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On Two HRM Systems

Yonatan Reshef
University of Alberta
School of Business
University of Alberta

The following discussion is based on Richard Locke and Thomas Kochan. 1995. "Conclusion: The Transformation of Industrial Relations? A Cross-National Review of the Evidence." In Richard Locke, Thomas Kochan and Michael Piore (eds.), Employment Relations in a Changing World Economy. The MIT Press.


Framework

F Two HRM systems (click for more info) -- Command-and-Control vs. High-Performance -- and two matching IR systems.

F The HRM/IR systems in place today in North America, Europe, and Japan are a consequence of labor's and management's choice of ideology (reform-socialism, anarcho-syndicalism, business unionism, Christian unionism) and strategy which took shape around the turn of the century.

F To understand national HRM/IR systems, we should adopt a systems view and an historical perspective. History, institutions and choices are all important considerations in explaining the nature of national HRM/IR systems and international variations.

Common Patterns

F The individual enterprise has emerged as an increasingly important locus of HR and IR decision making and strategy. Sweden represents the most visible case in point, as well as Germany where works councils are assuming a growing role as workplace bargaining agents.

F Decentralization has been accompanied by the search for greater flexibility in how work is organized and labor is deployed. This has resulted in a tension:

    A) On the one hand, part-time and temporary employment (fixed-term contracts) is on the rise;

    B) yet at the same time management makes efforts to tap front-line employee knowledge and experience by providing work arrangements that delegate decision-making authority to those who control how products/services are produced, and are best situated to identify quality problems, design solutions and implement them.


F There has been a growing importance of skill development.
F Union membership has declined.

National Variations

F Whereas flexibility in work organization is becoming a key source of competitive advantage, its diffusion remains uneven across and within countries.

    Across countries: Those countries that come from a tradition of job control (France, England, Canada, and the USA), have experienced the greatest pressures to transform their work organization arrangements. Those national systems of HRM/IR that were never completely Taylorist and/or where they already had workplace practices that promote flexibility and communication such as Japan and Germany, seem to have been able to accommodate more easily the need for these new work practices.

    Within countries: Even within countries there appears to be significant variation in the extent of change, and these differences seem to be linked to the particular characteristics of individual firms and industries. The most profound departures from traditional practices appear to take place where:

    v a new "greenfield" worksite is established (Kalmar, Udevalla).

    v major technological changes are introduced and employees or their representatives have some voice in that process (Japan);

    v in industries where the pressures of international competition are strong;

    v in settings where new union-management partnerships are created (e.g. Japanese transplants in England, Saturn, Shell Sarnia).

F The extent to which employees enjoy job security differs between and within countries. Generally, employees in Canada and the US have much less employment security than in the other countries. However within countries there are variations as well (e.g., British public-sector employees enjoy much better job security than their private-sector counterparts. In Japan, employees in small companies don't have the same LTE arrangements as employees in bigger companies do).

F Real wages have been the most stagnant in the USA and grown moderately in Japan, Germany and Sweden.

In principle, while employers search for increased competitiveness may be a general phenomenon emanating from international pressures that are common to all advanced industrial nations, different institutional arrangements (e.g. LTE, Solidaristic Wage Policy, Co-Determination, employment at will) filter these common pressures differently, so that changes in HRM/IR practices vary across these countries (p. 365).

Existing Tensions

F Managing simultaneously continuous quality improvement and cost containment.

F Polarization of opportunities between those with access to education, training, and jobs with innovative practices and those without. Is this gap larger or smaller than these found in traditional employment systems? If it is, how can it be narrowed?



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