HPWS employee control

People and Organization What are the implications of the introduction of high performance work systems (HPWS) for the efficiency of employee control?

Guanya Hao Business (Consulting) ID:1454798

Content Introduction..................................................................................1 Concept of high performance work system ( HPWS).................1 Concept of employee control...................................................... 2 Based on the social exchange theory —— Incentive system of High performance work system and employee control.............2 Social exchange theory..................................................................3 Incentive system of high performance work system...................3 Relations between incentive system and employee control—— From the perspective of social exchange theory.........................5 Limitations and weaknesses......................................................... 7

Conclusion.................................................................................... 8 References.................................................................................... 9

Introduction This article aims at explore the relationship between the high performance work system and employee control from the perspective of social exchange theory. In recent years, many articles use social exchange theory to study the relationship between high performance work system and the employee working outcomes, few articles explore the relationship between high performance work system and employee control. This article elaborates four measures of the incentive system of high performance work system and explains each of its impact on the employee’s mind and behavior. Moreover, based on the social exchange theory, the article connects the incentive with the theory and apply these two to the study of the employee control. Furthermore, the article uses perceived organizational support and in-role/out-role behavior of social exchange theory as mediators to test the relationship between high performance work system and employee control. Besides, the article considers the limitations and weaknesses of the “dark side” of the high performance work system and call for further study.

Concept of high performance work system ( HPWS) As a strategic human resource management, the concept “high performance work system” (hpws) has not been rigorous defined by western. Because high performance work system involves broad content and various formulations, such as high performance work system (Huselid, 1994), high involvement (Lawler, 1992) or high commitment (Wood, 1996) HR practices. Nadler, Gerstein and Shaw considered that high performance work system is “a system which can configure and organize various resources and make them meet the needs of the markets and the customers and then achieve an organization system with high performance”. Huselid, Jackson and Schuler defined the high performance work system as “highly consistent activities which ensure that the human resource serve the enterprise’s strategic objectives within the company.”1 Edwards and Wright considered that high performance work system contained the theory hypothesis that the organizations treated their members well, then the employee would improve their working attitude and increase their satisfactions and sense of commitment. MacDuffie points out that, human resource management practice system must have three elements to enhance organization performance: (1) employee must have considerable knowledge and skills; (2) human resource management activities must be able to motivate employee to fully exert their knowledge and skills; (3) employee must be autonomic to help the

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Huselid,M., Jackson,S.E.,& Schuler,R.S. Technialand strategic human resource management effectiveness as determinants of firm performance[J]. Academy of Management Jornal,1997,40(I):171-188 1

organization achieve the objectives.2 Based on the three elements above, Appelbaum came up with the famous “AOM” model of high performance work system and regarded the organizational performance as the function derived from core elements structure of the organization. The organizational structure consists of three dimensions: employee ability, motivation and opportunity to participate. These three dimensions must be improved if the organizational performance wants to be enhanced. In this article, high performance work system is based on the principle of employee high involvement and stress on maximization of employees’ knowledge, skills and initiative through the effective integration of the resource of organization system. Based on full implementation of enterprise basic human resource management, high performance work system aims at enhancing enterprise’s performance and centering on improving employee performance by means of incentive system and capability system.

Concept of employee control The term employee control refers to the latitude that staff has at work and their control over job related decisions and it affects their health, morale and ability to handle the workload. Richard Hackman and Greg Oldham reported, in 1976, that control (in terms of job-provided autonomy) enhanced motivation and growth in blue collar, white collar and professional positions.3 Employee control, must also include, discipline and responsibility to ensure staff take ownership for their team, workload, etc.

Based on the social exchange theory — — Incentive system of High performance work system and employee control

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MacDuffie, JP.Human resource bundles and manufacturing performance: organizational logic and flexible production systems in the world auto industry [J].Industrial and Labor Relations Review,1995,48:197-221 3 Hackman, J. R. and G. R. Oldham. Motivation through the design of work. Organizational Behavior & Human Decision Processes, 1976,Vol. 16(2), pp. 250-279 2

Social exchange theory4 Social exchange theory rose from 1960s in United State and has spread to all over the world. The theory views that all the behaviors of human are dominated by exchange activities which can bring awards and incentives. Thus, all the human social activities can be summarized as a kind of exchange, and the social relationship people form from the social exchange is a kind of exchange relationship. Social exchange theory provides a theoretical framework to illustrate that employees’ active attitude and behaviors can be gained through the improvement of human resource practice exchange.

Incentive system of high performance work system Incentive system is an important part of high performance work system. Through human resource management measures with high performance, enterprises can attract, develop and retain employee, and influence employee on their working motivation and stimulate their working passion, initiative and innovation. According to a 1989 survey, over 50% of the American believed that they would like to increase their productivity but they could not find such motivation. Therefore, high performance work system should be able to stimulate employee to take “appropriate behaviors”. 1.Employee involvement As an appreciative measure, employee involvement can meet the need for affiliation and being appreciated and it gives employee a sense of achievement. In a task, few will not be encouraged while participating in the discussion related to one’s own job. Organizations are changing from an activity system which is hierarchically controlled and coordinated to a system in which low level employee can be allowed to do those things which can improve performance. Involvement measure can not only increase the satisfaction of employees but also raise productivity. In high performance work system, employee involvement includes 4 main measures: (1) Job rotation Job rotation refers to the organized and regular personnel position adjustment. It offers employee a better chance to learn knowledge and develop themselves, making them feel fresh and exciting, as well as working satisfaction, without sharp increase in the cost of salary and welfare. Meanwhile, job rotation can release pressure of organizational promotion, and reduce discontent among employees. (2) Broad task Broad task means that enterprises intend to make the employees’ work latitude broad to increase the employees’ adaptability. Broad task means establishing a bigger challenge and achievement at work and making employee to take more responsibility of plan , organization, control and individual assessment. Simultaneously, through broad tasks, employees and

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Blau, P. Exchange and Power in Social Life. 1964, New York, NY: Wiley

organizations can find the activities which they are good at, thus letting employees bear appropriate working responsibilities to enhance individual performance thus increasing organizational performance. (3) Employee suggestion Employee suggestion refers to the enterprises’ adoption of suggestions from employees. Through this appreciation and adoption, not only employees’ needs for dignity and respect can be satisfied, but also their awareness of ownership can be raised, thus boosting their working activity, initiative and creativity. (4) Work team Work team means that enterprises make up different work teams based on employees who have different specialized skills to produce products, provide service. The work teams exert certain intense impacts on individuals via setting norms related to proper quantity and quality of the work. When managers give awards to group efforts or groups have decision-making power and control power or groups are seriously treated by organizations, the influence from groups are more likely to generate positive outcomes. Simultaneously, work teams can eliminate obstacles among departments, functions, subjects and majors, thus increase working efficiency. 2. Procedural justice Procedural justice reflects not only on the existing process, but also on how the process is executed. Procedural justice is more likely to influence on employees’ organizational commitment and trust to superiors and flow intentions. In high performance work system, procedural justice contains measures from 4 aspects: (1) Attitude investigation Attitude investigation refers to the annual survey towards employees’ working attitude and working satisfaction. To improve employee’s working satisfaction, enterprises must first know how satisfied the employee feels about the company. In addition, regular (or non-regular ) investigation into employees’ working satisfaction actually make employees feel that they are concerned by companies and as a result the satisfaction increases. Simultaneously, through the investigation into the employees’ attitude, enterprises can understand the employees’ real attitude and thoughts, in order to come up with constructive method to improve employees’ attitude. (2) Complaints mechanism Complaints mechanism refers to the formal complaint procedure which enterprises provide for employees. Complaints mechanism offers employees a mechanism which exerts its impact on the existing systems of enterprises and decision-making. Greenberg and Folger (1983) pointed out that individuals have the chance to exert their influence on decision-making and to “speak out” during the decision-making process make them tend to believe the decision is fair. Complaint mechanism is a cross-department task , including accepting complaints, analyzing and managing the complaints under different departments, making feedback to complaining employees. 3. Key points of management In high performance work system, key points of management includes following measures. (1) Performance-pay 4

Performance-pay means that enterprises pay salary to employees strictly according to the performance. It makes the employees realize that it is the performance determines the rewards, not the seniority, encouraging employees to improve the performance. Unfair distribution may lead to negative impact, influencing the inner-motivation of employees and as a result and undermine the overall performance of the enterprise and employees. (2) Welfare spending Welfare spending refers to benefits which enterprises provide to employees, in order to attract, encourage and retain those excellent ones. Employees’ satisfaction of their benefits may increase their job satisfaction, raise their sense of belonging and strengthen their trust of managers and lower their quit intention. 4. Interpersonal communication Interpersonal communication is a kind of effective immaterial incentive method. Carolyn and Matthes conceived that employees have motivations to communicate at work, these motivations include longing for communicating with superiors or colleagues in order to acquire pleasure, accept friendship, gain relax, obtain performance of higher level and gain the sense of belonging5. Through communication, people’s social need and need for being respected can be satisfied, directly exerting influence on the promotion of motivating employees. Communication also makes people understand each other, close interpersonal relationship and create comfortable work environment. In high performance work system, interpersonal communication includes 2 main measures: (1) Performance feedback Performance feedback means that enterprises give feedbacks of their performance status such as production and finance performance to the employees (2) Emotional communication Emotional communication refers to organizing various events or establishing an effective approach to promote emotional communication among employees. Emotional communication makes employees’ emotional needs be satisfied and makes trust and understanding among members (or between members and organizations) be built.

Relations between incentive system and employee control — — From the perspective of social exchange theory Considering from a positive perspective, this article studies employee behavior from two dimensions: employee in-role behavior6 (refers to a part of an employee’s work, this part is explicitly expected, assessed and awarded by the organization. These behaviors directly execute 5

Blau Gary, Merriman Kimberly, Donna S Tatum, and Sally V Rudmann, Antecedents and consequences of basic versus career enrichment benefit satisfaction [J]. Journal of Organizational Behavior, 2001,22 (6):669-688 6 Williams, L.J., Anderson, S.E. Job Satisfaction and Organizational Commitment as Predictiors of Organizational Citizenship and In-Role Behaviors. Journal of Management,1991,17(3):601-617 5

employees’ daily task and duties) and organizational citizenship behavior7 (refers to behaviors which are not explicitly and directly stipulated by reward system. These behaviors are employees’ self-conscious individual behaviors. We can regard these two kinds of behaviors as responsibility and ownership towards the work. 1. The effect of perceived organizational support Based on the social exchange theory, social exchange in the workplace can be divided into employee-organization relationship and employee-supervisor relationship. The term perceived organizational support is under the category of employee-organization. Perceived organizational support refers to the employees’ general view on the organization’s attention on employees’ contribution and degree of happiness. Thus, if employees think that the rewards from organization are not forced to adopt but voluntarily implemented by organizations, the organization decisions will make contribution to perceived organization support. One of the reasons that high performance work system has incentive effect on employees is that employee gain benefit from social exchange with organization. Furthermore, organizations can exert positive impact on perceived organization support through human resource management of investing in employees, such as training, promotion and increasing salary. Perceived organization support is influenced by three factors: decision-making involvement, fair treatment and opportunities, which are main content of the incentive system in high performance work system. Employees who gain organizational support are more likely to think that they have the responsibility to care about the development of organization. In other words, when employees’ dignity, recognition and sense of belonging be satisfied, they are inclined to show behaviors benefit to organizations as feedbacks. For example, when they feel support from organization, they will consciously execute their duties, help their colleagues and come up with creative suggestions, and these are out-role behavior. We can see these behaviors as a responsibility and ownership towards their work and team. In addition, perceived organizational support can also make employees to complete their in-role behavior and lower their quit intention. In short, perceived organizational support helps to improve employee’s organizational commitment, stimulate employee’s to show more in-role behavior, more organizational citizenship behavior and reduce absence behavior. 2. Adjustment function of procedural justice As a main part of incentive system in high performance work system, procedural justice exerts its adjustment function on employee behavior. Procedural justice follows the principles of conformity, avoiding bias, revisability, representativeness, morality and ethics. When the procedural justice is maintained, employees may think that the decision of organization is fair, leading to employees’ trust, positive evaluation and approval of their organization and organization agent. When the principles of procedural 7

Bateman, T.S., Organ, D.W. Job Satisfaction and the Good Soldier: The Relationship between Afect and

Employee Citizenship. Academy of Management Journal, 1983,26(4):587-595 6

justice are violated, the unfair decision may lead to employees’ negative attitude and evaluation towards organization or resource distributor. In an organization, procedural justice may influence employees’ interpretation towards human resource management practice, resulting in different feelings towards organizations among employees. Specifically, employees who have higher sense of procedural justice are able to share information, participate in decision-making, provide suggestions and gain promotion. They think that they gain positive evaluation and recognition from the organization and leaders, thus increasing trust and emotional dependence towards organization. Under such situation, employees tend to believe that high performance work system implemented by organization aims at maintaining and securing employees’ interests. Even if there is deviation during the process of high performance human resource management practice, employee still believe that organization has corresponding mechanism of procedural justice to guarantee their self-interests. In this condition, the social exchange between employees and organization is based on social emotional exchange of higher level and it is far beyond simple economic exchange. Therefore, effective implementation of high performance work system will increase employees’ perceived organizational support. With the combined effect of perceived organizational support influenced by the incentive system of high performance work system and procedural justice, employees tend to show more responsibility and ownership towards their work. Besides, the incentive system itself makes employees take active part in their job related decision, stimulate to promote employee’s working ability to handle the workload trough training and motivates employee to raise productivity, increase the efficiency of employee control.

Limitations and weaknesses The article stresses on the positive impact of the high performance work system on employee control and does not discuss the negative impact. Though most articles view that high performance work system is beneficial for organizations, they have not considered the dark side of it. High performance work system aims at creating a competitive advantage for organizations, do so at the expense of individual employees, leading to role overload, burnout, and heightened pressure for individuals. From this point of view, HPWS may have some negative consequences for employees. In addition, too many studies focus only on firm performance outcomes but largely ignore the potential negative effects on individual employee outcomes. Though employees treasure the incentives offered by the high performance work system, it is the company that ultimately benefits from the employees’ performance. Similarly, the control and performance requirements stemming from high performance work system can be taken only before the rise of employee discontent and conflict. Thus, the negative effect of the high performance work system still needs to be studied.

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Conclusion The article explores the relationship between high performance work system and the employee control. It analyses the incentive system of high performance work system and points out the reason of employee’s participation in the social exchange –the rewards from the incentive system. The article also explores the relationship between the incentive system and the perceived organizational support, a sub-concept of social exchange theory. As the influential factors of perceived organizational support, the incentive system exerts its impact on employees’ working ability, working attitude and working motivation. It also affects employees’ involvement in decision-making and makes them raise their awareness of ownership in their working team. Particularly, the article elaborates one of the main content, the procedural justice, to demonstrate its mediator function between high performance work system and employee behavior. The result is that high performance work system improves employee control. What is worth mentioning is that the article also notes the limitations and weakness of the study and call for further study in the dark side of high performance work system.

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References Blau, G., Merriman, K., Donna S.T. & Sally, V.R. 2001. Antecedents and consequences of basic versus career enrichment benefit satisfaction. Journal of Organizational Behavior, 22:669-688 Boxall, P & Macky, K. 2007. High performance work systems and organizational performance: Bridging theory and practice. Asia Pacific Journal of Human Resources, 45: 261-269. Harley, B, Sargent, L & Allen, B. 2010. Employee responses to “high performance work system” practices: an empirical test of the disciplined worker thesis. Work, Employment and Society, 24: 740-760 Harley, B. 2002. Employee responses to high performance work system practices: an analysis of the Awirs95 data, Journal of Industrial Relations, 44: 1-16 Huselid,M., Jackson,S.E.,& Schuler,R.S. 1997. Technialand strategic human resource management effectiveness as determinants of firm performance. Academy of Management Journal, 40:171-188 Jensen, J.M, Patel, P.C & Messersmith, J.G. 2011.Exploring employee reactions to high performance work systems: Is there a potential “dark side”. 1-6. Jensen, J.M, Patel, P.C & Messersmith, J.G. 2011. High-performance work systems and job control: consequences for anxiety, role overload, and turnover intentions. Journal of Management, 39: 1699-1718. Kaarsemaker, E.C.A & Poutsma, E. 2006. The fit of employee ownership with other human resource management practices: theoretical and empirical suggestions regarding the existence of an ownership high-performance work system. Economic and Industrial Democracy, 27: 669-685. Kauhanen, A. 2009. The incidence of high performance work systems: evidence from a nationally representative employee survey. Economic and Industrial Democracy, 30: 454-480 MacDuffie, J.P. 1995. Human resource bundles and manufacturing performance: organizational logic and flexible production systems in the world auto industry. Industrial and Labor Relations Review, 48:197-221 Shin, D. & Konrad, A.M. 2014. Causality between high-performance work systems and organizational performance. Journal of Management, XX: 1-19. Spector, P.E. 2002. Employee control and occupational stress. Current Direction of Psychological Science, 11:1-4. Wei, L.Q & Lau, C.M. 2010. High performance work systems and performance: the role of adaptive capability. Human relations, 63: 1487-1511 Williams, L.J. & Anderson, S.E. 1991. Job Satisfaction and Organizational Commitment as Predictiors of Organizational Citizenship and In-Role Behaviors. Journal of Management, 17:601-617 Wu, P.C & Chaturvedi, S. 2009. The role of procedural justice and power distance in relationship between high performance work systems and employee attitudes: a multilevel perspective. Journal of Management, 35: 1-16

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