The Good, the Bad and the Ugly: Employment Relations In New Non-Union Workplaces 1

THE GOOD, THE BAD AND THE UGLY: EMPLOYMENT RELATIONS IN NEW NON-UNION WORKPLACES'

David Guest, Birkbeck College Kim Hoque, Centre for Economic Pet.formanc2

The changing pattern of employment relations over the past fifteen years has awakened interest in non-union establishments. We know from the third Workplace Industrial Relations Survey (Millward et al., 1992) that the majority of private sector establishments employing more than 25 people are non-union. More importantly, the same survey reveals that well over two thirds of establishments set up since 1980 are non-union (Disney, Gosling and Machin, 1993), indicating that non-unionism is increasingly the norm.

One of the initial reasons for an interest in non-union establishments was that some appeared to be exemplars of innovative human resource management. In the United States, the move of industry from the so-called 'rust belt' of the northeast to the 'sun belt' of the south and west was a signal to companies to abandon trade unionism in the workplace. In its place some of the organisations, with high technology companies in the vanguard, introduced a range of human resource practices that seemed to offer considerable benefits to both company and workers. Examples are captured in the case studies presented by Foulkes (1980) in his book on Personnel Policies in Large Non-Uniun Cmpunies. Their potential for high performance is outlined by Lawler (19%). Writing at the end of the 198Os, Guest (1989) and Sisson (1989) suggested that non-union establishments provided the most likely context for the flowering of a potentially positive form of human resource management in the UK.

More recently, non-union plants have begun to receive a bad press. The main reason for this is the third Workplace Industrial Relations Survey (Millward et al., 1992). In both the survey report and in a fuller analysis (Mdlward, 1994) of the findings in relation to 'the new industrial relations', it is revealed that, compared with those that are unionised, non-union establishments provide fewer rights and benefits to workers, fewer opportunities to give or receive information and less scope to voice either constructive suggestions or dissent. As a result, in such establishments there is a higher level of absence, labour turnover and dismissal than in comparable unionised plants. What was thought to be potentially good, the ideal of the HRM-oriented non-union establishment where the interests of the staff were taken seriously, has now become bad or, to the extent that it is a deliberate exploitation of a weak, non-union workforce, even ugly.

In practice it seems unlikely that non-union establishments are either all good or all bad. As non-union establishments become more prevalent what we clearly need is a way of considering and classifyrig them which recognises their diversity. The aims of this article are therefore threefold. The first is to present a simple classification of non-union establishments which goes beyond existing approaches. The second is to explore the consequences of belonging to a particular category of non-union establishment for a range of outcomes. In this, we go beyond the traditional industrial relations concern for propensity to unionise, to consider HRh4 outcomes, other employee relations outcomes, and a number of performance outcomes. The third aim is to contribute to the debate on whether non-union establishments represent the good, the bad or the ugly face of the new industrial relations.

HUMAN RESOURCE MANAGEMENT JOURNAL VOL 5 NO 1 1

DAVID GUEST, BIRKBECK COLLEGE, AND KIM HOQUE, CENTRE FOR ECONOMIC PERFORMANCE

CLASSIFYING NON-UNION ESTABLISHMENTS

In the UK, researchers such as Beardwell (1994) and McLoughlin and Gourlay (1992), working within an industrial relations tradition, have been studying non-union establishments with a particular focus on why they are non-union. As a result, their conceptual frameworks are inevitably derived from the well-established traditions of industrial relations and one of the key outcomes with which they are concerned is the propensity to unionise. Their classification of non-union establishments reflects this focus. Bedwell (1994), in partidar, has identified five types of non-union setting in terms of the orientation of management and union towards the issue of trade union recognition. McLoughlin and Gourlay (1992) adapt the framework originally developed by Purcell (1987, which has its roots in an earlier era when trade unionism was much more dominant, and which uses the dimensions of strategic integration and individualism - collectivism. However, as several observers have now acknowledged (Purcell and Ahlstrand, 1994; Storey and Sisson, 1993; Storey, 1992), individualism and collectivism are complex multi- dimensional concepts that require considerable unbundling.

Since non-unionism is the norm for new establishments, we have arguably reached the point where we should get away from studying non-union establishments in relation to unionism and propensity to become unionised. Indeed the very term 'non-unionism' becomes a limiting definition of workplaces. Instead we should be developing frameworks and dimensions which allow us to study aspects of employment relations and human resource management without distinctive reference to the union issue. It therefore follows that we need somewhat different ways of classwg non-union establishments.

We propose to offer a simple extension of the framework adopted by Purcell and others but one which allows us to address some of the debates about the nature and impact of non- unionism. We will retain the dimension of strategic integration since it is so central to many of the debates about HRM. In these debates, the central issues are whether or not there is an explicit human resource strategy, how far human resource strategy is integrated with business strategy, and the content and focus of the human resource strategy. Many of those who have written about human resource strategy have argued that the content should vary according to key business considerations (see, for example, Miles and Snow, 1984; Pettigrew and Whipp, 1991). Therefore if we wish to understand how employment relations and other issues are resolved, we must look closely at variations in policy and practice. It follows from this that the second dimension on which we should focus is the nature of that policy and practice.

We therefore propose to classify establishments along two dimensions. The first is whether or not they have a human resource strategy. The second is the nature of human resource policy and practice. There are a range of practices associated with human resource management and the related dimension of the debate on the new industrial relations. These include a variety of forms of employee involvement and communications but also such practices as sophisticated selection methods, extensive training and quality improvements. Somewhat contrary to expectations, Millward and his colleagues found that these practices had not become much more widespread in industry during the second half of the 1980s. What we do not know is whether this is the result of a deliberate strategy or the absence of any coherent approach to innovation in human resource management.

2 HUMAN RESOURCE MANAGEMENT JOURNAL VOL 5 NO 1

THE GOOD, THE BAD AND THE UGLY EMPLOYMENT RELATIONS IN NEW NON-UNION WORKPLACES

Classifying establishments on the basis of these two dimensions, we can identify four possible types of non-union establishment. The language used to define these types captures the values of those who have debated them. We make no apologies for presenting valueladen definitions since they capture an important part of the debate on a potentially emotive topic. There is, of course, a counter-argument that the debate should be deliberately dispassionate and therefore the 'types' should be couched in a different language. We acknowledge this, but would argue that by doing so we lose an important dimension of the debate. The four types are as follows: 1. Establishments which have a clear HRM strategy and make extensive use of a range of

the sort of practices associated with an optimistic and positive form of HRM are Seen by a number of observers as the 'good' face of non-unionism. This reflects the kind of high involvement management espoused by Lawler (1986 and 1992) and the high commitment approach advocated by Walton (1985). Building on this, we label them the 'good'. If we wish to avoid the value-laden label of 'good' this could also be classified as a 'full utilisation, high involvement model'.

2. Establishments which have a clear strategy but make little use of HRM practices fit the pattern outlined by Millward. They provide a minimum level of workers' rights and would appear, to build on Sisson's (1993) preliminary analysis of WIRS3, to be bleak environments in which to work. For those who have anxieties about how some managers behave in non-union environments, they represent the 'ugly' face of non- unionism. This description might be justified because they seem to represent a deliberate strategy to deprive workers of many of their traditional rights including a voice of any sort. A less pejorative description of this approach might be an 'efficiency-driven' model.

3. Establishments which do not have a clear HRM strategy but still appear to have adopted a large number of the innovative type of HRM practices can be described as the 'lucky' face of non-unionism. They are lucky, or fortunate in the sense that they have stumbled on what some observers believe to be the best contemporary practice, perhaps with guidance from elsewhere, perhaps by copying others or perhaps by following fads and fashions. Of course this tells us little about how these practices are applied, and if strategc integration is of any importance, then we would expect such establishments, where policy and practice are essentially opportunistic, to be less successful in achieving their HRM and other goals than the 'good' establishments where there appears to be a more carefully thought out and integrated approach.

4. The final category consists of establishments which have no HRh4 strategy and a low uptake of HRM practices. In some respects they have the worst of all worlds in the sense that they appear not to have thought through their HRM strategies and they have not adopted many of the newer HRh4 practices. Another view might be that this reflects a sensible and realistic position of cautious pragmatism. We prefer to see it as poor management in which human resource issues have not been properly considered and we therefore describe these establishments as the 'bad' face of non-unionism.

If the approach to HRM outlined for example by Guest (1987) has any force, then we would expect to see the 'good' non-union establishments having the most positive outcomes and the 'bad' having the worst outcomes. The 'ugly' might gain on some outcomes from



having a clearly thought out approach but are likely to lose on others. The 'lucky' might be expected to be somewhere in the middle.

The remainder of this article develops and tests this classification. First the research context is presented. Secondly, the classification is operationalised and the characteristics of establishments falling into each category are identified. Thirdly, the impact of each category on various aspects of performance is examined. Behind this lies the broader question of whether human resource management, defined in terms of the strategic adoption of HRM policy and practice as found at the 'good' non-union establishments, pays off.

THE RESEARCH CONTEXT

The data reported below are part of a larger study of human resource management in greenfield sites. It has three components: an analysis of relevant aspects of the third Workplace Industrial Relations Survey which is reported in Guest and Hoque (1993a and 1993b); a survey of new establishments in the UK, reported in Guest and Hoque (1994a and 1994b); and a series of case studies. In this article we are only using data from the survey of new establishments. In mid-1993, a postal questionnaire was sent to just over loo0 establishments in the UK

employing more than 50 staff, including about 800 set up since 1980. We used 1980 as the defining year for new establishments for two reasons. It provides us with some opportunity to explore one of the major issues in the research, namely what happens when greenfield sites turn brown. Secondly, it marks the point at which Thatcherism began to have an impact at work, launching the debate about the new industrial relations. We received responses from 393 establishments, subsequently reduced to 347 since some had less than 50 employees. Of the 347,97 are purpose-built greenheld sites - new plants or offices being used for the first time; 154 are 'refurbished' sites, where there had been a major change of business and ownership; and 96 were set up before 1980.

One of the major research interests was the impact of national ownership on human resource practices. The sample contains 151 UK-owned establishments, 64 are American- owned, 56 are Japanese-owned, 33 are German-owned and the remaining 31 are owned by companies from the rest of the world which in practice means predominantly EC and ERA countries. The sample is broadly representative in size, based on number of employees. It is weighted towards manufacturing industry; indeed 84 per cent are manufacturing establishments, 10 per cent are in financial services and 6 per cent are in a range of other services.

For the present analysis we have restricted the sample to those establishments which are either greenfield sites or fully refurbished sites, omitting all those set up before 1980 and those which went through a less significant refurbishment. Therefore, all the establishments within this sample were either brand-new at the time of start-up (greenfield) or they were shut down and completely refurbished before the current ownership started using them (fully refurbished); in other words they have been through a scale of change that makes them closely equivalent in character to greenfield sites. (For a further discussion of the definition of greenfield sites, see Guest and R m t h a l , 1993 and Guest and Hoque, 1993a.)


THE GOOD, THE BAD AND THE UGLY: EMPLOYMENT RELATIONS IN NEW NON-UNION WORKPLACES

This group of establishments are therefore those where management is effectively starting with a new establishment and is unconstrained by any local history or tradition in the workplace. Arguably it is in such workplaces that management is given the freest rein to introduce policies and practices of its choice.

The restricted sample contains 156 establishments of which 122 are non-union and 34 are unionised. This figure of 22 per cent unionised estabhhments is in line with what we might expect from the analysis of wTRs3 (Disney, Gosling and Machin, 1993). We will omit the unionised establishments from this analysis. However, we should note two points in passing. There is no clear link in our sample between size and unionisation. The non-union establishments tend to be those which are larger and smaller while the unionised ones cluster around the middle, employing between 200 and 500. Secondly, although there are a number of variations, there is no consistent pattern indicating that either the unionised or the non-union establishments are more or less likely to adopt a range of HRM practices.

The questionnaire contains four sections. The first asks for background information on issues such as size, ownership, sector, age and location. The second contains items about the presence of mission statements, HRM strategy and the degree of 'parental' influence. The third contains 26 items describing a range of contemporary HRM practices and asks whether they are currently in existence at the establishment and whether they were used one year after start-up. The final section asks about a range of outcomes. These fall into three groups concerned with HRM, employee relations and establishment performance. The questionnaires were completed either by the head of personnel at the establishment or by the most senior line manager with special responsibility for personnel issues, which in practice often meant the MD, general manager or plant manager.

There are, of course, a number of potential problems in using questionnaires to obtain information on issues concerning HRM strategy and practice. These are complex issues; having a strategy is not the same as implementing it effectively. Reporting a practice is not necessarily the same as demonstrating that it is successfully in operation. Set against this, surveys have the advantage of providing extensive data across a large number of establishments, providing a constant stimulus to those who complete them and providing an opportunity for comparison and detailed statistical analysis. Surveys should therefore be used with caution and carefully prepared. In this study, we undertook a thorough pilot study and we have conducted a number of interviews and case studies 60 check the accuracy of the information provided. We found some confusion on two items - those Concerned with single status and a learning organisation - but have been impressed by the accuracy and care with which the great majority of questionnaires were completed.

IDENTImING THE TYPES OF NON-UNION ESTABLISHMENT

The four categories of establishment were identified using two types of information. The first is the response to the question 'Do you have a human resource strategy formally endorsed and actively supported by the top management team at the establishment?'. This provided the measure of strategic integration. Sixty-four of the establishments claimed to have a strategy and 55 did not. Three failed to answer the question and are eliminated from the analysis. The second source of information concerns HRh4 practice. Here we had a


DAVID GUEST, BIRKBECK COLLEGE, AND KIM HOOUE. CENTRE FOR ECONOMIC PERFORMANCE

choice of dividing the sample at the median and distinguishing those above from those below the median. However this, while providing four groups of fairly equal size, seemed less attractive than imposing a cut-off point separating those establishments that used more than half the practices from those that used less than half. It might be argued that some practices are more important than others, but we know of no theoretical basis on which to determine this. Therefore while the cut-off point is arbitrary, it does provide a distinction between those establishments which could be described as high and low users of HRM practices. Using these two criteria, we arrive at the sample illustrated in Figure 1.

FIGURE 1 Classifying the Establishment Types

HRM Strategy

HRM

and Practice

Policy

High

High Good n=%

Low Ugly n=8

Low

Lucky n=27

Bad n=28

Figure 1 reveals that almost half the establishments fall into the ‘good’ category. This suggests that in this predominantly manufacturing sample of new establishments, there is a real attempt to adopt a strategic approach to HRM. In contrast only 8 admit to a strategy which entails a deliberate low takeup of HRM practices and can therefore be classified as ‘ugly’. The pattern of distribution shows that a majority claim to have adopted a large number of HRM practices. Indeed, it might lead us to conclude that a high use of HRM practices is the norm among new manufacturing establishments. The take-up of the various practices is presented in Appendix 1. This shows that the highest figure is 88 per cent who claim that internal promotion is the norm followed by 84 per cent who state that staff are responsible for their own quality. At the other extreme, only 12 per cent specify a minimum amount of annual haining for all staff and only 20 per cent use psychological tests for the selection of all staff.

Having identified four types of non-union establishment, we can go a step further and examine their background characteristics to determine whether any pattern emerges. The range of independent variables which we looked at as potential predictors of non-union type included size, national ownership, sector, regional location and degree of independence (this refers to whether they are part of a larger organisation, which in theory they should all



be, or single independent establishments. Some independent establishments slipped into the sample; by definition, they should all be UK-owned). On this basis, multivariate analysis revealed a number of differences.

The good establishments are British-owned rather than American- or German-owned. They are part of a larger organisation and are in the non-financial service sector rather than the manufacturing sector. The lucky establishments are only distinguishable as employing more than 100 staff. The bad establishments are smaller, German- rather than TJK-owned, and more likely to be single independent establishments. There are no distinguishing features of the ugly establishments, mainly because with only eight in the sample it is impossible to undertake a sensible multivariate analysis.

There are some surprises in these background characteristics. We did not expect the UK-owned establishments to dominate the good category, especially in comparison with the American-owned establishments. The German-owned establishments emerge somewhat unexpectedly as distinctly bad rather than good. Nor did we expect the small non-financial service sector to stand out in the good category compared with manufacturing. Finally, we would not have expected the larger rather than the smaller establishments to feature in the lucky category, since it is reasonable to expect that larger establishments are more likely to have a strategy.

From this brief analysis there do appear to be distinguishing background features of the different types of non-union establishment. However, the pattern that emerges is not what we expected. It is perhaps worth noting that in the analysis of the sample as a whole, with unionised establishments included, it is the Japanese- and rest of the world-owned establishments that appear to make the most extensive use of HRM practices (Guest and Hoque, 1994a). Neither emerges in this analysis.

OUTCOMES OF DIFFERENT TYPES OF NON-UNION ESTABLISHMENT

In this final section, we are particularly interested in whether the non-union establishments that pursue a coherent high utilisation HRM strategy, the ‘good‘, have different performance outcomes from the other groups. This was again explored in two ways. The first involved a descriptive comparison of the categories on the various outcome measures, the second was a multivariate analysis, exploring the impact of these variables when the background factors were controlled. The descriptive statistics are presented in Table 1. The multivariate analysis is included in Appendix 2. We should emphasise that in a survey of this type we are inevitably dealing with managers’ perceptions of issues such as staff commitment, quality of staff and recovery from the recession. There is no good reason that we are aware of to believe that particular categories of manager have consistent biases in their responses to these issues.

HRM outcomes

The eight outcome measures in this section were intended to measure the variables identified by Guest (1987), namely commitment, quality, flexibility and integration. They are inevitably somewhat crude, especially with respect to integration. Each is scored on a five



point scale from 'very low' to 'very high'. Table 1 reveals significant differences in the reported level of commitment of lower grade staff. This is reinforced in the multivariate analysis. The good establishments have highest levels of commitment. Both they and the lucky establishments have sigruficantly higher levels of commitment among lower grade staff than the bad establishments.

TABLE 1 Outcomesfor New Non-Union Establishments

I Means lstandard deviations in brackets) and Chi2 results

HRM outcomes

Commitment of lower grade staff 3.857 (.749) 3 . m (.698) 3.071 (.858) 3.75 (.463) .011

The quality of staff employed 4.107 (562) 4 (.620) 3.556 (.641) 4.125 (.641) .004

Quality of work of lower grade staff 4.036 (631) 4.148 (.7l8) 3.75 (645) 4.375 (.744) .198

Quality of HR policies and practices 3.625 (.59) 3.222 (641) 2.643 (1.026) 3.875 (3%) .ooO The flexibility of staff 4.125 (.7l5) 3.693 (706) 3.519 (.935) 4.5 (.535) .015

Ability to move between jobs as needed 4.089 (721) 3.852 (.R) 3.5 (793) 4.125 (.834) .129

Flexibility to adjust workforce size 3.286 (1.155) 3.074 (1.269) 3.154 (1223) 3 (1.069) .707

Line mmenthusiasmfor HR wlicies 3.875 l.605) 3.444 1.698) 2.808 (.849) 3.25 l.463) .OOO

Emplovee Relations Outcomes

Performance Outcomes

Percentage of quality targets attained ($) 89.8 (16.79)

How well waa the recession weauered 4.143 l.773)

Pductivitv benchmarked against UK I 4.2 (.815)

7.41 1 7.14 112.5 I .433

84357 (32.219) 90.25 (7.785) 78.57 (28.446)

3.926 (.616) 3.857 (.7aS) 14.125 (.835) .Un 3.938 (772) 3.734 (.7M 14.125 (.835) 457

4.118 (.6W I 4 (1.033) 14.25 (.707l I .078

3.467 (1.06) 3.462 (.8n) 3.857 (.9) .788

3.813 (.981) 3.692 (1.032) 3.857 (1.069) .872

Notes: Means given (minimum 1, maximum 5) with standard deviations in brackets. (+) Reports percentages. ($) Means are expressed as percentages (standard deviations in brackets).



The results on the three quality items reveal a different pattern. On the Chi2 analysis in Table 1, the ugly establishments report the highest levels of quality. However, the multivariate analysis reveals that it is the gmd, followed by the lucky who have s iwcant ly higher levels of quality of staff compared with the bad establishments. There are no sigruficant differences in the quality of the work of lower grade staff. Most surprisingly, the ugly establishments claim the highest quality of HRM policy and practice. Both they and the good establishments claim significantly better policies than the bad and the lucky. This implies that it is having a strategy that makes the difference on this response.

There are three items concerned with flexibility. On the two key variables of general flexibility of staff and ability to move between jobs as needed, the ugly establishments report the highest levels of flexibility. However, in both cases the key result, revealed in the multivariate analysis, is that the bad establishments are sigruficantly less flexible than the ugly and more particularly the good. There are no sigruficant differences in flexibility to adjust workforce sue.

The last item concerns line management enthusiasm for HR policies and serves as a partial and crude measure of an aspect of integration. On this item, the good are signhcantly ahead of all the other types of establishment.

Three general points can be made at this stage. Firstly, the good establishments report the most positive HRM outcomes, a result which emerges more strongly when the multivariate analysis controls for background factors. Secondly, the ugly report surprisingly positive results, more especially with respect to quality and flexibility. It may well be that the key to these, at least in part, is having a coherent strategy. Finally, the bad establishments, those without a strategy and with a low use of HRM practices, consistently emerge as having poorer HRM outcomes.

Employee relations outcomes

Three items provided information about employee relations. The first concerns industrial disputes. Even though we are dealing with non-union establishments, it seemed worth examining. The question asked whether there had ever been a dispute at the establishment. Table 1 shows the percentage who answered Yes. This ranges from 1.8 per cent in the good establishments to 12.5 per cent in the ugly. In both cases these figures represent one establishment so they should be treated with considerable caution. Even so, the differences are close to sigruficance on the multivariate analysis.

Not all establishments were able to provide figures for absence and labour turnover in 1992. However, among those that were, the pattern that emerges reveals that the ugly establishments have the poorest record, more especially on absence. Multivariate ‘analysis confirms siphcant differences between the ugly and all other types on absenteeism.

Taken together, the results for employee relations reveal that the good have the best pattern of results and the ugly the worst. This takes us a step further in indicating that, at least for what we have labelled employee relations outcomes, it is the type of strategy that makes a difference rather than just having an HRM strategy.



Performance outcomes

There are six items that examine performance outcomes. One is a general question asking how well the establishments have weathered the recession compared with other establishments. The response was given on a five point scale from ‘much worse’ (1) to ‘much better’ (5). Although the results presented in the bivariate analysis in Table 1 are not sigruficant, the multivariate analysis reveals that the good claim to have weathered the recession sigruficantly better than the lucky.

Three items are concerned with performance on quality. The first is concerned with attainment of quality targets and shows the percentage of quality targets attained. This shows that the ugly are well below the rest and that the bad claim to be doing the best. This result should be treated with caution since a separate analysis has shown that the Japanese- owned establishments appear to do worse on this measure; this may be because they set more ambitious goals. The other two items on quality are concerned with quality benchmarks against the best in the sector in the UK and in the world. The response categories ranged from the ’bottom 10%’ (1) to the ‘top 10%‘ (5). On both items the good establishments report the best outcomes. Against the UK benchmark they are sigruficantly better than the bad in the multivariate analysis but the difference is not significant on the world benchmark.

The final two items are concerned with productivity and use the same benchmark categories against the best in the sector in the UK and the world. In the UK, the good claim the best performance, sigruficantly better in the multivariate analysis than the lucky. Against world standards the ugly claim the best results, just ahead of the good; however, none of the differences is sigNficant.

On balance, the good claim the best performance outcomes with all the other categories emerging as significantly worse on at least one item. Although a number of the differences do not appear large, the multivariate analysis has, on a number of occasions, revealed that when we control for background variables, the differences are statistically sigruficant.

DISCUSSION

This article set out with three objectives - to present a new classification of non-union types of establishment and relate these to background characteristics; to examine the consequences of belonging to each type in terms of a range of outcomes; and to provide a test of the impact of a high utilisation model of human resource management.

The analysis identified four conceptually distinct establishment types. We have given them the unapologetically valueladen names of the good, the bad, the ugly and the lucky and justdy them in terms of the way values have been attached to them in the literature which in turn often reflects the assumed impact of the associated policies for the workforce. The classification is a starting point which others may wish to refine; we were also limited by the low number who admitted to falling into the ugly category. However, we hope the classification takes forward the debate on non-union establishments.

Among this distinctive sample of new establishments we have been able to show that, contrary to expectations, the LJKavned establishments claim to be in the vanguard of strategic human resource management. At the other extreme, the Germans are the least enthusiastic.



There are differences in the range of outcomes across the non-union establishment types. The good, those with a strategic approach to HRM which involves extensive use of a range of HFW practices, consistently report the best results for HRM, employee relations and performance outcomes. In contrast, the bad establishments, those with no strategy and a low take up of HRM practices, consistently report the poorest outcomes. The ugly reveal a mixed pattern with some positive outcomes but distinct problems with employee relations. Some staff appear to dislike this strategy and vote with their feet. In this respect our results complement those obtained by Millward (1994) who found greater numbers of non-union establishments falling into what we have termed the bad or the ugly categories in his larger wIRs3 sample. On the other hand, the relatively positive HRM and performance outcomes for the small sample of ‘ugly’ establishments suggest that on some criteria these establishments are quite successful.

Perhaps most importantly, the results demonstrate that strategic HRM pays off. The good, with their full utilisation strategy reflected in extensive use of HRM practices, report better results on all three sets of outcomes. Equally importantly, the bad, those without a strategy and with a low take up of HFW practices, report the worst outcomes. In this sense, the good and bad labels seem appropriate. On this basis it appears that in new establishments, the context identified by Guest (1989) and Sisson (1989) as the most likely context for it to succeed, HFW is a feasible and sensible strategy to pursue.

There are two important caveats to this study. The first is that we are deliberately dealing with a limited sample of new establishments. We would therefore not expect the results to be directly comparable with WIRS3, by far the most comprehensive sample of establishments in the UK, and it would be dangerous to generalise them to older establishments or to the public sector. The sample is also heavily biased towards manufacturing; despite urgent calls to reinvest in the UK manufacturing base, we must acknowledge that the service sector remains the growth area of the economy. Although the sample did contain a minority of service sector establishments, it is possible that the results obtained here are a function of the bias within the sample towards manufacturing establishments. Therefore, while the results can be considered sound where the manufacturing sector is concerned, it would not be correct to assume that they apply to other sectors.

The second caveat is that, like most establishment level surveys we are inevitably dealing with self-report responses with the consequent risk of a consistent response bias across the items. We must accept the possibility that some respondents put an optimistic gloss on some of the results. On the other hand, we are dealing with new establishments and they should have the best, most innovative policies and the best outcomes, certainly against a UK benchmark. Furthermore, we are particularly interested in variations within the sample and we can see no reason why, for example, there should be a consistent response bias leading the managers of German-owned establishments to be less optimistic. One of the main purposes of the case studies which form the last part of the study is to follow up some of the questionnaire responses and explore how far they can be confirmed. This experience has increased our confidence in the results. We therefore stand by our conclusion that, at least in new non-union establishments, the adoption of an HRM strategy pays off.


DAVID GUEST, BIRKBECK COLLEGE, AND KIM HOOUE. CENTRE FOR ECONOMIC PERFORMANCE

NOTES

1. An earlier version of this paper was presented to a Workshop on Non-Unionism at the Centre for Economic Performance, April 1994.

2. The CEP is a designated ESRC Research Centre located at the London School of Economics. The research described in this article was funded by the Leverhulme Foundation.

APPENDIX 1

HRM PRACTICES IN NEW NON-UNION ESTABLISHMENTS

Policy /Practice

Single status 59.13

Internal promotion the norm 87.7

No compulsory redundancy 41.32

n.43 Trainability as a major selection criterion

use of psvcholopjCal tests for all selection I 20.49

Realistic job previews during recruitment

System to communicate values to new staff

56.03

71.31

Deliberate development of a learning org'n

Min. annual training requirements for all

62.5

12.3

Flexible job descs. not fixed to one task Jobs designed to make full use of skills

72.73

55.46

Teamworking for majority of staff

Staff involved in setting perf. targets

76.86

61.48

Staff responsible for their own quality I 84.62

Majority involved in QCa or QI teams

Regular use of attitude surveys 48.76

21.49

Team briehdinfo cascades I 65.57

Mo on mkt wsition/comDanv dormance I 79.34 Merit pay for all staff I 68.85

Formal appraisal for all at least m d y

HR policy integrated with business strategy

HR uolicies in-ted with each other

72.13

61.74

59.13



Commitment of lower grade staff

Quality of work of lower grade staff

Line mgr enthusiasm for HR policies

APPENDIX 2

OUTCOMES FOR TYPES OF NON-UNION NEW ESTABLISHMENTS

.865(.326)m .807(.371)" .248(.638) .209

369 (335) ,490 (.382) .778(.555) .191

-.983 (.321)" -2.211 (.378)'" -1.77 (.499)'" ,218

HRh4 Outcomes

The quality of staff employed

Quality of HR policies and practices

~ ~ ~~

T

1.48(.384)"' .969(.415)" .846(.570) .25

.024(.491) -1.128(.541)" -1.61 (549)'" .204

The flexibility of staff 1 921 (.BY" I .m (368)' I I 1.299(.548)" I .165

Ability to move between jobs as needed

Flexibility to adjust workforce size

1.028(.326)'" .334(.357) 1.018(.516)' .124

-.032(.282) -264 (304) .073 (.441) .067

Percentage labour turnover in 1992 ($)

Absenteeism in 1992 ($)

-8.295(4.979)' 4.764(5.53) -3.572(5.318) .m

-7.704(2.118)'" -6.371 (2.286)"' -8.115(2.304)m .1

Performance Outcomes

Percentage of quality targets attained ($)

How well was the recession weathered

Productivity benchmarked against UK

16.689 (10.241) 16.054(11.868) 23.572(11.507)' .025

.663 (306)'' S7 (.371) .873(.529) .lo6

-.848(.4@8)" -.928(.468)' (.496) .083

aality benchmarked against the UK I1.067(.447)" I .697(.536) I 1.232 (.594) 1.131

Prod'y benchmarked against world

aality bendunarked against world

~ ~

-.362(.381) -.138(.452) .168(.524) ,065

.16(.38) -.436(.458) -.27(.525) .os

Notes: Ordered probit analysis except for ($) OLS and (+) logit. R2 are pseudo for ordered probit and adjusted for OLS. * signhcant at lo%, *' sigruficant at 5%, )M sigruficant at 1%. Regressions control for establishment size, type of establishment, parent organisation, region and national ownership.



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Documents

The Good, the Bad and the Ugly: Employment Relations In New Non-Union Workplaces 1