Employees' Responses To High Performance Work Systems: Assessing HPWS Effectiveness
Employees' Responses To High Performance Work Systems: Assessing HPWS Effectiveness
Employees' Responses To High Performance Work Systems: Assessing HPWS Effectiveness
The purpose of this paper is to identify the effects that high performance work systems (HPWS) have on employees, in an attempt to ascertain the effectiveness of HPWS. The specifics covered in this paper include organisational commitment, the resulting effect HPWS had on work-family balance for employees, relations with management, job satisfaction, and the resulting stress caused by HPWS. The findings identified that HPWS do not, in practice, necessarily engender continuance of commitment to an organisation. The reasoning behind this comes through HPWS increasing employee discretion which in turn increases effort. This effort creates an increase in work pressure and strain which spills over into the home domain. As employment continues HPWS have a smaller impact on improving job satisfaction with it diminishing to levels prior to HPWS introduction. With lowered job satisfaction and increased work pressure, relations with management becoming strained. This identifies a possible path for employees to exit an organisation as a result of HPWS. It was therefore identified that HPWS in practice struggle to achieve their most basic premise of increasing performance.
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stakeholders or partners in the enterprise (Guest, 1999). Thus, the need for valid and accurate assessments of employee reactions to HRM has never been greater. Employee focused studies are a welcomed occurrence, due to this apparent lack of investigation into the effect HRM practice has on employees (Grant & Shields, 2002). Recent studies in employee centred literature have focused primarily on bundles of HRM (and non-HRM) employment practices (Grant & Shields, 2002). The study of these bundles indeed provides good insight into the general effect HRM practices have on employees; however the effects of individual practices on their own have not been investigated. Therefore, the purpose of this study is to do just that, by focusing primarily on the reactions employees have towards high performance work systems. This paper will critically analyze the research conducted on the reactions employees have towards high performance management practices, in an attempt to ascertain whether or not HPWS are indeed useful. Prior to delving into the literature, it is important for the purposes of this paper to determine how to best characterise the practices under discussion and to also highlight what these practices constitute. There are many labels given to this area of HRM. The predominant labels include high performance management (White, Hill, McGovern, Mills, & Smeaton, 2003), high involvement management (Lawler, 1986) and high commitment management (Wood & de Menezes, 1998). High involvement is used by some to emphasise the importance of enhanced opportunities for employees to make decisions and exercise discretion. Others, as highlighted, prefer to use the term high commitment to highlight the role of effective management in enhancing employee commitment and thereby reducing the need for managerial control. Nonetheless, there remains considerable overlap between the practices associated with each approach. For the purposes of this study, and given the nature of its aim to collate themes that arise from employee reactions, the term HPWS (high performance work systems) will be used on the basis that it is sufficiently broad enough to encompass the range of practices emphasised by different approaches (Ramsay, Scholaries, & Harley, 2000). Organisational Performance High performance work systems claim to increase organisational performance. It is crucial therefore to analyse whether or not these systems actually achieve the simple purpose they were devised to fulfil. There is a substantial and growing body of research which claims to show that enormous economic returns can be obtained through the implementation of HPWS (Pfeffer & Veiga, 1999). There are many indicators other than pure financial figures that indicate an increase in organisational performance (Huselid, 1995). One such indicator is the actual behaviour of employees, through the way they affect turnover and labour productivity (Huselid, 1995). Eliciting superior employee performance, which in turn increases organisational performance, comes from HPWS in the form of developing individuals to their full potential and motivating these individuals to apply their skills and abilities to their work-related activities (Way, 2002). This section will not delve into the issue of workforce turnover but will focus on the contentious issue of productivity. Way (2002) purports that HPWS result in an increase in labour productivity in small US firms. Further evidence comes from Delaney and Huselid (1996, p. 965), whereby it was concluded that, the widely asserted assumption that people are the pre-eminent organizational resource and the key to achieving outstanding performance was indeed a credible observation. Thus 26
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the simple premise that HPWS improve organisational performance seems to be true. These brief results alone do not fully explain the degree to which HPWS create increased performance. The following sections will help to further answer this. The identification of HPWS adding value to an organisation through increasing performance is meaningless unless one has a grasp of exactly what the literature views as HPWS. According to Pfeffer (1996) high performance work systems embrace employment security and high wages as well as communication and involvement schemes. Furthermore, we would see HPWS incorporating some sort of combination of schemes to promote employee discretion and autonomy such as team work, quality circles or problem solving groups, systems of communication that allow for upward communication of employee suggestions as well as downward communication from management, and serious attention to developing employee skills (Edwards & Wright, 2001, p. 570). Proponents of the HPWS approach stress that its application will improve organisational performance (Ramsay et al., 2000; Harley, 2002; White et al., 2003). It was identified by Harley (2002), that there is consensus amongst researchers who have sought to demonstrate a link between HRM systems and organisational performance that the performance outcomes arise chiefly because the HRM practices improve employee orientations to work, which in turn makes them more productive. The causal path assumed by most proponents of HPWS is as follows (Edwards & Wright, 2001, p. 570). Systems are established; they influence workplace practice; employee attitudes change, with increased satisfaction or commitment; there is a consequent effect on behaviour; and this in turn feeds through to the performance of the work unit and eventually the company The assumption has been made by HPWS theoretical models that any performance gains are necessarily attributable to a positive impact on employees, chiefly through increased autonomy, satisfaction and commitment (Harley, 2002). Harley (2002, p. 421) states that two alternatives have been overlooked: (i) improved performance may be driven by factors other than HRM practice; and (ii) improved organisational performance may arise via negative outcomes for workers. Therefore, the following analysis will endeavour to identify whether employees reactions do indeed elicit increased autonomy, satisfaction and commitment. Organizational Performance and Negative Outcomes for Workers Commitment As stated above, proponents believe that HPWS have a positive effect on employee commitment which in turn leads to increased performance. Therefore, this part of the paper will attempt to identify what the effect truly is, whether it is positive or negative. The definition of commitment adopted here is: the relative strength of an individuals identification with and involvement in a particular organisation, which is characterised by three related factors, strong belief in and acceptance of the organisations goals, a willingness to exert considerable effort on behalf of the organisation, and a strong desire to maintain membership of the organisation (Mowday, Steers, & Porter, 1979, p. 226). 27
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Prior work on turnover has examined the determinants of both individual employees departures and aggregate organizational turnover (Huselid, 1995). Previous research concluded that perceptions of job security, the presence of a union, job satisfaction, organisational tenure, demographic variables such as age, gender, education, and number of dependents, organisational commitment, whether a job meets an individuals expectations, and the expressed intention to search for another job were all predictive of employees decision to leave (Arnold & Feldman 1982; Cotton & Tuttle, 1986). High performance work systems aim at reducing turnover, absenteeism and costs through a reduction in the need for control and monitoring (Ramsay et al., 2000). Furthermore, so-called HPWS create high trust, high involvement, high intrinsic satisfaction, high skill and control and as a result, high commitment (Scholarios & Ramsay, 1999; Harley, 1999). With these objectives as they may be termed, it is important to analyse the actual affect of HPWS on organisational commitment. Findings that support these objectives as stated above, comes from Ramsay et al. (2000) whereby there was a positive correlation between HPWS and employee commitment. It was identified that the resulting regression equations performed on employee attitudes showed a score which had a positive and statistically significant effect. However, contradictory evidence came out of the same study, whereby there was one group of system practices (identified two HPWS system practices) which showed a negative statistically significant relationship with commitment (SWP1), and the other no effect (SWP2) (Ramsay et al., 2000). Explaining these results begins by looking at what made up these two systems. System one included such things as EEO policy, employee union representation, and family-friendly policies amongst other things. The second system included grievance procedures, formal teams, appraisals and formal training (Ramsay et al., 2000). It is this authors view that SWP1 could be labelled a politically correct system. Attributing a label to SWP2 is much more difficult as the variables contained within it seemed unrelated. A possible explanation of the results identified for SWP1 can be found in the affirmative action literature. Affirmative action is an important and generally controversial policy, which is used to combat differences between groups in earnings and employment (Coate & Loury, 1993). Affirmative action programmes identify unfair or uneven practices and prescribe rules that favour the disadvantaged group (Schotter & Weigelt, 1992). The relevance of this literature is that SWP1 is made up of affirmative action policies such as EEO, and family friendly policies. Furthermore the effects that affirmative action could have on employees are identified by Kuklinski et al. (1997). Kuklinski et al. (1997) identified that in the minority groups that receive affirmative action the result will be an increase in performance and commitment when the disadvantage was severe. Furthermore, it was identified that those not in the minority group expressed considerable dislike for affirmative action and would often attempt to resist it. In the authors view the dislike and resistance shown by the non minorities could be a possible answer as to why SWP1 resulted in a negative effect on commitment. When one is outside the scope of the affirmative actions range and when the disadvantage for the minority group was minor, it was identified that there would be a drop in overall performance and satisfaction in both groups. Therefore, this drop in satisfaction could result in a decline in employee commitment. With these results in mind, there is still the case of the statistically significant regression equations of employee attitudes, which showed that HPWS 28
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had a positive effect on commitment. This result simply shows that we can be reasonably certain that the results are not caused by sampling error. Furthermore in the authors view, although the result shows a real difference, it is so small that it is not applicable in reality. Therefore, it can be concluded from Ramsay et al. (2000), that high performance work systems may have a marginally positive effect on employees attitudes to commitment (which can be debated) but an overall negative effect on employees actual commitment. Further evidence of the effect of HPWS on employee commitment comes from Arthur (1994). These results were contradictory to Ramsay et al. (2000), in that the adoption of HPWS resulted in a dramatically lower turnover rate compared to control systems, and increased performance (Arthur, 1994). It was identified however, that the results for the regression analysis of the variables used against the commitment system were not significant. The difficulties posed here then are that the Human Resource System variable adopted in this study was one of the variables found to have an insignificant relationship and hence it must be interpreted with some caution. Harley (2002) identified that HPWS were negatively associated with employee continuance commitment. The workplace practice of high involvement creating commitment was statistically insignificant. Thus, from the literature discussed above, it can be concluded that the myth of thinking HPWS result in an increase in employee commitment is just that, a myth. The results from Ramsay et al. (2000) showed that actual commitment was negatively affected by HPWS. Furthermore Arthur (1994) looked at performance gains from enhanced commitment and any resulting turnover. These results identified an apparent statistically significant relationship between commitment and performance; however one performance variable returned an overall insignificant result. The issue that arises here is that the Human Resource System Variable in this model, which shows the significant relationship between commitment and performance must be interpreted with some caution. Furthermore Harley (2002) identified that high involvement practices have a negative effect on continuance commitment. Therefore from the analysed results above, it has been identified that although in theory HPWS should elicit commitment, it has been identified that in practice this is not necessarily the case. Although there were some results showing a positive effect, these are highly suspect as stated by the author. Having identified evidence that HPWS do not necessarily elicit commitment, a discussion on why this occurs is needed. This discussion will focus on team work in an attempt to elicit a possible reason. The purpose of analysing teams is that they increase autonomy and allow for greater discretion over work, which are all aspects of HPWS (Edwards & Wright 2001). Kirkman and Shapiro (1997) identify the self-managing work team, (SMWT hereafter). These work teams consist primarily of two dynamic components; (1) the process of self-management & (2) collaborative teamwork (Kirkman & Shapiro, 1997). The concept of self managing teams is closely linked to what is termed concertive control (Baker, 1993). Concertive control is whereby the group or team is given the power to control themselves as opposed to management traditionally holding it (Baker 1993). Employees typically develop a behavioural premise of ideas norms, or rules that enable them to act in functional ways for the organisation (Baker 1993). These new values that individuals within the teams have manifest into a supervisory force that guides the groups every action (Baker 1993). This concertive control formulated by the individuals themselves, fermented hostility towards both managements goals of making the 29
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teams fully self-managed and also the actual goals of the firm (Baker, 1993; Ezzamel & Willmott 1998; Sewell 1998). Therefore this hostility towards management and their goals could be directly linked into continuance commitment to the organisation. Thus with the control that team members exert over themselves in order to reach functionality for the organisation, they are in turn bringing into effect a power that has the ability to dwindle commitment to the organisation. Baker (1993) reported that workers in these self managing teams were reporting that they felt they were under much more control now than they were prior to the introduction of self managing teams. The result of this was reported as an increase in work pressure to conform to the group norms and greater dislike towards management (Baker 1993). Work-Life Balance and Work Intensification Throughout the literature it is purported that HPWS have a positive effect on employees discretion (White et al., 2003; Harley 2002). In particular there are claims that specific practices such as group work and the formation of teams aids in this positive affect. This concept of discretion is the employees ability to make good choices, be careful, and have the freedom of choice (Harley 2002). It was identified in Harley (2002) that HPWS have a positive effect on discretion. The results showed a significant and positive association to team building, which was further supported by White et al. (2003). The purpose of highlighting this association is that the effect of this increased discretion is that it may have repercussions beyond the workplace. White et al.(2003) examines this possibility through a detailed look into the impact that working hours and selected high-performance practices have on negative job to home spillover. In todays media saturated society, it is thought that employees choose demanding jobs to fulfil material ambitions in a consumer society that has developed powerful forms of advertising and credit purchase systems (Schor, 1991). Therefore many workers felt obliged to accept high work demands simply to service their personal debt (Schor, 1991). Schor (1991) investigated the increasing number of hours worked by employees in a typical week. This discussion however did not review the practices the employers were making their employees adhere to, and the pressure to work long hours, just the reasons for why an employee should feel compelled to do so. White et al.(2003, p. 177) proposes that it seems plausible that highcommitment or high-performance management will have a negative impact on the home domain of workers to the extent they are designed to elicit greater discretionary effort in pursuit of the organizations goals. This negative impact is counterproductive for many of the claims that state that HPWS are good for both the employee and the employer. Employers it is argued, gain through improved quality, productivity and financial returns, whilst employees benefit from higher wages and job satisfaction (Huselid, 1995). Evidence shows that this is not the case, with Ramsay et al.(2000) identifying that HPWS are associated with employees experiencing job strain, and lower pay satisfaction, while Godard (2001) identified that Canadian employees reported that high levels of adoption of these practices are linked with low job satisfaction and self-esteem, possibly because the work is considered to be more stressful. Evidence is vast, which challenges the claims that employees gain from HPWS (White et al.2003). With these findings in mind it is therefore important to assess the degree to which this job strain and increased stress spills over into the home domain. White et al.(2003) identified that high performance practices were a major 30
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contributor to this negative job-to-home spillover. Practices such as appraisal systems had a significant effect on increasing this spillover for both men and women. Other theoretically significant results concerned group or team motivational practices. It was identified that there was a tendency for grouporientated practices to further perpetuate this form of work family conflict, particularly in the year 2000 compared to 1992 (White et al. 2003). This finding suggests that group-orientated work is playing an increasingly larger role in work demands today. In 1992 performance related payment systems had a significant impact on reducing this negative job-to-home spillover (White et al., 2003). This impact showed considerable change in time, and by the year 2000 this relationship had become smaller and non-significant. The only high performance practice that showed a reduction in negative spillover was the adoption of flexible working hours albeit for women only (White et al., 2003). These results have shown that work place practices, in particular, high performance practices, increase the negative job-to-home spillover (White et al., 2003). There were considerable gender differences with men being less affected by group work practices compared to women, and men not benefiting at all from the introduction of flexible working hours (White et al.2003). Furthermore it was identified that the largest influence on negative job-to-home spillover came from actual hours worked. White et al. (2003) stressed that as the hours worked increased, so too did the pressure they felt, which resulted in an increase in negative spillover. The concept of work intensification includes not only the longer hours that an employee works, but the pressure created from having a more highly skilled workforce (Green 2001). When one looks at work intensification primarily from a perspective of increased hours, it is interesting to note that people work far fewer hours than those immediately after WWII (Green 2001). Furthermore in recent years the average hours worked have changed very little with only a slight increase (Green 2001). Thus the question must be asked, Where is this work intensification coming from? Metcalf (1994 cited in Edwards et al.2001) identifies that workers in the UK report work effort is increasing, and that there was a fear-factor associated with job loss in the 1980s. Therefore with the increase in work intensification and no apparent increase in hours worked, it could be posited that indeed HPWS induces increased discretion which in turn elicits an increase in effort. Furthermore this increase in work effort will perpetuate the feelings of pressure and strain at work. The additional effect of self managing work teams as noted by Baker (1993) creating constant pressure furthers perpetuates this outcome. Job Satisfaction and Relations with Management Harley (2002) purports that job satisfaction was positively associated with the HPWS practice of quality circles. It is important to clarify just what quality circles are, in order to further discuss their effect on job satisfaction. Quality Circles are generally defined as small groups of volunteers from the same work area who meet regularly to identify, analyze, and solve quality and related problems in their area of responsibility (Griffin, 1988). Further supporting evidence showing an increase in job satisfaction as a result of quality circles comes from (Griffin 1988), whereby it was identified that quality circles had a moderately positive increase in job satisfaction over a period of time. It is important to note however that this increase was not stable over time and eventually decreased back to its original level. This suggests that quality circles do have a positive effect on job satisfaction; however this effect is only short term in nature. 31
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The effect that HPWS had on relations with management was both small and very hard to explain. It was identified that employee attitudes to management were negatively associated with employment security (Harley, 2002). This suggests that the greater the proportion of employees employed on a permanent full-time basis, the more negative the employee perception of management will be. These results are difficult to explain but they contrast with the traditional view that offering employment security will lead to more positive orientations for employees (Albrecht & Travaglione, 2003; Jones & George, 1998 cited in Ferris & Travaglione, 2003).
Discussion
The findings identified in this paper show that HPWS sufficiently fulfil their basic premise of increasing performance (Delaney & Huselid, 1996; Way 2002). However it is important to discuss the fact that Huselid (1995), a reputable researcher in this area, stated that HPWS increase performance through a number of avenues, with one of these being employee behaviour. This employee behaviour affects turnover and labour productivity within the organisations (Huselid, 1995) thus eliciting employee commitment, which is in direct contrast to turnover. Findings in this paper suggest otherwise (Ramsay et al., 2000; Harley, 2002; Arthur, 1994). It was however identified that HPWS do not engender commitment to an organisation as was once thought. Furthermore, the scant results that supported Huselids findings were to be interpreted with some caution, due to the relevant variable being insignificant. Explaining a possible causal relationship was done through an analysis of the effect self-managing teams had on organisational commitment. It was identified that these teams generate their own rules and norms which in turn creates an immense power over its members to conform to them. The result of this being an increase in work pressure and strain, which inevitably causes turnover. Further findings identified that HPWS did increase discretion of employees (Harley, 2002; White et al., 2003). It was argued however, that this increase in employee discretion played a significant part in creating the negative job-tohome spillover. With discretion being the ability of employees to make good decisions, be careful and have freedom of choice this means that employees are given considerably more responsibility which in turn requires greater effort and in particular longer working hours. However, it was identified that work hours had not increased, in fact since shortly after the end of WWII they had actually been on the decline. Furthermore, it was identified that working hours had only slightly increased and could not be accountable for the increase in work intensification. It was identified that a possible origin of this work intensification came from the increase in work effort which was transcribed through HPWS creating an increase in employee discretion. The concept of job satisfaction in relation to HPWS showed a positive relationship. Evidence from Griffin (1988) and Harley (2002) showed a statistically significant relationship between quality circles and job satisfaction. However the continuance of job satisfaction was relatively low. Griffin (1988) identified that ongoing job satisfaction was unlikely, due to the fact that employee satisfaction followed a bell curve almost, whereby their satisfaction peaked and then returned to its origin level. The results from job satisfaction may offer a possible answer for the findings relating to employee relations with management. It was identified that employee attitudes to management were negatively associated with employment security (Harley, 2002). This simply meant that the longer an employee was 32
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employed the more likely they were going to generate feelings of dislike towards management. Therefore, the findings regarding job satisfaction and the resulting discussion add validity to these findings. Prior to drawing conclusions on this paper, it is important to note that this field of research, that being employee centred research regarding the effect of HPWS is relatively new. The important result of this is that current researchers in this field have been either adopting or adapting surveys or their data for the purposes of analysing this effect. Through not having an accurate measurement tool specifically tailored to this specific issue, this generates thoughts of its generalisability. Furthermore when one is interpreting survey data, it is obviously confined to that individuals perception of it. In conclusion, this paper has identified that HPWS may result in a marginal increase in performance. The effectiveness of HPWS is diminished through the lack of continuance commitment which can be directly related to the increased discretion which increases negative job-to-home spillover. Thus as Edwards and Wright (2001) proposed a causal path of HPWS, this author to would like to propose another one on the effectiveness of HPWS. HPWS increase individual employees discretion. This discretion results in an increase in effort which in turn creates increased work pressure and strain that culminates in negative job-to-home spillover. As employment continues, good relations with management diminish and as a result the organisation struggles with continuance commitment. The result is turnover, which is widely viewed as being detrimental to organisational performance.
References
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Scholarios, D., Ramsay, H., & Harley, B. (1999). High commitment management practices and employee outcomes: Evidence from Britain and Australia. Working Paper in HRM, University of Melbourne Schotter, A., & Weigelt, K. (1992). Asymmetric tournaments, equal opportunity laws, and affirmative action: Some experimental results. The Quarterly Journal of Economics, 107(2), 511-539 Sewell, G. (1998). The discipline of teams: The control of team-based industrial work through electronic and peer surveillance. Administrative Science Quarterly, 43, 397-428 Way, A. S. (2002). High performance work systems and intermediate indicators of firm performance within the US small business sector. Journal of Management, 28(6), 765-85 White, M., Hill, S., McGovern, P., Mills, C., & Smeaton, D. (2003) Highperformance management practices, working hours and work-life balance. British Journal of Industrial Relations, 41(2), 175-195 Wood, S. J., & deMenezes, L. (1998) High commitment management in the UK: Evidence from the Workplace Industrial Relations Survey, and Employers Manpower and Skill Practices Survey. Human Relations, 51(4), 485-515
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