High-performance work systems and organisational performance

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Asia Pacific Journal of Human Resources

DOI: 10.1177/1038411107082273.2007; 45; 261Asia Pacific Journal of Human Resources

Peter Boxall and Keith Mackypractice

High-performance work systems and organisational performance: Bridging theory and

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Asia Pacific Journal of Human Resources 2007 45(3)

High-performance work systems and organisational

performance: Bridging theory and practice

Peter BoxallUniversity of Auckland, Auckland, New Zealand

Keith MackyAuckland University of Technology, Auckland, New Zealand

This commentary paper explores the meaning and significance of high-

performance work systems (HPWSs), an important topic in the debate around how to build a ‘high-skill’ or ‘high-road’ economy. Work reforms to increase theinvolvement of production or front-line service workers are at the heart of these

systems, which are therefore more aptly called ‘high-involvement work systems’(HIWSs). While emphasising that the specific practices in such systems need to be

customised to industry and occupational conditions, this paper outlines the core features of HIWSs, including the wider managerial and governance processes inwhich they are embedded. The paper goes on to explain how the literature in the

HPWS area is making a valuable contribution to our understanding of the role of intervening management and employee variables in the performance of any kind of HR system. This underlines the value to any company concerned about

its HR performance of looking at the chain of links that runs from managementintentions through management practices and employee responses to

organisational outcomes.

Keywords: high-performance work systems, high-involvement work systems

High-performance work systems (HPWSs), a type of HR system, are animportant concept in contemporary research on workplaces. In an era of economic globalisation, they are a major issue in the policy debate around how

261

Correspondence to: Professor Peter Boxall, Department of Management & Employment

Relations, University of Auckland, Private Bag 92019, Auckland, New Zealand; e-mail:

[email protected]

Asia Pacific Journal of Human Resources. Published by SAGE Publications (Los Angeles, London, New Delhi and

Singapore; www.sagepublications.com) on behalf of the Australian Human Resources Institute. Copyright © 2007

Australian Human Resources Institute. Volume 45(3): 261–270. [1038-4111] DOI: 10.1177/1038411107082273.

APJHR 45_3_Boxall.qxd 30/10/2007 11:01 AM Page 261


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to build a ‘high-skill’ or ‘high-road’ economy and avoid engaging in a ‘race to

the bottom’.HR systems or models are clusters of work and employment practicesoriented to a particular group of employees. Large organisations typically haveone kind of HR system for managers and another for their main group of production or operations workers. Where professionals, technical specialistsand administrative support staff are employed, it is commonplace to havedistinctive HR models for these groups as well. While there will be someoverlaps among these systems, the differences among them are important,making a significant impact on the type of people recruited and how theycontribute to company performance.

The notion of HPWSs arises out of concern with the way in which

production workers have been managed in large parts of western manufac-turing. There are various definitions but a common thread is that HPWSs aresystems of managerial practices that increase the empowerment of employeesand enhance the skills and incentives that enable and motivate them to takeadvantage of this greater empowerment (Appelbaum et al. 2000; Gollan 2005;Lawler 2005). While the key focus has been on the way production workers aremanaged in manufacturing, the topic of HPWSs is actually part of a largeragenda concerned with how HRM can be used to improve performance in allkinds of organisations with various kinds of workers. In this article, wehighlight two sets of issues that have gained prominence under the rubric of HPWSs.

The first issue is concerned with those situations where a company’s HRsystems for its production workforce do not fit with its current competitivecontext. In these situations, firms need to make some kind of serious change.They can either outsource their production to sites which perform much betterin cost-effectiveness or revitalise their historical production sites through betterHR systems and new technology. The HPWS literature is mainly concernedwith studying western firms that decide to revitalise their historical HRsystems by examining why they change and what HR policies and practicesunderpin the change.

The second set of issues is to do with how the links between these newHR systems and organisational performance can be improved. Research on

HPWSs highlights the importance of the mediating links or interveningvariables between HR systems and organisational outcomes, including criticalvariables to do with employee beliefs, attitudes and behaviours. The lessonsfrom this line of HPWS research have much wider applicability: they aretelling us important things about how any HR system needs to work.

Going back to the landmark Hawthorne studies of the 1930s, there is a longtradition of interest in how to make production jobs more motivating and

262 Asia Pacific Journal of Human Resources 2007 45(3)

HPWSs: the why and what questions





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enhance employee commitment. Serious management concern with HPWSs,

however, really stems from the rise of Japanese high-quality productionsystems in the 1970s and 1980s, including such techniques as quality circles,just-in-time inventory and delivery, and flexible, team-based production(Bartram 2005; Boxall and Purcell 2003). Faced with competitors who weresimultaneously raising product quality, reducing production costs andimproving rates of innovation, some elements of western manufacturing (likethe British motorcycle industry)1 simply disappeared while others soon learntthey could not rely solely on their marketing skills. To survive, they had tofundamentally change their production systems and grow their reputation forquality and value.

A long overdue focus on the internal operations of companies began to

take hold. In the automobile manufacturing industry, struggling western firmsmade major efforts to reform their production systems by adopting Japanese‘lean production’ principles (Womack, Jones and Roos 1990). This meantmoving away from the low-discretion, control-focused work systems associ-ated with Fordist operations management towards work systems whichincreased the involvement of production workers and raised their skills andincentives (MacDuffie 1995).

Some commentators, like Appelbaum and Batt (1994) who published aninfluential book on the subject, began to call these new work systems ‘high-performance work systems’ while others, following Lawler (1986), talked of ‘high-involvement work systems’ (HIWSs). Yet others talked about ‘high-

commitment management’ (e.g. Walton 1985; Wood and Albanese 1995).We should pause for a moment to sort out this terminology. In our view,

Lawler’s involvement terminology is the most helpful because it makes it clearwhat it is that is changing in HR systems for production workers: we aretalking about a major shift in the degree to which production operators areinvolved in, or empowered to make, decisions that affect their work qualityand output. This then leads on to changes in practices that enhance their skills(such as more selective recruitment and better training) and their commitment(such as team- and company-based compensation). Collectively, these changesin HRM are designed to enhance employee and operating performance.

We should note, however, that this concern with the quality of produc-

tion-line work is not something that applies right across western manu-facturing. In semi-conductor manufacturing, for example, an industry whichhas emerged since World War II, production work has historically beendominated by highly skilled professional engineers (Appelyard and Brown2001). Unlike assembly-line production workers, these workers do not needjob enrichment because they have always enjoyed high levels of involvement.The interest in HIWSs really forms part of a major change in production

HPWSs and organisational performance 263

1 For an excellent analysis of the rise and decline of the British motorcycle industry, see Ian

Chadwick’s website: http://www.ianchadwick.com/motorcycles/britbikes/index.html





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systems in those parts of western manufacturing, such as steel making and car

manufacture, where the deskilling of production work and demarcationamong trades took a strong hold as mass production developed in the earlytwentieth century.

In these manufacturing contexts, the need to adopt Japanese-style leanmanufacturing principles has led to change in work systems towards a high-involvement model. High-involvement work practices typically includegreater decision-making autonomy on the job, as well as off line in qualitycircles or other types of problem-solving groups. Managers, however, need tokeep in mind the importance of customising work practices to their specificindustry and occupational conditions. For example, in situations whereworkers have high task interdependence, there is often a shift to teamwork,

but teams can be counterproductive in conditions of low interdependence(Park, Gardner and Wright 2004; Sprigg, Jackson and Parker 2000).

Along with the Japanese quality challenge, a key environmental stimulantof change in HR systems in manufacturing over the last 20 years has been theadvent of advanced manufacturing technology (AMT). This includes suchtechnologies as robotics, computer-aided design (CAD), computer numericalcontrol (CNC) machine tools, and electronic data interchange (EDI) systems.Research on AMT, including work conducted among Australian and NewZealand manufacturers (Challis, Samson and Lawson 2005), shows that suchtechnologies reach more of their potential when production workers’ jobs areredesigned and their skills improved to enable them to enhance the operating

performance of these technologies. Studies by Wall et al. (1990) and Wall,Jackson and Davids (1992), for example, show how work redesign and trainingthat enables production operators to solve technical problems as they occurreduces the need to call in specialist technicians for problem-solving andthereby enhances productivity. The productivity benefits come from quickerresponse to these problems and thus lower machine downtime. In the longerrun, productivity improvements also come from more effective use of thecapacity of operators for learning: employees who enjoy greater empowermentlearn more about the reasons why faults occur in the first place and find waysto reduce their incidence.

The converse of this argument is that investments in HIWSs are unlikely

to be economic in low-tech, labour-intensive manufacturing which makes littleuse of AMT. Much of the apparel and toy manufacturing being conducted inChina, for example, works very cost effectively on classical management prin-ciples of labour specialisation without much worker empowerment (Cooke2004). Firms in labour-intensive manufacturing are increasingly moving theirplants offshore to lower cost countries. A case in point is one of Britain’s mostinnovative manufacturing firms, Dyson. The firm, an international leader invacuum cleaner technology, shifted its production facilities to Malaysia in theyear 2000. Relocation to Malaysia not only delivered lower unit costs than waspossible in the UK, but also ensured proximity to key parts’ suppliers, thus






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improving the firm’s location in its supply chain. HR strategy in Dyson now

revolves around managing a dual workforce: one in the UK where researchand development (R&D) staff are employed, and one in Malaysia where theproducts are assembled.2

Bearing in mind, then, that the specific practices used to bring abouthigher employee involvement need to be intelligently adapted across indus-tries and work processes, the core features of HIWSs are outlined in table 1.The table helps to make the point that HIWSs are embedded in an organisa-tional context. There are features of the broader management process and theleadership or governance of the organisation that need to be supportive if HIWSs are to be successfully implemented (Gollan 2005).

While interest in HIWSs sprang from manufacturing, it is not simply a

manufacturing issue. There are also studies of the service sector which pointto the value of ensuring that HR systems fit appropriately with the nature of the industry or the competitive segment within the industry. High-skill, high-involvement systems of managing people are naturally necessary in profes-sional services because workers capable of providing professional services need


2 For a summary of the company’s history, see http://en.wikipedia.org/wiki/James_Dyson

1. Technology – Greater adoption of new technology in thoseindustries or work processes where it is a significant performanceenabler, including better IT

2. Work reorganisation – More empowering styles of working inthose jobs where job enrichment or greater worker involvementin problem solving and decision-making will make better use ofhuman potential and thus improve work quality or customersatisfaction

3. Employee selection and skill – Careful selection of employeesfor job-match and for learning potential plus enhanced skilldevelopment to take advantage of new technology and/or workin a more empowered way

4. Performance and commitment incentives – Enhanced incentivesto work smarter and to reduce employee turnover (e.g. financialincentives, stronger vocational or career development, family-friendly employment practices)

5. Management planning and measurement – Improved systemsto plan and measure workplace performance, including data

gathering on employee attitudes, and ensuring the accountingsystem properly recognises the investments in human resourcesthat drive performance improvements

6. Management capability and support – Improved investments inmanagement development at all levels and in support for theenabling role of front-line managers

7. More cooperative labour relations – A more consultative‘partnership’ style of labour relations with unions and/or withemployee representatives chosen by the workforce

HIWSs: direct drivers ofworkplace performance

HIWSs: indirect drivers ofworkplace performance

Table 1 HIWSs: key direct and indirect drivers of workplace performance





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to be paid well and developed continuously, but they are also becoming

important in those service industries which are able to segment customerneeds. In the hotel industry, for example, luxury hotel operators can improverevenue and customer retention through HR systems that empower front-lineemployees to personalise service (Haynes and Fryer 2000). They therefore havean interest in investing in the employee development and managementpractices that will support a high-quality competitive strategy in this industry.

Such investments in employees, however, are unlikely to be economic atthe low-price end of the hotel industry where customers want a cheap bed‘without frills’. In general, HIWSs are unlikely in mass services wherecustomers are price conscious and willing to engage in self-service to help keepprices low (Boxall 2003). It is important to bear in mind a critical difference

between manufacturing and services: while modern high-tech manufacturingoften has the capability to deliver better quality and lower prices, while alsoinvesting heavily in employee development and retention, improvements inquality in service industries generally translate into a price premium. If customers are resistant to price increases for basic services, the options for HRstrategy are more constrained.

In summary, then, the first stream of literature in the HPWS area isconcerned with identifying the market or technological situations in whichfirms have a clear interest in changing towards HR systems which increasethe empowerment, skills and rewards of production or service workers.Recognising the need to be careful with specific practices, research is increas-

ingly outlining the broad shape of the changes that are needed in such a high-involvement HR model.

To provide more practical guidance, however, research needs to explain morefully how such systems work. This involves studying the difficulties andcomplexities that can arise in what researchers have called the organisational‘black box’ (e.g. Purcell et al. 2003; Wright and Gardner 2004). The generalprinciples being developed in this stream of work are not relevant only to

HPWSs but can be applied to any situation in which there is a need for acompany’s HR systems to perform more effectively. This focus here is on themediating links from management’s intentions through to whatever notion of organisational performance is desired (figure 1). The process of HRM isactually a chain of links in which 1) intended HR practices lead to 2) actual HRpractices, which lead to 3) perceived HR practices, and then to 4) employeereactions, and, finally, to 5) organisational performance.

Figure 1 underlines two important facts about the links between HRMand performance. First, it emphasises that there is often a difference betweenwhat management says the company will do and what managers actually do


HPWSs: the how question





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with their staff. Line managers, including supervisors and team leaders, areresponsible for converting much of management’s intentions for HRM intoactual HR practice, given the resources they have to work with, and their

judgments about what will work and what serves their interests. It is usefultherefore to think of HR practice as a wide range of actual managerialbehaviour centred around a notional standard.

The second vital fact that figure 1 illustrates is that if management wantsto bring about valued organisational outcomes, it needs to influence employeebeliefs, attitudes and behaviour. Employee behaviour is critical to whether thedesired organisational outcomes will be achieved, and is influenced byemployee perceptions of, and their cognitive and affective responses to, HRpractices. Major gaps between management intentions and perceived manage-ment actions usually undermine employee trust and loyalty and thus affectperformance outcomes.

The possibility for gaps between rhetoric and reality (Legge 2005) under-lines not only the need for senior managers in large organisations to figurecarefully what they want to achieve and then follow through on their pledges– achieving greater consistency in their own behaviour – but also the impor-tance of the management of lower level managers. While this includes bothstaff specialists, such as HR specialists, and line managers, the latter are par-ticularly important if consistency is going to be high in HRM. Line managersare not simple conduits. Line managers’ action or inaction is often responsiblefor the difference between espoused HR policies and their enactment. Someformal HR policies (such as rates of pay and the details of pensions) are (nearlyalways) directly transmitted from policy to practice without slippage, but much

else is filtered through line managers, positively or negatively.The quality of the relationships between line managers and their team

members is starting to receive greater attention in the analysis of HR systems.There is no doubt that ties within a work team can be much stronger thanthose with remote senior executives because it is much easier to trust someoneyou know, especially if you find them to be a person of competence andintegrity (Macky and Boxall 2007). A recent study by Purcell and Hutchinson(2007) of the British retail organisation, Selfridges, underlines the value of senior management taking a much greater interest in the selection, develop-ment, support and motivation of front-line managers so that they, in turn,


Figure 1 The HRM-performance causal chain

Intended

HRpractices

Actual HRpractices

Perceived HR practices

Employeereactions

Organisationalperformance

Source: adapted from Wright and Gardner (2004); Purcell and Hutchinson (2007)





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manage front-line employees in ways that enhance employee satisfaction and

commitment.The impact of HIWSs on employee outcomes has thus become central tothe academic debate in this area. The issue of whether companies gain fromHIWSs turns on the way the HR changes affect employee attitudes andbehaviour (Kochan 2004). Here the academic literature is split. On the onehand, there are qualitative case studies that point to the dangers of work inten-sification, often when workers are confronted with greater responsibilities inlean, downsized organisations (see Delbridge (2007) for a review of thisevidence). On the other hand, survey evidence indicates that HIWSs whichbring improvements in employee autonomy, greater development and use of their skills, and greater financial rewards appeal strongly to workers, signifi-

cantly lifting job satisfaction (Berg 1999; Vandenberg, Richardson, andEastman 1999). A logical conclusion would be that workers respond most posi-tively when increases in their responsibilities do not come with an increase instress and strain (Macky and Boxall 2006; Mackie, Holahan and Gottlieb 2001).

In summary, then, the HPWS literature is bringing a sharper focus on theintervening or mediating variables that lie between management intentionsand organisational outcomes in HRM. While there are key issues that relatespecifically to worker responses to HIWSs, there are also important lessons forany organisation wanting to improve the process of HRM.

The burgeoning HPWS literature is playing two valuable roles in terms of thedevelopment of contemporary HRM. First, it is helping us to identify themarket and/or technological situations in which a company’s HR systems foroperating or front-line service workers would benefit from moving to a high-involvement model. The broad outlines of this HR model are becoming clearerand have been summarised in this article (table 1). Companies that see valuein this model, however, need to customise practices to their specific situation.Second, aside from the contours of this particular kind of HR system, the liter-ature in the HPWS area is making a valuable contribution in highlighting the

role of intervening management and employee variables in any kind of HRsystem (figure 1). Thus, the literature reinforces the value to any companyconcerned about its performance of looking internally at the chain of links thatruns from management intentions through management practices andemployee responses to organisational outcomes. The clear implication is thatdata-gathering through such practices as regular employee attitude surveysand focus groups is important when management wants to improve organ-isational performance through HRM. Better information on employee percep-tions of, and responses to, espoused and actual HR practices is a prerequisiteto improving HRM’s contribution to organisational effectiveness.


Conclusions





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Peter Boxall (PhD) is professor of human resource management in the Department of Management and

Employment Relations at the University of Auckland. He is co-author with John Purcell of Strategy and

human resource management , co-editor (with John Purcell and Patrick Wright) of the Oxford handbook

of human resource management , and co-editor (with Richard Freeman and Peter Haynes) of What

workers say: Employee voice in the Anglo-American workplace.

Keith Macky (PhD) is associate professor of human resource management in the Department of

Management at the Auckland University of Technology. He has more than 20 years’ HR experience in

both academic and consulting environments, including senior positions at Massey University, Ernst &

Young, and KPMG. He is the co-author with Gene Johnson of Managing human resources in New

Zealand .

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