by: Sesil, James
Source: Center for HR Strategy, Rutgers University
There is increasing recognition that the way in which the employment relationship is structured has an impact on the success of an enterprise. Recent research has shown there to be a positive impact of High Performance Work Systems, or High Commitment Work Practices on firm performance (Huselid and Becker, 1994; Ichniowski et al., 1996). These influences often include such practices as a group compensation and extensive employee involvement programmes. The new economics of personnel literature would predict that these practices may have an especially pronounced effect in firms which have highly skilled workers, such as high technology firms. This is because in such enterprises, tasks are more complicated, and the skill levels necessary are greater which may translate into the workforce having more 'scope' to influence output or performance.
Within the economic literature there is substantial research which focuses on the effects of financial participation on organisational outcomes. There are numerous studies examining the productivity effects of employee ownership programmes, profit-sharing, and incentive schemes (Kruse, 1993; Weitzman, 1995). There is also a substantial amount of psychological literature concerned with the productivity and motivational effects of various forms of employee involvement programmes (Wagner, 1994). Rarely, however, have the combined effects of financial and decision-making participation been researched. This is a serious omission in both the theoretical and empirical literature, because there is speculation that the combined effects will be particularly powerful (Blinder, 1990; Cotton, 1993; Weitzman, 1995).
Using data from the Corporate Performance Project Database, which contains detailed establishment based data on employee involvement and the existence of group incentive schemes, the impact of these practices on establishment performance is evaluated. The data-set contains detailed information on 118 manufacturing establishments, all located in the United Kingdom.
Publication Date: 1999-01-01