High performance workplace practices and job satisfaction

An analysis of data from the European Working Conditions Survey 2000 shows that high performance work practices impact positively on work satisfaction. Autonomy in the workplace, participation in decision-making, and increased communication with co-workers are key factors for workers’ well-being. However, team work, job rotation and supporting human resource practices have only a limited effect.

Context

The study High performance workplace practices and job satisfaction (313Kb pdf) examines the effects of innovative workplace practices on the quality of work, and investigates how being involved in high performance workplace organisations (HPWOs) affects job satisfaction.

In theoretical and empirical studies (Appelbaum, Bailey, Berg and Kalleberg, 2000; Bailey, Berg and Sandy, 2001; Freeman and Kleiner, 2000; Freeman, Kleiner and Ostroff, 2000; Godard, 2001) conducted in the US and Canada, key advantages of HPWOs for firms are seen in achieving more flexibility, product quality, performance and cost competitiveness. The benefits for employees are seen in higher wages and increased job satisfaction.

The main feature of HPWOs is understood as a change from a ‘Tayloristic’ work organisation to a more holistic work organisation, characterised by: flat hierarchical structures, enhanced skills through job rotation, self-responsible teams, multi-tasking, a greater involvement of non-managerial employees in decision-making, horizontal (rather than vertical) communication channels, and greater autonomy for employees over the way they perform their tasks.

Such innovative workplace practices are often accompanied by complementary human resource practices. The study assesses these practices, with a focus on payment systems, such as profit-sharing, group bonuses and company shares, and on employer provided training.

The report also makes reference to studies (Askenazy, 2001; Brenner, Fairris and Ruser, 2004; Askenazy and Caroli, 2002) that suggest that several features of HPWOs can lead to detrimental effects on employees, by increasing work-related health problems and the risk of occupational hazards. However, this issue is not investigated further.

European Working Conditions Survey 2000 (EWCS)

The research is based on data from the [EWCS](/search/node/ewco OR surveys OR index?oldIndex) 2000, covering the 15 EU Member States (before May 2004), conducted by the European Foundation for the Improvement of Living and Working Conditions.

Indices

The study constructs four key indices and several component indices. The assessment of the impact of HPWOs on self-reported work satisfaction builds on these indices. The construction of these indices follows, as closely as possible, a US study conducted by Appelbaum, Bailey, Berg, and Kalleberg (2000). This should facilitate a comparison with the US.

Work system index

This index measures the opportunity of workers to participate in substantive decision-making and the degree of worker autonomy over the way they perform their job. The work system index includes the following components.

Autonomy index

The autonomy of an individual in decision-making is based on workers’ responses to the questions of the EWCS 2000 concerning:

• the discretion of a worker to choose or change the [order of tasks](/search/node/ewco OR 3wc OR 3wc25 OR 1?oldIndex);

• [methods of work](/search/node/ewco OR 3wc OR 3wc25 OR 2?oldIndex);

• the [speed or rate of work](/search/node/ewco OR 3wc OR 3wc25 OR 3?oldIndex);

• whether a worker [assesses the quality of his/her own work](/search/node/ewco OR 3wc OR 3wc24 OR 2?oldIndex);

• whether the job involves the independent [solving of unforeseen problems](/search/node/ewco OR 3wc OR 3wc24 OR 3?oldIndex) by the worker.

Communication index

This index measures the degree of horizontal and vertical communication. It is derived from responses to five questions. The index investigates whether there is an exchange of views and problems among [colleagues](/search/node/ewco OR 3wc OR 3wc30b1?oldIndex), [superiors](/search/node/ewco OR 3wc OR 3wc30b2?oldIndex) and/or [staff representatives](/search/node/ewco OR 3wc OR 3wc30b3?oldIndex), and whether this exchange of views takes place on a [regular](/search/node/ewco OR 3wc OR 3wc30b5?oldIndex) and/or [formal](/search/node/ewco OR 3wc OR 3wc30b6?oldIndex) basis.

Team work and job rotation

The third component is based on whether the worker is involved in [team work](/search/node/ewco OR 3wc OR 3wc27b2?oldIndex), while the sub-index on [job rotation](/search/node/ewco OR 3wc OR 3wc27b1?oldIndex) explores whether the job design incorporates rotating tasks among colleagues.

These four indices describe the involvement of an individual in a flexible work system.

Skills index

Workers need appropriate skills, in order to assume responsibility to perform multiple tasks, and to be able to react in a flexible way to a changing environment.

The skills index is based on whether an employee received [training](/search/node/ewco OR 3wc OR 3wc29?oldIndex) and the [number of days](/search/node/ewco OR 3wc OR 3wc29?oldIndex) of training paid for or provided by the employer in the past 12 months.

Incentive index

The incentive index is drawn from responses regarding components of remuneration. It includes information on whether an individual participates in profit-sharing schemes, receives income from company shares, or from group bonuses.

Composite index

The ‘HPWO scale’ is a composite index that assesses an individual’s overall involvement in innovative workplace practices. This composite index is defined as the sum of the work system index, the skills index, and the incentive index.

HPWOs and job satisfaction

Being in a high performance work organisation is associated with higher job satisfaction. This positive effect is predominantly induced by increased autonomy of employees over how to perform their tasks, the opportunity to participate in decision-making, and increased communication with co-workers. Team work and job rotation, as well as supporting human resource practices, appear to have little impact on increased job satisfaction.

Working more hours, Saturdays and/or Sundays, or in shifts, and having a fixed-term contract impact negatively on work satisfaction.

Further information

In the coming weeks, the Foundation will publish a report, Wages and working conditions in the EU, looking at the effects of aligning appropriate pay systems to high performance work organisations.

References

Appelbaum, E., Bailey, T., Berg, P. and Kalleberg, A., Manufacturing advantage: Why high performance work systems pay off , ILR Press, Ithaca, New York, 2000.

Askenazy, P., ‘Innovative workplace practices and occupational injuries and illnesses in the United States’, Economic and Industrial Democracy 22, 4, 2001, pp. 485-516.

Askenazy, P. and Caroli, E., ‘New organisational practices and working conditions: Evidence for France in the 1990s’, Louvain Economics Review 68, 1-2, 2002, pp. 91-110.

Bailey, T., Berg, P. and Sandy, C., ‘The effect of high performance work practices on employee earnings in the steel, apparel, and medical electronics and imaging industries’, Industrial and Labor Relations Review 54, 2, 2001, pp. 525-543.

Brenner, M., Fairris, D. and Ruser, J., ‘Flexible work practices and occupational safety and health: Exploring the relationship between cumulative trauma disorders and workplace transformation’, Industrial Relations: A Journal of Economy and Society 43, 1, 2004, pp. 242-266.

Freeman, R. B. and Kleiner, M. M., ‘Who benefits most from employee involvement: Firms or workers?’, American Economic Review 90, 2, 2000, pp. 219-223.

Freeman, R. B., Kleiner, M. M. and Ostroff, C., The anatomy of employee involvement and its effects on firms and workers , NBER Working Paper No. 8050, NBER, Cambridge (Mass), 2000.