sometimes militant) relationship between union and firm Monthly data 1974-1991 follow the producton of a new line of 1974commercial aircraft, redesigned in 1980 Inverse productivity measure: Actual relative to planned hours per plane

Kleiner, Morris M., Jonathan S Leonard, and Adam M. Pilarski. How Industrial Relations Affects Plant Performance: The Case of Commercial Aircraft Manufacturing. Industrial and Labor Relations Review 55 (January 2002): 195-218. 195-

Over the period (Figure 1)

3 strikes Work-toWork-to-rule slow down 6 union presidents
1-3 moderate 4 most militant, drives union into receivership 5 promised to work closely with management 6 promised to end Total Quality Management (TQM)

4 CEOs
1: traditional adversarial relationship with labor 2: Quality circles 3: TQM 4: Return to tight management, ended TQM

Kleiner, Morris M., Jonathan S Leonard, and Adam M. Pilarski. How Industrial Relations Affects Plant Performance: The Case of Commercial Aircraft Manufacturing. Industrial and Labor Relations Review 55 (January 2002): 195-218. 195-

Table 2:  Concerted actions cost productivity

 

Takes 1-4 months to return production to normal 1Costs in lost production

   

Strike 1: Strike 2: Strike 3: Work-toWork-to-Rule:

$2.7 million $0.8 million $14 million $21 million

No gain from TQM, quality circles



Although labor productivity had started to rise by the end of the TQM period

Kleiner, Morris M., Jonathan S Leonard, and Adam M. Pilarski. How Industrial Relations Affects Plant Performance: The Case of Commercial Aircraft Manufacturing. Industrial and Labor Relations Review 55 (January 2002): 195-218. 195-

Why the lack of return to HP-HR? HP   

Ongoing planttransaction costs for change plant Initial implementation may lead to productivity losses FirstFirst-line supervisors feared loss of jobs Some in the union saw TQM as a sell-out to sellmanagement

High Performance Human Resource (HP-HR) (HPPractices: 20 years of experience are innovative HR practices more common?
Where
More

complex production processes (more scope for returns)

or newly reopened plants (more costly to convert ongoing operations)

New
May

be complementary with information technologies