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Employee involvement is often identified as a key contributor to high performance work systems.
Explain why employee involvement is so important. Use theory and examples to support your answer. Companies nowadays need to turn to various methods in shaping their competitive strategy in order to stay competitive and achieve bottom line. The focus on best allocation of human, technological and material resources is critical to organisational performance.
Theorists often consider people factor as the key resource ensuring success of an organisation.
In fact, people constitute and create organisations, being their foundations and accelerators of change. Hence, attention to wise management of human capital is essential in order to trigger off its entire potential. High performance work systems (hereinafter referred to as HPWS) are an example of such agile management system, which by many is considered to be medium of achieving competitive edge and wining both customers and employees (Owusu 1999).
HPWS is a collection of HRM practices that has revolutionised workplaces. HPWS is “a set of work innovations that include autonomous work teams, socio-technical systems, open systems planning, new plant designs, and other similar innovations” (Farias & Varma 1998, p.
50). Considerable number of recent studies has supported the idea that HPWS improve organisational performance and that employee involvement (EI) is its critical constituent.
This essay discusses employee involvement and its forms within the frames of HPWS, as one of its main practices. Further, it demonstrates the attributes and importance of EI, basing on the theory and relevant examples. Finally, the essay emphasises EI as being a seminal constituent of high performance work systems; however, it implies that it is not the sole element ensuring better corporate performance and a holistic view should be adopted in the management’s approach.
Approaches towards human capital have been evolving over decades and such efforts of theoreticians and researchers as the Hawthorne studies (1924-1932), McGregor’s Theory Y perspective (1960), or Maslow’s “Hierarchy of needs” (1954) demonstrate that the human relations element is essential in management’s approach and good communication, fairness and participation in decision-making have a positive effect on performance. By the same token, employee involvement “was borne out of a fundamental belief in the benefits of creating positive human relations within the organization” (Ang 2002, p. 99). The paradigm of HPWS is founded on the supposition that the given bundles of HR practices positively stimulate employees, reduce the dysfunctional behavior, such as absenteeism or resistance to change, in the same time increase productivity, and improve quality and customer service. The study of 76 Japanese companies by Takeuchi et al. (2009) confirms that HPWS exert considerable impact on employees’ and organizational performance. This view is consolidated by Gephart (1995), who claims that HPWS when properly applied, lead to a sustained competitive advantage.
Farias and Varma (1998) emphasise that HPWS internal design characteristics, i. e. organization structure, decision making, rewards, tasks and information systems, should fit with each other and should be tailored to the organization’s external environment. They argue that in order to achieve this “fit”, HPWS should be guided by the specific set of principles, with the two most important being empowerment and EI. The view that EI is a critical element of HPWS is supported by J. Pfeffer, who proposes seven practices ensuring success to an organization, where EI, information sharing and employee voice are among others the key constituents of HPWS (1998, pp. 64-98). Hsi-An et al. (2006) outline EI and information sharing as key elements of the core HR practices that should be central to the job infrastructure in any work place. EI is not an objective in itself, but a mechanism applied by management aiming to obtain better results from people, capture their trust and commitment, understand their needs, improve their and in turn company’s efficiency (CBI 1981, p. ).
Within the last 30 years there has been observed substantial interest in employee participation. The Bullock Report on ‘Industrial Democracy’ (1977) view the industrial participation as relying on collectivist principles, employee rights established on a statutory basis and partial union initiation through the labour party (Ackers et al 1992, cited Marchington & Wilkinson 2005, p. 77). The rise of EI has consequently led to the reduction in union power, increase in management initiated practices and stress on direct communications with individual employees.
The direct consequence of EI is the change of structure of an organization, with reduced layers, hierarchical levels and transfer of the decision-making capacity directly to lower levels of employees (Farias and Varma 1998). From the 1980s there has been observed growth in direct communication and EI, which was confirmed in the 1998 WERS with teamworking being used in 65% of studied workplaces, team-briefing 61% and staff attitude survey or problem solving groups being applied in over 40% of the given workplaces (Cully et al. 1998).
Surveys carried out by CEO (the Centre for Effective Organizations) at the University of Southern California have focused on EI and TQM practices in the Fortune 1000 companies, the results demonstrate the growing trend towards EI and TQM practices, as a result of effectiveness of these practices (Farias & Varma 1998, p. 51) Contrary to employee participation, employee involvement is a direct form of employee participation, which is initiated by management who involves employees on an individual level and is recognized as a softer form of participation (Bratton & Gold 2007, p. 51). EI comprises a wide spectrum of processes designed to trigger best possible contribution of all employees in an organization.
Marchington and Wilkinson (2005) distinguish seven different mechanisms of involving employees, i. e. : suggestion schemes, team briefings, regular meetings, problem-solving groups/ quality circles, TQM/ Kaizen approach, semi-autonomous or autonomous work teams and financial involvement. In practice, there are distinguished four different forms of EI, i. e. downward communication, upward problem solving, task participation and teamworking, and financial involvement. Downward communication considers managers informing and educating employees, who consequently can better understand and accept management’s plans. Among the techniques used here are team briefings, informal communication, formal written media (e. g. company newspaper or house journals) and videotapes concerning the organization’s financial performance or new managerial initiatives.
The certain advantage of this form of EI is the fact that employees are provided more information and in result are capable of better use of their knowledge and skills in order to enhance product quality or customer service, altogether contributing to sustainable competitive advantage of the company. Upward problem-solving (e. g. quality circles, action teams, suggestion schemes, attitude surveys) relies on utilising employees’ knowledge and opinions, gathered on individual or group level, with the intention of enlarging the ideas about the organisational matters, stimulate collaborative relations within the workplace or legitimize any change.
Such form of EI provides human capital with the superior opportunity to have a say in a discussion on issues concerning them. Employers, on the other hand, can gain in result from greater productivity and quality (Geary 2003, cited Marchington & Wilkinson 2005). Task participation and teamworking is also a kind of direct participation at an individual level as employees are encouraged to expand the scope of tasks involved in their work, e. g. job enrichment, teamworking, horizontal job redesign. According to Marchington and Wilkinson (2005), it is the most innovative method of involving employees, since it is concentrated overall on the job.
Finally, financial involvement, which received attention in the 1980s, considers various schemes that are designed to bind part of an employee’s reward to the success of the particular division, unit or a company as a whole. Among the whole variety of forms are profit sharing, employee share ownership schemes and ESOPs. The main thesis behind this form of involvement is that the employees with a financial stake in the success of the company are more likely to contribute the additional effort and work harder for its ultimate success. Richardson (1985, p. 3) distinguishes three levels in employee involvement, the first level is about improving communication and employees are still seen as passive recipients, on the second level employees are involved in productivity and cost management and on the third level employees are viewed as partners involved in e. g. profit sharing schemes. Van Aken and Monetta (1994, cited Ang 2002, p. 197) suggest division of employee involvement forms in the categories of supplemental initiatives and replacement initiatives, with the examples being suggestion schemes, quality circles or participation groups and self-managing work teams respectively.
For instance, Gephart (1995) claims that HPWS should embrace such forms of EI as self-managing teams or quality circles. Farias and Varma (1998) claim that the form of EI that is implemented has the critical value to any expected improvements. As stated hereinabove, EI is an important constituent of HPWS as by informing employees on the organisational issues and the open communication regarding strategy, operational matters or financial performance employees are given the sense of trust and fairness.
Ang claims that by involving employees management shows that values and trusts employees and that their contributing to decision-making results in better performance but also fulfilment of the higher needs (2002, p. 194). That is, it is suggested that EI and identification with the workplace are the conditions of satisfying the higher-order needs proposed by Maslow (Yeatts & Hyten 1998, cited Ang 2002, p. 194). Essential condition for team-working to be successful is such disclosure of adequate information, so as employees are able to provide their suggestions and contribute to improvements in organisational performance.
EI practices enable management to understand opinion of employees on certain decisions before they are ultimately made. Such open communication can prevent potential tensions and resolve existing conflicts (Marchington and Wilkinson 2005, p. 77). Lawler (1986) strengthens significance of employee involvement in the decision-making process, as it has constructive effect on both social and psychological grounds and hence leads to better performance.
EI is also important constituent of HPWS, as by means of establishing good employee-management communication it creates employee commitment, which in turn enhances organisational performance (Bratton and Gold 2007, p. 442). That is to say, it derives from an economic efficiency reason that EI is beneficial as committed workforce is prone to value what the organisation is trying to achieve and is more willing to provide its efficient contribution. Reason of creating commitment is based on the idea that long-term competitive advantage can only be attained with the contribution of and through employees.
Involving employees in the decision-making process, establishing communication mechanisms and giving employees more autonomy boosts employees’ job satisfaction, motivation and commitment to the organisation. EI improves attitudes of employees and creates organizational citizenship, which work towards improvement of employee relations (Bratton and Gold, p. 443). The involvement-commitment cycle demonstrates cause and effect relationship between decisions made by management, where EI instigates better individual and organisation performance (Bratton and Gold 2007, p. 55). EI tries to create commitment thereby making the organisational goals also the goals of its employees (IPA 1990, p. 11). It can be achieved, for instance, by financial participation, which promotes employees’ identification with the organisation (Marchington 1995, 2001). Verma (1995) argues that EI practices are important because of moral, economic and behavioural reasons (quoted Bratton & Gold 2007, p. 456). EI practices are considered moral, socially acceptable, ethical and because of these should be incorporated in management style in every democratic society.
Employees should be entitled to the right of expressing their own opinions in the matters that affect them directly. EI practices are also supported by economic principle, as they improve quality and implementation of decision-making, which motivates workers and increases their trust in management, enhancing their performance and in turn organisational performance (Verma and Taras 2001). EI is also regarded useful in resolving dysfunctional behavioural problems in the workplace, e. g. resistance to change, absenteeism or strikes (Beer et al 1984).
It is suggested that EI schemes are a form of resolution to these dysfunctional behaviours, i. e. when a company involves employees, their interests are more alike to those of organisation. They build trust and reliance, minimize chances for conflict and levitate possibility of constructive communication process (Beer et al 1984). Mackie et al (2001) claim that it also reduces stress levels. EI practices can also educate and reconstitute the individual, in result workers’ behaviour may be easier to manage.
Key matter in the choice of EI is the actual decision making power that employees have. It is often implied that employee involvement is effective when employees can make actual decisions, not just suggestions (Farias and Varma 1998). Parkes et al. present their findings from 20 case studies carried out in 12 Hospital Trusts and 8 Primary Care Trusts (Parkes et al. 2007). The 4 case studies are discussed in their paper, where the authors argue that EI is a crucial constituent of HR strategy, which generated reliable results in the National Health Service in the United Kingdom.
The study gives evidence on the link between HPWS, where EI is the key component, and performance of the organisation, emphasising in the same time the necessity of consistency and integration of strategy, policy and practice, where the method of implementation is the condition of effectiveness. Parkes et al. inform that 1999 Repost of Department of Health, confirmed effectiveness of EI techniques applied there, with the results of enhanced patient care, to introduce change by management, decreased rate of employee turnover and resulted in greater employee motivation (p. 03). The two case studies underscore the importance of good leadership of managers, teamworking and the process of involving in decision making of both staff and patients. The study revealed that EI practices were most successful when they were associated with working in teams and decision making process with clear responsibilities assigned to teams, which gave the employees the sense of common goal and increased their commitment and motivation. EI gave workers possibility of putting their own contribution and ideas in innovating patient care.
The identified barrier to EI was when it was used as a medium of resolving short term crisis or when the actual voice of employees was neglected. Parkes et al. point out that in some cases EI was not understood by employees, which stresses the necessity of more open communication and informal talks with workforce. Overall the case studies give evidence that EI practices are efficient and beneficiary to both employees and organisations when the focus is equally distributed between strategy, implementation and control of EI in practice.
Managers should provide extensive training to employees, make them acquainted with and maintain EI culture, streamline team working and get employees chance of genuine involvement. Managers should know how to support employees and communicate with them in friendly and open manner. When these conditions are satisfied, the study proves that commitment increases, employees are more creative and active, greater satisfaction of patients and better organisational performance (Parkes et al. 2007). It is worth noting that implementation of EI practices is exposed to certain difficulties and there is a number of paradoxes written in EI definition.
There are two major impediments to introduction of an effective EI mechanisms, so called ‘double blockage’ suggested by Dunton et al (2004). The impediments are the attitude of union representatives and the attitude of line managers. Another obstacle might be HR strategy. Stohl and Cheney (2001) introduce four types of EI paradoxes, i. e. organisational structures, the idea of agency, the paradox of identity and power. In actual fact, the important decisions are made by senior management and workers have only imited changes to the way in which work is designed, being eliminated from the most influential sphere, i. e. executive. The idea of agency implies that the employees shall have the possibility to change status quo, however, self-managed work-teams rely on the active subordination of team members to the will of the team. Another issue is that EI implies commitment, learning and open communication, however, there might exist discrepancy in opinions, which might be approached by management as resistance, lack of commitment or sabotage (Zorn et al, 1999).
Moreover, the notion of empowerment written in the scheme of EI might be solely superficial, as the independent voice might not contribute a lot, since the final decisions are ultimately made, or influenced to be made in a certain way, by management. Cooperation between managers and employees is exposed to such obstacles and whether creativity and innovation can emerge from these paradoxes is a challenge to both sides.
EI – element of – high performance work systems – however – a holistic view should be adopted in the management’s approach: Some scholars argue that involving employees at work is the most important factor in developing high-performance work systems (Dundan et al 2004; Marchington 2001). The study carried out by Hsi-An et al. (2006) demonstrates that elements of HPWS influence performance of a company and as well it emphasises the necessity of a holistic approach to adoption of HPWS mechanisms.
Similarly, Nadler and Gerstein (1992) claim that design principles, such as information sharing and information access or multi-skilling, assist organisations in setting up robust HPWS. They propose 10 design principles of HPWS and outline that teams are the principal units of the HPWS design, which are autonomous, empowered and possess the certain scope of power in decision making over the matters that affect them and are used to achieve certain goals. Disclosing of information and information access are critical elements, since employees should have appropriate data in order to make adequate decisions.
Hence, involving employees is essential, however not only important aspect of HPWS. Farias and Varma (1998) discuss previously conducted study by Huselid (1995) which implies that organisations should implement different practices together, rather than single practices, the survey conducted in 1000 companies confirmed this presupposition. The conclusions are drawn that in the companies where HPWS were introduced employee turnover decreased (measured in terms of sales per employee) and organisational performance was altogether superior.
Other conclusions which shall be drawn from the study is that HPWS should be viewed holistically and various features, tailored to the needs of organisation, should be implemented simultaneously. CRITICAL VIEVConclusions from the previously conducted studies are positive and in general successful for organisations; however, in certain aspects are not thoroughly conclusive. For example, not notable effects in terms of the cost-benefit ratio (Applebaum & Batt 1994 or Wagner 1994). Wagner (1994) EI – implementation of HPWS can produce mixed effects as costs of introducing are high and benefits gained might not trade off the resources sacrificed.
Organisation should look at the design features in a holistic way and achievement of “fit” between business environment and the organisation and design features should be the crucial aim of the design. Process of design takes time to prove effective and any costs and sacrifices should be well planned. The authors Farias, G. F. and Varma, A. (1998) emphasise the necessity of taking a holistic perspective on HPWS, where EI is a crucial design feature, however it is not the sole element ensuring any improvements to be achieved.
Authors also emphasise that achievements of sustainable competitive advantage is possible with appropriate implementation of the HPWS. Process of change is vulnerable and exposed to impediments. EI is used in deciding on and executing change to HPWS, makes it possible to better comprehend the causes for change and brings about higher commitment to the imposing of change practices. Farias, G. F. and Varma, A. (1998) High performance work systems: What we know and what we need to know. Human Resource Planning. 21(2), pp. 50-54. Study carried out by Lawler et al. n 1995 presented comparisons of companies using HPWS and those which did not utilise it. The Fortune 1000 companie which were usisng EI and TQM practices achieved better financial results than the companies which used HPWS in a limited sense. (Farias & Varma 1998, p. ) Ledford and Mehrman (1993) studied 12 worksites and noted variations in employee attitudes between brownfield and greenfield sited,
The result of their study implies EI as being a key contributor to HPWS and a key element leading to high performance and a tool to enhance overall performance. Farias & Varma 1998, p. ) (Mac Duffie, 1995; Pil & Mac Duffie, 1996) Other seminal study scrutinizing HPWS and EI as its constituent was oriented on the global auto industry. When HR practices are integrated with the production system and business strategy, the performance of an organisation is better and such organisation better adopts to changes and is more flexible. However, it depends more on a well-trained and committed employees. (Farias & Varma 1998, p. Beatty & Varma (1997) surveyed 39 companies in order to examine effectiveness of HPWS practices in the service sector of these organisations. All in all, HPWS practices improve organisational performance with regard to operational and financial issues. (Farias & Varma 1998, p. ) Welling et al. (1995) conducted the study in one unit of one company, with the results giving evidence on improved cycle time, productivity and corporate performance where constituents of HPWS were implemented, i. e. customer focus, EI and continuous improvement. (Farias & Varma 1998, p. )
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