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Introduction
Over the past two decades, many researchers in the human resource (HR)
eld have devoted considerable effort to understanding the relationship
between HR practices and organizational performance (Blasi and Kruse 2006).
These research endeavors helped to identify high performance work practices
(HPWPs), which consist of HR practices that improve employee human capital, motivate employees to use their human capital for organizational goals,
and provide employees with opportunities to do so (Batt 2002; Huselid 1995).
Empirical studies typically capture these practices as a set and develop an
index that measures the extensiveness of HPWPs. These studies consistently
* The authors afliations are, respectively, School of Management, The University of South Australia,
Adelaide, Australia. Email: yoshio.yanadori@unisa.edu.au; Sauder School of Business, University of British
Columbia, Vancouver, British Columbia, Canada. Email: vanjaarsveld@sauder.ubc.ca.
The authors would like to thank Ariel Avgar, John Benson, Alexander Colvin, and Carol Kulik for helpful
comments on earlier versions of this paper, and also Tina Morganella for her editorial assistance. While the
research and analysis are based on data from Statistics Canada, the opinions expressed do not represent the
views of Statistics Canada. Lee Grenon of Statistics Canada provided valuable assistance on the project.
INDUSTRIAL RELATIONS, Vol. 53, No. 3 (July 2014). 2014 Regents of the University of California
Published by Wiley Periodicals, Inc., 350 Main Street, Malden, MA 02148, USA, and 9600 Garsington
Road, Oxford, OX4 2DQ, UK.
501
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nd that a higher score on these HPWP indices is associated with better organizational performance (Combs et al. 2006), and with positive individual-level
outcomes such as organizational commitment (Kehoe and Wright 2013), citizenship behavior (Godard 2001), and job satisfaction (Mohr and Zoghi 2008).
Empirical research on HPWPs generally relies on two information sources:
management and employees. The studies that use information collected from
management commonly ask management to report whether or not a specic
practice is present in their organizations (e.g., Huselid 1995; Walsworth and
Verma 2007). Other studies use information collected from employees. In
these studies, employees are asked to report the extent to which the practices
they participate in are aligned with high performance HR policies (e.g., Avgar,
Givan, and Liu 2011; Godard 2001; Liao et al. 2009). These two approaches
capture the extensiveness of HPWPs in organizations from different perspectives, examining the presence of formal practices from the view of management or examining employee participation in these practices.
Several researchers have acknowledged the divergence between the presence
of formal practices and employee participation in them (Arthur and Boyles
2007); i.e., the presence of formal practices does not necessarily lead to
employee participation in these practices. Some practices may not be implemented successfully and remain inaccessible to employees (Diez, Wilkinson,
and Redman 2009; Glew et al. 1995). These practices, if implemented, may
only be accessible to some employees because organizations often develop distinct HR practices for different employee groups (Lepak and Snell 1999).
We contend that divergence can also occur when employees participate in
HPWPs on an informal basis. That is, employees participate in workplace
activities even though their organizations do not formally adopt these activities
as their formal HR practices (Eaton 2003). Some activities may be spontaneous in the sense that line managers or employees initiate the practices without
their organizations formal endorsement. Indeed, by examining the effects of
employee participation in HPWPs on job satisfaction, Mohr and Zoghi (2008)
found that employees often report participating in HPWPs that do not formally
exist in their organizations.
Recognition that employees participate in HPWPs both on formal and informal bases raises the following question: Is employee participation in informal
HPWPs (i.e., HPWPs that are not formally present in organizations) associated
with positive employee-level and organization-level outcomes in a similar
manner as employee participation in formal HPWPs (i.e., HPWPs that are formally present in organizations) is associated with these outcomes? On the one
hand, despite their informal nature, employees still participate in practices that
are instrumental to the mechanisms by which positive employee-level and organization-level outcomes are stimulated. On the other hand, employee reactions
Informal HPWPs
/ 503
to HR practices may differ depending on how they interpret their organizations HR policies (Bowen and Ostroff 2004). An ambiguous link between
organizations formal policies and actual workplace practices may weaken the
positive impact of informal HPWPs on employee-level and organization-level
outcomes. To address this theoretical conict, this study investigates the implications of employee participation in informal HPWPs by exploring relationships to job satisfaction and workplace protability. In so doing, we compare
these relationships to the relationships of employee participation in formal
HPWPs to the same outcomes.
To achieve our goal, we undertake two analyses with data from the Statistics Canada Workplace and Employee Survey (WES). The WES consists of
two surveys with matching reports from management and employees located
in the same workplace: (1) the Workplace Survey asks management about
their workplaces with a primary emphasis on their work practices, and (2)
the Employee Survey asks employees about their degree of participation in
these practices. The matched design of WES facilitates an investigation of
divergence between management and employee reports. Comparing management reports to the WES Workplace Survey with employee reports to the
WES Employee Survey enables us to distinguish among different types of
HPWPs. Our particular interest is in distinguishing between (1) employee
participation in formal HPWPs (i.e., employees report participating in HPWPs
that their management reports are present in the workplace), and (2)
employee participation in informal HPWPs (i.e., employees report participating in HPWPs that their management reports are not formally present in the
workplace).
Our rst analysis investigates the relationship between informal HPWPs and
employee job satisfaction. Job satisfaction is a key employee-level reaction to
their work experiences that predicts turnover (Tett and Meyer 1993), absenteeism (Scott and Taylor 1985), and performance (Judge et al. 2001), as well as
workers subjective well-being (Bowling, Eschleman, and Wang 2010).
Although Mohr and Zoghi (2008) have already demonstrated that employee
participation in HPWPs is associated with higher job satisfaction using the
WES, they did not examine formal HPWPs and informal HPWPs separately,
obscuring the extent to which employee participation in informal HPWPs contributed to enhanced job satisfaction. The second analysis aggregates the
reports from employees to the workplace level, and examines the relationship
between informal HPWPs and workplace protability. Since the seminal work
of Huselid (1995) and MacDufe (1995), the impact of HPWPs on organizational performance has been the central focus of HPWP research. Yet, to our
knowledge, no research has considered the implications of employee participation in informal HPWPs for organizational performance.
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Informal HPWPs
/ 505
illustrates four different types of HPWPs that emerge from our comparison of
management and employee reports.1
In Figure 1, the management reports are on the horizontal axis, and the
employee reports are on the vertical axis. Both the management and employee
reports consist of two response options: Yes and No. For the management
reports, Yes (or No) indicates that management recognizes the practice is present
(or not present) in the organization. For the employee reports, Yes (or No) indicates that employees participate in (or do not participate in) the practice. Simultaneous consideration of the management and employee reports on these questions
yields four categories. In Category 1, the practice is formally present in organizations and employees participate in the practice. In Category 2, the practice is not
formally present in organizations but employees somehow participate in the practice. We refer to these types of HPWPs as formal HPWPs and informal HPWPs,
respectively. In Category 3, the practice is formally present in organizations but
employees do not participate in the practice. We refer to this type of HPWPs as
unused HPWPs. Finally in Category 4, the practice is not formally present in the
workplace and employees do not participate in the practice. In this category, the
FIGURE 1
Management reports
Yes
(Employees participate in
the practice)
No
(Employees do not
participate in the practice)
Employee reports
Yes
(The practice is present in the
organization)
No
(The practice is not present in the
organization)
Category 4: No HPWPs
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One may argue that informal HPWPs should also include practices that go above and beyond formal
HPWPs (e.g., line managers communicate about their organizations more frequently than what the formal
information-sharing program originally expects of them) because this component of practices is informal in
the sense that it is not prescribed by formal organizational policies. However, this study treats this case as
part of formal HPWPs following the specication in Figure 1 (i.e., the practice is present in organizations
and employees participate in the practice). From an empirical standpoint, we expect that this case (i.e., an
extended use of formal HPWPs) is positively associated with job satisfaction and workplace protability as
it takes full advantage of the positive effects of formally structured HPWPs. Our narrow denition of informal HPWPs offers a more conservative test for their relationships to job satisfaction and workplace
protability.
Informal HPWPs
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Informal HPWPs
/ 509
all business locations operating in Canada.3 To ensure that the survey reects its
target population accurately, Statistics Canada uses stratied random sampling
(by industry, region, and workplace size) to build a sample of workplaces from
Canadas Business Register (Statistics Canada 2008). From this sample, Statistics
Canada contacts employees using lists provided by the workplaces. HR researchers have published several studies capitalizing on this high-quality data (e.g., Haines, Jalette, and Larose 2010; Mohr and Zoghi 2008; Zatzick and Iverson 2006).
The most recent wave of the WES was conducted in 2005 for the Employee
Survey (relevant to the employee participation in HPWPs) and in 2006 for the
Workplace Survey (relevant to the presence of formal HPWPs). To examine
the most recent information about employee participation in informal HPWPs
and its implications, our analysis matched the 2005 WES Workplace Survey
and Employee Survey.4 The 2005 wave of WES includes 24,197 employees
from 6693 workplaces. Response rates are 77.7 percent for the workplace and
81.2 percent for employees. We excluded employees from workplaces with ten
or fewer employees because the WES Workplace Survey does not collect
information about some work practices (e.g., information sharing, self-directed
teams) from these workplaces (Haines, Jalette, and Larose 2010; Mohr and
Zoghi 2008). We also excluded the reports from managerial employees to the
WES Employee Survey because HPWPs are primarily applied to nonmanagerial employees (Colvin, Batt, and Katz 2001). After removing observations with
unusable values (e.g., some employees answered no opinion regarding their
job satisfaction), the sample in this study consists of 17,697 nonmanagerial
employees from 4000 workplaces. Mean workplace size (measured by the
number of employees) is 47.720, with a median of 22.
Measures. Our independent variable is employee participation in informal
HPWPs. Mohr and Zoghis (2008) study, which builds on the WES Employee
The following workplaces are excluded: (1) those located in the Yukon, Nunavut, and the Northwest
Territories, and (2) those operating in crop production and animal production; shing, hunting and trapping,
private households, religious organizations and public administration (Statistics Canada 2008).
4
The analyses in this article employ a cross-sectional analysis. While the Statistics Canada WES administers multiple waves of surveys, construction of longitudinal data suffers from signicant attrition. For
instance, approximately 25 percent of employees who participated in the 2003 Employee Survey were not
included in the 2004 Employee Survey. With respect to the Workplace Survey, information relevant to
HPWPs is collected every other year (i.e., 1999, 2001, 2003, and 2005), and approximately 13 percent of
workplaces that reported to the 2003 Workplace Survey were not included in the 2005 Workplace Survey.
Our analysis reveals that this attrition is systematic. Employees with lower job satisfaction are more likely to
drop out from the next wave of the Employee Survey, and workplaces with lower prot are more likely to
drop out from the next wave of the Workplace Survey. Due to concerns that the analyses of these panel data
might produce biased estimates, we decided to focus on a cross-sectional analysis drawing on the most
recent WES data.
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Survey, and Zatzick and Iversons (2006) study, which builds on the WES
Workplace Survey, guide our choice of HPWPs because both studies use WES
data and examine the effects of HPWPs. In reviewing these two studies, we
found disagreement regarding the selection of practices considered to be part of
the HPWP index. Mohr and Zoghi (2008) analyzed seven participatory practices
(i.e., employee surveys, suggestion programs, exible job design, information
sharing, task teams, problem-solving teams, and self-directed teams). Zatzick
and Iverson (2006) examined four participatory practices (i.e., exible job
designs, information sharing, problem-solving teams, and self-directed teams),
gainsharing, and off-the-job training (off-JT). Because we found that the practices included in these two studies are all aligned with high performance policies,
we combined the HR practices from both the Mohr and Zoghi (2008) HPWP
index and the Zatzick and Iverson (2006) HPWP index. Following the specication in the WES Workplace Survey, we regard employee surveys as part of suggestion programs. In addition, we included OJT because it aims to improve
employee human capital, which is one aspect of a high performance work policy
(Crook et al. 2011). Similarly, we combined gainsharing, prot sharing, and
stock awards to create a group of nancial incentive plans whose payment is tied
to group- or organization-wide performance, referred to as productivity-related
bonuses in this article. All of these nancial incentives induce employees to work
effectively for the success of organizations by aligning their interests with organizational goals. As a result, HPWPs in our analysis consist of the following nine
practices: (1) suggestion programs, (2) exible job designs, (3) information sharing, (4) task teams, (5) problem-solving teams, (6) self-directed teams, (7)
productivity-related bonuses, (8) off-JT, and (9) OJT.
Table 1 compares specic questions for these nine HPWPs in the 2005
WES Workplace Survey and Employee Survey. Note that the WES Employee
Survey asks about employee participation in employee surveys and suggestion
programs separately, although these two practices collectively constitute suggestion programs in the WES Workplace Survey. In our two analyses, we
combined employee reports of employee surveys and suggestion programs into
one item to make employee reports and management reports comparable to
each other. For other practices, questions in the WES Workplace Survey closely match questions in the WES Employee Survey.
Before distinguishing among the different types of HPWPs we describe in
Figure 1, we created HPWP indices that reect the presence of HPWPs (from
the management reports) and employee participation in HPWPs (from the
employee report), respectively. For the index that reects the presence of
HPWPs, we counted the number of HPWPs that are present according to the
2005 WES Workplace Survey. For suggestion programs, exible job design,
information sharing, task teams, problem-solving teams, and self-directed
18 A.
18 B.
18 C.
18 D.
Suggestion program
Information sharing
Problem-solving teams
Practice
OF
31 (f)
31 (d)
31 (c)
31 (b)
31 (a)
WORDING
TABLE 1
Informal HPWPs
/ 511
18 F.
6 (a)
14 (a)
16 (c)
Self-directed teams
Productivity-related
bonuses
Off-the-job training
(Off-JT)
On-the-job training
(OJT)
VAN
25 (d)
DANIELLE D.
25
36 (d)
31 (g)
31 (e)
AND
18 E.
Task teams
Practice
TABLE 1 (Cont.)
Informal HPWPs
/ 513
teams, the survey asks management whether or not respective practices exist
in their workplaces on a formal basis. For productivity-related bonuses, the
survey asks management whether or not their workplaces have different types
of nancial incentive plans, and we considered the workplace as having productivity-related bonuses if management indicated that they adopt at least one
of the following plans: (1) group incentive systems including gainsharing, (2)
prot-sharing plans, and (3) employee stock plans. For off-JT and OJT, the
survey asks management whether or not their workplaces offer any types of
off-JT and OJT. We classied workplaces as having off-JT and OJT unless
management answered no classroom training and no on-the-job training,
respectively. Because HPWPs consist of nine practices, this variable can range
in value from zero to nine, and we divided this score by nine. We refer to this
index as management-reported HPWP index.
For the HPWP index that reects employee participation, we similarly counted
the number of practices each employee reports participating in. The 2005
Employee Survey asks employees to report their frequency of participation in
certain practices in the previous 12 months, except for productivity-related
bonuses, off-JT, and OJT. With regard to employee surveys, suggestion programs, exible job design, and information sharing, employees have three
response options: (1) never, (2) occasionally, and (3) frequently. For task teams,
problem-solving teams, and self-directed teams, employees have four response
options: (1) never, (2) occasionally, (3) frequently, and (4) always. We considered employees as participating in each practice unless they answered never.
Regarding the employee survey and suggestion program questions, which collectively constitute suggestion programs in the WES Workplace Survey, we considered employees as participating in suggestion programs unless they answered
never to both employee survey and suggestion program questions. For productivity-related bonuses, employees reported whether they received any productivity-related bonuses in the previous 12 months. We considered that employees
participated in productivity-related bonuses if they received any productivityrelated bonuses irrespective of the amount.5 For off-JT and OJT, employees
We acknowledge that management reports and employee reports regarding productivity-related bonuses
might not match well for two reasons. First, unlike the questions for other HPWPs, the WES Employee Survey does not provide a clear denition for productivity-related bonuses. Consequently, employee reports
regarding the receipt of productivity-related bonuses may exclude any of the practices we dene as productivity-related bonuses or include other incentives (e.g., individual incentives). Second, the fact that employees do not receive any productivity-related bonuses does not necessarily mean that these bonuses are not
applied to the employees. It may mean that workplaces apply productivity-related bonuses, but their employees do not receive payment because the workplaces (or employees) do not achieve performance goals. Based
on this concern, we ran analyses with HPWP indices that excluded productivity-related bonuses. The results
are essentially the same with our original analyses for job satisfaction and workplace protability.
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reported whether or not they participated in the respective types of training programs in the previous 12 months. The number of practices an employee participated in ranges from zero to nine, and we divided the number by nine. We
hereinafter refer to this HPWP index as employee-reported HPWP index.
We then derived indices that reect different types of practices following
the model presented in Figure 1. We created a HPWP index that reects formal HPWPs (i.e., Category 1) by counting the number of practices which
management reports are present in their workplaces (according to the 2005
WES Workplace Survey) and the employee reports participating in (according
to the 2005 WES Employee Survey). This variable can also range in value
from zero to nine, and we divided the number by nine. We refer to this index
as formal HPWP index. Next, we created a HPWP index that reects informal
HPWPs (Category 2) by counting the number of practices which management
reports are not present in their workplaces, but that the employee reports participating in, and dividing the number by nine. We refer to this index as informal HPWP index. Finally, we also created a HPWP index that reects unused
HPWPs (i.e., Category 3) by counting the number of HPWPs the employee
reports not participating in although the management reports are present and
dividing the number by nine. We refer to this index as unused HPWP index.
We did not create an index for no HPWPs (Category 4) because this is the
base condition. The relationships among different HPWP indices we derived
are described as follows:
management-reported HPWP index formal HPWP index
unused HPWP index
employee-reported HPWP index formal HPWP index
informal HPWP index
We acknowledge that both management and employee reports to the surveys
involve errors and the discrepancy between management reports (i.e., presence
of the HPWP) and employee reports (i.e., participation in a HPWP) in part
may be attributable to these measurement errors; e.g., management is unfamiliar with their organizations HPWPs or employees misunderstand activities
involved in HPWPs. Yet, given the detailed explanations of HPWPs in respective questions, as shown in Table 1, it is unlikely that either employee or management reports are misguided. Statistics Canada also endeavors to ensure the
accuracy of management reports by taking various steps such as checking
irregular answers (Statistics Canada 2008). Collectively, we contend that
comparison between the management and employee reports provides us with
reasonably accurate information about employee participation in formal,
informal, and unused HPWPs.
Informal HPWPs
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TABLE 2
VARIABLE DESCRIPTION
Variables
Dependent variables
Job satisfaction
HPWP indices
Management-reported
HPWP index
Employee-reported
HPWP index
Formal HPWP index
Informal HPWP index
Unused HPWP index
Control variables
Female
Married
Have disabilities
University degree or
higher
Tenure
Work hours per
week
Union member
Wage rate
Professional workers
Technical workers
Clerical workers
Production workers
Workplace sizeb
FOR
ANALYSIS
ON
JOB SATISFACTION
Description
Job satisfaction (4 = very satised, 1 = very unsatised)a
Mean
3.191
.420
.493
.228
.265
.192
.540
.516
.103
.198
8.795
35.909
.339
20.615
.218
.455
.169
.079
47.720
NOTE: N = 17,697 employees from 4000 workplaces. Calculated using survey employee weight except for workplace size,
which used workplace weight. The mean and median number of employee reports per workplace is 3.297 and 3, respectively.
a
Reverse-coded original responses where (4 = very dissatised, 1 = very satised).
b
Mean workplace size of 4000 workplaces used in this analysis. Calculated before applying log transformation. Median
workplace size is 22.
reports are drawn, this procedure calculates parameter estimates and standard
errors accounting for the hierarchical structure of the data (Cassell 2006).
While our theoretical argument predicts that employee participation in various
HPWPs inuences job satisfaction, reverse causality is also possible; that is,
employee job satisfaction inuences the level of employee participation in
HPWPs (Mohr and Zoghi 2008). We contend that reverse causality is more relevant to the distinction between formal HPWPs and unused HPWPs (i.e., whether
Informal HPWPs
/ 517
ICC(2) = (MSB MWS)/MSB, where MSB is the mean square between groups (i.e., workplace in this
case), and MSW is the mean square within groups (i.e., employee in this case).
7
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TABLE 3
RELATIONSHIP
Variables
Control variables
Female
Married
Have disabilities
University degree or higher
Tenure
Work hours per week
Union member
Wage rate
Professional workers
Technical workers
Clerical workers
Production workers
Workplace sizea
OF
HPWP INDICES
Model 1
.163*
(.074)
.266***
(.065)
.434**
(.142)
.144
(.087)
.005
(.003)
.001
(.004)
.043
(.081)
.023***
(.004)
.133
(.150)
.022
(.139)
.234
(.151)
.115
(.171)
.001
(.024)
HPWP indices
Management-reported
HPWP index
Employee-reported
HPWP index
Formal HPWP index
TO
JOB SATISFACTION
Model 2
.161*
(.074)
.266***
(.065)
.436**
(.142)
.143
(.087)
.005
(.003)
.001
(.004)
.047
(.081)
.022***
(.004)
.129
(.149)
.019
(.138)
.231
(.150)
.117
(.170)
.002
(.025)
Model 3
.137
(.075)
.257***
(.066)
.438**
(.143)
.145
(.086)
.005
(.003)
.004
(.004)
.006
(.081)
.019***
(.004)
.040
(.147)
.053
(.136)
.194
(.149)
.095
(.170)
.008
(.025)
.133
(.074)
.261***
(.066)
.440**
(.143)
.147
(.086)
.006
(.003)
.003
(.004)
.007
(.082)
.019***
(.004)
.042
(.146)
.042
(.136)
.205
(.149)
.091
(.170)
.002
(.026)
.070
(.161)
.981***
(.150)
Model 4
279343***
279844***
372147***
.922***
(.209)
.706***
(.211)
.574*
(.269)
384420***
NOTE: Standard errors are in parentheses. N = 17,697 employees from 4000 workplaces.
than .60, supporting our analytical strategy to treat job satisfaction as an individual-level variable.
Table 3 displays the results of our ordinal logistic regression analyses. To
highlight how different HPWP indices are associated with job satisfaction, we
Informal HPWPs
/ 519
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information about HPWPs came from the 2005 WES Workplace Survey and
Employee Survey, while the information about workplace protability came
from the 2006 WES Workplace Survey. Consistent with the previous analysis,
we focused on workplaces that (1) have more than ten employees, and (2)
have a report to the Employee Survey from at least one nonmanagerial
employee. In addition, workplaces must (3) be in the private sector because
the current analysis examined protability, and (4) have participated in both
the 2005 and 2006 waves of the Workplace Survey.
Workplace is the unit of analysis in this analysis, and therefore, we aggregated individual employees reports to the 2005 WES Employee Survey to
derive HPWP indices that reect employee participation in HPWPs at the
workplace level. Because previous HPWP studies do not provide the denitive
guideline regarding the minimum number of employee reports needed for
aggregation, we created two samples with different criteria used in previously
published HPWP studies: (1) Sample 1 includes workplaces with reports from
two or more nonmanagerial employees (e.g., Takeuchi et al. 2007), and (2)
Sample 2 includes reports from three or more nonmanagerial employees (e.g.,
Jensen, Patel, and Messersmith 2013). The sample size is 3125 workplaces
and 2665 workplaces, respectively. Mean workplace size is 43.928 with a
median of 24 for Sample 1, and 49.159 with a median of 27 for Sample 2.
The mean number of employee reports per workplace is 3.631 with a median
of 3 for Sample 1, and 4.154 with a median of 4 for Sample 2.
Measures. We summarize the variables we used in this analysis in
Table 4. We used the same procedure to develop the management-reported
HPWP index as we did in the previous job satisfaction analysis. For the other
HPWP indices that incorporate employee participation (i.e., employee-reported
HPWP index, formal HPWP index, informal HPWP index, and unused HPWP
index), we aggregated these indices calculated at the individual level in the
previous analysis by averaging them for each workplace (Gardner, Wright, and
Moynihan 2011; Wright et al. 2005). Appendix A summarizes the ANOVA
results and corresponding ICC(2). ICC(2) for our HPWP indices in both samples is sufciently high to support our aggregation at the workplace level: .66
(Sample 1) and .65 (Sample 2) for employee-reported HPWP index, .93 (Sample 1) and .93 (Sample 2) for the formal HPWP index, .73 (Sample 1) and .72
(Sample 2) for the informal HPWP index, and .86 (Sample 1) and .85 (Sample
2) for the unused HPWP index. These statistics support our aggregation of
individual-level HPWP indices to the workplace level in this analysis.
Our dependent variable is workplace protability. To derive this measure,
we divide workplace prot (revenue expenditures) by the number of employees (Zatzick and Iverson 2006). For both revenue and expenditure, manage-
Informal HPWPs
/ 521
TABLE 4
VARIABLE DESCRIPTION
Variables
Dependent variables
Organizational protability
in 2006a
HPWP indices
Management-reported
HPWP index
Employee-reported
HPWP index
Formal HPWP index
Control variables
Proportion of female
employees
Proportion of part-time
employees
Union density
Workplace sizeb
Workplace age
Cost leadership strategy
AND
SUMMARY STATISTICS
FOR
ANALYSIS
ON
WORKPLACE PROFITABILITY
Description
Prot (= operating revenue operating
expenditure) divided by the number of
employees in 2006
Average number of HPWPs management
answers are present in its workplaces
Average number of HPWPs employees
answer they participate in
Average number of HPWPs that
management answers are present in its
workplaces and employees answer they
participate in
Average number of HPWPs that
management answers are not present in its
workplaces but employees answer they
participate in
Average number of HPWPs that
management answers are present in its
workplaces but employees answer they do
not participate in
Proportion of female employees in the
workplace
Proportion of part-time employees in the
workplace
Proportion of employees that are covered
by a collective agreement
Number of employees in the workplace
Length of years the workplace has been
located at the current address
Average of the answers to the questions
that ask the organizations strategic
orientation: (1) reducing labor costs and
(2) reducing other operating costs, using a
5-point scale (Cronbachs alpha = .85)
Average wage of the employees in the
workplaces (total payroll expenditure
divided by the number of employees)
Sample 1
Workplaces
with 2
or more
employee
reports
Sample 2
Workplaces
with 3
or more
employee
reports
Mean
Mean
6.803
6.847
.319
.325
.458
.463
.157
.163
.301
.300
.162
.162
.451
.463
.238
.241
.112
.131
43.928
18.096
49.159
19.292
3.997
4.014
10.291
10.305
AND
DANIELLE D.
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JAARSVELD
TABLE 4 (Cont.)
Sample 1
Workplaces
with 2
or more
employee
reports
Sample 2
Workplaces
with 3
or more
employee
reports
Variables
Description
Mean
Mean
Organizational protability
(2005)a
7.678
7.579
Industry dummies
NOTE: N = 3125 for Sample 1 and 2665 for Sample 2. Calculated using survey workplace weight. The mean and median
number of employee reports per workplace is 3.631 and 3 for Sample 1 and 4.154 and 4 for Sample 2.
a
Hyperbolic sine function.
b
Calculated before applying log transformation. Median workplace size is 24 and 27, respectively.
c
In natural logarithm.
ment is asked to report respective dollar gures for the location. WES is a
workplace-level survey, and a workplace is often part of a larger corporation
(e.g., a manufacturing plant). We excluded observations if managements
answer about their workplaces revenue or expenditure included that for other
locations.8 While HPWPs may increase output by employees, they also
increase expenditures for these practices (e.g., training, bonus payment). Thus,
to determine whether organizations truly benet from HPWPs, performance
measures should take these expenditures into account (Chadwick, Ahn, and
Kwon 2012). Our preliminary analysis of workplace protability suggested
that it is highly skewed. Because protability can be positive or negative, we
applied a hyperbolic sine function (Burbidge, Magee, and Robb 1988). Similar
to a logarithmic transformation, the use of a hyperbolic sine function in regression models informs the percent change in the variable in question. Several
researchers have argued that this transformation is more appropriate when the
variable takes a negative value, which is problematic for logarithmic transformations (see Nyberg et al. [2010] for more discussion).9 Following the lead of
previous HPWP studies (e.g., Datta, Guthrie, and Wright 2005; Zatzick and
Iverson 2006), we controlled for several workplace-level variables including
workplace size, union density, and industry.
8
The WES Workplace Survey includes questions that ask whether the amount reported represents only
the gure for the workplace (e.g., 29(b) Does this amount represent the revenues for this location only?).
9
It is represented by the following equation: sinh-1(x) = log [x + (x2+1)1/2]
R2
Adjusted R2
N
HPWP indices
Management-reported HPWP index
Workplace age
Workplace size
Union density
Control variables
Proportion of female
employees
Proportion of part-time employees
Variables
< 0.10;
.307
.302
3,125
p < 0.05;
1.553**
(.568)
1.068
(.690)
1.510***
(.447)
.961***
(.157)
.005
(.007)
0.110
(.099)
1.233***
(.261)
.588***
(.017)
Model 1
OF
**
p < 0.01;
.307
.302
.767
(.537)
1.618**
(.570)
.994
(.692)
1.545***
(.448)
.900***
(.162)
.006
(.007)
.127
(.100)
1.185***
(.263)
.588***
(.017)
Model 2
***
1.875*
(.887)
1.633
(.954)
.787
(1.141)
.308
.303
1.640**
(.571)
1.024
(.693)
1.439**
(.451)
.883***
(.163)
.005
(.007)
.137
(.100)
1.098***
(.267)
.585***
(.017)
Model 4
.410
.406
2,665
.704
(.601)
.455
(.712)
2.257***
(.417)
1.238***
(.151)
.016*
(.007)
.043
(.105)
1.050***
(.274)
.663***
(.017)
Model 1
WORKPLACE PROFITABILITY
.412
.407
1.476**
(.546)
.792
(.601)
.530
(.711)
2.318***
(.417)
1.120***
(.157)
.015*
(.007)
.010
(.105)
.967***
(.276)
.662***
(.017)
Model 2
.414
.409
3.174***
(.818)
.858
(.600)
.256
(.712)
2.016***
(.421)
1.139***
(.153)
.018**
(.007)
.033
(.104)
.832**
(.279)
.661***
(.017)
Model 3
Sample 2 (Workplaces
with 3 or more employee reports)
.308
.303
1.656*
(.757)
1.614**
(0.569)
1.077
(.690)
1.410**
(.449)
.920***
(.158)
.004
(.007)
.126
(.099)
1.123***
(.265)
.585***
(.017)
Model 3
TO
TABLE 5
HPWP INDICES
RELATIONSHIP
3.123***
(.899)
3.500***
(1.056)
2.275
(1.260)
.414
.409
.835
(.601)
.290
(.714)
2.072
(.424)
1.081
(.157)
.017*
(.007)
.009
(.105)
.815
(.279)
.658
(.017)
Model 4
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DANIELLE D.
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Analysis. We used the ordinary least squares regression for this analysis.
When running the regression, we used the workplace survey weight provided
in the WES Workplace Survey. We recognized that some independent variables might be correlated with each other (e.g., proportion of part-time
employees and proportion of female employees). To assess whether multicollinearity problems were an issue in our analysis, we calculated the variance
ination factor (VIF) when we ran our regressions. The VIF in our regression
is lower than 3.0 for all independent variables, well below the threshold value
of 10.0 suggested by Neter, Wasserman, and Kutner (1985). Thus, multicollinearity is unlikely to be a concern in our analysis.
Similar to the analysis on job satisfaction, reverse causality is possible in
this analysis; that is, more protable workplaces may offer greater opportunities for their employees to participate in various HPWPs. We posit that the
reverse causality problem is more serious for the relationship between formal
HPWPs and workplace protability because more protable workplaces may
be willing to invest in various HPWPs. Yet, it may also be possible that
employees in more protable workplaces exhibit higher job satisfaction
(Schneider et al. 2003), which may promote these employees voluntary participation in informal HPWPs. To address the potential reverse causality, we controlled for the 2005 workplace protability. In so doing, our analysis offers a
better causal inference by estimating the 2006 workplace protability that is
unexplained by the previous years protability (Wright et al. 2005).
Results. Table 4 presents the mean of the variables we used in this analysis. The relationships among various HPWP indices are consistent with those
in our previous analysis on job satisfaction. Employees participated in informal
HPWPs (.301 in Sample 1 and .300 in Sample 2) to a greater extent than formal HPWPs (.157 in Sample 1 and .163 in Sample 2). Although employees
did not participate in some HPWPs that were present in the workplace, as represented by the unused HPWP index (.162 in Sample 1 and .162 in Sample 2),
the employee-reported HPWP index (.458 in Sample 1 and .463 in Sample 2)
is larger than the management-reported HPWP index (.319 in Sample 1 and
.325 in Sample 2). Although not reported in this manuscript, the correlation
between the management-reported HPWP index and employee-reported HPWP
index is moderate (r = .32 in Sample 1 and r = .40 in Sample 2). These gures
are comparable to r = .39 in Liao et al. (2009) and r = .41 in Takeuchi et al.
(2007), although lower than r = .59 in Messersmith, Patel, and Lepak (2011).
Table 5 displays the results of our regression analyses. We ran separate
models with different HPWP indices. Results show that both the managementreported HPWP index and employee-reported HPWP index are positively associated with subsequent workplace protability in Sample 2, but only
Informal HPWPs
/ 525
employee-reported HPWP index is positively associated with workplace protability in Sample 1. The insignicant effect of management-reported HPWP
index in Sample 1 appears to be due to the insignicant effect of unused
HPWP index considering that the management-reported HPWP index consists
of formal HPWP index and unused HPWP index.
For the analysis of the decomposed HPWP indices (Model 4), the relationship between the formal HPWP index and workplace protability is consistently positive and signicant in both samples. The relationship between the
informal HPWP index and workplace protability appears to be signicantly
positive. It is marginally signicant in Sample 1 (p = .087) and highly signicant in Sample 2 (p < .001). Beta coefcients are comparable between the formal HPWP index (b = 1.875 in Sample 1 and b = 3.123 in Sample 2) and
informal HPWP index (b = 1.633 in Sample 1 and b = 3.500 in Sample 2) in
both samples, and their differences are not statistically signicant (p = .811 in
Sample 1 and p = .716 in Sample 2). Overall, we surmise that employee participation in informal HPWPs is associated with better subsequent workplace
performance in a similar manner as employee participation in formal HPWPs
is associated with better subsequent workplace performance. The effect of
unused HPWPs on workplace protability is ambiguous. Their effect is insignicant in Sample 1, whereas it is marginally signicant in Sample 2.
The criteria we used to dene our samples, that is, two or more employee
reports from a workplace (Sample 1, N = 3125) and three or more employee
reports from a workplace (Sample 2, N = 2665), are based on the criteria used
in existing research (Jensen, Patel, and Messersmith 2013; Takeuchi et al.
2007). We ran analyses with samples that used alternative criteria. Specically
we ran the analysis with a sample with a lower threshold consisting of workplaces with employee reports from one or more employees (Sample 3, N =
3357) and a sample with a higher threshold consisting of workplaces with
employee reports from four or more employees (Sample 4, N = 2022). We
refer to the former sample as Sample 3 and the latter sample as Sample 4.
Mean workplace size is 41.040 with a median of 23 for Sample 3, and 64.667
with a median of 34 for Sample 4. The mean number of employee reports per
workplace is 3.268 with a median of 3 for Sample 3, and 4.986 with a median
of 5 for Sample 4.
We summarize our results of this additional analysis in Appendix B. Results
of the analysis with Sample 3 are highly consistent with the results of the
analysis with Samples 1 and 2. Both formal and informal HPWP indices are
positively and signicantly associated with workplace protability. In contrast,
none of the HPWP indices are signicant in our analysis using Sample 4.
Informal HPWP index is not signicantly associated with workplace protability although the sign of its beta coefcient is positive. Neither is formal HPWP
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DANIELLE D.
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Informal HPWPs
/ 529
needed to delve into the effects of unused HPWPs. Such research will need to
consider multiple mechanisms through which unused HPWPs affect employee
attitudes and behaviors.
There are several important limitations of this study. First, and most important, the results of the analysis on workplace protability changed when we
experimented with various thresholds for the number of employee reports collected. When we increased the threshold to four or more employee reports
(i.e., the analysis with Sample 4), the effects of informal HPWP index, as well
as those of other HPWP indices, became insignicant. While we suspect that
increasing the threshold excludes a large number of workplaces and departs
from the target sampling population of the WES Workplace Survey, we
acknowledge that this is an important limitation of our study. Considering that
the number of employee reports is positively associated with workplace size,
future studies should investigate whether our results regarding the effect of
informal HPWPs are more relevant to small and medium workplaces. While
we are not aware of any statistics, empirical research suggests that employers
apply distinct HR practices according to employee groups (Lepak and Snell
2002). Ideally, aggregation of HPWP indices at an organization level in large
workplaces should consider the possibility of this differentiation of HR practices across employee groups. The proportion of employees sampled in our
analyses is relatively small (i.e., 1315 percent of employees),10 and thus the
coverage of employee reports may not be as extensive as we would like it to
be. Although ICC(2) for our HPWP indices supports our aggregation of individual-level measures at the workplace level, our results are likely to be inuenced by which employees, as well as which occupational groups, are
included in the employee sample. We call for future research that compares
the effects of various types of HPWPs on workplace performance by incorporating the possible within-organizational differences in HR practices.
Second, the survey question wording in the WES Workplace Survey does
not perfectly match that in the Employee Survey. We submit that it is evident
from Table 1 that corresponding questions attempt to capture the same practices. Yet, it is still possible that part of the difference between management
reports about the presence of formal practices and employee reports about participation in HPWPs is attributable to the slight wording differences. Third,
our measure of informal HPWPs is derived from the comparison between
employee reports to the WES Employee Survey about their participation in
HPWPs and management reports to the WES Workplace Survey about the
presence of formal practices. In this sense, our measure does not directly ask
10
Calculation is made using the median values of workplace size and the number of employee reports.
AND
DANIELLE D.
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APPENDIX A
RESULTS
SAMPLE USED
IN THE
ANALYSIS
ON
Variables
Component
DF
Employee-reported
HPWP index
Formal HPWP index
Workplace
Employee
Workplace
Employee
Workplace
Employee
Workplace
Employee
Workplace
Employee
3,999
13,697
3,999
13,697
3,999
13,697
3,999
13,697
3,999
13,697
ANALYSIS
OF
OF
VARIANCE
JOB SATISFACTION
Sum of Squares
Mean Square
F-value
R2
200,330
242,022
254,741
74,557
197,745
126,621
113,968
74,557
1,308,945
2,462,396
50.095
17.670
63.701
5.443
49.449
9.244
28.499
5.443
327.318
179.776
2.84***
.453
.65
11.70***
.774
.91
5.35***
.610
.81
5.24***
.605
.81
1.82***
.347
.45
ICC(2)
SAMPLE USED
IN THE
ANALYSIS
ON
Variables
Component
DF
Employee-reported
HPWP index
Formal HPWP index
Workplace
Employee
Workplace
Employee
Workplace
Employee
Workplace
Employee
3,124
10,429
3,124
10,429
3,124
10,429
3,124
10,429
Mean Square
F-value
R2
12,247
14,092
12,464
2,855
10,393
9,287
6,240
2,855
3.920
1.351
3.99
.274
3.327
.891
1.998
.274
2.90***
.465
.66
14.57***
.814
.93
3.74***
.528
.73
7.30***
.686
.86
ICC(2)
SAMPLE USED
variables
Employee-reported
HPWP index
Formal HPWP index
Informal HPWP index
Unused HPWP index
IN THE
ANALYSIS
Component
Workplace
Employee
Workplace
Employee
Workplace
Employee
Workplace
Employee
ON
DF
2,664
9,969
2,664
9,969
2,664
9,969
2,664
9,969
Sum of Squares
9,877
13,030
10,842
2,658
8,100
8,509
4,803
2,658
Mean Square
3.708
1.307
4.070
.267
3.040
.854
1.803
.267
F-value
R2
ICC(2)
***
.431
.65
15.27***
.803
.93
3.56***
.488
.72
6.76***
.644
.85
2.84
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DANIELLE D.
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JAARSVELD
APPENDIX B
RELATIONSHIP
OF
HPWP INDICES
TO
WORKPLACE PROFITABILITY
Model 1
Model 2
Model 3
Model 4
1.954***
(.542)
Model 2
.284
.280
Model 4
0.726
(.528)
2.449***
(.709)
.282
.277
3,357
Model 3
.284
.279
0.431
(.816)
3.432***
(.851)
2.048*
(.874)
1.872
(1.091)
.286
.281
.484
.479
2,665
.485
.479
.484
.479
.378
(.866)
.795
(1.095)
2.196
(1.198)
.485
.479
NOTE: Standard errors are in parentheses. < 0.10; *p < 0.05; *** p < 0.001. Controls are included but not reported. Mean
and median workplace size is 41.040 and 23 for Sample 3 and 64.667 and 34 for Sample 4. The mean and median number of employee reports per workplace is 3.268 and 3 for Sample 3 and 4.986 and 5 for Sample 4.