AND
H
IGH
P
ERFORMANCE
W
ORKPLACES
:
A C
RITIQUE OF
M
ITCHELL AND
F
ETTER
PAULJ. GOLLAN* ANDJONATHANHAMBERGER**
I
n the September 2003 edition of the Journal of Industrial Relations, Mitchell and Fetter considered the extent to which the introduction of Australian workplace agreements (AWAs) has helped promote a ‘high performance’ HRM agenda in Australia. The authors observe that the ‘high performance’ workplace, as defined by Mitchell and Fetter, has never been sought by the proponents of individualisation, and that employment contracts are not the vehicle through which such practices would normally be formally enshrined. In addition, the authors contend that Mitchell and Fetter are unable validly to draw the conclusions they do from their analysis of the texts of two samples of AWAs, and that they have ignored significant evidence which points to directly contradicting conclusions. In particular, the results of a survey of AWA employees is drawn on to suggest that, at least in larger, private sector workplaces, AWAs are associated with a number of positive outcomes that would be consistent with AWAs being used in conjunction with a ‘high trust’ HRM agenda.INTRODUCTION
While Mitchell and Fetter’s article covers a lot of ground, they themselves summarised their purpose as assessing the extent to which the individualisation process, as measured in Australian workplace agreement (AWA) content, has achieved the (assumed) objective of producing a cultural shift towards ‘high commitment’ or ‘high performance’ workplaces (Mitchell & Fetter 2003).
They sought to determine this by examining the content of two separate samples of AWAs. Having in their view found little evidence that AWAs were being used to achieve this objective they then went on to suggest that AWAs were being predominantly used to pursue a ‘cost reduction’ strategy, rather than a ‘productivity-centred’ approach. The former was described as ‘an approach which attempts to restore high profitability in the short term though cost reduction methods—wage cuts, greater intensification of work effort, workforce reductions, increases in casual and temporary employment, and hierarchical organisation characterised by strong management controls and related high rewards for managers’.
The second approach, on the other hand, was described as ‘productivity centred, favouring a long term business strategy centred on a highly waged, highly skilled workforce, collaborative or participative work systems, high levels of investment in training and skill development and employment security’.
Not only do we contend that Mitchell and Fetter are unable validly to draw the conclusions they do from their own data—but we also hold that they have ignored significant evidence which points to contradictory conclusions. Their conclusions based on OEA commissioned case studies would also seem contradictory to the findings outlined in the research itself.
In addition, we call into question their assumptions in assessing their research aims and contend that their research approach and methodology has serious flaws, calling into question their conclusive findings.
A PROBLEMATIC STARTING POINT
As acknowledged by Mitchell and Fetter themselves, the term ‘high performance’ workplaces itself is quite inexact. The terms ‘high performance’ (or ‘high commit-ment’) workplaces come from a number of academic studies (mainly in the US and the UK) that sought to establish whether there was a correlation between the adoption of specific human resource management (HRM) practices and specific outcomes (such as better financial performance). It would be fair to say that these academic studies are not conclusive, though they certainly do present some evidence that certain HRM strategies are at least correlated with relatively positive outcomes.
However, different writers tend to stress different human resource practices. Certainly there tends to be an emphasis on employee involvement and partici-pation in decision making, but no necessary consensus on what form this should take. For example, UK academics tend to focus on formal consultative mechanisms such as joint consultative committees1whereas academics from the
US (where such arrangements generally do not exist) focus on practices such as team meetings and quality circles.2A typical definition (cf. Appelbaum et al.2000)
refers to establishments that seek a committed labour force relative to other goals, where employees enjoy a high degree of discretion in carrying out work assignments, and where non supervisory employees participate substantively in decisions.
While we question the logic of looking for high performance concepts such as trust and commitment within a legal document, it is also important to question to what extent it is reasonable to assume that AWAs were introduced in order to promote ‘high performance’ workplaces.
authors criticise AWAs for allegedly failing to achieve an objective which none of their proponents ever claimed they were trying to achieve.
What in fact did the proponents of individualising workplace relations say they were trying to achieve?
A good place to start would be the Minister’s Second Reading Speech accompanying the legislation that provided for the introduction of AWAs, the Workplace Relations and other Legislation and Amendment Act 1996(Reith 1996). That speech made it very clear that the Government’s purpose was to promote the negotiation of pay and conditions at the enterprise and workplace level, with-out ‘uninvited third party’ intervention. ‘Direct dealing’ was clearly not however an end in itself. The aim of promoting such a development was that this would in turn help achieve better wages and conditions of employment (and profits) through increased productivity.
The Second Reading Speech did not generally spell out how this would be achieved. However, the legislation must be considered in the context of the arguments being put at the time by some of the key proponents of industrial relations reform, such as the Business Council of Australia (BCA), in the period leading up to its introduction. In particular, the BCA did make it clear that it regarded the introduction of individual agreements as part of a process of changing management–employee relations, as well as allowing for changes such as more flexible working time arrangements and greater wage flexibility.
A typical article by the BCA’s then Executive Director, for example, stressed the need for ‘a climate in which employers and employees have a genuine sense of common purpose’. This would most likely be achieved by direct dealing between employers and employees ‘the key requirement for common purpose to be established is for all of the terms and conditions of employment to be settled directly between the parties’ (Barratt 1995).
Individual contracts were regarded by key members of the BCA as a logical component of a non-adversarial ‘high trust’ strategy, in contrast to the ‘them and us’ culture associated with traditional collective bargaining.
This ‘high trust’ strategy places a great emphasis on tapping the creativity and commitment of the workforce, to ensure that products and services consistently meet or exceed customer expectations (Hamberger 1995).
Comprehensive implementation of this strategy typically involves:
• The provision of extensive and company controlled channels of ‘employee voice’ like team briefings and employee involvement.
• The use of contingent reward systems, such as skill based pay, performance-based pay and profit sharing or employee share ownership.
• Broadly defined jobs, wide spans of control, flat organisational hierarchies and extensive use of team and project based work organisation.
• Design and implementation of enterprise-based grievance procedures (e.g. ‘fair people systems’).
• Improved managerial leadership and behaviour.
While this ‘high trust’ strategy has a lot in common with the notion of ‘high performance’ workplaces, it is perhaps not quite the same, especially when considering the way that Mitchell and Fetter use the term. For example, they see provisions in AWAs that increase employer discretion as inconsistent with ‘high performance’ workplaces, yet arguably they are not at all inherently inconsistent with a ‘high trust’ strategy. Indeed, in one way, making employees more subject to ‘managerial discretion’ rather than being ‘protected’ by tradi-tional, collectively bargained work rules (for example in relation to performance indicators, or job descriptions) can be seen as an inherent element of a ‘high trust’ strategy. In relation to employee involvement, the ‘high trust’ strategy focuses on extensive, but ‘company controlled’, forms of employee voice, such as team briefings, whereas Mitchell and Fetter seem to stress the need more for formal consultative mechanisms. Indeed, placing in a formal legal instrument the kinds of restrictions on managerial flexibility that Mitchell and Fetter seem to regard as necessary for a ‘high performance’ workplace could be seen as indicative of a ‘low trust’ environment.3
ANALYTICAL ISSUES WITH THEAWA EVIDENCE
How did Mitchell and Fetter come to their conclusion that AWAs were being predominantly used to pursue a ‘cost reduction’ strategy, rather than a ‘productivity-centred’ approach? Their methodology is based on analysing the texts of two reasonably random samples of AWAs for five features:
• flexibility in work performance; • employee empowerment; • performance-related rewards;
• commitment to quality of service or product; and • loyalty to the business concern.
It is not entirely clear why Mitchell and Fetter would consider it necessary for issues that do not relate directly to pay and conditions of employment to be explicitly dealt with in an AWA. In fact, Mitchell and Fetter themselves appear to acknowledge that some of the concepts they were looking for, by their very nature, are unlikely to be directly or explicitly reflected in individual agreements about pay and conditions:
‘high trust’, ‘flexibility’, ‘commitment’ and ‘participation’ are highly inexact terms, and the ideas embodied in those values seem rather misplaced in the context of the relatively fixed rights and obligations expressed in the form of the employment contract’.
It should hardly come as a surprise therefore that Mitchell and Fetter had difficulty in finding concepts such as ‘commitment to quality of service or product’ or ‘loyalty to the business concern’ contained in the texts of the AWAs they studied. We would suggest that failure to include such specific references in an AWA tells us nothing about whether such commitment or loyalty exists.
sharing, to consultation, to consultative committees and the like’. However, one simply cannot infer that these arrangements did not exist in the organisations concerned, because of their absence from an individual agreement on pay and conditions. There is simply no obvious reason why an organisation that has practices such as information sharing and consultation would feel the need to put it in an AWA.
In relation to the two features that are most directly relevant to pay and conditions, ‘flexibility in work performance’ and ‘performance related rewards’, Mitchell and Fetter in fact found that AWAs often contained provisions in relation to those matters. They seemed however to be concerned that they tended to provide substantial discretion to management, for example by permitting management to change employees’ duties or giving management the ability to determine performance indicators. However, it is hard to see why this in itself is incompatible either with a ‘high trust’ or a ‘high performance’ workplace.
OTHER EVIDENCE
As outlined earlier, it is not possible to determine whether AWAs are associated with either ‘high performance’ or ‘high trust’ workplaces simply by looking at the texts of the AWAs themselves. There are however a number of legitimate methods that could be used to answer this question, including surveys and case studies.
For example, in 2001 the OEA commissioned a survey by one of the authors (Gollan 2002), which allows a comparison between the perceptions of a random sample of employees who had signed AWAs and an equivalent random sample of employees who had not signed AWAs.4It is worth looking at some of the results
from the weighted data of employees in larger workplaces—in other words the kinds of workplaces where BCA members are likely to be the employer.5 If
employers in those workplaces were introducing AWAs as part of a ‘high trust’ strategy one might expect employees in AWA workplaces to have a higher level of trust in management, to be more satisfied with the level of communications and information, to be more satisfied with levels of employee involvement and control, and generally to have a more positive attitude to management, compared to employees under other forms of industrial instruments (which in those workplaces is most likely to be a collective agreement).
If, on the other hand, AWAs were associated with a ‘cost-cutting’ approach based on ‘wage cuts, greater intensification of work effort, workforce reductions, increases in casual and temporary employment, and hierarchical organisation characterised by strong managerial controls . . . ’ as claimed by Mitchell and Fetter, one would surely expect employees on AWAs to be more negative in their responses on these sorts of issues than employees without AWAs.
In fact, the AWA employees consistently had much more positive responses than the non-AWA employees.6 On the issue of trust for example, AWA
only 24 per cent disagree. In contrast, only 34 per cent of non-AWA employees trusted management, while 45 per cent distrusted it.
AWA employees were also more likely to answer positively on issues of employee participation and control—central issues when considering whether AWAs are associated with ‘High Performance’ work systems. Thirty-seven per cent of AWA employees agreed that management gave them a say in how things were run, compared to 31 per cent who did not agree, while 33 per cent of non-AWA employees thought management gave them a say in how things were run, and 43 per cent disagreed. Even more starkly, 64 per cent of AWA employees agreed that ‘management gives me a say in the way I do my job’ while 14 per cent disagreed. Of non-AWA employees, 49 per cent agreed with the proposition, while 23 per cent disagreed.
Likewise AWA employees were more likely than non-AWA to be satisfied with the level of communication and information (51 per cent as opposed to 42 per cent), with the amount of training received (49 per cent compared to 41 per cent) and to think they had influence over decisions which affect them at work (75 per cent compared to 70 per cent) with AWA employees more likely to think they have ‘significant’ influence. In addition to this, AWA employees were far more satisfied with recognition of work and effort at their workplace (51 per cent compared to 33 per cent of random employees) and they were much more likely to say that they were comfortable in raising issues with their supervisor (93.8 per cent compared to 83.4 per cent for random employees).
While the results of any single survey cannot be conclusive, it seems strange, to say the least, that employees subject to an HRM strategy based on ‘cost cutting’ appear to be more positive about these matters than those who have not been.
CONCLUSION
The concept of ‘high performance’ or ‘high commitment’ work systems is an interesting one, though it could be argued that it was a somewhat different ‘high trust’ model that motivated some of the key proponents of AWAs. However, examining the texts of AWAs simply cannot be used to assess whether employers are using AWAs in conjunction with such a high trust approach to HRM. In fact, at face value, it appears that AWA employees in larger, private sector workplaces do have a higher level of trust in management, and perceive that they have more control over their work than non-AWA employees. This is, at the very least, consistent with the proposition that key features of the ‘high trust’ model are more common in AWA workplaces than elsewhere.
Furthermore, Mitchell and Fetter’s methodological approach of analysis centred on the content and text of AWAs, draws conclusions that would seem underdeveloped in addressing their research questions.
simply provide no evidence whatsoever. While there is in fact limited evidence available either way about these issues, it is worth pointing out that, according to the ABS, employees on federal registered individual agreements receive signifi-cantly higher pay than those on registered collective agreements, in both the public and private sectors, even when the number of hours worked is accounted.7
What can be drawn from Mitchell and Fetter’s evidence is at best inconclusive. Reviewing selective data sources and using a narrow methodological approach by examining the text of AWAs can be regarded incomplete. More comprehensive findings could have been achieved by using other existing public sources of data to yield more valid results.
ENDNOTES
1. See for example Cully et al. (1999) who used the lack of formal structures representing employees’ interests to indicate the low incidence of ‘high commitment’ management practices.
2. See for example Lawler et al. (1998) who, in assessing whether an organisation was a high performance one, focused on forms of employee involvement such as information sharing, employee participation groups, self managing work teams and job enrichment.
3. Consider for example the following statement made by the advocate for Comalco during hearings in the Australian Industrial Relations Commission during the Weipa dispute in 1995: ‘ . . . the employee ceases to be in a work environment in which improvements in work have a tradeable value in the collective context and are therefore to be loaded up and sold in collective negotiation . . . In a staff relationship . . . the inbuilt constraints on the free flow of work improvements are removed because each individual knows that he or she will be subjectively judged on his or her work performance’
4. Additional cross tabs have been run for this article. The full SPSS Dataset is available from the Office of the Employment Advocate.
5. Workplaces with 500 or more employees
6. It is acknowledged that the random sample may include a small proportion of employees on AWAs, however this would have a negligible effect on the results.
7. Australian Bureau of Statistics, Employee Earnings and Hours, May 2003 (Cat. No. 6203.0), unpublished data.
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Mitchell R, Fetter J (2003) Human resource management and individuals in Australian labour law.
Journal of Industrial Relations 45(3) pp 292–325.
Gollan P (2002) Australian Workplace Agreements Employee Attitudinal Survey (weighted findings). Office of the Employment Advocate, Commonwealth of Australia, Sydney, October. Hamberger J (1995) Individual Contracts: Beyond Enterprise Bargaining? ACIRRT Working Paper
No. 39 Sydney: Australian Centre for Industrial Relations Research and Training.
Lawler EE, Mohrman SA, Ledford GE Jr (1998) Strategies for High Performance Organisations.
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