High Perf HR

High Commitment HRM and
Performance
CHAPTER
INTRODUCTION
There have been a signicant number of studies over the last decade investigating the links
between HRM and organisational performance. These have focused on the extent to which if
at all high commitment or best practice HRM may lead to improvements in worker or
organisational performance. This was stimulated initially by the work of a number of US
academics but it has been developed more recently by people in Britain as well. Basically, the
idea is that a particular bundle of HR practices has the potential to contribute improved
employee attitudes and behaviours, lower levels of absenteeism and labour turnover, and
higher levels of productivity, quality and customer service. This, it is argued, has the ultimate
effect of generating higher levels of protability. Since the HR practices that supposedly
contribute to an improved bottom line performance are generally perceived as good for workers
for example, employment security, training and development, information and consultation,
and higher levels of pay this looks like an attractive scenario for employers and workers alike.
However, not all the studies report such glowing and positive links between best practice
HRM and performance, and there are some doubts about the precise sorts of HR practices
that comprise the high commitment bundle, about their supposed synergy with one another,
about their attractiveness to workers and employers, and about their universal applicability.
Even if an association is found between high commitment HRM and performance, questions
remain about directions of causality and about the processes that underpin and drive these
linkages; recent research sponsored by the CIPD, undertaken by John Purcell and his
colleagues, provides further analysis of the make-up of this so-called black box. This chapter
reviews these debates and presents evidence about the value of best practice HRM to
workers and organisations. We use best practice/high commitment HRM interchangeably.
By the end of this chapter, readers should be able to:

contribute to the implementation of appropriate HR policies that maximise the

contribution of people to organisational objectives
convince other managers of the business benets to be gained from adopting

best practice HRM
benchmark their own organisations HR practices against those of competitors.
In addition, readers should understand and be able to explain:
the meaning of best practice/high commitment HRM, and the ways in which
bundles of HR practice may be combined together
the contribution of HR policies and practices to improvements in

organisational performance
the theoretical, methodological and empirical concerns about claims that best
practice HRM can be applied universally in all organisations.
A free sample chapter from Human Resource Management at Work by Mick Marchington and Adrian Wilkinson. Published by the CIPD. Copyright CIPD 2005
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71
PART 1 HRM, STRATEGY AND PERFORMANCE
DEFINING AND MEASURING HIGH COMMITMENT HRM

In recent years, there has been much interest in the notion of best practice human resource
management (HRM). Sometimes this is referred to as high performance work systems (Berg
1999; Appelbaum et al 2000), high commitment HRM (Walton 1985; Guest 2001a, 2001b) or
high involvement HRM (Wood 1999a). Whatever the terminology, the idea is that a particular
set (or number) of HR practices has the potential to bring about improved organisational
performance for all organisations. Since the 1990s, a number of US publications have
explored the links between HRM and performance (eg Arthur 1994; Pfeffer 1994; Huselid
1995; MacDufe 1995; Delaney and Huselid 1996; Delery and Doty 1996; Huselid and
Becker 1996; Youndt et al 1996; Ichniowski et al 1997; Pfeffer 1998; Appelbaum et al 2000;
Cappelli and Neumark 2001; Batt et al 2002; Bartell 2004). This has been supplemented by
an increasing number of studies in Britain (eg Wood 1995; Wood and Albanese 1995;
Patterson et al 1997; Guest and Conway 1998; Wood and de Menezes 1998; Wood 1999b;
Guest et al 2000a, 2000b, 2003; Purcell et al 2003), several of which have been published by
the CIPD.
Despite this substantial and growing output, it is still difcult to draw generalised conclusions
from these studies for a number of reasons. Some of the principal differences between the
studies are:
the nature and type of HR practices examined

the proxies developed for each of these practices
the measures of performance used
the sectors in which the studies have taken place
the methods of data collection
the respondents from whom information has been sought.
Guest (1997, p263) argued some time ago that there is little additive value in these and
whilst statistically sophisticated, they lack theoretical rigour. Despite a plea for more
theoretical models to underpin empirical research, this has not prevented even more of these
sorts of studies taking place, and there remains concern about the strength of the conclusions
that can be drawn from them. There are also more serious and deep-seated disagreements
about the extent to which high commitment HRM is something all employers might wish or be
able to implement, and to what extent the precise mix of practices varies between countries
and types of employer, as well as whether or not it is equally attractive to workers. These
issues are taken up later in the chapter.
Rather than review all of the studies mentioned above which would be lengthy and
repetitive we have decided instead to focus on the list of high commitment HR practices
outlined by Pfeffer (1998), and adapt these for a UK/European context. For example, our
analysis makes use of a wider denition of employee involvement and information sharing
that incorporates the notion of employee voice (Marchington and Grugulis 2000; Dundon et al
2004). Box 9 outlines this list of HR practices.
72
3 High Commitment HRM and Performance
BOX 9 COMPONENTS OF BEST PRACTICE/HIGH
COMMITMENT HRM
Employment security and internal labour markets

Selective hiring and sophisticated selection
Extensive training, learning and development
Employee involvement, information sharing and worker voice
Self-managed teams/teamworking
High compensation contingent on performance
Reduction of status differentials/harmonisation
Source: Adapted from Pfeffer J. The Human Equation: Building prots by putting people rst. Boston,
Harvard Business School Press. 1998
Employment security and internal labour markets

Pfeffer (1998) regards employment security as fundamentally underpinning the other six HR
practices, principally because it is regarded as unrealistic to ask employees to offer their
ideas, hard work and commitment without some expectation of employment security and
concern for their future careers. The contribution a positive psychological contract makes to
open and trusting employment relationships (Holman et al 2003), and the notion of mutuality
that is seen as a key component in partnership agreements both relate to this. For example,
whilst the partnership agreement at Borg Warner does not contain an explicit statement about
employment security, both managers and shop stewards from the company recognise that
the plant could not have stayed open without employee support (Suff and Williams 2003,
p39).
There are obviously limits to how much employment security can be guaranteed. It does not
mean that employees are necessarily able to stay in the same job for life, nor does it prevent
the dismissal of staff who fail to perform to the required level. Similarly, a major collapse in
the product market that necessitates reductions in the labour force should not be seen as
undermining this principle. The most signicant point about including employment security as
one of the high commitment HR practices is that it asserts that job reductions will be avoided
wherever possible, and that employees should expect to maintain their employment with the
organisation if appropriate through internal transfers. Employment security can be
enhanced by well-devised and forward-looking systems of human resource planning (see
Chapter 6) and an understanding of how organisations may be structured to achieve exibility
(Chapter 2). It is perhaps best summed up by the view that workers should be treated not as
a variable cost but as a critical asset in the long-term viability and success of the
organisation. Indeed, there is also a business case for employment security. As Pfeffer (1998,
p66) notes, laying people off too readily constitutes a cost for rms that have done a good
job selecting, training and developing their workforce . . . layoffs put important strategic assets
on the street for the competition to employ.
The denition and measurement of employment security has varied considerably, to a large
extent depending on whether information is sought about policy or practice. For example,
Wood and Albanese (1995) include three measures in reaching their assessment of
employment security: a policy of no compulsory redundancy; the use of temporaries
primarily to protect the core workforce; and an expectation on the part of senior managers
73
that new employees will stay with the rm until retirement. Delaney and Huselid (1996)
asked managerial respondents about lling vacancies from within and creating opportunities
for internal promotion as a proxy for employment security. Guest et al (2000a) use the
presence or absence of a job security guarantee for non-managerial employees, nding
that this is only reported by a very small number of workplaces 5 per cent in the private
sector, 15 per cent in the public. Guest et al (2003) ask a mix of questions about internal
labour markets and organisational commitment to employment security, as well as enquiring
about whether or not compulsory or voluntary redundancies have occurred in the last three
years. Over half of these organisations acknowledged that compulsory redundancies had
taken place during this period. Box 10 provides information on employment security at
different organisations.
BOX 10
EMPLOYMENT SECURITY PROVISIONS
Inland Revenue
The Inland Revenue is committed to avoiding compulsory redundancies except as a very
last resort, and one which it will do its utmost to avoid.
The Co-operative Bank
to jointly recognise that effective use of the revised organisational change process
(agreed with UNIFI) will require continued commitment to maintain an approach which
keeps the number of redundancies to a minimum and achieves redundancies on a
voluntary basis, as far as possible.
Welsh Water
Partnership gives employment security in these days of rapid change it is impossible to
give a guarantee of job security that is, doing the same job at the same location doing
the same things. But it does mean that permanent staff who want to continue working for
the company can continue to do so providing they understand their obligations to share
responsibility for continual improvements in meeting business objectives and providing
the highest levels of customer service.
BMW Hams Hall
The company and the trade union ofcers . . . both seek to establish a productive and
harmonious relationship between the parties. Job security, prosperity and development
depend upon the company continuing to grow and be successful. Both parties recognise
the objective is to achieve long-term prosperity.
Source: Adapted from various publications by the Involvement and Participation Association
After reading Box 10, to what extent do you think that employment security is an
important aspect of work and does it give an indication to workers that they are being
treated properly by employers?
74
Pfeffer (1998, p183) reckons that compulsory lay-offs and downsizing undermine employment
security, and sees the following as alternatives: (1) proportionately reducing working hours to
spread the pain of reduced employment costs across the entire workforce; (2) reducing
wages to reduce the labour costs; (3) freezing recruitment to prevent overstafng; and (4)
putting production workers into sales to build up demand.
This is some way short of full-blown employment security, and it is clear that employment
security is not expected to reduce corporate prots. The employers nancial exibility is
maintained by increasing employee workloads and by ensuring that salaries are related to
organisational performance in the event of a downturn in demand.
Selective hiring and sophisticated selection

Recruiting and retaining outstanding people and capturing a stock of exceptional human
talent (Boxall 1996, p6667) is seen as an effective way to achieve sustained competitive
advantage. Even though employers have always wanted to recruit the best people
available, this is nowadays more likely to be systematised through the use of sophisticated
selection techniques and taking greater care when hiring. Increasingly, employers are
looking for applicants who possess a range of social, interpersonal and teamworking skills
in addition to technical ability. For example, Wood and de Menezes (1998) asked about
the importance of social and teamworking skills as selection criteria, and Wood and
Albanese (1995) found that two of the major facets sought by employers were trainability
and commitment. Hoques (1999) study of large hotels also identied trainability as a
major selection criterion. Indeed, in a growing number of situations, it would appear that
employers feel that they can provide technical training for people so long as they have the
right social skills, attitudes and commitment (Sturdy et al 2001; Callaghan and Thompson,
2002; Marchington et al 2003b).
The proxies used to measure selective hiring vary widely. They include the following:

the number of applicants per position (Delaney and Huselid 1996) or as many good
applicants as the organisation needs (Guest et al 2003)
the proportion administered an employment test prior to hiring (Huselid 1995; Guest
et al 2003)
the sophistication of (selection) processes, such as the use of psychometric tests
(Patterson et al 1997) and realistic job previews (Hoque 1999; Guest et al 2000b,
2003).
These measures capture quite different components of the selection process and on whether
the focus is on the overall approach taken by employers or the precise techniques they use.
Moreover some of them emphasise inputs rather than outputs in terms of the quality of those
eventually recruited. For example, attracting a large number of applicants for a position may
indicate poor HR procedures due to failures to dene the job and the eld adequately prior to
advertising. As we see in Chapter 6, it is also possible that selective hiring, especially when it
focuses on how well new recruits might t with the prevailing organisational culture, can lead
to under-represented groups being excluded from employment. Moreover, an excessive
cloning of employees could be problematic if the organisation is keen to promote initiative
and diversity, and counterproductive if business needs and markets change. On the other
hand, there may be situations where it is impossible to attract sufcient applicants due to
skills shortages as with some professional jobs in the health and education sectors where
75
the emphasis shifts to generating a pool of potential recruits rather than nding more
sophisticated ways to choose between them.
Recruiting high quality, committed staff is seen as central to best practice HRM, and the use
of psychometric tests, structured interviews and work sampling is likely to increase the validity
of selection decisions. Competencies to be sought at the selection stage include trainability,
exibility, commitment, drive and persistence, and initiative. The key point about best
practice selection is that it should be integrated and systematic, making use of the
techniques which are appropriate for the position and the organisation, and administered by
individuals who have themselves been trained.
Extensive training, learning and development

Having recruited outstanding human talent, employers need to ensure that these people
remain at the forefront of their eld, not only in terms of professional expertise and product
knowledge but also through working in teams or in interpersonal relations. Boxall (1996, p67)
views this as one element in organisational process advantage, the idea that employers aim
to synergise the contribution of talented and exceptional employees. There is little doubt that
there has been a growing recognition of the importance of individual and organisational
learning as a source of sustained competitive advantage as employers introduce more skillsspecic forms of training and experience continuing skills shortages in some areas.
Wright and Gardner (2003, p312) note this is one of the most widely quoted and important
elements of high commitment HRM. The use of the word learning is crucial as it
demonstrates employer willingness to encourage and facilitate employee development rather
than just providing specic training to cover short-term crises. Different types of measure
have been used here: fully edged learning companies (Hoque 1999), employee
development and assessment programmes or task-based and interpersonal skills training
(see Chapter 9). The time and effort devoted to learning opportunities is also important. A
range of proxies have been used here such as the number of days training received by all
workers, the proportion of workers who have been trained, the budget set aside for training,
or the establishment of agreed training targets over a two-year period. The WERS survey
used a simple absence/presence distinction in relation to induction training and formal job
training, nding that well over half of all workplaces engaged in this. Training was provided at
fewer workplaces in the private sector than the public sector. The CIPD survey (Guest et al
2000a, p15) reports, quite surprisingly, that almost one-quarter of respondents claimed to
offer at least one months training per annum to their staff, although 13 per cent admitted that
they provided none at all. West et al (2002) used several measures for assessing training in
their study of NHS hospitals, each of which related to the amount of money spent, whilst
Guest et al (2003) focused instead on the amount of training received by workers.
Of course, there are problems in trying to measure and evaluate the concentration of training
and learning. While it is clearly important to establish how much time and resources
employers invest in formal training, and whether or not this covers the entire workforce, it is
also crucial to identify the type of training which is provided and who has responsibility for
managing this. Quite a number of the studies have looked solely at the nancial or
quantitative aspects in terms of money or time invested in training and ignored the quality
or relevance of training and learning that is provided. It is now widely acknowledged that most
workers are overqualied for the jobs they do (Grugulis 2003), and as such extra training may
add little to organisational performance or worker skills. Even where training opportunities are
provided, there is often no explicit aim within the training of increasing the individuals skill
76
base or broadening their experience (Truss et al 1997, p61). Similarly, questions need to be
asked about whether or not longer term budget safeguards are established so as to protect
training provision (Wood and Albanese 1995) or if training is tied in to increased promotability
within the organisation (Delery and Doty 1996). The quality of training, both in terms of its
focus and its delivery, is clearly more important than a simple count of the amount provided.
These issues are taken up again in Chapters 8 and 9.
How much time has been devoted to training in your organisation or one with which
you are familiar and what sort of training has been available? To what extent has it
been worthwhile?
Employee involvement (EI), information sharing and worker voice

There are a number of reasons why EI is an essential component of the high commitment
paradigm (Marchington and Wilkinson 2005). First, open communications about nancial
performance, strategy and operational matters not only ensures workers are informed about
organisational issues, it also conveys a symbolic and substantive message that they are to be
trusted and treated in an open and positive manner. Second, for teamworking to be
successful workers require information in order to provide a basis from which to offer their
suggestions and contribute to improvements in organisational performance. Third,
participation can provide management with some legitimacy for its actions on the grounds
that ideas have been put forward by workers and/or at least considered by them before
decisions are ultimately made. As we argue throughout this book, even if management has
more power at its disposal than do workers, the employment relationship is not complete and
legally dened in detail but open to interpretation and disagreement over how it is enforced
on a daily basis. Of course there are also arguments that workers have a moral right to
participation and involvement, but these are considered elsewhere in the book, particularly in
Chapters 10 and 11.
Information sharing or EI appears in just about every description of, or prescription for, best
practice or high commitment HRM. EI can include downward communications, upward
problem-solving groups and project teams, all of which are designed to increase the
involvement of individual employees in their workplace. The precise mix of EI techniques
depends upon the circumstances, but the range of measures used and the exible denition
of involvement are potentially confusing. Many of the studies restrict this to downward
communications from management to employees which measure the frequency of information
disclosure (Patterson et al 1997), the regularity of teambrieng or quality circles (Wood and
Albanese 1995) or the extent to which workers are informed or consulted about business
operations or performance (Guest et al 2003). The regularity of attitude surveys also features
strongly in many of the studies (eg Huselid 1995; Hoque 1999; Guest et al 2000a). Some go
further and enquire about the percentage of employees who receive training in group
problem-solving (Arthur 1994) or the level at which a range of decisions is made (Delaney
and Huselid 1996). The WERS survey analysis only included brieng in its estimates if at
least 25 per cent of the time at the meeting was devoted to employee questions and
discussion (Guest et al 2000a, p16), something that happens at about half the workplaces.
Again, the range of proxies used is so wide that it is difcult to compare results across these
studies and arrive at any rm conclusions about the importance of information sharing and EI
to high commitment HRM. The fact that EI is often little more than a cascade of information
77
from management means that any meaningful worker contribution is unlikely. Indeed, one of
the objectives of schemes such as team brieng is to reinforce the supervisor as an
information disseminator who adapts messages to suit specic operational requirements. This
one-way version of information sharing rather than being seen as educative, empowering
and liberating as the terminology might imply could more easily be interpreted instead as
indoctrinating, emasculating and controlling (Marchington and Wilkinson 2005).
Although only a relatively small number of authors (eg Huselid 1995; Roche 1999; Batt et al
2002; Dundon et al 2004) specically include voice as an aspect of high commitment HRM, it
seems essential that workers should have the opportunity to express their grievances openly
and independently, in addition to being able to contribute to management decision-making on
task-related issues. Employee voice may be achieved through trade union representation and
collective bargaining as well as through formally established grievance and disputes
procedures, but in addition it could be through speak-up schemes, which offer employees
protection if their complaints are taken badly by managers (Marchington et al 2001). In their
study of telecommunications, Batt et al (2002, p589) regarded direct participation and union
representation as complementary vehicles for employee voice at work.
Self-managed teams/teamworking
This practice has become more prevalent over the last decade for a variety of reasons, not
least as a way of pooling ideas and improving work processes in response to Japanese
competition. It has been identied by many employers as a fundamental component of
organisational success (Marchington 1999). It is also one of the key attributes that employers
look for in new recruits, something asked for in references, and it even plays a part in courses
organised for school students. Teamwork is typically seen as leading to better decisionmaking and the achievement of more creative solutions (Pfeffer 1998, p76). Evidence
suggests that employees who work in teams generally report higher levels of satisfaction than
their counterparts working under more traditional regimes, although they also report working
hard as well (Wilkinson et al 1997; Edwards and Wright 1998; Geary and Dobbins 2001; Batt
and Doellgast 2003).
The range of measures used by researchers to assess teamworking has been rather
narrower than those used to assess many of the other best practices. Generally, it refers to
the proportion of workers in teams (MacDufe 1995; West et al 2002; Guest et al 2003), the
use of formal teams (Patterson et al 1997; Guest et al 2000a) or the deliberate design of jobs
to make use of workers abilities (Hoque 1999). However, such measures can not tell us
whether or not these teams actually are self-managed or act as autonomous groups, and
much depends upon decisions concerning, inter alia, the choice of team leader, responsibility
for organising work schedules, and control over quality (Frobel and Marchington 2005). A
distinction is also made between off-line teams such as quality circles and on-line teams
where workers are involved in daily decisions about work organisation (Batt 2004). Regarding
the latter, WERS showed that whilst 65 per cent of workplaces claim to have teamworking,
just 5 per cent of these could actually be categorised as autonomous groups where team
members have responsibility for managing their own time and appoint their own leaders
(Cully et al 1999, p43).
In contrast, there is a less optimistic perspective on self-managed teams, which suggests that
they are intrusive and difcult to implement in practice, and that they serve to strengthen
rather than weaken management control. It may also be impossible to introduce any
realistic version of teamworking when workers are unable to enlarge their jobs to embrace
78
higher level skills or where there are legal, technical or safety reasons that prevent workers
from making certain types of decision. Moreover, the prospect of teamworking is limited
where the rotation of a range of low-level jobs means that one boring job is merely swapped
for another boring job on a regular basis. In situations such as these, teamworking may only
serve to make work more stressful and intrusive, and add nothing to the skills or initiative that
workers are able to deploy. While these criticisms of self-managed teams can be seen as
failures of implementation, some analysts see this form of organisation as potentially awed
because it gives the impression of control without devolving any real power or inuence.
Barker (1993, p408), for example, suggests that self-managing teams produce a form of
control more powerful, less apparent, and more difcult to resist than that of the former
bureaucracy because it shifts the locus of control from management to workers what he
terms concertive control. The consequence of this is that peer pressure and rational rules
combine to create a new iron cage whose bars are almost invisible to the workers it
incarcerates (p435). The negative impact of teamworking may be especially problematic for
lower skilled workers (Bacon and Blyton 2003).
What is your experience of working in teams? Do you think that peer pressure is more
likely to generate better performance than supervisory control? Is teamworking
automatically positive in your view?
High compensation contingent on performance

Pfeffer (1998) reckons that there are two elements to this practice higher than average
compensation and performance-related reward although both send a signal to employees
that they deserve to be rewarded for superior contributions. To be effective, this needs to be
at a level in excess of that for comparable workers in other organisations so as to attract and
retain high-quality labour. In addition, according to this scenario, rewards should reect
different levels of worker contribution, perhaps being paid as a regular bonus or through prot
sharing schemes. Despite the extensive criticisms of performance-related pay (see Chapter
12), it is included in most lists of best practice, particularly those conducted in the USA.
Given that research in the UK is much more critical about the value of incentive pay, it might
be better to include the entire reward package in this HR practice so that it is not restricted to
pay alone, and it can then relate to employee contributions to organisational performance
whether this is on an individual, team, departmental or establishment-wide basis.
Huselid (1995) includes two measures for this factor: the proportion of the workforce who
have access to company incentive schemes and the proportion whose performance
appraisals are used to determine their compensation. MacDufe (1995) refers to contingent
compensation. The UK studies also focus on merit or performance pay. Wood and de
Menezes (1998) enquired about merit pay and prot sharing, Guest et al (2000a) included
performance related pay for non-managerial staff, whereas Hoque (1999) asked about merit
pay and appraisal schemes for all staff and West et al (2002) and Guest et al (2003)
focused on appraisal as the key factor. Indeed, in West et als study, appraisal had an
extremely signicant impact on performance, as we see later in the chapter. Not surprisingly,
the proportion of workplaces covered by performance-related reward was rather less
widespread in the public sector than in the private (Guest et al 2000a, p16). However,
equally surprisingly, given the degree of practitioner interest in incentive pay schemes, about
two-thirds of the respondents to the CIPD survey (Guest et al 2000b, p16) said that their
organisations did not make use of individual performance related pay for their non
managerial employees.
79
Reduction of status differences/harmonisation

Symbolic manifestations of egalitarianism seen in the HR practices of some Japanese
companies are meant to convey messages to manual workers and lower grade ofce staff
that they are valuable assets who deserve to be treated in a similar way to their more senior
colleagues. It is also seen as a way to encourage employees to offer ideas within an open
management culture. This can be seen through egalitarian symbols, such as staff uniforms,
shared canteen and car-parking facilities, but it is also underpinned by the harmonisation of
many terms and conditions of employment such as holidays, sick-pay schemes, pensions,
and hours of work (IRS Employment Review 784a 2003). The principal point behind moves to
single status and harmonisation, as we see in Chapter 13, is that it seeks to break down
articial barriers between different groups of staff, thus encouraging and supporting
teamworking and exibility. Extending employee share ownership to the workforce as a whole
is a further way in which status differences can be reduced, typically through schemes
whereby staff are allocated shares according to some predetermined formula. Pfeffer (1998,
p38) argues that employee ownership, effectively implemented, can align the interests of
employees with those of shareholders by making employees shareholders too. Firms with
high shareholder returns also often have some form of employee ownership.
The proxies used for harmonisation and the reduction of status differentials are also wide and
variable. For example, Wood and de Menezes (1998) ask about whether or not any
employees have to clock in to work, and about the existence of employee share schemes
and welfare facilities/fringe benets. Hoques (1999) questions relate very broadly to
harmonisation and single status. Guest et als (2000a, 2000b, 2003) questions vary between
the highly specic (harmonised holiday entitlements for all staff) through to whether or not the
organisation has a formal commitment to achieving single status. Over 80 per cent of the
organisations in the CIPD survey (Guest et al 2000b) claimed to have harmonised holidays
and just under half reckoned to have a formal commitment to single status.
Table 8 shows how widespread these sorts of HR practices are in UK organisations. For
example, a signicant proportion of workplaces surveyed for WERS (Guest et al 2000a) have
grievance procedures in place, make extensive use of appraisals for a large percentage of their
non-managerial staff, and have a standard induction programme for all recruits. These features
are especially marked in the public sector. Around half of all workplaces use performance tests,
provide some degree of formal training, engage in teamworking and administer attitude
surveys. On the other hand, hardly any offer job security guarantees, only a small number have
problem-solving groups for a sizeable proportion of the workforce, and not many of the private
sector rms have a family-friendly policy or an all-employee share ownership scheme. The
CIPD survey by Guest et al (2000b, p37) reports different gures, but the conclusion is much
the same, that is human resource practices are not well embedded in a majority of workplaces.
Moreover, few of these workplaces have put in place a coherent range of practices of the sort
commonly associated with high commitment or high performance HRM (p37).
This is disturbing for the proponents of high commitment HRM because it appears to offer the
prospect of a more pleasant and stimulating working environment than would be experienced
in traditional, Taylorist regimes. For example, the provision of employment security is
attractive, the opportunity to earn above average wages and to be rewarded for performance
may be enticing, and the chance to gain extensive levels of training can be highly desirable.
Most attitude surveys have shown that employees would like to have more information about
their organisation and a chance to contribute to and inuence decisions that affect their
working lives, as well as remove status differences between separate categories of workers.
80
Table 8 The extent of high commitment HRM in the public and private sectors
Human resource practice
% of workplaces with this

practice in place
Public sector
Private sector
Use of performance test for selection
58
44
Preference for internal candidates in selection
16
30
Standard induction programme for new recruits
80
76
40% or more received formal job training in last year
68
37
Employees have a lot of variety in their work
52
41
40% or more work in formally designated teams
54
40
At least 25% of time at meetings devoted to

employee questions
63
49
40% or more take part in problem-solving group
28
16
Attitude survey in last three years
54
40
Formal appraisals for 40% or more of non-managerial

staff
77
87
100
90
Job security guarantee
15
Performance related pay for non-managerial staff
20
38
n/a
25
Formal grievance procedure in place
All employee share ownership scheme
Source: Guest D., Michie J., Sheehan M. and Conway N. Employment Relations, HRM and Business
Performance: An analysis of the 1998 workplace employee relations survey. London, CIPD. 2000a. p16
Selective hiring is less obvious as a source of direct benet to employees, although it might
reduce the likelihood of having to work alongside what might be seen as incapable or
ineffective co-workers. In addition, delaying recruitment or using temporaries might enhance
the employment security of those permanent staff in the event of a downturn although there
is also evidence that temporary staff may be used in order to reduce wages and put pressure
on so-called permanent staff (Rubery et al 2003). Put together especially in comparison
with the bleak house policies described by a number of authors high commitment HRM
seems very attractive. However, as we have also seen, digging beneath the surface implies
that some of these best practices may not be quite as appealing in reality.
Look at Table 8. Do any of these gures come as a surprise to you, either in terms of
how extensive or rare they are? Why/why not? If you work for an organisation, develop
a business case for increasing the number of high commitment practices used at your
workplace.
81
BUNDLES OF HUMAN RESOURCE PRACTICES

It should be clear from the previous section that there are often links between these high
commitment HR practices. For example, workers are more likely to welcome EI and
information sharing if they have employment security and their workplace is relatively statusfree. Equally, they are more likely to show an interest in teamworking if their efforts are
rewarded with performance-related incentives, share ownership, and access to training
opportunities. Similarly, if sufcient care has been taken at the recruitment and selection
stage, new recruits are more likely to adopt exible working practices and welcome
teamworking, as well as be striving for internal promotion in the future. In isolation, or without
the support of a strong organisational culture, each of these practices can easily be
dismissed as nothing more than a short-term fad or fashion. Conversely the more that HR
practices form a coherent and synergistic bundle of related practices, it is argued
organisations are more likely to enjoy success due to the fact that the high commitment
paradigm is more deeply embedded into the culture of the workplace. Benson and Lawler
(2003, p157) note that research at the work unit level conrms the importance of viewing
practices as complementary and that the high commitment model (in general) out-performed
more traditional control-oriented work systems despite the fact that the exact combination of
practices is uncertain and may be industry-specic.
There is certainly theoretical support for the notion that HR practices should operate more
effectively when combined together. For example, it could be argued that extensive training is
essential for self-managed teams to run effectively, or that higher than average rewards are
likely to have a positive impact on numbers of applications for jobs. An employer may feel
more inclined to promise employment security if selective hiring has taken place, selfmanaged teams are extensive throughout the organisation, and rewards are contingent upon
performance. Wood and de Menezes (1998, p485) nd an identiable pattern to the use of
high commitment HR practices and conrm that they are being used in conjunction with each
other. Similarly, despite nding a low take-up of the high commitment model across his
sample of Irish workplaces, Roche (1999, p669) notes that organisations with a relatively
high degree of integration of human resource strategy into business strategy are very much
more likely to adopt commitment-oriented bundles of HRM practices.
Guest (1997, p271) categorises previous attempts to examine internal t across HR practices
into three distinct groups. First, there are criterion-specic studies, such as that by Pfeffer,
which outline a number of best practices and suggest that the closer organisations get to this
list the better their performance is likely to be. The danger with such universalist approaches
is that they ignore potentially signicant differences between organisations, sectors and
countries, and posit a particular model in this case, the US model as the one to be
followed. With this approach, the principal job is to detect the bundle that seems to work and
then get all organisations to apply this without deviation. Second, there are two sets of
criterion-free categories, t as gestalt and t as bundles. In the case of the former, it is
assumed that the synergies are achievable only with the adoption of all these practices, and
that if one is missing the whole effect will be lost. These approaches are termed
multiplicative, and it is assumed that the whole is greater than the sum of its parts. In this
scenario, an organisation that adopted a majority of the practices would be no better off than
one that adopted none of them because the chain tying together the different elements of
HRM would be broken.
By contrast, bundles are additive. Generally speaking the more practices that are in place
the better, so long as some distinctive core exists. In other words, it may be possible to adopt
82
a large number of high commitment HR practices and ignore others, but still gain from the
interactive effects of those that are in place. Questions then arise as to how many practices
are needed to make a difference, from what areas of HRM these are to be drawn and
whether certain practices are fundamental to make the synergies work. As we see in the
section on HRM and performance later in this chapter, much of Guest et als recent work has
differentiated between organisations on the basis of how many HR practices they use. Their
analysis of the WERS data led them to conclude that despite trying a variety of approaches
and combinations, we could not nd any coherent pattern of bundles of practices in the
private or the public sectors. The only combination that made any sense was a
straightforward count of all the practices (Guest et al 2000a, p15). Provided a certain
minimum number of practices are in place, it is likely (though not automatic) that high
commitment HRM will be found in a range of different areas of practice such as selection,
training, EI and harmonisation.
It is assumed that contradictions between best practice in one area and worst practice in
another will undermine the package as a whole. Workers, it is argued, soon notice differences
between employment practices, and are quick to spot inconsistencies between policy
statements and workplace practice. There have certainly been many occasions when a highprole cultural change programme, for example, which majors on learning and development
as a key principle, has been undermined by the announcement of massive redundancies.
Similarly, it has not been unknown for an organisation to introduce a new set of EI policies
without rst consulting employees about its shape. Inconsistencies between different HR
practices are likely to be even more apparent in situations where several employers operate
at the same workplace or clients have a direct or indirect inuence over the work of supplier
organisations, either through short-term secondments of staff or through employers exercising
joint responsibility for the completion of work tasks (Marchington et al 2004c).
Even in the context of the single employeremployee relationship, Wood and de Menezes
(1998, p487) note that most studies indicate a lack of consistency, reporting fragmentation,
a pick and mix approach to managing human resources, ad hocism, pragmatism and short
termism, rather than the deployment of consistent, integrated and long-term packages of
HRM. Truss et al (1997, pp6667) sum this up by stating that their research found little
evidence of any deliberate or realised coherence between HR activities. For instance, one
HR Ofcer commented that the rm could be recruiting someone in one department and
laying-off someone with a similar prole in another. Moreover, they saw no evidence of any
coherence among HR activities in different parts of the organisation, and whilst the
language of the soft HRM model was in evidence so too was that of the hard model
emphasising nancial control. More seriously, while Caldwell (2003) shows from a survey of
about 100 major organisations that signicant progress has been made in the adoption of
HR practices, unfortunately most has been made in implementing those practices that are
regarded as least important, and least progress with those that are most important. His
respondents recognised the value of bundling but found the linkages extremely difcult to
achieve for a number of reasons: it was felt there was no universal or magic formula; the
size, complexity and multidivisional structure of their organisation impeded co-ordination;
devolution to line managers tended to increase fragmentation; and the difculty the HR
function experienced in breaking out of its operational requirement to provide administrative
efciency rather than strategic vision (p203). Perhaps the lack of any sizeable take-up of
these HR practices should not surprise us. As Pfeffer suggests, even smart organisations
often do dumb things, failing to learn from other examples or being driven by criteria which
are ultimately wide of the mark.
83
Does it matter if there are contradictions between different components of the HR

bundle? After all, the employment relationship is characterised by conict and co
operation, so why should these additional tensions cause any problems?
Although the principle of bundling together HR practices may appear sound, what happens if
the achievement of one of these practices contradicts with or undermines (some of) the
others? For example, employers may make employment security conditional on an
agreement that pay rates can be reduced in order to maintain the guarantee through lean
times. Selective hiring on the basis of future potential rather than immediate contribution may
require existing staff to work harder and longer in order to induct new staff. This may be
acceptable at the margins, but if the prot-sharing or performance-related component of
rewards is a signicant proportion of overall income, then it could be problematic to existing
staff as well as to customers who may have to wait longer to be served. Equally, if staff are
routinely expected to work long hours, their own quality of life can be adversely affected and
their own safety and that of others may be affected. Presumably, there is a point at which the
value of employment security is outweighed by the need for a certain minimum salary or
worklife balance.
One of the many advantages of self-managed teams, according to Pfeffer (1998, p77), is that
they can remove a supervisory level from the hierarchy: eliminating layers of management by
instituting self-managing teams saves money. Self-managed teams can also take on tasks
previously done by specialised staff, thus eliminating excess personnel. It is not self-evident
that the personnel who are eliminated are actually found other jobs, so the implementation of
self-managed teams even if it does empower certain groups of workers may result in
others losing their employment security. There are further potential contradictions between
the different practices. For example, teamworking may be undermined by the use of individual
performance-related pay or by the HR practices of other rms in a network that cut across
internal organisational coherence (Scarbrough and Kinnie 2003). Similarly, Cordery (2003)
quotes a number of studies in which teamworking took place against a background of
increased numbers of lay-offs and reduced levels of pay. It is also hard to square the notion
of an organisation without major status differentials with one where senior managers are able
to collect substantial bonuses because their pay is linked with company performance. In other
words, while there is strong support for bundling in one form or another it is also clear
contradictions and tensions may arise between the different HR practices in the bundle.
Indeed, Boxall and Purcell (2003, p57) do not see this as surprising as any notion of
organisational coherence inevitably oversimplies the paradoxical elements involved in
managing people.
HRM AND PERFORMANCE

Analysing the links between high commitment HRM and performance is now a major area of
interest for research and policy. Originally, this stemmed from work in the USA, but there
have now been several studies in the UK, most notably by David Guest and his colleagues.
Before reviewing some of this work in more detail, it is worth reminding readers of some of
the earlier studies that claimed to establish a link between HRM and performance. Huselid
(1995) drew his conclusions from a survey of nearly 1000 US organisations. He divided high
commitment work practices into two broad groupings: employee skills and organisational
structures, and employee motivation. The former included items concerned with the
proportion of workers taking part in attitude surveys, the number of hours training received in
84
the previous year and the proportion of workers required to take an employment test as part
of the selection process. The latter included items such as the proportion of the workforce
with performance appraisals linked to compensation and the number of applicants for those
posts where recruitment took place most frequently. Output measures included labour
turnover, productivity and corporate nancial performance. Huselid (p667) concludes that the
magnitude of the returns for investments in [what he calls] high performance work practices is
substantial. A one per cent standard deviation increase in such practices is associated with a
7.05 per cent decrease in labour turnover and, on a per employee basis, 27,044 US dollars
more in sales and 18,641 US dollars and 3,814 US dollars more in market value and prots
respectively. Appelbaum and her colleagues (2000) also argued that high performance work
systems paid off. Their research was conducted in a number of different industries (steel,
apparel and medical electronic instrument), and in each they were large enough to be
important to the companies in our study but not so large as to strain credulity (p19).
Importantly, they also found (p20) that high performance work practices increased workers
trust, job satisfaction and commitment, and notably no evidence of speed up (work
intensication) and higher levels of stress. A key factor, as we see later when we look at the
work of Purcell et al (2003), is that having the opportunity to participate enhances workers
discretion and effort.
The results from the survey by Patterson et al (1997) published by the Institute of Personnel
and Development (now CIPD), were quoted widely by the media and put forward as evidence
for the importance of HRM as a driver of, and contributor to, improved performance. The
research was based on longitudinal studies of 67 UK manufacturing that were predominantly
single site and single product operations. It has been claimed on the basis of this research
that HRM had a greater impact on productivity and prots than a range of other factors
including strategy, R&D and quality. For example, it was argued that 17 per cent of the
variation in company protability could be explained by HRM practices and job design, as
opposed to just 8 per cent from research and development, 2 per cent from strategy and 1
per cent from both quality and technology. Similar results were indicated for productivity.
Below we examine in more detail four of the studies undertaken in the UK by Guest et al
(2000a, 2000b), West et al (2002), Guest et al (2003) and Purcell et al (2003) and we draw
on some in-depth reviews of the HRMperformance link. Some of the best-known studies are
outlined in Table 9 (see pages 867).
On the basis of these studies some forceful claims have been made about the impact of high
commitment HRM on performance. Two CIPD reports (2001a, 2001b) argued that the
economic and business case for good people management has now been proved. One notes
(2001a, p4) that more than 30 studies carried out in the UK and the US since the early 1990s
leave no room to doubt that there is a correlation between people management and business
performance, that the relationship is positive, and that it is cumulative. Since, it is argued,
senior personnel practitioners now agree that the case for HRM impacting on organisational
performance is not in dispute, the key question is how to make it happen (Caulkin 2001).
From a US perspective, Pfeffer (1998, p306) agrees that best practice HRM has the potential
to have a positive impact on all organisations, irrespective of sector, size or country.
Organisations only need leaders possessing both insight and courage to generate the large
economic returns that are available from high commitment HRM. Many of the studies have
focused on manufacturing but Batt and Doellgast (2003, p306) also suggest that a growing
number of studies show that collaborative forms of work organisation predict better
performance in the service sector.
85
Table 9 Some of the major studies examining links between HRM and performance
86
Empirical studies
Sample
Nature of study
Arthur (1994)
USA: 30 mini-mills in the

steel industry
Cross-sectional study
Huselid (1995)
USA: 968 US-owned rms

with more than 100
employees
MacDufe (1995)
USA: 62 automotive plants
Delery and Doty (1996)
USA: 114 banks
Youndt et al (1996)
USA: 97 manufacturing
plants
Longitudinal study
Patterson et al (1997)
UK: 67 manufacturing rms

employing less than 1000
Longitudinal study
Wood and de Menezes

(1998)
UK: use of data from

WERS (1990) and
Employers Manpower and
Skills Practice Survey
approximately 2000
workplaces with more than
25 employees, all sectors
Guest et al (2000a)
UK: use of data from

WERS (1998)
approximately 2000
workplaces with more than
25 employees, all sectors
Guest et al (2000b)
UK: 835 private sector

companies with more than
50 employees, interviews
with HR professionals and
CEOs
Appelbaum et al (2000)
USA: 40 manufacturing
plants in steel, apparel and
medical electronics and
imaging
West et al (2002)
UK: 61 NHS acute hospital

trusts, interviews and
questionnaires mainly with
HR Directors
Table 9 continued
Empirical studies
Sample
Nature of study
Guest et al (2003)
UK: 610 private sector

companies both from
services and
manufacturing, telephone
interviews with Head of HR.
Longitudinal study
Review articles
Source
Wood (1999a)
International Journal of Management Reviews, Vol. 1,

No. 4
Wright and Gardner (2003)
Holman et al (eds), The New Workplace: A guide to the

human impact of modern working practices. London, Wiley
Godard (2004)
British Journal of Industrial Relations, Vol. 42, No. 2
These sorts of claims have also led to a stronger policy thrust from government. As we saw in
Chapter 1, Accounting for People (2003) notes that one way to increase the potential impact
of workers on performance was to encourage better HCM reporting. Whilst acknowledging
there was no single widely accepted best practice approach, the report nevertheless argued
(p3) that there is a growing consensus that high performance is linked with high quality in
practice in such areas as recruitment, skill development and training, remuneration, job
design and organisational culture. Ultimately, the Task Force decided to recommend a
consultative approach to encourage human capital reporting (and approaches) through the
setting-up of Standards Board which would bring together leading employers, professional
bodies and other relevant stakeholders to develop guidelines and to report back to
government within two years of its formation.
We now turn to look at four of the UK studies in more detail in order to address a number of
key points about this material. First, as will be apparent from Table 9, David Guest and his
colleagues published the results analysing two separate data sets on the links between
HRM/employment relations and performance during 2000. Both these are useful as they
focus on slightly different issues, and the CIPD survey unlike WERS makes some
estimate of whether or not HR practices are effective. Although it varies slightly between the
publications and with the detailed analyses, the broad theoretical framework guiding the
analysis is outlined in Figure 3 (Guest et al 2000b, p5; see page 88). Broadly, this proposes a
path model linking together business and HR strategies on the left-hand side of the diagram
(the input in positivist terms) with performance outcomes on the right-hand side. These
include indicators such as nancial performance, quality and productivity, as well as
employee outcomes in terms of competence, commitment and exibility. The overall
framework is glued together by a number of HR practices covering all the usual areas of
HRM, as well as by HR effectiveness. The HR practices include job security, recruitment and
selection, induction, appraisal, training and development, EI and teamwork, pay and rewards,
harmonisation and equal opportunities. The inclusion of a factor assessing effectiveness is
particularly important because this allows us to evaluate how well the practices are working,
in addition to whether or not they are present. In the CIPD survey, to some extent in
87
HR Effectiveness
Business Strategy
HR Practices
HR Strategy
HR Outcomes
Employee:
Competence
Commitment
Flexibility
Quality of goods
and services
Financial
Performance
Productivity
Figure 3 Model of the link between HRM and performance

Source: Guest D., Michie J., Sheehan M., Conway N. and Metochi M. Effective People Management: Initial ndings
of the Future of Work study. London, CIPD. 2000b. p5
contradiction to the ndings of Patterson et al (1997), it was revealing that whilst 70 per cent
of the chief executives felt that their business strategy relied a lot on people as a source of
competitive advantage, considerably less than half felt that people issues were more
important than nancial or marketing issues (Guest et al 2000b, p14).
A critically important nding of the study by Guest et al (2000a) is that a very small proportion
of organisations actually use more than three quarters of the HR practices outlined. At the
other extreme, an equally small proportion use less than a quarter. In general, those
organisations in the public sector and with trade union involvement utilise more practices than
those in the private sector and non-union rms, and indeed nearly 60 per cent reported using
less than half of the whole list of HR practices. We can see from the data in Table 8 that
certain practices are extremely widespread in the public sector such as a formal grievance
procedure, a written equal opportunities policy, and a standard contract. The private sector
typically shows lower levels of extensiveness, but the same sorts of HR practices emerge as
most widespread apart from the fact that appraisal appears to be used in more organisations.
The least extensive HR practices from the list are job security guarantees, the use of quality
circles and preference being given to internal candidates when lling vacancies. What the
data is unable to tell us, given that it relies on a straight number count, is whether or not
specic HR practices are essential for the HR bundle to work.
Even if organisations employ a wide range of HR practices, this does not mean that they are
applied effectively or that they have any impact on workers or managers. For example, while
it is important to know whether or not an employer makes use of regular appraisals or
provides information about performance targets, this gives us no clue as to whether the
appraisals make any difference or the information is supplied in a meaningful and timely
fashion. This is why measures of effectiveness are so useful. In the CIPD survey (Guest et al
2000b), Managing Directors and HR professionals were asked to assess the effectiveness of
each practice area, and in most cases they were judged to be either slightly or highly
effective. The results are outlined in Table 10. It can be seen that there are relatively small
differences between the respondents, with the HR professionals being slightly more
circumspect about the effectiveness of the practices. The most positive responses were in
relation to employment security, which is strange bearing in mind the fact that over half of the
sample had made compulsory redundancies during the last three years. The HR practices
deemed to be least effective were those related to nancial exibility, job design and
appraisal, and it is notable that the HR professionals felt they were less effective (Guest et al
2000b, pp1819). HR effectiveness both of the practices themselves and of the personnel
department increases the strength of the relationship between HRM and performance,
88
Table 10 The effectiveness of HR practices according to Managing Directors and HR professionals
Assessment of HR practice
Managing Directors
HR professionals
Quite
effective
Highly
effective
Quite
effective
Highly
effective
Recruitment and selection
41
13
41
12
Training and development
40
17
39
17
Appraisal/performance management
34
14
27
11
Job design
31
27
Communication, consultation, EI
43
23
39
12
Financial exibility
24
22
Harmonisation
32
20
34
17
Employment security/labour market

practices
39
23
45
26
Source: Guest D., Michie J., Sheehan M., Conway N. and Metochi M. Effective People Management:
Initial ndings of the Future of Work study. London: CIPD. 2000b. p19
again because of its impact on employee commitment, contribution and exibility (Guest et al
2000b, p31). In short, the more HR practices that are used, and the more effectively they
appear to be used in enhancing organisational performance.
The research by West et al (2002) investigated the links between particular HR practices and
performance in the NHS, based on interviews/questionnaires with HR managers in 61
separate Trusts. They found that three particular HR practices training, teamworking and
appraisal had a particularly strong impact on performance. A number of measures were
used to assess these practices as we have already indicated earlier in the chapter. Measures
of performance included information about mortality rates, waiting times, complaints and
nancial outcomes. This data was gathered by different researchers so as to prevent any
possibility of conscious or subconscious inuence on the conclusions. The analysis reveals a
strong relationship between HRM practices and mortality (2002, p1305), with appraisal
having the strongest inuence of all. These results have been widely quoted because of the
massive potential impact on policy but also because of the nding that better HRM might
lead to lower mortality rates. Drawing on this and other research, West et al (2002, p1309)
suggest that it may be possible to inuence hospital performance signicantly by
implementing sophisticated and extensive training and appraisal systems, and encouraging a
high percentage of employees to work in teams. However, the authors do urge caution in
assuming any direction of causality, and agree that it could be argued there is less pressure
on staff when the hospital is already achieving low mortality rates and so more time can be
devoted to investments in high commitment HRM (West et al 2002, p1308).
Subsequent work by David Guest and his colleagues has provided a further twist to the
debate (Guest et al 2003). We have already described the data (both HR practices and
89
performance measures) on which this research is based earlier in this chapter. The major
conclusion (2003, p307) is that the results are very mixed and on balance predominantly
negative. The tests of association show a positive relationship between the use of more HR
practices and lower labour turnover and higher protability, but show no association between
HR and productivity. The test of whether the presence of more HR practices results in a
change in performance shows no signicant results. Moreover, they conclude (Guest et al
2003, p311) that despite showing some strong evidence there are links between high
commitment HRM and performance, their study fails to provide any convincing indication that
greater application of HRM is likely to result in improved corporate performance. The key
point is that the methods used have a major impact on the results. When subjective
performance measures are used, there is a consistently positive message, whereas the
associations are less strong and consistent if objective measures of performance are
employed. This leads them to suggest, contrary to some of their earlier conclusions, that
reverse causality is actually quite likely; that is, rather than seeing HRM as leading to better
performance, it could be that protable organisations have the scope to introduce more high
commitment HR policies than their less successful counterparts a point to which we return
later in the chapter.
One of the problems with survey research is that, while it may be possible to demonstrate
links between HRM and performance, it is unable to explain in any detail why this might
happen. Research by John Purcell and his colleagues (Hutchinson and Purcell 2003; Purcell
et al 2003) has sought to open up this black box, and we briey review some of the major
ndings here that relate to high commitment HRM and performance; discussion on the role of
line managers is covered more extensively in Chapter 5. The Purcell study was undertaken
over a 30-month period in 10 organisations drawn from different sectors and comprising quite
a wide range of employment contexts; the sample included household names such as Tesco,
PricewaterhouseCoopers, Selfridges, Jaguar, Siemens and the Royal United Hospital at Bath.
Interviews were conducted with HR and line managers, as well as non-managerial staff, in
these organisations, generally on two separate occasions during the research period. The
research also involved close liaison with these organisations.
There are a number of signicant ndings that conrm, overturn or extend previous work
investigating the links between high commitment HRM and performance. First, the
researchers used the AMO model, which argues that in order for people to perform better,
they must:

have the ability and necessary knowledge and skills, including how to work with other
people (A)
be motivated to work and want to do it well (M)
be given the opportunity to deploy their skills both in the job and more broadly
contributing to work group and organisational success (O).
Second, each of the case study organisations was recognised to be operating with a big
idea, a feature or way of working that served to glue together all the different attempts to
make the organisation successful. The big idea was embedded within the organisation
connecting together different activities, it was seen as enduring, and it was collectively
shared. Moreover, one way or another, performance against or progress towards the big idea
was measured and managed in an ongoing basis (p13). Third, line managers were identied
as critically important for the achievement of high performance working as they provide the
principal point of contact with non-managerial staff and they are in a position to strengthen,
90
ignore or even undermine the messages conveyed through the big idea. Finally, measures of
performance were adapted so they were particularly relevant for the organisation concerned;
for example, at Tesco these included data on queue lengths, stock availability, theft and stock
errors as well as nancial data relating to the store (pp5354). The decision to collect this
data at unit level makes considerable sense, and it is a much more meaningful measure of
how workers might be able to contribute to improved performance than some distant measure
of protability over which most workers have little inuence. Indeed, it could be argued that it
also makes sense to vary the measures of high commitment HRM depending on the
workplace because workers are likely to stress different practices depending on their
occupational status, age or gender for example.
Find a copy of one or more these surveys or any others that are available and
analyse the links between high commitment HRM and performance. Prepare a
presentation on the benets that can be gained from investing in high commitment HRM.
RAISING QUESTIONS ABOUT THE HRMPERFORMANCE

LINK
Persuasive as they might appear, and attractive as they might be to HR professionals, studies
that argue high commitment HRM leads to improved levels of performance have not escaped
criticism, including as we have seen some by the authors themselves. Drawing on a
number of sources (eg Holman et al 2003: Wright and Gardner, 2003; Godard, 2004), some
of the major concerns are outlined below.
Questions about the direction of causality and the black box

It will be apparent from the earlier discussion that this is a major issue, and much depends on
the theoretical framework adopted by the researcher. Conceptually, it is equally likely that the
use of a strong bundle of high commitment HR practices could lead to improved performance,
at least at workplace level, as it is that high commitment HRM is made possible and paid for
by high levels of organisational performance. As we saw earlier in the chapter, questions will
remain until there is more longitudinal research and greater efforts have been made to open
up the black box by tracking organisational changes via case studies.
Little consistency in the HR practices included in the bundle

The number of HR practices in each of the lists varies substantially (from as few as six or
seven to twenty or more) as does the inclusion or exclusion of specic techniques. For
example, despite the importance attached to employment security by Pfeffer, this is not
included in several of the lists (eg Delaney and Huselid 1996; Patterson et al 1997; Wood
and de Menezes 1998). Similarly, while some authors include measures of employee voice
other than that achieved through self-managed teams and employee involvement, Pfeffer
does not. Perhaps this does not matter if we are clear as to why certain HR practices should
be included, but that does not seem to be the case. As Wood (2003, p280) argues, it is much
more important to focus on an underlying orientation for integrated management or high
commitment HRM that may be reected in slightly different types of practice rather than
spending time trying to identify a set of practices that might be appropriate across all
workplaces. However, far too often, the lists seem to be developed on the basis of individual
preference, by looking at what other researchers have used or by constructing groupings of
practices on the basis of factor analysis, and then attempting to impose some theoretical
justication for this ex-post facto. Of those that do have a theoretical model to underpin their
91
approach, even then it is not always clear why certain practices are included and others are
not. For example, Huselid (1995, pp645647) uses two groups of practices, entitled
employee skills and organisational structures which includes job design, enhanced
selectivity, formal training, various forms of participation, and prot sharing and employee
motivation which comprises performance appraisal linked to compensation and a focus on
merit in promotion decisions. It seems strange that participation and prot sharing should be
in the rst grouping rather than the second given the supposed importance of these as
techniques that enhance employee motivation. Patterson et al (1997) also emerge with two
groups of practices, subtitled acquisition and development of employee skills and job
design, and on this occasion, participation and teamworking nd their way into the second
grouping rather than the rst. In short, a simple count of how many HR practices are used
tells us little of any theoretical value.
Variations in the proxies used to measure high commitment HRM

The studies use a range of different proxies for the same HR practice. For example, some
are straight yes/no or absence/presence type measures whereas others ask for the
percentage of the workforce covered by a particular aspect of HRM such as performancerelated pay. In some cases, the proportions vary between studies with, say 25 per cent in one
and 90 per cent in another. Worse still, they can vary within a particular study between
different items. Differences in the way in which practices are counted as present or absent
have a major effect on the construction of the overall bundle, and it is rare for there to be an
explicit discussion as to why certain levels have been set. Notably, Guest et al (2000b) do
openly explain why they went for a gure of 90 per cent in some of their questions. More
seriously, the mere absence or presence of a practice is irrelevant because what matters is
how this is used and what impact it has on the people employed and on organisational
performance. Take the example of grievance procedures; these are almost universally
employed in organisations, so a proxy based around absence or presence tells us nothing
about how people take up grievances, how many they take up, and whether they regard the
processes as open and reasonable arguably more important as a differentiator. A similar
point arises in relation to days spent on training. Knowing that the typical employee is trained
for about ve days per annum is hardly evidence of high commitment HRM if they are trained
merely in how to conform to strict rules and procedures as sometimes happens in call
centres (Sturdy et al 2001). Moreover, potential problems also arise when compiling scores of
high commitment HRM in deciding whether or not each practice should be weighted equally.
This is clearly a problem where there are more measures of a particular item than others, for
example as often occurs with EI. It is possible in this situation that the overall measure gives
too much weight to one factor compared with others. Moreover, what happens when, as in
the WERS analysis, one practice is widely used such as a formal statement on equal
opportunities and another, such as job security, is rarely provided? Do these deserve to be
equally weighted or is the use of a relatively rare practice something that differentiates
organisations from their competitors.
Variations in the proxies used to measure performance

One of the major problems is the different types of performance measure that are used, in
particular whether they are based on objective or subjective assessments. Many of the
studies have focused on the former, using measures of organisational performance such as
protability that have very little obvious linkage with the efforts of individual workers, even
though ultimately this is what matters to organisations. This is clearly problematic in multiplant
organisations within the same industry, and even more complicated in conglomerates that
operate across a range of sectors and countries, as well as in publicprivate partnerships and
92
interorganisational networks where it is hard to establish identiable boundaries between

them. Questions can also be raised about the appropriateness of the measures used to
assess performance; in the West et al (2002) study, for example, one measure was the
number of deaths following hip surgery. Clearly, death during surgery is a major problem
not least to the patient but a more appropriate measure of success could be how well the
person felt a few months later or whether the new hip actually provided them with a better
quality of life. Other studies have asked HR managers or managing directors to estimate how
well their organisation is performing compared with others in the same sector. Although there
is some research that shows consistency between objective and subjective assessments
(Wall et al 2004), others are less convinced, and indeed Guest et al (2003) found no
association between them. Analysis of some of the WERS data shows that managers
consistently overestimate the performance of their organisation in relation to competitors.
Some of the intermediate employee outcome measures are simple to quantify but less easy
to interpret. For example, it may be important for an organisation to have low labour turnover
or absence levels compared with the average for the industry as a whole, but there are
questions about whether or not a zero gure is actually indicative of good employment
relations. In the case of labour turnover, work may be so pleasant and relaxed that very few
people ever want to leave but if productivity levels are poor, then this is hardly evidence of
effective HRM. Similarly, absence levels may be low because people are scared to take a day
off for fear of reprisal or because they have so much work to do they feel that it is impossible
to stay at home even when they are ill. Clearly, what appears initially as technical
measurement problems actually obscure rather more serious conceptual weaknesses.
Dangers in relying on self-report scores from HR managers

Differences can arise depending on the expertise of the person who completes the
questionnaire for an organisation. For obvious reasons, questions used in telephone surveys
tend to be those that are capable of an immediate answer that can be coded easily. As
Purcell (1999) notes, this may not get us very far in establishing what factors really make a
difference to employee commitment or organisational performance. Further problems arise
because personnel specialists, who are often the respondents in these surveys, often lack
detailed knowledge about the competitive strategies utilised by their organisations and the
proportion of sales derived from these strategies. At least the Guest et al study did overcome
a number of these shortcomings by including managing directors and HR professionals in
their sample, but they were unable to get opinions from employees themselves. This is
particularly problematic if worker perceptions are not even included in studies when the focus
is on objective measures of performance. Anxieties such as these mean that considerable
caution is needed when interpreting conclusions from these quantitative studies, and one
suggestion (Wall et al 2004) is that a team of independent experts could assess how
schemes were working rather than relying on internal evaluations alone. For example,
someone with a deep knowledge of EI could compare and contrast how these schemes were
working across a range of different organisations.
Doubts about how much autonomy organisations have in decisionmaking

It is implicitly assumed that organisations are free agents that are able to choose precisely
which HR practices they wish to employ without considering any forces beyond their own
organisational boundaries. As we have seen from Chapter 2, any organisation is subject to
forces that shape its HR policies, in terms of legal and institutional arrangements or through
the pressure exerted by clients or industry bodies. This is most apparent in how the high
commitment HRM package might be applied in different countries, and we should not assume
93
the Anglo-Saxon model (based principally on North American and UK research) is easily
applicable to other countries. Boselie et al (2001, p1122) make it clear that 12 out of Pfeffers
original list of 16 practices are common in the Netherlands, whereas very few UK
organisations could boast anything like this many. Because of the legal, political and social
infrastructure, certain HR practices are deemed necessary there. However, the same situation
could occur within certain industries in the UK whereby Codes of Practice or industry norms
are regarded as part of the way we do things around here. Moreover there are also
assumptions that, once the link is proven, all employers will see the benet of adopting the
high commitment paradigm as opposed to a low-cost or bleak house philosophy, and this is
far from assured. For companies that are competing against cheap foreign imports or have no
interest in having committed, enthusiastic workers who wish to exercise their discretion to
improve performance, the high commitment model offers few advantages. Indeed, even
amongst those organisations that adopt the high commitment model in relation to their own
employees, higher prots may be made at the expense of subcontractors whose low prot
margins mean there is little chance to invest in best practice HRM even if they wanted to
(Marchington et al 2004c)
In addition to the points made above, there is also a more radical critique that questions
whether or not the ndings actually support a link between high commitment practices and
performance, as the interpretation of this material takes for granted. Ramsay et al (2000)
propose an alternative, labour process explanation that suggests that higher levels of
organisational performance are achieved not through progressive employment practices but
instead through work intensication. Basically, both the high commitment and the labour
process versions agree that a distinctive set of HR practices may well contribute to improved
levels of organisational performance. However, as Ramsay et al (p505) argue, it is at this
point that the two approaches part company. The labour process critique holds that, while
high performance work systems practices may provide enhancements in discretion, these
come to employees at the expense of stress, work intensication and job strain, the latter
being a key explanatory factor in improved organisational performance. This interpretation is
quite different therefore, mirroring the discussion about competing versions of teamworking.
In order to test their proposition, Ramsay et al (2000) used the 1998 WERS survey material,
focusing in particular on employee outcomes. They also included other factors in their
analysis related to job strain and work intensication measured by questions about the lack
of time to complete work, worrying about work outside working hours, and changes in
productivity (p527). Their conclusions are at odds with those of the high commitment school,
in the sense that they nd little support for the notion that positive performance outcomes ow
from positive employee outcomes. They suggest that the high commitment approach has
been adopted without sufcient analysis of whether or not employees really do prefer such
regimes. At the same time, however, they nd little support for the labour process
interpretation either. While acknowledging that lack of support for either model may be due to
problems with the methodology, they conclude instead that neither bears much resemblance
to reality. This is due to the inability of senior managers to implement strategic thinking
either to treat workers as resourceful humans or as costs to be minimised (p522). This
conclusion leads Godard (2004, p350) to conclude that state support is probably required to
ensure the high commitment paradigm takes root.
What do you think workers want from their employment, and does this equate with the
high commitment bundle of practices considered here?
94
THE UNIVERSAL APPLICATION OF BEST PRACTICE HRM

One key aspect of the celebratory literature is that best practice HRM is capable of being
used in any organisation, irrespective of product market situation, industry, or workforce.
Pfeffer (1998, pp3334) produces evidence from many industries and studies which he
claims demonstrates the case for putting people rst. These include relatively low
technology settings such as apparel manufacture to very high technology manufacturing
processes. The results seem to hold for manufacturing and for service rms. Nothing in the
available evidence suggests that the results are country-specic. The effects of high
performance management practices are real, economically signicant, and general and
thus should be adopted by your organisation. Support for this argument comes from several
other studies. For example, Huselid (1995, p644) states that all else being equal, the use of
High Performance Work Practices and good internal t should lead to positive outcomes for
all types of rms. Delery and Doty (1996, p828) nd relatively strong support for the
universalistic argument and some support for other perspectives, and suggest that some
human resource practices always [our emphasis] have a positive effect on performance;
these were prot sharing, results-oriented appraisals and employment security. There is
support from a non-US study as well, with Wood and Albanese (1995, p242) agreeing that
certain HR practices have a universal effect.
There are criticisms of this view, ranging from minor adjustments through to downright
rejection of the case that progressive HR practices can always provide sustained competitive
advantage. Youndt et al (1996, p837) suggest that the universal approach helps researchers
to document the benets of HR across all contexts, ceteris paribus, [while] the contingency
perspective helps us to look more deeply into organisational phenomena to derive more
situationally-specic theories and prescriptions for management practice. Purcell (1999, p36)
is particularly sceptical of the claims for universalism, which lead us, he argues, down a
utopian cul-de-sac. He stresses the need to identify the circumstances of where and when it
[high commitment management; HCM] is applied, why some organisations do and some do
not adopt HCM, and how some rms seem to have more appropriate human resource
systems than others.
At a conceptual and empirical level, however, there are a number of reasons to doubt that
high commitment HRM is universally applicable (Marchington and Grugulis 2000). First, it is
apparent that the best practice works on the assumption that employers have the luxury of
taking a long-term perspective or that, with a bit of foresight, they could do so. For example,
they are encouraged to hire during the lean times when labour markets are less tight rather
than seek to recruit when they have a pressing demand for staff and it is harder to attract the
type of applicant desired (and desirable). Similarly, employers are advised to invest in
employees with non-specic skills that will offer most over the longer term rather than seek to
ll posts with staff who can solve immediate needs. It is suggested that employees should be
retained during downturns because it will only cost more to rehire them when the market
improves, a practice that also ties in with employment security guarantees. Similarly, instead
of cutting back on training when times get tough or cash is in short supply, employers are
urged to spend more money on training during the lean times because it is easier to release
employees from other duties when production schedules are less tight. There are good
economic and labour market reasons for employers to do all of these things, but they all
depend, to a greater or lesser extent, upon the luxury of a long-term perspective and the
prospect of future market growth. Of course, institutional forces beyond the level of the
organisation may serve to shape HRM more signicantly in some countries than they do in
95
others. As Boselie et al (2003) note, employers in some countries may take for granted what
in the UK is seen as best practice offered by just a few organisations.
Second, it is rather easier to engage in high commitment HRM when labour costs form a low
proportion of controllable costs. In capital intensive operations, it makes little sense to cut
back on essential staff who have highly specic and much-needed skills say, in a
pharmaceutical or chemical plant or with research scientists. When labour costs represent a
major cost compared with other factors, as in many service sector organisations for example,
it is much more difcult for managers persuade nanciers that there are long-term benets
from investments in human capital. It is unlikely, given their previous behaviour, that bankers
and lenders in Britain will perceive the benets of taking a strategic perspective on human
resources and sacrice short-term gains for longer term accumulation. In contrast, it is
immensely difcult to persuade employers to adopt a best practice approach if they operate
in situations where labour costs are sizeable, and where it is difcult to increase pay rates or
offer training when resources are constrained. Moreover, it is unlikely that customers or users
will accept inferior levels of service even if it is helping to develop talent over the longer term
(eg in the health service, pubs and restaurants). Furthermore, given an emphasis on
contracting and recontracting up and down the supply chain, there is often little incentive for
employers to invest in high commitment HRM if their contracts are of limited length and they
are expected to compete on the basis of reduced costs (Marchington et al 2004c). Cappelli
and Neumark (2001) report that, while high commitment HRM actually does increase worker
output, it also raises labour costs and employee rewards. This leads Godard (2004, p355) to
argue that the proponents of high commitment HRM overestimate the positive effects of high
levels of adoption of these practices, but also underestimate the costs. The end result is
likely to be little overall gain in productivity.
Bearing in mind some of the recent furore about contracting out manufacturing or call
centres to low wage economies, discuss whether or not customers really do gain from
best practice HRM or whether they would prefer to buy cheaper goods no matter how
they are produced.
Third, so much depends upon which categories of staff employers are trying to recruit.
MacDufe (1995, p199) is often quoted as someone whose research is supportive of the
universality argument, but it is apparent from his studies that high commitment HRM may
actually be situationally specic. He suggests:
Innovative human resource practices are likely to contribute to

improved economic performance only when [our emphasis]
three conditions are met: when employees possess knowledge
and skills that managers lack; when employees are motivated
to apply this skill and knowledge through discretionary effort;
and when the rms business or production strategy can only be
achieved when employees contribute such discretionary effort.
This seems to indicate clearly that the circumstances under which best practice HRM will
make a difference are quite specic. For example, it makes sense for the employer to
encourage discretionary behaviour in order to achieve organisational goals such as in high
technology industries where work systems and processes can not be easily codied or
96
overseen by managers, and qualied workers are in short supply and there may be strong
arguments for hoarding labour. In many other situations, the time taken to train new staff is
relatively short, work performance can be assessed simply and speedily, and there is a
supply of substitutable labour readily available. The rationale for employers adopting the high
commitment paradigm in these circumstances is hard to sustain. In addition, some jobs are
so boring or unpleasant that it is inconceivable that many people would see employment
security, basic training or information sharing for example as any kind of benet. On the
contrary, these workers would probably resent being expected to take an interest in their
organisation beyond routine work performance, and nd it stressful and intrusive. In short, the
best practice model may not be attractive or appropriate for all groups of workers or
employers.
Finally, the growth in non-standard contracts has led many commentators to question if
exible employment is compatible with best practice HRM, and whether or not the latter can
be applied to all employees in an organisation irrespective of their occupational status or
labour market value (Kinnie et al 2004). As we saw in Chapter 2, the changing nature of the
psychological contract has led to worries that employment insecurity is now widespread, and
evidence shows that between the 1970s and the 1990s, the proportion of people who had
experienced a spell of unemployment almost trebled from 7 per cent to approximately 20 per
cent of the population (Gallie et al 1998, p124). Other data reinforces case study and
anecdotal evidence that employees now feel rather more insecure than they did 20 years
ago. However, some groups of employees appear to be gaining more from best practice
HRM than others, especially those who remain working for the same employer for many
years. This suggests distinctions could be arising between long-serving workers, whom
employers might wish to nurture, and short-term contract staff or subcontracted workers
(Purcell 1999).
CONCLUSIONS
The focus in this chapter has been on high commitment HRM, and we have examined the
way in which HR policies and practices may be used to provide coherent and comprehensive
human resource bundles. This has led to suggestions that there is one best way in which
HRM should be delivered, and moreover that this has a positive impact on organisational
performance. There is currently a good deal of interest in the high commitment
HRMperformance link, and to ideas that a specic bundle of human resource policies and
practices is inherently superior and capable of making a major contribution to organisational
success in all workplaces. There is also policy interest in this approach through the notion of
HCM reporting. We have reviewed this argument in the chapter, pointing to alternative and
competing interpretations of the research ndings, as well as calling for greater reection on
whether or not best practice HRM really can make a difference to bottom line performance in
all workplaces. Holman et al (2003, pp422424) summarise the scale of the research task
that is needed to move the debate on, and include many of the points that have been raised
in this chapter. The high commitment model is appealing as it supports the case for
implementing good people management practices on business grounds. However, there is
also a strong theoretical and empirical basis for arguing that high commitment models cannot
be and are not being applied in all workplaces and to all groups of staff. Having
considered the best practice perspective in this chapter, we are now in a position to analyse
the alternative best t scenario in Chapter 4.
97
USEFUL READING
BOXALL P. and PURCELL J. Strategy and Human Resource Management. Basingstoke,
Palgrave Macmillan. 2003.
GODARD J. A critical assessment of the high performance paradigm, British Journal of
Industrial Relations, Vol. 42, No. 2, 2004. pp349378.
GUEST D., MICHIE J., CONWAY, N. and SHEEHAN M. Human resource management and
performance, British Journal of Industrial Relations, Vol. 41, No. 2, 2003. pp291314.
GUEST D., MICHIE J., SHEEHAN M., CONWAY N. and METOCHI M. Effective People Management:
Initial ndings of the Future of Work study. London, CIPD. 2000b.
HOLMAN D., WALL T., CLEGG C., SPARROW P. and HOWARD A. The New Workplace: A guide to
the human impact of modern working practices. London, Wiley. 2003. The chapters by
Wood, Batt and Doellgast, Wright and Gardner, and Legge are particularly useful
MARCHINGTON M. and GRUGULIS I. Best practice human resource management: perfect
opportunity or dangerous illusion?, International Journal of Human Resource
Management, Vol. 11, No. 4, 2000. pp905925.
PFEFFER J. The Human Equation: Building prots by putting people rst. Boston, Harvard
Business School Press. 1998.
PURCELL J. The search for best practice and best t in human resource management:
chimera or cul-de-sac?, Human Resource Management Journal, Vol. 9, No. 3, 1999.
pp2641.
PURCELL J., KINNIE N., HUTCHINSON S., RAYTON B. and SWART J. Understanding the People and
Performance Link: Unlocking the black box. London, CIPD. 2003.
RAMSAY H., SCHOLARIOS D. and HARLEY B. Employees and high-performance work systems:
testing inside the black box, British Journal of Industrial Relations, Vol. 38, No. 4, 2000.
pp501531.
WEST M., BORRILL C., DAWSON J., SCULLY J., CARTER M., ANELAY S., PATTERSON M. and WARING
J. The link between the management of employees and patient mortality in acute
hospitals, International Journal of Human Resource Management, Vol. 13, No. 8, 2002.
pp12991310.
98

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High Commitment HRM and

contribute to the implementation of appropriate HR policies that maximise the

convince other managers of the business benets to be gained from adopting

benchmark their own organisations HR practices against those of competitors.

In addition, readers should understand and be able to explain:

the contribution of HR policies and practices to improvements in

PART 1 HRM, STRATEGY AND PERFORMANCE

DEFINING AND MEASURING HIGH COMMITMENT HRM

the nature and type of HR practices examined

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3 High Commitment HRM and Performance

BOX 9 COMPONENTS OF BEST PRACTICE/HIGH

Employment security and internal labour markets

Employment security and internal labour markets

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PART 1 HRM, STRATEGY AND PERFORMANCE

EMPLOYMENT SECURITY PROVISIONS

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3 High Commitment HRM and Performance

Selective hiring and sophisticated selection

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PART 1 HRM, STRATEGY AND PERFORMANCE

Extensive training, learning and development

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3 High Commitment HRM and Performance

Employee involvement (EI), information sharing and worker voice

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PART 1 HRM, STRATEGY AND PERFORMANCE

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3 High Commitment HRM and Performance

High compensation contingent on performance

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PART 1 HRM, STRATEGY AND PERFORMANCE

Reduction of status differences/harmonisation

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3 High Commitment HRM and Performance

Human resource practice

% of workplaces with this

Use of performance test for selection

Preference for internal candidates in selection

Standard induction programme for new recruits

40% or more received formal job training in last year

Employees have a lot of variety in their work

40% or more work in formally designated teams

At least 25% of time at meetings devoted to

40% or more take part in problem-solving group

Attitude survey in last three years

Formal appraisals for 40% or more of non-managerial

Job security guarantee

Performance related pay for non-managerial staff

Formal grievance procedure in place

All employee share ownership scheme

PART 1 HRM, STRATEGY AND PERFORMANCE

BUNDLES OF HUMAN RESOURCE PRACTICES

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3 High Commitment HRM and Performance

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PART 1 HRM, STRATEGY AND PERFORMANCE

Does it matter if there are contradictions between different components of the HR