Title: Sub Heading
1High Performance Work Systems in Ireland Effects
on Employee Retention Productivity Innovation
James P. Guthrie September 2005
University of Limerick OLLSCOIL LUIMNIGH
Sub Heading And Date
2HRM Systems Human/Social Capital Human/Social
Capital Competitive Advantage
- An organizational resource can be a source of
competitive advantage if . - it adds value
- it is relatively rare
- it is difficult for competitors to imitate
3What is a High Performance Work System
- A system of HR policies/practices
-
- a set of distinct but interrelated HRM
practices used to select develop retain and
motivate a workforce that has superior abilities
applies these in their work-related activities
and whose work-related activities result in
achieving superior (firm) performance. - (Huselid 1995)
4What is a High Performance Work System
- Also known as ..
- High involvement work systems
- High commitment work systems
- High investment HRM
- Flexible labour systems
5What is a High Performance Work System
- Intensive recruiting
- Emphasis on internal recruiting
- Promotion based on merit vs. seniority
- Sophisticated/intensive selection procedures
- Routine performance feedback
- Multi-source performance feedback
- Compensation based on skills/knowledge
- Compensation to align interests based on team
unit or firm performance - Extensive communication with employees re
company information - Self-managing teams
- Extensive training Depth and breadth
- Use of attitude surveys
- Participatory mechanisms
- Use of grievance procedures
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7Survey-Based Research Project High
Performance Work Systems in Ireland University
of Limerick University of Kansas National Centre
for Partnership and Performance Patrick Flood
James P. Guthrie Wenchuan (Victor) Liu Sarah Mac
Curtain
8Study Questions
- Does greater HPWS use improve employee retention
- Does greater HPWS use improve firm productivity
- Does greater HPWS use enhance firm innovation
- How do Irish-owned and foreign-owned firms
compare
9HPWS and Innovation
- The best way to have a good idea is to have a
lot of ideas. - Dr. Linus Pauling Nobel Laureate
- Both process product innovation impacted by
utilization of all employees tacit knowledge - Decentralized decision-making
- Participatory mechanisms
- New combinations through team-structures
- Exposure to knowledge through training
- Better understanding through information
dissemination - Elicitation of tacit knowledge via group reward
systems
10Participating Companies
- Matched surveys from 165 companies
- GM Survey Respondent
- HR Survey Respondent
- 95 Irish-owned 70 Foreign-owned
- Median firm age 27 years
- Median number employees 246
- Median sales revenue EUR 78 million
- Wide industry distribution
11The HR Survey
- Measured percentage of firms employees covered
by each of 18 HPWS practices - E.G.
- Hired based on sophisticated selection
- Routine use of performance appraisals
- Participatory mechanisms etc. etc.
- Group A production maintenance service
clerical employees - Group B executives managers supervisors
professional/technical - Weighted average summed into a single HPWS index
- Voluntary Turnover
12The GM Survey
- Company age
- Sales Revenue
- Number of employees
- Innovation Proportion of sales revenue from
products/services introduced in the last 12
months - RD expenditures
- Primary Industry
13Study Results
- Does greater HPWS use improve employee retention
- YES!
- Does greater HPWS use improve firm productivity
- YES!
- Does greater HPWS use enhance firm innovation
- YES!
- How do Irish-owned and foreign-owned firms
compare - SEE NEXT ..
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16Average use of High Performance Work Systems
Note This HR gap remains after controlling for
differences in industry RD size age
unionization
17This HR Gap Helps Explain
- Several advantages enjoyed by foreign-owned
firms - Significantly lower voluntary turnover rates (
16 lower) - Significantly higher labor productivity ( 15
higher) - Significantly greater innovation
- Percentage of sales from new products ( 17
higher) - New product sales per employee (efficient
innovation) ( 22 higher) - Note These HR Gap induced advantages remain
after controlling for differences in industry
RD investment size age unionization
18Summary
HPWS/HRM
- Employee Retention
- Firm Productivity
- Firm Innovation
Human Social Capital
