Chapter I Introduction
Organizational commitment persists as a primary variable of interest in studies of employment, organizations, and allied fields. The dissertation First database reveals 202 dissertation and abstract titles referencing “organizational commitment” in scholarly sources published between 2001 and 2004, and organizational commitment remains a perennial topic for management scholars. Commitment has been studied by many because it is believed to affect organizational performance. For example, a primary aspect of organizational commitment is extra role behaviour. Organizations generally value the initiative and conscientiousness dials such contributions represent. Although organizations appreciate individual performance that goes beyond job requirements, few would argue that job descriptions can adequately specify all valued contributions. (Bills 2003 202-21)
Numerous studies have shown that organizational commitment predicts important variables, including absenteeism, organizational citizenship, performance, and turnover. Colbert and Kwon (2000) noted that organizational commitment has been related inversely to both intent to search for job alternatives and intent to leave one’s job. Also, it reduces absence frequency. In addition, organizational commitment has been related to more positive organizational outcomes, including job satisfaction and attendance motivation. These studies underscore organizational commitment’s importance and thus the need to understand better its antecedents. Many firms have moved rapidly from Tayloristic work systems, in which employees exercise limited discretion within narrow job descriptions, toward High Commitment Work Systems (HCWSs) that require considerable discretion, initiative, and judgment under reduced supervision. Lincoln and Kalleberg (1985) described a similar earlier trend inspired by the apparent success of Japanese-style management. These trends have spurred increased interest in organizational commitment, and will likely enhance its importance in coming years. Still, many issues concerning organizational commitment remain poorly understood. For example, scholars contend that many organizations adopt Human Resources (HR) practices intended to maximize employee commitment, yet, with few exceptions, little systematic research examines the influence of HR practices; including practices intended to promote commitment. Further, although prior work suggests that organizational structure influences commitment (Berger and Cummings, 2000), its effects have received only limited attention. (Berger 2000 287-326)
We examine effects of HR practices and organizational characteristics on commitment. Nearly all past studies rely on samples drawn from one (usually) or very few worksites. This severely restricts inferences on factors that tend to be constant within organizations, but vary across organizations, notably HR practices and organizational structures. The National Organizations Survey (NOS) used a hyper-sampling strategy to develop a nationally representative sample of employees and workplaces. It provides matched employee-employer surveys, including employer responses on HR practices and organizational characteristics. In addition to providing meaningful variance on HR practices, this helps overcome common method variance and causal inference problems that plague single source studies. Our study provides two major contributions. First, we test hypothesized relationships that have received little attention in past studies. Specifically, we examine the influence of HR practices and organizational structure on organizational commitment. Second, our study uses a diverse national probability sample of U.S. workers and their employers, providing greater generality than prior studies. (Kallenberg et. all 1991)
In the following section, we discuss theoretical foundations of organizational commitment, and present hypotheses for its relationships with various HR practices and organizational characteristics. Next, data, measures, and methods are discussed. Then, results are presented. Finally, we conclude with a discussion section addressing limitations, contributions of our study, and future research. Contested ground if employment relations are a definition that can be said to encapsulate both HRM and industrial relations, then it is first useful to disaggregate and define its two components. Thus: ‘HRM’ as a theoretical model involves the acquisition, development, remuneration, motivation and maintenance of an organisation’s workforce. Its functional activities are integrated, proactive and strategically orientated to the achievement of business objectives, and they include the organisational practices of human resource planning, job analysis and job design, recruitment and selection, training and career development, performance appraisal and management, compensation and benefits, health and safety and evaluation. Its orientations and activities are predicated on individualist and unitarist assumptions, and these assumptions deny the possibility of inherent conflict in workplace relations. (Holvino 2004 245)
‘Industrial relations’ as a theoretical model involves the rules governing workplace relations and the institutions established to govern and enforce these rules. These ‘rules’ are represented in the terms and conditions of work set out collectively and individually agreed labour contracts and common law contracts, as well as grievance procedures, dispute settlement processes, statutory regulations, codes of conduct, industrial law, and similar. Their formulation is reached through practices such as negotiation, conciliation, arbitration, collective bargaining, individual bargaining, and their governance and enforcement are mediated through ‘institutions’ such as trade unions, employer associations, industrial tribunals, state-sponsored regulatory bodies and the civil courts. Its various orientations and activities are predicated on collectivist and pluralist assumptions, and these assumptions accept the possibility of inherent conflict in workplace relations. (McMalian 1998 193-214)
Although briefly described, the various practices, rules and institutions that fall under these definitions cover the ground we hold as constituting the ’employment relationship’. There are clear differences between their various emphases of workplace interest, such that it would not be hard to reach the conclusion that there are likely to be significant problems in trying melding them together. Indeed, on face value, the distinctions identified may even seem irreconcilable. One could conceivably choose one or the other as a guide to, or mode of, labour management practice, but not both. Much of the HRM literature reflects this problem, typically devoting one or two chapters to industrial relations institutions and rules without saying much about how these fit into its overall vision. The industrial relations literature is similarly inclined, saying little about HRM programmes or how they might be expected to operate within the institutional machinery that regulate the rules of workplace relations. What comment has been passed has typically regarded HRM as a threat to industrial relations, the assumption being that its individualist and unitarist orientations are inimitable to the collectivist rule-making processes and the pluralist institutions set up to govern such processes. In other words, you can apply one (i.e. HRM) to replace the other (i.e., industrial relations), but you cannot have both. (Williams 2006 219-31)
From a theoretical point of view such an argument seems coherent. Industrial relations are based on the assumption that there is an ever-present potential for conflict between competing workplace groups, and therefore rules and institutions for its regulation are necessary. HRM, on the other hand, is based on the assumption that conflict is not an inherent part of workplace relations and therefore such rules and institutions are not needed. Indeed, from an HRM standpoint, they are often conceived to be the actual cause of conflict, such that their removal is fundamentally necessary for the proper operation of HRM practices. The first is that the less pervasive are the rules and institutions of industrial relation, the more HRM practices will prosper to the benefit of all. Hence the action to be taken is to seek the reduction or elimination of such rules and institutions. The second is that the more properly HRM practices perform to the benefit of all, the less need there will be for the rules and institutions of industrial relations – the action in this instance being to persist with HRM practices until this end is achieved. Firms in the industrial west have generally followed one or the other of these advocacies, some lobbying government for measures to limit the powers and prerogatives of such things as trade unions and industrial tribunals, others introducing HRM practices as a means of weaning employees away from such things as collective agreements and union affiliation. (McCuiston, 2004 73-92)
There are grounds for challenging the rationale underpinning both these claims. It is wrong, for example, to assume all workplace relations are marked by endemic conflict between competing workplace interests. Most day-to-day experiences and relations between managers and employees, in fact, contain a goodly amount of general reciprocal interest in securing the survival of the organisations they work for. But it would be equally wrong to deny the ever-present potential for conflict between these groups over the specifics of work. How a job should be allocated, how intensely it should be performed and at what rate it should be remunerated are all areas that raise and sustain the potential for workplace conflict. This is because managers typically have more power than employees to determine such matters, and it is a power that will inevitably be contested from time to time, if not by the employees themselves than by trade unions, pressure groups or governments acting on their behalf. It is furthermore wrong to conceptualise HRM and industrial relations as being mutually exclusive. Many HRM problems (e.g., absenteeism), for example, are in fact manifestations of industrial conflict (e.g. a ‘covert’ form of industrial conflict), whilst many industrial relations problems (e.g. discrimination) are manifestations of failing HRM practices. The point to be made here is that the assumptions dividing HRM and industrial relations are not as clear-cut as theory would suggest, such that the rationale underpinning the claim that the two forms of labour management are inimitable is questionable. This raises the possibility for their coexistence, an issue to which we now turn in the hope of relaying some understanding of how it might be conceptualised and applied. To this end we draw on a study by, which provides two useful analytical frameworks for this very purpose. The first delineates four approaches an organisation might take in its management-union relations. Looking at these approaches is a necessary first step, since the possible coexistence of HRM and industrial relations practices is very much predicated upon how an organisation chooses to relate with trade unions. (McMalian 1998 193-214)
So stated, the first approach involves managing trade union relations externally by referring industrial relations issues to employer associations or labour lawyers, thus providing the organisation with representation in negotiations conducted with trade unions and on matters brought before industrial tribunals. The advantage of this approach is that management can draw on outside industrial relations expertise, which can be cost effective, particularly for small organisations. It also allows organisations to resist trade union demands by making reference to industry standards and tribunal decisions. The major disadvantage is that any settlements reached will be less tailored to the particular circumstances of the organisation, and they may also not get to the root cause of the issue in dispute. This approach broadly reflects management-union relations under the centrally negotiated collective bargaining system. It is antithetical to the possibility of HRM practices as the wages and conditions of work are externally determined and imposed on the organisation from Outside’. In short, the On-the-job’ co-existence of HRM and industrial relations practices is difficult to contemplate under this type of approach. (Friday 2003 363-80)
The second approach involves managing trade unions relations internally through a specialist department (e.g. HRM). In this case the organisation, through its specialist department, negotiates directly with trade unions and the bargaining agendas are more clearly defined in terms of the circumstances and needs of the organisation. The main advantages of this approach are that it raises the quality of management-union relations and ensures negotiated outcomes are fair and consistent with accepted practices across the organisation. It also allows organisations to approach the management of trade union relations in a proactive rather than reactive manner. The main disadvantage is that it can encourage the growth and influence of trade unions within the decisional processes of an organisation, such that securing industrial peace becomes a more important goal than achieving business objectives. This approach is broadly consistent with management-union relations that operate under union negotiated collective agreements concluded at the level of the enterprise. Because it is organisationally-centred, the practice of HRM within the limitations and expectations imposed by trade unions is therefore possible.
The third approach involves managing trade union relations internally through line managers. In this instance, line managers are given the responsibility for dealing with industrial relations issues, negotiating directly with trade unions and providing representation in the proceedings of industrial tribunals. They may call on advice from an internal specialist department or externally from an employer association or labour lawyer, but the ultimate responsibility for any outcomes resulting from such negotiations and representations rests with them. Because of the closeness of line managers to the source of industrial relations problems, one advantage of this approach is that it encourages the early resolution of industrial relations issues. It also encourages higher levels of communication and cooperation between management and workers, thus reducing the number of issues likely to lead to disputes. The main disadvantage is that it is prone to marginalize trade unions from the workplace, which can provoke them into actions against an organisation to promote or sustain their relevance. It also relies heavily on the competence of line managers to deal effectively with industrial relations issues, trade unions and industrial tribunals. As in the previous approach, this one is similarly consistent with management-union relations that involve union negotiated collective agreements negotiated at the enterprise level, and so the coexistence of HRM and industrial relations practices is similarly possible within the limitations and expectations imposed by the negotiating trade unions. (McCuiston, 2004 73-92)
The final approach involves managing trade union relations, either externally through employer associations and labour lawyers and/or internally through line managers or specialist departments, but in this instance the aim is not to accommodate trade unions and industrial relations issues but to seek their elimination altogether from the workplace. To this end, it seeks to encourage employees away from trade union affiliation and thereby dispense with industrial relations issues by having line managers deal directly with employees on an individual and exclusive basis. It furthermore involves resisting or limiting workplace access to trade unions and strongly opposing their claims and demands in industrial tribunals. The main advantages and disadvantages of this approach extend upon those listed in the previous approach, the only difference being that the importance placed on the competency of line managers to deal with industrial relations issues, trade unions and industrial tribunals is dependent upon the success or otherwise of the approach. This approach is as organisationally centred as in the previous two approaches, but in this case it actively seeks to limit the role for trade unions in the settlement of workplace rules. It is therefore not possible to conceive of the coexistence of HRM and industrial relations under this approach. (McCuiston, 2004 73-92)
Summing the key elements of these four approaches it could be argued that centrally bargained collective agreements are more consistent with the operation of industrial relations alone, that individually bargained agreements and common law contracts are more consistent with the operation of HRM alone, and that neither of these forms of labour contract is capable of supporting the genuine coexistence of HRM and industrial relations practices. The operation of collectively bargained agreements at the level of the enterprise, on the other hand, is consistent. These later agreements, the provisions of which are typically settled with reference to the operational circumstances of individual organisations, bring HRM interests and trade union bargaining agendas into closer alignment. In so doing they provide the opportunity for HRM practices to influence and orientate workplace relations in ways that contribute to the strategic direction of an organisation, rather than leaving them to be structured solely by the rules and institutions of centrally determined industrial relations. They furthermore provide the opportunity for industrial relations practices to be tailored to suit the particular circumstances confronting workers employed in different organisational settings and different occupational categories, at the same time securing their workplace well being and protecting them from the vagaries of managerial discretion.
Having set out four possible approaches an organisation can take in its relations with trade unions, it goes on to set out a second framework for conceptualising the role of trade unions in organisational labour management processes. Now a couple of modifications to the subject matter of the study need to be made at this point for a true understanding of what is intended to be purveyed can gained. First, the framework we are about to refer to is concerned with the process of change within organisations that have a trade union presence. For present purposes the meaning of the word ‘change’ can be taken as being synonymous with the introduction and/or application of HRM practices designed to achieve some strategic goal (recall the definition outlined at the beginning of the first section). Second, the framework is also concerned with the ‘role’ trade unions play in the change process. In the following we hold this role to encapsulate everything trade unions do in terms of the earlier mentioned rules and institutions of industrial relations (recall again the definition outlined at the beginning of the first section). Neither of these modifications corrupts the meanings and understandings of the following framework, and is simply employed to demonstrate in a more accessible way how the coexistence of HRM and industrial relations might be conceptualised and applied. So stated, framework for workplace change involving trade unions is divided into three categorical models: management-driven’, trade union as ‘gatekeeper”, and managementunion ‘alliance ‘. It is to each of these that we now turn. (Brockner 2002 9-28)
The Management-Driven Model
In the first of these models the trade union plays no formal role in the change process. In the management dimension, the desire to introduce change is determined by management and its feasibility is considered in relation to the expected responses of employees. Having determined what is feasible it then develops a plan to affect the change. In the employee dimension it settles on a broad strategy (i.e., either to force or foster change), and establishes processes and structures of consultation and persuasion as a means of overcoming employee resistance to the proposed change. The substantive outcomes expected of the change process refer the way work is performed and remunerated, whilst the relational outcomes refer to the altered relationship between managers and employees. Although the trade union is not included in this process it can nevertheless act upon it in a number of ways. It can strengthen employee resolve to resist the change by making them aware of what happened when a similar change was introduced elsewhere. It can also utilise its expertise to identify operational, financial and longer-term deficiencies associated with the change that employees are unaware of. In so doing, the incentives and levels of consultation and persuasion needed to elicit employee acceptance of the change will become greater, costing more, taking longer, and achieving less. What is left of the change process after these ‘outside’ influences is a change in relational outcomes and no guarantee of a change in substantive outcomes. (Wright, 2002 1183-90)
Trade union as ‘gatekeeper’ model
An alternative model is where the trade union is not external to the change process, but is instead formally recognised by management as having a legitimate role to play in representing the interests of employees. It can still be expected to strengthen employee resolve to resist the change and to utilise its expertise in identifying problems with the change. But being integrated into the change process draws it into the role of a ‘gatekeeper’. By this it is meant that the trade union acts in a way that filters employee concerns to management about a proposed change, articulating what is possible and what is not in relation to those concerns. It also acts as a filter in the opposite direction, articulating to employees its own perspective of management’s intentions in relation to the change. As to the change processes itself, in the management dimension the desire for change is once again the sole prerogative of management, but in this instance it determines the feasibility of the change by making reference to the expected response of the trade union. It then develops a plan, a structure and strategy (i.e. forced or fostered change) to affect the change. In the employee dimension consultation with employees no longer figures in the change process, and is instead replaced by processes of persuasion conducted in a management-union negotiating committee. (McCuiston, 2004 73-92)
Here the trade union negotiates in ‘partnership’ with management, with both sides offering incentives and resistances, demands and counter-demands, claims and counter-claims to affect the best possible result for their constituent needs in relation to the change. Once a settlement is reached, both sides are then expected to deliver on any commitments given and agreed upon. In so doing, the incentives and levels of persuasion needed to elicit employee acceptance of the change will be less than in the previous model, costing less, taking less time, and is more likely to be achieved. The end result is a more effective process of change, with the workplace outcomes being realised on substantive and relational levels in accordance with the trade-offs agreed in negotiations within the management-union committee. (McCuiston, 2004 73-92)
The third model again sees the trade union formally integrated into the change process, but in this instance is involved much earlier. In the management dimension it is still the case that management is the key driver in determining the desirability of change, but its feasibility and planning are undertaken in consultation with the trade union. For its part the trade union can still be expected to articulate members’ resistance to the plan, but its expertise and perspectives on the change can be used to shape the elements and expectations of the plan. Hence, rather then being regarded as an obstacle or filter through which the plan must pass, the trade union is viewed as offering a positive contribution to the plan. Employee consultation and persuasion reappear in the employee dimension, such that the change process now operates on two levels: one involving management and the trade union, the other involving management and the employees. The issue of trust is important here. The trade union will need to trust the intentions of management consultations with employees are not trying to undermine its role in the workplace, and management will need to trust the intentions of the trade union in fairly representing the views of employees. If this is sustained, a mutually beneficial ‘alliance’ between management and the trade union and between management and the employees, over the elements of the plan and the processes by which it will be applied is possible. The end result is that change will be affected as expected by all parties on both relational and substantive levels.
In looking at these models, by definition the ‘management driven’ approach is inconsistent with the coexistence of HRM and industrial relations practices. Leaving a trade union outside the change process, or to put it in terms closer to the themes of the present discussion, leaving it outside the decisional processes involved in introducing and applying HRM practices, will leave the trade union with little option but to resist the introduction and application of the change. Thus, applying HRM practices will be contingent upon the ability to overcome this resistance, the outcome of which will largely depend on the balance of power each side can wield in the process. In this instance, it truly is a case of one set of practices prevailing over the other (i.e. HRM versus industrial relations) in the manner described in the early paragraphs of the last section, where the rules and institutions or industrial relations represent an obstacle to the implementation and operation of HRM practices. Although the model is inconsistent with the possibility of coexistence, it nonetheless provides a useful reference point for contrasting the other two approaches. (Kochan 2003 3-21)
Here we find that the ‘gatekeeper’ and ‘alliance’ models are, in fact, consistent with the possibility of coexistent HRM and industrial relations practices, but, not surprisingly, they are consistent in different ways. The gatekeeper approach, for example, allows HRM practices to be undertaken via & filtering process involving negotiated trade-offs with trade unions. In short, the coexistence occurs via HRM operating within the limitations imposed by the rules and institutions of industrial relations. The alliance approach, however, uses trade union expertise and employee consultation proactively in the planning stages of HRM, thereby closing the gap between what is desirable and what is feasible, at the same time co-opting trade union and employee commitment to the success of the plan. In short, the coexistence occurs via HRM practices conscripting the rules and institutions of industrial relations to service the achievement of organisational objectives. As a cautionary note, you should read its contents with a mind that it is a broad conceptual devise aimed delimiting in the simplest possible way the disconnected facts that make up the practical problems and prospects of integrating the two practices. In other words there will always be exceptions, indeed some sizable, to the inferred ‘rules-of thumb’ listed under the various categories. Omitted, for example, is any reference to statutory minimum requirements and common law obligations (as well as their overseeing bodies), both of which could also be considered as part of the rules and regulations of industrial relations that form a backdrop to those that more directly involve trade unions and industrial tribunals. (Guzzo 2003 323-38)
Applying Hrm Practices Within an Industrial Relations Setting
In this closing section we propose to draw on the preceding discussion to outline things that need to be considered when applying HRM practices within an industrial relations setting. In so doing we offer a general appraisal that is capable of embracing all three models, and assume (as a reference point against which other possibilities might be conceived or applied) that HRM practices are operating or intended. Thus, consistent with the processes of a model HRM programme (see above) the initial stage of implementation will rely on senior managers coming together to settle on the strategic objectives and goals of the organisation. In so doing they will need to assess and analyse the available information to determine a corporate plan on how these objectives and goals might be achieved in the most effective and efficient manner. The settlement of these issues will typically have ramifications for the management of the organisation’s employees. To pursue the corporate plan, for example, the organisation may need to recruit additional employees or lay-off existing employees. It may alternatively require the importation of new skills, the upgrading of existing skills, the introduction of new forms of performance appraisal, the application of new or innovative methods of remuneration, or some other alteration that changes the existing pattern of work and employment. Whatever the case, it will (or should ideally) be the responsibility of HRM (or those in charge of this function) to develop the employee and management dimensions of the corporate plan in a manner consistent with meeting the strategic goals and objectives of the organisation. (Soutar 2004 26-33)
Developing such ‘dimensions’ where trade unions are active and working arrangements are subject to collective agreements will necessitate the settlement of some form of industrial relations policy. Such a policy will need to reflect the organisation’s approach to industrial relations (i.e., management driven, gatekeeper or alliance) and provide a reference point for decision-making. It should be consistent with the achievement of the organisation’s strategic goals and objectives and provide employees with a measure of managerial accountability, particularly where consultations with employees and/or negotiations with trade unions are provided for. The policy should ideally cover a range of HRM issues likely to lend substance to these ends, but at the very least it should deal with the following issues:
- Attitude toward trade unions’ whether the organisation will recognise the legitimate right of trade unions to represent workers (alliance), or whether such a right will be merely tolerated (gatekeeper) or resisted (management directed).
- Structure of trade union representation: whether the organisation will encourage multi-union or single union representation of its employees (alliance and gatekeeper), or whether it will discourage all forms of representation (management directed).
- Negotiation: whether the organisation will negotiate with trade union, on what issues, and at what stage in the planning process (pre-emptively in the case of an alliance strategy, post-operatively in the case of a gatekeeper strategy, or not at all in the case of a management directed strategy).
- Consultation: whether the organisation will consult with employees in addition to negotiating with trade unions (alliance), or conducted with employees alone (management directed), or not at all (gatekeeper).
- Dispute settlement: how the organisation expects industrial disputes will be resolved, either through a combination of negotiations with trade unions and consultation with employees (alliance), or through negotiation with trade unions and/or shop stewards alone (gatekeeper), or through consultation with employees alone (management directed).
- Grievance Procedures: how the organisation expects grievance procedures to be followed, and whether this will involve trade unions and employees (alliance), or trade unions alone (gatekeeper), or employees alone (management-directed).
- Responsibility: who in the organisation will be responsible for industrial relations issues, whether external agencies in the form of employer associations and labour lawyers (management directed), or internally in the form of specialist departments and/or line managers (management directed, gate keeper and alliance). (Gardenswartz 1998 3)
Having settled the company’s approach to industrial relations, the managers of the HRM function will be in a position to consider the implications of applying practices or changing working arrangements to achieve the organisation’s strategic goals and objectives. Thus, if the company is seeking to multi-skill its workforce as part of a programme designed to achieve this aim, it will certainly need to discuss the proposal with its employees. Depending on the industrial relations approach adopted, it may or may not be decided to discuss the proposals with trade union representatives, as well as to take account of any provisions contained in collectively bargained agreements (e.g., job classifications, remuneration, skill development, and so on). The company will furthermore need to evaluate the legal requirements pertaining to such things as occupational health and safety and equal employment opportunity in determining training needs and its allocation among the workforce.
Bearing these considerations in mind the HRM team will need to show a considerable degree of lateral thinking and tact if it is to push through its agenda whilst retaining the trust and confidence of the workforce (i.e., employees only under the union directed model) and/or those with whom it is negotiating (i.e., trade unions only under the gatekeeper model and employees and trade unions under the alliance model). If endemic workplace conflict and collective bargaining between workers and management have long histories in the organisation, and if the trade unions covering the workforce are well organised and militant, then this will be no easy task. Indeed trying to apply a full HRM programme unilaterally (i.e., management directed) may even prove counter-productive. The alternative to such circumstances only serves to highlight the importance of negotiation and consultation, whether in the application stages of a HRM programme (i.e., gate keeper) and/or in the planning stages of the programme (i.e., alliance). Appropriate structures and processes therefore need to be put place to facilitate these activities, and are necessary preconditions if HRM outcomes within an industrial relations setting are to achieve any likely success. Managers need to be skilled in the art of negotiation and consultation, and thereby recognise that the likely implementation of a theoretically pristine HRM programme in is unlikely to be achieved. They must also have appropriate levels of authority to make decisions and deliver on commitments given in negotiations with trade unions and consultations with employees. And they must also have access to relevant sources of information, whether this is from internal specialist departments or external agencies of expertise (e.g., employer associations or labour lawyers). Once an HRM programme has been implemented, in whatever form (i.e., management directed, gatekeeper or alliance), the question remains as to whether its operation under the chosen industrial relations strategy has been successful. In this respect the accountability of management requires the establishment of industrial relations indicators, which can take the form of information on absenteeism rates, labour turnover rates, monthly calculations of the number of strikes, stop work meetings and grievance meetings, and the resultant lost time associated with each. (Cook 2003 296-322)
Four Human Resource Management Approaches
a company’s approach to human resource to human resource management in the global environment is guided by its general company approach to human resource management. Most businesses in human resource management: ethnocentric, polycentric, regiocentric, or geocentric. The decision depends on several factors- such as governmental regulations and the company’s size, structure, strategy, attitudes, and staffing. (Ragins 2004 48)
The ethnocentric approach uses natives of the parent country of a business to fill key positions at home and abroad. This approach can by useful when new technology is being introduced into another country. It is also useful when prior experience is important. Sometimes less- developed countries ask that companies transfer expertise and technology by using employees form the parent country to train and develop employees in the host country. The goal is to prepare the host country employees to manage the business.
The ethnocentric approach has drawbacks. For example, it deprives local workers of the opportunity to fill key managerial positions. This may lower the morale and lessen the productivity of local work3ers. Also, natives of the parent county might not be culturally sensitive enough to manage local workers well. These managers could make decisions that hurt the ability of the company to operate abroad. (Adler 2006 61-89)
The polycentric approach uses natives of the host country of a business to manage operations within that country and natives of the parent country to manage at headquarters. In this situation, host country managers rarely advance to corporate headquarters since natives of the parent country are preferred by the company as managers at that level. This approach is advantageous since locals manage in the countries for which they are best prepared. It is also cheaper since locals, who require few, if any, incentives are readily available and generally less expensive to hire than others. The polycentric approach is helpful in politically sensitive situations because the managers are culturally sensitive locals, not foreigners. Further, the polycentric approach allows for continuity of management. The polycentric approach has several disadvantages. One disadvantage is the cultural gap between the subsidiary managers and headquarters managers. If the gap is not bridged, then the subsidiaries any function too independently. Another disadvantage is limited opportunities for advancement. Natives of the host countries of the host countries can only advance within their subsidiaries, and parent country natives can only advance within company headquarters. The result is that company decision makers at headquarters have little or no international experience. Nevertheless, their decisions have major effects on the subsidiaries.
The regiocentric approach uses manager’s form various countries within the geographic regions of a business. Although the mangers operate relatively independently in the region, they are not normally moved to the company headquarters. The regiocentric approach is adaptable to fit the company and product strategies. When regional expertise is needed, natives of the region are hired. IF product knowledge is crucial, then parent- country nationals who heave ready access to corporate sources of information can be hired. One shortcoming of the regiocentric approach is that managers form the region may not understand the headquarters view. Also, corporate headquarters may not employ enough managers with international experience. This could result in poor decisions. (McCuiston 2004 73-92)
The geocentric approach uses the best available a mangers for a business without regard for their country of origin. The geocentric company should have a worldwide strategy of business integration. The geocentric approach allows the development of international managers and reduces national biases. On the other hand, the geocentric approach has to deal with the fact that most governments want businesses to hire employees from the host countries. Getting approval for non-natives to work in some countries is difficult or impossible. Implementing the geocentric approach is expensive. It requires substantial training and employee development and more r5elocation costs. It also requires more centralization of human resource management and longer lead times before employees can be transferred because of the complexities of worldwide operation.
Theory, Literature, and Hypotheses
Organizational commitment is an individual attitude that reflects one’s identification with and involvement in a particular organization. It can be characterized by three related factors: 1) strong belief in the organization’s goals and values, 2) willingness to exert extra effort on its behalf, and 3) strong desire to maintain membership. The extant literature has included important debates, or alternative perspectives, on several important issues, including the focus and conceptualization of organizational commitment. Various foci of employee commitment are possible. These include commitments to one’s employer, profession, immediate supervisor, and union. Our concern is with commitment to the employer. This aligns with our emphasis on organizational-level variables (i.e., HR practices, organizational characteristics) rather than supervisor or co-worker attributes. Also, we emphasize a “global” or unidimensional conception of organizational commitment rather than a faceted approach. Commitment facets are sufficiently correlated such that one may speak meaningfully of overall (unidimensional) commitment, and thus focus on it as a useful concept, even though it may be useful for some purposes to examine its facets in greater detail.
Critics have argued that research on organizational commitment lacks strong theoretical grounding. At least three compatible theoretical streams apply. First, common to all social exchange theories is the notion that individuals seek favourable outcomes relative to their inputs. Consistent with social exchange theory, perceived organizational support (POS) addresses the organization’s commitment to its employees. Specifically, POS refers to the extent employees perceive that employers value employee contributions and care about their wellbeing. Finally, psychological contract theory refers to the implicit, reciprocal rights and obligations that individuals perceive within exchange relations, and can also be used to understand commitment. Each perspective suggests that commitment is contingent on perceived exchanges. More favourable exchanges should strengthen employee attraction to the employment relationship and increase commitment. In addition, all three theories allow for exchange of either instrumental or affective outcomes. Finally, implicit or explicit within each theory is the notion that employees hold expectations of what employers should provide (e.g., comparison level (CL) standards or expectations, expectations of support, psychological contract expectations). Meta-analyses and more qualitative reviews show that prior study of antecedents varies greatly. Mathieu and Zajac (1990) were able to incorporate 41 prior estimates relating commitment and employee age, but only three on “organizational characteristics” (size and centralization). None of the antecedents examined could be termed a “human resource practice.” This is both interesting and problematic, given that such practices are a principal means organizations use to influence commitment. (McMalian 1998 193-214)
Variables such as age, gender, and tenure are often studied because they vary within a single site, are readily available, and are easy to measure. Prior studies typically focus on a single site where HR practice variation is limited or non-existent; thus, HR practices are not examined. Although a few studies have examined effects of specific HR practices, HR measures tend to be unique and not comparable across studies. This makes the accumulation of findings difficult at best. Hence, little is known about the influence of HR practices and most organizational characteristics. Despite this, prior research provides a basis for predictions on effects of HR practices and organizational characteristics. Testing such predictions is needed to establish the empirical relationship between HR practices and commitment. (Stone, 2005 214-39)
Human Resource Practices
Prior work (suggests distinct HR concepts that should influence commitment. Using that research as a foundation, the present study posits that internal labour markets, hiring selectivity, training, grievance resolution mechanisms, benefits, employee involvement, incentive pay, union pressure, compensation cuts, and downsizing all affect organizational commitment Internal Labour Markets. An internal labour market (ILM) exists when external hiring is limited to entry-level positions, job “ladders” exist to advance internally, and promotion from within is favoured. Bills suggested that a primary motivation to establish and maintain ILMs is to secure employee commitment. Since ILMs favour current employees over external rivals, employees should perceive ILMs positively and reciprocate this support with commitment. Also, individuals may see ILMs fulfilling an employer’s duty to provide security and opportunity for development and advancement. We expect employees appreciate their favoured status in an ILM and, consequently, feel higher commitment. (Marchant 2004 36-42)
H1: Internal labour market practices are positively related to organizational commitment
Hiring Selectivity: Hiring selectivity refers to the rigor of hiring as indicated by applications per vacancy. Selective hiring may indicate numerous phenomena, including extreme care in matching applicants with job requirements or firm culture, an internal development strategy (i.e., selection for careers), and conscious effort to “skim the cream” of the labour market and offer higher compensation to dissuade shirking. Hiring selectivity and associated screening also may form a “rite of passage,” an initiation rite that elicits increased attachment. Employees’ awareness that the organization has incurred substantial costs in selection also may enhance their sense of valuation by the organization and their perceptions that it is committed to them. The effect may be a felt obligation or voluntary desire (or both) by employees to repay the organization for its investment through commitment. Further, based on attraction-selection-attrition (ASA) theory, rigorous selection systems should produce high person-organization fit, enhancing attachment. Finally, employee awareness of rigorous hiring may enhance personal competence perceptions, and meta-analytic evidence shows that perceived personal competence is strongly related to commitment. This suggests that selectivity enhances employee commitment. Prior research supports this prediction. (McCuiston, 2004 73-92)
H2: Hiring selectivity is positively related to organizational commitment
Training: a strong training emphasis implies an internal labour market and career opportunities. Such emphasis is indicated by formal training, numbers participating, training effectiveness, and firm attempts to match current training practices. Based on human capital theory, employees should perceive employer training investments as symbols of continued future employment and higher wages. Employees should value training for the security, advancement, and higher earnings implied, and thus be more committed. Prior research shows organizational climates that emphasize continuous training and updating elicit high commitment. (McMalian 1998 193-214)
H3: An emphasis on employee training is positively related to organizational commitment
Grievance Resolution Mechanisms: Many firms have formal procedures for resolving worker disputes. These provide a mechanism to redress grievances, and promote “voice” over “exit.” Such procedures encourage the view that the organization seeks fairness and is open to calls for change from below. Because this concern for due process and fairness signals the organization’s support and its commitment to employee concerns, grievance mechanisms should increase employee commitment. Further, grievance procedures fulfil due process and fairness expectations. Consistent with these arguments, Bemmels (1995) found grievance procedures positively related to commitment.
H4: The provision of formal dispute resolution procedures is positively related to organizational commitment
Benefits: As noted, certain HR practices provide both instrumental and affective outcomes. Although benefits certainly have instrumental worth to employees, they also may signal the organization’s affective valuation of employees (i.e., organizational support). Further, since many benefits are discretionary, employees should reciprocate with commitment (Eisenberger et al., 1986). Koys (1991) found stronger commitment when benefits are seen as discretionary. Finally, some prior results suggest a positive relationship.
H5: The level of benefits provided to employees is positively related to commitment
Employee Involvement: Employee involvement is often viewed as an integral part of High Commitment Work Systems. Involvement in decisions provides a sense of ownership of and commitment to both those decisions and the organization. Clearly, employee involvement processes should engender the perception that the organization values employee contributions. Thus, we predict that involvement increases commitment. Additionally, employee involvement might be perceived by workers as a discretionary positive benefit. In the sense that involvement opportunities are voluntarily provided, employee commitment to the employer-employee relationship should increase. Further, Lawler and Youn (1996) found that when parties to an exchange relationship work together toward a super ordinate goal, relational cohesion increases. In that employee involvement serves the dual purposes of enriching jobs and improving organizational processes and outcomes, employee involvement will be positively related to employee commitment to the organization. Previous research has supported a moderately strong link between related measures (e.g., autonomy) and commitment. Employee involvement is often realized in the form of increased worker responsibility and autonomy. (Colbert 2000 484-501)
H6a: Employee responsibility is positively related to organizational commitment
H6b: Employee autonomy is positively related to organizational commitment
Incentive Pay: One argument for incentive pay systems is that they harmonize employee and employer interests by aligning incentives. Further, incentive pay systems should promote equity feelings because workers are paid for performance contributions. Accordingly, employees should view incentive pay as a form of support and show increased commitment in return. Despite well-known problems with incentive systems, this basic idea suggests that workers will be more committed in firms where performance is an important earnings influence. Prior research by Florkowski and Schuster (1992) provides some support for the positive effects of an incentive pay system on commitment.
H7: Incentive pay systems are positively related to organizational commitment
Union Pressure: Union pressure refers to the extent that unions influence a firm’s current practices, specifically practices on training and wages. Workers realize how they benefit from union pressure or activity outside their own workplaces (e.g., when wage increases are granted following a union-management settlement elsewhere). Union pressure may promote perceptions that the organization begrudgingly addresses employee concerns. Workers may thus view organizations as lacking commitment to employees, and reduce their commitment. Finally, workers in firms with high union pressure may credit gains received to unions rather than employers, and thus we expect:
H8: Union pressure is negatively related to organizational commitment
Compensation Cuts: As Wheeler and McClendon (1991) noted, a pay cut is a clear threat to well-being, and encourages hostility. Compensation cuts constitute a clear violation of the psychological contract. Social exchange theory suggests unilateral employer-initiated reductions in the exchange rate will decrease employee attachment. Further, reduced compensation levels also likely fall below employees’ comparison levels (CLs) or expected levels of pay. Compensation cuts also signal a lack of employer support, in that employee contributions are devalued and concerns for employees are seemingly abandoned. Generally, various compensation reductions (e.g., direct cuts in pay and benefits; increased deductibles, co-payments, or employee contributions) should diminish employee commitment. (Arvey 2001 367-407)
H9: Compensation cuts are negatively related to organizational commitment
Downsizing: Downsizing indicates reduced commitment of firms to workers and this causes workers to respond with reduced commitment to employers. The effect within a given firm is not clear-cut, however. Some research suggests that layoff survivors who had the greatest commitment prior to the lay-off had greater negative reactions than those who were less committed. Also, “survivors” may be grateful, and new hires (some victims of downsizing elsewhere) may be grateful to their new employers. Thus, we leave this as an empirical question.
H10a: Downsizing is negatively related to organizational commitment among the retained employees
H10b: Downsizing is positively related to organizational commitment among the retained employees
Bureaucratic structuring of activities refers to a key dimension of. Structuring is generally thought to indicate greater efficiency, but its impact on worker attitudes is unclear. On the one hand, greater efficiency may mean worker concerns are addressed more effectively, while, on the other, bureaucratic structuring might imply that workers are removed from decisions assigned to specialists and experience the frustration of dealing with layers of specialized bureaucrats. According to Lawler and Youn (1993), the intensity of interaction between parties to exchange influences relational cohesion and each party’s commitment. If structuring depersonalizes the exchange, commitment should fall. Although there is evidence that bureaucratic structuring increases commitment in voluntary associations, on balance the benefits of structuring accrue to non-employee stakeholders. (Wending 2000 215-26)
H11: Bureaucratic structuring is negatively related to organizational commitment
Decentralization: Previous discussion references issues associated with decentralization, specifically, employee involvement. Although sharing of decision making may operate through such variables, decentralization is more pervasive. For example, employees may value decision making that is “local” and feel committed to such decisions, even if not directly involved. As such, shared decision-making power should engender perceptions of organizational support, beyond effects stipulated earlier. Further, because organizations typically have no formal obligation to distribute decision making, those that do should be perceived positively (e.g., a goodwill symbol). Evidence mildly suggests that workers are more committed to decentralized organizations. (Becker 2006 464-82)
H12: Decentralization is positively related to organizational commitment
Not-for-profit Status: Not for profit (NFP) organizations often exist to serve goals regarded as nobler than the goals of for-profit organizations. Employees are often drawn to NFPs to serve a “cause” (e.g., to help others). Moreover, one may seek employment to serve a cause and subsequently generalize that commitment to the organization. According to ASA theory, employees in organizations whose values and goals are congruent with their own should form strong attachments. Because a major aspect of commitment is one’s identification with organizational goals and values, commitment should be higher in NFPs. (Wheeler 2001 4783)
H13: Organizational commitment is higher among employees in not-for-profit organizations than among employees in for-profit organizations
As shown, HR practice and organizational characteristics are predicted to have direct effects on organizational commitment. Figure I also present control variables. Those will be discussed briefly below. (Amabile 2003 357-76)
The data used in this study are from the 1991 National Organizations Survey (NOS) database. The NOS consists of two surveys, linked via a hyper-sampling design. Respondents to the 1991 General Social Survey (GSS; a national probability sample of adults) were asked to identify their employers. The “NOS proper” was then administered to GSS respondents’ employers, yielding a nationally representative sample of employing establishments. The GSS component provides data on various employee characteristics and attitudes. Demographic variables such as age, education, and gender are provided, along with a six-item Likert-style scale for organizational commitment based closely on the Organizational Commitment Questionnaire or “OCQ”. The real strength of the NOS arises, however, in the richness of the NOS-proper component, the employer survey, and matched employee-employer responses. The quality of available measures varies across issues, but the NOS-proper provides multi-item scales for many HR practices and other organizational characteristics. Just fewer than 400 cases are available with matching surveys and complete responses to items in the organizational commitment measure. (Kallenberg et. all 1991)
Our measures for most independent variables closely follow previous work by Delaney and Huselid (1996). When possible, we used employer responses to measure HR practices and organizational characteristics. Employee responses (from the GSS) were used to measure organizational commitment and control variables (e.g., job satisfaction). To obtain greater confidence in the scales, we submitted multi-item measures to exploratory factor analysis. In the majority of cases, the constructed scales were, in fact, unidimensional. Other scales were examined carefully (based on content) to ensure that multiple dimensions within the single measure were part of a higher-order construct captured by the composite scale. (a detailed description of all measures is provided in an appendix available from the authors.)
Human Resource Practices: Two items were used to measure internal labour markets by assessing the extent of promotion-from-within. a single question was posed for up to three different job types, yielding up to three items used to form a scale measuring hiring selectivity (“In the past two years, about how many applications have you considered for an opening?”). Four items were used to measure training emphasis (e.g., “Within the last two years, how many employees participated in formal job training?”). a single item addressed grievance resolution procedures (“Are there formal procedures for resolving disputes between employees and their supervisors or co-workers?”). Twelve items measured benefits (e.g., medical benefits, sick leave with full pay, pension programs). Two scales were constructed to measure employee involvement. First, a seven-item scale was constructed for worker responsibility (e.g., training of others, evaluation of others’ performance). Second, a four-item scale was constructed for worker autonomy (e.g., having substantial decision input, working independently). a single question was posed for up to three different job types, yielding up to three items used to form a scale measuring incentive pay (“How important is job performance in determining individual earnings?”). Four items addressed whether HR practices are influenced by union pressure (e.g., “Is any of the formal training offered because of union contracts?”). Five items were used to measure compensation cuts (e.g., “Over the past two years, has the organization lowered salaries or wages, or given smaller raises to pay for medical or fringe benefits?”). Finally, one item assessed downsizing (“Compared to one year ago, has the number of full-time employees in the organization increased, decreased, or remained the same?”). (Arrendondo 2006 27-33)
Organizational Characteristics: a single item assessed organizations’ not-for-profit status (“Not-for-profit status of the organization”-yes or no). a composite index based on items used to assess organizational specialization (eight items), departmentalization (eight items), vertical hierarchy (one item), and formalization (seven items) constituted a measure of bureaucratic structuring. Finally, eight items were used to measure decentralization of decision making. (Payne 2005 158-68)
Organizational Commitment: Mowday et al. (1979) developed the Organizational Commitment Questionnaire (OCQ), a self-report instrument. Three facets were originally proposed, but Mowday et al. (1982) maintain that the OCQ measures a single global construct. Other related measures consistently demonstrate strong consistency with the OCQ (Morrow, 1993). Six items based on the OCQ were used to measure organizational commitment (Davis and Smith, 1991). Except for very minor wording changes, the GSS commitment items were identical to OCQ items. Factor analysis indicated that the six-item OCQ based measure was, in fact, unidimensional. (Caldwell 2000 245-61)
Other possible antecedents of organizational commitment, which may correlate with the variables of interest, are controlled to obtain unbiased estimates. We control for variables that have shown moderate or strong influences on commitment. Single items were used to measure education, gender, minority status, job complexity, and organizational tenure. Multi-item scales were used for job satisfaction, perceived personal competence, and the perceived fairness of rewards. Although organizational level was formed by consulting multiple items, they were not combined in an additive fashion. Consequently, the organizational level variable does not have an alpha. (MacDonald 2003 22-25)
a Company must assess its staffing needs to compete successfully in the international market. Employment forecasting is estimating in advance the types and numbers of employees needed. Supply analysis is determining if there are sufficient types and numbers of employees available. Through selection or hiring and reduction or terminating processes, companies balance the demand foe and supply of employees. Once a Company assesses its overall staffing needs, managers begin to fill individual jobs. a number of factors must be considered. What will the new employee are assigned to do? What are the qualifications that the employee will need? What is the best combination of technical abilities, personality traits, environmental factors, and family situation to ensure success? When these types of questions are answered, specific job data are gathered. This includes information about such things as assigned tasks; performance standards; responsibilities; and knowledge, skill, and experience requirements. From this information a job description is prepared. a job description is a document that includes the job identification, job statement, job duties and responsibilities, and job specifications and requirements. (Swanson 2002 257-68)
Recruiting Potential Employees
a Company officially announces a job by circulating the job announcement and job description through appropriate channels. If the job will be filled by someone already working for the company, then internal channels will be used. The job information will be sent to all human resource offices within the company. Theses offices will post the information or notify company employees of the job availability in some other manner.
If the job will be filled by someone who currently does not work for the company, then different channels will be used. If a decision has been made to hire a parent- country national, then channels within the parents’ country will be selected. If a third- country national will be hired, then channels in other countries that could provide suitable employees will be used. The specific types of outlets selected could be influenced by the type of employee needed. If an unskilled or semiskilled worker is needed, then local public outlets such as Job Service orbits overseas equivalent might be used. If a skilled, technical, or managerial worker is needed, then public and private outlets might be used. For unusual or high- ranking managerial positions, the company might employ a specialized recruitment firm known as a head-hunter. Such a firm, sometimes for a substantial fee, locates one or more qualifies applicants for the position. (Black 2001 291-317)
Selecting Qualifies Employees
Companies that operate in the global environment use a variety of methods to select the best applicant. The best applicant is the person with the highest potential to meet the job expectations. Most companies use a combination of several selection methods, including careful examination of the applicant’s past accomplishments, relevant tests, and interviews. In the process of screening applicants, companies are usually concerned about three broad factors. These are competence, adaptability, and personal characteristics. The factor of competence relates to the ability to perform. Competence has a number for dimensions. One important dimension is technical knowledge. Is the applicant competent in the desired specialty areas? Another dimension is experience. Has the applicant performed similar or related tasks well in the past? For managerial positions, leadership and managerial ability are important. Can the applicant work with others to accomplish goals? For positions I other countries, cultural awareness and language skills are critical. Does the applicant understand the region or market for which he or she would be responsible? Is the applicant able to communicate fluently I the local language? The factor of adaptability relates to the ability to adjust to different conditions. Possessing a serious interest in international business is necessary. Does the applicant really want to work abroad? The ability to relate to a wide variety of people is important, too. Does the applicant work effectively with diverse groups of people? The ability to empathize with others is needed. Can the applicant relate to the feelings, thoughts, and attitudes of those from other cultures? The appreciation of other managerial styles is also highly desirable. Can the applicant accept alternate managerial styles that are preferred by local? The appreciation of various environmental constraints is needed, too. Does the applicant understand the dynamics of the complex environment in which international business is conducted? The ability of the applicant’s family to adjust to another location is particularly important for international assignments. Can the family members cope with the challenges of living abroad? (Price 2000 183-97)
The factor for personal characteristics has many dimensions. The maturity of the employee is one dimension. Is the applicant mature enough, given the assignment and the culture in which the assignment will be undertaken? Another dimension is education. Does the applicant have a suitable educational level given the assignment and the location? In special circumstances gender is a concern. Will the applicant’s gender contribute toward or interfere with the ability to be successful in the working environment? In Saudi Arabia, for example, women are not business associates. The social acceptability of the applicant should also be considered. What is the likelihood that the applicant will fit into the new work environment? Diplomacy is another trait to include. Is the applicant tactful in communication, especially when unpleasant information is involved? General health is another consideration. Is the applicant healthy enough to withstand the rigors of the work assignment? Mental stability and maturity should not be overlooked. Does the applicant function on an even keel and in a responsible manner? The stability of the relationships within the family is important, too. Will the family be able to withstand the additional challenges of a new job- perhaps abroad? As various applicants are screened, one fact usually stands out: no single applicant possesses the perfect combination of competence, adaptability, and personal characteristics. When this happens, the company will have to balance the strengths of the various applicants against their weaknesses. Overall, which applicant best matches the needs of the position? Which applicant has the greatest likelihood of being successful o the job? THE answers to such question result in the selection of the best- qualified individual to fill the job. (Swanson 2002 257-68)
Training and Development Are Critical
Employees make or break an international business, just as they do a domestic one. Their daily actions put the life of the company on the line. Consequently, companies need to be sure all of their employees are well prepared for their work. This includes both lower- level and higher- level employees. Training and developing employees to work at their maximum potential are in the best interest of a company in the long run. Training and development are an investment in the future of the company. The better trained and developed the employees are, the greater the likelihood that the company will be successful. Training and developing employees are major expenses for a company. Managers must decide what types of employees in which locations should receive specific types of training and development. These decisions are not easy. Because of limited resources, companies have to balance needs and potential benefits. (Bemmels 2005 401-22)
Historically speaking, many U.S.- based international companies have skimped on training and development. This has contributed to their difficulties abroad. Many of their employees have not been well prepared to compete in the global marketplace. Companies headquartered in other countries often invest extensively in training and development. In fact, some countries have laws that require companies to train and develop their employees. Such employees are often well prepared for work in the highly competitive global marketplace. U.S. based international companies are now realizing the value of providing more extensive training and development. (Burton 2002 181-97)
Types of Training and Development
Managers working within international companies need a variety of training and development. Managers need training in job- related issues. For example, they need to be aware of the current economic, legal, and political environments. They need to be current o relevant governmental policies and reputations. Managers also need to be aware of managerial practices within their areas of responsibility. Current information about the company, its subsidiaries, and their operations is needed, too. In addition, parent- country national and their families need training and development relating to relationships. At a minimum, they need to develop survival- skill knowledge in the local language upon arrival or shortly thereafter. Managers and their families also need cross- cultural training. They need to understand the various dimensions of the local culture that were discusses in Chapter 3. Also, managers need relating to life in the host country. For example, they need to know about the currency. They need to know what foods are available and their approximate costs. They need to understand housing options and prices.
Special counselling may be needed if the manager has a working spouse. Increasingly, both husbands and wives work, and career moves that are beneficial to one may not be beneficial to the other. If only one of the two benefits, is eth job change worthwhile? Determining if the spouse can work into eh host country is important in many employment decisions. Some governments prohibit the spouses of foreign workers from being employed. What realistic employment options, if any, exist for the spouse in the host country if the spouse cannot work, can he or she adjust to that fact? Providing training and development is costly. Nevertheless, companies cannot fail to provide it especially for parent- country nationals. If parent- country nationals are unsuccessful abroad or if their families cannot adjust to like abroad, the company loses. In effect, a company that provides training and development is like a person who buys insurance: it helps to protect against the risks. Research suggests that relevant training and development does increase the likelihood of success abroad. (McCuiston, 2004 73-92)
Training and Development Help to Prevent Failure
In spite of the efforts of many companies to provide parent- county nationals with relevant training and development, a number of them is unsuccessful abroad. Theses employees may return home early, angry and frustrated. They may muddle through the assignment abroad with little or no success. They many even leave the company during or at the end of the overseas assignment. The associated monetary and psychological costs of failure are high. Failure hurts both the company and the employee. Why does parent- country national fail? One commonly cited reason is the inability of the employee to adjust to different physical and cultural environment. Another is the spouse’s inability to adjust to a different physical and cultural environment. Adjustment problems for other family members can also contribute toward failure. Characteristics of the employee’s personality can cause parent- country nationals to fail. For example, the person’s emotional maturity can be seriously strained by an overseas assignment. The person’s inability to work productively can contribute to failure. The parent- country national may not accept the new responsibilities. He or she may lack the motivation to cope with the challenges of working abroad. She or he might even lack sufficient technical competence. To reduce the chances of failure abroad, companies should select only successful and satisfied workers for overseas assignments. Companies should also provide extensive relevant training and development before departure, throughout the assignment abroad, and after returning home. Companies should make the international assignment part of he long- term employee development process. This effort should benefit both the company and the employee in planned and purposeful ways. (Quartes 2004 176-94)
The international assignment should be accompanied with adequate communication between the company and its employee. The company should know about the employee’s overseas experiences. The employee should know about changes at company headquarters, too. When the employee returns home, the company should provide a job that uses the employee’s international experience. The knowledge and skills acquired abroad should not be ignored. Company managers, especially those without international experience, should be trained to value international experience. The company should expect returning employees to experience reverse culture shock. However, a supportive training and development program should minimize the readjustment time. (Kozlowski 2002 161-67)
Motivating Employees Is Culturally Based
Managers around the world try to motivate their employees to perform to their fullest potential. While this ideal is commendable, the specific things that contribute to peak performance vary. What motivates a U.S. worker to perform well may have little or no effect elsewhere. Employee motivation is not universal. Instead, it is culturally based; that is, it varies from culture to culture. For example, the U.S. culture value individualism. It also values material possessions. It values taking personal risks to gain personal rewards. Consequently, for most U.S. workers motivation relates to the personal desire to assume risk in order to gain material rewards. Consequently, for most U.S. workers motivation relates to the personal desire to assume risk in order to gain material rewards. For many in the U.S. money is a major motivator. It is a reward for accepting individual risks and performing well. The more personal responsibility a U.S. worker accepts and handles well, the more money he or she receives. The more money a U.S. worker ahs, the more material possessions she or he can acquire. Money motivates many in the U.S. to perform well. Of course, money is not the only motivator. As money allows U.S. workers to fulfil their needs and wants, money becomes less and less a motivator. The possibility of earning $3,000 more motivates a U.S. worker who earns the minimum wage. It will allow him or her to have more creature comforts. However, it does not motivate a U.S. millionaire very much. The millionaire has already used money to fulfil basic needs and wants. Money cannot buy everything. Some desires must be fulfilled in other ways. Other factors, such as personal recognition and the sense of reaching full potential, motivate many .S. workers when money can no longer do so. Experiences worldwide suggest that U.S. models of motivation work best with U.S. workers I their native country. When U.S. based international companies try to apply their domestic models fail to explain motivation elsewhere because what motivates people differs from culture to culture. For example, publicly praising the individual achievements of a U.S. worker may motivate him or her toward higher achievement. Treating a Japanese employee in the same manner may not motivate her or him. Since the Japanese employee in the same manner may not motivate her or him. Since the Japanese culture emphasizes group harmony, praising an individual may disrupt the group harmony. It can cause the person singled out to lose face or to suffer personal embarrassment. It can cause that person to behave in the future in a way that will not draw attention too himself or herself. In effect, praising a Japanese employee publicly can backfire. Consequently, international managers must use motivation strategies that are culturally acceptable to her employee. (Rosner 1999 18)
Employee compensation packages are influenced by the local culturally accepted standards. North American and European international companies generally reward employees based on the type of work performed and the skills required. In places like Singapore and Hong Kong, individual performance and skill influence compensation. In Japan such factors as age, seniority, and group or company performance determine compensation. In Latin America penalties for forcing older employees into early retirement are so high that most companies continue to pay these workers as much as younger workers. Since compensation standards vary around the world, companies should be guided by local laws, employment practices, and employer obligations as they design compensation packages. Employees of international companies are motivated are motivated toward peak achievement by culturally sensitive compensation package. These benefit packages include both cash and non-cash items. The mix of employee benefits varies from country to country; however, the cash component is typically the largest. Some companies provide free or price- discounted products or services to their employees as non-cash compensation. In European countries such items as lunches and transportation are often part of non-cash executive compensation. In less developed and developing countries, such basic foodstuffs as rice and flour are sometimes part of non-cash benefits.
Employee compensation packages for parent- country nationals usually are based on several factors. One factor is base salary. For the parent- country national, the bas salary at least maintains the customary standard of living of the employee and the family while living abroad. Another factor is an expatriate bonus. Often a company must pay a premium to persuade an employee to work abroad. It provides compensation for adjustment problems and for hardship caused by living and working abroad. Another factor is a cost- of- living adjustment. It compensates for the fact that basic living costs vary greatly around the world in comparison to the cost of living in Washington, D.C., U.S.a. Finally, fringe benefits often are provided to compensate for the additional expenses of living abroad. They include compensation for having to pay various local taxes and contributions to government insurance programs. They also include relocation expenses, high- risk insurance premiums, extra educational expenses, and extra medical expenses. (Williams 2006 219-31)
Evaluating Employee Performance
Companies that operate internationally must evaluate the performance of their employees. Employee performance, especially for parent- country nationals, is influenced by three factors: the environment, the task, and the individual’s personality. Business environments differ greatly around the world. Some offer better opportunities for success than others. Job tasks vary, too. Some jobs are more demanding than others. It is more difficult to perform jobs with many challenging tasks. Personality characteristics contribute to the likelihood of success, especially in internationals assignments. The match between personality types and job demands is important. The human resource management approach used by the company determines who sets the employee performance standards. For example, with the ethnocentric approach, parent- country nationals primarily set and administer the standards. The nature of the employee performance standards varies from job to job. Different jobs require different combinations of competence, adaptability, and personal characteristics. Standards also vary from country to country since different cultures view employee performance in different ways. Although many companies try to assess the performance of host- country nationals and third- country nationals much like parent- country nationals, it is difficult to do. Even if the evaluation forms are translated into the appropriate languages, misunderstandings can occur. If local evaluation forms are used, can the company headquarters interpret them correctly? Another problem is how employee performance evaluation is perceived in different parts of he world. In some location it can be viewed as threatening. It can also be viewed as insulting or evidence of lack of trust. Finding way of evaluation employee performance that is both culturally sensitive and meaningful is difficult. Balancing the needs of the employee and the company is indeed a challenge in the global business environment. (Stone 2005 214-39)
Repatriation is the process a person goes through when returning home and getting settled after having worked abroad. The repatriation period often is a difficult one, filled with many adjustments. It is the challenging time when expatriates experience reverse culture shock. They have difficulty becoming reacquainted with their native culture. These major adjustments involve such things as work, finances, and social relationships. Returning expatriates often experience a sense of isolation. They have grown in different detractions while abroad. Because their extended families and friends have not had similar experiences, they seem like strangers.
To minimize the problems when returning home, expatriates need to plan ahead. It is not too early to start before ever leaving on an international assignment. With careful advanced planning, many of the problems of returning employees can be lessened. One should learn all about the host country and its way of life before going there. Once abroad, one must keep in frequent communication with former colleagues and friends. The expatriate should share new experiences with them and find out what are new their lives. In addition, one can learn to enjoy the benefits of the host culture and its way of life whenever possible. One should also begin exploring new career options at least one year before the end of the international assignment.
“To encourage employees to act on principle, an organization must be led by a chief executive who actually makes decision not only within business boundaries but also within ethical boundaries”. (Hackworth 199 n.p.)
Much of prior literature suggests that HR practices and other organizational characteristics influence organizational commitment. However, little research has tested these predictions. Further, virtually all prior research used single-site samples. Thus, the ability to generalize has been limited. To address these shortcomings, we examined the effects of HR practices and organizational characteristics using a diverse national probability sample of U.S. workers and their employing organizations. Overall, the R2 change due to HR practice measures in both samples is on the order of .05, a significant change in a joint F-test (p < .01) in Sample 2, but not in Sample 1. The results for these joint tests are notable in summarizing the collective effects of HR practices, and particularly in terms of overcoming co-linearity problems that can make tests for individual variables unreliable. That is, to the extent that HR practices covary strongly, their individual effects are difficult to estimate with precision, but the joint F-test includes their common as well as unique effects. Thus, along with the modest correlations among HR practices and other predictor variables indicated in Table 1, the joint F-test results lead us to discount co-linearity as an explanation for the HR practices results. Note that bivariate correlations between HR practice measures and commitment in Table 1 are modest to weak. This is not an instance where predictor-criterion relations are obscured by correlation among predictors. Taken as a whole, the results provide limited support for the proposed effects of HR practices and organizational characteristics. Specifically, for HR practices, results showed that grievance resolution procedures, compensation cuts (inversely), and employee involvement predicted commitment. Further, the only organizational characteristic that predicted commitment was decentralization. (Williams 2006 219-31)
Many hypotheses were not supported. These findings may call into question the attitudinal commitment effects of some HR practices (e.g., generous benefits, internal labour markets) and organizational characteristics (e.g., bureaucratic structure, not-for-profit status). At the same time, we acknowledge that hindsight suggests other possible explanations. Non-significant or marginal results for many HR practices may lie in the nature of the variables. Specifically, given the relatively fixed, stable quality of most HR practices, it may be that the influence of these organizational-level factors is a bit far removed from the attitudinal variable of organizational commitment. That is, certain human resource practices may constitute more distant rather than more immediate influences. Accordingly, observed effects of HR practices may not be very strong. Becker et al.’s (1996) findings on supervisory commitment as a predictor of performance indicate that more immediate influences may have stronger effects. (Williams 2006 219-31)
Aside from the quality of measures, there is the question of omitted variables. Although the NOS provided at least a reasonable proxy for many commitment antecedents identified in previous research, some gaps are evident. We already noted the absence of direct employee involvement measures. Another notable gap is initial employee socialization, and we were unable to identify any reasonable proxy for this concept. Future research needs to further examine these variables. Another issue is statistical power. Based on our sample sizes and number of predictors, tables for a power level of suggests that this study was capable of detecting moderate or strong effects, but perhaps not small effects. Limitations in measures noted above may combine with limited power to account for some disappointing findings. Despite some positive and interesting findings, questions remain about HR practice or organizational characteristic effects on commitment. (Williams 2006 219-31)
There is still much debate how HRM and industrial relations practices might be integrated and implemented. What cannot be denied is that the former have become increasingly widespread as a way of soliciting the commitment and support of employees towards organisational goals and objectives. Based on explicitly individualist and unitarist ideals, HRM has called into question the assumptions of inherent conflict and divergent interests in employment relations. One expected outcome of its adoption – sometimes made explicit, but as often not – is that its application will serve to displace or downgrade the role of trade unions in the workplace. Many industrial relations writers have criticised this purpose, arguing that it merely leaves workers open to more surreptitious and potentially more exploitative forms of managerial control. Others, however, have suggested that there are elements of the HRM agenda that overlap those of industrial relations agendas. The content of the present paper is supportive of this latter interpretation, not least because the recent experience has seen growing numbers of managers and trade unions demonstrating a willingness to explore new and more innovative ways by which individual appraisals and goal-setting procedures, as well as more open systems of communication and remuneration, might be negotiated and incorporated within collective bargaining frameworks. (McCuiston, 2004 73-92)
One should not, however, overstate the extent to which coexistent HRM industrial relations practices are being presently applied. Managerial approaches to trade unions and industrial relations, for the most part, still appear to be very much cautionary in a manner consistent with the ‘gatekeeper’ thesis. Except for a few isolated cases there is little evidence that they have entirely abandoned pluralism in favour of a wholehearted commitment to the individualism of model HRM programmes. The tendency has instead been to accept the existing industrial relations machinery whilst experimenting with policies and practices that signal a departure towards new priorities and new ideas in the management of labour. Trade union officials have broadly accepted these moves and the messages embodied in the HRM imagery, even if many still see in it as a more surreptitious form of labour control and exploitation. Whatever the present predilections held by the two sides of industry it is clear that the rules and institutions of industrial relations will continue to persist in some form or another, as will the desire on the part of organisations to implement evermore sophisticated HRM programmes, The present contextual circumstances that surround employees’ experiences and managers’ expectations of work and employment will see to this. Melding these two forms of labour management practice will thus remain problematic for the foreseeable, but only to the extent that both sides of industry remain fixated by the merits of one form of labour management practice over the other. Recognising the problem this involves is at least a first step towards its resolutions, one then looks to the possibilities of coexistent practices occurring within ’employment relations’ systems that are capable of accommodating both the regulatory realities of industrial relations and managerial efforts to improve the organisational effectiveness of those on their charge. (Althauser, 2004 143-61)
a final possible limitation is the age of the data. HR practices and employee expectations have certainly changed since the surveys were administered in 1991. Although the dataset is older, the results are still applicable to current business practices. Most or all of the HR practice variables tested in this study are still widely used in organizations and are subjects of continuing research debate. Also, considering the breadth of organizations sampled, it is unlikely that either employee expectations or HR practices have significantly changed across the range of workplaces surveyed. However, future research could attempt to replicate these findings using a more recently sampled population.
Despite limitations, this study makes important contributions. a major contribution is that it examines the influences of numerous HR practices and organization-level factors on organizational commitment rarely examined in prior research or that have been examined only in a single site. As such, the study provides some insight on the “commitment maximizing” effects of HR practices and organizational characteristics suggested by some scholars. a second contribution lies in the relatively unique quality of the data (despite limitations noted). Specifically, the fact that data cross levels from multiple, independent sources and were collected at different times contributes to the validity of the findings, the confidence that can be placed in them, and the conclusions that can be drawn. Further, because the study results are based upon data obtained from a nationally diverse probability sample, the generality is higher than in most prior studies. Finally, the nature of the relationships examined herein also allows stronger causal inferences to be drawn than is possible in most commitment research. Specifically, the probable direction of influence is much stronger for the effects of HR practices and organizational characteristics on organizational commitment than for the reverse effects. This is consistent with Mathieu and Zajac’s (1990) call for improved causal analysis and inference. (Berger 2000 287-326)
For practitioners, these results indicate the importance of employee “voice” through grievance resolution procedures, employee involvement, and decentralization. In particular, if one views employee involvement programs to be generally consonant with the decentralization of decision making (a structural method for increasing worker autonomy) and programs designed to increase employee “voice,” the overall pattern of results converges to provide support for an “empowerment” effect. Thus, it appears that organizational practices and characteristics that provide for the expression of worker interests are the strongest organizational determinants of employee commitment.The cumulative effect of the preceding research design qualities is a level of methodological rigor that is often absent in organizational commitment research, which frequently relies on self-report data collected at a single point in time, leaving results open to common method variance explanations. Mathieu and Zajac (1990) noted in their meta-analytic review that the average adjusted correlation of organizational commitment with other variables, when both were measured with self-report instruments, was 2.66 times larger than the same average adjusted correlation when different measurement methods or data sources were used. It is notable that Mathieu and Zajac’s (1990) meta-analytic findings showed that the average adjusted correlation across commitment and related variables, when using different measurement sources and methods, was a mere .132. Therefore, despite the potential limitations noted earlier, our findings may, in fact, be more meaningful than first appears.
Finally, both established theoretical bases and prior organizational commitment research were used to ground the hypotheses in the present study. Although the notion of exchange between employer and employee has been recognized in the area of organizational commitment, none of the prior work that we reviewed provided a clear and explicit theoretical integration of organizational commitment with social exchange theory. Given that social exchange theory addresses both instrumental and affective exchanges, it could serve as a basis for integrating conceptions of calculative or continuance commitment (which are based on instrumental or economic concerns) and the attitudinal conception of commitment examined here. For example, social exchange theory examines how relationships initially based on instrumental concerns may later become more affectively oriented and could prove useful in understanding the dynamics of how commitment develops over time. An explicit treatment of commitment based on social exchange theory also might be useful in generating new, insightful hypotheses. For example, theory predicts that interaction frequency or intensity leads to a stronger relational affect and cohesion, and the objectification of the relationship as a unique, valued entity. Future research, therefore, might examine whether the frequency or intensity of organizational-individual interactions predicts commitment (e.g., the relative effects of social activities or communications on member commitment). (Holvino 2004 245)
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