1

The Diffusion of High Performance Workplace Practices in Pakistan and their Performance Associations

A thesis submitted to the University of Manchester for the degree of Doctor of Philosophy (PhD) in the Faculty of Humanities

2012

Mansoor Ahmad Manchester Business School

2 Table of Contents

List of Tables................................................................................................................................. 5

Total Word Count = 108184 .......................................................................................................... 5

Abstract ........................................................................................................................................ 6

Declaration .................................................................................................................................... 7

Copyright Statement...................................................................................................................... 8

Acknowledgements ....................................................................................................................... 9

Chapter 1 Introduction ................................................................................................................. 10

1.1 Context ........................................................................................................................ 11

1.11Labour Markets and Employment Profile of Pakistan......................................................... 13

1.12 Trade Unions Coverage in Pakistan ................................................................................. 16

1.13 Employment Contract and Termination ............................................................................ 17

1.2 Significance of the study .............................................................................................. 18

1.3 An Outline of the High Performance Workplace Practices .................................................. 20

1.4 Organization of the Thesis ................................................................................................. 22

Chapter 2 The Theory of High Performance Workplace Practices ................................................ 30

2.1 From Control to Commitment ............................................................................................. 31

2.1.1The Taylor Model ......................................................................................................... 31

2.1.2 Change over time ....................................................................................................... 32

2.2 High Commitment/ Involvement/ Performance Models ....................................................... 35

2.3 Best Practice or Universalistic Perspective......................................................................... 44

2.4 Best Fit or Contingency Perspective. ................................................................................. 47

2.5 Configurational Perspective ............................................................................................... 51

2.6 The Contextual Perspective ............................................................................................... 52

2.7 Conclusion ........................................................................................................................ 53

Chapter 3 Literature Review ........................................................................................................ 55

3.1 Employment Security and internal labour markets .............................................................. 61

3.2 Selective Hiring and Sophisticated Selection ...................................................................... 67

3.3 Extensive training, Learning and Development................................................................... 70

3.4 Employee Involvement and Participation and Worker Voice ............................................... 75

3.5 Self-Managed Teams/Team Working ................................................................................. 80

3.6 High Compensation Contingent on Performance ................................................................ 83

3.7 Performance Review, Appraisal and Career Development ................................................. 88

3.8 Reduction of Status Differences / Harmonization ............................................................... 91

3.9 Work-Life Balance ............................................................................................................. 93

3.10 The Issue of Performance ................................................................................................ 98

3.11Linking HRM Practices to Performance ........................................................................... 103

3.12 Single Industry vs. Multiple Industry studies ................................................................... 110

3.13 Assessing the High Performance Studies in East & South Asian Economies .................. 112

3.14 Key Implications for Research study in Pakistan ............................................................ 115

3 Chapter 4 Research Methodology ............................................................................................. 118

4.1 Introduction ..................................................................................................................... 118

4.2 The Sectors and the Population ....................................................................................... 119

4.3 The Respondents ............................................................................................................ 122

4.4 Response Rate ................................................................................................................ 123

4.5 The Research Strategy .................................................................................................... 125

4.6 Measures ........................................................................................................................ 130

4.6.1 The Nine HRM Practices ........................................................................................... 130

4.6.2 Operationalization of HRM practices ......................................................................... 131

4.6.3 Human Resource and Establishment Outcomes........................................................ 133

4.6.4 Objective vs. Subjective Performance Measurement ................................................. 134

4.6.5 Dependent Variables: HR and Establishment Outcomes ........................................... 135

4.6.6 Control Variables ...................................................................................................... 138

4.7 Reliability ......................................................................................................................... 141

4.8 Validity ............................................................................................................................ 142

4.9 Data Analysis .................................................................................................................. 143

Chapter 5 The diffusion of high performance workplace practices in Pakistan: evidence from

banking, IT and pharmaceutical establishments of multinational and local firms ......................... 153

5.1Employment Security and Internal Labour Markets ........................................................... 165

5.2 Selective Hiring and Sophisticated Selection .................................................................... 168

5.3 Extensive Training, Learning and Development ............................................................... 169

5.4 Employee Involvement and Participation and Worker Voice ............................................. 171

5.5 Self-Managed Teams/ Team working ............................................................................... 174

5.6 High Compensation contingent on Performance .............................................................. 175

5.7 Performance Review, Appraisal and Career Development ............................................... 176

5.8 Reduction of Status Differences/ harmonization ............................................................... 178

5.9 Work-life Balance ............................................................................................................ 179

5.10 Nature of Business and High Performance Workplace Practices .................................... 181

5.11 Age of the Establishment and High Performance Workplace Practices ........................... 183

5.12 Organizational Size and High Performance Workplace Practices ................................... 183

5.13 Proportion of Workforce made up of non-managerial Employees and High Performance

Workplace Practices .............................................................................................................. 184

5.14 Conclusion .................................................................................................................... 185

Chapter 6 Ownership of the establishment and the association of control variables with the

diffusion/adoption of an HPWS practices in Pakistan ................................................................. 188

6.1 Conclusion ...................................................................................................................... 208

Chapter 7 High Performance Workplace Practices and Performance ...................................... 211

7.1 HPWS Practices and Human Resource Outcomes .......................................................... 215

7.1.1 Loss Working Days due to Employee Sickness or Absence....................................... 215

7.1.2 Employee Turnover................................................................................................... 224

7.1.3 Voluntary Turnover ................................................................................................... 225

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7.1.4 Employees Discharged ............................................................................................. 233

7.2 HPWS practices and Establishment outcomes ................................................................. 240

7.2.1 Labour Productivity ................................................................................................... 241

7.2.2 Labour Productivity Growth ....................................................................................... 249

7.2.3 Financial Performance .............................................................................................. 257

7.3 Conclusion ...................................................................................................................... 265

Chapter 8 Conclusion ................................................................................................................ 269

8.1Implications for the Firms .................................................................................................. 273

8.2 Implications for the Policy Makers .................................................................................... 275

8.3 Contribution to the High Performance Workplace Practices Theory .................................. 277

8.4 Limitations of the Study and Directions for Future Studies ................................................ 279

Appendix A Study Questionnaire ............................................................................................... 281

Appendix B Descriptive statistics for explanatory variables ........................................................ 286

Appendix C Results of the Chi-square tests ............................................................................... 288

Appendix D Logistic Regressions: Control variables and the adoption of HPWS practices ......... 340

Appendix E Logistic Regression Results for HRM practises and dependent variable of Loss in

working days due to employee sickness or absence without permission .................................... 354

Appendix F Regression Results for HRM practices and dependent variable voluntary turnover .. 368

Appendix G Regression results for HRM practices and dependent variable of employees

discharged ................................................................................................................................ 382

Appendix H Regression results for HRM practices and dependent variable of labour productivity396

Appendix I Regression results for HRM practices and dependent variable of growth in labour

productivity ................................................................................................................................ 410

Appendix J. HRM practices and the dependent variable of financial performance ...................... 424

References: .............................................................................................................................. 438

5 List of Tables

Table 4.1 Profile of Survey Respondents (in per cent) ............................................................... 124 Table 4.2 Definition of Control Variables .................................................................................... 149 Table 4.3 Definition of Dependent Variables .............................................................................. 150 Table 4.4 Definition of Explanatory HPWS Practices.................................................................. 150 Table 4.4 continued ................................................................................................................... 151 Table 5.1 Descriptive Statistics .................................................................................................. 155 Table 5.2 The Most Diffused HPWS Practices* .......................................................................... 158 Table 5.3 The Diffused Practices in 60-70% Range* .................................................................. 159 Table 5.4 The Diffused Practices in 50- 60% Range* ................................................................. 160 Table 5.5 The Diffused Practices in 40-50% Range* .................................................................. 161 Table 5.6 The Least Diffused Practices* .................................................................................... 161 Table 5.7 Chi-Square Results for the practice of Employment Security and Internal Labour Markets

................................................................................................................................................. 166 Table 5.8 Chi-Square Results for the practice of Selective Hiring and Sophisticated Selection ... 168 Table 5.9 Chi-Square Results for the practice of Extensive Training, Learning and Development 169 Table 5.10 Chi-Square Results for the practice of Employee Involvement and Participation and

Worker Voice ............................................................................................................................ 172 Table 5.11 Chi-Square Results for the practice of Self-directed Teams ...................................... 174 Table 5.12 Chi-Square Results for the practice of High Compensation Contingent on Performance

................................................................................................................................................. 175 Table 5.13 Chi-Square Results for the practice of Performance Review, Appraisal and Career

Development ............................................................................................................................. 177 Table 5.14 Chi-Square Results for the practice of Reduction of Status Differences/ Harmonization

................................................................................................................................................. 178 Table 5.15 Chi-Square Results for the practice of Work-Life Balance ......................................... 180 Table 6.1 HPWS practices excluded from the Logistic Regression Analysis ............................... 190 Table 6.2 Definition of Control Variables .................................................................................... 190 Table 6.3 Ownership of the Firm and Diffusion of Employment Security and Internal Labour Market

Practices ................................................................................................................................... 191 Table 6.4 Ownership of the Firm and Diffusion of Selective Hiring and Sophisticated Selection

Practices ................................................................................................................................... 194 Table 6.5 Ownership of the Firm and Diffusion of Extensive Training, Learning and Development

Practices ................................................................................................................................... 197 Table 6.6 Ownership of the Firm and Diffusion of Employee Involvement and Input Practices .... 199 Table 6.7 Ownership of the Firm and Diffusion of Appraisal and Work-Life Balance Practices .... 202 Table 6.8 Ownership of the Firm and Diffusion of High Compensation Contingent on Performance

Practices ................................................................................................................................... 205 Table 6.9 Ownership of the Firm and Diffusion of Practice of Reduction of Status Differences ... 207 Table 7.1 HPWS Practices and Dependent Variable of Loss in Working Days ........................... 218 Table 7.2 HPWS Practices and Dependent Variable of Voluntary Turnover ............................... 227 Table 7.3 HPWS Practices and Dependent Variable of Employees Discharged ......................... 234 Table 7.4 HPWS Practices and Dependent Variable of Labour Productivity ............................... 243 Table 7.5 HPWS Practices and Dependent Variable of Labour Productivity Growth ................... 252 Table 7.6 1HPWS Practices and Dependent Variable of Financial Performance ........................ 259

Total Word Count = 108184

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Abstract

The University of Manchester

Mansoor Ahmad

Doctor of Philosophy (PhD)

August 2012

The Diffusion of High-Performance Workplace Practices in Pakistan and their Performance Associations

The topic of high performance workplace practices and their impact on organizational performance has been extensively researched in US and UK. Increasingly evidence with regard to diffusion of high performance workplace practices is emerging from fast developing Asian economies. However, very little is known about the state of diffusion of high performance workplace practices in Pakistan, a South Asian economy on route to industrialization. This study attempts to explore the diffusion of high performance workplace practices among the multinational and local firms in the important industrial sectors of banking, information technology and pharmaceutical in Pakistan that are characterized by high level of inward foreign direct investment. Recently the Pakistani Government has passed laws to encourage greater use of HPWS practices amongst domestic firms. This study compares the prevalence of HPWS practices in domestic firms to that in multinationals. MNCs are chosen as a competitor because they have been seen as being at forefront of HPWS use. First of all, the study explored an overall diffusion of high performance workplace practices in Pakistan and determined the state of differences with regard to diffusion of the practices between the establishments of multinational and local firms. Secondly, the study further explored the differences by taking into account the role of control variables such as age, size, percentage of non-managerial employees and nature of business at the establishment. The most important argument underpinning the high performance paradigm is that practices have substantial impact on human resource and performance outcomes of a firm. Thus the third objective of the study was to test and report the association of individual practices with various performance outcomes for a sample of local firms in Pakistan. The study observed whether such claims are valid for the local Pakistani establishments that implement such practices in hope of achieving better performance outcomes. The study found that a number of practices had a consistent and significant association with various performance outcomes across the industrial sectors in Pakistan. The results of the study suggest that latest innovations in human resource management in advanced industrial economies have fast spread among establishments in Pakistan. Moreover the results also suggest that arguments of high performance theory, in particular the universalistic/ best practice model hold ground when it comes to the diffusion of such practices in developing economies such as Pakistan with some caveats.

7 Declaration

I, Mansoor Ahmad, declare that no portion of the work referred to in this thesis has been submitted

in support of an application for another degree or qualification of this or any other university or

other institute of Learning.

8 Copyright Statement

The following four notes on copyright and the ownership of intellectual property rights must be

included as written below:

i. The author of this thesis (including any appendices and/or schedules to this thesis) owns certain

copyright or related rights in it (the “Copyright”) and s/he has given The University of Manchester

certain rights to use such Copyright, including for administrative purposes.

ii. Copies of this thesis, either in full or in extracts and whether in hard or electronic copy, may be

made only in accordance with the Copyright, Designs and Patents Act 1988 (as amended) and

regulations issued under it or, where appropriate, in accordance with licensing agreements which

the University has from time to time. This page must form part of any such copies made.

iii. The ownership of certain Copyright, patents, designs, trademarks and other intellectual property

(the “Intellectual Property”) and any reproductions of copyright works in the thesis, for example

graphs and tables (“Reproductions”), which may be described in this thesis, may not be owned by

the author and may be owned by third parties. Such Intellectual Property and Reproductions

cannot and must not be made available for use without the prior written permission of the owner(s)

of the relevant Intellectual Property and/or Reproductions.

iv. Further information on the conditions under which disclosure, publication and commercialisation

of this thesis, the Copyright and any Intellectual Property and/or Reproductions described in it may

take place is available in the University IP Policy (see

http://documents.manchester.ac.uk/DocuInfo.aspx?DocID=487), in any relevant Thesis restriction

declarations deposited in the University Library, The University Library’s regulations (see

http://www.manchester.ac.uk/library/aboutus/regulations) and in The

University’s policy on Presentation of Theses.

9 Acknowledgements

I would like to thank my supervisor Dr Matthew Allen for his dedication and guidance throughout

my four years at Manchester Business School. Dr Allen always provided the much needed time

and effort that required completing the study. I would also like to thank Dr Leo McCann and the

internal PhD committee members who have provided me with their valuable comments during my

committee meetings and annual reviews.

I highly appreciate the participation of all the busy establishment managers who were kind enough

to respond to the survey request. I would also like to thank the Manchester Business School for

providing me partial financial support to carry out my PhD studies. It would be unfair not

acknowledge the sacrifice of my family members, in particular my wife Jawaria Saleem, for allowing

me to complete my studies and my brother Dr Saqib Ahmad for providing me with financial support

to look after my family during these four years of my PhD.

10

Chapter 1 Introduction

Within the human resource management literature, there has recently been increased interest

among management scholars to explore the effects of HRM practices, often termed high

performance workplace practices, on organizational performance outcomes (Arthur, 1994; Guest

and Hoque, 1994; Huselid, 1995; MacDuffie, 1995; Delaney and Huselid, 1996; Delery and Doty,

1996; Ichniowski et al, 1997; Vandenberg et al., 1999; Hoque , 1999; Wood, 1999; Wright et al.,

1999 & 2003; Way, 2002; Purcell et al., 2003; Guest et al, 2003; Datta et al., 2005; Wood and de

Menezes, 1998 & 2008; Wood et al., 2006). The main concern of these publications was to explore

the effects of high performance workplace practices on performance outcomes in advanced

industrial countries, in particular in US and UK. The main argument of HPWS studies is that people

and the way they are managed have implications for firm-level outcomes. Currently in the

management literature, a lot of evidence is emerging from the Asian context with regard to

successful implementation of high performance workplace practices in countries such as China,

India, Singapore, Taiwan, Korea and Thailand (Xiao and Bjorkman, 2006; Wei and Lau, 2008;

Akhtar et al., 2008; Zhang and Li, 2009; Chan et al., 2004; Som, 2008; Singh, 2010; Chand, 2010;

Cooke and Saini, 2010; Khatri, 2000; Lee et al., 2010; Bae et al., 2003). This study seeks to assess

the diffusion/ adoption of high performance workplace practices in Pakistan by addressing the

following questions:

To assess the overall state of diffusion of high performance workplace practices in

establishments in Pakistan.

Are there differences between the establishments of multinational and local firms

in Pakistan with respect to diffusion/ adoption of high performance workplace

practices in Pakistan?

Do the differences hold when explored alongside the control variables as size, age

and nature of the business?

Is there evidence to suggest that local establishments that adopt high performance

workplace practices in Pakistan have better performance outcomes as measured

by absenteeism, quit rates, labour productivity etc.

The answers to the above questions have important implications for policy makers and businesses

in Pakistan and the multinational companies intending to invest in Pakistan. For the Government of

11 Pakistan that is trying to improve the productivity of local establishments (Labour Policy, 2008) the

study can help to assess the situation of the local establishments with regard to human resource

policies and practice. In particular the policy makers can have an idea to what extent the Pakistani

establishments are at par with the firms in the advanced industrial economies as the study provides

a detailed assessment of the state of diffusion/ adoption of latest human resource practices that

have in general been linked to improvement in an establishment performance outcomes in US and

UK. In Pakistan the multinational establishments are generally regarded as the role models in

management and local firms benchmark their practices against them. The study by comparing

multinational and local establishments provides much needed assessment of the differences

between them and may help policy makers to decide which areas of HRM need further

improvement in local firms. Moreover such practices represent a movement forward from

bureaucratic methods of organizing work to high commitment/ involvement/ performance models.

Being a unique study assessing such practices in Pakistan, the study will provide valuable

information to global businesses that are interested in knowing about the state of management and

HRM trends in Pakistan. The study by examining the empirical evidence whether such practices

have much claimed performance associations or not in the local establishments that have adopted

the high performance workplace practices in Pakistan can build a strong case for further adoption/

diffusion of high performance workplace practices to other establishments operating in different

sectors in Pakistan.

1.1 Context

Over the last two decades Pakistan has moved forward from a controlled economy towards a

liberal economic model with deregulation and privatization of state owned institutions and many

important business sectors were opened up for foreign companies. Pakistan is the 27th largest

economy in the world in terms of purchasing power and the 45th largest in absolute dollar terms.

Pakistan is a fast developing country and at present it can be categorized as a semi-industrial

economy on route to industrialization (Board of Investment, Govt. of Pakistan, 2010). The

importance of foreign direct investment cannot be ignored for any developing country. In the case

of Pakistan the US and the UK are the two biggest contributors to foreign direct investment. The

importance of FDI in Pakistan becomes manifold as these multinational companies not only bring

12 much needed capital but also introduce the country to latest management practices and trends. It

has generally been argued that multinationals act as agents of change and set benchmarking

standard in the field of HRM (Khilji, 2002). Moreover the small-scale study by Khilji (2002) paints

the picture of management in local firms in Pakistan as reflecting a bureaucratic management

approach. The current thesis argues otherwise and expects that a number of latest HPWS

practices must have diffused to multinational and local establishments in Pakistan in the last

decade primarily due to remarkable investment and entrance of multinational firms in banking and

informational technology sectors in Pakistan. The second reason for such an expectation is that the

Government of Pakistan has recently introduced a new labour policy in 2008 that was made a law,

Industrial Relations Act 2010; this encourages cooperation between labour and management and

introduces steps to increase the productivity of workforce in Pakistan. The salient features of the

IRA 2010 suggest the following steps to achieve the objectives of improvement in labour

productivity in Pakistan.

The IRA 2010 acknowledges the workers right to form unions and encourages

organizations to develop an institutional framework to foster close cooperation and create

an atmosphere of harmony with workers at establishment level.

The IRA 2010 makes it mandatory for employers to consult workers on matters of interest

to the establishment and to take steps to ensure welfare of the workers.

To provide job security and to develop effective procedures to give preference to existing

employees in case of further opportunities of advancement.

Proper and expeditious grievance procedure should be established.

Focus on employee training and other management practices and conditions that can

enhance the labour productivity of the establishment.

One of the possible routes for the Government and the establishments in Pakistan is to understand

and implement the new and innovative human resource management practices also termed as

high performance workplace practices at their establishments to not only improve the labour

productivity but to also accrue financial gains associated with implementation of such practices.

This research explores HPWS practices in three dynamic and fast developing sectors of banking,

pharmaceutical and information technology in Pakistan and provides an assessment of an overall

diffusion of HPWS practices in Pakistan, the differences between multinational and local firms with

regard to state of adoption of HPWS practices, and evaluates the much claimed performance

13 effects associated with adoption of such practices in literature. After discussing some of the

important steps the Government of Pakistan has introduced to improve the labour management

cooperation and labour productivity of the establishments in Pakistan, the Chapter provides a brief

introduction to labour markets and employment regulation system in Pakistan.

1.11Labour Markets and Employment Profile of Pakistan

This section provides brief and concise information on structure of labour markets in Pakistan, the

relative importance of industrial sectors with regard to employment trends, the coverage of trade

unions and system of employment regulation. The basic aim of the section is to layout some basic

descriptive information on employment and labour market scenario in Pakistan. The information

provides an understanding of the vital labour market characteristics in Pakistan that are essential

for understanding the arguments the thesis makes in subsequent Chapters.

Pakistan is one of the most populous countries in the world having a population of 167 million and

the average annual growth rate of the population is around two per cent. The huge population and

a high growth rate indicates that a large number of people enter the labour market every year, thus

the policy makers in Pakistan face a challenge to create employment opportunities for the a large

number of additional entrants into the labour market. According to the Labour Force Survey 2009-

10 the estimated labour force is 54.92 million with a labour force participation rate of 33 per cent. In

context of Pakistan the labour force comprises of all the persons who are ten years of age or

above. The labour force survey further indicates that the employed labour force is 51.87 per cent

and the unemployed is 2.93 million. The unemployment rate is thus 5.6 per cent. Of the employed

labour force the women constitute around 20 per cent. The labour force survey data reveals that in

Pakistan the employment to population ratio is low; this is primarily due to low participation of the

women in the workforce (Labour Force Survey, 2009-10). Another important trend to note is that

unemployment in Pakistan has declined since 2002 and the trend is being sustained (Ghayur,

2009).

A report on Pakistan from the International Labour Organization indicates that recent

macroeconomic performance of Pakistan has been impressive. Employment opportunities have

expanded in line with the economic development of the country and the economy has a strong

14 absorptive capacity. An average annual employment growth rate of 4 per cent was achieved during

2005-06 which was satisfactory compared to the GDP growth of 6.6 per cent in the same period.

Keeping in view the improved macroeconomic foundations, the employment growth is projected to

increase from 2.8 per cent to 3.3 per cent in 2009-10. ILO report further suggests that women

participation in the workforce is improving with female unemployment rate decreasing to 9.3 per

cent from 17.3 per cent in 1999-2000. However the report outlines it concerns for the productivity of

labour in Pakistan, the report indicates that Pakistan has a well-established network of vocational

training institutes however sustained high economic growth requires greater investment in the

education and vocational training sector (Ministry of Labour, 2007). It is quite visible from the report

that Pakistan has a huge labour force with problems such as lower productivity. One of the main

arguments of the high performance workplace practices is that they have the potential to improve

the performance outcomes of the workplaces which implement them. This thesis explores and

argues that establishments in Pakistan that implement HPWS practices will benefit from human

resource and organizational performance gains as compared to the establishments that do not

implement any such practices.

The labour force survey 2009-10 indicates that agriculture and fishery is the largest employment

group in Pakistan with 45 per cent of the labour working for the sector, followed by whole sale &

retail (16.3 per cent), manufacturing (13.2 per cent), community/social and personal services (11.2

per cent), construction (6.7 per cent), transport/storage and communication (5.2 per cent) and

others (2.4 per cent). The survey further indicates that out of the total workforce some 15 per cent

are craft and related trade workers, 12 per cent are legislators/senior officials/managers, 5 per cent

are service workers, 5 per cent are technician and associate professionals, 4 per cent are

plant/machine operators and assemblers, 2 per cent are professionals and 1 per cent are clerks.

Apart from above classification of the workforce, it is important to note that some 63 per cent of the

workforce is related to farming and related activities that is milk, dairy, poultry and livestock industry

(Labour Force Survey, 2009-10). The labour force survey indicates that the agriculture sector still

remains the largest employer in Pakistan however there is a significant improvement in other

sectors such as industry and services over the decade since 2000.

After providing a brief outline of the labour market, the Chapter briefly discusses a series of

indicators that provide an understanding of the structure of employment market in Pakistan such as

hours of work, employment by sector and employment in informal economy.

15 The ILO figures indicate that workers in Pakistan work excessive long hours, with more than 40 per

cent working 50 hours per week. The ILO report suggests that even though the long work hours are

voluntary, the income distribution and poverty in the country makes the majority of the employees

to work long hours to ensure minimum level of income while performing low-productivity work. This

research thus focuses on work-life balance practices as an essential component of HPWS

practices and explores their diffusion and performance associations in Pakistan. As already

indicated above, agriculture is the largest employment sector in Pakistan; the latest figures indicate

that services and industry are catching up. The share of agriculture in the employment is declining;

the figures indicate that the sector recorded a decline of five per cent during 2000-2006. This shift

in employment from agriculture to industry is line with the economic growth and policy of

governments in Pakistan. As the industrial and services sectors size is increasing in Pakistan, the

importance of human resource management and the establishments ability to adopt the latest

management and HRM practices to increase their efficiency and productivity becomes manifold.

Thus it is a right time to explore the diffusion of high performance workplace practices among the

establishments in Pakistan. Another important feature worth mentioning to help understand the

employment patterns in Pakistan is the presence of a large invisible and neglected informal sector.

Whereas the formal sector just accounts for 27 per cent of economic activity, the informal sector

accounts for more than 70 per cent of the economic activity that is even greater than the agriculture

sector the largest employment sector in Pakistan. The informal sector creates a number of

problems for policy makers in Pakistan such as improvement of working conditions, legal and

social protection of the workers and tax & governance issues. This type of employment pattern has

implications for the industrial relations in Pakistan as the existing laws, rules and regulations cannot

be applied to the informal sector. The regulation of informal sector in Pakistan is a serious issue

and challenge for the policy makers to resolve. On the whole labour force data indicates that labour

market is gaining momentum in Pakistan and the industrial sector is developing with considerable

number of employment opportunities. However labour market imbalances persist along the gender

lines and the productivity of workers in Pakistan is a major concern for the policy makers (Ministry

of Labour, 2007). Thus the findings of the thesis may have important implications for the policy

makers in Pakistan who want to increase the establishments’ labour productivity and want to

increase the participation of women in workforce.

After a brief evaluation of working population and labour market in Pakistan, the Chapter addresses

the role of industrial relations in Pakistan; in particular it briefly outlines its history for an

16 understanding of its embedded roots, the trade union coverage in Pakistan and the system of

employment regulation.

The Indian subcontinent, of which Pakistan is only one part, was ruled by the British for over 200

years since 1757. The industrial relations legislation introduced in the latter half of the 19th century

was one of laissez-faire and selective intervention at the most. The labour-management relations

were only given importance after the First World War and the Indian Trade Unions Act 1926 and

Trade Disputes Act 1929 were passed. The labour was thus allowed to be represented by unions

and a mechanism for prevention and settlement of disputes was established. Pakistan inherited all

the important four industrial relations laws from the British India: Trade Union Act 1926; Industrial

Employment Act 1946; Industrial Disputes Act 1947 and Factories Act 1934. Also important to note

is that Pakistan inherited the concept of Tripartism and social dialogue from British India and in its

present shape is called the Pakistan Tripartite Labour Conference, which is forum that consults

workers and employers on all labour legislation and labour policy issues. Before proceeding

forward to examine the issues of employment regulations in Pakistan, the Chapter provides basic

information on trade unions coverage in Pakistan.

1.12 Trade Unions Coverage in Pakistan

Trade unions in Pakistan operate under restrictive laws; they have faced legal intervention from

hostile military governments and employers. According to one estimate only 6.3 per cent of the

non-agriculture workforce is organized and a mere 2.2 per cent of them have a collective

bargaining agents. Several major sectors are excluded from trade unionism by law including

agriculture, teachers, health and public sector workers. Apart from these sectors employees

working in the export processing and special economic zones are not allowed to unionize (Ghayur,

2009). Though the workers right to unionize and collective bargaining is guaranteed under article

17 of the Constitution of Pakistan, the ground reality is quite opposite to their enshrined rights

rather the hostile and feudal attitude of employers and in general the anti-trade union attitude of the

successive governments in Pakistan has eliminated the influence of trade unions in Pakistan and

they are on the verge of extinction (Ghayur, 2009).

17 Industry and workplace relations in Pakistan are now governed by Industrial Relations Act, 2010

(IRA, 2010). The IRA 2010 has withdrawn many restrictions and bans on trade unions imposed by

successive governments, however a ban on trade unions in export processing and special zones is

still effective and workers are not allowed to unionize and bargain collectively. Many trade unions

operate at a single plant or establishment level and without any collective bargaining agent. There

are few large national federations of unions with declared memberships and they are registered

with the Registrar of trade unions, for example, Pakistan Workers Federation, All Pakistan Trade

Union Federation etc. and many medium sized unions organized on industrial or sectoral basis

exist in Pakistan. However data availability is major constraint in understanding the working of

trade unions in Pakistan and their representation in the national or sectoral federations (Ghayur,

2009).

On the other hand the employer’s community in sectors such as manufacturing, finance, banking

and services is well organized and actively safeguards their business interests not only through

national organizations such as Federation of Chambers of Commerce and Industries and the

Employer’s Federation of Pakistan but also through their sectoral and industry specific

organizations. Currently the Employer’s Federation has 537 industrial and commercial

establishments and 14 trade bodies as its members.

The above section has described the basic information on trade unions coverage in Pakistan; the

Chapter in following paragraphs provide information on important labour issues of employment

contract and their termination.

1.13 Employment Contract and Termination

The Industrial and Commercial Employment Ordinance 1968 was enacted to address the issues of

contractual relationship between the employer and the employee. This ordinance is now been

merged into IRA 2010. The IRA 2010 is applicable to establishments with 20 or more employees,

the legislation classifies the workmen into six classes: permanent, probationers, badlis, temporary,

apprentices and contract workers. The legislation requires that all workers should be issued

contracts in writing, showing terms and conditions and mentioning their wages. Termination of an

employment contract may be either termination simpliciter that is termination on grounds other than

18 misconduct after a notice or termination on grounds of misconduct. Notice of termination

simpliciter is mandatory for the permanent workers. A notice of one month must be served or

payment of one month salary must be made in lieu of the notice. The law also requires that the

employer issues the termination certificate with a reason for termination stated on it, which may be

examined as appropriate or may be rejected by the labour court. However no worker can be

dismissed on the basis of trade union affiliation. Even if the termination is on the basis of

misconduct the worker still has the right of fair hearing by the labour court. Termination on the

basis of economic reason/retrenchment is allowed and the legislation provides a procedure for it, a

due notice should be given and in case of 50 or more workers the employer must get a prior

approval from the labour court. An individual whose employment is terminated is required by the

law to first use the internal mechanism of dispute resolution and then may appeal to labour court,

however in case of severance; pay/gratuity is to be paid equivalent to 30 days wages for every

completed year of service (IRA, 2010). The procedure of employment contracts and their

termination may help in understanding the situation of employment security and lifelong

employment in Pakistan.

These are some of the important features of the employment policy in Pakistan which can help

understanding of the shape of labour markets and employment regulation that exists in Pakistan.

1.2 Significance of the study

The first important objective of the current study is to explore the state of diffusion of the latest

human resource and management practices often called high performance workplace practices in

Pakistan. In doing so the research explores the differences between the diffusion of HPWS

practices among the multinational and local firms operating in the similar industries in Pakistan.

The current study explores the latest human resource management practices in a detailed and

comprehensive manner in Pakistan. In general it has been argued in literature that local firms in

Pakistan follow the multinational companies in setting their human resource and management

policies and practices (Khilji, 2002). This study is a stepping stone in clarifying the picture and

documenting the evidence as to what extent the multinational establishments in Pakistan

implement the latest human resource and management practices and to what extent such practices

have diffused to the local establishments. Such documentation can help the local companies in

19 understanding in which areas of the HRM do they need further improvement or not. The thesis will

also provide valuable information to the policy makers who intend to improve the labour productivity

of the local firms in Pakistan. Moreover it has been an important objective of successive

Governments in Pakistan to attract foreign direct investment; the information can be useful for such

investors as it can help them understand the management trends in Pakistan.

The second most important objective of the current thesis is to determine if the adoption of HPWS

practices results into any performance gains for the local firms or not. The theme of HRM and

performance has been a key debate in human resource management literature; however much of

the research in the field has been undertaken in the developed Western countries (Guest, 1997;

Wood, 1999; Marchington and Zagelmeyer, 2005; Budhwar and Debrah, 2009). Budhwar and

Debrah (2009) argue that due to rapid globalization, technological advancements and

developments in the field of HRM, and examination of HRM systems in emerging Asian countries is

need of the time not only to fill the gap in literature but also for the development of the HRM theory.

The issue of HRM and performance is one of the key research avenues being opened up in the

Asian context. Academic studies have started emerging from Asian context, for example in case of

China see studies (Xiao and Bjorkman, 2006; Wei and Lau, 2008; Akhtar et al., 2008; Zhang and

Li, 2009; Shanshi et al., 2007), in case of India see studies by (Som, 2008; Singh, 2010; Guchait

and Cho, 2010; Chand, 2010, Cooke and Saini, 2010; etc.), for studies on Singapore, Taiwan,

Korea and Thailand see studies by (Khatri, 2000; Bae and Lawler, 2000; Bae et al, 2003; Haung,

1998; Lee et al., 2010; etc.). Expectedly the evidence from Asian countries is mixed and less

conclusive and a great opportunity exists for researchers to examine HRM and performance

debate and to weigh the arguments of different school of thoughts i.e. universalistic—best practice

or contingency—best fit and evaluate evidence with respect to their applicability to Asian

organizations and multinational firms operating in these countries (Budhwar and Debrah, 2009).

Emerging Asian countries are already playing a significant role in World economy for example they

are producing more goods and services than North America and Europe and are on route to

become developed in a decade or two (Tan, 2002). The list of countries in Asian region from where

high performance workplace practices evidence has started emerging indicates that no such study

has ever been planned to examine HRM and performance context in case of Pakistan. Against this

backdrop, this study examines the high performance orientation of multinational and their local

competitors in adopting the latest innovative workplace practices in Pakistan, in particular among

20 the private sector establishments representing dynamic and growing industrial sectors of banking,

pharmaceutical and information technology.

Thus a very important element of the current thesis is to provide evidence with regard to the

effectiveness of the individual high performance work place practices by evaluating the subjective

responses of the establishment senior managers with respect to human resource and performance

outcomes. This objective is in line with the universalistic assumptions of high performance

proponents who argue that the practices would work irrespective of the context in which the firm

operates. The investigation of HRM and performance impact of high performance practices is very

important as the core principle of the paradigm states that organizational performance is influenced

by the way employees are managed. Boxall and Macky (2009, 3) state that “the notion of high-

performance work systems constitutes a claim that there exists a system of work practices for core

workers in an organization that leads in some way to superior performance”. In short this study will

seek evidence from a totally different Asian context on the effectiveness of high performance

practices and thus supplement the literature on high performance workplace practices. By doing

so, the research will be in a position to either further strengthen the best practice approach or to

refute its arguments in light of evidence from local establishments in Pakistan. In addition to

theoretical contribution, the research will have important policy implications as it makes the case for

the wider implementation of HPWS practices ever stronger, if such an implementation by the

existing local establishments results into any human resource and performance gains for them.

1.3 An Outline of the High Performance Workplace Practices

Human resource practices such as employment security and internal labour markets, sophisticated

recruitment and selection, extensive training, employee involvement and team working, high

compensation contingent on performance, performance review, appraisal and career development,

reduction in status differences and work-life balance have generally been termed as high

performance workplace practices. The high performance paradigm can be best understood in

terms of different typologies that have been put forward by theorists. However what constitutes

high performance workplace practices has been disputed in literature and this is one of the reasons

why the paradigm lacks specific definitions of individual practices. The same practices have been

21 measured by different proxies by different studies. However the general theme underlying all these

studies is that high performance practices have the potential to improve the organizational

performance outcomes. The most frequently cited definition is attributed to the US department of

labour (1993:1) version which defines it as: “systems of mutually reinforcing practices [that] create

multiple ways to develop worker skills, to align individual and organizational goals and to share

information crucial to solving problems”. The literature on the HPWS practices indicates that model

is a counterpoint to Taylorist approach of job design and thus is a symbol of genuine

transcendence of Taylorism. The paradigm incorporates and is built on the principles of Walton

(1985) and Lawler (1986) models of high commitment and high involvement management. In

general the paradigm treats all the three terminologies as synonymous. The paradigm gained

global popularity after Pfeffer’s (1994) book on competitive advantage through people and

Huselid’s (1995) seminal work that suggests that people how they managed can be source of

competitive success and increase in organization performance. An important argument worth

noting has been put forward by researchers such as Wood and Albanese (1995), Wood and de

Menezes (1998) and many others is that high performance workplace practices in actual practice

may take many shapes and forms. In reality the practices are beings diffused to varying degree to

the establishments rather than a beings adopted as a total package. This argument may be quite

true in case of Pakistan and the current thesis evaluates the strength of this argument in light of

empirical evidence from the establishments of multinational and local firms in Pakistan.

Another very important argument underlying the high performance studies has been termed as

best practice or universalistic perspective. The universal application of high performance workplace

practices is the main concern of the theorists supporting the universalistic perspective (Pfeffer,

1998; Huselid, 1995). The universalistic perspective underpins the current study is objective of

exploring high performance workplace practices in Pakistan. Keeping in mind the Huselid’s (1995)

and Delaney and Huselid’s (1996) arguments, the current thesis explore whether a simple adoption

of individual HPWS practices results into any performance returns or not and if treating people as

an organizational resource matters for local establishments performance outcomes in Pakistan or

not. At the same time the arguments of contingency perspective also have very important

implications for the paradigm. The perspective highlights the importance of moderating variables in

HRM and performance outcomes. The current study evaluates the impact of contingencies such as

age, size and nature of business in determining the diffusion and performance association of the

22 practices. The purpose of doing so is to map whether the differences between the establishments

of multinational and local firms still hold in presence of control variables or not.

1.4 Organization of the Thesis

Following on from the introduction, the Chapters in the thesis have been organized in the following

order.

Chapter 1

The Chapter one introduces the research aims and objectives that underpin the investigation of

diffusion of high performance workplace practices in Pakistan. The Chapter provides an

introduction to Pakistan; in particular it highlights the characteristics of labour force, nature and

structure of labour market, system of employment regulations, trade union coverage and general

information on scale and ownership of firms. The Chapter also outlines the significance of the

study, a brief introduction to high performance workplace practices. Finally it provides an outline of

the thesis Chapters with brief summary and the basic findings.

Chapter 2

The Chapter two introduces the concept of high performance workplace practices. The Chapter

explains how in the last decade or so a new paradigm termed as high commitment/ high

performance human resource management has captured the interest of many academics and

practitioners. This theme of research has mainly addressed the issue of HRM and its relationship to

human resource and organizational performance outcomes such as absence, turnover, labour

productivity and financial performance. Along with many others influential proponents of the

paradigm, the Chapter takes into account the arguments of Pfeffer (1994 and 1998) and Huselid

(1995) as their interest and subsequent writings on the topic have made the paradigm globally

popular. The Chapter entails and discusses many meanings and typologies of the paradigm put

forward by different eminent human resource academics. In particular the Chapter discusses the

typologies of Walton (1985), Lawler (1986), Pfeffer (1998) & Marchington and Wilkinson (2008).

The Chapter provides a detail discussion of different debates within the paradigm and outlines the

study decision to choose the Marchington and Wilkinson (2008) typology as a framework for

23 investigation in Pakistan. In doing so the Chapter takes into account the journey of change over

time and development of high performance paradigm. The Chapter also provides a detailed

discussion on the different influential perspectives that dominate the debate on investigation of

HRM and performance. The simplest of all the perspectives is the best fit or universalistic

perspective that basically argues that a set of human resource management practices are

applicable across the contexts, organizations and cultures and when implemented raise the

business performance of the organizations. The second most influential best fit perspective on the

contrary argues that in order to raise the business performance a right fit between the business

strategy and HR practices is essential. The Chapter provides a detail discussion on the best

practice and best fit perspective as they underpin the exploration of high performance workplace

practices in Pakistan. The Chapter also briefly discusses the other prevalent perspectives in the

paradigm that can potentially enhance the understanding of the linkages between HRM and

performance. The perspectives are configurational and contextual, with former emphasizes the

issue of complementarities among HR practices and the later acknowledges the role of the wider

context in shaping the HRM practices of an organization.

Chapter 3

The Chapter three reviews the major empirical work on the high performance human resource

management that investigates the relationship between HRM and performance outcomes. The

Chapter while reviewing the studies, highlights and debates the major tensions within the high

performance literature. In particular the Chapter critiques the issue of individual practices versus

the bundles/ systems or indexes. The Chapter raises many interesting and pertinent questions, for

example, is it the whole bundle or system that parsimoniously affects performance or whether any

of the constituent practices are more effective than other or not, is there any theory that underpins

the development of such bundles or systems and is it better to focus on individual practices as

compared to bundles or systems keeping in mind the exploratory nature of the research in

Pakistan. The Chapter while reviewing the studies provides justifications for choosing individual

practices over the bundles or systems and provides answers to issues raised in literature review

concerning the questions raised above. The Chapter draws attention towards the issue of variation

in proxies used to measure the high performance workplace practices and appraises the literature

with regard to the issue and the methods used by various studies to capture the constructs. The

aim is to provide justification for using already developed and tested measures available in the

24 literature. After evaluating the issues related to the measurement of the practices the Chapter

proceeds to appraise the individual high performance practices that constitute the Marchington and

Wilkinson (2008) typology one by one in detail. The section not only outlines the importance of the

practices for the paradigm but also evaluates the studies for human resource and organizational

performance effects of HPWS practices. The section in particular focuses on studies undertaken in

the US and the UK, for example (Arthur, 1994; Guest and Hoque, 1994; Huselid, 1995; MacDuffie,

1995; Delaney and Huselid, 1996; Delery and Doty, 1996; Ichniowski et al., 1997; Vandenberg et

al., 1999; Hoque, 1999; Wood, 1999; Wright et al., 1999 & 2003, Way, 2002; Guest et al., 2003;

Wood and de Menezes, 1998 & 2008 and Wood et al., 2006 etc.). A review of the literature

indicates that in case of certain HPWS practices the evidence is overwhelmingly positive and

significant for their effects on human resource and performance outcomes. At the same time for

certain other practices the evidence is not conclusive. However most of the evidence quoted is

cross sectional and few of the longitudinal studies undertaken in the field cast their doubts on such

a relationship. After evaluating the links between individual practices and the bundles or systems

with performance outcomes, the Chapter takes into account some other relevant issues. In

particular it focuses on methodological issues as to whether the practices should be evaluated at

the corporate or at the establishment level, the issues related to cross-sectional and longitudinal

designs and their importance for the question of causality. The Chapter also highlights the

strengths and weaknesses associated with measurement of performance in HRM. The Chapter

addresses the issue of link between HRM and performance in detail. The Chapter ends by

providing assessment of studies emerging from the region that is East and South Asian economies

that capture the presence of high performance workplace practices concept in the region and

assess their links with a wide variety of performance outcomes.

Chapter 4

The Chapter discusses the methodology adopted to explore the high performance workplace

practices in Pakistan and provides the justification for the method of data collection and

subsequent analysis. The Chapter begins with outlining the reasons for conducting a primary

survey in Pakistan. It describes the three important sectors of banking, information technology and

pharmaceutical from which the sample has been drawn. In doing so it describes the method by

which the sample was identified with help of comprehensive lists available at the website of their

respective industry associations. The Chapter outlines the reasons for collecting data from senior

25 establishment managers instead of human resource managers and provides details of response

rate. The Chapter discusses in detail the survey strategy adopted to collect data. In particular it

justifies the mix mode approach of combining face to face and telephone surveys in Pakistan. The

Chapter provides details of the variables and items used to measure the nine HRM practices in

Pakistan and their operationalization in case of Pakistan. In similar manner it provides details for

operationalization of control and dependent performance measures. The discussion also focuses

on reliability and validity issues the research faces, in particular due to its reliance on single

informant for data collection. The data analysis section explains the reasons for using the two

different statistical techniques that is Chi-square and logistic regression to achieve the aim of

exploring the high performance workplace practices in Pakistan and their associations with

performance outcomes. Chi- Square is a non-parametric statistic ideal to explore differences

between variables of interest that is, in the case of the current study the ownership of the firm and

diffusion of the high performance workplace practices in Pakistan. Keeping in mind the non-

parametric nature of the data set logistic regressions provided a better alternative to explore the

performance associations of the practices with establishment outcomes. The Chapter provides

detail justifications for using the above mentioned statistic to achieve the study objectives.

Chapter 5

The chapter outlines the overall state of diffusion of high performance workplace practices in

Pakistan and then discusses the differences between the establishments of multinational and local

firms with respect to diffusion/ adoption of HPWS practices in Pakistan. The chapter results are

based on general descriptive statistic and on the results of Chi-square test. The first part of the

chapter disaggregates the practices into five distinct categories based on the count of responses of

the managers showing agreement with the presence of a practice at their workplace out of total of

392 establishment managers that participated in the survey. An important finding on the basis of

descriptive statistic indicates that a number of high performance workplace practices have diffused

to 80 per cent or more of the MNC and local establishment surveyed in Pakistan. The practices

were: presence of internal labour markets, a selective hiring system that generates as many good/

qualified applicants as the establishment needs. From the training, learning and development

category the most diffused practice was intensive/extensive training in company specific skills. The

evidence indicates that employee involvement and participation: worker voice and self-managed

teams were the most widely diffused practices in the establishments in Pakistan as compared to

26 any other set of practices, in particular the establishments were providing the non-managerial

employees with operating performance information, strategic information and a formal procedure

for complaint resolution. Similarly more than 90 per cent of the surveyed establishments agreed

with the presence of self-managed teams. Evidence further indicates that practices relating to

performance review, appraisal and career development have also diffused to a large number of

establishments in the banking, IT and pharmaceutical companies surveyed in Pakistan. The data

indicates that more than 90 per cent of the establishments surveyed agreed that the workplace

conducts formal performance appraisal on routine basis, a proportion of the workers’ pay is

determined on the basis of performance appraisal and the performance feedback provides

information on how the employees do their job. As per the response of the managers the practice

of reduction of status differences and harmonisation was popular among the establishments. At

least 89.5 per cent managers agreed that establishments treated the employees and the managers

at the same level. These were perhaps quite surprising results as it was never expected that a

number of HPWS practices would be diffused to more than 80 per cent of the establishments

surveyed in Pakistan. In particular it is noticeable that a number of practices belonging to EIP, team

working, performance appraisal and career development and reduction of status differences have

diffused to large number of establishments in the banking, IT and pharmaceutical sectors in

Pakistan. Despite the fact that implementation of practices varies from establishment to

establishment, the results confirm the universalistic assumptions that practices are applicable in

every sector irrespective of business strategy or sector or country of origin, as the evidence

indicates that at least 67 per cent of the establishments belonging to diverse industry sectors such

as banking, IT and pharmaceutical employed at least half of the practices. The second half of the

Chapter explores the differences between the establishments of multinational and local firms based

on the Chi-Square test statistic.

Again it is quite evident from the results of Chi-square tests that the establishments of MNCs have

implemented the high performance workplace practices in a more consistent and comprehensive

manner as compare to the local firms. In particular the MNCs have comprehensively implemented

the practices in the domain of extensive training, learning and development, employee involvement

and participation: worker voice and high compensation contingent on performance as compared to

local firms. Though the MNCs did not provide any guarantees of employment security to

employees but still kept the internal labour market open and expected the employees to stay till

retirement. An important finding was that at the moment, the practices related to work-life balance

27 have been ignored by both establishments of MNCs and local firms in Pakistan. On the whole the

chapter discussed the overall picture and the state of differences between the establishments of

MNCs and local firms regarding the diffusion of high performance HRM. The Chapter also

assesses the change in management culture and practices in Pakistan and argues that there is

major shift in the way the work is being organized in the private sector establishments in Pakistan.

Chapter 6

This Chapter further explores the differences between the two set of establishments by running a

series of logistic regressions alongside control variables and the dummy variable of ownership of

the firm. The previous Chapter has identified the practices where with regard to diffusion of the

practices there were distinct differences between the establishments of multinational and local

firms. The Chapter further explores the differences while controlling for the other factors that are

likely to influence the adoption of such practices. The main objective of the Chapter was to

examine whether the differences hold or not when run in logistic regression model that controls for

firm characteristics such as nature of the business, size and age of the firm and proportion of the

workforce made of non-managerial employees. Another aim of the Chapter is to shed light on the

fundamental issue of best practice versus best fit debate in the high performance workplace

literature. As a general observation, the findings indicate that the practices retained their diffusion

differences with respect to ownership of the firm in presence of control and dummy variable.

Findings further indicate that a number of control variables have a significant association with the

adoption of such practices by an establishment in Pakistan.

Chapter 7

The Chapter presents the results of logistic regression analyses undertaken to determine the

associations of individual high performance workplace practices with various human resource and

performance outcomes. The chapter highlights the individual practices that have a significant

association with performance outcomes in local establishments in Pakistan and discuss such

associations in light of wider existing evidence from high performance literature. By examining the

performance outcomes associated with such practices the Chapter is able to evaluate the most

important argument of the high performance paradigm whether the local establishments that have

introduced HPWS practices in Pakistan have better performance outcomes or not. The results of

the study indicate that universalistic assumptions are valid as the practices have a significant

28 association with human resource and performance outcomes across the local establishments

operating in different industrial sectors in Pakistan. The results are consistent with outcomes of

many existing studies that indicate that HRM practices have a significant association with

performance outcomes. The results show that three HRM practices, an establishment’s recruitment

process ability to generate good/ qualified applicants, training non-managerial employees in variety

of job and conducting attitude surveys to correct employee morale problems have a significant

negative association with above average loss in working days due to employee sickness or

absence without permission and voluntary employee turnover. For the dependent variable of

employees discharged, the HPWS practice of conducting employment tests prior to hiring was the

only practice that had a significant negative association with above average discharge of

employees.

A number of HRM practices have a significant association with establishment performance

outcomes. The results indicate that practices such as an establishment policy to expect employees

to stay till retirement, conducting employment tests prior to hiring, training non-managerial

employees in variety of jobs and generic skills, sharing relevant strategic information, conducting

attitude surveys and practice of reducing status differences have a significant positive association

with above average labour productivity. A number of HRM practices also had a significant positive

association with above average growth in labour productivity. The practices were: an expectation

that all employees will stay till retirement, one or more employment tests prior to hiring, training

non-managerial employees in variety of jobs and generic skills, EIP practise such as employee

input programmes, sharing of relevant strategic information and conducting attitude surveys,

performance related pay practices as profit sharing an pay rise due to job performance and work in

a team, reduction of status differences and career breaks. In a similar manner a number of HRM

practices have a significant positive association with above average financial performance of the

firm. The practices were: the firm expectation that employees will stay till retirement, employment

tests, training in variety of jobs and generic skills, attitude surveys and participation in profit sharing

schemes.

Overall the results suggest that HPWS practices have the potential to improve the establishment

performance outcomes and can act as agent of change and can be further incorporated by other

organizations to improve the productivity and profitability of Pakistani establishments.

29 Chapter 8

The Chapter provides a conclusion and a summary of major findings. The research implications

and contribution for the practice and the high performance theory are discussed. Foremost and

most importantly the study by drawing on a largest survey yet undertaken has documented the

state of latest human resource management practices in Pakistan. There is scarcity of information

regarding HRM practices in Pakistan. The Conclusion highlights the importance of information

generated by the study for the firms operating in Pakistan and those intending to invest in Pakistan

in near future. The firms can have an idea of the state of HRM in Pakistan and thus decide either to

remodel their approach to management of employees in Pakistan or not. The Chapter also outlines

important implications for the policy makers in Pakistan. The policy makers in particular can rethink

and redesign their approach towards promoting certain management practices in an effort to

improve the productivity of establishments in Pakistan. The Chapter also highlights the contribution

of the study towards high performance workplace practices theory. Finally the limitations of the

current study are considered, some substantive issues that need further detailed investigation are

discussed and suggestions for the future research are offered.

30

Chapter 2 The Theory of High Performance Workplace Practices

In the last 20 years one theme of research has dominated the interest of many North

American, UK and European HRM academics and practitioners. This theme or paradigm can

be best described in the words of Legge (2010: 221) as a, “predominantly survey-based

research on the nature of ‘strategic’ high commitment/ high performance human resource

management and its relationship to organizational performance”. The interest in the theme

exploded after the global popularity of Pfeffer’s (1994) book on competitive advantage

through people and Huselid’s (1995) seminal work that suggests that greater use of high

performance practices is associated with decreased labour turnover and increased

productivity, profitability and market value. Pfeffer (1994: 6) puts the case for managing the

people right, “people and how we manage them are becoming more important because

many other sources of competitive success are less powerful than they once were”. Pfeffer

(1994: 16) further argues that the firms that adopt the new paradigm outmanoeuvre and

outperform their rivals, “achieving competitive success through people involves

fundamentally altering how we think about workforce and the employment relationship”.

Pfeffer suggests that firms see their workforce as a source of competitive advantage rather

than a cost to be minimized and invest in practices that can train, retain, motivate and

improve the human capability of a firm. This new paradigm has been termed by theorists as

high commitment / high involvement / high performance human resource management

(Wood, 1999; Marchington and Zagelmeyer, 2005; Boxall and Macky, 2009). The high

performance studies generally focus on HR practices such as sophisticated recruitment and

selection, extensive training, appraisal systems, performance-related pay and rewards,

employee involvement and team working. Guthrie (2009: 112) disputes the exact

specification of the practices comprising the high performance work system but agrees that

the common theme is on, “utilizing a system of management practices providing employees

with skills, information, motivation and latitude”, that can create a competitive advantage for

the firm.

The purpose of this chapter is to provide an introduction to the theory of high performance

workplace practices in light with the central element of the current thesis. Keeping in view the

first objective of exploration of high performance workplace practices among the

establishments of multinational and local companies in Pakistan, the chapter provides a

31

concise theoretical understanding of high performance workplace practices. In order to set a

context for the chapter of literature review, the discussion of the theory focuses on the issues

of control to commitment, reasons of change and typologies of high performance workplace

practices. For the second objective of thesis i.e. to assess the effect of individual practices

on human resource and performance outcomes, the chapter discusses the universalistic-

best practice, contingency- best fit, configurational- bundles and contextual perspectives.

The discussion of these perspectives aims to provide a broader understanding of HRM and

performance linkages. These perspectives identify several overlapping phases and provide

an insight into ebb and flow of high performance workplace practices theory (Guest, 2011).

2.1 From Control to Commitment

2.1.1The Taylor Model

Walton (1985: 78) rightfully points out that at the heart of the, “traditional model is the wish to

establish order, exercise control and achieve efficiency in the application of workforce”.

Frederick W. Taylor, ‘father of scientific management’, ideas on organization of work have

influenced the management of work for almost a century now. Miller (1992) classifies Taylor

approach to management as a ‘mechanistic control problem’ of designing incentive systems

and sanctions in a way that employee finds it in his/her own interest to work towards the

organization’s goal. Braverman (1974) critiques the approach and argues that it treats the

organization as a machine and people as it components and regards money as the only

motivator. Braverman account further reveals that Taylor was strongly against any idea of

discretionary effort or employee involvement, as he would term any management as

‘ordinary management’ that would pass general orders and allowed workers to retain their

grip on the labour processes. Taylor firmly believed that control over the labour process

should rest in the hands of the management and by this he meant each and every step of

the process including its mode of performance. The approach viewed the organizations as

mechanistically structured to be run on scientific principles. Management was considered to

be a science focused on studying organizational dynamics and processes and the interaction

of organizational components and systems with its environment (Elliott, 1990). People like

32

machines were expected to behave in an orderly fashion (Salaman, 1992). Such a

management approach thus ignored the importance of people and paid no attention to their

development and did not recognize the value of worker discretion and effort as fundamental

to achieving organizational performance. Rather the perspective relied on maximum control

of the people just like other resource at the disposal of the management (Analoui, 1998).

Nelson (1980) argues that in-spite of the inherent limitations of the idea of complete control

over the labour process; Taylor was one of the key members of the group that transformed

industrial management. The firms that adopted scientific management principles become the

world most meticulous factories. Despite many criticisms the contributions of Taylor to

evolution of modern management are immense and influential, though may seem

paradoxical by later standards, need to be acknowledged.

2.1.2 Change over time

The organizations of work and management rules that govern them have changed over time.

Miller (1992) indicates that after World War II, a number of industries initiated a programme

of technical modernization to improve productivity. The changes involved incorporation of

work teams, informal norms of cooperation and effort and delegation of authority. An obvious

question is why change is happening. Noon and Blyton (1997: 13) argue that, “world of work

has undergone a dramatic change over the past 20 to 30 years ….representing a

fundamental shift in the nature of capitalism itself: a shift from ‘Fordist’ to ‘post-Fordist’ forms

of production, from mass production systems to flexible specialisation, from industrial to

post-industrial society, or from modern to post-modern forms of organisation”. Walton

(1985:77) also recognizes the change, “in factory after factory there is a revolution under

way in the management of work”.

There is a strong argument in high performance literature that changes in the business

environment such as globalization, internationalisation of economy, reduction in trade

barriers, deregulation of markets, privatization and end of state monopolies, dramatic

advancement in information and production technologies, increase participation of women in

the workplace, and changing consumer demands have resulted in a paradigm shift in the

management of employees (Holman and Wood, 2003). These changes are fast affecting

33

developing countries like Pakistan. Globalization coupled with deregulation and privatization

of state controlled industry has resulted into opening up of business sectors for foreign direct

investment. A major inflow of investment occurred in banking and information technology

sectors in Pakistan from 2000 to 2007. Many multinational companies from the US, the UK

and around the world established themselves in the Pakistani market. It has already been

mentioned in the introduction chapter that multinational companies in Pakistan are the

means of bringing new work practices and act as agent of change. Khilji (2002) argues that

there is some preliminary evidence that multinationals in Pakistan diffuse much of the latest

human resource practices to local companies. Human resource management has undergone

a tremendous change in the West and has moved from bureaucratic management system

towards high commitment/ involvement and performance models. Demographic changes in

west i.e. increased participation of women in the workplace have forced companies to

introduce work-life balance practices. These demographic trends have started influencing

Pakistani workplaces too. A sizeable number of women with professional qualifications are

entering the workplace. In sectors like banking and information technology these changes

are quite visible and an increasing number of women are working in the sectors. In the same

way the latest trends in information and production technologies are also visible in

developing nations like Pakistan. In the developed industrialized world, these changes are

fast affecting the way work is organized and managed, there is a hard body of evidence that

indicates that Western establishments are moving towards high commitment/ high

involvement/ high performance models of human resource management that have significant

effects on employee absence, turnover, productivity and financial performance of the firm

see, for example (Huselid, 1995; Huselid et al., 1997, Delaney and Huselid, 1996; Ichniowski

et al., 1997; Appelbaum et al., 2000; Osterman, 2000; Patterson et al., 1997; Wood and de

Menezes, 1998; Wright et al., 1999; Guest et al., 2003; Wright et al., 2003; Purcell et al.,

2003; Wood and de Menezes, 2008; Boaden et al., 2008). In light of these changes the

current study explores the state of high performance workplace practices in the

establishments of multinational and local companies in Pakistan.

As already mentioned, in response to these changes and trends, organizations are adopting

new workplace practices that are flexible and responsive to changing market and consumer

demands. One solution to these new challenges facing management is to develop highly

skilled and committed workforce. Holman and Wood (2003) argue that these modern work

34

arrangements and complex technologies require a totally different type of workforce with

technical and higher-order cognitive abilities, having high-level of communication and

interpersonal skills, employees are required to be innovative and creative and exercise a

degree of discretion and responsibility. Holman and Wood (2003) further argue that

innovative human resource practices termed as high commitment or high involvement or

high performance models, have the potential to develop a highly skilled and committed

workforce.

In the preceding section, the chapter outlined the theoretical arguments that recapitulate the

process of change in management over the period of time. In response to changing business

environment, it would appear that organizations are moving towards high performance

models not only in the advanced economies but also in the developing world. The next

section introduces the main assumptions of the normative models that provide the theoretical

foundations on which the later typologies of high performance work practices have been

built. In doing so, the chapter provides some of the popular typologies of high performance

models and cites frequently used definitions of the HPWS model. The chapter also considers

some of the arguments of high performance theorists regarding the paradigm that underpin

the research design in Pakistan.

Over the last 20 years, a number of potential models and approaches have emerged that

explain the HRM and performance linkages. A number of these approaches overlap, and

provide a general understanding of the phenomenon and do not agree on a common theory,

framework or typology. Guest (1999a) classifies the general level theoretical models as

strategic, descriptive and normative. Of these models, the normative typologies of Walton

(1985), Lawler (1986) and Pfeffer (1998) have attracted the most attention. The main

argument of the normative perspective is that specific practices and specific HRM goals will

always be superior (Guest, 1999a). It can safely be argued that normative models support

the best practice or universalistic perspective.

35 2.2 High Commitment/ Involvement/ Performance Models

The origin of the term ‘high performing system’ can be traced to Peter Vaill and Barbara

Perry work in early 1980s. These earlier accounts of high performance like their modern

counterparts emphasize practices and policies such as team working, decentralized decision

making, reward system and on achieving extra-ordinary performance levels for the individual

and the company. The earlier accounts describe that such policies had a positive impact on

number of plant performance indicators (Buchanan and McCalman, 1989). Later on two very

important management frameworks Walton (1985) and Lawler (1986) proposed a normative

model of HRM based upon the central element of developing employee commitment to the

organization. Walton (1985: 79) model places central importance on work enrichment as a

distinctive feature of the new management approach.

In this new commitment-based approach to the workforce, jobs are designed to be broader than before, to combine planning and implementation, and to include efforts to upgrade operations, not just maintain them. Individual responsibilities are expected to change as conditions change, and teams, not individuals, are often the organizational units accountable for performance. With management hierarchies relatively flat and differences in status minimized, control and lateral coordination depend on shared goals, and expertise rather than formal position determines influence.

Wood and Wall (2007) argue that an emphasis on work-enrichment, participation, incentives,

employee involvement and voice in Walton’s (1985) model were a counterpoint to the

bureaucratic models of job design and thus symbolized a genuine transcendence of

bureaucratic models. Wood and Albanese (1995: 220-221) explain that high commitment

management is aimed at eliciting employee behaviour that is primarily self-regulated rather

than controlled by sanctions. This reverses the management equation of control to a

relationship based upon trust and commitment as a distinctive basis of HRM (Guest, 1999a).

Though the normative models aim to improve the individual and organizational performance

through motivation and satisfaction route the ultimate objective is to improve human

resource and performance outcomes (Wood and Wall, 2007). Walton’s (1985) model lays

out the importance of self-regulation as compared to control as a distinct feature of new

management approach. The most up-to-date evidence from Pakistan regarding the

management trends is by Khilji (2002) which points to the emergence of strategic human

resource management approach among multinational companies in Pakistan, but as far as

36

local companies are concerned the evidence as of 1999 still points towards an inherited

British bureaucratic model of management. However Khilji (2002) highlights that managers in

Pakistan are increasingly adopting American style of management. Business Schools in

Pakistan teach American syllabi and number of business graduates have advance

management degrees from the US and the UK. Walton (1985) and Lawler (1986) models of

management are two important models that influence much of the debate on high

performance workplace practices. The current study captures many dimensions of the

Walton (1985) and Lawler (1986) model in the case of Pakistan as part of HPWS practices

under investigation. Though the study is not an outright measurement of Walton and Lawler

models of management, but as these models form the basis of high performance workplace

practices typologies, so the study will in an indirect manner capture and discuss some of

their dimensions. In particular the study will be in a position to throw some light on the

aspects of decentralization of decision making, suggestion-making, voice and participative

self-regulated behaviour.

A year later Lawler (1986) also provided a management model essentially based upon

commitment philosophy and termed it as high-involvement model. Lawler (1986) argued that

plants practising high involvement practices were clearly different and successful in business

as compared to traditional plants. The model includes practices that are related to employee

involvement, team working, extrinsic motivation, reduction of status differences and work

enrichment. Lawler (1986) argues that high involvement is the best way forward to achieve a

competitive advantage available to countries with educated, achievement- oriented

workforce through the route of improving performance and engaging in participative self-

regulating work behaviour. Lawler’s (1986) high involvement model is multifaceted with four

dimensions of power, information, knowledge and rewards. These four dimensions also

provide logic for implementation of high involvement practices; if implemented and moved to

lower levels of the organization with consistency and congruence the practices have the

ability to affect the total performance of an organization. The power distribution to lower

levels includes decentralization of decision making, suggestion-making and voice aspects.

The dimensions of information sharing, knowledge and reward are there to ensure that

employees have the right skills and incentives to use their power to have a sustainable effect

on performance (Lawler, 1986 and Wood and Wall, 2005). Benson and Lawler (2003) argue

that foundations of high involvement thesis are based on the notions of individual motivation

37

and extra effort. Both intrinsic and extrinsic motivation principles are incorporated in the high

involvement orientation, giving people ‘responsibility’ and linking ‘pay to performance’ in an

effort to raise performance outcomes (Benson and Lawler, 2003 and Wood and Wall, 2005).

Whatever might be the causal path that may lead to performance effects of high

performance practices, in short the most important and essential claim of high involvement

model is its potential to enhance organizational performance, lower employee absenteeism

and turnover (Lawler, 1991).

The earlier typologies of Walton and Lawler reveal that foundations of commitment and

involvement models rest upon the core concepts of job enrichment, quality of work-life

techniques, self-managing teams, pay for performance and employee involvement as the

basic building blocks of the models. These policies and practices also form the foundations

of later high performance models. The study in case of Pakistan will provide evidence on

salient features of Lawler’s (1986) model and will assess high performance practices that

provide intrinsic and extrinsic motivation opportunities to workers in Pakistan to improve

performance outcomes. By assessing the implementation of high performance practices with

regard to non-managerial employees in Pakistan the study will argue for the case that

strategic human resource management in Pakistan is now well established as compared to

1999 when the companies had started taking a strategic view of the workforce as means of

achieving competitive advantage.

One of the widely accepted typologies of high performance practices has been put forward

by Pfeffer (1998: 64) in his book, The Human Equation, in which Pfeffer proposes a set of

seven people management practices that have the potential to substantially enhance

economic performance of an organization. He specifies these policies as: employment

security, selective hiring of new personnel, self-managed teams and decentralization of

decision making as the basic principles of organizational design, comparatively high

compensation contingent on organizational performance, extensive training, reduced status

distinctions and barriers, including dress, language, office arrangements and wage

differences across levels and extensive sharing of financial and performance information

throughout the organization.

Pfeffer (1998) argues that people are a company’s most valuable assets and how they are

treated, how their skills and competencies are developed determines an organization’s

38

success. Pfeffer suggests that every type of industrial set up can adopt and benefit from high

performance practices as such practices are embedded in social science principles that

provide a sound foundation for their implementation. Pfeffer sums the theoretical rationale

underpinning the high performance practices as, people will work harder as result of control

over their work, will work smarter as high performance practices not only increase the skills

and competence but rather direct their discretionary effort towards enhancing organizational

performance. Moreover their implementation saves administrative cost, as the responsibility

for task management is shifted towards workforce. The research evidence generated in case

of Pakistan will be evaluated in light of Pfeffer arguments and the study will be in a position

to shed some light on the argument of value of employees for MNCs and local companies in

Pakistan and does their treatment as valuable assets results into performance gains for

establishments operating in Pakistan.

Another typology has been offered by Marchington and Wilkinson (2008); though very similar

to Pfeffer (1998) list of practices, it takes into account work-life balance practices. This

addition is valuable and timely as the number of women entering the workforce worldwide is

on the rise and as a response to new legal requirements; many Western organizations are

developing and implementing work-life balance policies. With the increasing importance of

women as part of workforce becoming visible in developing countries like Pakistan, it is

expected that establishments in Pakistan will be offering work-life balance opportunities to

their employees. Moreover a recent study by Kinnie et al (2005) based on evidence

generated from 18 multi-sector UK organizations suggest that work-life balance initiatives

are being valued by employees and increases their overall commitment to the organization.

39

The current study uses the list developed by Marchington and Wilkinson (2008) as an overall

framework of best practices forming the basis of investigation of high performance

orientation of the establishments of multinational and local companies in Pakistan. The list is

outlined below.

1. Employment security and internal labour markets

2. Selective hiring and sophisticated selection

3. Extensive training, learning and development

4. Employee involvement and participation: worker voice

5. Self-managed teams / team working

6. High compensation contingent on performance

7. Performance review, appraisal and career development

8. Reduction of status differential / harmonisation

9. Work-life balance

The high performance workplace practices can best be understood by closely examining the

constituent policies and practices which constitute the typologies. The practices reflect a

major strategic shift on the scope and practical application of work organization with an aim

to improve organizational performance outcomes and redefines the management function at

all levels as compared to bureaucratic management approach.

The most frequently cited definition of high performance in literature has been attributed to

US department of Labour (1993: 1) version, which defines it as: “systems of mutually

reinforcing practices [that] create multiple ways to develop worker skills, to align individual

and organizational goals and to share information crucial to solving problems.”

Applebaum et al. (2000) interpret high performance practices as work organization practices

that develop non-managerial employees’ ability to participate in substantive shop floor

decisions. Similarly Patterson et al. (1997:13) argue that these practices have the potential

to improve the company performance by, “increasing employee skills and abilities, promoting

positive attitudes and increasing motivation and by providing employees with expanded

responsibilities so that they can make full use of their skills and abilities”.

A review of the theory indicates that different terminologies have been used to describe the

new management paradigm. Terms like high commitment, involvement and performance are

40

notable in this regard. Though to the majority of theorists the terms are synonymous and

measure the same phenomenon, to others there are some underlying distinct features of the

approaches. The current study draws on the measures of both approaches and considers

them as synonymous terminologies. However it is important to take into account the

differences outlined in the literature and assess their implications for the current study. The

terms high commitment, involvement and performance are generally used synonymously

(Wood, 1999; Wall and Wood, 2005; Boxall and Mackay, 2009). However some important

distinctions have been outlined in the literature. Legge (2005: 19) outlines an important

distinction; she argues that “HCM focuses on job security, job design, and employee

development as the route to high productivity/ profits and to high employee satisfaction/

commitment. HPWS focuses on practices correlating with high financial performance, such

as incentivised pay, de-emphasising job security and the use of internal labour markets and

is concerned only with high productivity and profits”.

Wood and Wall (2005) indicate that the term high performance work organizations was

coined by US Department of Labour in 1993 indicating that such firms emphasize quality and

adaptability to a changing environment. The firms must be able to utilize the creativity,

ingenuity and problem-solving abilities of their employees. The system emphasis

decentralized decision-making and incorporation of skills and information among employees

to take such decisions. Like high involvement, the high performance system places

importance on employee discretion as a potential source of superior organizational

performance. Apart from major similarities between involvement and performance models,

high performance work practices model places more importance on skills and extrinsic

motivational elements as compared to work enrichment and voice methods in involvement

models. Huselid and Becker (1996) and Becker and Huselid (1998) two of the most leading

advocates of high performance work systems highlight the significant role of extrinsic

motivators i.e. performance contingent compensation as the distinguishing feature of the

model. Thus the core of high performance management concept is expanded by them and is

centred on performance contingent incentive systems. The literature highlights the

differences between two terms, but many proponents of high performance systems treat the

commitment, involvement and performance as companion terminologies (Wall and Wood,

2005) and for the purpose of current thesis, the research also treats the three terminologies

as synonymous. As previously mentioned that the research treats the terminologies as

41

synonymous, it takes a balanced approach and investigates both set of practices depicting

the major frameworks of HPWS theory and focuses on aspects such as employee

involvement, participation, information sharing and voice reflecting the key ingredients of

commitment and involvement models and on aspects as training and extrinsic motivation

reflecting the key ingredients of high performance models. As far as outcomes are

concerned, the research follows the major high performance studies and measures human

resource and establishment performance outcomes as dependent variables and does not

follows the commitment, motivation or satisfaction route. Therefore the current research

provides a more encompassing perspective, regarding the state of under-researched HPWS

phenomenon in Pakistan.

A number of high performance studies taking the high involvement perspective generally

make an argument that such approaches improve labour productivity and organizational

performance through motivation and commitment route. However this argument of

commitment has been seriously challenged by Legge (2005) as she asserts that there is no

logical connection between commitment models and strategic integration. She further

questions the weak and fragile chain of relationships that focuses on commitment which in

turn can increase organizational performance. She asserts that most of the evidence

presented is cross-sectional and correlational; leaving one to ponder whether commitment

identified is a cause or effect. A number of theorists challenge the performance claims via

commitment route that proponents of high performance often make. Prominent among such

studies are (Ramsay et al., 2000; Knights and McCabe, 2000; Barker, 1993). A number of

studies challenging the commitment route also access the impact of high performance

practices on employee experience of work. Some of them highlight the negative implications

of such practices (see, for example, Barker, 1993; Boxall and Purcell, 2003; Hutchinson et

al., 2000). On the whole it can be safely argued that positive performance outcomes are

more consistent and stronger as compared to their negative implications (Batt, 2004;

Cordery et al, 1991; Hunter et al., 2002; Banker et al., 1996; Vandenberg et al., 1999;

Guthrie, 2001). As already mentioned the current study does not take into account the

moderating or mediating effects of commitment on performance outcomes nor does the

study accounts for any positive or negative outcomes from employee perspective. Instead it

follows the major high performance studies and directly captures the effect of practices on

HR and performance outcomes in case of Pakistan. This was primarily done keeping in view

42

the study objectives to explore the state of diffusion of high performance practices in

Pakistan and to keep the issues of critical work on HPWS for future research.

The chapter has discussed how different proponents of high performance systems have

conceptualised different typologies and models of the paradigm. It is apparent that no exact

or specific definition or framework is available that clearly outlines how the high performance

system works or what are its constituent practices. Though no theoretical framework exactly

defines the paradigm, however in most of these accounts the focus is on at least the

following operational typology of Legge (2010:224) and most of the models essentially

comprise of policies as: careful recruitment and selection with emphasis on traits and

competencies, extensive use of systems of communication, team working with flexible job

design ,emphasis on training, learning and knowledge management, involvement in decision

making with responsibility (empowerment) and performance appraisal linked to contingent

rewards system.

An important dimension the chapter draws attention to is the fact that in practice the actual

implementation of high performance/ commitment/ involvement models may take many

shapes and forms. A number of studies provide evidence that in actual practice the high

commitment management is being adopted to varying degree (Wood and Albanese, 1995).

Similarly a study by Wood and de Menezes (1998) investigates the diffusion of HCM in

British workplaces and argues that HCM is rather a matter of degree than a total package.

However few studies support a comprehensive adoption of the package and argue that

positive benefits of high involvement only accrue when the model is implemented in a

comprehensive and planned manner (Vandenberg et al., 1999). At the same a number of

theorists recommend that any implementation is better than nothing and use of such

practices lowers turnover and increases productivity (Arthur, 1994; Guest and Hoque, 1994;

Guthrie, 2001). A study by de Menezes and Wood (2006) argues that certain sectors of

British economy use high performance practices more consistently as compared to other

sectors. The study reveals that practices are applicable to both high and low autonomy jobs

and have the potential to improve productivity. The objective to highlight the point was to

build the ground that in case of Pakistan it can be expected that certain set of establishments

may have adopted the practices to varying degree and a complete and consistent

implementation may still be far away.

43

As the work in the area of linking HRM with performance has progressed, researchers have

begun to delineate other broad perspectives. The chapter discusses two of these

perspectives, the best practice and best fit in detail as the current thesis while investigating

the high performance workplace practices in Pakistan takes a universalistic stand of point.

However in order to assess the arguments of universalistic perspective it is necessary to

compare and contrast the approach main arguments against its opposite contingency

perspective. The chapter then briefly introduces the configurational and contextual

perspectives which are gaining popularity in linking HRM with performance.

1. Best-practice---- one set of HR practices can be identified which when

implemented will raise business performance.

2. Best-fit----- A right fit between business strategy and HR practices is essential for

achieving business performance.

3. Bundles----Specific combinations according to business context will achieve

business performance.

4. The Context----takes into consideration the relationship between contextual

conditions and HRM.

The lack of theory on HRM practices, bundles or combinations and on their linkages with

performance outcomes has generally been termed as a ‘black box’ (Marchington and

Wilkinson, 2008 & Wright and Gardner, 2003). Guest (1997) and Wright and McMahan

(1992) use the term ‘atheoretical’to describe the deficiency of theory in HRM. However a

number of perspectives have been put forward by theorists to illuminate the ‘black box’, the

most influential ones being the best practice, best fit and bundles perspective. The chapter

proceeds further to review these perspectives one by one to highlight their main arguments

and contradictions. Though the chapter discusses all the five perspectives the emphasis will

be on best practice and best fit approaches All the five perspectives are embedded in the

literature of strategic human resource management addressing the same research question

i.e. impact of human resource management practices on performance outcomes with each

perspective emphasizing a specific dimension of the reality and at the same time

complementing each other by adding constructs, relationships and variables not considered

before. In this way they add complexity to the basic theme that HRM can influence firm

44

performance and enhance the field by introducing new dimensions and thus enrich our

understanding by illuminating the black box.

2.3 Best Practice or Universalistic Perspective

The simplest of all the perspectives is the best practice or universalistic perspective. The

key assumption of the perspective is that best practice HRM is applicable across

organizations, irrespective of product-market situation, industry or workforce (Marchington

and Wilkinson, 2008). Martin-Alcazar (2005) argue that in universalistic perspective

researchers identify best human resource practices that have the potential to improve

organizational performance and are generalizable across the contexts. Many research

studies taking a universalistic stand point have studied the impact of single practices on

performance outcomes. For example, compensation (Gerhart and Milkovich, 1990), selection

(Terpstra and Rozell, 1993), training (Bartel, 1994; Russell et al., 1985; Garcia, 2005), team

working (Banker et al., 1996; Batt, 1999; McNabb and Whitfield, 1997) and work-life balance

(Goodstein, 1994; Ingram and Simons, 1995). In many cases the proponents of universalistic

models analyse more than one best practice and term their index or system as high

performance work system i.e. (Guest and Hoque, 1994; Huselid, 1995; MacDuffie, 1995;

Delaney and Huselid, 1996; Delery and Doty, 1996, etc.). The underlying argument of the

universalistic perspective, “that greater the extent to which characteristics of an HCM /

HPWS model are adopted, the better the organizational performance”, enjoys the wider

support of the theorists and practitioners among all the other perspectives linking HRM to

performance (Legge, 2010: 229). Though the perspective has been criticized for its

limitations and simplistic rationale, some of the limitations would be discussed in the

paragraphs that follow, but at the same time it is important to note that the perspective has

appealed to many theorists.

Though a simple perspective in understanding, it is one of the most influential perspectives

dominating the high performance paradigm. In the context of Pakistan where no previous

study with regard HPWS practices exists, the perspective provides a solid theoretical

foundation to begin the exploration and documentation of the practices among the

establishments of MNCs and local companies. Drawing from the perspective the study

45

focuses on individual practices and hopes to find a greater use of these practices in the

sampled establishments. It is also expected that as theorized, the individual practices will

have a universalistic application in case of Pakistan. The chapter continues and considers in

detail the arguments of the universalistic perspective with its potential implications for the

study.

Pfeffer (1998: 34) being the most ardent supporter of the case for “putting the people first”

argues, “the effects of high performance management practices are real, economically

significant and general---and thus should be adopted in your organization”. In a similar

manner Huselid (1995: 668) strongly supports the universal application of high performance

work practices, “And given the substantial main effects associated with systems of High

Performance Work Practices, one might conclude that the simple adoption of such practices

is more important than any effort to ensure these policies are internally consistent or aligned

with firm competitive strategy”. Delery and Doty (1996:828) support the universalistic

assumptions and argue, “Organizations that adopt best HR practices can generate greater

returns. Such practices include profit sharing, result-oriented appraisals and greater

employment security”. Many influential studies in high performance paradigm support the

best practice perspective or universal applicability of high performance practices in the HRM

–firm performance relationship debate. Delaney and Huselid (1996: 964-5) based on a

national equiprobability sample of a wide variety of organizations support the assertion that

“people are the preeminent organizational resource and the key to achieving outstanding

performance”, “our results suggest that progressive HRM practices including selectivity,

training, and incentive compensation, are positively related to perceptual measures of

organizational performance”. A meta-analysis by Combs et al. (2006:518) adds credence to

universal application and performance effects of HPWS and argues that the effect is not only

statistically significant but also managerially relevant, “increasing use of HPWPs by one

standard deviation increases performance by .20 of a standard deviation”. Combs et al.

(2006: 524) support the theory that certain human resource practices improve performance

and argue, “Our results lay to rest any doubt about the existence of a relationship”.

The crux of the above discussion points to one conclusion that people are an organizations

best resource to achieve significant performance outcomes. A simple adoption of HPWS

practices can help a firm achieve the intended results. The discussion indicates that the

46

relationship between HPWS and performance is without doubt established in US and UK

context. The current study in light of evidence generated in Pakistan will assess the

existence of such a relationship in case of Pakistan.

The universalistic perspective is also consistent with arguments of institutional theory about

institutional isomorphism (Paauwe and Boselie, 2003; Paauwe, 2009). The institutional

isomorphism argues that organizations that can identify and implement best policies or

practices will survive and prosper in the long run. As a result of benchmarking successful

organizations follow the same management practices. In HRM terms this can be equated to

treating employees as assets via HCM/ HPWS models for achieving best performance

(Legge, 2005). The issue of institutional isomorphism can be relevant in case of Pakistan

where it is higher possibility that HPWS practices gain credence in the industry in response

to pressure to conform to certain industrial standards, recommendations of trade

associations and management consultants, governmental pressures or a simple desire to

benchmark against the best in the industry. In such a case, the performance effects may not

be an ultimate aim of the followers. The arguments of intuitionists are gaining popularity as

they argue that the HRM system of an organization may not reflect a rational choice but

rather may take a particular shape in order to attain legitimacy in the eyes of different

stakeholders and to meet certain other external pressures. The establishments may just be

implementing such practices to conform to industry or institutional pressures. The chapter

continues the debate and draws attention to the black box ‘lack of theory’ for which the

perspective is criticized by many theorists.

The proponents of universalistic perspective with their deductive logic enjoy a superior level

of statistical strength in testing of HRM and performance hypotheses, though the perspective

has been frequently accused of being a-theoretical and for lack of consideration of crucial

variables, constructs and relationships (Guest, 2011 and Martin-Alcazar et al., 2005).

However researchers using universalistic perspective draw their inspiration from transaction-

cost economies, agency theory and basic prepositions of human capital theory. Though

these theories are not management theories yet they have become an important source of

theorising in management and have important implications for universalistic perspective

(Jackson and Schuler, 1999; Jones and Wright, 1992; Jones, 1984; Eisenhart, 1988; Wright

and McMahan, 1999; Blair, 2011).

47

Though the universalistic theorists have drawn upon the arguments of transaction cost

economies, agency theory and human capital theories, a number of theorists have blamed

the universalistic assumptions to lack any solid theoretical foundations (Guest, 2011 and

Purcell, 1999). At the same time the universalistic theorists can be credited for their efforts to

establish the importance of human resource management practices in the strategic

management of a firm. Youndt et al. (1996: 837) suggest that,

the universal approach helps researchers to document the benefits of HR across all contexts, ceteris paribus, [while] the contingency perspective helps us to look more deeply into organizational phenomena to derive more situationally-specific theories and prescriptions for management practice.

Purcell (1999) terms the universalistic perspective as a cul-de-sac that ignores the changes

in work, employment, society and wider community. This brings the chapter to discuss the

contingency perspective which argues that performance is optimised when there is a fit

between an organization’s structure and its strategy. In the field of HRM the perspective

argues that an organization set of HR practices must be aligned to other organizational

factors in order to have impact on performance.

2.4 Best Fit or Contingency Perspective.

The contingency perspective introduces the role of contingencies between HRM and

performance. Boselie et al. (2005) argue that the internal and external context in which a firm

operates holds critical information for researchers investigating the HRM impact on

performance. The contingencies can range from factors such as business strategy, size,

structure, technology and environmental variables. Contingency research does not differ

from the universalistic perspective in terms of level of analysis. Both single and group of

practices have been analysed without due consideration to synergistic mechanisms or

integration of practices or to wider context (Martin-Alcazar et al., 2005 and Colbert, 2007).

Contingency perspective draws its inspiration from the resource based view of the firm, the

view propagates the argument that sustained competitive advantage rests on developing

unique, non-imitable competencies (Barney, 1991). The perspective discourages the

imitation of best practices but rather lays emphasis on developing an idiosyncratic fit

48

between HRM practices and contingencies facing the firm arising out of path dependency,

social complexity and causal ambiguity (Legge, 1995). The most common contingency

variable whose relationship with firm performance has been explored is firm strategy. The

crux of contingency perspective has been clearly summed up by Colbert (2007: 103) as:

A contingency perspective draws a causal line from the HR policies and practices to the organizational performance metrics, and it allows for the moderating effects of strategy. The primary concern is with vertical fit (alignment with strategy) rather than horizontal fit (HR practices hanging together as a coherent, self-reinforcing system). While this mode directs attention toward effects among variables, internal system interaction effects are not central concern.

Contingency perspective evaluates HRM impact on performance in presence of moderating

variables. Business strategy is the most frequent variable researchers investigate in

contingency perspective, with most of studies concentrating on Miles and Snow 1978 and

Porter 1980 and 1985 typologies. Some of the major studies examining business strategy

and alignment of HRM impact on performance are (Johnson et al., 1989; Schuler and

Jackson, 1987; Peck, 1994; Milkovich et al., 1991; Cowherd and Levine’s 1992; Russell et

al., 1993, Datta et al., 2005 etc.). Some of other variables researched in HRM and

performance equation are for example, technology ( Snell and Dean, 1992; Macduffie, 1995;

Wright et al., 1999 etc.) organization structure (Van Sluijs et al., 1991; Ghoshal and Bartlett,

1990; Bowen et al., 1991 etc.) size (Lawler et al., 1992; Huselid, 1995; Koch and McGrath,

1996, etc.) and life cycle stages (Baird and Meshoulam, 1988; Ferris et al., 1984; Lengnick-

Hall and Lengnick-Hall, 1988; etc.).

The current study in case of Pakistan though captures the impact of few contingencies as

control variables in exploring the relationship between the practices and the performance

outcomes, the study is not a an investigation of contingency perspective arguments in

Pakistan. The arguments are only presented to draw out the comparison between the two

most influential perspectives in HPWS paradigm i.e. best practice vs. best fit.

Purcell (1999) argues that at the heart of best fit model is the business strategy and type of

HR model needed to fit that strategy. Given the fact that a limited number of business

strategies and their alignment with HR architecture for potential impact on firm performance

have been researched, for example Miles and Snow and Porter models creates a unique

problem as Becker and Huselid (2006) point out that this makes them easier to imitate and

49

reduces their value as source of competitive advantage. The arguments of generic HR-

competitive strategy lack empirical support (Becker and Huselid, 1998; Delery and Doty,

1996; Huselid, 1995).

Marchington and Wilkinson (2008) and Legge (2010) argue that contingency perspective

suffers from a number of problems. The contingency approach takes a classical rationalistic

approach to strategy making whereas in reality many organizations do not have a clear

business strategy. The approach takes a static view of strategy which precedes HR strategy

whereas in practice the process is much more interactive, messy, multistage, multilevel and

political.

Marchington and Wilkinson (2008) and Legge (2010) further highlight that the perspective in

many cases focuses on single contextual factor and ignores the sheer diversity of business

strategies pursued by diversified companies and assumes that the variable highlighted

determines HR style. Whereas in reality which HR style is adopted by a firm depends on

many complex factors beyond the immediate context of employment relationship.

Marchington and Wilkinson (2008) draw ones attention to other contingent variables i.e. life

cycle, size, technology etc. and argue that these variables are subject to constant change. It

would make almost impossible for a business to constantly remodel its HR strategy in

anticipation of change. The perspective clearly fails to consider the influence of

governmental, trade bodies and other stakeholders influence on the regulatory environment

that may impact HRM. These limitations and drawbacks of the perspective have been

addressed to a certain extent by the contextual perspective which takes into consideration

both internal and external environment of the business. However the arguments of

Marchington and Wilkinson (2008) and Legge (2010) highlight an important dimension of

constant change which in reality limits the ability of managers to remodel their HR strategy,

thus adding strength to universalistic arguments that HPWS practices have the ability to

function in all contexts and industries.

Marchington and Wilkinson (2008) challenge the prescriptive value of the perspective. They

argue that HR practices differ from industry to industry; this phenomenon is quite observable

and understandable. However the perspective fails to explain the paradox that why within the

same broad product markets the HR practices differ for example different practices in Tesco

and Sainsbury or Ford and General Motors. This limits the ability of best fit models to explain

50

how HRM develops in organizations and then to develop any theory that is applicable in

practice.

Marchington and Wilkinson (2008) agree that though the best fit model ignores the effect of

many other factors that shape HRM and the factors may change over time but still the best fit

or contingency approach has its own importance. If the model is to retain its usefulness, it

should be used as a tool for guidance rather than a prescriptive technique. Legge (2010)

argues that best practice and fit approaches are contradictory in nature. However in-spite of

inherent contradictions and limitations of the two perspectives, there has been some attempt

to reconcile them. Boxall and Purcell (2002) argues that best practice can be termed as the

surface layer of HR policy or practice that will have a universal relevance and the way it is

implemented will depend upon the context of the company, thus the application may reflect

contingency perspective. However Purcell is much more critical of the approach in (1999: 38)

and terms contingency perspective as a ‘chimera’ “limited by the impossibility of modelling all

the contingent variables, the difficulty of showing their interconnection, and the way in which

changes in one variable have impact on the other, let alone the need to model idiosyncratic

and path dependent contingencies”. In a similar effort Becker and Gerhart (1996) argue that

best practice and fit perspectives are not in conflict, they simply operate at different levels of

an HR system. They highlight the argument that there exists a best HR system architecture

across firms and the actual implementation of individual practices may vary from one firm to

another. Similarly Barney and Wright (1998) also suggest that the fact that these practices

need to be aligned to a firm strategy does not imply that firms can ignore best practices for

each of the various HR activities. Such ignorance may result into competitive disadvantage

for the firm. The arguments of Marchington and Wilkinson (2008), Legge (2010) and others

make the case of investigating best practices in case of Pakistan ever stronger. The

arguments create a need to assess the state of best practices in Pakistan to build a picture

of MNC and local firm awareness about them as a starting point. Perhaps future studies can

take the research further and probe the issues of contingencies and differentiated HR

structures in detail in Pakistan.

A variant of contingency perspective is the configurational perspective that essentially

argues that bundles or systems of synergetic HR practices that are both vertically and

horizontally aligned to firm internal and external business environment have the ability to

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improve organizational performance. Though the current study does not focus on the issue

of configurations in case of Pakistan but it is worthwhile to briefly discuss the main argument

of the perspective.

2.5 Configurational Perspective

A very important theme underlying many accounts of high performance management is the

assumption of complementarities among the HR practices. The complementarities thesis

essentially argues for synergistic or mutually reinforcing influence of practices on

performance. The configurational argument stresses the visibility of interaction effects

among HRM practices and their ability to explain at least some variance in dependent

variable apart from any main effect of individual practices (Macky and Boxall, 2007). This

has led to exploration of number of hypothesized ‘bundles’ of HR practices in research

studies (Delery and Doty, 1996; Arthur, 1992 &1994; MacDuffie, 1995; Huselid, 1995 and

Ichniowski et al., 1997 etc.). At the same time the perspective lays an emphasis on vertical

or external fit of such bundles or systems to the business environment of the firm. In other

words, “the configurational school follows a holistic principle of inquiry and is concerned how

patterns of multiple interdependent variables relate to a given dependent variable (Colbert,

2007: 103).

However this perspective lacks any agreed upon theoretical framework, it creates practical

difficulties as it is unmanageable to construct and test more than a few configurations,

whereas in reality the practical situation in organizations is much more complex, which may

still require more sophisticated and complex methodological approach to test and verify

systems or bundles (Colbert, 2007 and Delery, 1998).

Lepak and Snell (1999 and 2002) take the configurational debate further and suggest that a

single organization may employ different HR configurations for a subgroup of employees

depending on the variation between the human capital value and uniqueness of the

subgroup within the organization. This idea of configurations within an overarching

architecture is still in infancy and needs to generate more empirical evidence if it is to make a

valuable contribution to configurational perspective. The current study decided to focus on

52

individual practices and their performance outcomes in case of Pakistan as it may generate

a more meaningful and comprehensive scenario of HPWS practices as compared to taking a

system or bundle or index approach.

An emerging number of theorists are urging the researchers to evaluate the context in which

a firm operates in an effort to illuminate the black box in HRM and performance linkage. This

perspective has been termed as Contextual perspective.

2.6 The Contextual Perspective

Human resource theorists have always been concerned about the impact of context on

HRM. The classic models of Beer et al. 1984—Harvard model, Fombrun et al. 1984---

Michigan model all were interested in a wide range of contextual factors. Jackson and

Schuler (2007) argue that in order to understand HRM in context, the research needs to take

into account internal and external environment of the organization. In the words of Martin-

Alcazar et al. (2005: 637- 638) the contextual perspective, “introduces a descriptive and

global explanation through a broader model, applicable to different environments

encompassing the particularities of all geographical and industrial contexts.” They further

argue that, “while the rest of the perspectives at best considered the context as a

contingency variable, this approach proposes an explanation that exceeds the organizational

level and integrates the function in a macro-social framework with which it interacts”.

Empirical studies using this perspective are emerging and a number of theorists propose

frameworks to guide researchers to undertake contextual studies (for example, Jackson and

Schuler, 2007; Martin-Alcazar et al., 2005; Paauwe, 2009). The perspective is appealing and

logical, but undertaking even small scale contextual studies in HRM is difficult and may face

many methodological and empirical challenges. The main theme of the perspective is to

analyse the external environment and the organizational context as a framework instead of

unidirectional contingency variables (Martin-Alcazar et al., 2005). Jackson and Schuler

(2007) suggest that HRM studies that focus on contextual perspective should look at more

abstract, fundamental dimensions of contexts, HRM systems and dimensions of employee’s

reactions in order to enhance the theory on HRM and performance.

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Contextual perspective creates many methodological issues for researchers to tackle. To

overcome the issues theorists suggest fundamental changes in methodologies and

measurement tools, a change that can facilitate meaningful comparisons among

organizations and across environmental contexts (Jackson and Schuler, 2007). Even if a

researcher overcomes the methodological and empirical challenges, a frame work analysis

is much more daunting to research and again many organizations would be reluctant to

participate in projects that require information on their internal and external climate (Guest

2011).The perspective has been described with a purpose to provide introduction to

emerging themes in HRM and performance research, however to follow such a suite is

beyond the scope and objectives of the current research. One last perspective rather a

theory that is gaining importance in the recent days is that of Institutionalism or institution

theory. Institutionalism may be important as the study perceives that in case of certain HR

practices in Pakistan, the managers are concerned about meeting legal, regulatory and

certification requirements rather than performance effects that may accrue as a result of the

implementation of a high performance practice. However a future study can undertake a

detailed analysis of HRM from institutional perspective.

2.7 Conclusion

The chapter has outlined the major theoretical perspectives linking human resource

management and firm performance. The introduction to high performance theory discussed

the normative typologies that reinforce the best practice orientation with their argument that

specific practices lead to specific outcomes. In particular the chapter reproduced the Pfeffer

(1998) and Marchington and Wilkinson (2008) typologies that form the basis of research in

Pakistan. It is important to recognize that in practice the high commitment or performance

models are often implemented to varying degree and seldom the implementation is

undertaken as whole as prescribed by the theorists. This may be true in case of Pakistan

where the implementation may not reflect a comprehensive approach. The typologies

indicate that most of the accounts reflect the same underlying orientation and most of these

accounts of high performance workplace practices reflect HRM polices as; careful

recruitment and selection, extensive use of system of communication, team working, training

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and learning, empowerment and performance appraisal linked to a reward system. In short

the high performance practices are a combination of high involvement, human resource and

industrial relations policies that can increase employee skills and knowledge, motivation,

empower them to make decisions and increase their commitment and loyalty to the

organization. At the same time the policies have the potential to enhance indicators of

human resource and organizational performance, thus supporting the arguments of ‘mutual

gains’ and creating important implications for the policy makers, practitioners and social

partners. The chapter has provided all this information with an aim to provide a theoretical

introduction to supplement the literature review.

In the second phase of the writing, the chapter introduced the major perspectives

underpinning the HRM-performance debate. The chapter has assessed the arguments of

two perspectives in detail, the best practice or universalistic approach and best fit or

contingency approach, with an aim to build support for the argument to what extent the high

performance orientation of Pakistani establishments both local and MNC reflects a best

practice approach. The chapter has also discussed some other influential perspectives like

configurational and contextual in an effort to provide a broader understanding of the debate.

In short the Universalistic approach argues that there is an identifiable set of individual or

system of human resource policies and practices that have positive effect on organizational

performance irrespective of the contingencies faced by the organization. In contrast the

contingency approach argues that HRM policies and practices must be congruent with firm

internal and external environment. In other words using resource-based view, the

contingency theorists suggest that competitive advantage will only result by developing an

idiosyncratic fit rather than by copying the best practices. The discussion of perspectives

was mainly undertaken to justify the thesis second objective i.e. to explore the performance

effects of the high performance practices on subjective human resource and organizational

performance outcomes and to make a cautious judgement about the best practice

orientation of Pakistani establishments.

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Chapter 3 Literature Review

As a pretext to literature review, the theoretical chapter introduced the main themes and

perspectives on high performance workplace practices. In doing so the chapter identified the

similarities and differences between the commitment/ involvement/ performance models and

argued that the three approaches essentially represent the same underlying best practice

orientation or universalistic approach. The chapter also captured and differentiated between

the main arguments of best practice/ universalistic, best fit/ contingency, configurational and

contextual perspectives. This was done to set a background to the literature review and to

assess the theoretical arguments of the HPWS perspectives for the current research.

This chapter examines the major empirical studies with an objective to assess the

importance of individual practises for the paradigm and appraises the evidence with regard

to practices effects on key performance indicators. The performance variables that are focus

of the current study are absenteeism, turnover, labour productivity, labour productivity growth

and financial performance. The empirical studies considered in the literature review have

been published in journals and mainly focus on the high performance orientation of firms and

establishments in US and UK.

Though the chapter takes into account studies that investigate the arguments of

contingency perspective while evaluating the HPWS practices; it is mainly embedded in

universalistic arguments. The high performance model regards people as the most valuable

assets worthy of trust, development and delegation to achieve better organizational

outcomes. The universalistic perspective is pre-dominantly positivist in nature and essentially

argues that a set of innovative and progressive human resource management practices have

the potential to improve organizational performance across all contexts. Keeping this

mainstream standpoint in view (Boselie et al., 2005), the current study explored the high

performance orientation of the establishments of multinational and local companies in three

promising sectors of banking, information technology and pharmaceutical industry. In doing

so the thesis also evaluated the performance claims generally associated with such

practices in Pakistani context.

The chapter is organized as follows. Firstly, the chapter provides the typology that forms the

basis of the framework used to investigate the high performance workplace practices in

56

Pakistan. The chapter then discusses the research rationale for exploring the individual

practices instead of bundles, systems or indexes in Pakistan. From here it proceeds to

assess the importance of individual practices for high performance paradigm and provides

empirical evidence with regard to practices association with human resource and

establishment outcomes. After assessing the performance effects of individual practices, the

chapter then assesses some of the major studies on HRM and performance and clarifies the

issues on performance and single vs. multi-industry studies. The chapter concludes by

reviewing the evidence emerging from HPWS studies undertaken in the East and South

Asian Economies and assesses there impact for the current study in case of Pakistan.

The study in case of Pakistan outlines a number of best practices identified by the US and

UK HPWS studies and evaluates their diffusion among MNCs and Local establishments.

Keeping in view the focus of HPWS studies on performance outcomes, the study also tests

the relationship of these specified practices with human resource and organizational

outcomes. The framework used to explore the high performance workplace practices in

Pakistan is based on the typology of Marchington and Wilkinson (2008). The framework is

outlined below.

1. Employment security and internal labour markets

2. Selective hiring and sophisticated selection

3. Extensive training, learning and development

4. Employee involvement and participation: worker voice

5. Self-managed teams / team-working

6. High compensation contingent on performance

7. Performance review, appraisal and career development

8. Reduction of status differentials / harmonization

9. Work-life balance

The practices were measured by items drawn from major high performance workplace

studies such as (Wood and Albanese, 1995; Becker and Huselid, 1998; Hoque, 1999; Macky

and Boxall, 2007; Guthrie, 2001; Huselid, 1995; Guest et al., 2003; Guthrie et al., 2009). The

details of items and the studies from which they have been drawn are provided in the

methodology section of the thesis. The current thesis investigates the impact of individual

HRM practices and disaggregates the analysis to item level. There is an argument in the

57

literature that items used to measure high performance practices reflect distinct individual

human resource activities and can be termed as complete practices at their own (Wright and

Gardner, 2003). It has also been argued that individual human resource practices provide a

better potential for theorising and discovering the impact on performance outcomes (Wright

and Gardner, 2003). The current research measuring high performance practices in

Pakistan, explores a broad set of items drawn from existing Western management literature;

the choice of items was decided depending upon their scope in case of Pakistan. An

emphasis on individual practices and the items used to capture them provides the research

with an opportunity to theorize and discover the impact of HPWS practices which are

implemented on non-managerial employees by the establishments of multinational and local

firms in Pakistan. Such an analysis is more appropriate and informative for a context from

where there is absolute no existing study on the topic.

In the following few paragraphs the chapter assesses the arguments relating to mode of

measurement in high performance studies i.e. either to measure practices or

indexes/bundles/systems. The literature equally recognizes the importance of individual

practices, bundles, systems and indexes in the process of determining the effects of HPWS

practices on human capital and performance issues. An important point worth remembering

is that all the methods of inquiry relying either on practices or systems/ bundles/ indexes

address the same underlying issue of HRM and performance.

A closer examination of the literature reveals that both lines of inquiries have strong

arguments to justify the use of individual practices or systems/ bundle/ indexes. A number of

high performance studies taking the systems approach argue that HR practices are more

effective when used in a coherent and consistent manner. The studies using a system/

bundle/ indexes approach incorporate the arguments of contingency and configurational

perspectives with an emphasis on internal and external alignment of the practices in order to

generate synergistic combinations that affect organizational outcomes (Kepes and Delery,

2007). Before critiquing the systems/ bundles/ indexes the research provides evidence from

empirical studies to indicate the different methods used by researches to construct their

systems.

Arthur (1994) creates six clusters using cluster analysis of 10 practices that were further

reduced into two categories of control and commitment systems. Huselid (1995) uses

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principal component analysis and discovers two systems; these are skills and work structure

and motivation. In a similar way Macduffie (1995) uses an additive approach to combine his

practices and further validates his bundle by clustering algorithms and choose the ones that

are most statistically distinct. A number of studies use such an approach to create a bundle

or system (See, for example, Delaney and Huselid, 1995; Delery and Doty, 1996; Koch and

McGrath, 1996; Youndt et al., 1996; Ahmad and Schroeder, 2003).

Apart from using complex statistical techniques for identifying system, a number of studies

use a practices approach to form a system i.e. they base HRM orientation on the count of

usage of strategic HRM practices by organizations (See, for example, Guest and Hoque

1994; Hoque 1999; and Bryson et al., 2005). A number of high performance studies create

an index by simply creating an additive index, a multiplicative index, by ratio of HRM

practices used out of total, by averaging the weighted average of the percentage of

employees covered by practices, a simple overall index (See, for example, Wright et al.,

2003; Datta et al., 2005; Guest et al., 2003; Way, 2002; Batt, 2002; Guthrie, 2001; Guthrie et

al., 2009).

The above paragraphs have provided evidence from empirical studies; it depicts few of the

ways and methods by which different studies created their index, system or bundle. Boselie

et al. (2005) argue that in absence of any accepted theoretical foundations, all sort of

indexes, systems and bundles have been created either by a simple count of practices or by

complex statistical methods such as factor analysis, principal component analysis,

confirmatory analysis, cluster analysis and sequential tree. A studies system or bundles

shape and components largely depend upon underlying theoretical orientation and choice of

the author(s); “whatever researchers wish or perhaps what their samples and data set

dictate” Boselie et al. (2005: 74). Though the construction of bundles or systems have been

subject of critique for lacking any consistency or theoretical foundation, even then a

substantial empirical evidence has emerged that supports the importance of complementary

practices and the notion of synergistic effects (Kepes and Delery, 2007). Similarly Delery

(1998) and Ichniowski et al. (1997) also support the concept that coherent bundles instead of

individual practices are a better and more effective method of analysing and testing the

organizational performance outcomes. In principle the current study does not has any

objection to the idea of complementary and synergistic effects of HR practices and the

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concept is very appealing both logically and as a common sense too, but after due

consideration of choosing between individual practices and systems or bundles, the research

decided to keep the analysis to the assessment of links of individual practices on Human

resource and performance outcomes in case of Pakistan. The following paragraph clarifies

the rationale for deciding in favour of individual practices.

While not attempting to downplay the importance of the systems or bundles the current study

focuses on individual HRM practices and their impact upon HR and performance outcomes.

Though systems or bundles approach is becoming overwhelming popular with researchers a

number of studies are not much in favour of such bundles or systems. Guest et al. (2000a)

based on their analysis of WERS 1998 data conclude they could not find any convincing

evidence of coherent bundles in private or the public sector and the only combination they

could support was based upon straight forward count of all practices. Similarly Wood and de

Menezes (1998) and Truss et al. (1997) conclude that instead of any consistency among HR

bundles most studies represent a pick and mix approach. The argument is augmented by

Caldwell (2003) whose research on 100 major organizations failed to find any coherent

bundle. Whereas much of the research contests the prevalence of coherent bundles at

workplaces, Kersley et al. (2005) based upon WERS 2004 data argue that high performance

practices are still not that common among workplaces having 10 or more employees. If

workplaces in an highly industrialized country are still on the route to adopt innovative

workplace practices, and again if the evidence of bundles is still in its initial stage in these

highly advanced economies, it makes all the sense to keep the exploration of such practices

in a developing country to individual practice level in order to assess to what extend such

practices are being used at workplaces in Pakistan.

Building the case for the use of individual practices, Huselid (1995: 643, see also p.668)

puts forward the argument that, “it should be possible to identify the best practices, those

whose adoption generally leads to valued firm-level outcomes”. “And given the substantial

main effects associated with systems of High Performance Work Practices, one might

conclude that simple adoption of such practices is more important than any effort to ensure

these policies are internally consistent or aligned with firm competitive strategy”. Batt (2002)

argues that workplaces often have mix of HR practices that provide contradictory incentives,

for example investment on training on one hand and contingent staffing on the other hand.

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This concept of deadly combinations has also been highlighted by Kepes and Delery (2007).

Considering such contradictions in implementation of HPWS practices Batt (2002) argues

that it is appropriate to examine the HR practices individually.

After careful consideration of above mentioned arguments the current research decided that

probably it is more appropriate to investigate individual practices in order to keep the

approach simple as compared to making it complex by undertaking a system or index

perspective. Moreover taking a basic universalistic approach is quite in line with the, in one

sense, exploratory nature of the research objectives as it would enable the research to shed

more light and provide useful information as to what is happening in Pakistan with respect to

high performance work practices impact on HR and performance outcomes and to describe

the scenario of best practice adoption in multinational and local firms in Pakistan. Again the

study reiterates the argument of Wright and Gardner (2003) that examination of broad set of

HR practices provides a greater potential for theorizing and evaluating both negative and

positive impact of practices on performance. A number of high performance workplace

studies have examined the relationship between individual HRM practices and human

resource and firm performance outcomes (See, for example, Delaney and Huselid, 1996;

Delery and Doty, 1996; Koch and McGrath, 1996; Wright et al., 1999; Fey et al., 2000;

Cappelli and Neumark, 2001; Wood et al., 2006).

However the issue of what constitutes high performance workplace practices is disputed in

literature. Though many of the studies measure the same underlying orientation, there is

variation in proxies used to measure the same concept. Due to lack of agreed upon

description of each practice based on some sound theoretical foundation, there is a problem

of level of specificity in defining how a specific HPWS practice should be measured (Wright

and Gardner, 2003). For example Huselid (1995, 646) measures financial participation by

asking, “What is the proportion of workforce who have access to company incentive plans,

profit sharing and/or gain-sharing plans?” Guthrie et al. (2009, 117) measures the concept by

inquiring, “What proportion of your workforce receives compensation contingent on group

performance (e.g. profit-sharing, gainsharing, team-based)?” A very important study by

Guest et al. (2003) measure the practice in another way: The study measures the practice in

a totally different way using multiple items, for details see Guest et al. (2003) page 298. To

overcome the problem of level of specificity, the current research uses already developed

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and tested measures drawn from major US and UK studies keeping in view the scope of

practice in case of Pakistan.

After evaluating the arguments regarding investigation of practices or bundles/ systems/

indexes and building case in favour of individual practices as mode of measurement in

Pakistan, the chapter proceeds further to assess the importance of practices one by one in

high performance literature and assesses evidence from major HPWS studies that take into

account the effect of practices on human resource and firm performance outcomes either as

an individual practice or as a part of collective set or system. The following section begins

with the assessment of employment security and internal labour as an important HPWS

practice and then reviews literature and evidence on all the nine practices outlined in the

typology of Marchington and Wilkinson (2008). The objective of undertaking the literature

review is to build a case to appraise the evidence generated in Pakistan to achieve the

following aims.

To provide an overall picture of diffusion of high performance workplace practices in

the banking, information technology and pharmaceutical establishments in Pakistan.

To probe the differences if any between the establishments of multinational and local

firms with regard to their orientation towards high performance workplace practices in

Pakistan.

To assess the association between individual high performance workplace practices

and subjective establishment HR and performance outcomes.

3.1 Employment Security and internal labour markets

The promise of employment security and lifelong employment within the same company is

fast fading away in the US and UK labour markets (Rubery, 2010; Osterman and Burton,

2010). The argument of job security creates an interesting paradox in the high performance

workplace practices literature. On the one hand employment security has been emphasized

as a critical element in HPWS implementation, for its potential impact on measures of firm

performance, for its importance for the principle of reciprocity and mutuality at work and for a

positive psychological contract between employee and employer (Pfeffer, 1998). On the

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other hand the post-Fordist regime signals a change in the employment relationship (Rubery,

2010).

Research findings from Western developed economies indicate that the concept and

meaning of employment security has undergone a tremendous change. The change is

visible in the form of employer commitment shifting away from permanent contracts towards

part-time, fixed-term contracts and agency work. The level of employment protection

available to workforce through regulatory framework has been relaxed in favour of

employers. This has led to an increased feeling of insecurity among workers (Rubery, 2010).

Evidence from US also indicates a rise in the feeling of insecurity and contingent

employment. It has been argued that US employees are willing to accept the change as the

spread of high performance working practices in manufacturing and service establishments

has generally been associated with market-based pay systems and pay-for-performance

schemes across all categories of employees. However many theorists doubt the strength of

the argument. The argument has been challenged by the industrial relations scholars on the

grounds that in the new employment regime the employers are calling the shots and in

absence of any regulatory protection the employees are left with no choice but to offer co-

operation (Osterman and Burton, 2010).

Though no concrete evidence is available in case of Pakistan as to what is happening to the

employment relationship based on the principle of life-long employment. The regulatory

framework in Pakistan seems to favours the employers and downsizing is allowed under the

Industrial Relations Act (2010). The employer can downsize or close the establishment

within a stipulated time period after giving notice of closure to the authorities. However at the

same time the evidence that is available on local establishments seem to indicate that

practices in Pakistan are path dependent on their British management traditions (Khilji, 2002)

and they still offer a promise of life-long employment. A large number of MNCs operating in

Pakistan are from US or UK. It would certainly be worthwhile to evaluate the behaviour of

MNCs and Local companies in Pakistan with regard to the policy of employment security in

the context of changing product-market environment and abandonment of the practice by

their Western counterparts. Moreover by evaluating the performance effects of the practice,

the thesis evaluates the effectiveness of the practice in the case of Pakistan.

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The negative implications of cost-cutting HR practices such as downsizing have long been

recognized in the human resource management literature. The research evidence indicates

that downsizing results into a high rate of turnover among the most skilled and qualified

employees as they search for alternative jobs due to sense of insecurity and fear a result of

cost-cutting and conversion of core jobs into contingent positions (Blake and Uzzi, 1993;

Houseman, 2001; Katz and Krueger, 1999). Though the high performance literature regards

the practice of employment security of utmost importance for the firms if they desire to

manage the workforce effectively, later work in the area recognizes the limit to the type of

employment security a firm can offer. Marchington and Wilkinson (2008) argue that dismissal

of non-performing employees and a cut in labour force due to firm’s product-market situation

do not undermine the principle of employment security. The practice is still important for

HPWS system and in principle the practice asserts that job reductions would be avoided

wherever possible and employees should expect to maintain their employment with the

organization through mechanism of internal transfers in presence of practice of pay-for-

performance.

Related with the practice of employment security is the internal labour market. Doeringer and

Piore (1971: 2) define an internal labour market (ILM) as “an administrative unit, such as a

manufacturing plant, within which the pricing and allocation of labour is governed by a set of

administrative rules or procedures”. Internal labour markets with their distinct characteristics

facilitate the implementation and operationalization of a high performance work system and

are considered essential for their possible impact on HR and firm performance outcomes.

The characteristics such as entry limited to the bottom of the ladder, movement up the ladder

with development of knowledge, skills and performance over time provide stability and

control to the firm and thus create a positive psychological contract between the employee

and the employer leading to a long-term employment relationship (Blake and Uzzi, 1993).

Osterman and Burton (2010) argue that ILMs are on decline in the US and though the high

performance systems are on the rise in the US, the changing work environment necessitates

the elimination of ILMs under the banner of HPWS. Similarly Rubery (2010) drawing upon

evidence from data on Organization of Economic Co-operation and Development countries,

argues that the institution of ILM is on the verge of extinction. In light of changes happening

in the much of the developed economies the current thesis examines the practice of ILM in

Pakistan, an emerging economy. The degree to which Western MNCs differ, if at all, in their

64

practices and performance outcomes from indigenous companies has not been examined

within the Pakistani context.

After appraising the changing trends of employment security and internal labour markets in

the Western developed economies, and the practice potential importance for the high

performance work systems, the chapter proceeds to examine the empirical evidence from

major studies that evaluate the practice effects on HR and performance outcomes.

Delery and Doty (1996) establish that employment security is positively related to accounting

measure of firm financial performance (p < .001). Fey et al. (2000) infer that job security is a

key determinant in retention of non-managerial employees and significantly impacts the

subjective managerial opinion of firm performance (p < .05). Wood and de Menezes (2008)

testing competing perspectives, best practice, synergistic practices and underlying

orientation argue that job security is the only practice associated with reduced labour

turnover, though does not has any association with absenteeism, labour productivity and

change in labour productivity. The studies by Batt et al (2002) and Batt (2002) use objective

measures to analyse the relationship between job security and performance outcomes. The

study by Batt et al. (2002) argues that downsizing is associated with increased quit rates.

Similarly the study by Batt (2002) argues that employment security as a part of work design

and high involvement index significantly lowers the quit rates.

A set of studies use a simple one item measure to capture employment security as a policy /

practice of no compulsory redundancy as part of their HRM bundle. The studies are by

Guest and Hoque (1994), Ichniowski et al. (1997) and Hoque (1999). Guest and Hoque

(1994) classify establishments on the basis of strategic integration and usage of human

resource practices and label them as the good, the lucky, the bad and the ugly. The

multivariate analysis reveals that ugly establishments have poor records for absence and

turnover. However there are no significant differences between the groups of establishments

representing different labels on performance outcome of labour productivity. Ichniowski et al.

(1997) conclude that innovative HRM systems have greater productivity (p < .01). Hoque

(1999) argues that HRM is not related to absenteeism, though there is a strong positive

relationship between the extent of usage of practices and labour productivity and financial

performance. Another set of studies use multiple measures to investigate the practice of

employment security.

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Ramsay, Scholarios and Harley (2000) measure job security as a summed score of three

variables and argue that HPWS bundle consisting of the practice was positively related to

management reports of a greater comparative labour productivity, financial performance and

decreased turnover rate (p < .01), though absence rate is unrelated to HPWS score. Guest

et al. (2003) also employ multiple measures to capture employment security and found a

significant relationship between greater use of HR practices and lower reported level of

turnover (p < .001), HR practices and increased profit per employee (p < .05), though no

significant relationship between HR practices and employee productivity was found.

However the relationship between HR practices and profitability vanishes once profitability

for the previous years is controlled. Not all studies overwhelmingly support the association,

the following two studies by Ahmad and Schroeder (2003) and Bryson et al. (2005)

cautiously interpret the association.

Ahmad and Schroeder (2003) infer that there is no direct relationship between employment

security and organizational performance, however its absence can hinder development and

minimize the potential of HRM as a whole. Similarly Bryson et al. (2005) argue that job

security does not has any significant relationship with labour productivity or financial

performance unless evaluated as a part of organization support practices, i.e. internal

recruitment, job security and financial participation, then the bundle shows a significant effect

on financial performance ( p < .05).

The above discussion indicates that employment security evaluated either individually or as

a part of a bundle or a system has substantial impact on subjective and objective HR and

performance measures. The current research assesses the evidence, in light of above

discussion in the case of Pakistan and critically provides an evaluation of practice effects on

performance outcomes in case of establishments of banking, IT and pharmaceutical

companies in Pakistan. Linked to employment security is the policy of internal labour

markets, which in theory plays a vital role in the implementation of an HPWS system. The

next section provides empirical evidence on measurement and effect of internal labour

markets on HR and performance outcomes.

Internal labour market policy has generally been captured in HPWS literature by gathering

information about promotion opportunities available to existing employees. The chapter first

reviews the studies that focus on the practice and its impact on performance as an individual

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practice. Delany and Huselid (1996) developed an HPWS index that included five items to

measure the opportunities for promotion within a firm and an alternate measure to capture

the vertical hierarchy within an organization in order to assess the extent to which an

organization is able to provide promotion opportunities. The results indicate that internal

labour market has no significant relationship with perceived organizational performance,

though the vertical hierarchy significantly affects the perceived organizational performance (p

< .05). In the case of perceived market performance both the variables had a significant

positive relationship, internal labour market (p < .05) and vertical hierarchy (p < .10). Delery

and Doty (1996) capture internal labour markets by developing a multiple item scale to

measure internal career opportunities. The results indicate that internal career opportunities

have no significant relationship with financial performance. Similarly Wood et al. (2006)

argued that internal recruitment has no association with HR performance indicators such as

sickness and unauthorized absence. An important study by Wood and de Menezes (2008)

found no significant association between internal recruitment and labour turnover,

absenteeism, labour productivity and change in labour productivity. The following few studies

capture internal labour markets as part of a bundle or system.

Huselid (1995) concludes that employee motivation practices including internal promotion

policy are not significantly related to turnover, though the bundle is significantly related to

productivity (p < .01), to market based measure of firm performance Tobin’s q (p < .01) but

not to the accounting measure of gross rate of return on capital GRATE. Ramsay et al.

(2000) argue that HPWS bundle consisting of internal labour market measure was positively

related to management reports of greater comparative labour productivity (p < .001),

financial performance (p < .01) and decreased turnover rate (p < .01) though absence rate is

unrelated to HPWS score. Guthrie (2001) using internal promotion measures as a proxy for

internal labour market in a bundle, argue that a system of HPWS practices is significantly

associated with employee retention and firm productivity (p < .01). Datta et al. (2005) use an

HPWS index comprising of a measure to capture internal labour market and report that the

index is significantly related to productivity (p < .05). Similarly Wright et al. (2003) using early

and post-performance measures interpret that HRM practices consisting of a measure of

internal labour market are not significantly related to productivity but positively related to

profit ( p < .01).

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The empirical evidence presented above indicates that in the case of internal labour markets

the results are mixed with number of studies supporting the link between internal labour

markets and HR and performance outcomes and others finding no such association. The

current research assesses the effect of ILM on important HR and establishment performance

outcomes in case of Pakistan and provides evidence with regard to use and effectiveness of

the practice. The next important practice the chapter focuses upon is that of selective hiring

and sophisticated selection.

3.2 Selective Hiring and Sophisticated Selection

The discussion regarding internal labour markets highlights the importance of externalization

of human resource processes and the need for organizations to be effective recruiters. The

externalization process can save a firm a major chunk of the training cost. Hiring the right

people is of paramount importance for organizational success as a poor recruitment decision

can cost a firm an unbearable loss in shape of lower productivity and higher turnover. Taylor

one of the most influential management thinker introduced the idea that people should be

selected for their particular skills and abilities through some testing mechanism and the

selection decision should not be based on who you knew or who was first in the queue

(Newell, 2005). Taking into account the potential effects of recruitment and selection

processes on human resource and firm performance outcomes, it is expected that the

practice would be well-established and carefully executed by establishments in Pakistan.

Though the evidence from the public sector organizations in Pakistan is otherwise, where in

most of the cases the hiring is done on political pressure or on the basis of reference rather

than on merit. The general trend has been not to advertise or announce a vacancy. In

addition to a dysfunctional recruitment policy, Pakistan is a country with a huge population

and hence the companies generally do not have any recruitment difficulty (Khilji, 2002). The

current thesis argues otherwise that as oppose to public sector Pakistani corporations, the

private sector establishments in Pakistan, like their Western counterparts operating in

Pakistan would have a well-planned hiring and selection policy. The reason for such an

expectation lies in the rationale that in the current environment of increased global and local

competition, advancement of technology and the knowledge intensive nature of the

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workforce in the sectors under study, it is not possible for firms to ignore their recruitment

and selection procedures, as any such ignorance may increase cost of doing business and

ultimately may have detrimental effects on HR and performance outcomes.

Recruitment has been differentiated from selection in the literature and has been defined as

“those practices and activities carried out by the organization with the primary purpose of

identifying and attracting potential employees” (Barber 1998 as cited in Orlitzky, 2010: 273).

Whereas selection is the HR function that pares down the number of applicants and consists

of variety of methods that can be used to make selection decisions such as interviews,

psychological testing, performance tests and realistic job previews etc. Attracting high quality

staff and techniques used to select them are central to high performance theses and a

systematic and integrated system operated by qualified individuals having ability to identify

competencies such as trainability, commitment, flexibility, drive, persistence and initiative is a

key ingredient to successful best practice HRM (Marchington and Wilkinson, 2008). With

regard to selective hiring and sophisticated selection the research aims to explore the extent

to which the establishments of MNCs and local companies in Pakistan have such a policy. In

addition the research intends to capture the HR and performance outcomes of

establishments having a selective hiring and sophisticated selection policy in Pakistan, from

a universalistic best practice perspective. The following paragraph assesses the research

evidence with regard to selective hiring and sophisticated selection by reviewing major high

performance workplace studies. The aim of assessment being to build a ground for critical

evaluation of the performance effects of practice, if any at all in Pakistan.

A number of high performance studies examine recruitment and selection potential effect on

HR and organizational performance measures. Koch and McGrath (1996) found that

investments in hiring practices are positively associated with labour productivity (p < .05).

The findings suggest that firms that systematically plan their recruitment and selection

processes tend to have higher labour productivity. Delaney and Huselid (1996) investigated

staff selectivity as an individual HPWS practice and found that it was not related to perceived

organizational performance, though had a significant positive effect on perceived market

performance (p < .01). Ahmad and Schroeder (2003) argue that a carefully planned selective

hiring process has the potential to significantly increase the establishment operational

performance across industries and countries.

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Wood et al. (2006) found that systematic selection tests had no significant relationship with

absence unauthorized or due to sickness and turnover. However systematic selection tests

had a significant association with operational performance (p < .05). Wright et al. (1999)

while evaluating the impact of HR practices on the financial performance infer that selection

as an individual HR practice fails to account for any significant variance in financial

performance.

After examining some of the major studies that evaluate the impact of selective hiring and

sophisticated selection on firm performance the research proceeds to produce evidence from

studies where the impact has been evaluated as a part of a bundle or a system.

Huselid (1995) argues that recruitment intensity combined with employee motivation was

positively related to productivity and one measure of financial performance Tobin’s q.

Ichniowski et al. (1997) argue that an innovative HRM system using extensive selection

procedure was positively related to productivity (p < .01). Wood and de Menezes (1998)

operationalized sophisticated selection criterion as search for quality of an individual’s social

skills and his ability to work in a team. The study classified workplaces as low HCM,

low/medium HCM and medium/high HCM and high HCM. No difference was observed

between the four types of workplaces on reported productivity or change in productivity and

labour turnover. However the medium/ high HCM workplaces had lower absence rate as

compared to other groups and high HCM workplaces had significant greater overall financial

performance than medium categories though they did not perform any better than low HCM

workplaces.

Bae and Lawler (2000) high involvement strategy measure, containing selective staffing

items was positively associated with perceptual measure of organizational financial

performance and employee productivity. The study also tested the association with

concurrent and subsequent objective financial measure and found a significant positive

association in both cases. Before considering few other HPWS practices the research briefly

reviews two meta-analysis conducted by combs et al. (2006) and Subramony (2009) to

evaluate their findings on selective hiring practices.

Combs et al. (2006) focused on 13 HPWS practices including selectivity to create a system

of HPWS. The study concluded that an HPWS system enhances organizational performance

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and the relationship is stronger in case of HPWS system and performance as compared to

individual practices. Selectivity as an individual HPWS practice is associated with all

measures of organizational performance i.e. financial performance, productivity and

retention. Subramony (2009) classified staffing activities as recruiting to ensure availability of

large applicant pools and use of structured and validated tools/procedures as part of skill-

enhancing bundle. Skill-enhancing bundle was found to be positively related to business

outcomes, operating performance, financial performance, and overall performance except for

retention. Staffing practices as a standalone practice also showed a strong relationship with

performance outcomes, though the effect size is much greater when outcome is evaluated

as a part of skill-enhancing bundle. A meta-analysis by Kristof-Brown et al. (2007) found that

employee-organization fit is negatively related to employee turnover. Takeuchi et al. (2007)

argued that availability of a pool of candidates to select from, and an organization ability to

provide job relevant training leads to collective human capital which in turn has a significant

positive impacts an establishment relative performance (p < .05).

The brief review above indicates that a large number of high performance studies have

accessed the impact of selective hiring and sophisticated selection techniques on firm

performance either as individual practice or as a part of a larger set of a bundle or system

and found that it significantly determines the business outcomes. On the basis of available

existing evidence, it can be argued that selective staffing procedures not only result in better

workforce induction but also have a significant impact on the firm performance. The same

can be expected in case of establishments of MNCs and local firms investigated in Pakistan.

The next best practice the research appraises is that of extensive training, learning and

development, an essential component of high performance workplace practices.

3.3 Extensive training, Learning and Development

Training is a crucial practice for the high performance HRM philosophy of one best way of

leading people in organizations. The changing global trends in product-markets and fast

paced technological advancement increase the significance of learning for the organization

and the individual worker. The identification of skills and training required to maintain

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competitive advantage has been recognized by firms, thus increasing the value of an

organization training and development system as a strategic tool (Peteraf, 1993 and Holden

1997). Though the theory supports the argument that providing training to new or current

employees to develop skills and competence improves firm performance, the evidence with

regard to training potential effects is hard to validate (Molina and Ortega, 2003). In short the

empirical evidence is not conclusive. However it can be argued that employer provided

training can only be justified if it leads to positive return in form increased productivity or firm

performance (Wiele, 2010). Another important argument with regard to training worth

considering is that large firms as compared to small ones are more likely to impart training to

employees (Black et al., 1999 and Patton et al., 2000). Small firms in fear of turnover and

market-failure are less likely to train employees or focus on career development. This may

be quite true of establishments in Pakistan, as number of them operating in IT and

pharmaceutical sectors can be termed as single-site small firms. Also important is to

consider the fact that in IT and banking establishments under study in Pakistan; knowledge

workers represented the major chunk of the workforce. It has been argued in literature that

such employees look forward to work in environment where the opportunity to develop and

learn new skills and technologies are offered to them (Horwitz, et al., 2003). The employees

working in IT sectors prefer opportunities for career development and firms that cannot

provide an enabling and learning environment risk higher turnover (Horwitz et al., 2003).

Similarly in financial sectors like banking there is evidence that continuing professional

training either internal or external is positively related to financial performance (Jones et al.,

2012). It can be expected that establishments of banking and IT companies in Pakistan must

be focusing on training activities either general development or specific training not only in

an effort to attract, retain and motivate employees but also to improve their HR and

establishment performance outcomes.

Employer focused investment in human capital can be categorized as general training and

specific training. Through general training employees gain knowledge and develop

capabilities that are not only helpful in case of current job but also develop their marketability

in wider labour market (Wiele, 2010). Barrett and O’Connell (2001) argue that employer

provided general training can be interpreted as a gift, which in most cases employees

reciprocate by increasing their effort and thus general training has significant positive effect

on firm productivity. On the other hand specific training is focused on current job and is by

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definition not transferable to other jobs or employers. Therefore it is highly likely that

employers focus more on specific training. It has been acknowledged in literature that type

of training imparted i.e. firm specific or general would depend upon the firm involved either it

is a price-sensitive mass marketing firm sensitive to training cost or a firm playing in

sophisticated differentiated market where skill development is essential for a profitable

performance (Boxall, 2003). Though the markets may shape the type of the training imparted

to employees much of the finance and initiative comes from the firm involved (Leuven and

Oosterbeek, 1997). The employee may enjoy the benefits such as skill enhancement, value

in the labour market, pay rise and job security. At the same time the effects of training extend

beyond the participating individuals. The cost- saving, productivity and financial gains are

substantial in the long- run for the firms investing time and effort in creating learning

opportunities (Ottersten et al., 1999). In general firms have focused on training policy which

facilitates workers in performing their current jobs. High performance training practices

reflect a policy which encourages a multipurpose generic, specific and cross-functional

development of the human capital (Garcia, 2005). The current thesis assesses the nature of

training practices being implemented in case of Pakistan, the thesis critically assesses the

situation and seeks answer to the questions, do the MNCs and local establishments in

Pakistan impart only firm specific training to their employees or do they focus on general

training or do they altogether abstain from any such high performance training initiatives.

In case of Pakistan some preliminary evidence from the study of Khilji (2002) indicates that

multinational companies were providing more training to their employees as compared to

local firms. However the study of Khilji (2002) is just restricted to 15 organizations and does

not entails any details as to what sort of training practices are present in the MNCs and local

firms. The current study comprehensively measures the practice from an HPWS perspective

in a large number of MNC and local firms and critically evaluates the state of training in

establishments of banking, IT and pharmaceutical companies in Pakistan.

After providing a brief theoretical review of the literature on training policy, the research now

focuses on empirical evidence from outstanding high performance literature that signifies the

importance of training for business outcomes.

One of the pioneer studies that established association between training as a policy and

business outcomes in US manufacturing sector is that of Bartel (1994). Bartel by comparing

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firms’ data in 1983 and 1986 established that firms that introduced employee training after

1983 had achieved a significant increase in labour productivity of their employees and found

that returns on training investment increased productivity by about 16%.

Another early research study providing convincing evidence of the effectiveness of employee

training on organizational performance outcomes is that of Russell et al. (1985). Using

archival store performance and employee survey data from an international merchandizing

firm that included both objective and subjective measures of training, Russell and colleagues

concluded that percentage of employees trained had a significant positive effect on sales

efficiency and store image.

Similarly Kalleberg and Moody (1994) investigating the characteristics of high performance

organizations available in the National Organizations study (NOS) data and their relationship

with performance outcomes measure training as the managers evaluation of the

effectiveness of the organization’s employee training. The subjective opinion of managers on

performance issues benchmarking with other organizations in the same industry indicates

that training is significantly related to HR outcome of employee retention and performance

indicators of growth in sales, profitability and market share. All of the associations were

significant and positive at (p < .001) level.

Delany and Huselid (1996) capture training effectiveness as on-the-job and formal job

training either on or off the premises, the number of employees participating in formal job

training and the effectiveness of the training provided. Training is significantly positively

related with perceived organizational performance (p < .01) in all the regression models

testing the relationship either as a one practice or entered simultaneously with other HRM

practices. In case of the second performance measure of perceived market performance the

association is only significant when practice is entered individually though the coefficient

reduces its statistical significance to (p < .05).

Koch and McGrath (1996) argue that a firm investment in human resource developments

was associated with productivity pay-off (p < .05) only when a new variable (development

multiplied by capital intensity) of the business unit is included in the regression model. As a

standalone practice training does not appears to effect firm productivity. This makes them

conclude that firm-sponsored training increases the skill and knowledge of employees thus

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subsequently creating an idiosyncratic human capital base difficult to duplicate for the

competitors. Another important earlier high performance study that did not find any

significant association between training and firm financial performance is that of Delery and

Doty (1996).

Garcia (2005) investigated the relationship between training and business performance and

argued that training had a significant positive impacts on firm performance and moreover the

study supports the argument that a training policy oriented towards human capital

development can be applied to any group of employees across organizations and regions

they are located in, thus supporting a universalistic association between training and

business performance. A meta-analysis by Combs et al. (2006) also provides evidence

towards effectiveness of training as an HPWS practice. The study argued that training as an

individual practice was associated with financial performance, productivity and retention.

Not all studies are as enthusiastic about relationship between training and firm performance

as that of Garcia (2005). One of the latest research by Nikandrou et al. (2008) using Cranet

1999 survey and testing a model of T&D and firm performance among 14 EU countries failed

to find any significant relationship between them. Some of other important studies which

failed to find any significant association between training and firm performance are that of

Cunha et al. (2003) and Apospori et al. (2008).

To summarize one can argue that evidence with respect effectiveness of training as an

individual practice is somewhat mix. A few outstanding studies overwhelmingly support the

relationship while at the same time many other important studies did not find any significant

relationship and would urge for further investigation of association. However there are

number of high performance studies which investigate the association incorporating training

as a part of bundle or system (Arthur, 1994; Guest and Hoque, 1994; Youndt et al., 1996;

Ichniowski et al., 1997; Hoque, 1999; Vandenberg et al., 1999; Guthrie et al., 2009).

Arthur (1994) argues that general training as a part of commitment-based HR system was

associated with labour productivity and lower labour turnover. Guest and Hoque (1994)

argued that trainability as a policy had no significant impact on labour productivity. However

such establishments had a better record with regard to absence and turnover. Youndt et al.

(1996) studied training as part of HR system and argue that the system had a significant

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positive association with employee productivity. An important study by Ichniowski et al.

(1997) argues that both high and low level of training policy had a significant positive

association with labour productivity. A study by Hoque (1999) argues that training as part of

high HRM had a strong positive association with labour productivity, financial performance

and lower absence rate. Vandenberg et al. (1999) argue that high involvement system is

strongly linked to effective financial performance of an organization and turnover. In

particular training is significantly related to lower turnover among employees and increase in

financial performance. A study by Guthrie et al. (2009) that comprehensively measures

training as a part of HPWS system argues that such an HPWS system enhances attendance

and retention of employees and at the same time its greater use had significant positive

association with labour productivity.

Employees have been carefully selected and trained, a high performance management

system ensures that a set of management practices are implemented in an organization that

can increase the worker participation and involvement. The next section evaluates the

arguments and evidence with regard to EIP as the most important pillar of high performance

paradigm.

3.4 Employee Involvement and Participation and Worker Voice

Employee Involvement and participation (EIP) is an essential component of high

performance paradigm (Marchington and Wilkinson, 2008). As compared with other forms of

enrichment options like job rotation and job enlargement Wood and Wall (2007, 1336) label

employee involvement as a “genuine transcendence of Taylorism”. Workers enjoy a lot of

discretion and freedom to organize and manage their work under the EIP model as

compared to tightly controlled jobs. Employee involvement is defined by Lawler and Benson

(2003, cited in Wood and Wall, 2007: 1336) as providing low-level employees with

“opportunities to make decisions concerning the conduct of their jobs and to participate in the

business as a whole”. Conduct of the job is understood as job-level involvement and

includes activities as work enrichment and decentralization of decision making. The second

part i.e. participation in the business has been associated with employee voice mechanisms.

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The most important feature of this new management approach is its reliance upon extrinsic

rewards to be offered to an individual employee or a team for achieving the desired

outcomes.

Marchington (2007) argues that employee voice replaces all terms associated with

involvement, empowerment, participation, industrial democracy and both direct and indirect

forms of participation. While EIP has been a focus of attention of quality of work movement

and Japanese model of a mass production it has also been a central design element of the

new form of personnel management called high performance work systems in the changing

global political and economic scenario. According to EIP philosophy managers are supposed

to share with employees’ information about business objectives in order for the employees to

improve their work processes. This is quite in consistence with the objectives of the HPWS

as the definition of an high performance work organization reflects this objective, ‘provide

workers with the information, skills and incentives and responsibility to make decisions

essential for innovation, improvement and rapid response to change’ (US Department of

Labour, 1993 : 1). Wood and Wall (2007 argue that the logic behind the delegation and

empowerment story is simple; the power generated by EIP can be harnessed to produce

superior organizational performance.

In short EIP and voice is an essential component of a high performance work system.

Godard (2004) argue that positive effects of a Voice system for employees and the firm only

become visible when it is properly embedded in the organization. Similarly Cappelli and

Neumark (2001) also argue that employers generally do not implement the voice system in a

coherent way as the financial return from such a system is not immediate rather it increases

the employers cost in the short-run. Vandenberg et al. (1999) argue that positive effects of

employee involvement for organizational performance are due to the reason that such

programmes allow workers to acquire skills and knowledge which ultimately results in

improved productivity.

One of the important objectives of the current study is to explore the state of EIP in

multinational and local establishments in Pakistan. The research assesses the state of EIP

adoption by establishments in Pakistan. Are they implemented in a coherent way in Pakistan

or not. Do they have any effect on the establishment HR and performance outcomes? The

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practice of EIP forms the foundation of a high performance paradigm. The practice is an

essential element of Walton (1985) and Lawler (1987) commitment and involvement models.

Without its measurement the story of HPWS in Pakistan cannot be complete. Khilji (2002)

points that generally organizations in Pakistan offer no delegation of authority, there is

communication gap and lack of participation or in short an orientation towards a hierarchical

structure with high power distance. The current theses argues that climate of HRM in

Pakistan in particular in MNCs and private local establishments must have changed in light

of changes discussed in the theoretical discussion and in light of preliminary evidence that

there is some indication that firms in Pakistan are moving towards strategic HRM (Khilji,

2002). The thesis thus expects that employee participation and involvement would be one of

highly diffused practices among the establishments in Pakistan. One reason for such an

expectation is the nature of the sectors, both in banking and in particular in IT sector

employee input and information sharing is essential for not only for a positive employee

experience of work but also for achieving the establishments performance objectives. In a

similar manner the manufacturing in pharmaceutical is a highly integrated process and a

minor mistake can destroy the whole batch of the medicine. Such conditions demand an

open communication and information sharing practices for successful operation and

continuous improvement of the processes, which ultimately results into improvement in

establishment HR and performance measures.

The review of empirical evidence in case of EIP begins with analysis of major HPWS studies

which provide results for individual practices and HR and firm performance. Wright et al.

(1999) measure employee participation with a ten item scale assessing the

comprehensiveness of the concept by exploring the extent to which operators were allowed

to participate in a variety of governance decisions mainly related to problem-solving and

goal-setting activities. Wright et al. (1999) conclude that participation plays a moderating role

between HR practices and performance outcomes. HR practices are only effective and

financial performance is high when simultaneous investment in participation programmes is

undertaken.

Delery and Doty (1996) conceptualize employee participation and voice as degree to which

employees were allowed and valued for their input and had access to grievance systems.

The results indicate that employee participation and voice were not associated with firm

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measures of financial performance. Similarly Fey et al. (2000) found that decentralization

and complaint resolution procedure had no association with subjective firm performance

measures. Cappelli and Neumark (2001) using data from establishment-level survey of

employment practices conducted by US Bureau of Census incorporate both cross-sectional

and longitudinal design, based upon their analysis argue that HR practices in general

including employee involvement investigated under the label of work teams and TQM

practices have little consistent statistically significant association with productivity. On the

contrary they seem to increase the labour cost of the establishment. TQM as a discrete

practice has an insignificant effect on productivity and boosts labour cost. To conclude they

argue that EIP net effect on profitability is unclear.

Another important group of studies which focuses on non-union voice mechanisms and

problem-solving groups is that of Batt et al. (2002). The study infers that participation in

problem-solving groups is negatively related to quit rates and non-union grievance

procedures did not significantly reduced quit rates. Ichniowski et al. (1997) conclude that

information sharing, off-line meeting with operatives and low grievance rate are significantly

associated with productivity as a system of practices while individual practices have little

effect on productivity.

After examining the results of the studies which investigate the individual effects of EIP or

voice on HR and performance indicators the research proceeds to examine the studies

where the practice has been incorporated as a part of the bundle, system or index with an

aim to set ground for critical evaluation and comparison of the results generated in Pakistan

with the wider evidence available from HPWS studies.

Arthur (1994) capture both elements of EIP and Voice and in particular focus on percentage

of employees who receive training in group problem-solving conclude that commitment

systems show higher productivity and lower reported labour turn-over (p < .05). Moreover

commitment systems were associated with lower scrap rates and higher labour efficiency as

compared to control systems in manufacturing plants adopting integrated continuous

production technology. Huselid (1995) extensively investigate EIP and Voice mechanism i.e.

information sharing, participation in quality circles / quality of work life programs / labour-

management participation teams, access to formal grievance procedures and administration

of attitude surveys. On the basis of principle component analysis the study categorizes it

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under the employee skills and organizational structure factor and concludes the factor is

negatively related to turnover and positively related to productivity and corporate financial

performance.

Bae and Lawler (2000) argue that employee involvement practices as part of high

involvement HRM are strongly related to objective external measures of firm performance. A

study by Guthrie (2001) also supports the positive impact of EIP practices such as

participation, information sharing and attitude surveys. The study found that high

involvement practices relate positively with high employee retention and with the amount of

increase in employee productivity. Another important study by Datta et al. (2005) that

examines EIP as part of HPWS argues that the system is positively associated with

workforce productivity (p < .05). The study argues that a one deviation increase in HPWS

scale is associated with substantial increase in labour productivity irrespective of industry.

The above discussion points to the conclusion that evidence of association between EIP and

performance outcomes is not overwhelming strong though it is assumed to be an essential

and integral part of high performance workplace practices. Though there is no precise mix of

items defining or measuring EIP or voice but measures do include items as downward and

upward communication, problem-solving groups, team-briefing, information sharing, attitude

surveys and complaint resolution procedures. As already stated above, an important

objective of this study is to explore the state of existence of EIP and voice practices in

multinational and local establishments and there potential effect on subjective HR and firm

performance outcomes in Pakistan.

Another important High performance practice generally taken as part of EIP or vice versa is

that of team-working. Team-working is the most popular management initiated practice

targeted to improve organizational effectiveness and performance and employee experience

of work. It became a popular topic of discussion in the western management literature in

response to success of Japanese model of management.

80 3.5 Self-Managed Teams/Team Working

Cohen and Bailey (1997: 242) define organizational team as “…collection of individuals who

are interdependent in their tasks, who share responsibility for outcomes, who see

themselves and who are seen by others as an intact social entity embedded in one or more

larger social systems (e.g. business unit or the corporation), and who manage their

relationship across organizational boundaries”.

Teams have been associated with benefits such as shared responsibility and leadership,

flexibility, peer-based control and discipline, openness and trust, management of employee

knowledge and innovation (Pfeffer, 1998). At the same time teams have been accused of

work-intensification and a means of introducing concertive control at work (Barker, 1993).

Knight and McCabe (2000) challenge those who view team working as inherently good as

opposed to management agenda of gaining control over labour in a new and more

sophisticated form of managerial oppression and normative control. Similarly Mueller (1994:

386) views team working as: “a modern attempt to re-align individual motivations with

organizational rationality”.

Apart from there positive and negative consequences teams provide the foundations on

which the building of lean and flexible integrated manufacturing rests. It is the philosophy of

self-managed teams that has led to flat organizational structures and broken the boundaries

of tightly defined jobs and vertical hierarchical structures of Fordist regimes (Delbridge,

2003). Teams have proved to be the single most popular work practice innovation; the rate

of its diffusion across the globe can be judged from the adoption in different major industrial

countries, US (50%, Osterman, 1994), UK (35%), Japan (22%), Australia (45%) and

Switzerland (50%), (Clegg et al., 2002). The current study expects that the global success of

team working as a management practice of choice must have changed the organization of

work among the MNCs and local establishments in Pakistan. In the last decade with an

increasing presence of Western multinationals and Japanese auto-manufactures in Pakistan,

the practice must have completely changed the path dependent bureaucratic management

styles in progressive upcoming sectors in Pakistan. The current study assesses the evidence

with regard to team working popularity in Pakistan and at the same time intends to capture

the practice effects on HR and firm performance outcomes.

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The interest of the present study is not only to explore the popularity of the practice in

Pakistan but also to establish the association of team-working and HR and firm performance

issues as a best practice. To begin the search for the relationship the study starts the review

with one of the classical studies i.e. Banker et al. (1996). Banker et al. (1996) using a

longitudinal research design studied an experiment in which workforce of a unionized

Fortune 500 plant was converted to work teams. The results of the study indicated that high

performance work teams significantly increase the productivity of the plant. The improvement

was up to 20 % over time in 21 month study period. Similarly Batt (1999) undertook the

examination of self-managing customer service teams in a telecom firm and found that sales

improved by 10-17%. Deriving a data set from WIRS 1990 and Employer Manpower and

Skills Practices Survey McNabb and Whitfield (1997) conclude that in presence of union’s

flexibility in assignments and team working is significantly related to financial performance

and the effect is positive. Ahmad and Schroeder (2003) reveal that teams only affect

organizational performance through their interaction with mediating variable of employee

commitment. Bryson et al. (2005) found a mix support for effects of team working. The

results show that team working is positively associated with labour productivity but this

relationship does not converts into any financial gain for the firm.

However few other studies are sceptical of the positive benefits of team working and effect

on organizational performance, Staw and Epstein (2000) found no economic benefit for the

firm as a consequence of team-working, similarly Hackman (1990) based on their analyses

of 33 case studies of teams in organizations suggest caution in interpreting productivity

effects of team working. Similarly Way (2002) did not find any significant association

between team working and indicators of firm performance i.e. workforce turnover, voluntary

turnover, labour productivity and perceived productivity in a sample of firms representing US

small business sector. In one of latest studies on psychology-based practices Birdi et al.

(2008) infer that team working does not effects company performance. They argue that there

is time lag before HR practices show any effect on performance indicators and for team

working it can be from 6-9 years before employees learn how to perform effectively to have

an impact on performance.

The case for team working and its impact on HR and firm performance issues becomes

stronger when it is evaluated as a part of bundle, system or an index in high performance

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literature. MacDuffie (1995) based on their study of 62 automotive assembly plants argue

that HR bundle comprising of team work practice, termed as Work Systems Index is related

to productivity (p < .05). Overall the evidence points out that assembly plants using flexible

production systems and an integrated bundle of HR practices outperform their mass

production counterparts in achieving productivity targets. Similarly Ichniowski et al. (1997)

argue that production lines that adopt innovative work practices including team working have

substantially higher levels of productivity as compared to units who had a Taylorist approach

to work. Guest et al. (2003) investigate the relationship between greater use of HR practices

and firm performance. Team working constitutes the bundle under investigation. The results

indicate an association between greater use of HR practices and lower turnover. However

the association was not significant between greater use of HR practices and productivity.

Similarly Datta et al. (2005) found that high performance systems consisting of self-managed

teams had a significant association with productivity. Guthrie et al. (2009) found that

attendance, retention and productivity are positively associated with high performance work

system having practice of self-managed teams.

Self-managed teams are generally considered to be an essential part of post-Fordist

management routine. The evidence of their impact on firm performance though not

overwhelmingly strong and varies from study to study, yet the evidence is strong enough to

make a case for team working inclusion into any high performance study. It would be

certainly worthwhile to explore the diffusion and popularity of team working in Pakistan.

The above discussion has focused on policies and practices which outline a route and plan

for the organization to increase its productivity and performance. If an organization desires

its employees to learn and develop their generic and firm specific skills, participate in EIP

and teams then naturally it needs to compensate them for their outstanding performance, an

essential condition for high quality labour performance (Pfeffer, 1998). The next high

performance practice the chapter discusses is that of high compensation contingent on

performance.

83 3.6 High Compensation Contingent on Performance

Performance-related pay (PRP) is an integral part of the ‘New Pay Agenda’ and its impact

on business performance has been of interest to best practice researchers since 1990s

(Reilly, 2003 and Oliver, 1997). Depending upon the level of work interdependence PRP can

be designed both for individual and group effort (Shaw et al., 2002) though its successful

implementation depends upon its alignment with other HPWS practices. Pfeffer (1998: 81)

suggests that contingent compensation can take many forms and shapes “including gains

sharing, profit sharing, stock ownership, pay for skill or various forms of individual and team

incentives”. Although PRP has been target of critique in a number of debates on the

incentive effects of monetary (i.e. extrinsic) rewards on employee attitudes and performance

(Guthrie, 2007); PRP is gaining extensive popularity in USA and UK and the policy is a

compulsory part of the list of the most of the best practice studies conducted during the last

two decades (Marchington and Wilkinson, 2008). PRP is increasingly becoming popular in

Europe (Poutsma and de Nijs, 2003) and is fast spreading in Asian countries even in Japan

where employees once enjoyed seniority based pay system (Chang, 2006 and Cin et al.,

2003). Vandenberg et al. (1999) argue that both individual and group rewards are essential

to make employees work hard, to reinforce their motivation and to encourage cooperation

among them. Individual incentives encourage personal accountability and team based

rewards facilitate employee interaction. As team working is becoming a dominant method of

organizing work, firms have to ensure that mechanisms are in place that recognize team

effort and appropriately rewards them. Another important element of high performance work

practices is that the incentive system should be perceived throughout the firm. The practice

should be cascaded down to non-managerial employees.

The concern of the present research is firstly to examine the use of PRP in multinational and

local establishments in Pakistan and secondly to access its impact on HR and business

outcomes. The available evidence in case of Pakistan indicates that rewards systems in

Pakistan do not recognize the efforts of employees in terms of PRP (Khilji, 2002). If an

organization fails to reward its employees, it can create a climate where employee appraisal

and evaluation does not makes any difference, which may ultimately lead to reduction in

employee input and loyalty and thus increase turnover and may have negative repercussions

84

for establishment productivity and profitability. The current study comprehensively measures

the practice in Pakistan and expects it to be a widely diffused practice among the MNCs and

local companies. To meet the second objective of evaluation of effects of the practice on HR

and performance, the research now discusses evidence from major high performance

literature that examines the pay for performance and outcomes such as absenteeism,

turnover, productivity and financial success.

Delaney and Huselid (1996) argue that incentive compensation is significantly related to

perceptual measures of organizational performance. Delery and Doty (1996) capture pay for

performance as a profit sharing plan tied to bank performance. Profit sharing had a

significant positive effect with financial performance (p < .01). The study further argues that

profit sharing does not creates any additional burden on banks as the profit is distributed

according to employee performance and by tying individual compensation to organizational

profit the banks are encouraging behaviour that is in harmony with bank goals. Moreover the

concept can be applied to all business organizations. Fey et al. (2000) measure PRP as

performance based pay and merit based promotion and high salaries. In case of non-

managerial employees performance based compensation and promotion has no significant

association with HR and firm performance outcomes.

One of the important high performance studies finding overwhelming support for pay for

performance practice as a group based employee compensation is that of Way (2002) which

provides empirical evidence from US small business sector measuring establishments

orientation towards group based compensation as contribution towards employee stock

options or profit sharing. Way argues that group based compensation is the only HRM

practice that is significantly associated with lower labour turnover, lower voluntary turnover,

high labour productivity and higher perceived productivity. Agreeing with previous research

Becker and Huselid (1998) reinforce the message that much of performance gains

associated with HPWS may be attributable to compensation package of the firm. Bryson et

al. (2005) investigate performance related pay and financial participation and find that PRP is

significantly associated with financial performance but its effects on productivity are not

statistically significant. Wright et al.’s (1999) results indicate that performance related

compensation was significantly associated with financial performance only under highly

participative systems. However as an individual practice compensation had no association

85

with financial performance. An important study that evaluates the effects of different types of

pay for performance systems with turnover is that of Guthrie (2000).

Guthrie (2000) assesses the effect of skill and group based pay practices on turnover. The

results indicate that there is strong association between skills or knowledge based pay

systems and reduced turnover. The study results do not support the use of group based pay

practices as such practices seem to increase the turnover rates. Moreover such turnover is

dysfunctional as those who often leave are high performing employees. Finally the study

argues that group incentive plans can be attenuated by the free-rider effect however firms

can overcome the problem by properly designing them, such as increasing reward size and

incorporating individual effort in an equitable and just manner. In short a design choice may

reduce the turnover problem and enhance efficiency and productivity. However meta-

analysis by Combs et al. (2006) provides a different interpretation and argues that for some

practices such as incentive systems the version such as individual versus group may not

matter in determining their impact upon performance. The study provides a robust, positive

association between incentive compensation and performance measures (p < .01).

Wood and de Menezes (2008) investigate variable pay defined as 80% or more of non-

managerial employees receiving share ownership, profit-related or performance related pay

using a British data set WERS 98. The results indicate that variable pay is positively

associated with labour productivity and change in labour productivity (p < .001). However

variable pay shows no significant relationship with labour turnover and absenteeism. Wood

and de Menezes further elaborate the importance of variable pay and argue that its

association with productivity and rate of productivity change is enhanced if management has

a high involvement orientation and vice versa. The study in particular emphasizes the

argument that performance related pay systems particularly those which are group based

are not antithetical to high involvement management. As opposed to Beer et al.’s (1984)

arguments that pay for performance is incompatible with high involvement orientation Wood

and de Menezes (2008) suggest that variable pay actually initiates a change in work routines

that has a positive effect on productivity. The study supports the argument of change by

Dowling and Richardson (1997) who investigate the performance related pay introduction in

NHS and conclude that proper goal setting and assessment created a motivational force

more powerful than the financial rewards for the employees to perform. The scheme remains

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incomplete without some sort of monetary gain for employees as a reward and its impact on

organizational performance.

After reviewing some of the major high performance studies that examine the effects of

performance related pay and HR and business outcomes, the chapter proceeds to examine

evidence from another set of high performance studies which investigate the practice as part

of the index, system or bundle.

Macduffie (1995) investigate contingent compensation as a part of HRM bundle in

automotive plants and conclude that the bundle significantly effects labour productivity. One

of the seminal studies that investigate the PRP and its effect on HR and performance

outcomes in detail is that of Huselid (1995). The study captures performance related pay

with two measures: the proportion of the workforce who have access to company incentive

schemes and whose performance appraisals are used to determine their compensation. The

study classifies incentive schemes as part of employee skills and organizational structure

factor whereas compensation dependent upon performance appraisal is part of motivation

factor. The regression results on turnover indicate that employee skills and structure factor

was negative and significant whereas motivation factor had no significant effect. Huselid

infers that incentive compensation systems linked to appraisal actually encourage poor

performers to leave and this is one of the reasons for high turnover in such firms. As far as

effects of productivity are concerned both factors when entered individually show a positive

and significant effect however, when regressed together only the motivation factor retains its

significance. When corporate financial performance was assessed as measure of Tobin’s q

(accounting measure) both factors had a significant effect. However in the case of gross rate

of return on assets (a market measure), only employee skills and organizational structure

had a positive and significant effect. Huselid (1995) agrees with Gerhart and Milkovich

(1992) argument that due to problems associated with use of accounting measures many

firms’ link compensation incentive schemes with capital market returns.

Another important study that measures the concept of performance related pay incorporating

in-depth measures of both individual and group or team based rewards is that of Guest et al.

(2003). The cross-sectional analysis indicates that greater use of HRM is associated with

lower objective measures labour turnover. However there is strong association between

greater use of HRM and subjective measures of productivity and financial performance. A

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number of studies exploring PRP association with HR and performance outcomes find a

significant relationship between them (Vandenberg et al., 1999; Bae and Lawler, 2000;

Guthrie, 2000; Guthrie et al., 2009; Datta et al., 2005).

Vandenberg et al. (1999) argue that performance related pay incentive systems are not

effective in reducing employee turnover. Moreover the study concludes that PRP based

incentive systems are expensive to implement than seniority based systems. However

research findings by Bae and Lawler (2000) in Asian context indicate that a high involvement

strategy incorporating PRP had a positive and significant effect on perceptual measures of

financial performance. Similarly a study by Guthrie (2001) argues that PRP measures as

skill-based pay, group-based pay and employee stock ownership as a part of high

involvement practices relates positively with employee retention and productivity. A latter

study by Guthrie et al. (2009) also supports a positive relationship between PRP as part of

HPWS and employee retention and productivity. An important study by Datta et al. (2005)

argues that PRP practices as a part of HPWS have significant effect on workforce

productivity.

The evidence above indicates a strong positive relationship between contingent pay and

HRM outcomes on the one hand and firm performance indicators, on the other. However the

nature and type of PRP --- individual or group and its effects on performance measures are

disputed to certain extent. However overwhelming evidence supports the overall positive

association. Poutsma et al. (2003) highlight that financial participation has become a global

phenomenon, especially its popularity is on the increase in the industrialized world. It would

definitely be interesting to explore the association between incentive schemes and subjective

performance measures in case of Pakistan an economically developing country and

contextually, a different culture from the Western world. The next important high

performance practice the research intends to explore is that of performance review,

appraisal and career development.

88 3.7 Performance Review, Appraisal and Career Development

A decade ago performance appraisal was a straight forward year-end review process done

with a formality of form filling without any consideration of its consequences for the employee

and the organization until the form was filled again the following year. The process is now

much more complex and integrated with other human resource activities as Bach (2005)

suggests the process has evolved and changed into an on-going system termed as

performance management. One of the many definitions which cover the concept is provided

by Pritchard and Payne (2003: 219) who broadly define performance management as a

“range of activities or practices an organization engages in to enhance the performance of a

target person or group, with ultimate purpose of improving organizational performance”.

Bach (2005) argues that competitive pressure has forced the firms to overcome the

problems associated with performance appraisal and introduce a more dynamic 360-degree

feedback system (i.e. feedback from multiple stakeholders). One of the compulsory

conditions in the best practice approach is the alignment of the individual performance

management to corporate objectives that makes the system worth of investigation. 360-

degree performance appraisal administrated through expert facilitators is fast becoming a

tool for employee development and career management. Performance appraisal has

become a part and parcel of much of the research undertaken under the best practice

paradigm. One of the interesting aims of the research is to explore the state of performance

appraisal as a constituent part of high performance practices in multinational and local

establishments in Pakistan. Generally it is assumed that in Pakistan maintaining a good

relationship with managers is far more important than actual performance. This kind of

attitude may prevent an organization from living up to expectations of its employees and to

meet the challenges of the business. The current thesis expects that performance appraisal

approach in MNCs and local private companies in Pakistan must have changed over the

time. The companies must be following the latest tools of 360 degree appraisal to develop

the capabilities of their employees to achieve the business goals in face of growing domestic

and regional market competition. The chapter proceeds to produce evidence from some of

the major HPWS literature linking performance appraisal to HR and business outcomes.

89

An influential study by West et al. (2002) argues that a consistent implementation of the

appraisal system not only improves individual performance but ultimately enhances

organizational performance. Delery and Doty (1996) argue that results-orientated appraisals

based upon quantifiable measures and feedback is significantly associated with financial

measures. The study further argues that result-oriented appraisals are effective when

measures of desired results are available. Wright et al. (1999) argue that development-

orientated appraisal is only related to performance (p < .05) when paired with participative

systems. However not all studies associating appraisals with HR and firm financial

measures find the relationship significant. One such study is that of Wood and de Menezes

(2008). The study operationalizes the measure as if 80% or more of the non-managerial staff

have their performance appraised regularly. The results indicate that appraisal does not

have any significant association with labour productivity or change in labour productivity,

turnover or absenteeism. Similarly meta-analysis by Combs et al. (2005) finds no significant

association between appraisal and different performance dimensions i.e. financial

performance, productivity and retention. Apart from studies measuring individual association

of appraisal with HR and business outcomes a number of studies measure the relationship

as a bundle, system or index. The chapter proceeds further to appraise evidence from such

studies.

Huselid (1995) captures appraisal as a part of their motivation factor and found that it had

significant association with productivity and financial performance. Youndt et al. (1996) focus

on developmental, result-based and behaviour-based aspects of an appraisal system.

Development and behaviour oriented appraisal is classified as part of human capital

enhancing HR system. The results reveal that human capital enhancing HR system had a

significant effect on employee productivity (p < .01). However the study argues that result-

based appraisal as a part of administrative HR system plays an important role in the

performance of cost conscious manufacturing units. Vandenberg et al. (1999) investigate

360 degree appraisal as a part of work design category. The results of the study indicate that

work design practices did not have any significant association with turnover or financial

performance. Ramsay et al. (2000) measure performance appraisal as formal appraisal exist

for at least some occupations, is linked to pay, is conducted at least once a year, used for

feedback and behaviour change, non-managerial occupations are part of appraisal process.

The results indicate that high performance work practices are related to management reports

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of comparative labour productivity (p < .001) and financial performance (p < .05). However

the practices are not related to absence but still significantly lower the turnover rate (p < .05).

One of the major studies measuring high performance practices in detail is that of Guest et

al. (2003). The study measures the concept of performance appraisal as: are non-

managerial employees regularly appraised i.e. quarterly or annually, does appraisal

determines a proportion of their pay and does the process incorporate feedback from

multiple sources. The results support the association between greater use of HRM practices

and lower turnover, higher profitability, productivity and financial performance depending

upon the nature of measures i.e. objective or subjective and either cross-sectional or

longitudinal data. Similarly Datta et al. (2005) index containing performance appraisal and

feedback item shows significant relationship between the index and labour productivity (p <

.05). In contrast to Combs et al. (2005) meta-analysis, Subramony (2009) found a significant

association between performance appraisal as an individual practice and as a part of

motivation enhancing bundle with business outcomes. Guthrie et al. (2009) measure

appraisal as proportion of employees who receive it on routine basis and receive feedback

from more than one source. The results indicate that greater use of HPWS was associated

with lower absenteeism (p < .001), lower turnover (p < .001), and greater productivity (p <

.001).

The evidence strongly supports the notion that appraisal system significantly improves

organizational HRM and business performance. Little is known about what the state of affairs

is in Pakistan with regard to performance review system in MNCs and local establishments

and about effectiveness of the practice on performance outcomes. The current research

sheds light on the issues of best practice performance appraisal practices present among

the establishments of MNCs and local firms in Pakistan. The next important HPWS practice

the chapter examines is that of reduction of status differences / harmonisation.

91 3.8 Reduction of Status Differences / Harmonization

Reduction of status differences / harmonization has been an important element of the

Japanese management philosophy and since 1980s a distinct recognizable feature of high

profile Japanese plants of Nissan, Komatsu and Toshiba. These companies followed the

concept of single status with as a religious ritual with same canteens, car parks, toilets,

clothing and harmonization of terms and conditions of employment for managerial and non-

managerial employees (Marchington and Wilkinson, 2008). Such a system of harmonization

has been labelled by Pfeffer (1998: 48) as ‘symbolic egalitarianism’ an essential condition for

creating an open communication system for successful implementation of many HPWS

practices such as team working and employee involvement. Moreover Pfeffer (1998) argue

that it is the most important gesture to workers from the firm to make them feel valuable and

equal to any other cadre of employees. The ultimate aim of the management is to align

employees’ commitment and effort in direction with firm’s objectives.

Although single status and harmonization is integral part of high performance paradigm, its

implementation is not beyond critique. See for example, (Knight and McCabe, 2000) where

the study argues that the practice is extreme form of normative management control. But on

the other hand proponents of high performance (Pfeffer, 1998) deem it as a necessary

condition to develop common fate by limiting differences in management and other

employees in all aspects of employment.

From the Japanese plants the practice of status reduction and harmonization has diffused

into Western management culture where once fringe benefits typically depended upon the

status of the employee. A number of factors have led to this change, the important among

them is the technological evolution resulting in decrease in distinction between white and

blue collar jobs and need for works who are multi-skilled, flexible and co-operative and part

of the corporate team (Sisson and Storey, 2000). Another important factor is the change in

European legislation which endeavours to eliminate sex discrimination and offer equal pay

and harmonize the terms and conditions across Europe (Marchington and Wilkinson, 2008).

In the current Western management scenario and even in Asian context the practice of

status reduction and harmonization is becoming popular. Is this the case in MNCs and

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private local establishments in Pakistan, the current thesis reviews evidence generated and

evaluates the status of the practice in establishments of Pakistan. The available evidence in

case of Pakistan indicates that there are high status differences in organizations; this

phenomenon has generally been blamed on the British management culture of the colonial

times which created an elite class that had an indifferent attitude towards the middle class

(Khilji, 2002). However keeping in view the nature of sectors under investigation and the

changing trends of management the current thesis argue that at least at the policy level

organizations in Pakistan must be aspiring to reduce status symbols and are working

towards eliminating the elite culture in organizations. The main stream high performance

studies that analyse the practice of status reduction and harmonization are fewer in number,

use wide and variable proxies to measure the practice. In the following paragraph the

chapter proceeds to examine some of these high performance studies and evaluates the

empirical evidence with regard to the effectiveness of the practice.

In one of the earliest studies measuring harmonized terms and conditions and single status

in establishments is that of Guest and Hoque (1994). The results indicate that

establishments having such a practice have low absence and labour turnover rates. The

establishments also have best performance outcomes with regard to productivity. MacDuffie

(1995) captures single status as a part of HRM policies index, the study operationalizes the

concept as the extent to which status barriers between the managers and the workers are

present, and in particular the study explores the presence / absence of common uniform,

common cafeteria, common parking, and no ties. The results indicate that HRM policies

index is statistically significant predictor of labour productivity. Ramsey et al. (2000) measure

harmonization as: all employees have standard employment contracts, managers and

employees have same entitlements. The System of work practices SWP-2 comprising of

harmonization items significantly lowers the employee turnover (p < .01) and labour cost (p <

.001). The SWP-2 system is not significantly associated with labour productivity, financial

performance and absence rate. The SWP-2 as a part of the HPWS index shows significant

association with all the workplace performance indicators except absence rate. Wood and de

Menezes (1998) inquire about whether or not employees have to clock in or not, whether all

employees are offered participation in share schemes and same type of welfare / fringe

benefits as part of investigation of four progressive styles of high commitment management.

The study is sceptical about high commitment performance effects though firms with medium

93

level of HCM show significant positive association with labour productivity (p < .05). Hoque

(1999) incorporate items of single status for all staff and harmonized terms and conditions

between management and non-management staff in a study that investigates the

relationship between HRM and performance in UK. The results indicate that HRM is related

to reported productivity (p < .001) and financial performance (p < .001) but had no significant

effect on absenteeism. Another important study that examines single status and

harmonization is that of Guest et al. (2000). The study finds significant association between

greater use of HRM and firm subjective and objective performance criteria.

The evidence indicates that major high performance literature exploring single status and

harmonization as a part of system, bundle or index are fewer in number but do report

significant positive association with business performance outcomes. It would be interesting

to explore the association in case of Pakistan a predominantly Asian culture. The last high

performance practice the research explores is that of Work-Life balance.

3.9 Work-Life Balance

Work-life balance has become one of the important employee-centred management policies

in the present decade. Changing values and regulations in the Western World have resulted

in an influx of women in labour force. As a result both men and women require flexibility to

manage their work and family lives (Goodstein, 1994 and Ingram and Simons, 1995). The

legal and political pressure exerted by the authorities in USA and EU has forced the

employers to adopt family friendly policies. In the recent decade employers’ involvement in

work-family issues has increased to satisfy the demands of their workforce, to recruit high-

quality employees and to avoid problems of lateness, absenteeism and distraction

(Goodstein, 1994 and Osterman, 1995). Osterman (1995) argues that firm involvement in

work-family issues is immensely important for maintenance of its internal labour market and

for retaining its organizational legitimacy in conforming to the institutional pressure.

Goodstein (1994) also advocates the argument that firms that provide work-life balance

opportunities address societal concerns and reinforce their image of legitimacy and social

fitness. The most important aspect of family-friendly programmes is their capacity to create

94

social exchange behaviour. This signals the worker that the firm values them and thus

enhance their organizational citizenship behaviour resulting in reciprocity towards the

employer in shape of increased productivity and efficiency (Lambert, 2000).

Marchington and Wilkinson (2008: 107) outline a range of proxies that can be used to

measure work-life balance. These include provision or assistance with childcare or adult

care, emergency leave, maternity and paternity leave. Similarly Kersley et al. (2006) highlight

the importance of working time flexibility available at workplace identified by increase /

decrease in working hours, change in shift patterns, job-sharing and home-working. An

argument put forward by Lewis et al. (2007) is quite relevant in present business

environment where they argue that 24/7 working patterns of the 21st century have made

workers feel pressure, lack of time and general busyness. These changing trends

necessitate that both men and women working in the new knowledge economy need to

balance their time between work and personal life. Fleetwood (2007) argues that business

case for work-life balance is not conclusive, and there is some controversy whether

businesses promote work-life balance for better employee experience of work or do they

push the agenda to improve business performance.

The brief discussion above indicates that work-life balance though a new concept even in the

Western developed economies is fast spreading in US and Europe due to demographic and

institutional changes. Wood et al. (2003) based upon their analysis of WERS 98 data set

argues that management in the average British workplace do not practice family-friendly

flexible arrangements. Only the large British firms adopting innovative work practices are

more likely to have work-life balance policy. Moreover Wood et al. (2003) support the

perspective that as compared to UK comparable US organizations are much more likely to

adopt the policy in an integrated manner. However Fleetwood (2007) conclude that it is

evident from CIPD research agenda that flexible working policies and work-life balance

practices are becoming a norm in the British workplaces.

95

The comments made by Employers for Work-life Balance organization in 2006 summarizes’

the concept and its potential benefits.

Work-Life balance is about people having a measure of control over when, where, and how they work. It is achieved when an individual’s right to a fulfilled life inside and outside paid work is accepted and respected as the norm, to mutual benefit of the individual, business and society….Good work-life balance polices are good for business and some benefits can be directly measured financially. These include: increased productivity; improved recruitment and retention; lower rates of absenteeism; reduced overheads; an improved customer experience; a motivated, satisfied and equitable workforce (cited in Fleetwood, 2007: 351).

The last objective of the current study is to explore the concept of work-life balance in

multinational and local establishments in Pakistan where too during the last decade a large

number of women have entered the workforce due to economic pressure and increase in

women’s educational achievements. Moreover keeping in view the changing demographic

trends, their impact on the nature of work around the globe and the potential for employers in

Pakistan to tap into a talent pool of educated women the current study assesses the work-life

practices of establishments, an essential practice to create an enabling working environment

for women entering the workforce in Pakistan. However it is expected that such practices

may be rare in establishments in Pakistan as most of the workforce is comprised of men,

and generally society differentiates between the types of role the sexes play in life in

Pakistan. The issue of women emancipation in Pakistan has been a priority subject for

government, non-governmental organizations and international agencies. The government is

focusing on women development and supports their employment by introducing quotes in

jobs for them. During the collection of data it was observed that a sizeable number of women

work in the sectors sampled in Pakistan. Keeping in view the above discussion, the study

argues that it is a right time to assess work-life balance practices of establishments in

Pakistan. As the number of women in workforce is going to increase in future in Pakistan, the

importance of practice is going to increase manifold for all employees either men or women

and the demand for work-life balance practices by employees would be impossible for

employers to ignore. Thus the results of the study can have important implications for the

human resource practitioners to rethink their policies and for the government to provide

policy guidance or incentives to firms for implementing work-life practices.

After outlining the research objectives, the study discusses the evidence with respect to

work-life balance and HR and business outcomes. The number of major UK and US high

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performance studies incorporating work-life measures are rather few in number. Somehow a

majority of them do not focus on Work –life balance issues and exclude them from either

individual or bundle of strategic human resource practices. Konard and Mangel (2000) based

upon data from both public and private industrial firms conclude that work-life balance

programs affect firm productivity. The study argues that the association between the work-

life balance and firm productivity is dependent upon the type of employees employed by firm

i.e. higher percentage of women and professionals. However Milliken et al. (1998) argue

otherwise and suggest that it is the responsiveness of senior human resource managers of a

firm that determines their reaction to work and family issues and its subsequent impact on

firm performance rather than the percentage of women employed by a firm. An important

study finding a significant relationship between usage of bundles of work-family and

perceived organizational performance is that of Perry-Smith and Blum (2000).

The study by Perry-Smith and Blum (2000) infers that firms with more work-family policies

have higher performance i.e. perceived market performance and profit-sales growth than

firms with less number of policies. Guest (2002) recognizes the importance of family-friendly,

equal opportunity and anti-harassment practices as pivotal employee-centered practices that

strongly affect the employee psychological contract leading to increase in employee

performance and ultimately improve the corporate performance in context of partnership or

mutual gain system. Apart from mutual gains perspective, a study by Arthur and Cooke

(2004) concludes that announcement of work-life initiatives positively impact business

outcomes in shape of an increase in their share price. However the positive trend is not

sustainable over the long run or in case of subsequent announcements. A longitudinal study

by Giardini and Kabst (2008) concludes that no bundle of work-family practices was

associated with perceived general or financial performance. Bundles represented different

work-life practices such as childcare – bundle A, flexibility practices- bundle B, recruitment

practices-bundle C and an overall index of Work-family practices. In case of absenteeism

bundle B and work-family index showed a significant negative impact.

One of the major high performance studies incorporating family-friendly practices as a part of

the high performance orientation is that of Ramsay et al. (2000). The study includes equal

employment opportunity / diversity management and family-friendly elements of Work-life

balance. Based upon principle component analysis these practices are bundled with

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employee / union representation, consultation committees and sophisticated recruitment /

selection and termed as Systems work practices 1 (SWP-1). The results indicate that SWP-

1 bundle is not related to any workplace outcomes i.e. labour productivity, financial

performance, and change in labour productivity and absence rate. The bundle though shows

negative association with turnover, the association is not significant at conventional levels.

The evidence above indicates that work-life balance is an under-researched policy in high

performance studies though some theorists consider it to be the only policy oriented towards

facilitating the employees in the new work arrangements catering for ever increasing work

pressure and family demands. The present study attempts to explore the issue in

multinational and local Pakistani establishments with an intention to capture the existence of

a relatively new concept even in the highly industrialized Western economies.

The chapter has assessed the evidence from major high performance studies that link

individual practices and in many cases bundles, systems and indexes with human resource

and firm performance issues. It can be safely argued that evidence is mix with regard to

performance effects of many practices. Some of the studies overwhelmingly support the

positive effects of the practices while others are sceptical of the claims. The chapter

proceeds further to discuss some important issues regarding the measurement of high

performance workplace practices in Pakistan and critically evaluates the issue of

performance, the issue of single industry vs. multi-industry studies and takes into account

the empirical evidence emerging from South East and South Asian countries with regard to

diffusion of high performance practices and their effect on performance outcomes.

98 3.10 The Issue of Performance

The strongest argument of the best practice high performance HRM is that the practices are

applicable and have significant effects on performance across organizations, sectors,

product-markets and countries. In case of UK CIPD puts forwards a strong case for good

people management.

More than 30 studies carried out in the UK and the USA since the early 1990s leave no room to doubt that there is a correlation between people management and business performance, that the relationship is positive, and that it is cumulative (CIPD, 2001: 4).

Similarly from US perspective Pfeffer (1998) suggests that best practices have the potential

to impact performance irrespective of sector, size or country. In-spite of positive evidence,

many of these high performance studies have certain major limitations and in words of Wall

and Wood (2005: 429).

it is often assumed that research over the last decade has established an effect of human resource management practices on organizational performance. Our critical assessment of existing studies finds that, although collectively they opened up a promising line of inquiry, their methodological limitations make such a conclusion premature

In their endeavour to highlight the importance of HR practices, Ichniowski et al. (1997) claim

that an HRM system that incorporates innovative practices such as high involvement teams,

communication practices and extensive training and maintained these changes for ten years

is likely to increase its operating profit by over $ 10 million.

The current study expects to validate the universalistic claims, based on the empirical

evidence generated from establishments in Pakistan. There are many reasons for such an

expectation; the Government in Pakistan is focusing on improving the labour productivity of

the workforce and has made it mandatory for employers to enforce training and other

management practices that can enhance the labour productivity of the establishment

(Industrial Relations Act, 2010). Moreover it is in the interest of the Pakistani establishments

for their own survival in the light of global and regional business climate, to adopt the latest

management practices that have the potential to improve the human resource and

establishment performance outcomes. One such route can be through the adoption of best

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practice high performance HRM practices. The current study expects to uncover the change

in the management practices in Pakistan and to provide empirical evidence of the diffusion of

HPWS practices in three promising sectors in Pakistan. In addition to exploration of the

diffusion HPWS practices, the study assesses the universalistic claims of practices effects

on performance outcomes in Pakistan.

The issue of performance also suffers from number of problems, some studies support the

potential HR practice-performance relationship, others raise the issue of causality, a number

of studies use objective measures of performance, others prefer subjective measures, and

some studies combine the both. The next few paragraphs take into account these issues and

their implications for the current study.

The issue of performance is quite complex, a number of studies support the potential link

between HPWS practices and firm performance. At the same time a number of them are

sceptical of the any such association. A seminal study by Huselid (1995:667) claims, “one

standard deviation increase in HR practices is associated with 7.05 per cent decrease in

labour turnover and on per employee basis, 27,044 US dollars more in sales and 18,641 US

dollars and 3,814 US dollars more in market value and profits respectively”. Huselid (1995:

667) further suggest, “that firms can indeed obtain substantial financial benefits from

investing in the practices studied here”. Similarly a number of studies support the productivity

and performance effects of systems of HRM practices. In this regard studies by Ichniowski et

al. (1997) and by Youndt et al. (1996) support the positive impact of an HRM system on

performance. A series of meta-analysis by Combs et al. (2006) and Subramony (2009)

strongly supports the impact of high performance practices on performance measures.

Combs et al. (2006) strongly justify investment in high performance practices and argue,

high performance practices both as a system and individual practices enhance

organizational performance (r = .28 for HPWP system versus r = .14 for individual practices).

Similarly the meta-analysis by Subramony (2009:759) suggests that, “firms can benefit from

the adoption of high-performance HRM practices, even if they are few, as long as they are

complementary”. The meta-analysis further reveals that the effects of HPWS bundles are

stronger in manufacturing settings and where the performance rating are collected from the

same source. Similarly a study by Datta et al. (2005) argues that in general the high

performance systems tend to have positive effects on productivity. A study by Wood and de

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Menezes (2008) argues that an orientation to HRM is associated to performance and argues

that individual practices as task variety, variable pay and job security are critical for

performance outcomes. Studies by Apospori et al. (2008) and Guthrie et al. (2009) support

the universalistic arguments that HR practices are important in HR-performance relationship

and their usage is associated with performance outcomes.

However a number of high performance studies doubt the strength of the relationship. One

of the most important studies by Guest et al. (2003: 307) fails to find any evidence that HRM

causes higher performance.

The results are very mixed and on balance predominantly negative. The tests of association show a positive relationship between the use of more HR practices and lower labour turnover and higher profitability, but show no association between HR and productivity. The test of whether the presence of more HR practices results in change in performance shows no significant results.

Guest et al. (2003) suggest that it is quite possible that reverse causality exists, meaning that

actually successful organizations are more likely to introduce the high performance

workplace practices. Like Guest et al. (2003), Cappelli and Neumark (2001) and Wright et al.

(2003) also caution against interpreting the strong positive results of HPWS studies. Cappelli

and Neumark (2001) are also suspicious of the effects of high performance practices on

performance. The longitudinal design and incorporation of panel data, and with a sample of

establishments with a long history of operations, allows them to predict that high

performance practices raise labour cost per employee, have weak association with

productivity and no effect on labour efficiency. Similarly a study by Wright et al (2005) argues

that the causal model positing that HR practices impact performance outcomes is supported

in predictive sense. The results support the notion that HR practices improve operating and

financial performance, however the relationship significantly weakens once past and

concurrent performance is controlled for. The study concludes that HR practices do impact

performance, the true causal relationship is still questionable either HR practices cause

performance or vice versa, or is it some third variable such as leadership that causes

performance.

The above discussion indicates that pinpointing the causal direction is a particular problem

the research faces in establishing the HR practice-firm performance relationship. However a

number of high performance studies under-take a cross-sectional analysis of the relationship

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(see, for example, Arthur, 1994; Guest and Hoque, 1994; MacDuffie, 1995; Delaney and

Huselid, 1996; Youndt et al, 1999; Fey et al., 2000; Wright et al., 2003; Wood and de

Menezes, 2008; Guthrie et al., 2009). The current study like many high performance studies

is cross-sectional in nature and does not captures the causal direction of the HR practice-

firm performance relationship. A longitudinal research design that could potentially address

the issue of causality was beyond the scope of the current research. In short the current

study provides cross-sectional evidence from Pakistan and argues for universalistic

relationship across the sectors in Pakistan. Thus the current cross-sectional design of the

study can only reveal associations between HR practices and subjective performance

outcomes in case of Pakistan. However the evidence with regard to effectiveness of

practices potential to improve establishment outcomes is substantial and it would be

worthwhile to assess the claims of best practice HRM in Pakistan.

The high performance studies have focused on both objective and subjective measures of

performance. The studies measure both proximal HR outcomes and distant firm

performance outcomes. The issue of choice of measures has been discussed and critiqued

in the methodology chapter in detail. Over here the chapter takes into account the way

different high performance studies have measured the performance outcomes.

A review of literature indicates that studies have used a variety of measures to assess

performance. The studies have typically focused on human resource measures such as

absenteeism, turnover and motivation; organizational measures such as productivity,

productivity increase, quality and customer satisfaction; financial accounting measures such

as return on assets and financial market measures such as stock price or Tobin’s Q (Wright

and Gardner, 2003).

The chapter appraises the way few noteworthy studies have tackled the issue of

measurement of performance. A number of studies measure the performance by a single

HR or generic outcome entitled firm performance. For example Batt et al. (2002) and Batt

(2002) measures the practices effect by using proximal human resource measure of

turnover. Though human resource measures are considered more appropriate measures to

capture the effects of HR practices, the study just relied on a single measure. Similarly a

number of studies focus on generic dependent variable of firm performance (see, for

example, Delaney and Huselid, 1996; Delery and Doty, 1996; Wright et al, 1999). A number

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of studies use both proximal and distant measures of performance. In this regard Huselid

(1995) study is an exceptional example that measured employee outcome of turnover,

financial outcome of gross rate of return and market-based measure of Tobin Q. The study

captured both proximal and distant measure of performance. A study by Guest et al. (2003)

incorporated both subjective and objective HR and firm performance measures. The study

measured outcomes such as absence, turnover, industrial conflicts, labour productivity and

financial performance. Subjective outcomes were measured on the pattern of Workplace

Employee Relations Survey and objective measures were independently collected through

Dun and Bradstreet data base. Similarly a study by Guthrie (2001) measures the turnover

subjectively and labour productivity by objective measures. A number of studies just focus on

labour productivity as the performance measure. Labour productivity has been considered as

relatively direct and crucial indicator of workforce performance. See for example the studies

by Datta et al. (2005), Guthrie et al. (2009) and Way (2002). Birdi et al. (2008) argue that

productivity is less likely to be influenced by factors beyond the control of the firm and hence

proves to be a better measure of performance as compared to financial outcomes. However

a number of high performance studies take altogether a different approach and captures the

HR and firm performance measures through subjective interpretation of the respondents.

Prominent studies that measure performance outcomes subjectively are: (Ramsay et al.,

2000; Wood and de Menezes, 2008; Fey et al., 2000; Wright et al., 1999; Hoque, 1999). The

studies generally ask the managers to rate the performance of their workplace with others in

the industry on key indicators as financial performance, labour productivity and change in

labour productivity. The current study also measured the key performance indicators through

subjective interpretation of the managers mainly due to reasons as non-availability of

objective data at establishment level in Pakistan. Moreover it has been argued that

subjective measures generally increase the participation of managers, in particular in

cultures where establishment managers are reluctant to share any objective data (Fey et al.,

2000).The study incorporated both proximal HR and productivity measures and distant

financial performance measures in an effort to comprehensively measure the issue of

performance in establishments of MNCs and local firms in Pakistan.

103 3.11Linking HRM Practices to Performance

Guest (1997) argues that there is no general theory about performance or linkages between

HRM and performance per se. However a number of approaches and models built using

specific disciplinary perspectives such as economics, occupational psychology or production

management exist that help to understand the linkages between HRM and performance. It

has generally been agreed that the issue of linking HRM and performance is a black box and

much effort is needed to illuminate it and to advance the field (Boselie et al., 2005). Early

attempts to link HRM and organizational performance relied on common sense belief that

improving the management of employees led to enhanced performance (Ulrich, 1997).

Jackson and Shuler (2007) outline a number of theories including transaction cost

economies, agency theory, human capital theory and resource-based theory of the firm that

help the understanding of linkages between HRM and performance.

Though these theories are not management theories yet they have become an important

source of theorising in human resource management and help the understanding of the

linkages between HRM and organizational performance outcomes. This section of the

Chapter briefly takes into account all such theories that illuminate our understanding of the

black box between HRM and performance. However it must be kept in mind that though the

study uses the underlying arguments of the following theories in explaining many of its

findings, it does not relies on in-depth application of such theories as a model for exploration

of HRM in Pakistan, rather the thesis is embedded in the arguments of universalistic and

contingency perspectives.

The foundations of transaction cost economies are based on the work of Coase 1960 and on

the contributions of Williamson 1971, 1985 and 1996. Transaction cost economies suggest

that any transfer of goods and services is a transaction associated with friction or costs.

Employer-employee contract is a transaction and hence human resource policies are a

critical part of the contract. A contract must be defined in a way that organization is able to

attract and retain the best employees and at the same time is able to address the issues of

bounded rationality and opportunism (Zivnuska et al, 2007). Jackson and Schuler (1999)

argue that the theory has implications for human resource management practices that can

be used to create a governance structure that addresses implicit and explicit contracts. For

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example organizations that require firm-specific knowledge and skills can create internal

labour markets that bind self-interested and bounded rational employees to the organization

or can explore external labour markets as an alternative if they do not require firm specific

skills. The usefulness of transaction cost and agency theory approach for describing

underlying theoretical rationale for human resource practices has been established by

theorists (for example Jones and Wright, 1992; Jones, 1984; Eisenhart, 1988).

Jones and Wright (1992) link the transaction cost model to human resources through the

concept of bureaucratic costs, which occur as a result of managing human resources when

an authority relationship exists. Jones and Wright argue that bureaucratic costs incur, as the

firm needs to hire the employees with right skills, needs to provide them firm specific skills, in

order to monitor and evaluate human actions. HRM decisions can be modified to generate

HR solutions associated with employee-employer contract that can maximize the profitability.

Related to transaction cost economies is the agency theory which explains the difficulty

associated with verification of work done by the agent and the acceptable level of risk that

the principle and agent experience associated with the contract. The agency theory lays

importance on the implementation of a monitoring system in an organization. The type of

monitoring system Fordist or post-Fordist may have important ramifications for a firm

strategy. A common monitoring system is the ‘supervision by the mangers’ which meets the

criteria of the theory that urges a focus on the separation of ownership and control in the

modern firm. In the modern working environment also termed as converging economy,

employees hold substantial knowledge power and require adaptability and flexibility to meet

the converging economy demands. The managerial control if not adequately designed may

result into problems of low morale, low productivity and turnover. To be successful the

managers need strategic support from human resource department to satisfy all the

stakeholders (Zivnuska et al, 2007). Jackson and Schuler (1999) and Wright and McMahan

(1999) argue that from agency theory perspective HRM practices allow a firm to design a

reward system that reflects the strategic goals of the organization. An excellent example of

application of compensation systems using agency theory perspective is that of Eisenhart

(1988) where she argues that agency theory variables such as job programmability, span of

control and outcome uncertainty determined the role of commission based pay systems.

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The basic prepositions of human capital theory have also been used to justify the linkages

between HRM and performance. Blair (2011) terms Human Capital as the most important

factor of production, a source of economic wealth and growth over time. The term Human

Capital can be understood as the skills, knowledge and capabilities a workforce of a firm or

population of country possesses. The term also encompasses the organizational

arrangements and networks that enable the workforce to be innovative and productive. The

capabilities of a workforce are critical inputs into production, and resources spent on

education, training, team-building and other forms of human capital investment can be

justified in the same manner as investments in physical capital. The idea of improvements in

human capital goes back to Adam Smith, though the term become popular after Gary Becker

wrote a book on the subject in 1964. In essence the human capital theory says that

investment into education and training of employees contributes to development of special

traits that enables the employees to better organise the production process and to produce

more with same inputs of land, machines, materials and time than employees who lack such

traits. Unlike other investments, the investment in human capital is a complex problem and

raises issues of control and opportunity cost, thus making it harder for management to

undertake such investments (Blair, 2011). However the essence is the more a firm is willing

to invest in human resource management activities the more likely it is to increase the

individual productivity and overall firm performance (Truss, 2001).

An alternative view is the resource-based theory of the firm. Drawing inspiration from

Penrose (1959, 1995) the resource-based view of the firm focuses on internal development

of the organization.

Penrose (1959, 67) theory of growth of firm defines firm as, “collection of productive

resources the disposal of which between different uses and over time is determined by

administrative decision”.

Similarly Penrose (1995) clearly focuses on resources as a source of ‘distinctive

competence’ an idea earlier proposed by Selznick in 1957. “it is heterogeneity, not the

homogeneity, of the productive services available or potentially available from its resources

that give each firm its unique character. Not only can the personnel of a firm render a

heterogeneous variety of unique services, but also the material resources of the firm can be

used in different ways” (Penrose as cited by Grimshaw and Rubery, 2007, 69).

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Wernerfelt (1984) work on resource-based view provided impetus to research in strategic

management; however the framework became popular with human resource theorists after

Barney (1991) propagation of the view that resources that are rare, valuable, inimitable and

non-substitutable can provide sources of sustainable competitive advantage. Much of the

research that followed this framework in human resource management focused on linking

HRM practices to differences in firm performance. The perspective development and

influence in strategic human resource management can be attributed to number of theorists,

prominent among them are (Barney, 1991, Barney and Wright, 1998; Wright et al, 1994,

2001; Delery, 1998).

The main arguments of the resource-based view are around the notion that, “human

resources--- the skills, knowledge and behaviour of employees or organizational resources--

control systems, routines and learning mechanisms-----that are products of complex social

structures built over time and, thus, are difficult to understand and imitate”, for competitors

to create any competitive advantage for their firms (Colbert, 2007,101). This importance of

human capital pool and firm performance creates the need for the deployment of right type of

human resource practices that can attract, identify, retain and direct the employee behaviour

towards the organization goals (Truss, 2001). The incorporation of right type of HR policy

and practices has also been echoed by Kamoche (1999). Kamoche (1999) argument is

based upon the extension of Penrose (1959) views that the value of a resource is in its

potential to yield a service, Kamoche (1999, 92) proposes a resource-capability framework,

“that emphasizes that value is maximized when capabilities are deployed to utilize the

resources in their most suitable activities”. Kamoche based on Amit and Shoemaker (1993)

view of capabilities as the capacity to deploy resources argue that firms capacity to deploy

human resources through HR policies and practices constitutes HR capabilities that are

difficult to identify and imitate.

This right type of human resource practices are reflected in the idea of fit as Guthrie et al.

(2009) argues that the value of human capital and HR policies and practices for firm

competitive advantage increases the need of fit between HRM practices and business

environment. This leads one to ponder that what makes such systems so unique that they

are inimitable for competitors. A potential answer is provided by Wright et al (1994), they

argue that due to unique historical conditions, causal ambiguity and social complexity of the

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organization makes it impossible for other firms to duplicate the human resource systems.

Similarly Barney (1999) argues that socially complex resources and capabilities that are not

patentable are difficult to imitate. Wright et al (1994) and Barney (1999) argument is similar

to the mainstream assumptions of many other proponents of the fit thesis (Amit and

Schoemaker, 1993; Barney 1991, Conner, 1992, Oliver, 1997 and Peteraf, 1993). Despite

the importance of fit in the RBV theory, the empirical evidence does not supports the

generic-HR competitive strategy contingencies model (Becker and Huselid, 1998; Delery and

Doty, 1996; Huselid, 1995). Thus an influential group of theorists question the strategic

importance or inimitability of all groups of employees that work for an organization. However

the resource-based theory of the firm is a dominant framework used by proponents of high

performance workplace practices that take the contingency and configurational approach to

justify the linkages between the HRM practices and performance outcomes.

The above theories have been termed as an important part of strategic or descriptive models

that explore the link between HRM and performance. Guest (1997) argues that in

comparison to these models the normative models that have their roots in the literature of

occupational psychology provide a stronger explanation for the linkages by assuming that

specific HRM practices tap the motivation and commitment of the employees that results into

improved human resource and organizational performance outcomes. The factors that

describe the specific HRM practices are derived from the theories of organizational

commitment, job design and goal setting. Guest (1997) argues that these theories have the

potential to spell out the linkages between the practices and performance.

The foundations of the normative model are strongly embedded in the works of Walton

(1985), Lawler (1998) and Pfeffer (1994 & 1998). Theses model in general list specific

practices and advocate that the practices have the potential to enhance employee

commitment. These models have been criticized on the basis that they prescribe one best

way of HRM and the perspective underpins much of the research conducted in high

performance paradigm. The salient features of the model have been discussed in detail in

the Chapter 2.

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Researchers supporting the normative approach use arguments of AMO and Expectancy

theory to justify the links between HRM practices and performance. The essence of the AMO

model is based on the following equation:

Performance = f {employees ability, motivation and opportunity to participate}

The model essentially argues that the organizational interests are best served by and HR

system that has the ability to enhance employee skills, motivate them and provides them an

opportunity to participate in quality job (Boselie et al., 2005). However Purcell and Kinnie

(2007) urge caution as AMO model still begs the question what are those specific practices

and how the model explains the role of mediating effects of key variable in the linking

mechanism.

Guest (1997) proposes that expectancy theory of motivation provides a better basis for

developing more coherent rationale to link HRM practices and performance. The expectancy

theory proposes that at an individual employee level high performance depends upon high

motivation, abilities, role design and a perception on the behalf of the employee that such

conditions can lead to better individual and organizational performance. Guest (1997) argues

that drawing the logic of the theory HR practices can be designed to achieve better human

resource and performance outcomes (for example, low absenteeism, low labour turnover

and high productivity) giving rise to other things equal higher financial outcomes. Specifically

HRM practices that increase skills and abilities such as careful selection and training,

motivation such as employee involvement and performance related pay and an appropriate

role structure such job design based on team working and open communication and

feedback facilitate the high individual performance. Guest suggests that the issue of

perception is important as it strengthens the psychological contract that is the key

intervening variable that explains the link between HR practices and employee outcomes

such as job satisfaction, motivation and commitment, such an organizational process may

ultimately lead to higher productivity and profitability.

However Purcell and Kinnie (2007) argue that looking inside the black box requires

specifying a causal chain. Developing the work of Wright and Nishi (2004), Purcell and

Kinnie provide a model that specifies the route to linkages between HRM practices and

performance and has the following features.

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Intended HR Practices are designed by the senior management to be applied to all

or most of the employees. While designing the practices important aspects as

employee ability, motivation and opportunity to participate are considered. These

practices are articulated through organization value system and are part of the

company HR manual.

Actual HR Practices are the practices which exist in reality and are applied by line

managers.

Perceived HR Practices are the practices that are experienced by the employees

working for the organization. The employees may judge the practices based on the

notions of fairness and equity at work. This may change or distort their expectations

and perceptions regarding overall work climate.

Attitudinal Outcomes are in general visible in shape of increased/ decreased

motivation, job satisfaction and commitment.

Behavioural Outcomes flow from attitudinal dimensions. They are visible by

employee participation in learning opportunities, organizational citizenship behaviour

and increase in job attendance.

Performance Outcomes can be distal or proximal and can include measures of

effectiveness.

The model flows in the above described sequence five steps, moving from intended to actual to

perceived practices, followed by employee reactions and then to performance. If the causal chain is

not distorted at any stage of its implementation and line managers play the expected role the

process can lead to organizational performance. Gerhart (2005) argues that this new line of

research relating employee attitudes to behaviour and thence to performance creates value. Using

arguments of social exchange theory it is argued that high performance HR practices are viewed

by employees as an investment by the organization on them and they reciprocate by positive

attitude and behaviour that can lead to higher organizational performance.

The above are some of the influential theories and models from economies and occupational

psychology literature that help the understanding of link between HRM and performance. The issue

is still considered to be a black box and number of theorists and researchers are working on new

dimensions to illuminate the black box. High performance studies have focused both on single

110 industry sample and on multi-industry samples too, the next section discusses the issue of single

vs. multi-industry studies.

3.12 Single Industry vs. Multiple Industry studies

High performance studies have been conducted across single industry sectors and across multi-

industry sectors. Both level of analysis has its own advantages. The following paragraph examines

few such studies and appraises the studies with a view to take advantage of both types of research

designs in case of Pakistan. A review of high performance literature reveals that studies examining

HR-performance relationship at business-unit or establishment level, target single industry or have

small sample size (Benson and Lawler, 2003). A good example of major high performance study

that focuses on single industry is that of MacDuffie (1995). Using data from 62 automotive

assembly plants, the study argues that HR bundle coupled with plant manufacturing strategy

affects performance. Another single industry study by Youndt et al. (1996) collects data from

metal-working plants. The study supports the association between HR and performance from

universalistic perspective but at the same time acknowledges the contingency effects of firm

manufacturing strategy like MacDuffie (1995). Similarly a study by Hoque (1999) acknowledges

that relationship between HRM and performance was moderated by hotel business strategy. In the

same way Wright et al. (1999) found that HR practices in petro-chemical refinery were strongly

related to financial performance in presence of participative system. A number of important single

industry studies support a direct relationship between HRM and performance outcomes see, for

example Ichniowski et al (1997), Wright et al, (2003) and Wood et al (2006). Benson and Lawler

(2003) argue that though single industry studies provide convincing evidence of association

between HRM and performance, it is dangerous to generalize from such studies. Benson and

Lawler (2003) argue that multi-industry studies are in better position to provide evidence that HR

practices have the ability to contribute to firm profitability across different sectors. Whereas in

certain cases the single-industry studies support the contingency arguments, multi-industry studies

have more potential to strengthen the universalistic arguments by providing evidence that practices

work effectively across the sectors. One of the very important multi-industry studies by Huselid

(1995) showed significant relationship between the practices indices and performance outcomes.

Similarly a study by Delaney and Huselid (1996) acquiring data from National Organizations Survey

111 (NOS) that is a representative sample of US work establishments argue that HRM practices have

positive association with firm performance measures. The data set represents sample of some 727

multi-industry US establishments. A study by Fey et al. (2000) targeted some 395 foreign firms in

Russia and collected data at firm-level from variety of manufacturing and service firms. A number

of studies use secondary data-sets that are spread across sectors and in some cases across

countries. A study by Ahmad and Schroeder (2003) uses world class manufacturing project data to

ascertain the effects of HRM in different industries and countries. The study supports the efficacy of

Pfeffer’s seven HRM practices in manufacturing industries. Similarly studies by Birdi et al (2005)

and Wood and de Menezes (2008) use large scale data sets to examine the impact of HRM on

different performance outcomes. Both studies target the firm as level of analysis. The study by Birdi

et al. (2005) found that empowerment and extensive training in presence of team working

enhanced performance across the manufacturing firms. The study of Wood and de Menezes

(2008) measures practices across a large sample of British economy and found that practices had

consistent results across sectors. Another important study that collects data from 366 UK

manufacturing and service companies using a longitudinal research design, and both objective and

subjective performance outcomes is that of Guest et al. (2003). The study found positive

association between HRM and performance outcomes but did not find any prove that presence of

more HR practices results in significant change in performance across sectors. The above

discussion reveals that single industry studies are more consistent in finding a positive association

between HRM and performance whereas a number of multi-industry studies though supportive of

the association, are sceptical about the direction of causality of the relationship. Moreover the

studies with longitudinal designs do not find any conclusive evidence of the relationship. The

current study combines the advantages of both single and multi-industry studies. Like many single-

industry studies it measures the data at the business-unit or establishment level, which provides

the study with an advantage to measure the practices and outcomes quite specifically and probably

more accurately. And like many multi-industry studies the current study measure the HRM and

performance relationship across industries and sectors thus increasing the potential of the study to

generalize from the results. A multi-industry design of the current study increases the advantage of

the research to strengthen the arguments of best practice or universalistic approach to HRM in

Pakistan.

The last section of the chapter examines few of the high performance studies that have looked into

HRM and performance relationship in South Asian and South East Asian context. The purpose of

112 this discussion is to provide evidence that HPWS practices are increasingly becoming popular and

are fast diffusing in emerging Asian economies. If the firms in the neighbouring countries China,

India and many others are fast adopting such practices, there is a high probability that firms

operating in Pakistan must have adopted such high performance HRM practices.

3.13 Assessing the High Performance Studies in East & South Asian Economies

China’s emergence in the global economy, growth of its high-tech industry, the introduction of

market reforms in 1980s, admission into WTO, a direct and joint ventures investment by Western

companies has made it an exemplary transitional economy (Chow and Gong, 2010). The Chinese

central government interest in the importance of human resource management has moved the

Chinese organizations towards adopting more market-driven and performance–based HR systems.

China is not only an emerging global economy but also a very important regional market. China

and Pakistan have a special friendship and numbers of Chinese firms have active presence in

Pakistan. A number of research studies have captured the presence of high –commitment work

systems in Chinese organizations. One such study that claims to capture a preliminary measure is

by Xiao and Bjorkman (2006). Another study by Wei and Lau (2008) claims that as Chinese firms

are moving towards market orientation, strategic human resource practices are evolving and the

firms having such practices are able to achieve better performance outcomes as compared to their

counterparts. An earlier study by Bjorkman and Xiucheng (2002) exploring the links between HRM

and performance in sixty-two Western-Chinese manufacturing firms found positive effects of HRM

practices and HRM-strategy integration on organizational performance. The study further found

that performance-based rewards, individual performance appraisal and attitude surveys had strong

effect on organizational performance. Similarly a large scale questionnaire survey by Akhtar et al.

(2008) in three major Chinese industrial cities having a 78% response rate identified that training,

participation, results-oriented appraisals and internal career opportunities have positive impact

upon firm product / service and financial performance. The study other important findings were that

job security is no longer guaranteed and employees need to maintain a good track record in order

remain in competition for internal career opportunities. A study by Zhang and Li (2009) exploring

the high performance work practices and perceptual firm performance in pharmaceutical industry in

China strongly supports the universalistic perspective and found that HPWS index composed of

extensive training, participation, detailed job definition, result-oriented appraisal, internal career

113 opportunities and profit sharing was significantly related to firm market performance. However not

all studies find a support for a direct impact of HRM practices on performance. A study by Chan et

al. (2004) having a multi-industry sample of Hong Kong firms did not find any direct impact of HR

practices on firm performance. The researches blame this on unique characteristics of Hong Kong

market i.e. short-term approach of employers and lack of loyalty on behalf of employees. Similarly

a study by Shanshi et al. (2007) on China retail chain industry failed to find impact of HR practices

on performance. A possible reason put forward by researchers is that HR function in China retail

chain industry still plays a bureaucratic role and is slow in adopting the high performance work

practices.

After assessing some of the evidence on high performance practices from an important regional

emerging economy, the research proceeds to examine evidence from India, like China, Pakistan’s

next door neighbour and fast emerging economy. A number of research studies examining the

relationship between high performance workplace practices and firm performance have emerged

from India in recent years. The present study takes into consideration a few of them in order to

provide evidence of diffusion of the concept in the region. India is important in a sense that it is

member of regional economic block, though not on friendly terms with Pakistan, still there is an on-

going contact between the businesses of two countries on the forum of South Asian Regional

Cooperation Association. Som (2008) argues that Indian economy is on road to liberalization since

1991, this has led to change in HRM practices of Indian organizations. The firms are fast adopting

innovative HRM practices with an intention to enhance corporate performance. The study supports

the best practice perspective and argues that certain HR practices are better or more important

than others i.e. selectivity in staffing and incentive compensation consistently lead to higher

performance across whole population of organizations. The study is important as it sheds light on

the issue that work patterns in transition economies are on path to change with replacement of

seniority based rewards towards performance based pay systems and competency based

remuneration. Similarly Singh (2010) analysing the HRM and performance in a broad-spectrum of

major domestic Indian industries conclude that industries that use strategic human resource

practices gain significant financial returns. A study looking at employee intention to leave in service

sector employees in India by Guchait and Cho (2010) argues that an index of eight high

involvement practices had a significant impact on employee intention to leave. Another study in

Indian hotel industry context by Chand (2010) argues that HRM improves hotel service

effectiveness and as a consequence hotel performance. An important qualitative study by Cooke

114 and Saini (2010) in Indian context, finds evidence of universality of strategic HRM principles and

concludes that Indian managers are heavily influenced by Western business and management

education and actually believe that strategic HRM principles dictated by Western MNCs, HR

consultants and professional networks are best practices. This conclusion can be quite true in case

of Pakistan too. Another very important economy of the region is that of Singapore, a study of

strategic human resource practices by Khatri (2000) found that practices such as employee

participation, HR planning, use of structured interviews, use of employment tests and training have

a universal appeal and are being adopted by all type of firms irrespective of strategy. An important

study by Bae et al. (2003) investigating the impact of high performance work system on

organizational performance in four east and Southeast Asian economies i.e. Korea, Taiwan,

Singapore and Thailand concludes that despite the cultural and institutional differences across the

four countries high performance work systems tend to have a positive effect on perceived

organizational performance. Important argument of the study is that positive HPWS effect means

that these practices have the potential to assist companies to attain organizational flexibility and

respond to global economic and technological challenges. The study also indicate that local firms

implementing HPWS practices have greater success in doing this as compared to Western and

Japanese MNC’s. Last but not the least, a study by Lee et al. (2010) on HRM and firm

performance in Taiwan steel industry conclude that training and development, teamwork, HR

planning performance appraisal, employment security and compensation / incentive, all six HRM

practices significantly improve firm performance. The purpose of this section of the literature review

was to highlight the fast emerging evidence from East and South Asian emerging transitional

economies about the successful diffusion of the concept of high performance work place practices

into a context different from Western context. The evidence indicates that such practices are not

only being increasingly adopted in Asian subsidiaries of multinational companies but are also being

successfully implemented by the local companies. Moreover such practices are having a significant

positive impact on the measures of firm performance too. The review of the literature emerging

from South Asian economies indicate that one particular country that has been neglected in these

studies is Pakistan. This study aims to fulfil the gap by exploring the diffusion of high performance

work place practices in the subsidiaries of multinational and their local competitor establishments in

Pakistan. Moreover keeping in line with the traditions of high performance research, the study also

aims to assess the impact of such practices on establishment HR and performance measures.

115 3.14 Key Implications for Research study in Pakistan

From the literature review undertaken, the current study exploring the HPWS diffusion and the

practices impact on performance outcomes in establishments of MNCs and local firms in Pakistan

highlights the following key points learned.

1. The studies indicate the problem of variation in proxies, a serious problem in absence of any

theoretical foundations, however to overcome the problem to an extent the current research

focuses on using already developed and tested measures available in the literature.

2. The studies measuring the impact of HRM practices on performance have focused both on

individual HRM practices and on the system or bundles or indexes of practices. Most of the

studies aggregating the individual practices into multi-component scales do not provide any

results for the effects of individual practices. This gives rise to the question; is it the whole

bundle or system that parsimoniously affects performance or whether any of the constituent

practices are more effective than others or not. Moreover the formation of bundles on simple

count of practices or on the basis complex statistical techniques creates many options of

optimal combinations. Though many clusters and systems are available in research, they

again lack any strong theoretical underpinnings for their existence. This gives raise to

questions such as do cluster or system work for all organization in all contexts or

environments; moreover do managers in organizations are familiar with these clusters or

systems as they exist in research. These questions still need further exploration in

management research and need to be tested with rigorous research designs. A better option

for the current research was to focus on individual high performance practices as identified

by major US and UK studies, in order to explore them for the first time in Pakistan. This also

increased the current study strength to theorize and measure the practices in detail as

compared to taking a systems approach.

3. The chapter appraised the individual high performance workplace practices in detail,

outlining their importance for the paradigm and their effects on the performance measures. A

review of the literature indicates that in case of certain HPWS practices the evidence is

overwhelmingly positive and significant while in case of some other practices the evidence is

not conclusive. Some studies find strong evidence regarding the practices effects on

116

performance outcomes, while others are sceptical of the association. However all the

practices are important part of the paradigm and cannot be ignored for their potential

diffusion or performance effects in case of current study in Pakistan.

4. The high performance studies have been conducted at corporate as well as establishment

level, both the level of analysis have their own advantages and disadvantages, but in case of

Pakistan, the establishment as the basis of analysis seems more appropriate as the number

of multinational and local companies available in a particular sector are limited and just

focusing on the company level would have resulted in fewer responses, thus limiting the

research potential to make any worthwhile contribution or useful inferences on the basis of a

survey. A case study research would then be a better option, but as never before any study

of HRM and performance has been undertaken in case of Pakistan, a case study would have

a limited potential to fill the void. Further it would have hampered the research ability to fulfil

its objective of looking into the strength of best practice arguments.

5. The studies on high performance have generally focused on single respondents per

establishment and generally have a cross-sectional design. Though the multiple respondents

increase the reliability and validity of the measures and the longitudinal designs better

address the question of causality, nonetheless in case of Pakistan, many of the

establishments are much smaller in size as compared to their Western counterparts, giving

an advantage to the manager to be more aware of the establishment practices that govern

them. The single managerial-level informant has been criticised on the ground that what

such managerial informants say is done may not bear any relationship to what actually

occurs (Gerhart et al., 2000; Purcell, 1999). Adding multiple managerial respondents would

not necessarily address the problem. The issue of causality is beyond the scope of this

research, as it only intends to provide a snapshot of innovative workplace practices in

Pakistan, thus the cross-sectional design is in conformance with the research objectives.

Moreover a longitudinal research requires time commitment beyond the scope of the present

research.

6. The high performance studies have tended to focus on both objective and subjective

measures of performance and have focused on both shareholder and stakeholder

117

perspectives. The study in case of Pakistan caters for both shareholder and stakeholder

perspectives as it provides a balanced approach and incorporates both proximal and distal

measures of performance. The availability of objective performance data at establishment

level to research would be a remote possibility due to number of reasons. First the

establishment managers’ position may be jeopardised by sharing any commercially sensitive

information. Secondly most of the establishments in our sample are privately owned firms,

such establishments in Pakistan are quite secretive about their operations and generally do

not share any performance data with the researchers. Though the subjective measures have

their own problems but they do make it easier for the respondent to participate in research

surveys

7. The analysis reveals that high performance studies span across the industries and sectors or

typically focus on a particular sector or industry. In case of Pakistan the study is spread

across a heterogeneous sample of establishments in particular the population comprises of

banking, information technology and pharmaceutical establishments. The main rationale was

to provide a picture of innovative HRM practices across a cross-section of establishments in

Pakistan. This study incorporates establishments from both manufacturing and service

sectors in Pakistan. The high performance research provides evidence that while the

practices sprang from the manufacturing, it is not simply a manufacturing issue, high

performance systems are increasingly being incorporated among professional services firms

too.

118

Chapter 4 Research Methodology

4.1 Introduction

The methodology adopted to conduct the current study reflects and is justified by its main objective

i.e. to explore the state of diffusion of high performance workplace practices among the

establishments of multinational and local companies in Pakistan and to assess the impact of

individual practices on human resource and performance outcomes. This chapter explains the

research methodology undertaken to collect and analyse the data on high performance workplace

practices in Pakistan.

A review of literature linking high performance human resource management practices with firm

performance outcomes indicates that much of the mainstream research incorporates a survey

design and takes a positivist position in explaining the phenomenon. The studies generally either

explore the existing data bases i.e. Workplace Employment Relations Survey and Employers’

Manpower and Skills Practices Survey in the UK and National Employer Survey in the US (see for

example, Wood and de Menezes 2008; Way 2002; Cappelli and Neumark 2001)or collect a primary

data set by designing a survey (see, for example, Huselid, 1995; MacDuffie, 1995; Fey et al., 2000;

Wright et al., 1999 & 2005; Datta et al., 2005, Wood et al., 2006; Guthrie et al., 2009 etc.).

In Pakistan, there are no secondary surveys that parallel the WERS or the NES; consequently, to

gain data for this study, primary data had to be collected. This was done by conducting a survey.

Given the fact that the study comprehensively captures the high performance workplace practices

in Pakistan, an effort was made to reach out to the maximum possible number of establishments to

comprehensively investigate the state of HPWS among the subsidiaries of multinational and local

establishments taking a universalistic perspective. With a survey of banking, information

technology and pharmaceutical sectors in four main cities of Pakistan the study generates

pioneering evidence with regard to high performance workplace practices.

The research was conducted over the period of five months from January 2010 till May 2010 in

three major sectors spanning over four main metropolitan cities of Islamabad, Rawalpindi, Lahore

and Karachi. Much of the industrial activity in Pakistan in the sampled sectors is organized in and

around these cities. Karachi is the biggest industrial city of Pakistan, followed by Lahore and

119 Islamabad/ Rawalpindi. These cities are hub of trade and commerce in Pakistan. Islamabad is

home to telecom and IT companies in Pakistan whereas banks have their headquarters in Karachi

(Pakistan Software Export Board, 2010; State Bank of Pakistan, 2010). In the pharmaceutical

sector 335 out of 350 establishments are located in the industrial zones of these major cities. This

is evident from there registered addresses as indicated by the list available on Pakistan

Pharmaceutical Manufacturers Association (PPMA) website (Pakistan Pharmaceutical

Manufacturers Association, 2010).

Firstly the chapter explains the rationale for selecting the three sectors for research in Pakistan. In

doing so it also outlines the basis on which the population was identified in the three sectors. The

chapter then proceeds to discuss the respondents and the response rate and the research

strategy. Secondly the chapter explains the operationalization of the independent, dependent and

control variables. The chapter then discusses the issues of reliability, validity and explains the basic

data analysis procedure.

4.2 The Sectors and the Population

The establishments of banking, information technology and pharmaceutical companies selected for

the purpose of the research represent few of the most dynamic and fastest growing sectors in

Pakistan. The sectors have been a recipient of a sizeable amount of foreign direct investment in

the last decade and a number of multinational and local companies operate in these sectors. A

sizable amount of foreign direct investment and presence of multinational and local companies in

the sectors makes them establishments of choice to investigate and justify the aims and objectives

of the thesis. Total foreign direct investment in Pakistan over the period 2001 to 2010 has been to

the tune of US $ 23.49 billion (Board of Investment, 2010). The inflow of FDI to the banking sector

accounts for 20% of the total inward FDI to Pakistan over the decade. The extraordinary

importance of the banking sector for the economy of Pakistan can be gauged from a report on

banking sector of Pakistan published by State Bank of Pakistan which claims that the sector has

induced an FDI of US $ 4.7 billion over the period (Board of Investment,2010). Pakistan banking

sector has remained remarkably strong and resilient during the global financial crisis and has faced

the pressures emerging from weakening macroeconomic environment since 2007. Due to

120 deregulation of the sector in late 1990s, a number of Western multinational banks and private local

banks have established their presence in the sector (Saleem, 2009). Almost of half of the assets of

banks are now owned by foreign banks that are at the forefront of introducing innovative products

and technological improvements. As compared to other emerging market countries the sector

remains small in relation to economy and has enormous potential to grow (State Bank of Pakistan,

2008). Banking system in Pakistan is made up of 53 banks, which includes 30 commercial banks.

As compared to 1990s when 90 per cent of the system assets were owned by government

controlled banks, in 2010 the private banks controlled nearly 80 per cent of the system assets.

According to one estimate, the share of foreign banks in the industry has reached 13 per cent

(State Bank of Pakistan, 2008). The amount of FDI and presence of adequate number of Western

banks and future growth potential of the industry makes it worthwhile to be investigated for latest

management and human resource practices.

A list of banks operating in Pakistan is available on the website of the Banking Association of

Pakistan (Pakistan Bankers Association, 2010). The list provides details of government owned

banks, privatized banks, developmental financial institutions, small and medium financial

enterprise, private banks, foreign banks and non-member banks & development financial

institutions operating in Pakistan. The list is comprehensive and provides details of both member

and non-member banks operational in Pakistan. According to the list there are 10 foreign banks

operating in Pakistan. Out of them 7 participated in the research. Similarly there are 16 private local

banks in the industry and out of them 7 participated in the study. The multinational and local banks

that participated had 191 and 484 branches respectively in four main cities of Pakistan. The

website of each individual bank was used to identify the number of branches that were operational

in the four cities in 2010. The sufficient number of branches provided the research with an

opportunity to cast a wide net. The survey therefore captured a large and representative sample of

establishments in this sector in Pakistan.

The second important sector in terms of foreign direct investment is that of telecom and IT which

had enjoyed an investment of US$ 7.4 billion in the last decade (Board of Investment, 2010). This

accounts for almost 31.5% of the total inward FDI for the period 2000-2010. The total worth of IT

industry in Pakistan is estimated to be around US $ 2.8 billion, a major chunk of this investment is

due to the flow of FDI from US multinationals and expatriate US Pakistani nationals who have

established an IT company in Pakistan with a front office in US (Pakistan Software Export Board,

121 2010). Year 2007-9 has been a period of considerable turmoil for global software industry. The

global turmoil also tested the grit and resilience of Pakistan IT industry. Relatively a new industry

with heavy presence of North American and European companies and with its knowledge intensive

workforce makes it a worthwhile sector to explore HPWS practices in Pakistan.

The list regarding the population of IT companies in Islamabad/Rawalpindi was available at the

website of PSEB and Pakistan Software Houses Association (PASHA) in January 2010. The list

indicated a presence of 412 companies as that of 2006. However the harsh climate of 2007-9 had

resulted into decline of the sector in Pakistan. The economic survey 2009-10 confirms that a net

disinvestment of US $ 95 million occurred in the IT service sector in Pakistan in the year

(Government of Pakistan, 2010). This created a hard challenge of verifying the list. The companies

were verified by a telephone call and physical inspection where necessary. According to the

estimate of the current study there were around 156 IT companies operating in the region by

January/February 2010 that met the research criteria of 20 or more employees. Once again the

research has been designed to capture a large and representative sample of MNCs and

indigenous Pakistani firms in this sector.

The pharmaceutical sector though did not enjoy any major FDI in the recent decade but the sector

has a long history of well- established presence of multinationals in Pakistan. The story is

otherwise, the local companies have started to catch up with the multinational in the recent

decades. Multinational companies dominate the sector with a market share of 60 per cent (PPMA

2010; Global Insight Report on Pakistan, 2010). The sector has special significance for a country

with a population of 160 million people. The sector has a great potential to grow as still a majority of

the population has no access to healthcare facilities and the sector was just worth US $ 2.9 billion

in 2009, equating to per capita consumption of US$ 10 per year. This is far below the regional

average and is expected to increase by 2012. The drugs manufactured in Pakistan have a good

market in Africa and Central Asia with an annual export of over US$ 100 million in 2009 (Trade

Development Authority of Pakistan, 2011). The population was identified with the help of list of the

members available at the website of the PPMA in 2010. The list indicated the number of

manufacturing units operational in Jan 2010 to be 350. The number is roughly the same as

indicated by the Global Insight report on Pakistan Healthcare and Pharma industry (Global Insight

Report on Pakistan, 2010). The number of companies was also confirmed by the Drug Controller,

Ministry of Health, Government of Pakistan. The Drug controller confirmed the list and informed

122 that pharmaceutical sector is stringently monitored and controlled by the government and unless a

company is member of PPMA, it cannot file for either company registration or drug patent with the

ministry. The research again therefore was designed to capture responses from a sizeable number

of multinational and local pharmaceutical companies in Pakistan.

To summarize the research opted for sectors where in the recent decade a lot of FDI has taken

place from US and UK companies and thus a sizeable number of multinational and local

companies operate in the Pakistan in the above sectors. Before proceeding to discuss the

research strategy adopted in Pakistan, the chapter provides the details of respondents and the

response rate.

4.3 The Respondents

The respondents in the study were senior managers representing the establishment. They typically

had titles as branch managers, plant managers, general manager and chief executives. However in

some cases they happened to be the chief executives cum the owner of the establishment. Senior

establishment level managers instead of human resource managers prove to be more reliable,

aware and impartial about people management processes and practices of their organization

(Boselie, et al., 2005; Marchington and Zagelmeyer, 2005). Moreover they describe HR practices

quite specifically and most accurately. Due to their close proximity and first-hand experience and

low risk of variance in HR practices within the unit, the responses are perhaps more valid (Wright

and Gardner, 2003). A number of studies measure HR practices at establishment and link them to

performance outcomes (see, for example, Cappelli and Neumark, 2001; Ichniowski and Shaw,

1999; MacDuffie, 1995; Youndt et al., 1996; Wright et al., 1999 & 2003; Wood et al., 2006).

The current study like many high performance studies (see, for example, Arthur, 1994; Guest and

Hoque, 1994; Huselid, 1995, Bae and Lawler, 2000; Wright et al., 2003 and Wright et al., 2005))

uses single respondents as source of information on practices and performance outcomes. To

some researchers (Gerhart et al., 2000; Ichniowski et al., 1996; Purcell, 1999) the design raises

concerns of reliability as they prefer multiple respondents. However Guest (1999) and Marchington

and Zagelmeyer (2005) argue that even multiple respondents are not enough and workers are the

best evaluators of HR practise they experience. However using establishment as unit of analysis

123 resolves this problem to certain extent as this overcomes the issues of multiple locations and jobs.

In case of Pakistan majority of the establishments surveyed were single-site and had medium sized

workforce. On the basis of above arguments it is reasonable to assume that establishment as unit

of analysis in case of Pakistan may provide a better understanding of managerial perception of

high performance workplace practices in Pakistan. This justifies the purpose of the study to map

the extent to which certain HR practices may have been adopted by establishments in Pakistan. It

is important to clarify that the study does not assess how these practices are experienced by

workers.

4.4 Response Rate

High response rates are very important for researchers as they increase the external validity of the

research project. The response rate increases the research confidence to support or reject a

hypothesis. If the response rate is low, it raises the concern that the responses may not be

representative of the sample and thus the data set may suffer from response characteristics and

thus there is high probability of biased results and subsequent interpretation (Hinkin and Holtom,

2011). In short obtaining a high response rate to survey is important to ensure quality of the data

and generalizability of the results. Out of population of 1081 establishments in Pakistan some 396

participated in the research. From 396 responses some 392 were used in analyses thus generating

a usable response rate of 36.4%. This response rate can be considered good considering the

range of other survey-based studies in high performance workplace practices literature. The high

performance studies have response rate from 6% to 28% (Becker and Huselid, 1998). On the

whole high performance studies targeting mangers have an average response rate of 17.4%.

Majority of the major studies eliciting data from managers have a low response rate for example

Guthrie et al. (2009) 12.3%, Datta et al. (2005) 15%, Wood et al. (2006) 20%, Guthrie (2001)

23.4%, with few achieving 25% or more response rate, Fey et al. (1999) 25%, Huselid (1995) 28%,

Wright et al. (1999) 34% and Batt et al. (2002) 54%. This can be taken as relatively high response

rate in case of Pakistan where management research is almost non-existent and can be attributed

to telephone and face to face interview method followed by the current study. The Table 4.1

provides the basic profile of the survey respondents with regard to attributes as ownership of the

company, industry, nature of the business, age, size and proportion of the workforce made of non-

124 managerial employees. The Table shows that some 33 per cent of the respondents were

establishments of multinational firms as compared to 66 per cent local establishments. The

establishments that took part in the survey, 51 per cent belonged to the retail banking sector, 23

per cent represented the information technology companies and 24 per cent were pharmaceutical

establishments. A number of establishments that is 49 per cent have been working in Pakistan for

almost 10 years and some 47 per cent have been operational for more than 11 or more years in

Pakistan. Majority of the establishments surveyed in Pakistan have less than 100 employees,

almost 77 per cent indicated having up to 99 employees working at the site. Some 39 per cent

establishments indicated to have less than 83 per cent workforce classified as non-managerial

employees as compared to 61 per cent that indicated that more than 83 per cent employees at

their workplace were classified as non-managerial employees.

Table 4.1 Profile of Survey Respondents (in per cent)

Respondents

Ownership of the establishment MNC Local

33.4 66.4

Industry Retail banking Information technology Pharmaceutical

51.8 23.7 24.5

Nature of Business Manufacturing Services

24.5 75.5

Age Up to 1 year 1-10 year 11or more years

4.1 49 47

Size 20-99 100-300 More than 300

77.2 17.4 7.2

Proportion of workforce made up of non-managerial employees Less than 83 per cent More than 83 per cent

39.1 61.1

Note: Total population = 1081; number of survey respondents = 392; Rounding error may prevent column totals equalling 100 per cent.

125 4.5 The Research Strategy

The study investigated the state of HPWS practices to which non-managerial employees were

subjected in establishments of multinational and local companies in Pakistan. High performance

workplace practices theory argues that for the practices to have any worthwhile impact on

performance they need to be cascaded down to the ordinary workers in a firm (Lawler, 1986;

Pfeffer, 1994). A number of major high performance workplace studies have focused on non-

managerial employees as recipient of such practices in their analyses of impact of HRM on

performance, (see, for example, Batt, 2000 & 2002; Batt et al., 2002; Wright et al., 2005; Wood et

al., 2006). Keeping this in view the research focused on the high performance practices at the

establishments level with 20 or more non-managerial employees in Pakistan. An important fact

worthwhile to mention is the educational level of the workers in Banking and IT sectors. The non-

managerial employees in banks and IT sectors were highly educated professionals, thus making

the sectors an interesting sample to explore high performance workplace practices in Pakistan.

Data were collected through structured interviews using telephone in case of banking sector and

face to face interviews in case of information technology and pharmaceutical sectors. The decision

to use telephonic and face to face interviews instead of postal self-completion questionnaires was

taken taking into account the practicalities of research environment in Pakistan. A number of

management academics working in Pakistan suggested that postal survey or use of online survey

software is not likely to result into any considerable number of responses. Taking into consideration

the lack of research environment in Pakistan and time constraints a PhD study imposes on the

researcher, it was decided to avoid postal surveys; and go for a telephone survey in the banking

sector and face to face survey in IT and pharmaceutical sectors.

The strategy to combine two modes of data collection raises the question whether the mode of

administration matters. Bryman (2008) argues that if variation in respondents’ replies could be

attributed to the mode of conducting the survey, it is not recommended to combine the data sets.

However Bryman (2008) argues that evidence emerging from studies using different modes

indicates that mode of administration does not make any significant difference to the findings.

Similarly Beuckelaer and Lievens (2009) argue that merging data form multi-mode survey is

legitimate as there is no conclusive evidence that indicates that there are differential effects across

mode of data collection rather evidence is in favour of measurement-equivalence. Mixed mode

126 surveys can take variety of forms; different modes may be used for different respondents in the

same survey, for different parts of the survey, or different modes for countries in cross-national

surveys. In the case of the current study, two different modes were used, for the banking sector the

data was collected via a telephone interview whereas in case of IT and pharmaceutical sectors a

face to face interview was conducted. Holbrook et al. (2003) justify the use of mix mode research

design if it meets some stringent conditions. Firstly all the respondents in the same group should

be interviewed by the same mode, respondents should not be allowed to choose the mode to avoid

the self-selection bias and no previous research should have questioned the respondents to avoid

practice effects. In case of current study all the respondents in a particular sector were interviewed

using the same mode depending on the criteria of ease of access and coverage in a particular

sector. The respondents were not given a choice of mode and moreover as already mentioned no

previous study measuring high performance practices has ever been conducted in Pakistan thus

eliminating the practice effect.

The strongest arguments that support the combination of mode come from Couper (2011) and

Lugtig et al. (2011) where they argue that mode effects depend upon what is being measured and

the topic of the research. If the research measures social sensitive issues there is a higher chance

of mode effect. It has been argued that where factual information is sought or questions are of

factual nature and do not measure people attitude, beliefs, socially sensitive issues or abstract

concepts the chance of mode effect are nil. In such a case the presence or absence of researcher

or visual or aural presentation does not affect the findings and the telephone approach has a value

as mode. The current study inquired the senior manager about their establishment high

performance workplace practices, it inquired about either the practice existed or not thus inquiring

about a factual truth rather than assessing their beliefs, feeling or attitudes, increasing the study

confidence that mode effects may be virtually non-existent in such a case. In high performance

literature Guest et al. (2003) strongly argues in favour of measurement equivalence of two

approaches. Telephone interviews have been successfully used by Guest et al. (2003) in their

study of relationship between HRM and performance in UK. Guest et al. (2003) argue that

telephone interviews do not result in different responses as compared to face-to-face interviews.

Moreover telephone interviews allow for clarification of responses and make it easy, quicker and

inexpensive to contact the right person (Bryman, 2008).

127 The issue of mode of administration can further be justified by careful examination of arguments

that discourage such a method and its potential implications for the telephone interviews in the

case of current study. Holbrook et al. (2003) highlights that one of the major problems with

telephone interviews is the issue of survey satisficing. Satisficing theory is based upon the

assumption that optimal question answering is based on cognitive ability of the respondent. It has

been argued that cognitive skills strongly correlate with the formal education of the respondent. In

the case of banking sector, the branch managers were highly educated professionals with advance

degrees and substantial industry experience. The research required to report on the presence or

absence of particular management or HR practice at their establishment. It is reasonable to

assume that the branch managers on the basis of their service length and high cognitive abilities

were adequately qualified to response to type of questions asked and there was no apparent

difficulty or reason for weak or strong satisficing effect. Another reason quoted for satisficing effect

is the lack of motivation on part of the respondents due to lengthy questionnaire and demand on

their time. The questionnaire used in the study was carefully designed and kept short. On the

average it just took 20 to 30 minutes per respondents. This helped to reduce the effect of boredom

or fatigue in response process. Even in the case of face to face interviews the process took roughly

the same amount of time. The pace of the interview depended on the respondent. They were not

pressurized to be quick and were encouraged to reflect on their response. There were no silences

or break-offs in any of the interviews, rather the respondents who agreed for participation were

more than happy to provide additional information and participated with much enthusiasm. Many of

them provided their e-mail addresses, names and telephone numbers in case any further

information was required.

Holbrook et al. (2003) and Lugtig et al. (2011) argue that social desirability is another important

issue to consider in research design. It is an urge on the behalf of the respondent that encourages

them to deceit in an effort to attain favourable image in eyes of others. In case of telephone

interview a social distance may have encouraged the respondent to be honest and frank in their

responses. Moreover a careful introduction to the research may help reduce such an effect. In the

case of current study the introduction was carefully planned and leading statements were avoided.

Moreover the issue of rapport was resolved as the premises of the same bank were used to

contact them and the credentials of the researcher were verified by their fellow colleague branch

manager. This must have potentially boosted their confidence in the research and diminished any

128 chances of weak or strong satisficing. Another important issue highlighted in literature that effects

mode combination is that of recency effect (Lugtig et al., 2011).

To avoid the recency effect, the respondents were asked to make a note of the five-point Likert

scale at the start of the interview and were provided with a choice to neither agree nor disagree,

this resulted in robustness of the scale and avoided the criticism that telephone interviewers do not

acknowledge or do not know answers. Keeping in view the arguments listed above it can be

argued that on the whole the combination of the modes has not generated any mode effects and

thus has not contributed to survey error.

In the literature of high performance, a very important study by Delaney and Huselid (1996)

examined the relationship between HR practices and firm performance measures in 590 for-profit

and non-profit US organizations. The data was obtained from the National Organizations Survey

(NOS) 1991 which is a survey conducted regularly in US work establishments about their structure,

context and personnel practices. The survey is conducted by a mix-mode and collects data by

either a telephone interview or a questionnaire survey. The NOS provides objective and perceptual

data on HR practices and perceptual data on performance outcomes. Similarly another important

HPWS study by Fey et al. (1999) in Russia collected data by face to face interviews and by faxing

the questionnaire to the managers. The use of mix-mode survey data by academic studies

increases the current research confidence, that such methodology may have limitations but at the

same if carefully planned and executed may not affect the overall robustness of the results.

Keeping in view the advantage i.e. ease of access in approaching the right branch manager, it was

decided to cover the identified banking population in the three cities with telephone interviews. All

the branches of a particular bank in the four cities of Pakistan were reached via the telephone from

a bank branch in Rawalpindi/Islamabad.

The research started the data collection from the Banking sector in January 2010, a bank

employee in each of the participating banks helped to identify the branches with less than 20

employees and at the same time introduced the researcher to prospective participating bank

branch manager. The decision for the rationale to use telephone interviews was primarily taken due

to the fact that visiting 675 bank branches in person within the planned time period was not

possible and telephonic interviews were much more viable option to collect the responses

efficiently and quickly.

129 The participating branch manager was explained the purpose of the research and assured that

neither the participants nor the branch would be identified in the research process or any

publication. After introduction of the research and assurance of anonymity the respondent was

invited to participate in the research. Those who refused were thanked for their patience and time

and no further contact was established with them. However a large number of them did participate

or indicated a time when they were available for interview. Those who agreed were read out the

statements that measured high performance orientation of the bank over the telephone line. A

statement was repeated or a word was clarified if the respondent failed to understand it for the first

time. However the language was not a barrier, the branch managers were fluent in English and did

not express any comprehension difficulties. At the start of the interview the respondents were

asked to make a note of the 5-point Likert scale and were asked to choose a response on the

Likert scale unless prompted otherwise. On the average a typical telephonic interview lasted for 20

to 30 minutes.

The second sector the study targeted for data collection comprised of Information technology

companies operating in Islamabad and Rawalpindi region. The IT companies were approached in

person and face to face interviews were conducted using a structured questionnaire. The

respondents in case of IT companies typically consisted of CEOs, general managers and in some

cases Manager Administration. IT companies in Islamabad/ Rawalpindi are concentrated in two

government sponsored Software Houses, commercial Areas and in few cases in residential

estates. In the IT sector, the survey instrument was piloted with the help of Pakistan Software

Export Board. The survey was piloted in December 2009, and around 8 responses were received

and none of the participant reported any difficulty or problem in completing the survey. Almost 40

interviews were undertaken in early January whereas rest of them were conducted in end of

February and beginning of March 2010. In IT sector 96 companies responded to interview request

out of some 156 operating in the region. The interview was done using the structured questionnaire

face to face and the respondents were asked to choose a response on Yes/No category or provide

a response on five-point Likert scale.

In the similar manner data were collected face to face in pharmaceutical sector in

Islamabad/Rawalpindi, Lahore and Karachi from mid-March 2010 to May 2010. Out of some 350

pharmaceutical manufacturing establishments 100 responded to the request for interview. In

majority of the cases the interviews were conducted at the factory premises with either plant

130 managers or factory general manager. In a few cases they happened to be chief executive cum

owner of the establishment.

In the above mentioned way, the data was collected from the banking, IT and pharmaceutical

sectors in Pakistan. The data thus generated was analysed to assess the high performance

workplace practices of multinational and local companies and the practices potential effects on

subjective establishment human resource and performance outcomes. In the next section, the

chapter proceeds to explain the operationalization of independent, dependent and control

variables.

4.6 Measures

4.6.1 The Nine HRM Practices

Appendix A provides the questionnaire detailing the variables and the items used to measure the

nine high performance workplace practices in Pakistan. In most of the cases the HRM practice

was measured using multiple items though in few cases a single item was used as determined by

the scope of the practice in Pakistan. Human resource measures were drawn through existing

literature and covered the nine main areas of HRM: employment security and internal labour

market, selective hiring and sophisticated selection, extensive training, learning and development,

employee involvement and participation and worker voice, self-managed teams, high

compensation contingent on performance, performance review, appraisal and career development,

reduction of status differences/ harmonisation, and work-life balance.

Both perceptual and dichotomous scales were used to measure the items. The items were of

factual nature measured on a five-point Likert scale or by a Yes/No option, where Likert scale

made no sense. Many of the high performance studies use indices of systems that are simply

counts of practices either additive or multiplicative. Instead of using an index approach this study

decided to use a scale. Wood and de Menezes (2008) distinguish between a scale and index and

argue that assumption behind an index is that all items do not reflect or represent a single concept.

Whereas a scale measures an underlying construct and items making it up are assumed to reflect

or caused by it. Though the research does not intend to either use a system approach or to

conduct factor or cluster analysis to identify any clusters or systems of practices in case of

131 Pakistan, but still using a scale, in particular a Likert-scale allows the respondent to reflect on the

intensity of implementation of such practices at their establishments as compared to alternative

measurement systems i.e. just asking for their presence or absence. Further Wright and Gardner

(2003) suggest that researchers should replace objective scales with subjective ones, as subjective

measures provide more accurate data than supposedly objective one. Most of the high

performance studies objectify the scale by asking about presence / absence of a practice. Using a

Likert-type scale to capture the responses allows a better medium to the respondent and makes

them to think and reflect about effectiveness of a particular HR practice instead of just recalling

their presence or absence or giving the percentages of employees covered by a HR practice. The

current study uses HR measures for which level of specificity is appropriate to describe the

construct and the Likert-scale provides an opportunity to the respondent to reflect their perceptions

about the effective implementation of an HR practice at their establishment rather than just

agreeing with their presence or absence.

4.6.2 Operationalization of HRM practices

The practices were operationalized using measures available from major high performance studies.

The approach followed by most researchers is to derive items from existing literature as there are

no agreed upon measures based on theoretical model to measure high performance workplace

practices (Becker and Gerhart, 1996; Delery, 1998). For a detailed discussion on practices,

systems or indexes see the chapter-3 on literature review.

The practice of employment security and internal labour market was measured using three items

and was captured using a yes/no scale. The organization has a formal policy of no compulsory

redundancy (Wood and Albanese, 1995; Wood, 1996; Becker and Huselid, 1998; Hoque, 1999;

Macky and Boxall, 2007). The firm expects all employees to stay till retirement (Wood and

Albanese, 1995). The internal labour market was measured using the proxy: when a job becomes

vacant, management normally tries to fill them with people from inside the organization rather than

recruiting from outside (Guthrie, 2001; Huselid, 1995; Guest, 1999; Mackay and Boxall, 2007).

The second HPWS practice the research measured was selective hiring and sophisticated

selection. The practice was measured using a five-point Likert scale and was operationalized using

132 two items: How often your recruitment process generates as many good/qualified applicants as you

need (Guest et al., 2003). Are one or more employment tests (e.g. skills tests, aptitude tests,

mental/ cognitive ability tests) used prior to hiring (Guthrie et al., 2009).

The third HPWS practice the study measured was extensive training, learning and development.

The practice was measured using a Yes/No scale and was operationalized using three items: Have

non-managerial employees been trained in variety of jobs or skills (are cross trained) and / or

routinely perform more than one job (are cross utilized); received intensive/ extensive training in

company specific skills (e.g. task or firm specific training); received intensive/ extensive training in

generic skills (e.g. problem solving, communication skills, etc.) (Guthrie et al., 2009).

The fourth HPWS practice the study measured was employee involvement and participation and

worker voice. The items were measured using a Likert scale except for the employee voice item

where a Yes/ No scale were used. The practice was operationalized by using six items from

Guthrie et al. (2009) study: Are non-managerial employees involved in programmes designed to

elicit participation and employee input (e.g. quality circles, problem solving or similar groups);

provided with relevant operating performance information (e.g. quality, productivity, etc.); provided

with relevant strategic information (e.g. strategic mission, goals, tactics, competitor information

etc.); routinely asked to fill out attitude surveys to identify and correct employee morale problems;

do they have access to formal grievance/ complaint resolution procedure.

The fifth HPWS practice the study measured using a Likert scale was that of self-managed teams

using a single item from Guthrie et al. (2009): Are non-managerial employees organized in self-

directed work teams in performing a major part of their work role.

The sixth HPWS practice measured using a Likert scale was that of high compensation contingent

on performance using two items from Pil and MacDuffie (1996), Huselid (1995), Snell and Dean

(1992) and Wright et al. (2003): Non-managerial employees can participate in profit sharing or

share ownership schemes based on their job performance or team performance; Are they offered

additional pay or have they been offered a pay rise in the past year as a result of job performance

or work in team.

The seventh HPWS practice measured using a Likert scale was that of performance review,

appraisal and career development operationalized by using four items. Two of the items were

drawn from Guthrie et al. (2009) & Guest et al. (2003): Receive formal performance appraisal or

133 evaluation on routine basis; Receive formal performance feedback from more than one source (i.e.

feedback from several individuals such as supervisors, peers etc.). A third item was also drawn

from the study of Guest et al. (2003): A proportion of non-managerial employees pay is determined

by performance appraisal. The learning and development aspect of appraisal rather on financial

rewards has also been emphasized in literature. This aspect was covered by an item from Mackay

and Boxall (2007): Performance feedback provides information on how they do their job.

The eighth HPWS practice measured using a Likert scale was that of reduction of status

differences/ harmonisation. A broad single item drawn from the study of Macky and Boxall (2007)

was used to operationalize the practice: There are few status differences in the establishment

between the managers and the rest of the employees. They are all on the same level.

The final HPWS practice measured by the study was that of work-life balance. A Likert scale was

used to measure the practice. Five items were drawn from the study of Konard and Mangel (2000),

Giardini and Kabst (2008), Wood et al. (2003) and Kersley et al. (2006). The proxies used to

measure the practice were: The establishment allows career breaks to employees for child care,

elder care and leisure activities; the establishment provides flexible working arrangements such as:

change in shift pattern, increase/decrease in working hours, job sharing and home working.

4.6.3 Human Resource and Establishment Outcomes

The dependent variables the current study measured included establishment human resource

outcomes i.e. absenteeism, voluntary and involuntary turnover and performance outcomes of

labour productivity, productivity growth and financial performance. Before proceeding further to

describe the dependent variables, it is worthwhile to briefly evaluate the arguments in literature with

regard to efficacy of both type of measure.

134 4.6.4 Objective vs. Subjective Performance Measurement

The current study asked about subjective opinion of managers about human resource and

performance outcomes of their establishments. The problems concerning the dependent variable

performance, either proximal or distal becomes aggravated when it comes to the question of using

either objective or subjective performance measures. As compared to objective measures the

subjective evaluation of performance outcomes by manager’s subjective assessment of relative

productivity or profitability raises the question of their reliability as indicators of actual performance

(Forth and McNabb, 2008). The subjective measures have raised number of concerns among the

researches. The primary concern being that managers who participate in surveys have limited

knowledge about all the performance measures and that high proportion of managers’ report their

establishment performance as being above average. The overstatement of establishment

performance may lead to measurement errors and if the response categories are categorical in

nature this further dampens an analyst ability to explain the variance in performance across

workplaces. The effect becomes serious if there is consistent positive or negative response bias,

so called common-rater bias. The common-rater bias may lead to either a positive or negative

responses towards practices or performance measures. However apart from critique on the nature

of response categories of subjective measures and their limited ability to quantify practices impact

on performance, subjective measures have number of significant advantages.

Forth and McNabb (2008) highlight number of advantages for using subjective performance

measures. It often happens that objective financial data are not available at the establishment level

and even if it is available it is commercially sensitive and the respondent may need special

corporate level permission to provide such information, which in most of the cases is not possible.

However they are more willing to participate in any subjective assessment of human resource or

performance measures. In light of such problems, using subjective measures makes a pragmatic

sense as managers are unable to provide objective data. Moreover Machin and Stewart (1990)

argue that objective financial data has limitations of its own and can be subject to measurement

error. Though there are differences in the way subjective and objective data are collected, Forth

and McNabb (2008, 108) argue that, “there is underlying presumption that subjective assessments

of establishment performance should correspond reasonably closely with objective data”. A number

of high performance studies have used objective and subjective performance measures, one such

study by Guest et al. (2003) find that the relationship between practices and performance is

135 stronger when subjective measures are used. Similarly a study by Haskell (2005) argues that

subjective and objective measures produce very different results. Whereas studies show

scepticism about outcomes of using subjective measures, a study by Wall et al. (2004) supports

the argument of equivalence between subjective and objective measures of performance. Similarly

Forth and McNabb (2008) conclude that there is evidence of some congruence between the

subjective and objective measures.

A number of major high performance studies have subjectively measured performance outcomes,

for example (Arthur, 1994; Guest and Hoque, 1994; Delaney and Huselid, 1996; Hoque, 1999;

Wright, 1999 and Fey et al., 2000; etc.). In case of Pakistan in absence of any publically available

performance measures at establishment level and due to possible reluctance of establishment

managers to share any objective human resource or performance measures, it was decided to

capture the dependent performance variables subjectively.

4.6.5 Dependent Variables: HR and Establishment Outcomes

Past empirical research has mostly focused on firm financial performance (Delery and Doty, 1996;

Huselid, 1995; Wright et al., 1999; Guest et al., 2003; etc.) but increasingly the high performance

studies are also focusing on stakeholder issues as absenteeism and employee turnover and

productivity (Arthur, 1994; Guest and Hoque, 1994; Hoque, 1999; Ramsay et al., 2000; Guthrie,

2001; etc.). It was also decided to take both a shareholder and stakeholder perspective while

measuring the establishment performance in Pakistan and include subjective performance

measures as lost working days due to sickness or absence, voluntary and involuntary turnover,

labour productivity, labour productivity growth and financial performance. The manager responding

to HR practices also responded to the performance measures. The self-assessment of workplace

performance by the same respondent participating in the HR practices survey must be regarded

with caution but in absence of actual establishment performance outcomes, the perceptual

measures are the best available basis for analyses in case of Pakistan.

Absence and labour turnover are considered to be more proximal measures of performance which

may more likely be influenced by HRM practices a firm adopts. In contrast to major high

performance studies which examine clusters or indexes of HR practices, the current study

136 investigates the association of individual practices on human resource and performance outcomes.

The approach based on logistic regression identified the association level and unique contribution

of individual practices on establishment performance outcomes. It has been argued in literature

that high performance workplace practices such as internal labour markets, firm specific training,

team working and performance-based pay are likely to decrease turnover (Batt et al., 2002).

Keeping these recommendations in view, the current study documents the association of high

performance practices on three HR outcomes in Pakistan i.e. absenteeism, voluntary and

involuntary turnover. The study differentiates between voluntary and involuntary turnover following

Shaw et al. (1998) and Batt et al. (2002) recommendation that determinants of discharges and

voluntary turnover are distinct.

“Employee absenteeism refers to the temporary withdrawal from the organization, is used by

employees to escape from a work situation considered as stressful and unpleasant” (Zatzick and

Iverson, 2011). It can be safely argued that high performance workplace practices are likely to

result in decrease of absenteeism behaviour and thus report low incidence of loss in working days

due to sickness or absence without permission. Absenteeism if ignored by the management can

result in loss in working days and lower performance. Labour turnover has been extensively

researched and its consequences are well-documented in literature. Much of the research on

turnover focuses on individual-level variables like job satisfaction and commitment, in contrast to

this high performance literature argues that organizational- level human resource practices are

significantly related to turnover (Arthur, 1994). Firms that dedicate significant resources to attract,

develop and motivate employees expect them to stay for a long time as high rate of turnover not

only effects normal business operations but also lowers performance (Haines et al., 2010). An

important point to note is that some theorists argue that determinants of voluntary and involuntary

turnover are quite different (Powell et al., 1994; Shaw et al., 1998), considering this argument, the

current research draws a distinction between them. The study comprehensively measures the

associations of individual human resource practices with voluntary and involuntary turnover. The

objective is to clearly identify the relationship between practices and turnover in case of Pakistani

establishments.

Lost working days due to absenteeism and voluntary and involuntary turnover were each

measured by single statements drawn from the study of Allen (2006). Lost working days due to

absenteeism were measured by using the statement, over the last 12 months approximately what

137 percentage of working days was lost through employee sickness or absence without permission.

Voluntary turnover was measured using the statement, during the last 12 months approximately

what percentage of non-managerial employees left the establishment voluntarily. Similarly

involuntary turnover was measured by using the statement, during the last 12 months

approximately what percentage of non-managerial employees at this establishment was

discharged.

Establishment performance was measured using three items, labour productivity, labour

productivity growth and financial performance. Labour productivity indicates the extent to which a

firm’s labour force is efficiently creating output. It has been identified as a crucial indicator of work

force performance (Delery and Shaw, 2001) and is one of the most widely used dependent variable

in HRM and performance literature (Boselie et al., 2005). It has been argued in literature that

progressive human resource practices have consistent positive effect on productivity and

productivity growth (Huselid, 1995). Similarly effect of high performance practices has been

investigated for level and rate of change of productivity (Wood and de Menezes, 1998; Wood and

de Menezes, 2008; Ichniowski et al., 1997; Ramsay et al., 2000; Cappelli and Neumark, 2001). The

third performance outcome the current study measured is that of financial performance. Financial

performance is the most popular performance outcome that has been measured by both objective

and subjective items in high performance studies (Huselid, 1995; Delaney and Huselid, 1996;

Hoque, 1999; Vandenberg et al., 1999; Wright et al., 1999; Fey et al., 1999; Ramsay et al., 2000;

Guest et al., 2003, etc.). A number of studies using subjective measures use a format similar to

WERS 98 management questionnaire that basically asks the management to rate the performance

of their workplace in comparison with other workplaces in the industry (Ramsay et al., 2000; Guest

et al., 2003; Wood and de Menezes, 2008). Taking a similar approach the respondents in the

current study were asked to assess their establishment current performance with other

establishments in the same industry. A five point scale used by Guest et al. (2003) was employed

to capture the managers’ response for labour productivity, labour productivity growth and financial

management. The five-point scale used was: a lot better than average, better than average, about

average, below average and a lot below average.

Finally the managers were asked to indicate the measure that corresponded closely with their

interpretation of financial performance. The options were: profit or value added, cost or

expenditure, sale/fee/budget and other.

138 4.6.6 Control Variables

Variables entered into the logistic regression as controls included nature of business at

establishment: manufacturing/services; are you subsidiary of a multinational or are you a local

company; age and size of the establishment; and proportion of workforce made of non-managerial

employees. It is worthwhile to mention, that control variable of union density was dropped from

analyses due to the reason that apart from two or three multinational pharmaceutical

establishments in Pakistan none of the other establishments that participated in the survey allowed

the workers to form any union.

Management of HR in manufacturing context has been of utmost interest to high performance

theorists in US and UK. Studies analysing different manufacturing sectors such as apparel

(Appelbaum et al., 2000), auto assembly (Macduffie, 1995), Steel (Arthur, 1994; Ichniowski et al.,

1997), petro-chemical refineries (Wright et al., 1999) in essence all report a positive association

between measures of HRM and organizational performance. Moreover it has been argued that

modern manufacturing environment resembles a learning factory where discretionary effort and

employees skills and knowledge have an important role in individual, team and organizational

performance (Delbridge, 2007). The new working environment at the manufacturing plants requires

effective implementation of progressive human resource practices known as high performance

work practices. The current study, focused on both manufacturing and service industries in

Pakistan. The manufacturing sector comprised of pharmaceutical manufacturing companies in

Pakistan. The service sector was represented by banking and IT establishments in the current

sample. The control variable capturing the manufacturing and service orientation of firms in

Pakistan would allow the study to differentiate between the nature of firm business and its adoption

or differences in performances outcomes of high performance workplace practices in the two

sectors. Service management has become increasingly important in the advanced economies due

to shrinkage of manufacturing. The main importance of the sector lies in its ability to generate huge

revenue and profit as compared to manufacturing sector (Batt, 2007). This revenue potential

aligned to service quality perceptions of the sector increases the importance of human resource

practices not only for service providers in the advanced economies but also those operating in the

developing economies. It has been argued in high performance work practices literature that

Human resource management has an equal important role to play in the performance of service

organizations (Batt, 1999; Batt, 2002; Hoque, 1999; Wood et al., 2006). Keeping in view the

139 emphasis the high performance literature places on manufacturing and service sectors the current

study also controlled for differences in performance associations of HPWS practices in

manufacturing and service sectors in Pakistan. The control variable was captured using an item

from the study of Allen (2006): What is the main nature if the business at this establishment?

Please tick one: (Manufacturing, services).

The second control variable incorporated in the current study is there to distinguish between a

subsidiary of a multinational and local company in Pakistan. It is essential to recognize that the

control variable as part of the model has been introduced to account for the high performance

practices differences in the two sets of establishments. Again it is important to mention that the

research does not addresses the questions of (how or why) the diffusion of high performance

practices takes place in multinationals or local establishments in Pakistan nor does the research

addresses the questions of convergence or divergence of HPWS practices in Pakistan. The study

only purpose to control for a company foreign or local ownership is with an intention to

comprehensively document the state of prevalence of HPWS in MNC’s and local establishments

and their potential associations with performance measures in Pakistan. The variable was drawn

from the study of Allen (2006) and was operationalized as: are you a subsidiary of a multinational

or are you a local company? Please tick one: MNC subsidiary, Local Company.

After clarifying the rationale for using the control variable of subsidiary of MNC or local company, it

is important to highlight the importance of MNC’s and FDI for developing economies in shape of

exposure they get in terms of management trends and practices. A number of studies are pointing

towards global convergence of HRM practices and MNC’s as important transmitters of best

practices and management innovations in developing countries (Hoffman, 1989; Posthuma, 1994;

Frenkel, 2000; Kuruvilla et al., 2003). As already mentioned in introduction chapter, in Pakistan

MNC are considered as leaders in introducing management practices and local establishments

benchmark themselves against MNC standards (Khilji, 2002). With the help of control variable of

subsidiary of MNC or local company the research intends to control for the differences in the two

set of establishments while exploring the high performance workplace practices and their

performance outcomes in Pakistan.

The third variable the research controlled for is that of age of the company. The age of the

company was ascertained by an item adapted from Allen (2006) study: How long has your

establishment been working in Pakistan? Up to 1 year. 1-4 years. 5-10 years. 11 to 20 years and

140 more than 20 years. The age of a firm can be associated with an advantage or disadvantage a firm

may enjoy in adoption of HPWS or differences in performance outcomes (Guthrie et al., 2009). Age

of firm in case of Pakistan can identify the potential differences if any associated with number of

years a firm has been operational and it relationship with HPWS performance outcomes.

The fourth control variable again drawn from Allen (2006) study was entered into the model to

identify the potential links associated with size of the firm and adoption of HPWS or differences in

performance outcomes. It was measured by the statement: Would you tell us about the estimated

number of employees at your establishment. The respondents were required to provide a number.

Firm size has been associated with use of HPWS as well as absenteeism, turnover and

productivity (Huselid, 1995; Datta et al., 2005; Guthrie, 2001; Guthrie et al. 2009).

The fifth control drawn from the study of Allen (2006) and entered into the model was that of, “what

proportion of your workforce is made of non-managerial employees”. The respondents were

required to provide a percentage. The percentage of managerial employees a company has may

have direct implications for the type of HR system it implements. The high performance workplace

systems have generally been associated with fewer numbers of managerial hierarchical positions.

It has generally been argued that instead of management control, the high performance work

systems rely on employee participation, team working and shop floor empowerment for enhancing

firm performance (Delbridge, 2007). This variable has been introduced into the study to have an

idea of layers of management hierarchies the establishments in Pakistan have incorporated into

their management structure and to check for its association with HPWS practices and outcomes.

A final control variable measured in the study, but later excluded from analyses was that of union

density. A majority of establishments including all in banking and IT and local pharmaceutical did

not allow their workers to from any union. Only few i.e. two or three multinational pharmaceutical

companies have allowed the right of unionization to their workers. Though the unions have been

associated with reduction in voluntary turnover (Addison and Belfield, 2004), increase in training

(Green et al., 1999) but evidence is not clear cut. In US unions have generally been associated

with negative or non-significant effect on productivity (Hirsch, 2004). However in case of UK the

evidence is mix and there is some support for mutual gains approach (White, 2004; Metcalf,

2003a). Similarly there are studies which do not associate union presence with any financial

performance (Addison et al., 2000; Addison and Belfield, 2000 & 2001; Wilkinson, 2001; Bryson

and Wilkinson, 2002) whereas there are number of studies which support positive effects of unions

141 on workplace performance in interaction with HRM (Metcalf, 2003b; McNabb and Whitefield, 1997

& 1998; Guest and Peccei, 2001). Apart from the importance of unions in workplace performance,

Industrial Relations Law has always guaranteed workers the right to unionise in establishments in

Pakistan. The workers have enjoyed the right to unionise and engage in collective bargaining since

the introduction of Trade Union Act of 1929 by the British. The Industrial Relations Act 2010,

Government of Pakistan strongly supports workers in their right to organize. However subsequent

Military governments in Pakistan have substantially weakened the power of unions (Khilji, 2004)

and employers taking the advantage of the situation do not allow workers to organize. It emerged

during the course of the research that majority of establishments either MNC or local do not

recognize the workers right to organize or become member of any union. Having assessed the

situation of unionization in the participating sectors in Pakistan, it was not possible to control for the

variable in the model.

After describing the basic research strategy, the sector, the sample and operationalization of the

independent, dependent and control variables, the chapter proceeds further to discuss the issues

of reliability and validity before proceeding to elaborate the procedure used for data analysis.

4.7 Reliability

The key concept of reliability refers to the idea that an experiment, test or a measuring procedure

should result the same on repeated trials. However a possibility of chance error is always present

and while repeated measurements never exactly equal one another they do tend to be consistent

from measurement to measurement (Carmines and Zeller, 1979, 11-12). Cronbach’s alpha has

been regarded as a reliable test of internal reliability and its range varies from 1 (perfect reliability)

to 0 (no reliability). Almost all the High performance studies report the Cronbach’s alpha score as

an indication of internal reliability of their scale. The current study also reports its Cronbach’s alpha

score. Nunnally (1967) argues that a Cronbach’s score of > 0.5 is acceptable and a score of > 0.7

is highly recommended. The current study alpha score for the original Likert scale is .763. However

when the Likert scale was converted to items composed of dichotomous scale to be used for

analyses, in particular to meet the requirements of logistic regressions, the dichotomous scale

yielded an alpha score of .636. The dichotomous items were scored one or zero depending

142 whether the respondent does or does not agree or disagree with the characteristic under

investigation. A number of high performance studies who report the alpha score fall into the range

of .54 to .91 (see, for example, Ramsay et al., 2000; Huselid 1995; MacDuffie 1995). Keeping in

view the alpha scores of high performance studies, the current study alpha value can be

considered satisfactory.

4.8 Validity

Bryman (2008, 151) argue that validity refers to the issue of whether an indicator (or set of

indicators) that is devised to gauge a concept really measures the concept. Validity can be

assessed in different ways; social scientists have focused their attention to measurement of

construct validity (Carmines and Zeller, 1979). Construct validity generally refers to the process

whereby a researcher deduce hypotheses form a theory that is relevant to the concept. Though

there are no agreed upon measures based on solid theoretical foundations that measure high

performance workplace practices in literature, every item used in the current study was drawn from

major US and UK studies thus increasing the confidence of research regarding reliability and

validity issues. Reliance on existing measures to gauge the concept resulted in context-specific

questions which managers were readily able to answer without consulting any other

documentation. According to Batt et al. (2002) such a survey procedure based on field research

can improve the validity of a research. Moreover the survey focused establishments rather than

corporate as unit of analysis. The managers at the establishment level are in a better position to

evaluate HRM practices and their impact on performance outcomes (Wright and Gardner, 2003).

The respondents in many cases were not HR managers thus increasing the research confidence

that they may have been less optimistic in their assessment of HR practices (Gerhart et al., 1999).

It is important to note that the current study relied on single-respondents to capture its independent

HR measures and dependent performance outcomes. Gerhart (2007) argue that such a design

may lead to common method bias; however in binary tests of statistical significance such a

variance may not make much difference, though still may influence the effect size. Podskoff et al.

(2003) suggest number of remedies that a research can undertake to test for common method

bias. The research conducted Harman’s single factor test as one of the recommended statistical

remedies to identify the potential common method bias. Following the procedure the research

143 loaded all the variables into an exploratory factor analysis and examined the un-rotated factor

solution to determine the number of necessary factors that account for variance in the variables.

The statistic suggested that data did not suffer from common method bias as the single factor did

not account for the majority of the covariance among the measures. The study also conducted

confirmatory factor analysis (CFA), a more sophisticated test and did not find that a single factor

accounted for all the variance in the data. The positive findings thus increased the study confidence

that the data set did not suffer from the common method bias. However the research cautions the

reader to keep this caveat in mind while interpreting the results.

Having discussed some of the issues related to validity of the research, it is important to mention

that due to the inherent design limitations of the current study, the research cannot check for the

threat of non-response bias as there were no late versus early respondents to compare along key

study variables. However due to a high response rate of 36%, the research is confident about the

generalizability of the results to the population. After highlighting aspects of reliability and validity,

the chapter proceeds to describe the data analysis procedure the research undertook to achieve its

objectives.

4.9 Data Analysis

The data analysis was undertaken to achieve the main objectives of the research by following two

steps. In the first step a Chi-Square test was undertaken to achieve the first objective of the

research i.e. to explore the high performance workplace practices among the establishments of

multinational and local companies in Pakistan. However before discussion of the differences, on

the basis of descriptive statistic, a simple count of responses of the establishment mangers

indicated an overall state of the diffusion of HPWS practices in Pakistan, the count was used to

categorize the practices. In the second step a series of logistic regression were performed to

examine the links between the nationality of the ownership and the adoption of the HPWS practices

in the establishments of MNCs and local firms in Pakistan, the regression analysis was undertaken

with a number of control variables as well as a dummy variable to indicate the local or foreign

ownership of the establishment. Finally a regression analysis was undertaken to ascertain the

performance associations of high performance practices on establishment HR and performance

144 measures. Some preliminary analysis was done to check for summary statistics, in the case of

categorical data the recommended descriptive statistics is Frequencies (See Appendix B). The Chi-

square test is the only recommended statistics for analysing the categorical data (Pallant, 2010) to

detect differences between groups.

As already mentioned the first step in analysing the data set was based on series of Chi-square

tests, primarily performed to explore the high performance workplace practices prevalent among

the multinational and local companies and to highlight the differences between the practices of two

set of establishments in Pakistan. Field (2009, 688) argues that Pearson’s Chi-Square test, “is an

extremely elegant statistic based on simple idea of comparing the frequencies you observe in

certain categories to the frequencies you might expect to get in those categories by chance”. The

test can be classified as a non-parametric statistic and is ideal if the research uses a categorical

scale or when the data sets do not meet stringent assumptions of parametric tests. The main value

the test produces is that of Chi-Square test. The value that needs to be reported is that of Yates

Correction for continuity, it is termed as significant if the value is .05 or less (Pallant, 2010). The

next chapter-5 discusses the results based upon Chi-Square statistic.

Tuselmann et al. (2007) recommend that in case of discontinuous variables, that is, they take

limited range of fixed values, the conventional linear regression model is not appropriate, rather a

special class of regression model termed as logistic regression has been developed for analysis of

such variables. In the second step a series of logistic regression were undertaken to determine the

associations of individual high performance workplace practices on subjective human resource and

performance outcomes for the local establishments in Pakistan. The decision to run regression

analysis for a reduced sample of local firms was primarily taken; keeping in view that running

regression analysis for the whole sample would violate the basic principle of independent variable,

which states that independent variable should be independent. Subsequent analysis had shown

that ownership of the firm that is a subsidiary of a multinational firm or a local firm had a significant

association with diffusion of practice in Pakistan and also with the performance outcomes. Keeping

this technical reason in view, the performance associations were scored for a reduced sample of

local firms in Pakistan.

The decision to use logistic regressions raises the questions as to why the study did not conduct

the standard multiple regression analysis as the questionnaire used to collect data measured the

study items on a Likert Scale and ordinarily a standard regression analysis was a feasible option to

145 explore the associations between the study dependent and predictor variables. A preliminary

analysis for the normal distribution of data indicated that the data did not meet the stringent

assumptions about normality. The data was further tested with specific tests for normality that is

Kolmogorov-Smirnov statistic that also indicated that the data was not normally distributed. It is not

recommended to conduct standard multiple regressions if such assumptions are violated by a data

set (Pallant, 2010). A more rigorous alternative is to use logistic regressions to explore the

hypothesized associations of dependent variables with predictor independent variables. Using

arguments of Menard, the following paragraph discusses the advantages of conducting logistic

analysis in such a situation.

In Menard (2002, v) applied logistic regression analysis, series editor in editors introduction

highlight few salient features of logistic regression which make them a tool of choice if dependent

variable is dichotomous in nature.

The linear regression model provides a powerful device for organizing data analysis. Researchers focus on the explanation of a dependent variable, Y, as a function of multiple independent variables, from X1 to Xk. Models are specified, variables are measured, and equations are estimated with ordinary least squares (OLS). All goes well if the classical linear assumptions are met. However, several assumptions are likely to be unmet if the dependent variable has only two or three response categories. In particular, with a dichotomous dependent variable, assumptions of homoscedasticity, linearity, and normality are violated, and OLS estimates are inefficient at best. The maximum likelihood estimation of a logistic regression overcomes this inefficiency, transforming Y (1, 0) into logit (log of the odds of falling into the “1” category).

Menard (2002) explains that linear regression depicts the strength of the linear relationship. The

relationship takes the shape of the formula.

Y = α + βX

Y = dependent variable X = independent variable

α = value of Y when X = 0

β = change in Y associated with one-unit increase in X

As compared to linear regression in a multiple regression, there are several predictor variables and the equation takes the shape.

Y = α + β1 X1 + β2 X2 + …………+ βk Xk + ε

146 β1, β2...βk are called partial slopes coefficients, reflecting the fact that any one of the k predictor variables X1, X2, …….Xk provides only a partial explanation or prediction for the value of Y.

ε = where ε is the error term, a random variable that represents the error in predicting Y from X.

Whereas in case of the logistic regression the equation takes the following shape:

P (Y) = 1

1 + e – (bo + b1X1i + b2X2i + ……+ bnXni)

P (Y) = probability of Y occurring

e = base of natural logarithm

bo = constant

X1 = a predictor variable

b1 = co-efficient (or weight) attached to that predictor (b1)

An important difference to note between the formulas is the logarithmic transformation in case of

logistic regression. Field (2009) argues that research cannot apply linear regression directly to

situation in which outcome variable is categorical. The logarithmic transformation is a way to

express non-linear relationship in linear terms. The ability of logistic regression to overcome the

inefficiency associated with the assumptions of homoscedasticity, linearity and normality by

transforming the measured variable into logit makes it a better model than ordinary least square for

testing predictive ability of the variables in the model. The logistic regression does not makes

assumptions regarding the distribution of scores for the predictor variable; however it is sensitive to

multicollinearity and influence of outliers.

Keeping in mind the above mentioned advantages associated with logistic regressions, it was

decided to use them as the most robust method for the investigation of individual HPWS practices

associations with dependent HR and performance outcomes. Logistic regressions provide further

few options as a model: one of the options for undertaking an analysis is to use categorical

predictor and categorical dependent variables. Such a variable classification is feasible for the use

of binary logistic regressions. On the other hand, a study can use categorical predictor variables

and maintain two or more than two categories in case of dependent variables. This classifies the

model as a multinomial logistic regression. Multinomial regression is better option if the dependent

147 variables cannot be classified into useful categories, for example the blood groups of the patients,

however if the dependent variable can be classified into meaningful categories then they can be

analysed using a binary logistic regression model. The current study did not have any classification

problem associated with its dependent variables. Further if a research aims to explore complex

interactions between the predictor or the predictors and dependent variables or intends to

customize the model, again multinomial regression proves to be a more efficient model, however

the current research intended to capture the simple associations of HPWS predictors with the

dependent variables thus making the binary logistic regressions a more suitable option for

achieving the exploratory nature of the aims and objectives of the study. Moreover a number of

variables measured by the study did not have sufficient responses for a particular category of

neither agree nor disagree thus making it necessary for the research to covert the Likert scales into

useable categorical scale for the purpose of logistic regression analysis (Field, 2009).

Logistic regressions have been successfully used by major high performance workplace practices

studies to measure the underlying orientation of the management see for example Wood and de

Menezes (1998) and Wood et al. (2006). Wood and de Menezes (1998) argue that latent class

model logistic regression can be used to identify any pattern in the use of high performance

management practices, to identify bundles or systems and to assess an underlying approach or

orientation. If the model fits the data, the research can use the resulting latent variable scores as a

measure of high performance management. The regression model can be used to access the

relationship of a variable say MNC or local to high performance practices or to assess the

relationship of practices with the dependent variables of human resource and establishment

performance outcomes. Wood and de Menezes (1998) further argue that one of the advantages of

using the model is that the analysis uses the actual number of workplaces that adopt a particular

practice and thus there is no need to use weighted frequencies. Similarly there is no need to

correct the data for sample bias since the model is independent of the sample structure.

For the particular purpose of the research, the survey measures derived from the survey and used

in the analyses were transformed to categorical variables. The process of analyses began with the

conversion of the scale, all the variables measured i.e. control, high performance workplace

practices and performance outcomes were converted into categorical variables. They were coded

‘1’ for presence of a characteristic of interest and ‘0’ for lack of it. All responses indicating neither

agree nor disagree were coded as missing system. A SPSS programme allows for conversion of

148 scale. The recoding was done with the purpose of applying logistic regression analysis to the data

set.

As an example of recoding, a control variable, ‘how long has your establishment been working in

Pakistan’ measured originally with options: Up to 1 year; 1-4 year; 5-10 year; 11 to 20 years; more

than 20 years was recoded as below. The new variable was created based on the mean age of the

establishments operating in Pakistan. In this case the duration a firm was operational in Pakistan

was recoded into a dichotomous variable indicating establishments operational for less than 10

years and establishments operational for more than 10 years.

RECODE Duration (123=0) (45=1) (SYSMIS=SYSMIS) INTO NDuration. VARIABLE LABELS NDuration 'NDura'. Value Label NDuration 0 'Lessthan10' 1 '10orGreaterthan10'. EXECUTE.

A typical high performance practice originally measured on Likert scale was recoded into a

dichotomous scale as:

RECODE Employmenttests (1 2=0) (4 5=1) (SYSMIS=3) INTO EmpTest.

VARIABLE LABELS EmpTest 'ET1'.

Value Label EmpTest 0 'Disagree' 1 'Agree'.

EXECUTE.

Similarly a human resource outcome of percentage of working days lost through employee

sickness or absence without permission was recoded and that of performance outcome of labour

productivity, how would you assess your establishment’s current performance compared with other

establishments in the same industry originally measured as: a lot better than average; better than

average; about average; below average; a lot below average. For example loss in working days

was recoded on the mean value 2.3224 as indicated below. The variables of loss in working days

and labour productivity were recoded as shown below.

149 Using a similar method other measures related to Human resource and establishment performance

outcomes were also recoded.

RECODE Lossofworkingdays (SYSMIS=SYSMIS) (Lowest thru 2.3224=0) (2.32241 thru Highest=1) INTO Lossworkday. VARIABLE LABELS Lossworkday 'LWD'. Value Labels Lossworkday 0 'belowaverage' 1 'aboveaverage'. EXECUTE.

RECODE Labourproductivity (SYSMIS=SYSMIS) (1 2=1) (3 4 5=0) INTO Lproductivity. VARIABLE LABELS Lproductivity 'LP'. Value Labels Lproductivity 0 'aboutaverage' 1'aboveaverage'. EXECUTE.

The definitions for all the control, explanatory and dependent variable are shown in the Table 4.2 to

Table 4.4.

Table 4.2 Definition of Control Variables

Control Variables Values and labels

Main nature of the business at the establishment.

0 = manufacturing ; 1 = services

Subsidiary of multinational or are you a local firm

0 = MNC establishment; 1 = Local establishment

How long the establishment has been working in Pakistan

0 = up to 10 years ; 1 = 11 or more years

Number of Employees 0 = below 93.1480; 1 = above 93.14801

Proportion of workforce made up of non-managerial employees

0 = less than 83 per cent; 1 = more than 83.01 per cent

150 Table 4.3 Definition of Dependent Variables

Dependent variables

Values and labels

Loss in working days through sickness or absence without permission

0 = below average; 1 = above average

Voluntary turnover 0 = below average; 1 = above average

Employees discharged 0 = below average; 1 = above average

Labour Productivity 0 = about average; 1 = above average

Labour Productivity Growth 0 = about average; 1 = above average

Financial Performance 0 = about average; 1 = above average

Table 4.4 Definition of Explanatory HPWS Practices

High performance workplace practices Values and labels

Formal policy of no compulsory redundancy 0 = no; 1 = yes

Expects employees to stay till retirement 0 = no; 1 = yes

When job become vacant, management normally first tries to fill them with people from inside the organization rather than recruiting from outside

0 = no; 1= yes

Recruitment process generates applicants 0 = disagree; 1 = agree

One or more employment tests prior to hiring 0 = disagree; 1 = agree

Been trained in variety of jobs 0 = no; 1 = yes

Intensive/ extensive training in company specific skills

0 = no; 1 = yes

Intensive/ extensive training in generic skills 0 = no; 1 = yes

Involved in programmes designed to elicit participation and employee input

0 = disagree; 1 = agree

Provided with relevant operating performance information

0 = disagree; 1 = agree

Provided with relevant strategic information 0 = disagree; 1 = agree

Attitude surveys to correct employee morale problems

0 = disagree; 1 = agree

Organized in self-directed teams 0 = disagree; 1 = agree

Formal performance appraisal on routine basis 0 = disagree; 1 = agree

Feedback from more than one source 0 = disagree; 1 = agree

Access to formal grievance/ complaint resolution procedure

0 = no; 1 = yes

Participate in profit sharing 0 = disagree; 1 = agree

Additional pay or pay rise as a result of job performance or work in a team

0 = disagree; 1 = agree

Proportion of pay determined by performance appraisal

0 = no; 1 = yes

Performance feedback provides information on how they do their job

0 = disagree; 1 = agree

151 Table 4.4 continued

High performance workplace practices Values and labels

Few status differences in the establishment between the managers and the rest of the employees. They are all on the same level.

0 = disagree; 1 = agree

Allows career breaks 0 = disagree; 1 = agree

Change in shift pattern 0 = disagree; 1 = agree

Increase/ decrease in working hours 0 = disagree; 1 = agree

Job sharing 0 = disagree; 1= agree

Home working 0 = disagree; 1 = agree

After the conversion of the scale the data was checked for multicollinearity as the logistic

regression is sensitive to high intercorrelations among predictor variables. The collinearity

diagnostics indicated tolerance values within acceptable limits indicating that the data did not

suffered from the problem of multicollinearity. Two values are important while interpreting the

results, tolerance and variance inflation factor (VIF). A value of tolerance less than .10 and a value

of VIF above 10 indicate the problem of multicollinearity (Pallant, 2010). The test clearly indicates

that the data set did not suffer from multicollinearity. All the tolerance and VIF values were within

limit. However as a decision was taken to run the regressions for individual high performance

workplace practices alongside the control variables for all the dependent variables, hence the issue

of multicollinearity was not a problem anyhow.

The second issue that may affect the logistic regression prediction power are cases which may be

classified as outliers. Tabachnick and Fidell (2007) define outliers as those cases with standardised

residual values above about 3.3 or less than -3.3. All the identified outliers were deleted once for

each and every set of logistic regressions undertaken for HR and performance outcomes.

While interpreting the results of logistic regression, the main aspects that need a check are:

Omnibus test of model coefficients, Hosmer and Lemeshow test, the Cox and Snell R square and

Nagelkerke R square. Omnibus test of model coefficients indicates how well the model performs.

The value for the test should be less than .05. Similarly the Hosmer-Lemeshow test is also a test of

fit of the model, however in this case the value of the test should be greater than .05. The values of

Cox and Snell R square and Nagelkerke R square explain the amount of variation in the dependent

variable (Pallant, 2010; Field, 2009).

152 The most important table the logistic regression generates is labelled as variable in the equation.

The table provides information about the contribution of each of the predictor variable. The test

used in this analysis is called Wald test, the variables having a Wald statistic values significant at

less than .05 are the predictors that contribute significantly to the predictive ability of the model.

The table provides B values that can be positive or negative and indicate the direction of the

relationship. If correctly coded i.e. 0 = lack of characteristic or no, 1 = presence of characteristic or

yes, a negative B value indicates that an increase in the independent variable score will result in a

decreased probability of the case recording a score of 1 in the dependent variable. Another

important piece of information the table provides is related to odds ratio. The ratio indicates the

change in odds of being in one of the categories of outcome when the value of the predictor

increases by one unit (Pallant, 2010; Field, 2009).

This chapter has highlighted the research rationale for the selection of the sectors, the basis on

which the population was identified and the reasons for investigating the establishments as unit of

analysis. In the case of the selection of the sectors the chapter has argued that FDI flows in the last

decade as a percentage of overall FDI makes the sectors an interesting case to be investigated for

latest management practices. A sizeable number of US and UK multinational companies have

established themselves in the market in the last decade. Has there presence in the Pakistan

effected the management trends in particular do they practice the latest and innovative

management practices in Pakistan or not. Do the multinational trends affect the local management

scenario? Do such practices have the much debated performance links in the case of local firms

that adopt them in Pakistan? The next few chapters will address these issues on the basis of data

collected in Pakistan.

The chapter has also addressed and justified the issues of respondents and response rate. The

chapter also provided a detailed discussion of the research strategy adopted to collect data in case

of Pakistan. The chapter provided details of operationalization of control, HRM and outcome

variables. The chapter has addressed the issues of reliability and validity and explained the two

main procedures used to analyse the data set. The main method of analyses adopted by the thesis

that is use of Chi-square tests and regression analysis have been justified in light of the purpose of

the thesis and in meeting the stringent data analysis requirements. The subsequent chapters

discuss the results based upon the two main methods of analyses.

153 Chapter 5 The diffusion of high performance workplace practices in Pakistan: evidence from

banking, IT and pharmaceutical establishments of multinational and local firms

This chapter examines the diffusion of high performance workplace practices in the establishments

of multinationals and local firms operating in banking, information technology and pharmaceutical

sectors in Pakistan. In Chapter 1 the thesis argued that high performance workplace practices

provide an alternative method to organize work compared to the bureaucratic models. A review of

theory indicated that one of the ways to understand the high performance workplace practices is to

take into account the typologies that reflect the paradigm. The current study draws on Marchington

and Wilkinson (2008) typology which is composed of following list of practices and explores there

diffusion in Pakistan.

1. Employment security and internal labour markets

2. Selective hiring and sophisticated selection

3. Extensive training, learning and development

4. Employee involvement and participation: worker voice

5. Self-managed teams/ team working

6. High compensation contingent on performance

7. Performance review, appraisal and career development

8. Reduction of status differential/ harmonization

9. Work-life balance

In the process of discussing the diffusion of high performance workplace practices in Pakistan, the

Chapter examines the state of change in management practices in Pakistan. A review of literature

indicated that firms in Pakistan follow the bureaucratic management model (Khilji, 2002). The study

based on investigation of HRM in limited number of organizations in Pakistan provided some

evidence that the firms were reorganizing the human resource function and were moving towards

American management models in particular the study argued that reorganization was more

prevalent in multinationals and at that time just three multinationals out of total sample of 15 local

and multinational banks had a focus approach towards change. That study has number of

limitations; in addition it does not define what is meant by the term ‘American management model’

nor does the study comprehensively differentiate between the management practices of MNC and

local firms in Pakistan. However the final conclusion of the study was that the management culture

154 in Pakistan reflects a bureaucratic model. The current thesis expected otherwise. The reason for

such an expectation were the changes in the global and regional business climate coupled with the

recent shift in the economic model in Pakistan towards neo-liberalism, deregulation, privatization of

state owned institutions and due to subsequent inflow of foreign direct investment into the banking

and IT sectors. Since late 1990s a number of Western multinational banks and IT firms have

entered the Pakistani market. It has been argued that multinationals in Pakistan not only act as

leaders of change but also diffuse management and human resource practices to the local firms

(Khilji, 2002). In light of these changes there is a high probability that the management practices in

Pakistan must have undergone a change and the management model must have moved towards

high commitment/ involvement/ performance practices in the last decade. This chapter discusses

the empirical evidence of diffusion of high performance workplace practices from the

establishments of multinational and local firms in Pakistan.

This chapter addresses the question of diffusion of HPWS practices in establishments in Pakistan

in two ways; first of all the chapter discusses an overall picture of the diffusion by taking into

account the responses of the establishment managers with respect to the coverage of the practices

at their workplaces. In the second phase, the chapter discusses the differences between the

diffusion of HPWS practices among the establishments of multinational and local firms based upon

the results of Chi-square test. The details of descriptive statistics are shown in Table 5.1.

155 Table 5.1 Descriptive Statistics

N Per cent Mean

Statistic

No/Disagree Yes/Agree

Statistic

CR1 392 42.9 57.1 .5714

RTD2 392 32.7 67.3 .6735

Internal recruitment3 392 8.9 91.1 .9107

Trained in variety of jobs 4 392 48.2 51.8 .5179

Company specific5 392 .5 99.5 .9949

Trained in generic skills6 392 31.6 68.4 .6837

Formal grievance 7 392 . . 1.0000

POP by perf appraisal 8 392 2.8 97.2 .9719

GA9 390 11 89.0 .8897

ET10

390 43 55.9 .5615

EP11

388 48.7 50.3 .5077

op12

386 5.6 92.9 .9430

SI 13

383 8.2 89.5 .9164

SDT14

380 2.6 94.4 .9737

FPA15

391 3.8 95.9 .9616

PS16

385 54.1 44.1 .4494

AP17

391 61.0 38.8 .3887

JF18

388 3.6 95.4 .9639

SD19

388 15.6 83.4 .8428

ShP20

172 29.6 14.3 .3256

WH21

359 53.6 38.0 .4150

JS22

348 70.2 18.6 .2098

HW23

298 58.2 17.9 .2349

CB24

392 41.3 58.7 .5867

PF25

392 58.9 41.1 .4107

AS26

392 52.3 47.7 .4770

Valid N (listwise) 116

156

Notes: The superscript numerals refer to:

Table 5.1 shows the descriptive statistics for the categorical variables used in the study. Use of

Frequencies as a measure of descriptive statistics has been recommended in literature as means,

standard deviations do not make any sense for the categorical variables (Pallant, 2010). Table 5.1

provides the information about the no/disagree and yes/agree responses of the establishment

managers, the percentage and the mean value. The scores on N statistic indicating the total

number of responses for a variable warrant attention. In case of some of the variables, the

response rate is less than 392. This is due to the missing cases for a particular variable, as during

the process of recoding the questionnaire from Likert scale to categorical, neither agree or disagree

responses were treated as missing system.

On the whole the empirical evidence indicates that a number of high performance workplace

practices have diffused to the establishments of multinational and local firms operating in banking,

information technology and pharmaceutical firms in Pakistan. The diffusion is not only visible but is

rather radical. The first part of the chapter disaggregates the practices into five distinct categories

based on the count of responses of the managers showing agreement with the presence of a

1. Formal policy of no compulsory redundancy

2. Expectation to stay till retirement

3. Internal labour market

4. Training in variety of jobs

5. Training in company specific skills

6. Training in generic skills

7. Formal grievance/complaint resolution procedure

8. Proportion of pay determined by performance appraisal

9. Recruitment process generates applicants

10. One or more employment tests used prior to hiring

11. Programmes designed to elicit participation and employee input

12. Provided with relevant operating performance

13. Provided with strategic information

14. Team working

15. Formal performance appraisal on routine basis

16. Profit sharing or share ownership schemes

17. Additional pay as a result of job performance or work in a team

18. Performance feedback provides information on how they do their job

19. Reduction of status differences

20. Change in Shift pattern

21. Change in working hours

22. Job sharing

23. Home Working

24. Career breaks

25. Feedback from more than one source

26. Attitude surveys to correct employee morale problems

157 practice at their workplace out of total of 392 establishment managers that participated in the

survey. The responses have been categorized as the most diffused practices, practices diffused in

the 60 to 70 per cent range, practices diffused in the 50 to 60 per cent range, practices diffused in

the 40 to 50 per cent range and the least diffused practices.

Table 5.2 describes the practices that have been categorized as the most diffused practices in the

establishments of MNCs and local firms in Pakistan. These practices have diffused to 80 per cent

or more of the MNC and local establishment surveyed in Pakistan. The practices were: presence of

internal labour markets, a selective hiring system that generates as many good/ qualified applicants

as the establishment needs. From the training, learning and development category the most

diffused practice was intensive/extensive training in company specific skills. The evidence indicates

that employee involvement and participation: worker voice and self-managed teams were the most

widely diffused practices in the establishments in Pakistan as compared to any other set of

practices, in particular the establishments were providing the non-managerial employees with

operating performance information, strategic information and a formal procedure for complaint

resolution.

158 Table 5.2 The Most Diffused HPWS Practices*

Similarly more than 90 per cent of the surveyed establishments agreed with the presence of self-

managed teams. Evidence further indicates that practices relating to performance review,

appraisal and career development have also diffused to a large number of establishments in the

banking, IT and pharmaceutical companies surveyed in Pakistan. The data indicates that more

than 90 per cent of the establishments surveyed agreed that the workplace conducts formal

performance appraisal on routine basis, a proportion of the workers’ pay is determined on the basis

of performance appraisal and the performance feedback provides information on how the

employees do their job. As per the response of the managers the practice of reduction of status

differences and harmonisation was popular among the establishments. At least 89.5 per cent

managers agreed that establishments treated the employees and the managers at the same level.

These were perhaps quite surprising results as it was never expected that a number of HPWS

practices would be diffused to more than 80 per cent of the establishments surveyed in Pakistan. In

particular it is noticeable that a number of practices belonging to EIP, team working, performance

appraisal and career development and reduction of status differences have diffused to large

number of establishments in the banking, IT and pharmaceutical sectors in Pakistan.

Employment Security and Internal Labour Markets

Preference to existing employees as compared to recruitment from outside

Selective Hiring and Sophisticated Selection

Recruitment process generates good/ qualified applicants as required

Extensive Training, Learning and Development

Received intensive/ extensive training in company specific skills (e.g. task or firm specific

training)

Employee Involvement and Participation: Worker Voice

Provided with relevant operating performance information (e.g. quality, productivity etc.)

Provided with relevant strategic information (e.g. strategic mission, goals, tactics,

competitor information etc.)

Access to Formal grievance and complaint resolution procedure

Organized in Self-directed work teams

Performance Review, Appraisal and Career Development

Formal Performance appraisal on routine basis

Proportion of pay determined by performance appraisal

Performance feedback provides information on how they do their job

Reduction of Status Differential/ Harmonisation

*The above are the most diffused high performance workplace practices. For most of the practices above 90% of the establishment managers agreed with their presence at the site. The only exception was the practice of selective recruitment and sophisticated hiring and reduction of status differential and harmonization where the agreement count was 88.5% and 89.5% respectively.

159 Table 5.3 describes the practices that have diffused to 60 to 70 per cent of the establishments

sampled by the study in Pakistan. A set of practices from the employment security and employee

training, learning and development category have diffused to 60 to 70 per cent of the

establishments surveyed in Pakistan. A sizeable percentage of managers i.e. 67 per cent indicated

that the establishment expected the employees to stay till retirement. A high number of them also

indicated, almost 68 per cent that the establishment provides non-managerial employees with

intensive/ extensive training in generic skills. It is also worth noticing that apart from the most

diffused practices only two practices one from employment security and ILM category and one from

the training category have diffused to more than 60 per cent establishments in surveyed in

Pakistan.

Table 5.3 The Diffused Practices in 60-70% Range*

After describing the practices that have diffused to 60-70 per cent establishments, the table 5.4

describes the practices that have diffused to 50-60 per cent establishments surveyed in the sectors

in Pakistan. A number of practices fall into this category. In the case of policy of no compulsory

redundancy 57 per cent establishments agreed that they did not have any such formal policy.

Reflecting the state of sophisticated selection some 55 per cent managers agreed that the

establishment conducted one or more test prior to hiring. Similarly 51 per cent managers agreed

that non-managerial employees have been trained in variety of jobs. As compared to overwhelming

popularity of EIP practices i.e. sharing of operating and strategic information with non-managerial

employees and complaint resolution procedures, the evidence indicates that only 50 per cent of the

establishments surveyed involved non-managerial employees in programmes designed to elicit

participation and employee input. The only work-life balance practice that was being practiced in

establishments in Pakistan (58%) was that of career breaks to employees for child care, elder care

and leisure activities.

Employment Security and Internal Labour Markets

The firm expects all employees to stay until retirement

Employee Training, Learning and Development

Receive intensive/ extensive training in generic skills (e.g. problem solving, communication

skills, etc.)

*The above are the high performance practices that have diffused in the range of 60% to 70%. The establishment scores indicate that 67% establishment managers agreed that they expected the employees to stay until retirement and 68% agreed that the non-managerial employees training in generic skills.

160 Table 5.4 The Diffused Practices in 50- 60% Range*

It is interesting to note that a number of important HPWS practices from sophisticated selection

category i.e. employment tests, EIP practice of involvement i.e. quality circles, problem solving and

communication skills and work-life balance practice of career breaks were diffused to more than 50

per cent of the establishments surveyed in Pakistan.

However the empirical evidence from the establishments in Pakistan indicates that a number of

HPWS practices were diffused to less than 50 per cent establishments surveyed. Table 5.5

describe the practices that were relatively less diffused at the time of the research. The practices

were: use of attitude surveys, profit sharing or share ownership schemes and formal feedback from

more than one source. On the basis of empirical evidence it is safe to consider that the practices

are on route to adoption in Pakistan. Some 47 per cent establishments conducted attitude surveys

to correct employee morale problems. 44 per cent rewarded non-managerial employees with profit

sharing or share ownership based on their job performance or team performance. Just over 40 per

cent establishments offered non-managerial employees feedback from more than one source i.e.

feedback from several individuals such as supervisors, peers etc.

Employment Security and Internal Labour Markets

The organization has no formal policy of compulsory redundancy

Selective Hiring and Sophisticated Selection

One or More employment test are conducted prior to hiring (e.g. skills test, aptitude tests,

mental/cognitive ability tests)

Employee Training, Learning and Development

Trained in a variety of jobs or skills (are cross trained) and/ or routinely perform more than

one job (are cross utilized)

Employee Involvement and Participation: Worker Voice

Involved in programmes designed to elicit participation and employee input (e.g. quality

circles, problem solving, communication skills, etc.)

Work-life Balance

The establishment allows career breaks to employees for child care, elder care and leisure

activities

*The above are the high performance practices that have diffused in the middle range i.e. in the range of 50% to 60%. The establishment scores indicate that 57% managers agreed that the organization has no formal policy of compulsory redundancy. Some 55% managers agreed that the establishment conducted one or more employment tests prior to hiring. 51% managers agreed that they trained the non-managerial employees in variety of jobs or skills. 50% agreed that non-managerial employees were involved in programmes designed to elicit participation and employee input. Some 58% agreed that the establishment allowed career breaks.

161 Table 5.5 The Diffused Practices in 40-50% Range*

Table 5.6 shows the high performance workplace practices that were least diffused among the

establishments of multinational and local banking, IT and pharmaceutical firms in Pakistan. These

practices can be categorized as least diffused in establishments in Pakistan. The survey evidence

indicates that practice of compensation contingent on performance such as additional pay or pay

rise as an incentive for job performance or work in a team was being practiced only in 38 per cent

of the establishments. A lower coverage of PRP practice warrants special attention as this practice

is considered to be very important for effective implementation of HPWS system.

Table 5.6 The Least Diffused Practices*

The evidence indicates that work-life balance practices such as change in shift pattern, increase/

decrease in working hours, job sharing and home working were rare in the establishments in

Pakistan, to the extent that some less than 20 per cent of the establishment surveyed offered

Employee Involvement and Participation: Worker Voice

Attitude surveys to identify and correct employee morale problems

High Compensation Contingent on Performance

Profit sharing or share ownership schemes based on their job performance or team

performance

Performance Review, Appraisal and Career Development

Formal Feedback from more than one source (i.e. feedback from several individuals such

as supervisors, peers etc.)

*The above are the high performance practices that have a relatively low diffusion score. 47% mangers indicated that the establishment conducted routine surveys to identify and correct employee morale problems. 44% managers indicated that non-managerial employees were offered profit sharing or share ownership. 41% managers indicated that the establishment offered formal feedback from more than one source.

High Compensation Contingent on Performance

Non-managerial employees are offered additional pay or have they been offered pay rise in

the past year as a result of job performance or work in team

Work-Life Balance

Change in shift pattern

Increase/ decrease in working hours

Job sharing

Home working

*The above are the least diffused high performance workplace practices in establishments in Pakistan. 38% managers indicated that the establishment offered additional pay or pay rise in the past year as a result of job performance or work in team. For all the remaining work-life balance practices less than 20% managers indicated their presence at their presence at establishments.

162 flexible work-life balance practices to their non-managerial employees. It was quite expected that

diffusion of flexible work arrangement practices would be at their initial stages in Pakistan.

As can be seen from the results there is a considerable variation in the diffusion of the individual

high performance workplace practices in the establishments in Pakistan. A number of

establishments, more than 90 per cent reported use of at least 9 out of 26 high performance

workplace practices measured by the study, the number increases to 11 when the establishment

count is reduced to 80 per cent. The number of high performance practices used increases with

further decrease in count of the establishments. Some 67 per cent establishments reported use of

13 out 26 practices, which means roughly 67 per cent establishments in banking, IT and

pharmaceutical sectors used half of the high performance workplace practices in Pakistan.

However it is worthwhile to note that 50 to 60 per cent establishments that participated in the

survey reported use of more than 18 high performance workplace practices in the sampled sectors.

The results indicate that firms have implemented high performance workplace practices to varying

degree in establishments in Pakistan. Though a complete implementation of the high performance

workplace practices is ideal for their positive impact on performance outcomes (Vandenberg et al.,

1999), a number of theorists have argued that any implementation is better than nothing (Arthur,

1994; Guest and Hoque, 1994; Guthrie, 2001). However a closer examination of literature reveals

that in reality, the practices are indeed implemented to varying degree across the workplaces and

the evidence from Pakistan mirror the Wood and de Menezes (1998) and de Menezes and Wood

(2006) findings that certain sectors of the economy use the practices more consistently as

compared to others. Despite the fact that implementation of practices varies from establishment to

establishment, the results confirm the universalistic assumptions that practices are applicable in

every sector irrespective of business strategy or sector or country of origin, as the evidence

indicates that at least 67 per cent of the establishments belonging to diverse industry sectors such

as banking, IT and pharmaceutical employed at least half of the practices.

Existing research findings also indicate that workplaces even within the same industry implement

high performance workplace practices to varying degree. Notable in this regard are the studies by

Guest and Hoque (1994), Wood and de Menezes (1998) and Hoque (1999). Guest and Hoque

(1994) on basis of the usage of the HRM practices label the establishments as the good, the lucky,

the bad and the ugly. Similarly the study by Wood and de Menezes (1998) classified the British

establishments as low HCM, low/medium HCM, medium/high HCM and high HCM on the basis of

163 use of range of HRM practices. A major study by Hoque (1999) classified the establishments as

low to high HRM on the basis of count of practices the hotels surveyed used. The findings of the

current study indicate that establishments in Pakistan used the HPWS practices to varying degree

and as the existing research indicate that such an adoption of HPWS practices is quite common in

industries and sectors.

The research findings indicate a low coverage of certain high performance work place practices in

the establishments sampled in Pakistan. The practices include flexible working arrangements,

compensation contingent on performance, attitude surveys and 360 degree feedback. Despite the

low coverage of certain HPWS practices, the evidence indicates successful diffusion of essential

elements of high commitment and involvement models such as team working, employee

participation and involvement, reduction of status differences among the establishment of

multinational and local firms in Pakistan. To a number of proponents of high performance paradigm

this would count towards a genuine transcendence of Taylorism and reversal of bureaucratic

management in the sectors sampled in Pakistan (Walton, 1985; Lawler, 1986; Guest, 1999a; Wood

and Wall, 2007).

However a low coverage of important high performance practices like compensation contingent on

performance and work-life balance practices may reflect the peculiar contingencies of the business

environment in Pakistan or it may be the case that the establishments do not have the resources to

implement them. The employers have to take into account the labour and product market

conditions and must take a long term perspective to implement such practices and unless and until

they have good economic reasons to do so they are generally reluctant to take such decisions and

suffice with implementing certain practices that may satisfy the institutional forces (Marchington

and Wilkinson, 2008). Though the situation needs further investigation to ascertain the reasons for

the low coverage of such an important component of the paradigm, it may be true to certain extent

that in practice it is the successful companies that are in better position to comprehensively

implement the whole package. The argument that profitable firms are more likely to implement the

high performance practices by Wall and Wood (2005) may quite be pertinent in the case of

establishments in Pakistan, but unfortunately the cross-sectional design of the study limits the

research ability to make any conclusions.

However in the presence of sufficient number of workplaces indicating the coverage of practices

such as internal recruitment, sophisticated recruitment, intensive/ extensive training in company

164 specific and generic skills, team working, employee participation and involvement, formal

performance appraisal, formal grievance/complaint resolution procedure, proportion of pay

determined by performance appraisal, feedback on job done and reduction of status differences the

thesis safely argues that the diffusion of HPWS practices has indeed been more than successful.

Management practices in Pakistan are fast changing and the high performance workplace

practices are fast diffusing to the establishments in Pakistan, at least in the sectors where there is

an adequate presence of Western companies. The current thesis strongly argues that multinational

and local private sectors establishments in Pakistan are no longer path dependent on British

bureaucratic management model as argued by Khilji (2002) rather the firms have reorganized their

human resource function and have embraced the latest high performance workplace practices.

This may be in part due to the changing global business environment and technological

advancement in the manufacturing and in particular due to the fast developing information and

communication technologies that are generally associated with paradigm shift in management of

employees (Holman and Wood, 2003).

Over the last decade empirical evidence indicates that HPWS practices have spread to the whole

of the South East and South Asian economies. A number of studies from China have found the

presence and positive effects of high performance practises (Bjorkman and Xiucheng, 2002; Akhtar

et al, 2008; Zhang and Li, 2009). Similarly evidence from India confirms universalistic application of

HRM practices and influence of best practices on Indian managers (Som, 2008; Cooke and Saini,

2010). Similarly in other neighbouring economies such as Singapore and Taiwan evidence is

emerging that high performance workplace practices have a universal appeal and are being

adopted by all type of firms (Khatri, 2000 and Lee et al., 2010). On the basis of the evidence from

the establishments in Pakistan, the thesis argues that spread and diffusion of HPWS practices in

Pakistan is no different from other regional countries and all types of surveyed multinational and

local establishments were adopting the best practices to a varying degree.

The section above has discussed the overall picture of the state of diffusion of high performance

workplace practices in establishments of banking, IT and pharmaceutical firms in Pakistan. The

second half of the chapter focuses the discussion on the state of differences and similarities

between the HPWS practices beings used in the establishments of multinational and local firms in

Pakistan. The discussion is underpinned by the theoretical arguments that highlight the importance

of the individual practice for the paradigm of HPWS. The differences between the establishments of

165 the multinational and local firms were explored using the Chi-square test. Chi-square test is a non-

parametric test that is ideal if a data set does not meets the stringent assumptions of parametric

test or is categorical in nature. The Chi-square tables used in the Chapter highlight the differences

between the coverage of practices for establishments of MNCs and local establishments. The

tables show values for Yates Correction for Continuity and associated significance level presented

in column labelled Asymp.Sig. (2-sided). Yates Correction for Continuity is a recommended statistic

for 2 by 2 tables as it compensates for the overestimate of the Chi-square value (Pallant, 2010).

Appendix C (C1 to C 26) provides the detail results of the Chi-square tests. In total there were 131

establishments of MNCs and 261 establishments of local firms that participated in the study from

the three sectors. The discussion begins with the practice of employment security and internal

labour market and progresses to discuss all the nine HPWS practice.

5.1Employment Security and Internal Labour Markets

The policy of employment security and internal labour markets is considered to be a vital

component for successful implementation of high performance workplace practices. The practice is

expected to create a positive psychological contract and reduce the rate of turnover among the

employees. Table 5.7 shows the results for the Chi-square test for the practice of employment

security and internal labour markets in Pakistan. The results indicate that local firms were more

likely to offer a promise of no compulsory redundancy and expected their employees to stay till

retirement. However the establishments of both multinational and local firms kept the doors of

internal labour market open and offered a vacant vacancy to an existing employees before

recruiting from outside.

A number of multinational establishments some 61.8 per cent 81 out of 131 establishments agreed

that they had a policy of compulsory redundancy as compared to 33.3 per cent of the local firms

that is 50 out of 261 local firms that indicated such a policy. Some 57.3 per cent i.e. 75 out of 131

MNC establishments indicated that they expected all employees to stay till retirement as compared

to 72.4 per cent i.e. 189 out of 261 local establishments. For the provision of internal labour market

opportunities to existing employees an overwhelming number of establishments from MNC (88.5

166 per cent i.e. 116 out of 131) and local firms (92.3 per cent i.e. 241 out of 261) indicated presence of

such a mechanism.

The results indicate significant differences between the establishment of MNC and local firms with

regard to the policy of employment security. Though the practice of employment security is very

important for the principle of reciprocity and mutuality at work (Pfeffer, 1998), its concept and

meaning has changed over time. The scenario of employment security in multinational

establishments in Pakistan is similar to what is happening in US and rest of the developed

economies. Empirical evidence emerging from OECD countries confirms that level of employment

protection once available to employees no longer exists (Rubery, 2010).

Table 5.7 Chi-Square Results for the practice of Employment Security and Internal Labour Markets

Though in Pakistan the employer is allowed to downsize and close the establishment under

Industrial Relations Act (2010), the state expects the establishments to provide job security to

workers through mechanism of internal labour markets. Though there is no legal hindrance to

downsize, the evidence suggests that local establishments were keener to offer job security to

workers as compared to MNCs. Considering the high rate of unemployment in Pakistan, it is safe

to argue that employees may feel content and satisfied with the promise of job security offered to

them by the local firms.

Though the multinationals do not offer a direct promise of employment security, empirical evidence

suggests that in an indirect manner they do expect the best employees to stay till retirement.

Osterman and Burton (2010) argue that US employees are more than willing to sacrifice

employment security if high performance systems are accompanied by market-based pay and

performance related pay. This argument holds ground in case of multinationals in Pakistan, as the

Yates Continuity Correction

df Asymp.

Sig

(2-sided)

The organization has a policy of no compulsory redundancy 27.774 1 .000

The firm expects all employees to stay till retirement

8.441 1 .004

When a job becomes vacant management normally tries to fill them with people from inside the organization rather recruiting from outside

1.108 1 .292

167 empirical evidence from the existing literature indicates that MNC are more likely to offer better

compensation and working environment in Pakistan (Khilji, 2002).

Evidence for the policy of internal labour market indicates that both MNC and local establishments

prefer to offer a vacant job to existing employees. This practice is important for high performance

work systems to function and allows a firm to encourage workers to develop their skills and

performance. It increases the control of the firm over its workers and strengthens the psychological

contract (Blake and Uzzi, 1993). Though the practice is on decline in the US and the UK (Rubery,

2010; Osterman and Burton, 2010), the evidence suggest that foundations of internal labour market

are quite strong in Pakistan. This was evident from the responses of the establishments as more

than 57 per cent MNC managers and more than 72 per cent local firm managers expected their

employees to stay till retirement. The situation of ILMs and an opportunity to develop career within

the establishments of MNCs and local firms highlights the importance Marchington and Wilkinson

(2008) argument that dismissal of non-performing employees and downsizing due to product-

market conditions does not undermines the principle of employment security if the firms keeps the

internal labour markets open and are willing to adjust the existing employees. Moreover by keeping

the ILMs open the firms in Pakistan fulfil their legal obligation of implementing effective procedures

that gives preference to the existing employees in case availability of further opportunities for

advancement (IRA, 2010). However an expectation on behalf of the management to continue the

employment till retirement instead of offering any promise of employment security seems to work

better for firms in Pakistan as indicated by the different performance outcomes. The results of

logistic regression substantiate the significant performance effects the practice has on number of

HR and establishment outcomes in Pakistan. The details of the results are discussed in the chapter

7.

The literature on high performance highlights the importance of selective hiring and sophisticated

selection for the successful functioning of the paradigm. Hiring the right person on the basis of

some testing mechanism is one of the founding principles of management (Newell, 2005). The

next section examines the empirical evidence with respect to differences in the diffusion of

selective hiring and sophisticated selection in the establishments of multinational and local firms in

Pakistan.

168 5.2 Selective Hiring and Sophisticated Selection

The evidence from the establishments of multinational and local firms in Pakistan indicates that a

selective hiring and sophisticated selection system is in place to screen out the best available

human resource. The results indicate that there was no difference between the establishments of

multinational and local firms with regard to practices of selective hiring and sophisticated selection.

A closer examination of the evidence suggests that some 89 per cent i.e. 117 out of 131 MNCs

establishments and 88 per cent i.e. 230 out of 259 local establishments’ recruitment process

generated as many good/ qualified applicants as they needed. Similarly 60 per cent i.e. 78 out of

130 and 54 per cent i.e. 141 out of 260 local establishments indicated that they conducted one or

more employment test prior to hiring.

Table 5.8 Chi-Square Results for the practice of Selective Hiring and Sophisticated Selection

Evidence indicates that attracting high quality applicants in a systematic manner was not a problem

for establishments in Pakistan. It has been argued in literature that a recruitment system that

responds well to an establishment need for attracting right people is a key ingredient to successful

best practice HRM (Marchington and Wilkinson, 2008). The results supports the assumption that

majority of the establishments in Pakistan do not ignore their recruitment and selection procedure.

Though there is a high rate of unemployment in Pakistan the evidence suggests that firms have

moved forward from the days when political pressure or reference was the only criteria for hiring as

documented by Khilji (2002). Though the use of the practice of conducting employment tests is in

the range of 50 to 60 per cent, it is a development that can be followed by other establishments

and they can design a sophisticated mechanism for selection of candidates instead of relying on

reference or choosing the person who is first in the queue. The logistic regression results indicate

Yates Continuity Correction

df Asymp.

Sig

(2-sided)

Does your recruitment process generate as many good/qualified applicants as you need

.000 1 1.000

Are one or more employment tests (e.g. skills tests, aptitude tests, mental/ cognitive ability tests) used prior to hiring

.949 1 .330

169 that the practice had a significant positive effect on the performance outcomes in Pakistan. The

results are discussed in detail in chapter-7. The next section discusses the differences between the

establishments of MNCs and local firms in Pakistan for the practice of extensive training, learning

and development.

5.3 Extensive Training, Learning and Development

In the fast changing global business and product-market environment training new or current

employees is considered to be one of the best ways to lead people in organizations (Peteraf, 1993

and Holden, 1997). Table 5.9 shows results for the practice of training, learning and development.

The results indicate that establishments of multinational firms were more likely to engage in cross-

training of their non-managerial employees as compared to local firms. Similarly employees of

multinational firms were more likely to receive intensive/extensive training in generic skills as

compared to their counterparts working for the local firms in Pakistan.

Table 5.9 Chi-Square Results for the practice of Extensive Training, Learning and Development

However a closer examination of the evidence indicates that local firms do engage more in generic

training their employees as compared to training them in variety of jobs. Evidence reveals that

some 62 per cent i.e. 161 out 261 local establishments indicated providing generic training to

employees as compared to 44 per cent 116 out of 261 that indicated providing training in variety of

jobs. This figure was much higher in case of MNCs as 82 per cent i.e. 107 out of 131 agreed to

Yates Continuity Correction

df Asymp.

Sig

(2-sided)

Been trained in a variety of jobs or skills (are cross trained) and/ or routinely perform more than one job (are cross trained)

15.990 1 .000

Received intensive/ extensive training in company specific skills (e.g. task or firm specific training)

.064 1 .800

Received intensive/ extensive training in generic skills (e.g. problem solving, communication skills, etc.)

15.211 1 .000

170 providing generic and some 66 per cent i.e. 87 out of 131 agreed that the establishment trained the

employees in variety of jobs. The empirical evidence further reveals that both the establishments of

MNCs and local firms provided their non-managerial employees with intensive/ extensive training in

company-specific skills. The evidence indicated that all 131 MNC establishments indicated

providing intensive/extensive training in company-specific skills. Similarly a high number of local

establishments 259 out of 261 indicated that they provided training to non-managerial employees in

company-specific skills. No previous study has measured the training practices of firms in

Pakistan; however it is generally assumed that MNCs are better training providers as compared to

local firms (Khilji, 2002) and this seems to be the case as evident from the responses of the

establishments.

The results of the current study confirm that MNCs in Pakistan were more likely to provide

multipurpose firm-specific, generic and cross-functional training programme that increase the

employee value for internal and external labour market. It has been argued in literature that the

effects of training extend beyond the participating individual and result into productivity and

financial gains for the firm in the long run (Ottersten et al., 1999). This aspect will be examined in

detail in chapter 7.

The empirical evidence from the establishments in Pakistan confirms some of the important

theoretical arguments prevalent in the existing literature. The average size of an establishment in

Pakistan was around 93 employees; a majority of the local establishments in Pakistan can be

classified as small or medium size single-site firms. Given the arguments of Black et al., (1999) and

Patton et al., (2000) about the potential fear of small firms about turnover and market failure it is

not surprising to find that local establishments in Pakistan were less likely to implement an overall

effective training initiative. There is a strong argument in one strand of training literature that

classifies employer provided training as a gift that is reciprocated by the employee in shape of

increased effort which can lead to positive effect on productivity (Barrett and O’ Connell, 2001;

Wiele, 2010) but at the same time an overall training policy implementation involves a substantial

amount of finance (Leuven and Oosterbeek, 1997). And it is argued that general training of the

employees increases the risk of poaching from the competitors as the skills and knowledge of well

trained employees are in much demand in the wider labour market (Wiele, 2010). These strong

arguments from the training literature provide possible justification for lack of better training

opportunities in small size local establishments in Pakistan.

171 Another strand of literature highlights the importance of the role of the firm market in determining

the type of training a firm will deliver to its employees (Boxall, 2003). It is quite understandable that

small size and price sensitive local establishments in Pakistan focus on company specific training

and majority of them avoid investment in cross training and generic skills training. However such a

training policy creates the potential problem of retaining the best employees as the literature draws

attention to the motivation aspects of firms operating in banking or IT industry. A set of studies by

Horwitz et al., (2003) and Jones et al., (2012) suggest that employees working in knowledge

intensive firms appreciate an enabling and learning environment that can lead to career

development in wider labour market as compared to permanent employment.

The evidence from the establishments in Pakistan indicates that MNCs provide cross functional,

generic as well as firm specific training opportunities to employees. This may be due to the fact that

MNCs are more focused on differentiated markets and are in a better financial position to invest on

their employees. The performance aspects of training practices on key productivity and financial

outcomes as discussed in the Chapter 7. The Chapter next discusses the results with respect to

the most important component of high performance i.e. employee involvement and participation

and worker voice.

5.4 Employee Involvement and Participation and Worker Voice

Employee involvement is the founding stone on which the building of the high performance rests.

Without the investigation of practices related to EIP and worker voice the thesis could not complete

the story of high performance in Pakistan. The sharing of information and decentralization of

decision making is the main principle and objective of high performance workplace practices

associated with genuine transcendence of Taylorism (Wall and Wood, 2007). The results of Chi-

square indicate that a large number of establishments have adopted employee involvement and

participation practices in Pakistan; however the establishments of multinationals were more likely to

implement them in a comprehensive manner as compared to local firms. Evidence indicates that

60.5 per cent of MNCs that is 78 out of 129 as compared to 46 per cent 119 out of 259 local

establishments involved non-managerial employees in programmes designed to elicit participation

and employee input (e.g. quality circles, problem solving or similar groups).

172 As far as sharing of relevant operating and strategic information with non-managerial employees is

concerned both type of establishments indicated a high use of the practice. Some 97 per cent

establishments from MNCs i.e. 127 out of 130 and 93 per cent establishments from local firms i.e.

237 out of 256 were sharing operating performance information with the non-managerial

employees. In a similar manner some 97 per cent i.e. 127 out of 130 establishments of MNCs and

90 per cent i.e. 224 out of 252 establishments of local firms were sharing strategic information with

the non-managerial employees. Though in statistics terms the MNC were more likely to share the

operating performance and strategic information with their non-managerial employees, even then

judging from the responses of local establishments, it was evident that the practice is quite

common among them.

The results indicate that establishments of MNCs were more likely to conduct regular attitude

surveys to identify and correct employee morale problems. Some 68 per cent i.e. 89 out of 131

establishments of MNCs agreed with the presence of the practice as compared to 38 per cent i.e.

98 out of 261 local establishments. The establishments of both MNCs and local firms 100 per cent

agreed with the statement that a well-defined formal grievance/ complaint resolution procedure

existed for the non-managerial employees. The detail discussion regarding the performance effects

of EIP practices in Pakistan has been undertaken in chapter 7.

Table 5.10 Chi-Square Results for the practice of Employee Involvement and Participation and Worker Voice

Yates Continuity Correction

df Asymp.

Sig

(2-sided)

Involved in programmes designed to elicit participation and employee input (e.g. quality circles, problem solving or similar groups)

6.694 1 .010

Provided with relevant operating performance information (e.g. quality, productivity, etc.)

3.298 1 .069

Provided with relevant strategic information (e.g. strategic mission, goals, tactics, competitor information etc.)

6.294 1 .012

Routinely asked to fill out attitude surveys to identify and correct employee morale problems

31.085 1 .000

Have access to formal grievance/ complaint resolution procedure

Statistics not

computed

----- ----------

173 Whereas a certain group of EIP practices have diffused to a large number of establishments in

Pakistan, research findings suggest a lower use of EIP practices such as participation programmes

like quality circles and attitude surveys. The results are quite consistent with the low use of other

HPWS practices that have the potential to enhance an employee ability to participate in EIP

schemes such as cross training and training in generic skills. The empirical evidence suggests that

EIP implementation lacks a coherent implementation. The EIP situation in Pakistan reflects the

argument of Cappelli and Neumark (2001) as their study indicates that employers due to the costs

involved do not implement voice systems in a coherent way.

However the evidence indicates that firms in Pakistan do recognize the importance of EIP as a

management practice and the practice is diffusing fast across the establishments. The picture of

participation and involvement is much different at least in the establishments of MNCs and local

private firms from what Khilji (2002) has inferred about organizations in Pakistan, Khilji (2002) study

indicated a communication gap between management and workers and low delegation of authority

to employees. The 100 per cent agreement of establishments with a mechanism for complaint

resolution may reflect the institutional pressure that is exerted on them to fulfil the requirements of

the law. Industrial relations policy in Pakistan requires firms to provide a proper and expeditious

grievance resolution procedure (IRA, 2010).

The current study by exploring EIP practices in the establishments of Pakistan can confirm the

arguments of Marchington (2007) and Wood and Wall (2007) that EIP is becoming central part of

work design all around the world and managers are sharing information with workers to improve

work processes to harness organizational performance. Though the evidence indicates that a large

number of establishments in Pakistan are using EIP practices as essential component of HPWS, a

relatively low use of programmes designed to elicit participation and input and attitude surveys to

correct employee morale problems suggest that practices need to be more consistently embedded

in the establishments as argued by Godard (2004) to allow workers to acquire skills and knowledge

that improves productivity (Vandenberg et al., 1999). The next section evaluates the state of

diffusion of team working in Pakistan another very popular practice implemented to improve the

organizational performance and employee experience of work.

174 5.5 Self-Managed Teams/ Team working

The concept and philosophy of team working has broken down the boundaries of tightly defined

jobs and hierarchical structures of Fordist regimes (Delbridge, 2003). Though team working has

been accused of concertive control (Barker, 1993), it can be credited for creating a new

management culture based on trust and openness (Pfeffer, 1998). The evidence from the

establishments of banking, IT and pharmaceutical firms in Pakistan indicates that the concept of

team working has diffused to large number of workplaces. The Chi-square results table 5.11 shows

no significant differences between the establishments of MNCs and local firms in the use of the

practice of team working.

Table 5.11 Chi-Square Results for the practice of Self-directed Teams

The evidence suggests that after attainting popularity in major industrial countries US, UK, Japan,

Australia and Switzerland (Clegg et al., 2002) the practice is in wide spread use in a developing

country Pakistan. A closer examination of the results reveals that 99 per cent establishments of

MNCs and 96 per cent establishments of the local firms agreed that they organized workers in self-

directed work teams. Given the popularity of team working in the establishments in Pakistan, it is

safe to argue that a significant presence of Japanese auto and electronic manufactures in Pakistan

and the Western multinationals in Pakistan has resulted into wide spread diffusion of the practice.

The overwhelming presence of team working in establishments in Pakistan demands a full scale

investigation to determine the practice shape and style whether it resembles the Japanese or the

Scandinavian model. Due to an overwhelming agreement of the establishments with the presence

of the practice, the thesis was not able to compute the variable into the logistic regression model to

examine its effects on human resource and performance outcomes. The Chapter next examines

the differences between the establishments of MNCs and local firms with regard to the practice of

high compensation contingent on performance.

Yates Continuity Correction

df Asymp. Sig

(2-sided)

Are non-managerial employees organized in self-directed teams in performing a major part of their work role

1.644 1 .200

175 5.6 High Compensation contingent on Performance

The practice of performance-related pay is a vital component of HPWS system that has

increasingly become popular not only in US and UK but also in Japan, a seniority based

management culture (Marchington and Wilkinson, 2008; Chang, 2006; Cin et al., 2003). The

empirical evidence from the establishments in Pakistan indicates a low usage of the practice for the

non-managerial employees, though the establishments of MNCs are more likely to offer incentives

such as profit sharing and share ownership, however there was no difference between the

establishments with regard to the practice of additional pay or pay rise as result of job performance

or work in a team.

Table 5.12 Chi-Square Results for the practice of High Compensation Contingent on Performance

A closer examination of the evidence reveals that 56 per cent i.e. 73 out of 131MNC

establishments rewarded their non-managerial employees with schemes as profit sharing or share

ownership as compared to 39 per cent i.e. 100 out of 235 local establishments. However in the

case of additional pay or pay rise due to job performance or work in a team only 43 per cent i.e. 56

out of 130 MNC establishments and 37 per cent i.e. 96 out of 261 local establishments agreed with

the presence of the practice at their workplaces.

It has been argued in HPWS literature that employees in US prefer performance-related pay

initiatives on the behalf of employers (Osterman and Burton, 2010). Moreover extrinsic rewards are

an essential component and distinguished features of high performance work systems (Huselid and

Becker, 1996; Becker and Huselid, 1998). In absence of such rewards it is difficult to encourage

employees to work hard and create an environment of personal or team accountability

Yates Continuity Correction

df Asymp.

Sig

(2-

sided)

Can the non-managerial employees participate in profit sharing or share ownership schemes based on their job performance or team performance

9.311 1 .002

Are they offered additional pay or have been given pay rise in the past year as a result of job performance or work in a team.

1.194 1 .274

176 (Vandenberg et al., 1999). The empirical evidence from establishments in Pakistan indicates that

the practice of profit-sharing or share ownership has a significant positive effect on performance

outcomes. The results are discussed in detail in chapter 7. As opposed to Khilji (2002) argument of

non-existence of performance related rewards system in organizations in Pakistan, the current

study captures preliminary evidence of diffusion performance-related pay incentives in number of

establishments surveyed in Pakistan. The evidence also reveals that there is ample opportunity for

further coherent and consistent implementation of the practice. High performance literature

recommends introduction of performance-related pay and argues that such an initiative is

equivalent to a change in work routines that has strong motivational impact that results into

productivity and performance gains for the organization (Dowling and Richardson, 1997; Wood and

de Menezes, 2008). It has been argued in the literature that much of the performance gains

associated with the HPWS are attributable to proper design, just and equitable implementation of

the practice (Becker and Huselid, 1998; Guthrie, 2000). In view of the strong recommendation of

the practice by the HPWS research and theory, the current study hopes that the practice will diffuse

to more establishments in Pakistan in the near future. The next section discusses the results with

respect to the practice of performance review, appraisal and career development.

5.7 Performance Review, Appraisal and Career Development

Performance appraisal has become an effective tool for not only managing an employee

development but also for clarifying goals, training needs and ultimately improving organizational

performance (Bach, 2005). The results with regard to the practice of performance review, appraisal

and career development indicate that though in statistic terms the MNCs were more likely to

implement the practices such as performance appraisal on routine basis, proportion of pay

determined by performance appraisal and information on how employees do their job, a closer

examination reveals that the practices have diffused to a large number of local establishments in

Pakistan.

177 Table 5.13 Chi-Square Results for the practice of Performance Review, Appraisal and Career Development

Whereas 100 per cent establishments of MNCs agreed with the presence of the above practices at

their workplaces, a large number of local firms i.e. 94 to 95 per cent of the establishments surveyed

also agreed with the coverage of the practices at their workplaces. As far as evidence with regard

to formal performance feedback from more than one source is concerned both the establishments

of MNCs and local firms indicated a low coverage of the practice for their non-managerial

employees. Some 44 per cent of MNC establishments as compared to 40 per cent of local ones

agreed with the practice of providing feedback from more than one source to non-managerial

employees.

Overall the results suggest a comprehensive use of performance appraisal practices in the

establishments of MNCs and local firms. The results are promising for the sectors of banking IT

and pharmaceutical companies in Pakistan; as the evidence shows that firms by implementing a

comprehensive performance management approach have realized the importance of aligning

individual performance to corporate goals as Bach (2005) argues that such an alignment is

necessary for employee development and part and parcel of best practice HRM. High performance

literature argues that appraisal systems have significant association with performance outcomes

(Huselid, 1995). The results of the logistic regression confirm that providing feedback from more

than one source to employees has significant effect on performance outcomes. The details of the

results are discussed in the chapter 7. The next section evaluates the results with regard to

practice of reduction of status differences/ harmonization considered as a distinct recognizable

feature of high performance management.

Yates Continuity Correction

df Asymp.

Sig

(2-sided)

Receive formal performance appraisal or evaluations on routine basis

6.290 1 .012

Receive formal performance feedback from more than one source (i.e. feedback from several individuals such as supervisors, peers etc.

.647 1 .421

Proportion of pay determined by performance appraisal 4.240 1 .039

Performance feedback provides information on how they do their job.

5.920 1 .015

178 5.8 Reduction of Status Differences/ harmonization

Symbolic egalitarianism is an essential condition for creating an environment suitable for

implementation and success of high performance workplace practices such as employee

participation and involvement and team working (Pfeffer, 1998). The results of Chi-square test

(table 5.14) shows that there are no significant differences between the establishments of MNCs

and local firms with regard to the practice of reduction of status differences between managerial

and non-managerial employees.

Table 5.14 Chi-Square Results for the practice of Reduction of Status Differences/ Harmonization

Both the establishments of MNCs and local firms indicate a high use of the practice for their non-

managerial employees. A closer examination of the evidence indicates that some 88.5 per cent i.e.

116 out of 131 establishments of MNCs and 82 per cent 211 out of 257 local establishments

agreed that there are few status differences in the establishment between managers and rest of the

employees. They are all on the same level. A number of studies indicate that the practice is

essential for improving performance outcomes. The results of the current study confirm the

positive and significant effect of the practice on performance outcomes. The results are in sharp

contrast to picture of high status differences painted by Khilji (2002) of Pakistani organization. The

results of the current study reveal that the establishments in Pakistan have a new mind set about

treating their workers. Pfeffer (1998) argues that reducing status differences is an important

gesture that makes the employees feel valuable and equal to any other cadre of employees and

aligns their commitment and effort towards achieving organizational goals. The importance of this

argument becomes manifold for knowledge intensive sectors investigated in Pakistan where

workers provide innovative solutions to many problems and to develop a sense of common fate

and open communication system is ever important (Pfeffer, 1998). The logistic regression results

Yates Continuity Correction

df Asymp.

Sig

(2-sided)

There are few status differences in the establishment between the managers and the rest of the employees. They are all on the same level.

2.258 1 .133

179 confirm that the practice of reduction in status differences had a significant positive effect on

number of performance outcomes.

Though many theorists critique the practice as a deception to capture employees heart and minds

(Knight and McCabe, 2000) in light of thinning distinction between white and blue collar workers

and need for multi-skilled, flexible and co-operative team work the practice has become popular

and diffused from the Japanese plants to Western management culture (Sisson and Storey, 2000)

and the current study provides a clear evidence of its diffusion among the establishments in

Pakistan. The chapter proceeds to discuss evidence with respect to the least diffused HPWS

practice of work-life balance in Pakistan.

5.9 Work-life Balance

The changing demographic trends in the Western world have increased the demand for human

resource practices that enable the employees to strike a balance in work-life activities (Goodstein,

1994; Ingram and Simons, 1995). This section reviews evidence for the practice of work-life

balance from the establishments of MNCs and local firms in Pakistan. The evidence indicates that

both the establishments of MNCs and local firms allowed the employees career break for child

care, elder care and leisure activities. A closer examination of the evidence reveals that some 61

per cent i.e. 80 out of 131 MNC and 57.5 per cent i.e. 150 out of 261 local establishments agreed

with the coverage of the practice for non-managerial employees. The evidence further reveals low

coverage of flexible working arrangement practices for non-managerial employees. Evidence

indicates no significant differences between the establishments of MNCs and local firms with

regard to practices of change in shift pattern and home working.

Research evidence indicates that some 25 out of 65 responding MNC establishments agreed that

they allowed workers a change in shift pattern as compared to 31 out of 107 responding local

establishments. Similarly some 28 out of 110 MNC establishments agreed that they allowed home

working as compared to 42 out of 188 local establishments. However MNCs were more likely to

allow workers to increase/ decrease working hours as compare to local establishments though the

difference is only significant at 10 per cent (p < .074).

180 Table 5.15 Chi-Square Results for the practice of Work-Life Balance

Empirical evidence further indicates that 56 out of 115 MNC establishments agreed that they

allowed the non-managerial employees increase/ decrease in working hours as compared to 93 out

of 244 local establishments. In a similar way MNCs were more likely to allow job sharing to non-

managerial employees as compared to local firms. Some 41 out of 114 MNC establishments

agreed with the practice of job sharing as compared to 32 out of 234 local establishments.

The empirical evidence indicates that apart from the practice of career break the rest of flexible

work-life balance practices were not that popular in the establishments in Pakistan. However it is

reassuring that at least some of the establishments were implementing and extending the flexible

working practices to their non-managerial employees. Though in the sectors surveyed a sufficient

number of women were employed, at the moment employees in Pakistan do not enjoy any

institutional support that may force the firms to implement work-life balance practices as workers in

US and EU do. Given the importance of legal, political and employees’ pressure for implementation

of work-life balance and flexible working arrangements (Goodstein 1994; Osterman 1995; Lewis et

al., 2007) it is understandable that in absence of such pressures the establishments of both MNCs

and local firms in Pakistan are reluctant to implement such practices.

The existing research provides strong evidence that work-life balance practices generate a feeling

of reciprocity through the social exchange process that can enhance organizational productivity

(Lambert, 2000). The evidence from the establishments of MNCs and local firms in Pakistan

Yates Continuity Correction

df Asymp.

Sig

(2-

sided)

The establishment allows career breaks to employees for child care, elder care and leisure activities

.329 1 .566

The establishment provides flexible working arrangement such as change in shift pattern

1.254 1 .263

The establishment provides flexible working arrangement of increase/decrease of working hours

3.182 1 .074

The establishment allows job sharing 21.650 1 .000

The establishment allows home working .221 1 .638

181 suggests that at the time of the research, work-life balance practices were the least diffused among

the MNCs and local firms in Pakistan; however as the number of women entering the workforce is

on the rise such practices can have a positive effect on organizational performance outcomes.

The state of the diffusion of work-life balance practices in Pakistan is not much different from the

rest of the world, as studies indicate that even in industrialized countries like UK and US the

implementation of work-life practices is in initial stages and lacks a coherent implementation. For

example Wood et al. (2003) findings suggest that it is only large British firms that implement work-

life balance practices as compared to small firms. Another study by Fleetwood (2007) indicates that

work-life practices are in the process of becoming a norm in British workplaces. If the work-life

balance practices are still in process of becoming a norm in developed economies, it is quite

understandable that in societies like Pakistan which has pre-defined conceptions about the role of

men and women, the work-life balance practices will take time to diffuse among the firms. The

current study thus makes a contribution by assessing the state of work-life balance practices well in

time. The results of the logistic regression indicate that the practice of allowing career break to non-

managerial employees had a significant effect on number of performance outcomes.

Before concluding the chapter, the study briefly provides details of the effects of control variables

i.e. nature of business either manufacturing or services establishment, the number of years an

establishment has been working in Pakistan, number of employees working at the establishment

and proportion of workforce made up of non-managerial employees.

5.10 Nature of Business and High Performance Workplace Practices

There is a strong argument in high performance workplace practices literature that industry context

plays an important role in determining the HR system of a firm (Datta et al., 2005). Previous

research in the field has mostly focused on manufacturing settings, however studies in the service

sectors have found that practices are equally applicable in these sectors though there may be

contextual differences (Batt, 2002; Batt et al., 2002). Significant differences between the nature of

business i.e. a manufacturing unit or service establishment and diffusion of high performance

workplace practices were found in Pakistan. It was found that manufacturing firms were more likely

to have a policy of no compulsory redundancy (p = .000) and expected their employees to stay till

182 retirement (p = .014). Similarly manufacturing firms were more likely to offer profit sharing or share

ownership schemes to non-managerial employees (p = .007) and additional pay or pay rise as

result of job performance or work in a team (p = .000). The manufacturing firms were also more

likely to reduce status differences and treat all employees at the same level (p = .000). The

manufacturing firms offered more work-life balance opportunities such as career breaks (p = .029)

and flexible working arrangements such as change in shift pattern (p = .000) and change in

working hours (p = .000). On the other hand establishments of service firms were more likely to

implement HPWS practices as employment tests (p = .000), train non-managerial employees in

variety of jobs (p = .000) and generic skills (p = .002). From the category of EIP practices it was

found that service firms were more likely to share strategic information with their non-managerial

employees (p = .000). With respect to practices of performance review, appraisal and career

development the findings indicate that establishments belonging to service sector firms implement

them in a consistent manner. The service sector non-managerial employees were more likely to

receive a formal performance appraisal on routine basis (p = .000), receive feedback from more

than one source (p = .001), have a proportion of pay determined by performance appraisal (p =

.001) and receive performance feedback that provides information on how they do their jobs. From

the flexible working perspective the service sector establishments were more likely to allow job

sharing (p = .000) and home working (p = .004) to their non-managerial employees.

The results reveal some important differences with respect to nature of business and diffusion of

HPWS practices. The interest and investigation of high performance practices arose among the

academics from the manufacturing sector. Finding indicate that manufacturing establishment in

Pakistan were more oriented towards offering a promise of employment security and in particular

were willing to share profits and offered rewards based on individual or team performance. Though

the overall findings suggest a low coverage of the practice of compensation contingent on

performance an essential component of HPWS the differences between the sectors indicate that

the practice was common among the manufacturing establishments in Pakistan. The evidence

suggests that establishments of banking and IT companies were more likely to offer opportunities

for general and generic training and had a more consistent coverage of EIP and performance

review practices for non-managerial employees they were reluctant to share any additional rewards

with their employees. It seems to be a surprising finding; however it may be a case that banking

and IT companies pay relatively a high compensation package and do not provide any additional

compensation contingent on performance, though considered essential for the motivation and

183 retention of the employees in the aforementioned sectors. On the whole sector differences with

respect to the diffusion of high performance workplace practices were quite visible among the

establishments of manufacturing and service firms in Pakistan.

5.11 Age of the Establishment and High Performance Workplace Practices

Age of a firm has been associated with advantage or disadvantage a firm may have in adoption of

HPWS practices (Guthrie et al., 2009). The findings reveal that diffusion of the HPWS practices

was associated with the number of years an establishment was operational in Pakistan. The firms

that have been operational for 11 or more years were more likely to adopt practices such as

expectation that employees stay till retirement (p = .000), offer a vacant vacancy to existing

employee (p = .000). Recruitment process in such firms was able to generate as many applicants

as possible (p = .001) and they used one or more tests prior to hiring (p = .000). These firms were

more likely to cross train (p = .000) and provide non-managerial employees training in generic skills

(p = .000). The age of 11 or more years was also significantly associated with adoption of practices

as designing programmes to elicit employee involvement and participation (p = .000) and

conducting of attitude surveys to identify employee morale problems (p = .000). The findings

indicate that such firms were more likely to offer profit sharing (p = .000) and reduce the status

differences in the establishment (p = .022). However firms that were operational for under 11 or

more years were more likely to have policy of no compulsory redundancy (p = .000) and offer work-

life balance practices as job sharing (p = .044). The empirical findings indicate that age of the firm

was associated with number of HPWS practices diffused among the establishments in Pakistan.

5.12 Organizational Size and High Performance Workplace Practices

Firm size has been associated with the adoption of HPWS practices as well as performance

outcomes (Huselid, 1995; Datta et al., 2005; Guthrie, 2001; Guthrie et al., 2009). The findings

indicate that establishments having more than 93 employees were more likely to offer a promise of

no compulsory redundancy (p = .015) and were more likely to expect employees to stay till

184 retirement (p = .032). Similarly such establishments were more likely to have programmes to elicit

employee involvement and participation (p = .000) and were likely to conduct attitude surveys (p =

.090). In the same way establishments with more than 93 employees were more likely to have

practices such as profit sharing, offered additional pay due job performance or work in a team,

reduce status differences and offer career breaks and flexible working arrangements such as

change in shift pattern and working hours. In all the cases the relationship was strongly significant.

However with regard to practices of performance review, the establishments having less than 93

employees were more likely to provide formal performance feedback from more than one source (p

= .041), provide information on how a job was done (p = .052) and would determine a proportion of

pay on the basis of performance appraisal (p = .043). The results on the whole indicate that the

age of the firm was significant predictor of diffusion of the practice in case of number of practices.

5.13 Proportion of Workforce made up of non-managerial Employees and High Performance

Workplace Practices

The number of managerial employees a firm employs may have implications for the type of HR

system it implements. HPWS systems are generally associated with less number of managerial

hierarchical positions. The current study found that establishments having less than 83 per cent

employees in the non-managerial cadre in Pakistan were more likely to expect them to stay till

retirement (p = .000), train employees in variety of jobs (p = .011) and were more likely to have use

EIP practices as attitude surveys (p = .049) and share strategic information with non-managerial

employees (p = .033). Similarly such firms were more likely to generate applicants to fill in

vacancies and conduct employment tests prior to hiring (p = .000).

On the other hand the establishments having more than 83 per cent employees in the non-

managerial cadre were more likely to reduce status differences (p = .000) and offer flexible working

arrangements such as change in working hours (p = .000) and allow home working (p = .009). On

the whole the control variable of proportion of workforce made of non-managerial employees was

not significant predictor of diffusion with respect to number of practices, i.e. policy of no compulsory

redundancy, internal labour market, training in generic skills, programmes designed to elicit

participation and involvement, sharing relevant operating performance information, team working,

185 formal performance appraisal on routine basis, feedback from more than one source, performance

feedback provides information on job done, proportion of pay determined by performance

appraisal, access to grievance resolution procedure, profit sharing or share ownership, additional

pay or pay rise as result of job performance or work in a team, career breaks, change in shift

pattern and job sharing.

5.14 Conclusion

The purpose of this chapter was to provide evidence and explore the diffusion of best practice high

performance workplace practices among the establishments of multinational and local firms

operating in industrial sectors of banking, information technology and pharmaceutical in Pakistan.

The industrial sectors sampled in Pakistan were special as they have been exposed to foreign

direct investment, fast-changing technology and markets. Thus the thesis expected that if local

firms have learnt about HPWS practices from MNCs, it is likely that these three sectors will be the

ones were local firms will have similar HPWS practices as to MNCs.

The empirical evidence indicates that multinational establishments were more likely to implement

the HPWS practices in a consistent and coherent manner. At the same time the local firms have

similar HPWS patterns as MNCs and have introduced a number of HPWS practices at their

establishments. The evidence further indicates that control variables have a significant association

with the adoption of certain high performance workplace practices. The association of the control

variables on adoption of a particular high performance practice by an establishment in Pakistan are

further explored in Chapter 6. However while interpreting the results of the Chapter, a few

limitations must be considered. The current study does not examine the underlying processes, the

local conditions or institutional contexts. However the current study did comprehensively captured

the evidence with regard to existence and implementation of the latest human resource

management practices in Pakistan. This is an important step forward, as till now there is no study

that sheds any light on the diffusion of high performance workplace practices in Pakistan.

The diffusion of the practices to MNCs and local firms operating in a very different labour market

confirms many important assumptions of the best practice approach. The findings of this study

validate the arguments of Pfeffer (1998) and Huselid (1995) that HRM policies and practices

186 identified as high performance workplace practices are applicable in all sort of organizations

regardless of the geographical or cultural differences. Though the thesis does not contests the best

fit argument that practices should be adapted according to the context, however the finding suggest

that perhaps the case of diffusion in Pakistan is more aligned to Huselid (1995) argument that

simple adoption of such practices is more important than any internal or external alignment. It has

been argued in literature that universalistic perspective is consistent with the arguments of

institutional theory (Paauwe and Boselie, 2003; Paauwe, 2009). On the basis of available evidence

the study speculates that findings in Pakistan to an extent reflect an institutional shade of

universalistic perspective, in particular an overwhelming implementation of certain HPWS practices

reflects the institutional pressure the establishments face in order to attain legitimacy in the eyes of

different stakeholders.

An overwhelming presence of certain HPWS practices in diverse business sectors in Pakistan

lends credence to an important argument prevalent in literature that critiques the contingency

perspective. The argument by Marchington and Wilkinson (2008) and Legge (2010) carries weight

that contingent variables are subject to constant change that makes it impossible for the business

to constantly remodel its HR style. Many important theorists have critiqued the contingency

perspective for its limited scope as it is impossible to model all the contingent variables, a task

termed as chimera in literature (Purcell, 2002; Marchington and Wilkinson, 2008). The evidence

with regard to overwhelming presence of number of HPWS in the establishments in Pakistan

substantiates the arguments of Pfeffer (1998) and Barney and Wright (1998) that a simple and

straightforward application of the practices is more prevalent in the firms as they do not want to

ignore best practices and implement them to varying degree to avoid any competitive

disadvantage.

An important aspect of this thesis is that it provides evidence on the state of change in

management trends and practices in the establishments of Pakistan. The change was assessed on

the basis of earlier speculations by Khilji (2002) regarding the management trends in Pakistan. As

compared to earlier conceptions that management in Pakistan reflects bureaucratic model, the

current evidence from the establishments of multinational and local private firms confirms that the

management model in Pakistan has changed. From the evidence it is safe to infer that the current

management style does reflect a movement towards high commitment/ involvement and

performance models. It is interesting to note that EIP and team working practices that have been

187 associated with organizational democracy and open working environment in US and UK have

diffused to a large number of establishments in Pakistan. As already mentioned according to a

strand of HPWS literature this can be termed as genuine transcendence of Taylorism (Wood and

wall, 2007). The chapter to an extent argues that firms in Pakistan have started treating their

employees’ as strategic assets that can play an important role in organizational performance. The

evidence from the establishments in Pakistan substantiate the Pfeffer (1994) argument that people

and how a firm treats them is an essential key to organizational performance.

On the basis of empirical evidence available the current study confirms that best practice high

performance workplace practices have diffused to a large number of multinational and local

establishments in Pakistan. Again it is quite evident from the results of Chi-square tests that the

establishments of MNCs have implemented the high performance workplace practices in a more

consistent and comprehensive manner as compare to the local firms. In particular the MNCs have

comprehensively implemented the practices in the domain of extensive training, learning and

development, employee involvement and participation: worker voice and high compensation

contingent on performance as compared to local firms. Though the MNCs did not provide any

guarantees of employment security to employees but still kept the internal labour market open and

expected the employees to stay till retirement. An important finding was that at the moment, the

practices related to work-life balance have been ignored by both establishments of MNCs and local

firms in Pakistan. This chapter discussed the overall picture and the state of differences between

the establishments of MNCs and local firms regarding the diffusion of high performance HRM.

However from a high performance workplace practices literature perspective the consideration of

the effects of individual practices on subjective human resource and performance outcomes is a

very important aspect of their successful implementation. This Chapter did not discuss the

performance effects of the practices; the Chapter 7 covers the performance aspects in detail, an

important factor that could influence the adoption of the HPWS practices in Pakistan. Before

examining the association of practices with human resource and establishment performance

outcomes, the Chapter 6 by running a series of logistic regression examines the associations of

control variables in addition to main variable of interest i.e. subsidiary of MNC or local firm on the

adoption of high performance workplace practices by the establishments in Pakistan.

188 Chapter 6 Ownership of the establishment and the association of control variables with the

diffusion/adoption of an HPWS practices in Pakistan

The previous Chapter examined the diffusion of high performance workplace practices in Pakistan;

it first of all examined an overall state of diffusion of HPWS practices in establishments of banking,

information technology and pharmaceutical sectors, and secondly the Chapter explored the

differences in the diffusion of HPWS practices between the establishments of multinational and

local firms in Pakistan. The Chapter argued that HPWS practices have diffused to varying degree

among the establishments in Pakistan. The empirical evidence indicated that 11 out of 26 practices

measured by the study have diffused to more than 85 per cent of the establishments in Pakistan

irrespective of their size, age and industrial sector. The evidence thus strongly supported the

universal application of at least 40 per cent of the HPWS practices measured by the study in

Pakistan. On the other hand findings of the study also indicated that work-life balance practices, in

particular the flexible working arrangement practices were diffused to low number of

establishments in Pakistan. If the study excludes the flexible working practices from the total count

of the practices, then the percentage of the HPWS practices diffused to more than 85 per cent

establishments’ in Pakistan increases to 50 per cent.

The previous Chapter also identified the practices, where with regard to diffusion of such practices

there were distinct differences between the establishments of MNCs and local firms. The practices

belonged to categories as employment security, extensive training, learning and development,

employee involvement and participation, high compensation contingent on performance and

performance review, appraisal and career development. This Chapter further explores the above

mentioned high performance workplace practices between the two groups of establishments whilst

controlling for other factors that are likely to influence the adoption of such practices. The main aim

of the Chapter is to examine if the differences between the multinational and local establishments

with regard to the diffusion of the practices retain their significance or not, when run in a logistic

regression model that controls for the firm characteristics that is the control variables, nature of the

business, size and age of the firm and proportion of workforce made up of non-managerial

employees. Given the importance of universalistic and contingency approaches within the HRM

literature, the chapter will discuss the association between the control variables and the high

performance workplace practices in order to shed light on this fundamental issue.

189 To examine the links between the nationality of the ownership and the adoption of the HPWS

practices in the establishments of MNCs and local firms in Pakistan, a regression analysis was

undertaken with a number of control variables as well as a dummy variable to indicate the local or

foreign ownership of the establishment. The regression analysis was undertaken for a reduced

number of practices as the evidence from the descriptive statistic indicated that a number of HPWS

practices have diffused to large number of establishments in Pakistan. Similarly the flexible work

arrangement practices were also dropped from regression analysis, as again the descriptive

statistic evidence indicated a low usage of such practices by the establishments in Pakistan. Table

6.1 outlines the practices that have been dropped from further analysis. The theory of multivariate

regression analysis informs that if there is less than 10 per cent variation in the responses of the

informants for a particular variable in question it is highly likely that the variable will record a B

value of more than 10, indicated by the variables in the equation table in the logistic regression

output. The recommended statistic is less than 10. If the value exceeds the recommended statistic

the variable needs to be taken out of the model as it infringes the minimum sufficiency

requirements of multivariate analysis (Field, 2009). Keeping the minimum sufficiency requirements

in mind a number of study variables, where the descriptive statistic indicated that there is less of

variation in responses of the mangers or where there were a large number of missing cases, all

such variables were taken out of the subsequent regression models not only for the purpose of

current Chapter but were also dropped from logistic regression analysis in Chapter 7 that explores

the performance associations of HPWS practices with human resource and organization outcomes.

As a general observation, the study discovered that a number of HPWS practices retained their

significance in presence of control and dummy variable when tested for diffusion differences by

running a regression model. In general the results of the logistic regression were consistent with

the findings of the Chi-square test. The logistic regressions also indicated that a number of control

variables have a significant association with the dependent variable of HPWS practice. These

associations are discussed in detail in the following paragraphs. The details of the logistic

regression results are available in Appendix D (D1 to D14).

190 Table 6.1 HPWS practices excluded from the Logistic Regression Analysis

Employment Security and ILM When a job becomes vacant, management normally tries to fill them with people from inside the organization rather than recruiting from outside. Extensive Training, Learning and Development Non-managerial employees receive intensive/extensive training in company specific skills(e.g. task or firm specific training) Employee Involvement and Participation: Worker Voice Non-managerial employees are provided with operating performance information (e.g. quality, productivity, etc.). Have access to formal grievance/ complaint resolution procedure. Self-directed Teams Performance Review, Appraisal and Career Development Non-managerial employees receive formal performance appraisal or evaluation on routine basis. Proportion of pay is determined by performance appraisal Performance feedback provides information on how they do their job Work-life Balance Change in shift pattern Increase/ decrease in working hours Job sharing Home working

The dependent variable of high performance workplace practices were recoded as 0 = no/disagree,

indicating no coverage of the practices for non-managerial employees at an establishment and 1 =

yes/agree, indicating coverage of the practice for non-managerial employees at an establishment.

Table 6.2 provides definitions of the control variables.

Table 6.2 Definition of Control Variables

Control Variables Values and labels

Main nature of the business at the establishment.

0 = manufacturing ; 1 = services

Subsidiary of multinational or are you a local firm

0 = MNC establishment; 1 = Local establishment

How long the establishment has been working in Pakistan

0 = up to 10 years ; 1 = 11 or more years

Number of Employees 0 = below 93.1480; 1 = above 93.14801

Proportion of workforce made up of non-managerial employees

0 = less than 83 per cent; 1 = more than 83.01 per cent

191 Tables 6.3 to 6.9 provide a brief summary of the results for each HPWS practice regressed against

the control variables. The Tables also provide the vital model statistic such as the Omnibus Test of

Model Coefficients and Hosmer and Lemeshow Test to give an overall indication of the model

goodness of fit that is how well the model performs. The recommended value of significance for the

Omnibus test is less than .05 and for the Hosmer and Lemeshow test, it is greater than .05.

The analysis begins by running the HPWS practices of employment security as dependent variable

against the control and dummy variable of firm ownership. Table 6.3 shows the results for the

logistic regression.

Table 6.3 Ownership of the Firm and Diffusion of Employment Security and Internal Labour Market Practices

Predictor---Control Variables Dependent variables----Employment security practices

Policy of no compulsory redundancy Expectation to stay till

Retirement

B values B values

Subsidiary of MNC or local firm 1.308*** .891***

Main nature of the company Manufacturing/ Services

-1.306 *** -.805**

Percentage of work-force made up of non-managerial employees

-.518 * -1.652***

Number of employees .633* .388

Age of the Establishment -1.772*** .982***

Model Specifications X2 (5, N=388) = 94.020, p

<.001 Hosmer & Lemeshow .857

Cox & Snell R Square .215 Nagelkerke R Square .289

X2 (5, N=385) = 88.582, p <

.001 Hosmer & Lemeshow .289

Cox & Snell R Square .206 Nagelkerke R Square .289

B values taken from the model

significant at 10 per cent * significant at 5 per cent ** significant at 1 per cent ***

Model Specification provides values for Omnibus test of model coefficients and Hosmer and Lemeshow test. 5 = df (degree of freedom) and N = number of cases included in the analysis.

The results of the logistic regression indicate that the establishments of local firms are more likely

to offer a policy of no compulsory redundancy and expect their employees to stay till retirement.

The Cox & Snell and Nagelkerke R statistic indicates that on the whole the model explains 21.5 per

cent to 28.9 per cent variance in the diffusion of HPWS practice of no compulsory redundancy. The

Hosmer and Lemeshow test recorded a value of .857 which is greater than the recommended

192 value of .05, thus the test supported the model as being statistically significant in predicting the

variance in the dependent variable. In a similar manner, the practice of firm expectation that all

employees will stay until retirement recorded a significant Hosmer and Lemeshow value of .289

thus supporting the model. The Cox & Snell and Nagelkerke R square statistic indicate that the

model as whole explained 20.6 per cent to 28.9 per cent of the variance in the diffusion of the

practice of an expectation by the establishment that all employees will stay until retirement. The

association is strongly significant at one per cent level. The logistic regression results are

consistent with the Chi-square test results, which indicated that local establishments were more

likely to adopt the employment security and internal labour market practices as compared to

multinational establishments. The evidence confirms that the employment security is only HPWS

practice that local firms are more likely to adopt in Pakistan. Perhaps the offer employment security

by the local firms in Pakistan is a reflection of distinct differences between employment patterns

that exist between the two set of establishments in Pakistan. Does the adoption of the practice

results into any performance gains for the local establishments, the Chapter 7 will examine the

empirical evidence regarding this aspect of the HPWS practices.

Findings of the logistic regression indicate interesting association of control variables with the

adoption of the employment security and internal labour market practices in Pakistan. The

establishments with less than 83 per cent of the workforce consisting of non-managerial employees

are more likely to adopt the practices of no compulsory redundancy (p < .05) and expect their

employees to stay till retirement (p < .001). As already discussed the local establishments are more

likely to offer employment security promise to their employees. The evidence with regard to

proportion of workforce made of non-managerial employees indicates that local firms have a higher

proportion of managers at their establishments compared to their total workforce. The general

principle underlying the high involvement and commitment models argues that firms adopting such

systems need less number of managers as shop floor employees are delegated to take decisions

that concerns the daily management of the task (Lawler et al., 2001, Wall and Wood, 2005). On

the contrary, the evidence in case of local establishments in Pakistan indicates that though such

establishments are adopting HPWS practices, still they have a higher number of managers at their

establishments as a proportion of total workforce. This perhaps suggests that diffusion of the high

performance workplace practices in local firms is at initial stages in Pakistan and they need some

time before they can fully implement the system and reduce the layers of management at their

establishments.

193 The results further indicate that establishments of manufacturing firms are more likely to have a

policy of no compulsory redundancy (p < .001) and expect their employees to stay till retirement (p

< .05). A possible explanation for the difference between the sectors may be the different

employment patterns: in the service sector, employees may expect to change the jobs more

frequently to gain promotion or to overcome the risk of organizational failure; by contrast,

employees in the manufacturing sector may gain promotion by developing more firm-specific skills

and by continuing the employment relationship within the same company. This result should,

however, be interpreted with caution as this is the only study examining any such links in Pakistan.

For the control variable of number of employees, the establishments with more than 93 employees

are more likely to offer a policy of no compulsory redundancy. The association is weak and

significant at 10 per cent level only. The results are quite understandable as size of the firms is one

indication of its success and growth in the market, perhaps giving the establishment a financial

capacity to implement employment security practices for their employees.

Findings with regard to control variable of age of the firm indicate that establishments with less

than 10 years of operations in Pakistan are more likely to have a policy of no compulsory

redundancy (p < .001), whereas establishments with 11 or more years of operations were more

likely to expect the employees to stay till retirement. This suggests that younger firms in Pakistan

avoid unnecessary downsizing. Newly incorporated establishments in Pakistan perhaps try to

retain their employees and avoid above average turnover of employees in fear of financial costs

involved in rehiring and retraining the employees. However it is important to consider that

downsizing due to product market conditions or discharging non-performing employees does not

undermine the principle of employment security (Marchington and Wilkinson, 2008). A possible

interpretation keeping in view the Marchington and Wilkinson (2008) argument can be that though

such firms claim to provide an explicit promise of employment security to their employees, the

promise is linked to such establishments’ product market conditions in Pakistan. On the other hand

the evidence suggests that establishments with 11 or more years of operations in Pakistan do not

offer any explicit promise of life-long employment but still keep the internal labour market open for

their employees. This indicates that such establishments are keener to retain the best employees

and provide them with opportunities to develop career within the firm. This also suggests that such

firms perhaps have a sophisticated HR system in place and use a well- developed appraisal

system that enables them to identify the right employees for career development through the

194 mechanism of internal labour market. The finding with regard to control variables of size and age of

the firm are consistent with wider theoretical arguments of contingency perspective that size and

age of the firms is positively associated with existence of well-developed HR practices and their

association with performance outcomes (Wood and de Menezes, 2008 and Guthrie et al., 2009).

A number of control variables have a significant association with the HPWS policy of employment

security and internal labour markets in Pakistan, the important finding to consider is that the

differences between the establishments of MNC and local firms remain significant. The findings of

the regression analysis confirm that local firms as compared to multinational firms were more likely

to have the policy of employment security and promote internal labour markets as compared to

multinational establishments.

The Chapter next examines the results for the logistic regression results for the policy of selective

hiring and sophisticated selection.

Table 6.4 Ownership of the Firm and Diffusion of Selective Hiring and Sophisticated Selection Practices

Predictor---Control Variables Dependent variables---selective hiring and sophisticated

selection practices

Recruitment process generates applicants Employment Tests

B values B values

Subsidiary of MNC or local firm .788 .177

Main nature of the company Manufacturing/ Services

1.532 ** 3.559***

Percentage of work-force made up of non-managerial employees

-1.582 ** -.126

Number of employees .410 1.5000***

Age of the Establishment 2.629*** 2.670***

Model Specifications X2 (5, N=379) = 44.311, p

<.001 Hosmer & Lemeshow .497 Cox &Snell R Square .319

Nagelkerke R Square .427

X2 (5, N=383) = 146.965, p <

.001 Hosmer & Lemeshow .024

Cox & Snell R Square .121 Nagelkerke R Square .161

B values taken from the model

significant at 10 per cent * significant at 5 per cent ** significant at 1 per cent ***

Model Specification provides values for Omnibus test of model coefficients and Hosmer and Lemeshow test. 5 = df (degree of freedom) and N = number of cases included in the analysis.

195 Table 6.4 shows the results for the regression analysis undertaken to examine association of

control variables with the adoption of the practices of selective hiring and sophisticated selection in

Pakistan. The Cox & Snell and Nagelkerke R square statistic indicates that on the whole the model

explains 31.9 per cent to 42.7 per cent of the variation for the diffusion of the practice of recruitment

process generates as many good/qualified applicants for the establishments as they need in

Pakistan. The Hosmer and Lemeshow test with a value of .497 supported the model as being

statistically significant. However for the practice of one or more employment test used prior to hiring

the Hosmer and Lemeshow test with a value of .024 did not support the model as being statistically

significant. The Cox & Snell and Nagelkerke R square statistic indicates that on the whole the

model explains 12.1 per cent to 16.1 per cent of the variance for the diffusion of the practice to the

establishments in Pakistan. This variance can be considered as relatively low compared to the

recruitment practice of generating as many good/ qualified applicants. Findings of the logistic

regression indicate that ownership of the firm did not have any significant association with the

adoption of the practises of selective hiring and sophisticated selection. The results are consistent

with the findings of the Chi-square tests. As previously noted, findings of Chi-square indicated that

both type of the establishments did not face any problem in attracting good/qualifies applicants. A

possible explanation is that Pakistan has high rate of unemployment, the size of both skilled and

un-skilled workforce is large and in general the employers do not face any difficulties in recruitment.

Similarly roughly equal number of MNC and local establishments conduct employment test prior to

hiring. Though there is evidence that in Pakistan reference matters a lot (Khilji, 2002), however the

descriptive statistic evidence indicates that some 55 per cent establishments that participated in the

survey conduct employment tests prior to hiring. This is much improvement from what the small

scale study of Khilji (2002) had inferred about recruitment systems in Pakistan. Khilji (2002)

findings indicated that establishments in Pakistan in general recruit on the basis of reference.

However it is interesting to note that at least a sizeable number of establishments have realised the

importance of employment tests to select the right candidate.

Findings from the logistic regression indicate that a number of control variables have a significant

association with the adoption of the recruitment and selection practices in Pakistan. The

establishments of service firms are more likely to generate good/qualified applicants (p < .05) and

conduct employment test prior to hiring (p < .001). The evidence suggests that service sector firms

in Pakistan have been more successful in implementing a sophisticated recruitment and selection

system as compared to the manufacturing firms. This was quite expected as the nature of the work

196 in the service sector firms and the importance of firm-specific human capital that is essential to

maintain the customer contact creates a greater need to identify the right kind of candidate with

high general skills, formal education and capable of on-going learning (Batt, 2002). Does the

practice create any performance gains for establishments in Pakistan, the Chapter 7 will discuss

the performance outcomes associated with the adoption of the practice in Pakistan.

The results further indicate that establishments working for 11 or more years in Pakistan were more

likely to generate good/qualified applicants and conduct employment test prior to hiring (p < .001).

This is an interesting findings to note, as in the previous section, the chapter highlighted that firms

with less than 10 years of operations in Pakistan were more likely to offer a promise of life-long

employment to their workforce, it was expected that in doing so they would be rely on their

recruitment processes to identify the right kind of candidate, however the empirical evidence

suggests otherwise and indicates that establishments with 11 or more years of operations in

Pakistan are more likely to conduct employment tests prior to hiring. A probable explanation can be

that young firms in Pakistan either rely more on interview screening or their network to hire the

employees as compared to using employment tests.

For the control variable of number of employees, the results indicate that establishments with more

than 93 employees are more likely to conduct employment tests prior to hiring (p < .05). This again

suggests that as the establishments grow in age and size in Pakistan, they are more likely to adopt

selective hiring and sophisticated selection practices. However the results with regard to the

practice of employment tests need to be interpreted with caution as the Hosmer and Lemeshow

test indicated a value less than .05, thus indicating that overall the model is not a good predictor for

the adoption of the practice. The Chapter 7 will examine the associations of the selective hiring and

sophisticated selection practices with performance outcomes in Pakistan.

The Chapter next examines the effects of control variables on the adoption of extensive training,

learning and development.

197 Table 6.5 Ownership of the Firm and Diffusion of Extensive Training, Learning and Development Practices

Predictor---Control Variables Dependent variables---extensive training, learning and

development practices

Training in variety of jobs Training in generic skills

B values B values

Subsidiary of MNC or local firm -.852*** -1.162***

Main nature of the company Manufacturing/ Services

.626 1.055**

Percentage of work-force made up of non-managerial employees

-.089 -.281

Number of employees -.571* .414

Age of the Establishment 1.024*** 1.688***

Model Specifications X2 (5, N=392) = 50.433, p

<.001 Hosmer & Lemeshow .097

Cox & Snell R Square .121 Nagelkerke R Square .161

X2 (5, N=386) = 82.350, p <

.001 Hosmer & Lemeshow .000

Cox & Snell R Square .192 Nagelkerke R Square .271

B values taken from the model

significant at 10 per cent * significant at 5 per cent ** significant at 1 per cent ***

Model Specification provides values for Omnibus test of model coefficients and Hosmer and Lemeshow test. 5 = df (degree of freedom) and N = number of cases included in the analysis.

Table 6.5 shows the regression results for the practices of extensive training, learning and

development. The Hosmer and Lemeshow test with a value of .097 supported the model as being

statistically significant for the practice of training non-managerial employees in variety of jobs. The

Cox & Snell and Nagelkerke R square statistic indicates that on the whole the model explains 12.1

per cent to 16.1 per cent of the variance for the diffusion of the practice of training non-managerial

employees in variety of jobs for the establishments in Pakistan. The variance explained is relatively

low as compared to other practices the study explores, for example the employment security and

recruitment practices. For the practice of training non-managerial employees in generic skills the

Hosmer and Lemeshow test with a value of .000 did not support the model as a significant

predictor of variance in the diffusion of the practice. However the Cox & Snell and Nagelkerke R

square statistic indicates that on the whole the model explains 19.2 per cent to 27.1 per cent of the

variance for the diffusion of the practice in the establishments in Pakistan. Though the Hosmer and

Lemeshow test is not statistically significant the variance explained by the model is comparable to

other practices investigated by the study, for example the practices of employment security.

198 Findings of the regression indicate that establishments of MNCs are more likely to train the non-

managerial employees in variety of jobs and in generic skills (p < .001) as compared to local firms.

The results of the regression are consistent with findings of the Chi-square tests. As already

discussed in the previous Chapter, it is generally assumed in Pakistan that MNCs are better

providers of training opportunities to their employees (Khilji, 2002).

The results indicate that the age of the establishment has a strong positive association with the

training practices of the workplace in Pakistan. The establishments working for 11 or more years

were more likely to train non-managerial employees in variety of jobs or skills and generic skills (p

< .001). The results till now indicate that age of the firm is consistently linked with adoption of

HPWS practices in Pakistan. The wider high performance literature associates age of the firm with

an advantage or disadvantage a firm may enjoy in adoption of HPWS practices (Wood and de

Menezes, 2008 and Guthrie et al., 2009). The evidence from the current study is consistent with

Guthrie et al. (2009) findings that suggest that age of the firm indeed increases the odds of

adopting the HPWS practices.

Findings suggest that service sector establishments are more likely to train employees in generic

skills (p < .001). This was quite expected as training in the generic skills increases the ability of the

service sector employees to better interact with customers and thus benefit the establishment. A

possible explanation is that service sector employees have to interact and respond more actively

not only with their follow workers but also with customers to meet their demands and secure a sale

(Batt, 2002). However the practice has equal importance for the manufacturing sector as the

practice is essential for successful implementation of EIP programmes such as problem solving

groups and self-directed teams.

The results further indicate that firms with less than 93 employees are more likely to train non-

managerial employees in variety of jobs. The association is weak and significant at 10 per cent

only. Though the association is weak, the results are contrary to expectations as findings of the

existing studies indicate that small firms in fear of poaching or turnover are less likely to provide

training to employees (Black et al., 1999 and Patton et al., 2000). However training is important for

better performance outcomes and general training can be interpreted as gift, which benefits both

the employee and the employer (Barrett and O’Connell, 2001). A possible explanation is that the

importance of training increases manifolds for knowledge intensive firms and workers (Horwitz et

al., 2003) and perhaps even if the size of the firm is small the establishments cannot ignore the

199 importance of training as the case seems to be in case of service sector establishments in

Pakistan.

The Chapter 7 will examine the performance associations if any of the training practices with the

performance outcomes in Pakistan. This Chapter next examines the association of control

variables for HPWS practice of Employee Involvement.

Table 6.6 Ownership of the Firm and Diffusion of Employee Involvement and Input Practices

Predictor---Control Variables Dependent variables---employee involvement and participation:

worker Voice

Employee input programmes Strategic Information / Attitude

Surveys

B values B values

Subsidiary of MNC or local firm -.843*** ------ 1.262***

Main nature of the company Manufacturing/ Services

.320 ------ .362

Percentage of work-force made up of non-managerial employees

1.250*** ------ -.050

Number of employees .988* -.770 .559*

Age of the Establishment 1.734*** 2.037*** .694***

Model Specifications X2 (5, N=387) = 76.398, p

<.001 Hosmer & Lemeshow .273

Cox & Snell R Square .179 Nagelkerke R Square .239

X2 (5, N=367) = 10.550, p <

.001 Hosmer & Lemeshow .997/

X2 (5 =392) = 49.142, p < .001.

Hosmer & Lemeshow .157 Cox & Snell R Square

.028/.118 Nagelkerke R Square

.094/.157

B values taken from the model

significant at 10 per cent * significant at 5 per cent ** significant at 1 per cent ***

Model Specification provides values for Omnibus test of model coefficients and Hosmer and Lemeshow test. 5 = df (degree of freedom) and N = number of cases included in the analysis.

200 Table 6.6 shows the results for the regression analysis undertaken to examine the association of

control variable and the dummy variable of ownership of the firm with the adoption of employee

involvement and participation practices in Pakistan. The table 6.6 clearly indicates that the Hosmer

and Lemeshow test recorded significant values for all the employee involvement and participation

practices. The Cox and Snell and Nagelkerke R square statistic indicates that model explained

17.9 per cent to 23.9 per cent variance for the practice of involving non-managerial employees in

programmes designed to elicit participation and employee input. For the practice of sharing

strategic information with non-managerial employees the Cox & Snell and Nagelkerke R square

statistic indicates that the model explains 2.8 per cent to 11.8 per cent of the variance in the

diffusion of the practice. The variation explained by R square statistic is relatively low as compared

to other practices the study investigates for their diffusion among the establishments in Pakistan.

For the practice of conducting attitude surveys to correct employee morale problems the R square

statistic indicates that the model explains 9.4 per cent to 15.7 per cent of the variance. This

comparable to level of variance explained by the model for the practices of training employees in

variety of jobs and conducting employment tests prior to hiring. Findings indicate that

establishments of MNCs are more likely to implement the employee input programmes and

conduct attitude surveys to correct employee morale problems (p < .001). The findings are

consistent with the results of the Chi-square test that also indicated that MNC were more likely to

adopt EIP practices at their establishments. It is important to highlight that in general the use of EIP

practices as programmes designed to elicit employee participation and input is comparatively low

as compared to use of other EIP practise such as sharing operating and strategic information and

formal grievance resolution procedure in establishments in Pakistan. However it was expected that

MNCs are more likely to implement such practices at their establishments as compared to local

firms. At the same time it is worth reminding, as discussed earlier in Chapter 5, the diffusion of

HCM and high involvement practices is on the rise in Pakistan and establishments are

implementing them to varying degree.

The results suggest some very interesting associations of control variables with the adoption of the

EIP practices in Pakistan. The findings indicate that establishments consisting of more than 83 per

cent non-managerial employees as proportion of the total workforce are more likely to implement

the employee input programmes (p < .001). The finding are consistent with the theoretical

arguments of implementing the EIP practices, as the theory suggests that such firms delegate the

decision making and control to shop floor employees thus increasing their participation in day to

201 day management and execution of tasks. This reduces the need for layers of management and

thus counts towards genuine democracy at work (Wood and Wall, 2007).

Similarly establishments with more than 93 employees are more likely to implement employee input

programmes and conduct attitude surveys to correct employee morale problems. However the

association is weak and only significant at 10 per cent. The weak association of the variable with

the practice perhaps suggests that even small size establishments in Pakistan do implement EIP

programmes and create an open environment and communication culture where the management

expects employees to participate in quality circles and suggestion schemes to continuously

improve the work processes and regularly conduct attitude surveys to correct employee morale

problems.

The results further reveal that establishments working in Pakistan for 11 or more years were more

likely to implement employee input programmes (p < .001) and share strategic information with

non-managerial employees and conduct attitude surveys (p < .001). Again the empirical evidence

suggests that more the age of a firm the more is the likelihood that establishment will adopt HPWS

practices in Pakistan.

The Chapter next examines the regression results for the practices of performance appraisal and

work-life balance. The Chapter was able to run only one practice from each category in the

regression, as for the rest of the appraisal practices descriptive statistic indicated that more than 90

per cent establishments agreed with their coverage for non-managerial employees at their

workplace. For the flexible working arrangement component of the work-life balance practices

majority of the establishments disagreed with their usage at their workplaces.

202 Table 6.7 Ownership of the Firm and Diffusion of Appraisal and Work-Life Balance Practices

Predictor---Control Variables Dependent variables---appraisal and work-life balance HPWS

practices

Feedback from more than one source Career breaks

B values B values

Subsidiary of MNC or Local firm

-.071 -.253

Main nature of the company Manufacturing/ Services

1.219*** -.143

Percentage of work-force made up of non-managerial employees

.978*** .304

Number of employees -.123 .638**

Age of the Establishment 1.081*** .881***

Model Specifications X2 (5, N=392) = 37.759, p

<.001 Hosmer & Lemeshow .000 Cox & Snell R Square .100 Nagelkerke R Square .135

X2 (5, N=392) = 27.501, p <

.001 Hosmer & Lemeshow .675

Cox & Snell R Square .068 Nagelkerke R Square .091

B Values taken from the model

significant at 10 per cent * significant at 5 per cent ** significant at 1 per cent ***

Model Specification provides values for Omnibus test of model coefficients and Hosmer and Lemeshow test. 5 = df (degree of freedom) and N = number of cases included in the analysis.

Table 6.7 shows the results of the regression analysis undertaken to examine the association of

control variables and the dummy variable of the ownership of the firm with the adoption of the

appraisal practice of feedback from more than one source and work-life balance practice of career

breaks for non-managerial employees. The findings of the logistic regression with respect to

appraisal practice of feedback from more than one source are consistent with the Chi-square test

results. The logistic regression confirms that ownership of the firm did not have any significant

association with adoption of the appraisal practice in Pakistan. However it is important to note that

the Hosmer and Lemeshow test with a value of .000 did not support the model as being statistically

significant. The Cox & Snell and Nagelkerke R square statistic on the whole explains relatively low

variance that is 10 per cent to 13.5 per cent for the diffusion of practice among the establishments

in Pakistan. The same is the case for the work-life balance practice of career breaks as the R

square statistic explains a low variance in the range of 6.8 per cent to 9.1 per cent; however the

Hosmer and Lemeshow test supports the model as being statistically significant. It has already

203 been discussed in Chapter 5 that on the whole both type of establishments that is MNC and local

establishments have a low coverage of the practice for the non-managerial at their workplaces.

The results indicate that establishments with more than 83 per cent non-managerial employees as

proportion of total workforce were more likely to provide feedback from more than one source. The

findings suggest an interesting and consistent pattern of the association of the variable with the

adoption of HPWS practices in Pakistan The findings of the Chapter indicate that such

establishments are more likely to implement EIP practices and provide feedback from than one

source to improve organization performance outcomes. Perhaps such firms are moving towards a

culture of team working, where employees expect feedback from peers, managers and the

customers.

The results also indicate that the establishments of service firms are more likely to provide

feedback from more than one source as compared to the manufacturing firms. A possible

explanation is that the association reflects the management culture of the service firms in general.

It has been argued in literature that due to specific characteristics of the service sector firms and

the potential of the employee behaviour to affect the performance outcomes, the service sectors

focus extensively on monitoring and performance management of their employees (Batt, 2002).

The findings indicate that age of the firm has a significant positive association with the adoption of

the practice of the feedback from more than one source. The association is significant at one per

cent level. It is safe to argue in light of available evidence that firms in Pakistan with 11 or more

years of age are more likely to implement HPWS practices. However it is important to note that in

case of appraisal practice the Hosmer and Lemeshow test did not support the model, indicating

that the dummy and the explanatory control variables are not good predictors for the adoption of

the practice.

For the practice of allowing non-managerial employees career breaks, the results are consistent

with the findings of the Chi-square test that indicated that there were no differences with respect to

the ownership of the firm and adoption of the practice by an establishment in Pakistan. The

evidence indicated that the practice of allowing career breaks to non-managerial employees was

the only work-life balance practice that had diffused to a large number of establishments in

Pakistan.

204 Results with respect to control variables indicate that establishments with more than 93 employees

were more likely to allow career breaks (p < .05). The evidence suggests that establishments with

large number of employees in Pakistan are in a better position to spare employees to pursue other

interests and take a break from work. The pattern with regard to age of the firm remains the same;

the results again indicate that establishments that have been working in Pakistan for 11 or more

years were more likely to allow career breaks for non-managerial employees (p < .001). This again

suggests that in Pakistan large size and firms with considerable number of operational life are more

likely to implement a coherent and consistent HR policy.

The Chapter next examines the association of control variables and the dummy variable of

ownership of the firm for the adoption of compensation contingent on performance practices.

205 Table 6.8 Ownership of the Firm and Diffusion of High Compensation Contingent on Performance Practices

Predictor---Control Variables Dependent variables---compensation contingent on performance

Profit sharing Additional Payment or Pay rise

B values B values

Subsidiary of MNC or local firm -.947*** -.462*

Main nature of the company Manufacturing/ Services

-.406 -.381

Percentage of work-force made up of non-managerial employees

.589 .692***

Number of employees .575* 1.001***

Age of the Establishment 1.006*** -.117

Model Specifications X2 (5, N=385) = 47.771, p

<.001 Hosmer & Lemeshow .156 Cox & Snell R Square .117 Nagelkerke R Square .156

X2 (5, N=391) = 36.630, p <

.001 Hosmer & Lemeshow .012 Cox & Snell R Square .089 Nagelkerke R Square .121

B values taken from the model

significant at 10 per cent * significant at 5 per cent ** significant at 1 per cent ***

Model Specification provides values for Omnibus test of model coefficients and Hosmer and Lemeshow test. 5 = df (degree of freedom) and N = number of cases included in the analysis.

Table 6.8 indicates that establishments of the MNCs were more likely to share profit or offer share

ownership schemes to non-managerial employees (p <.001) and offer additional pay or pay rise

due to job performance or work in a team (P < 0.1). The Hosmer and Lemeshow test recorded a

value of .156 thus supporting the model being statistically significant for the practice of profit

sharing. The R square statistic indicates that the model as whole explains 11.7 per cent to 15.6 per

cent of the variance in the diffusion of profit sharing practice to the establishments in Pakistan. The

table 6.8 also indicates that for the practice of additional pay or pay rise due to job performance or

work in a team, the Hosmer and Lemeshow test with a value of .012 did not support the model as

being statistically significant. The Cox & Snell and Nagelkerke R square statistic indicates that the

model explains 8.9 per cent to 12.1 per cent of the variance for the diffusion of the practice. The R

square value is quite comparable with low variance explained by certain other practices

investigated by the study, for example feedback from more than one source and work-life balance

practice of career breaks. The results for the practice of profit sharing are consistent with the

findings of the Chi-square test. However in case of the additional payment or pay rise, the logistic

regressions have picked up a weak association of the practice with the dummy variable of

206 ownership of the firm, it is important to note that the association is weak and significant at 10 per

cent level only, however the Chi-square test failed to identify the difference. Thus according to the

logistic regression results the MNCs are more likely to implement compensation practices of

additional pay or pay rise as result of job performance or work in a team. However it is important to

note that Hosmer and Lemeshow test did not support the model as being worthwhile in case of the

practice of additional pay or pay rise due to job performance or work in a team.

The results indicate that establishments with more than 93 employees are more likely to offer profit

sharing schemes to non-managerial employees (P < 0.1) and offer additional pay or pay rise due

job performance or work in a team (p < .001). The results further indicate that establishments that

have been working for 11 or more years are more likely to offer non-managerial employees share

ownership schemes (p < .001). The finding again support the assumption that establishments with

a large number of employees and with 11 or more number of years of operational life in Pakistan

are more likely to implement the HPWS practices. This suggests that such firms in Pakistan are in

a better financial position to share the profits with the non-managerial employees. The Chapter 7

will examine if the adoption of compensation contingent on performance practices by the

establishments in Pakistan transform into any performance gains for them in Pakistan or not.

The Chapter next examines the association of control variables and the dummy variable of

ownership of the firm with the practice of reduction of status differentials as dependent variable.

207 Table 6.9 Ownership of the Firm and Diffusion of Practice of Reduction of Status Differences

Predictor---Control Variables Dependent variable---reduction of status differences B Values

Subsidiary of MNC or local firm -1.1999**

Main nature of the company Manufacturing/ Services

Not computed

Percentage of work-force made up of non-managerial employees

1.464***

Number of employees 2.657***

Age of the Establishment -.666*

Model Specifications X2 (4, 379) = 57.526, p < .001 Hosmer & Lemeshow .056 Cox & Snell R Square .141 Nagelkerke R Square .256

B values taken from the model

significant at 10 per cent * significant at 5 per cent ** significant at 1 per cent ***

Model Specification provides values for Omnibus test of model coefficients and Hosmer and Lemeshow test. 5 = df (degree of freedom) and N = number of cases included in the analysis.

Table 6.9 shows the regression results for the dependent variable of practice of reduction in status

differences. The results indicate that establishments of MNCs were more likely to reduce the status

differences (p < .05) at their workplaces as compared to local firms. The Hosmer and Lemeshow

test with a value of .056 supports the model as being statistically significant. The Cox & Snell and

Nagelkerke R square statistic indicates that the model as a whole explains 14.1 per cent to 25.6

per cent of the variance associated with the diffusion of the practice to the establishments in

Pakistan. The R square statistic for the diffusion of practice of status differences explains relatively

high variance that is comparable to the variance of other practices explored by the study such as

selectivity in recruitment, employment security etc. in Pakistan. The logistic regression results are

not consistent with the results of Chi-square tests. The Chi-square test did not indicate any

difference between the two set of establishments with regard to adoption of the practice of the

reduction in status differences. However the logistic regression analysis recorded a significant

association at five per cent. It is important to note that the control variable of the nature of the

company had to be dropped from the model as it recorded a B value of more than 10. Generally

the acceptable value has to be less than 10.

The results show a significant association of number of control variables with dependent HPWS

practice of reduction in status differences. The results indicate that the establishments with more

208 than 83 per cent employees as part of workforce were more likely to reduce status differences (p <

.001). This is consistent with other findings of the Chapter regarding the link of the variable with

adoption of EIP practices and feedback from more than one source. The results are consistent with

the underlying theoretical argument that suggests that these practices increase employee skills and

abilities by expanding their responsibilities (Patterson et al., 1997) and thus reduce the need for

direct management control. Reduction of status differences is considered to be an integral part of

high commitment and involvement models like EIP practices (Lawler et al., 2001).

For the control variables of size and age of the firm, the results indicate that the establishments that

have more than 93 employees are more likely to reduce status differences (p < .001) in Pakistan.

The results further suggest that establishments that have been working for less than 10 years in

Pakistan are also more likely to reduce status differences. However the association of age of the

firm with reduction of status differences has weak association significant at 10 per cent level only.

The results for the control variable of age warrants attention as the results are vice versa, that is

the younger establishments are more likely to reduce such differences in Pakistan as compared to

positive association of control variable of age with other HPWS practices. However it must be kept

in consideration that as such more than 89.5 per cent establishments surveyed in Pakistan agreed

that they reduce status differences at their workplace.

6.1 Conclusion

This Chapter has examined the adoption of high performance workplace practices by the

establishments of multinational and local firms in Pakistan by running a series of logistic regression

in alongside the control variables of proportion of workforce made of non-managerial employees,

nature of main business at the establishment, number of employees and the age of the firm. The

main aim of the Chapter was to verify if the differences between the establishments of

multinationals and local firms with regard to diffusion/ adoption of the high performance practices

stay significant or not when evaluated in presence of control variables.

The findings of the Chapter supported the results of Chi-Square tests apart from two cases. They

were the practices of additional payment or pay rise as a result of job performance or work in a

team and the reduction of status differences. The results of the logistic regression indicated that in

209 case of both practices the MNCs were more likely to adopt them as compared to local firms. This

contradicted the Chi-square results which did not indicate any significant differences with regard to

adoption of the practices in two set of the establishments.

The results of the logistic regression also indicated that a number of control variables were

significantly associated with the adoption of a high performance workplace practice by an

establishment in Pakistan. In particular the size and age of the firm had a significant and positive

association with the adoption of HPWS practices in Pakistan. The results also indicated that

proportion of workforce made up of non-managerial employees had a significant and positive

association with practices such as, EIP, feedback from more than one source and reduction of

status differences. This is an important finding as it is consistent with the general principles

underlying the HCM, high involvement and performance models.

The main claim of the contingency perspective is that different contingencies such as strategy,

size, age and structure of the firm play an important role in adoption of HPWS practise (Boselie et

al., 2005). The study captured the associations of many of these variables as control variables for

adoption of a practice in Pakistan. However it is important to highlight that the current study where

it found significant association of control variables with the adoption of an HPWS practice in

Pakistan also found that a large number of practices had a universal appeal and were adopted by

the establishments in Pakistan irrespective of their age, size, sector and proportion of non-

managerial employees.

The wider high performance literature does acknowledges the role of different contingencies in

adoption of practices by a firm and does not considers the universalistic or contingency

perspectives to be conflict with one another. Becker and Gerhart (1996) argue that the two

perspectives are not in conflict rather they operate at different level of HR system. As Boxall and

Purcell (2002) that best practice can be considered to be a surface layer of HR policy or practice

that has a universal application and its implementation or design may reflect the context of the

company. However it is also worth considering the arguments of Purcell (1999), Legge (2010) and

Marchington and Wilkinson (2008).

Purcell (1999) argues that in actual implementation of HR practices it is next to impossible for firms

to continuously remodel their HR policy and practices in response to change in contingent

variables. In a similar way Marchington and Wilkinson (2008) argue that contingent variables such

210 as size of the firm are subject to change and are difficult to remodel, and are generally ignored by

the firms in designing their HR policy (Legge, 2010). However at the same time some factors may

have an important role in determining an HR policy of an establishment such as the nature of

business and age of the firm. There is strong evidence in literature that industrial sector and age of

the firm have significant association with the adoption of a practice (Datta et al., 2005; Wright et al.,

1999; Ichniowski et al., 1997; MacDuffie, 1995).

The consistent association of size and age of the establishment in Pakistan is not surprising, as

they can be expected to have more well developed human resource policies and practices. This

also suggests that as firms become more successful and establish viable business they are more

likely to implement HPWS practices (Cappelli and Neumark, 2001). In case of local firms the

argument makes perfect sense as with time they grow in size and business and are more likely to

follow the latest management trends and benchmark against the best companies in market. In case

of Pakistan, the best companies happen to be multinationals (Khilji, 2002) and as the current study

evidence indicates are more likely to have coverage of HPWS practices for non-managerial

employees at their workplaces.

The next Chapter 7 examines the performance associations of the HPWS practices with human

resource and performance outcomes in Pakistan. The findings of Chi-square and logistic

regressions indicate that they are distinct differences between the multinational and local firms in

adoption/ diffusion of HPWS practices in Pakistan. The findings indicate that establishments of

multinational firms in Pakistan were more likely to diffuse HPWS practices at their workplaces as

compared to local firms. Does the adoption of these practices result into any performance gains for

establishments; the next Chapter 7 will shed light on this issue on the basis of empirical evidence

from Pakistan.

211

Chapter 7 High Performance Workplace Practices and Performance

This Chapter presents the performance associations of individual high performance workplace

practices with human resource and performance outcomes for the local establishments in Pakistan.

A decision was taken to present results for reduced sample of local firms because of the nature of

the statistical technique that is logistic regression the Chapter has used. As the results of the

previous Chapters have indicated that the ownership of the firm that is a subsidiary of a

multinational or local firm matters in adoption of a practice, then running a regression analysis for

the whole sample would have violated the basic principle of independent variable, which states that

independent variable should be independent. This means that if, on the one hand, the ownership of

a firm matters for HR policies then it is not appropriate to have in a regression an independent

variable that includes nationality of ownership and HR policy. Keeping this technical reason in view,

performance associations of individual human resource practices were explored for a reduced

sample of local firms.

In the recent years the Government of Pakistan has tried to improve the productivity of labour in

Pakistan, in order to do so, it has introduced changes in labour law that are geared towards

improving co-operation between labour and management and improve labour productivity. In

particular the Labour Policy 2008, later Industrial Relations Act 2010 requires establishments to

provide and introduce management practices that can enhance labour productivity. In this regard

HPWS practices can provide an effective mechanism to achieve the objectives set by the

government in the labour policy. The Chapter, thus by evaluating the performance association of

practices, would be in a position to recommend whether HPWS practices can improve labour and

establishment outcomes in Pakistan or not. Perhaps if the practices have much desired

performance associations in private sector establishments in Pakistan, they have the potential to

improve the human resource and performance outcomes in other sectors in Pakistan. In this way,

the results of study can help the policy makers in Pakistan to rethink or reshape their policies with

regard to human resource management initiatives in Pakistan.

The results of the previous Chapter 5 indicated that a number of high performance workplace

practices have diffused to a large number of establishments in Pakistan. Practices such as

preference to existing employees when a job becomes vacant, recruitment process generates

good/qualified applicants, intensive/ extensive training in company specific skills, sharing relevant

operating performance and strategic information, access to formal grievance and complaint

212 resolution procedure, organizing non-managerial employees in self-directed teams, formal

appraisal on routine basis, proportion of pay determined by performance appraisal, feedback

provides information on how employees do their job and reduction of status differences/

harmonisation. The evidence was quite in line with the universalistic arguments that HPWS

practices are applicable to all sorts of organizations. However with respect to a number of other

high performance workplace practices, the Chi-square test showed that there were distinct

differences with respect to the ownership of the firm and adoption/ diffusion of the practice in

Pakistan. The multinational firms were more likely to train non-managerial employees in variety of

jobs and generic skills, involve their employees in EIP programmes, offer non-managerial

employees participation in profit sharing or share ownership schemes, conduct performance

appraisal on routine basis, determine a proportion of pay on basis of performance appraisal and

provide performance feedback information to employees on how they do their jobs. The differences

were further explored by running a series of logistic regressions alongside control variables. The

results indicated that the differences with regard to adoption/ diffusion of practices remained

significant. The results were consistent with the findings of the Chi-square test. The results of

regression confirmed that multinational establishments in Pakistan were more likely to adopt high

performance workplace practices as compared to the local establishments.

This Chapter takes the debate of high performance practices further and examines the

performance claims associated with the implementation of such practices in the context of

Pakistan. The strongest argument of the best practice high performance HRM is that the practices

are applicable and have significant effects on performance outcomes across organizations,

sectors, product-markets and countries. It has been argued that organizations that adopt best

practice HRM can generate better results and achieve outstanding performance (Delery and Doty,

1996). A number of meta-analyses conducted to explore the performance associations of HRM

practices strongly support the impact of practices on performance outcomes (Combs et al., 2006

and Subramony, 2009). A number of major high performance studies verify such performance

claims for example, see (Huselid, 1995; Ichniowski et al., 1997; Datta et al., 2005; Apospori et al.,

2008; Guthrie et al., 2009). An increasing number of studies from the region of South and South

East Asia have also reported positive effects of the practices (Wei and Lau, 2008; Akhtar et al.,

2008; Zhang and Li, 2009; Som, 2008; etc.). The Chapter thus will evaluate the performance

outcomes of individual high performance workplace practices in local establishments in Pakistan by

running a series of logistic regressions.

213 Although previous research has been conducted in this area, many of the studies focus on an

index or system and even where the studies focus on practices they seldom account for the

practice effect size, the current study by interpreting the logistic regression results is in a position to

account for the likelihood of a practice potential to improve the performance outcome of an

establishment as compared to the establishments where such practices are non-existent. Unlike

majority of previous studies that focus on few performance outcomes and in many cases on single

outcome, this study captures a number of both proximal and distant performance measures. A

number of studies see for example, Batt et al. (2002) and Batt (2002) measure human resource

outcome by using a single dependent variable of turnover, a number of them focus on generic

dependent variable of firm performance, see for example, Delaney and Huselid (1996), Delery and

Doty (1996) and Wright et al. (1999). Some of these measures, that is human resource outcomes

as absence, turnover and labour productivity, have been labelled as proximal and are considered

more meaningful, whereas financial measures are labelled as distant. Both type of measures have

problems and complications of their own (Purcell and Kinnie, 2007; Marchington and Wilkinson,

2008). Keeping the advantages and disadvantages of both type of outcomes, the current research

decided to explore the association of HRM practices with number of dependent outcomes in

Pakistan. The set thus includes absenteeism, voluntary resignations, involuntary turnover,

comparative labour productivity, labour productivity change and comparative financial performance.

The first three measures are generally considered as important measures that indicate the factors

that increase productivity.

Like many high performance workplace practices studies the current research measures the

practices at establishment level. This provides the study with an advantage to measure the

practices and outcomes quite specifically and probably more accurately. Moreover the study

captures the performance associations of a broad set of individual human resource practices with

performance outcomes in Pakistan. Though a number of HPWS studies use an index or system or

bundle approach, the individual practices have the potential to reveal both negative and positive

impact on outcomes and thus provide a greater potential to discover and identify their associations

with performance outcomes for establishments that implement them in Pakistan. Thus by exploring

the individual HPWS practices in Pakistan, the study provides a detail and better understanding of

the practices associations with performance outcomes, both from theoretical and practitioner

perspective.

214 The results of the logistic regression are based on subjective data that covers senior establishment

management perception on a range of pertinent human resource outcomes. The results also cover

senior managers’ assessment of the establishment current performance compared with

establishments in the same industry. Although the wider high performance literature prefers to

measure the outcomes by using objective measures, a number of studies also capture such

outcomes based upon subjective interpretation of managers. Again some researchers considers

that objective or subjective measures do not make much difference (Wall et al., 2004); however in

the absence of available objective measures, many studies capture the outcomes using the WERS

pattern, where an establishment manager is generally asked to rate the performance of their

workplace in comparison with others in the industry, see for example (Ramsay et al., 2000; Wood

and de Menezes, 2008; Fey et al., 2000). A number of researchers have outlined the advantages

for using subjective measures such as willingness of respondents to participate in such surveys,

equivalent and close congruence to objective data and no issues of commercial sensitivity (Forth

and McNabb, 2008; Machin and Stewart, 1990; Wall et al. 2004). The subjective collection of data

on labour productivity avoids the risk of confounding price and quantity effects. Moreover

researchers generally agree that there is an association between subjective performance

evaluation and actual performance (Tuselmann et al., 2007). Keeping in view the non-availability

and difficulty in access to objective measures at establishment level in Pakistan and the

advantages associated with using subjective measures, the current study captured the outcomes

using subjective measures.

In this Chapter a detailed analysis between HPWS practices and the various HR and performance

outcomes is conducted using series of logistic regressions. The results of the regression analysis

are shown in Tables 7.1 to 7.6. The results are presented in summary form; they show the

associations between individual high performance practices and the range of performance

outcomes after allowing for the influence of the control variables. The full regression models are

shown in the Appendix E to J for each individual high performance practice and human resource

and establishment performance outcomes. For ease of presentation the summary table only report

the sign and the B values and indicates the significance level if any, the odds ratios, the value of

Hosmer and Lemeshow test, the Cox and Snell R square and the Nagelkerke R square. According

to Tabachnick and Fidell (2007, 461) the odds ratio indicate the odds of an establishment

answering yes to the independent predictor and is interpreted as, “change in odds of being in one

of the categories of outcome when the value of a predictor increases by one unit.” In general, the

215 Omnibus test of model coefficients indicated that the model performed well for all of the

regressions run by the study. As a rule the value of the test should be less than .05. In our case the

value is .000 therefore, the model was highly significant. However another test which also indicates

the reliability of the model fit is that of Hosmer and Lemeshow Test, as a rule its value should be

greater than .05. In our study for some of the models of the regression analyses value of Hosmer

and Lemeshow was less than .05; the study thus presents the value of Hosmer and Lemeshow test

for each individual HPWS practice regression model to indicate the model fit and suggests that the

results should be interpreted cautiously for some of the regressions where the test value falls below

.05. The Chapter also provides the values of pseudo R square statistics; this piece of information

indicates the ability of the model to explain the variability in the dependent variable caused by

independent predictor and control variables. It is provided by the values of Cox & Snell R square

and the Nagelkerke R square values that show the amount of variation in dependent variables

explained by the model (Pallant, 2010). The R square values are compared in many cases to two

studies in the field, Wood and de Menezes (1998) and Wood et al. (2006) that also use logistic

regressions to analyse the data.

The Chapter is structured as follows; it examines and discusses the associations between the

individual HPWS practices and HR outcomes such as working days lost due to absence, voluntary

turnover and employees discharged and the establishment performance outcomes such as labour

productivity, labour productivity growth and financial performance one by one.

7.1 HPWS Practices and Human Resource Outcomes

7.1.1 Loss Working Days due to Employee Sickness or Absence

The high performance literature argues that implementation of such practices is significantly related

to a reduction in the absence rate among employees. The absence rate in the establishments in

Pakistan was measured by the answers to the following question: “over the last 12 months

approximately what percentage of working days was lost through employee sickness or absence

without permission” (Allen, 2006). Table 7.1 presents the results of the logistic regression for

individual high performance workplace practices in which dependent variable reflects the

establishment manager view on the loss in working days due to employee sickness and absence

216 without permission. The regression models contained an individual high performance workplace

practices and the control variables as predictors of the likelihood that managers would report above

average or below average loss in working days due to sickness or absence without permission. As

already mentioned, for ease of presentation, the summary tables report signs and B values, the

significance level if any, the odds ratio and Hosmer and Lemeshow test values. To ease the

interpretation of the results the Chapter reminds that dependent variable was recoded with 0

indicating below average loss in working days and 1 indicating above average loss in working days.

Similarly all the independent predictor HPWS practices were also recoded with 0 indicating

no/disagree and 1 indicating yes/agree with the coverage of the practice at the establishment. The

detail results are available in Appendix E (E1 to E 14).

Table 7.1 shows the results for the logistic regression models that assess the links between the

individual high performance workplace practices and dependent variable of loss in working days

due to sickness or absence without permission. Contrary to expectations a number of high

performance practices did not have any significant association with the dependent variable. The

regression results indicate that three HPWS practices have a significant negative association with

above average loss in working days.

The regression results indicate that establishments that are able to generate as many good/

qualified applicants as needed are less likely to have above average loss in working days. The

association is significant at the one per cent level; however Hosmer and Lemeshow test with a

value of .012 did not support the model as being statistically significant. Though the Hosmer and

Lemeshow test did not support the model, the pseudo R statistics that is Cox & Snell R square and

Nagelkerke R square explained 12.3 per cent to 16.9 per cent of the variation in the dependent

variable of loss in working days due to absence. Only a few HPWS studies explore the relationship

of individual HPWS practices with absence as a dependent variable, a comparable study by Wood

and de Menezes (1998) using logistic regression indicates that on the whole high commitment

management practices account for 34 per cent variation in the dependent variable of absence.

There is one important difference between Wood and de Menezes (1998) and the current study

that must be kept in mind while comparing the R square statistic of the two studies. The difference

lies in the analysis procedure, the current study analysed the individual high performance studies

one by one whereas Wood and de Menezes (1998) used the forced entry method that is there

model analysed all the practices simultaneously.

217 The existing high performance literature that evaluates the effectiveness of recruitment intensity

indicates that recruitment process ability to generate high performance applicants is linked to a firm

overall performance (Koch and McGrath, 1996; Huselid, 1995; Delaney and Huselid, 1996). The

results of the current study substantiate the arguments of HPWS studies, as they indicate that

establishments that are able to generate good/qualified applicants, in other words high performing

applicants through their recruitment process in Pakistan are less likely to face the problem of

absenteeism.

The findings also indicate that an establishment practice of conducting employment tests prior to

hiring has a negative association with absence rate. Again the Hosmer and Lemeshow test with a

value of .000 does not supports the model as being statistically significant. However the Cox &

Snell and Nagelkerke R square explains 9 per cent to 12.5 per cent of the variation in the

dependent variable of loss in working days due to absence. The variance explained by the practice

of conducting employment test is relatively low as compared to a study by Wood et al. (2006). The

study by Wood et al. (2006) is among few of the studies that use logistic regressions to analyse its

data set. The study indicates that on the whole the practice explains 13.9 per cent to 18.2 per cent

of the variance in the dependent variable of unauthorized absence. The results suggest that a local

establishment with a high performance recruitment strategy are able to maximize applicant pool

size and then they can systematically select the best applicant for the job. Their recruitment

strategy seems to work for them as the evidence indicates that it reduces the absence rate. Thus a

well-defined recruitment process comprising of HPWS practices ensures a low rate of absence for

the local establishments in Pakistan. A comparable study by Wood et al. (2006) however shows a

mixed association of the practice with absenteeism. The study found that the practice of conducting

employment tests has a negative association with unauthorized absence; however the association

was positive in case of absence due to sickness. On the contrary, the current research findings

suggest that the practice has a negative association with absence either due to sickness or without

permission in case of local establishments that implement them.

218 Table 7.1 HPWS Practices and Dependent Variable of Loss in Working Days

HPWS Practices B Values Odds ratio

H&L C &S R

2

Nagel R

2

The organization has a formal policy of no compulsory redundancy

-.342 .710 .001 .096 .131

The firm expects all employees to stay till retirement

-.407 .665 .027 .097 .133

Recruitment process generates as many good/qualified applicants as the establishment needs

-1.179*** .307 .012 .123 .169

One or more employment test is conducted prior to hiring

-.110 .896 .000 .091 .125

Non-managerial employees receive training in variety of jobs or skills and/ or routinely perform more than one job

-.777*** .460 .205 .117 .160

Non-managerial employees receive intensive/extensive training in generic skills

-.386 .679 .037 .098 .134

Non-managerial employees are involved in participation and involvement programmes

.009 1.009 .004 .091 .124

Non-managerial employees are provided with relevant strategic information

-.336 .714 .014 .085 .116

Routinely conducts Attitude surveys to correct employee morale problems

-1.128*** .324 .064 .143 .197

Receive Formal feedback from more than one source (i.e. feedback from several individuals such as supervisors, peers etc.

-.354 .702 .026 .097 .133

Non-managerial employees participate in profit sharing or share ownership schemes

-.155 .594 .036 .085 .116

Offered additional pay or offered pay rise in past year as result of job performance or work in a team

.112 1.118 .001 .092 .126

There are few status differences in the establishment between managers and the rest of the employees

.709 2.031 .036 .095 .130

The establishment allows career breaks to employees for child care, elder care and leisure activities

.296 1.345 .004 .095 .131

***Significant at one per cent, **Significant at five per cent, *Significant at ten per cent

H&L = Hosmer and Lemeshow Test

C&S = Cox &Snell R Square

Nagel = Nagelkerke R Square

219 The results further indicate that an establishment policy to train non-managerial employees in

variety of jobs or skills has a significant negative association with above average loss in working

days due to employee sickness or absence without permission. The association is significant at the

one per cent level. The odds ratio indicates that local establishments that trained the employees in

variety of jobs are two times less likely to have above average loss in working days due to

employee sickness or absence without permission. The Hosmer and Lemeshow test with a value of

.205 supports the model as being statistically significant. The Cox & Snell and Nagelkerke R

square statistic indicates that the model explains 11.7 per cent to 16 per cent of the variation in the

dependent variable of loss in working days due to absence. The R square value is quite

comparable to the R square values generated by the model for other practices, as the table 7.1

indicates that on the whole the R square values have a spread from 8.5 per cent to 16.9 per cent. A

comparable study by Wood et al. (2006) indicates that training practices explain 13.6 per cent to

14.2 per cent variance in dependent variable of unauthorized absence. Thus the variance

explained by the current study is quite in line with the variance explained by Wood et al. (2006). It

has been argued in theory that knowledge workers prefer to work in environment that provides

them with an opportunity to develop their skills and learn new technologies (Horwitz et al., 2003).

The evidence from the local establishments in Pakistan suggests that establishments that are able

generate high quality candidates and then provide them with training opportunities are less likely to

experience the problem of absenteeism. Perhaps a local establishment’s policy to cross train and

cross utilize its employees in Pakistan, makes them feel valuable and they reciprocate by avoiding

unnecessary absence from work. A comparable study by Wood et al. (2006) that also used logistic

regression analyses, indicates that training practices have a positive association with absence due

to sickness or without permission except in the case of further training that has a negative

association with unauthorized absence. On the contrary the current study results indicated that

training non-managerial employees in a variety of jobs has a significant negative association with

loss in working days due to absence due to sickness or without permission. In a similar manner,

evidence from the establishments in Pakistan indicates that training non-managerial employees in

generic skills has a negative association with absence as well. The findings though not significant

are quite in line with theoretical justification of implementing high performance training practices.

The Cox & Snell and Nagelkerke R square indicate that the model explains 9.8 per cent to 13.4 per

cent of the variation in the dependent variable of loss in working days due to absence. The

variance explained by the practice is quite in line with the variance explained by Wood et al. (2006).

220 On the whole the findings are quite in line with Wood and de Menezes (2008) argument that

perhaps workers horizon is likely to increase as result of training in variety of jobs and generic

skills, and they are no longer constrained by narrow definitions of their jobs and become more

interested in their work and the organization and even in activities not directly related to them. The

outcome of the training practices with regard to their association with absenteeism are consistent

with Hoque (1999) findings that indicate that training practices as part of HRM bundle significantly

lower absence rate.

Findings of the current study indicate that EIP practice of conducting attitude surveys to correct

employee morale problems has a significant negative association with above average loss in

working days. The association is significant at the one per cent level. The odds ratio indicates that

such establishments are three times less likely to have above average loss in working days due to

employee sickness or absence without permission. The model explained 14.3 per cent to 19.7 per

cent of the variation in the dependent variable of loss in working days due to absence. The Hosmer

and Lemeshow test with a value of .064 supports the model as being statistically significant. The

results further indicate that an establishment practice to share relevant strategic information with

non-managerial employees has negative association with above average loss in working days.

Though the Hosmer and Lemeshow test with a value of .014 did not support the model, the model

as a whole explains 8.5 per cent to 11.6 per cent of the variation in the dependent variable of

absence. The variance for the EIP practices is not directly comparable to Wood et al. (2006) study

as it does not measures EIP practices, the variance explained by EIP practices is quite in line with

the variance explained by other practices of the current research. The results are consistent with

the findings of Wood and de Menezes (1998) study that indicates that workplaces that implement

medium to high level of high commitment management practices have lower absence rate. It is

essential to consider that EIP practices are an important component of HPWS practices and reflect

the genuine transcendence of bureaucratic models. Such practices empower the ordinary worker,

and are associated with superior organizational performance (Wood and Wall, 2007). Thus it was

expected that the implementation of EIP practices will decrease absenteeism in establishments in

Pakistan that adopt them. Surprisingly the practice of employee input such as suggestion schemes

and quality circles has a positive association with absenteeism. Though the findings seem

surprising as ordinarily it is expected that employee input programmes increase employee

motivation and hence are likely to have a negative effect on absence. However, an important study

221 by Wood and de Menezes (2008) also found that the practice has a positive association with

absenteeism quite opposite to predicted link in theory.

A number of other high performance workplace practices warrant special attention as though the

practices did not have a significant association with the dependent variable; have a negative B

values indicating their use is possibly linked with decrease in loss in working days. The practices

are: establishment policy of no compulsory redundancy and an expectation on the behalf of the

management that employees will stay till retirement. It is important to note that the Hosmer and

Lemeshow test with a value of .001 and .027 did not support the model as being statistically

significant in case of these practices. The Cox & Snell and Nagelkerke R square statistic explained

9.6 percent to 13.1 per cent of the variation in the outcome variable of absence due to predictor

variable of no compulsory redundancy and some 9.7 per cent to 13.3 per cent variation due to

predictor variable of an expectation on behalf of the establishment that employee will stay till

retirement. Again the variance explained is quite in line with the amount of the variance explained

by other HPWS studies measured by the study. In general the high performance studies have not

explored the association of employment security practices with absence. However the policy of

employment security is considered to be an integral part of the HPWS system by earlier

proponents of the paradigm (Pfeffer, 1998). The results of the current study with regard to

employment security practices are quite in line with proposed theoretical effects of implementing

such practices at workplaces, the wider HPWS theory argues that such practices have the potential

to improve human resource outcomes of a workplace. Findings of the current study are consistent

with the study of Hoque (1999) that measures policy of no compulsory redundancy and existence

of internal labour market as a part of HRM bundle and did not find any significant association of the

bundle with absenteeism. In a similar manner a study by Ramsay et al. (2000) measuring job

security and internal labour market as part of HPWS bundle did not find any significant association

of the practices with absenteeism.

The results of the current study indicate that the appraisal practice of feedback from more than one

source has a negative association with absenteeism. The Hosmer and Lemeshow test with a value

of .026 did not support the model as being statistically significant. The Cox and Snell and

Nagelkerke R square statistic explains some 9.7 per cent to 13.3 per cent of the variation in the

dependent variable of absence. The variance explained by the current study is relatively low as

compared to Wood et al. (2006) findings that indicate that performance appraisal practices explain

222 13.6 per cent to 16.9 per cent variance in dependent variable of unauthorized absence. The

findings suggest that perhaps local establishments that take a keen interest in their workers

performance with an objective to focus on their development are likely to increase their motivation

at work and thus employees attend their work with punctuality and avoid unnecessary absence.

The findings are consistent with the study of Wood et al (2006) that also indicates that performance

appraisal has significant negative association with absence either due to sickness or without

permission. The results are also consistent with the findings of Hoque (1999) and Ramsay et al.

(2000) studies that did not find any significant association between the appraisal practices as part

of the HRM bundle and absenteeism.

The results also indicate that the practice of profit sharing has a negative association with above

average loss in working days due employee sickness or absenteeism. The Hosmer and Lemeshow

test with a value of .036 did not support the model as being statistically significant. The Cox & Snell

and Nagelkerke R Square statistics explains some 8.5 per cent to 11.6 per cent variation in the

dependent variable of absence due to model predictors. The variance explained by the practice is

relatively low as compared to other variance explained by other practices of the study. Though the

practice is fast diffusing in Asian countries (Poutsma and de Nijs, 2003), the descriptive statistics

evidence indicated that variable pay practices have diffused to relatively less number of

establishments in Pakistan. However the practice has the potential to decrease the absenteeism

behaviour for the establishments that implement it in Pakistan. The findings are consistent with the

studies of Ramsay et al. (2000) and Wood and de Menezes (2008) which indicate that the

practices of variable pay do not have any significant association with absence rate. The results of

the current study further indicate that the practice of offering additional pay or pay rise due to job

performance or work in a team has a positive association with above average loss in working days

due to employee sickness or absence without permission. The Hosmer and Lemeshow test with a

value of .001 did not support the model as being statistically significant. The Cox & Snell and

Nagelkerke R Square statistic explains some 8.5 per cent to 11.6 per cent of the variation in the

dependent variable of absence. The variance explained is quite compared to the practice of profit

sharing but relatively low compared to other practices measured by the study. The results are

surprising as high performance theory in general suggests that the both individual and group

rewards are essential to motivate employees and create an environment of accountability and

cooperation among workers (Vandenberg et al., 1999), which probably should make them work

hard and avoid unnecessary absence from work. The results with regard to practice of additional

223 pay or pay rise are quite in contrast to Wood and de Menezes (2008) findings that indicate the

practice has a negative association with absenteeism. In a similar manner a study by Ramsay et al

(2000) also indicates that HPWS bundle comprising of performance related pay was negatively

related to absenteeism. The results of our study are thus not consistent with the HPWS model

predictions regarding the effect of reward practice of additional pay or pay rise with absenteeism.

The findings of the current study further indicate that the practice of single status and harmonized

terms has a positive association with above average loss in working days due to employee

sickness or absence without permission. The Hosmer and Lemeshow test did not support the

model as being statistically significant. The Cox & Snell and Nagelkerke R square statistic explains

some 9.5 per cent to 13 per cent variation in the dependent variable of absence due to the model

predictors. The variance explained is quite comparable to the amount of variance explained by pay

contingent on performance practices of profit sharing and additional pay. Again the result is not

consistent with the HPWS model predictions regarding the practice potential to reduce

absenteeism. The practice has been regarded as a symbol of egalitarianism that makes feel

employees valuable and equal to other cadre of employees (Pfeffer, 1998). Ordinarily it is expected

that the practice should have negative effect on absenteeism, however the current study results

contradict the hypothesized prediction in theory. The findings are consistent with the study of Wood

and de Menezes (2008) results that indicate that single status practice has positive association with

absenteeism. However a study by Ramsay et al. (2000) measuring single status as part of HPWS

bundle found that the HPWS bundle had a negative association with absenteeism. The current

study results are thus more in line with Wood and de Menezes (2008) findings, though contrary to

theoretical assumptions that such a practice should reduce the absence rate.

In a similar manner, the work-life balance practice of allowing career breaks to non-managerial

employees has a positive association with above average loss in working days due to employee

sickness or absence without permission. The Hosmer and Lemeshow test with a value of .004 did

not support the model as being statistically significant. The Cox & Snell and Nagelkerke R square

statistic indicates that the model explains 9.5 per cent to 13.1 per cent of the variation in the

dependent variable. The variance explained is quite comparable to other practices, in particular to

the practices of profit sharing, additional pay, reduction of status differences and employment

security practices. In general it has been argued in theory that work-life balance opportunities

improve employee experience of work (Fleetwood, 2007). This gesture should be reciprocated by

224 the employee and perhaps reduce the absence rate. However the evidence from the current study

is in opposite direction to predicted outcome.

Apart from highlighting the positive and negative association of HRM practices with absenteeism in

local establishments in Pakistan, the current study found that at least two practices; training non-

managerial employees in variety of jobs or skills and conducting attitude surveys to correct

employee morale problems have a significant negative association with above average loss in

working days due to sickness or absence without permission. The Chapter next examines the

associations of individual high performance workplace practices with voluntary and involuntary

turnover.

7.1.2 Employee Turnover

Employee turnover is one of the most explored associations between HPWS practices and human

resource performance outcomes in HPWS studies. However a closer examination of HPWS

studies indicates that majority of studies investigating the association of HPWS on turnover do not

differentiate between voluntary and involuntary turnover. A number of major HPWS studies that

explore the HRM practices effects on voluntary turnover, for example, Way (2002), Delery et al.

(2000), Batt et al. (2002) and Batt (2002) do not investigate the effects of the practices on

involuntary turnover or employees discharged by the management. In general the issue of

distinguishing between voluntary and involuntary turnover has been well recognized in

management literature on individuals but organizational research in contrast has ignored the issue

and the two types of turnover has been collapsed in nearly all organizational studies (Shaw et al.,

1998). To treat quits, discharges as synonymous ignores the markedly different etiologies and

effects of the phenomena. Voluntary turnover reflects an employee decision to leave an

organization whereas involuntary turnover generally indicates that an employee has been

dismissed for cause including theft, unacceptable performance, insubordination and inability to

learn aspects of a job (Shaw et al., 1998; Staw and Oldham, 1978). Staw and Oldham (1978)

suggest that it is necessary to consider dependent variable in detail; otherwise, the research can

conclude inappropriate generalizations. Keepings such aspects in view, the current study explored

and report the associations of the practices for both voluntary and involuntary turnover for the local

establishments in Pakistan.

225 7.1.3 Voluntary Turnover

The high performance theory suggests that such practices significantly reduce employee turnover

(Arthur, 1994; Batt, 2002; Batt et al., 2002). The dependent variable of voluntary turnover was

captured using the subjective measure, during the last 12 months approximately what percentage

of employees left the establishment voluntarily i.e. resigned (Allen, 2006). For the purpose of

logistic regression the variable was converted to a dichotomous variable with 0 indicating below

average turnover and 1 indicating above average turnover. Table 7.2 presents the results of the

logistic regression for high performance workplace practices in which dependent variable reflects

the establishment manager view on voluntary turnover during the last 12 months. All the practices

were run one by one, thus the regression model contained an individual high performance

workplace practices and the control variables as predictors of the likelihood that managers would

report above average or below average voluntary turnover. The detail results of the logistic

regression are available in Appendix F (F1 to F14). For the ease of interpretation, the summary

table only reports the value and sign of the B values, indicates significance if any, the odds ratio

value and the Hosmer and Lemeshow test value. The section also discusses the R statistics by

taking into account the Cox & Snell and Nagelkerke R square values generated by the models. In

general, the high performance studies looking into association of individual practices as a

regression model with labour turnover indicate R square statistic of .27 (Wood and de Menezes,

1998) and .41 (Shaw et al., 1998).

The results of the regression analyses indicate that an establishment’s policy of no compulsory

redundancy did not have any significant association with the above average voluntary turnover.

The results further indicate that the practice has a positive B value that suggests that the practice is

likely to result into above average voluntary turnover. The evidence confirms that the practice does

not result into any gain for the local establishments that implement it, on the hope of reducing

voluntary turnover. The Hosmer and Lemeshow test with a value of .060 supports the model as

being statistically significant. The Cox & Snell and Nagelkerke R square statistic indicates that the

model explains 16 per cent to 21.3 per cent of the variation in the dependent variable of voluntary

turnover. A study using logistic regression suggests that HCM practices explain 27 per cent of the

variation in the dependent variable of voluntary turnover (Wood and de Menezes, 1998). A study by

Shaw et al. (1998) using ordinary least square regression analysis suggest that high performance

practices explain up to 41 per cent variance in dependent variable of voluntary turnover. The

226 variance explained by the current study is thus relatively low and conservative as compared to

Shaw et al. (1998) study. The findings on the whole are contrary to the general findings of the

existing high performance studies that indicate that the practice of the employment security

reduces turnover (Fey et al., 2000; Guest et al., 2003; Wood and de Menezes, 2008; Batt, 2002;

Ramsay et al., 2000). This perhaps reflects that the local establishments that adopt the policy of

no compulsory redundancy do not meet the other expectations of their employees, as ordinarily

such a policy should have a positive effect on employee experience of work and thus increase their

commitment with the organization and reduce voluntary turnover.

On the other hand it is interesting to note that establishments that expect the non-managerial

employees to stay till retirement are less likely to have above average voluntary turnover. The

Hosmer and Lemeshow test with a value of .008 indicated that model is not statistically significant.

The Cox & Snell and Nagelkerke R square indicate that the model explained 30 per cent to 40 per

cent of the variation in the dependent variable of voluntary turnover. The variance explained by the

practice is quite in line with overall variance explained by Shaw et al. (1998), however the Shaw et

al. did not use logistic regressions to explore their data set, rather they used ordinary least square

regression analysis. For this reason, the Chapter suggested caution in the interpretation of the

association of certain practices with the dependent variables.

227 Table 7.2 HPWS Practices and Dependent Variable of Voluntary Turnover

HPWS Practices B Values Odds ratio

H& L C&S R

2

Nagel R

2

The organization has a formal policy of no compulsory redundancy

.243 1.275 .060 .160 .213

The firm expects all employees to stay till retirement

-2.435*** .088 .008 .301 .402

Recruitment process generates as many good/qualified applicants as the establishment needs

-1.455*** .233 .439 .232 .310

One or more employment test is conducted prior to hiring

-1.041*** .353 .471 .224 .300

Non-managerial employees receive training in variety of jobs or skills and/ or routinely perform more than one job

-.1.631*** .196 .260 .253 .338

Non-managerial employees receive intensive/extensive training in generic skills

-1.906*** .149 .008 .298 .397

Non-managerial employees are involved in participation and involvement programmes

-1.041** .535 .006 .189 .252

Non-managerial employees are provided with relevant strategic information

-1.548*** .213 .023 .176 .235

Routinely conducts Attitude surveys to correct employee morale problems

-2.325*** .098 .110 .326 .436

Receive Formal feedback from more than one source (i.e. feedback from several individuals such as supervisors, peers etc.

-1.055*** .348 .002 .199 .266

Non-managerial employees participate in profit sharing or share ownership schemes

-1.455*** .233 .010 .246 .328

Offered additional pay or offered pay rise in past year as result of job performance or work in a team

-.316 .729 .041 .181 .241

There are few status differences in the establishment between managers and the rest of the employees

-.375 .687 .005 .151 .201

The establishment allows career breaks to employees for child care, elder care and leisure activities

-.180 .835 .012 .159 .212

***Significant at one per cent, **Significant at five per cent, *Significant at ten per cent

H&L = Hosmer and Lemeshow Test

C & S = Cox and Snell R Square

Nagel = Nagelkerke R Square

228 An expectation that employees will stay till retirement indicates the existence of internal labour

market (Delaney and Huselid, 1996). A possible explanation can be that local establishments by

promoting from within the organization and at the same not making any explicit promise of lifelong

employment force the workforce to work hard and meet the performance expectations of the

management. Or perhaps this also reflects the way work is being organized in certain local

establishments that they do not offer a permanent contract, but still expect the employment

relationship to continue for indefinite time, depending upon the establishment product-market

conditions or financial viability. The findings of the existing research with regard to practice

association with turnover are rather not conclusive. Studies by Wood and de Menezes (2008) and

Huselid (1995) indicate that internal labour market policy did not have any significant association

with turnover. On the other hand, studies by Ramsay et al. (2000) and Guthrie (2000) investigating

the ILM policy found a significant association of the policy with reduction in turnover. In the case of

local establishments in Pakistan, the evidence is quite in line with the studies of Ramsay et al.

(2000) and Guthrie (2000) as the practice works in reducing above average voluntary turnover in

local establishments in Pakistan.

With regard to the practices of sophisticated selection and selective hiring, the results of the current

study indicate that the establishments whose recruitment process is able to generate good/

qualified applicants are less likely to have above average voluntary turnover. The odds ratio

indicates that such establishments are four times less likely to have above average voluntary

turnover as compared to establishments that are not able to generate good/ qualified applicants. In

a similar manner the practice of conducting employment tests has a significant negative

association with above average voluntary turnover. The establishments conducting employment

tests prior to hiring are two times less likely to have above average turnover. The Hosmer and

Lemeshow test with a value of .439 and .471 supported the models as being statistically significant.

The Cox & Snell and Nagelkerke R square statistic indicates that the practices explained 23.2 /

22.4 per cent to 31 / 30 per cent of the variation in the outcome variable of voluntary turnover. A

comparable study by Wood et al. (2006) explains 17.9 per cent to 18.1 per cent of the variance in

the voluntary turnover by the practice. The current study thus explains relatively higher amount of

variance for the recruitment practices association with voluntary turnover. The findings perhaps

suggest that establishments with extensive HPWS recruitment practices in Pakistan are in a better

position to make the right decision at the hiring time and thus are less likely to face above average

voluntary turnover. The findings of the current study are consistent with the conclusion of a meta-

229 analysis by Combs et al., (2006) that found a significant association between selective hiring as

individual practice and employee retention. However in general the existing high performance

studies do not find a significant association of the recruitment practices with employee turnover

(Wood et al., 2006; Wood and de Menezes, 1998; Subramony, 2009).

The results further indicate that an establishment practice to train non-managerial employees in

variety of jobs or skills has a significant negative association with above average voluntary

turnover. The odds ratio indicates that establishments implementing such a practice are five times

less likely to have above average voluntary turnover. The Hosmer and Lemeshow test with a value

of .260 supports the model as being statistically significant. The Cox & Snell and Nagelkerke R

square statistic indicates that the model explains 25.3 per cent to 33.8 per cent of the variation in

the dependent variable of voluntary turnover. The results also indicate that establishments that

train their non-managerial employees in generic skills are less to have above average turnover.

The Hosmer and Lemeshow test with a value of .008 did not support the model as statistically

significant for the association of the practice of training non-managerial employees in generic skills.

The Cox & Snell and Nagelkerke R square statistic indicates that the model explains 29.8 per cent

to 39.7 per cent of the variation in the outcome variable of voluntary turnover. A comparable study

finding indicates that training practices explain 17.9 per cent to 19.9 per cent of the variance in the

dependent variable of voluntary turnover (Wood et al., 2006). Another study by Wood and de

Menezes (1998) findings suggest that HCM explains 27 per cent of the variance in the dependent

variable of voluntary turnover. Yet another study using ordinary least square regression analysis

indicates that HPWS practices explain 40 per cent of the variance in the dependent variable of

voluntary turnover (Shaw et al., 1998). The variance explained by the current study is thus

relatively higher as compared to Wood et al. (2006) and Wood and de Menezes (1998) but quite

comparable to Shaw et al. (1998). A possible explanation can be that local establishments that

invest in their human capital and develop their skills create an environment of mutual exchange

and thus benefit from a lower voluntary turnover rate. The results are consistent with the findings of

an earlier study by Kalleberg and Moody (1994) that concluded that training as an individual

practice has a significant association with employee retention. The results are also consistent with

the findings of a number of studies incorporating training as a part of bundle or system and found

that such a bundle or system had a significant negative association with employee turnover (Arthur,

1994; Vandenberg et al., 1999 and Guthrie et al., 2009).

230 The regression analyses further indicates that a number of employee involvement and participation

practices that is programmes designed to elicit employee input, sharing of strategic information and

attitude surveys have a significant negative association with above average voluntary turnover. The

Hosmer and Lemeshow test with a value of .110 supports the model as being statistically

significant with regard to the practice of conducting attitude surveys to correct employee morale

problems only. The odds ratio indicates that the establishments that conducted attitude surveys to

correct employee morale problems are ten times less likely to have above average turnover. The

Cox & Snell and Nagelkerke R square statistic indicates that the model explains 32.6 per cent to

43.6 per cent of the variation in the dependent variable of voluntary turnover. The variance

explained is relatively higher as compared to overall variance of 27 for HCM relationship with

voluntary turnover as indicated by Wood and de Menezes (1998). On the whole employee

involvement practices are considered to be an important component of high performance

management practices that are crucial for firm performance. If management shares relevant

information with workers regarding their work and expects them to make suggestions and

participate in programmes designed to improve processes, it is expected this leads to a supportive

work environment and potentially motivates employees (Wood and Wall, 2007). It was expected

that implementation of EIP practices by the local establishments in Pakistan will improve their

employee turnover rate. Moreover, it was also expected that establishments that conduct routine

attitude surveys to correct employee morale problems are likely to reduce employee turnover rate.

The findings are consistent with the existing high performance studies results that indicate that EIP

practices reduce turnover (Arthur, 1994; Huselid, 1995; Guthrie, 2001; Batt et al, 2002).

Form the performance review, appraisal and career development practices the regression analyses

indicates that the practice of feedback from more than one source has a significant negative

association with above average turnover. The Hosmer and Lemeshow test with a value of .002 did

not support the model as being statistically significant. The Cox & Snell and Nagelkerke R square

statistic indicates that the model explains 19.9 per cent to 26.6 per cent of the variance in the

dependent variable of voluntary turnover. A comparable study by Wood et al. (2006) suggests that

the practice of performance appraisal explains 17.9 per cent to 18.4 per cent of the variance in

dependent variable of voluntary turnover. The current study thus explains relatively higher amount

of variance in the dependent variable of voluntary turnover caused by the appraisal practice. The

findings perhaps suggest that the local firms that provide a comprehensive and timely feedback

that is focused on employee development are in a better position to retain their employees. Though

231 the findings of the existing studies with regard to effect of appraisal practices are inconclusive, a

study by Guthrie et al., (2009) found that feedback from more than one source as part of HPWS

bundle reduces turnover. An earlier study by Vandenberg et al., (1999) capturing 360 degree

appraisal failed to find any significant effect of the practice on turnover. In general a number of

studies measuring performance review and appraisal practices do find a significant negative

association between the practices and turnover (Ramsay et al., 2000; Guest et al., 2003;

Subramony, 2009).

Form the high compensation contingent on performance practices; the results of the regression

analyses indicate that non-managerial employees’ participation in profit sharing or share ownership

schemes based on their job performance or work in team has a significant negative association

with above average voluntary turnover. However it is important to note that Hosmer and Lemeshow

test with a value of .010 did not support the model as being statistically significant. The R square

statistic explains some 24.6 per cent to 32.8 per cent of the variance in the outcome variable of

voluntary turnover caused by the model. The results also indicate that the practice of additional pay

or pay rise as a result of job performance or work in a team has a negative B value that indicates

the likelihood that the practice has the potential to reduce employee turnover. The Hosmer and

Lemeshow test with a value of .041 did not support the model as being statistically significant.

Again the R square values indicate that model explains 18.1 per cent to 24.1 per cent of the

variance in the dependent variable of voluntary turnover. A study by Wood and de Menezes (1998)

suggests that HCM explains 27 per cent of the variance in the dependent variable of voluntary

turnover. The variance explained for the practices of profit sharing and additional pay is almost

within the same range. A possible explanation can be that rewards package plays an important role

in employees decision to stay or leave an organization for better pay, so it was expected that

benefits such as profit sharing and variable pay will reduce voluntary turnover. Thus the role of

extrinsic motivators such variable pay is considered to be very important in HPWS theory for not

only employee motivation but also for high level of organizational performance. The findings

indicate that local establishments that adopt the variable pay practices are more likely to retain their

employees. Findings of the current study are consistent with existing literature that considers the

PRP as an important HPWS practice that has significant negative effect on turnover (Way, 2002;

Guthrie, 2000; Guthrie, 2001; Combs et al., 2006; Guthrie et al., 2009). An important study by

Guest et al. (2003) found that individual as well as group based rewards are associated with lower

232 turnover. However a seminal study by Huselid (1995) found that compensation dependent on

appraisal increases turnover as it makes non-performers to leave.

The regression results further indicate that practices such as harmonized terms and conditions and

single status and allowing career breaks to non-managerial employees did not have any significant

association with above average voluntary turnover. In case of both of the practices the Hosmer and

Lemeshow test with values of .005 and .012 did not support the model being statistically significant.

The regression models explained some 15.1/ 15.9 per cent to 20.1/ 21.1 per cent of the variance in

the dependent variable of voluntary turnover. However the practices have a negative B sign

indicating the likelihood that the practices can reduce above average voluntary turnover. Findings

of the existing studies indicate that the practice of reduction in status differences has significant

negative association with lower labour turnover (Guest and Hoque, 1994; Ramsay et al., 2000;

Guest et al., 2000). In the case of practice of career breaks, findings of the only high performance

study that measures the practice effect on labour turnover is that of Ramsay et al., (2000). The

study results are consistent with the current study findings, as Ramsay et al. (2000) did not find any

significant effect of the practice on labour turnover, however the association was negative.

The regressions results indicate that a number of HPWS practices have a significant negative

association with above average voluntary turnover. In particular the practices of sophisticated

selection and selective hiring; an establishment ability to generate as much good/ qualified

applicants as needed and conducting one or more employment test prior to hiring, training non-

managerial employees in variety of jobs or skills, EIP practice of conducting attitude surveys to

correct employee morale problems have a significant negative association with above average

voluntary turnover. The association was significant at one per cent. In addition to this the Hosmer

and Lemeshow test supported the regression models in case of above mentioned practices as

being statistically significant. The current study differentiated between voluntary and involuntary

turnover, the next section discusses the associations of HPWS on involuntary employee turnover.

233 7.1.4 Employees Discharged

It has been argued in management literature that determinants of voluntary and involuntary

turnover are distinct, majority of studies that capture effects of HPWS practices on labour turnover

do not draw any distinction between them. However the current study draws the distinction and

measures involuntary turnover by the statement drawn from the study of Allen (2006), during the

last 12 months approximately what percentage of non-managerial employees at the establishment

were discharged. For the purpose of logistic regression analysis, the variable was recoded as 0

indicating below average discharge of employees and 1 indicating above average discharge of

employees. Table 7.3 shows the results of the regression in which the dependent variable

represents the local establishment manager response on employees discharged.

The detail results of the regression analysis are available in Appendix G (G1 to G14). This section

presents the results for the association of HPWS practices with dependent variable of employees

discharged. It is expected that establishments that have implemented high performance workplace

practices in Pakistan are less likely to discharge above average number of employees, primarily

due to selective hiring and recruitment process as part of high performance management system

ensures that a right candidate is selected and there is no need to discharge employees later on.

Moreover one of the main arguments of the high performance paradigm is that such systems

create an environment of mutual gains and thus create a better working environment based on the

principles of employee participation and input and therefore it can be expected that the employees

will reciprocate by working hard as it is generally assumed that HPWS system increases their

commitment to the organization. It is important to note, that though a number of high performance

workplace practices have a significant association with the dependent variable of employees

discharged, the Hosmer and Lemeshow value was less than .05 indicating that the model in case

of most of the practices was not statistically significant. The only practice that fulfilled the conditions

of the logistic regression model is the selective hiring and sophisticated selection practices of

conducting employment tests prior to hiring.

234 Table 7.3 HPWS Practices and Dependent Variable of Employees Discharged

HPWS Practices B Value Odds ratio

H& L C&S R

2

Nagel R

2

The organization has a formal policy of no compulsory redundancy

-.492 .145 .039 .087 .128

The firm expects all employees to stay till retirement

-1.452*** .234 .035 .138 .202

Recruitment process generates as many good/qualified applicants as the establishment needs

-.192 .825 .133 .084 .123

One or more employment test is conducted prior to hiring

-.925*** .397 .074 .114 .167

Non-managerial employees receive training in variety of jobs or skills and/ or routinely perform more than one job

-1.012*** .364 .033 .118 .173

Non-managerial employees receive intensive/extensive training in generic skills

-1.226*** .293 .024 .131 .191

Non-managerial employees are involved in participation and involvement programmes

-.389 .678 .158 .085 .124

Non-managerial employees are provided with relevant strategic information

-1.095** .334 .039 .098 .143

Routinely conducts Attitude surveys to correct employee morale problems

-.585* .557 .001 .091 .133

Receive Formal feedback from more than one source (i.e. feedback from several individuals such as supervisors, peers etc.

-.620* .538 .015 .093 .136

Non-managerial employees participate in profit sharing or share ownership schemes

-.668** .512 .023 .090 .131

Offered additional pay or offered pay rise in past year as result of job performance or work in a team

-.289 .749 .059 .083 .121

There are few status differences in the establishment between managers and the rest of the employees

-.871** .418 .003 .097 .142

The establishment allows career breaks to employees for child care, elder care and leisure activities

-.738** .835 .041 .105 .153

***Significant at one per cent, **Significant at five per cent, *Significant at ten per cent

H&L = Hosmer and Lemeshow Test

C&S = Cox and Snell R Square

Nagel = Nagelkerke R Square

235 In general the high performance studies do not explore the relationship of the practices with the

dependent variable of employees discharged. However that a study by Shaw et al. (1998) provides

values for R square statistics that indicates that individual HPWS practices can account for 28 per

cent of the variance in the dependent variable of employees discharged. The Cox & Snell and

Nagelkerke R square statistics for the practice of employment tests prior to hiring indicates that on

the whole the individual practice explains 8 per cent to 20 per cent of the variance in the dependent

variable of employees discharged for the current study. This can be considered a relatively low

amount of variance as compared to Shaw et al. (1998), however it is important to note that the

studies do not use the same regression models to analyse the data.

Table 7.3 shows the regression analysis results for HPWS practices as independent predictors of

above average discharge of employees by a local establishment in Pakistan. The results indicate

that employment security policy of no compulsory redundancy has a negative association with

above average discharge of employees. Whereas the policy of an expectation that employee will

stay till retirement has a significant negative association with above average discharge of

employees. It is interesting to note that the association of the policy of no compulsory redundancy

with above average employee discharge is negative whereas the policy has a positive association

with the dependent variable of voluntary employee turnover. The results suggest that local

establishments that avoid compulsory redundancy are perhaps more likely to provide stability at

work to their employees without fear of downsizing. However it is important to assess whether such

a policy results into any productivity or financial gain for the employer, in the next coming sections,

the Chapter will assess the possibility whether such a policy results into any such gain for the local

establishments or not. Again it is reiterated that the Hosmer and Lemeshow test values did not

support the models as being statistically significant. The R square statistic indicates that the

practice of no compulsory redundancy accounts for an 8.7 per cent to 12.8 of the variance and the

expectation to stay till retirement accounted for 13.8 per cent to 20.2 per cent of the variance in the

dependent variable of employees discharged. The variance thus explained by the practices is quite

in line with the variance explained by other practices explored for their association with dependent

variable of employees discharged by the study.

The results also show that the practice of selectivity, that is an establishment ability to generate as

many good/ qualified applicants as needed has a negative association with above average

discharge of employees. The Hosmer and Lemeshow test with a value of .133 supported the model

236 as being statistically significant. The model accounted for 8.4 per cent to 12.3 per cent of the

variance in the dependent variable of employees discharged. The practice of conducting

employment test prior to hiring has a significant negative association with above average discharge

of employees. The odds ratio indicates that establishments that conduct employment tests prior to

hiring are two times less likely to discharge above average number of employees. The association

is significant at the one per cent level. The Hosmer and Lemeshow test with a value of .074

supports the model as being statistically significant. The Cox & Snell and Nagelkerke R square

statistics indicates that the model accounts for 11.4 per cent to 16.7 per cent of the variance in the

dependent variable of employees discharged. Again the range of the variance explained is quite in

conformance with variance explained by other practices measured by the study. The results

highlight the importance of selective hiring and sophisticated selection practices, if the hiring

system is not properly designed; it is likely that an establishment is compelled to select perhaps

bad hires and is likely to have an above average rate of employee discharge. Thus the results are

in line with Huselid (1995) findings that indicate selective staffing practices are related to total

turnover. Thus establishments using a high performance recruitment and selection practices in

Pakistan are less likely to have above average rate of employee dismissal.

The results further indicate that the practices of training non-managerial employees in variety of

jobs and generic skills have a significant negative association with above average employee

discharge. The Hosmer and Lemeshow test recorded values less than .05 for both the practices

that is .033 and .024, thus indicating that the model is insignificant. However the Cox & Snell and

Nagelkerke R Square value for the practice of training non-managerial in variety of jobs indicates

that the model explains 11.8 per cent to 17.3 per cent of the variability in the dependent variable of

employees discharged. In a similar manner the Cox & Snell and Nagelkerke R square test explains

13.1 per cent to 19.1 per cent of variability in the dependent variable of employees discharged for

the practice of training non-managerial employees in generic skills. Though the Hosmer and

Lemeshow test does not support the model the variance explained by the practices is almost equal

to other practices that have been explored for their associations with dependent variable of

employees discharged. A possible explanation is that training employees is long term investment

that can only be recouped if the employee maintains its employment relationship with the

establishment. If the cost of investment in the employee is high the establishment is most likely to

avoid unnecessary termination of the employees. Moreover such an investment may improve the

employee behaviour at work thus reducing the need for any dismissals. In general the findings of

237 existing literature suggest that training both as a standalone and part of bundle has a significant

negative association with employee turnover (Kalleberg and Moody, 1994; Arthur, 1994;

Vandenberg et al., 1999 and Guthrie, 2009). The results of the current study suggest that training

practices have a significant negative association with above average rate of employees discharge.

The findings of the current study indicate that employee involvement practices have a negative

association with above average discharge of employees. The establishment policy of sharing

relevant strategic information with non-managerial employees has a significant negative

association at five per cent level, whereas the practice of conducting attitude surveys to correct

employee morale problems has a weak association significant at the ten per cent level. The

Hosmer and Lemeshow test indicates that model is insignificant as the practices recorded values of

.039 and .001, which are less than the recommended value of .05 or above. However the Cox &

Snell and Nagelkerke R square statistics indicates that the practice of sharing strategic information

with non-managerial employees explains 9.8 per cent to 14.3 per cent of the variability in the

dependent variable of employees discharged. In similar manner the practice of conducting attitude

surveys explains 9.1 per cent to 13.3 per cent of the variance in the dependent variable. The

variance explained by the EIP practices is roughly equal to the variance explained by other

practices explored by the study for their associations with the dependent variable of employees

discharged. The results suggest that perhaps a delegation of authority and empowerment at work

strengthens the psychological attachment to the establishment and organizing work in teams and

employee participation in quality circles or suggestion schemes improves his work behaviour, thus

reducing the rate of employee dismissal at the establishments that implement HPWS practices in

Pakistan. In general the HPWS studies indicate that EIP practices reduce employee turnover

(Arthur, 1994; Huselid, 1995; Guthrie, 2001; Batt et al., 2002). The results of the current study

indicate that EIP practices in a similar manner have the potential to reduce involuntary turnover at

the local establishments that implement them in Pakistan.

The regression analyses further indicates that appraisal practice of feedback form more than one

source has a significant negative association with above average discharge of employees. The

Hosmer and Lemeshow test indicates that the model is not significant as it recorded a value of .015

which is less than the recommended value of .05. The Cox & Snell and Nagelkerke R square

statistics indicates that the practice explains 9.3 per cent to 13.6 per cent of the variability in the

dependent variable of employees discharged. Again the variance explained by appraisal practice is

238 equal to variance explained by other practices regressed by the study for their association with

employees discharged. Though ordinarily it is expected that a performance appraisals are crucial to

identify and dismiss non-performing employees. However, the evidence from the establishments in

Pakistan suggests otherwise, perhaps a development oriented appraisal is in employee self-

interest, it provides the employee with an opportunity to learn and identify further training needs,

thus it proves to be an effective tool to align employee behaviour with organizational objectives and

has a negative association with above average rate of employee discharge. Findings of the high

performance workplace practices with regard to 360 degree feedback have a mix results. A study

by Guthrie et al. (2009) indicates that feedback from more than one source has negative

association with employee turnover, whereas an earlier study by Vandenberg et al. (1999) failed to

find any significant effect of the practice on employee turnover. The findings of the current study

suggest that the practice has the potential to lower the above average discharge of employees for

the local establishments that implement the practice.

Table 7.3 shows that the practice of profit sharing or share ownership schemes has a significant

negative association with above average discharge of employees. The practice recorded a value of

.023 on Hosmer and Lemeshow test which is less than recommended value of .05. However the

Cox & Snell and Nagelkerke R square values indicate that the practice explains 9 per cent to 13.1

per cent of the variability in dependent variable of employees discharged. The results also show

that the practice of additional pay or pay rise due to job performance or work in a team has a

negative association with above average discharge of employees. The Hosmer and Lemeshow test

indicates that the model was significant as it recorded a significant value of .059. The Cox & Snell

and Nagelkerke R square statistic indicates that the practice explains 8 per cent to 12.1 per cent of

the variability in the dependent variable of employees discharged. The variance explained by the

pay contingent on performance practices is comparable to the amount of the variance explained by

other practices investigated by the study. A possible explanation is that provision of financial

benefits by an establishment creates a psychological state that changes employee attitude which in

turn leads to desired behaviour, thus reducing the need for employee dismissal. A number of high

performance management practices studies indicate that performance related pay has a significant

negative effect on employee turnover (Way, 2002; Guthrie, 2000; Guthrie, 2001, Guthrie et al.,

2009; Guest et al., 2003; Combs et al., 2006). The results of the current study indicate that the high

compensation contingent on performance practices also have a negative association with the

239 dependent variable of employees discharged similar to what the above mentioned studies indicate

in the case of voluntary employee turnover.

The results further show that the practice of single status and harmonization at work has a

significant negative association with above average employee discharge. However the practice

recorded a value of .003 on Hosmer and Lemeshow test which is less than the recommended

value of .05 or above. The Cox & Snell and Nagelkerke R square statistic indicates that the

practice explains 9.7 per cent to 14.2 per cent of the variability in the dependent variable of

employees discharged. Reduction of status differences is considered an important gesture on

behalf of the management that makes workers feel valuable and equal to any other cadre of

employees. A possible explanation can be that such a policy captures workers heart and minds

and they reciprocate by working hard and there is less need to discharge them. Findings of studies

by Guest and Hoque (1994), Guest et al. (2000) and Ramsay et al. (2000) indicate that the practice

has significant negative association with employee turnover. The results of the current study

indicate that practice has a significant negative association with dependent variable of employee

discharged are similar to its effects with the voluntary turnover as outlined by major high

performance workplace studies.

Table 7.3 indicates that the work-life balance practice of allowing career breaks has a significant

negative association with above average employee discharge. The practice recorded a value of

.041 on Hosmer and Lemeshow test which is less than the recommended value of .05.The Cox &

Snell and Nagelkerke R square statistic explains 10.5 per cent to 15.3 per cent of the variability in

the dependent variable of employees discharged. Again the variance explained is in line with the

variance explained by other HPWS practices for their association with employees discharged by

establishments in Pakistan. The results perhaps suggest that a provision of career breaks provides

the workers with much needed time to pursue personnel interests of family matters and improves

their psychological well-beings at work and thus improves their performance and reduces the need

to dismiss them. A few high performance studies explore the association of work-life balance

practices with human resource and performance outcomes. A study by Ramsay et al., (2000)

indicates that the practice has a negative association with employee turnover. The results of the

current study indicate that the practice has a significant negative association with above average

employee discharge, a finding that reflects the underpinning objective of implementing such a

practice.

240 On the basis of available evidence, it is safe to infer that high performance workplace practices

have the potential to lower the above average discharge of employees at establishments. Though

the major high performance workplace studies have not investigated the association of the

practices with the dependent variable of employees discharged, but on the whole the results of

HRM practices are consistent with existing studies that have argued that HPWS practices

significantly lower employee turnover (Huselid, 1995; Wood and de Menezes, 1998; Wood and de

Menezes, 2008; Guthrie, 2001; Guthrie et al., 2009; Batt, 2002; Batt et al., 2002; Ramsay et al.,

2000; Fey et al., 2000; Kalleberg and Moody, 1994; Vandenberg et al., 1999).

The findings of the section also indicate that in addition to practices that have a significant

association with voluntary turnover, a set of practices have a significant association with number of

employees an establishment discharged in Pakistan. The practices were: establishment

recruitment process generates as many good/ qualified applicants as needed, single status /

harmonization at work and a facility of career breaks for non-managerial employees. Thus

differentiating between voluntary and involuntary turnover proved beneficial as the process

highlighted additional independent predictors that have a significant negative association with the

involuntary turnover. Thus the argument of Shaw et al. (1998) is noteworthy as they argue that

organizational level studies should differentiate between voluntary and involuntary turnover.

The next section discusses the effects of HPWS practices on subjective establishment

performance outcomes of labour productivity, labour productivity growth and financial performance.

7.2 HPWS practices and Establishment outcomes

The current study measured labour productivity, labour productivity growth and financial

performance as measures of establishment outcomes. Though objective measures of performance

are preferred by studies, in absence of such measures, subjective measures similar to WERS

management questionnaire that asks the managers to rate the performance of their workplace in

comparison with other workplaces in the industry have been used by a number of studies (for

example, see, Ramsay et al., 2000; Guest et al., 2003; Wood and de Menezes, 2008). Taking the

same approach and using a five point scale the establishment managers were asked to rate their

establishments’ performance in comparison with other in the same industry for labour productivity,

241 labour productivity growth and financial performance. The five point scale was later convert to a

categorical scale for purpose of logistic regression analysis with 0 indicating about average and 1

indicating above average performance with respect to labour productivity, labour productivity

growth and financial performance.

7.2.1 Labour Productivity

Labour productivity is one of the most widely used dependent variable in high performance studies

(Boselie et al., 2005). Table 7.4 shows the results for regression analysis undertaken for the

control and HPWS practices as predictors of above average labour productivity in the

establishments of local firms in Pakistan. A number of individual high performance workplace

practices have significant association with the dependent variable of labour productivity. The detail

results are available in Appendix H (H1 to H14). Again the results provide values of essential tests

like Hosmer and Lemeshow, Cox and Snell R square and Nagelkerke R Square to ease the

interpretation.

Of the employment security practices, the results of the current study indicate that establishments

that offer an explicit promise of no compulsory redundancy are less likely to have above average

labour productivity. However the association is weak and significant at the ten per cent level only.

The odds ratio indicates that such establishments were 1.7 times less likely to have above average

voluntary turnover. The Hosmer and Lemeshow test with a value of .068 indicates that the model

performed well in explaining the association of predictor variable with dependent variable of labour

productivity. The Cox & Snell and Nagelkerke R square statistic indicates that the practice explains

21.8 per cent to 29.1 per cent variability in the dependent variable of labour productivity. Though

the variance of the current study is not directly comparable to existing studies, a study by Koch and

McGrath (1996) though did not use logistic regression indicates that HPWS practices explain 27

per cent to 36 per cent variance in the dependent variable of labour productivity. In a similar

manner a study by Hoque (1999) indicates that HRM explains 6.6 per cent variance in the

dependent variable of labour productivity. In a similar manner a study by Guest et al. (2003)

indicates that HRM explains around 3 per cent to 7 per cent of the variance in the dependent

variable of labour productivity. However it is important to note that data analysis method of the

above mentioned studies is different from the analysis adopted by the current study. The previous

242 section highlighted that the local establishments that implement the practice were less likely to

have above average discharge of employees. The findings that policy of no compulsory

redundancy has negative association with above average labour productivity are contrary to

expectations as the regression analyses indicates that the policy does not results into any

productivity gains for the local establishments in Pakistan.

Ordinarily it was expected that employment stability should enhance employee productivity.

However the results of the current study are consistent with the findings of number of high

performance workplace studies that indicate that employment security has no direct link with labour

productivity (Wood and de Menezes, 2008; Guest et al., 2003; Bryson et al., 2005).

Three major studies in particular use the measure of no compulsory redundancy, one by Guest and

Hoque (1994) found no difference between establishments with regard to the effect of the practice

on labour productivity, however studies by Ichniowski et al. (1997) and Hoque (1999) found a

strong positive link between employment security as part of the HRM practices and labour

productivity.

On the other the results of the logistic regression indicate that an expectation on the behalf of the

management that employee will stay till retirement has a positive association with above average

labour productivity. The establishments implementing the policy are three times more likely to have

above average labour productivity. The association is significant at the one per cent level. The

Hosmer and Lemeshow test with a value of .052 supports the model as a significant predictor of

the association of practice with the dependent variable. The Cox & Snell and Nagelkerke R square

test indicates that the model explains 25.6 per cent to 34.2 per cent variability in the dependent

variable of labour productivity.

243 Table 7.4 HPWS Practices and Dependent Variable of Labour Productivity

HPWS Practices B values Odds ratio

H& L C &S R

2

Nagel R

2

The organization has a formal policy of no compulsory redundancy

-.571* .565 .068 .218 .291

The firm expects all employees to stay till retirement

1.274*** 3.54 .052 .256 .342

Recruitment process generates as many good/qualified applicants as the establishment needs

.729 2.073 .026 .223 .297

One or more employment test is conducted prior to hiring

1.064*** 2.898 .089 .243 .324

Non-managerial employees receive training in variety of jobs or skills and/ or routinely perform more than one job

.930*** 2.534 .074 .239 .318

Non-managerial employees receive intensive/extensive training in generic skills

1.219*** 3.385 .567 .256 .342

Non-managerial employees are involved in participation and involvement programmes

.788*** 2.198 .000 .234 .312

Non-managerial employees are provided with relevant strategic information

1.027* 2.792 .175 .224 .298

Routinely conducts Attitude surveys to correct employee morale problems

1.267*** 3.551 .094 .259 .346

Receive Formal feedback from more than one source (i.e. feedback from several individuals such as supervisors, peers etc.

1.134*** 3.108 .011 .341 .455

Non-managerial employees participate in profit sharing or share ownership schemes

.621** 1.861 .008 .210 .281

Offered additional pay or offered pay rise in past year as result of job performance or work in a team

.417 1.517 .009 .214 .286

There are few status differences in the establishment between managers and the rest of the employees

1.062*** 2.893 .063 .221 .294

The establishment allows career breaks to employees for child care, elder care and leisure activities

.887*** 2.427 .001 .302 .403

***Significant at one per cent, **Significant at five per cent, *Significant at ten per cent

H&L = Hosmer and Lemeshow Test

C&S= Cox and Snell R Square

Nagel = Nagelkerke R Square

244 The findings perhaps suggest that existence of career opportunities linked to performance works

better for local establishments than an outright promise of no downsizing. This also hints towards

successful implementation of advanced human resource system that can effectively distinguish

between performers and non-performers for advancement within the firm. A study by Wood and de

Menezes (2008) reporting the effect of ILM as individual practice did not find any significant positive

association between ILM and labour productivity. However findings of the current study are quite in

line with the existing studies using a bundle or system approach that indicate a significant positive

association of ILM with labour productivity (Huselid, 1995; Ramsay et al., 2000; Guthrie, 2002;

Datta et al., 2005).

The results of regression analysis further indicate that practice of conducting employment tests

prior to hiring has a significant positive association with above average labour productivity. The

odds ratio indicates that establishments conducting employment tests prior to hiring are two times

more likely to have above average labour productivity. The association is significant at the one per

cent level. The Hosmer and Lemeshow test recorded a value .089 supported the model as being

statistically significant. The Cox & Snell and Nagelkerke R square statistic indicates that the model

explains 24.3 per cent to 32.4 per cent variability in the dependent variable of labour productivity.

The results also indicate that recruitment process ability to generate as many good/ qualified

applicants has a positive association with above average labour productivity. The Hosmer and

Lemeshow test with a value of .026 did not support the model as a statistically significant predictor

of the association of the practice with dependent outcome of labour productivity. On the whole the

model explained 22.3 per cent to 29.7 per cent of the variance in the dependent variable of labour

productivity. Findings of existing studies indicate a range of variances for the HCM relationship with

labour productivity, for example a study by Koch and McGrath (1996) suggests a variance of 27 per

cent to 36 per cent. A study by Wood and de Menezes (1998) indicates that HCM explains 7 per

cent of the variance in dependent variable of labour productivity. The variance explained by the

current study though not directly comparable to Koch and McGrath (1996) is quite in line with their

findings. A possible explanation is that selection ratio indicates how choosy an organization is in

hiring employees and a valid selection procedure helps identify the best hires. The results of the

study thus indicate that establishments that use high performance recruitment and selection

practices are more likely to expect above average labour productivity from their best hires. The

results of the research are consistent with existing studies that have found that a systematic

245 selection and recruitment system has a significant positive effect on labour productivity (Koch and

McGrath, 1996; Huselid, 1995; Bae and Lawler, 2000; Combs et al., 2006).

The results indicate that training practices that is training non-managerial employees in variety of

jobs and generic skills have a significant positive association with above average labour

productivity. The association is significant at the one per cent level. The establishments training

non-managerial employees in variety of jobs are two times more likely to have above average

labour productivity. The Hosmer and Lemeshow test with a value of .074 indicates that the model

performed well in predicting the association of the practice with the dependent variable of labour

productivity. The Cox & Snell and Nagelkerke R square statistic indicates that the model explains

23.9 per cent to 31.8 per cent variability in the dependent variable of labour productivity. In a similar

manner establishments training non-managerial employees in generic skills are three times more

likely to have above average labour productivity. The association is significant at one per cent level.

The Hosmer and Lemeshow test recorded a value of .567 indicating that the model performed well

in predicting the association of the practice with the dependent variable of labour productivity. The

Cox & Snell and Nagelkerke R square statistic explains 25.6 per cent to 34.2 per cent variability in

the dependent variable. The variance explained by the practices is thus quite in line with the

findings of Koch and McGrath (1996), though quite high as compared to Wood and de Menezes

(1998) and Guest et al. (2003). The results validate the arguments prevalent in high performance

workplace practices theory that training either general or specific not only benefits the employees

but also creates productivity gains for the firm (Ottersten et al., 1999). These findings are in line

with various high performance studies that have examined the training effects on labour

productivity either as standalone practice or a part of bundle or system (Arthur, 1994; Youndt et al.,

1996; Ichniowski et al., 1997; Hoque, 1999; Combs et al., 2006; Guthrie et al., 2009). The theorists

in general agree that a policy to develop human capital has potential to create idiosyncratic human

capital and the argument is valid for every cadre of employees across the organizations (Koch and

McGrath, 1996 and Garcia, 2005). The arguments seem to hold for local establishments in

Pakistan as the evidence indicates that training non-managerial employees has a significant

positive association with above average labour productivity.

The results further indicate that a number of EIP practices have a significant positive association

with the dependent variable of above average labour productivity. However in the case of the

practice of programmes designed to elicit participation, the Hosmer and Lemeshow test with a

value of .000 did not support the model as being statistically significant. For the practice of sharing

246 strategic information with the non-managerial employees, the results indicate that the practice has

a positive and significant association with above average labour productivity. However the

association is significant at the ten per cent level only. The Hosmer and Lemeshow test with a

value of .175 indicates that the model performed well in predicting the association of the practice

with dependent variable of labour productivity. The Cox & Snell and Nagelkerke R square statistic

explains 22.4 per cent to 29.8 per cent variability in the dependent variable of labour productivity.

The odds ratios indicate that such establishments are two times more likely to have above average

labour productivity. The practice of conducting attitude surveys has a significant positive

association with above average labour productivity. The association is significant at the one per

cent level. The Hosmer and Lemeshow test recorded a value of .094 that indicates that the model

was significant in predicting the association of the practice with dependent variable of labour

productivity. The Cox & Snell and Nagelkerke R square statistic explains 25.9 per cent to 34.6 per

cent variability in the dependent variable. The variance explained by the EIP practices is roughly

equal to the amount of the variance explained by the other HPWS practices explored by the current

study. The odds ratio indicate that establishments implementing the practice are three time more

likely to have an above average labour productivity. The findings of the study are quite in line with

the underpinning objectives of implementing employee involvement practices at workplaces. At the

heart of high performance workplace systems are the employee involvement practices that are

considered as a key to organizational performance (Wood and Wall, 2007). The basic objective of

the employee involvement initiatives is to involve low-level employees in decisions regarding their

job so that individuals or teams can decide matters related to their work and to enhance their

participation at work. Walton (1985) and Lawler (1986) and the wider high performance theory

regards the employee involvement and worker voice as the basic element of high commitment and

involvement and performance models that can improve an organizations performance outcomes.

The results of the current research indicate that EIP practices improve the labour productivity an

important aspect of organizational performance of the local establishments that implement such

practices in Pakistan. The findings are quite in contrast to the existing studies that examine EIP

practices association with labour productivity as a standalone practice and do not find any

significant association (Wright et al., 1999; Cappelli and Neumark, 2001). However findings of the

current study are consistent with studies examining EIP as a part of bundle or system that have

found a significant positive association of EIP practices with labour productivity (Arthur, 1994;

Huselid, 1995; Ichniowski et al., 1997; Datta et al., 2005). Though the current study finds a

247 significant association of EIP practices with labour productivity, the findings of the wider HPWS

studies can be termed as inconclusive.

From the appraisal category, the study was able to run only practice that is feedback from more

than one source in the regression analyses. Though the practice has a significant positive

association with the dependent variable of labour productivity, the Hosmer and Lemeshow model

with a value of .011 did not support the model as being statistically significant. However the Cox &

Snell and Nagelkerke R square statistic explains 34.1 per cent to 45.5 per cent variability in the

dependent variable of labour productivity. The variance explained by the appraisal practice is

relatively higher as compared to other practices explored for their associations with labour

productivity by the current study. A review of theory indicates that development and behaviour

oriented appraisal is classified as human capital enhancing practice considered essential for cost

saving and performance. The results of the current research are quite in line with the findings of a

number of studies that take a bundle or system approach and report a significant positive effect of

the practice on labour productivity (Huselid, 1995; Ramsay et al., 2000; Guest et al., 2003; Datta et

al., 2005; Subramony, 2009; Guthrie et al., 2009). However it is important to mention that a major

study by Wood and de Menezes (2008) did not find any significant association between

performance appraisal and labour productivity. Similarly a meta-analysis by Combs et al. (2006)

also did not find any significant effect of appraisal practices on labour productivity.

The results of the regression analyses indicate that the practice of profit sharing or share

ownership has a significant positive association with above average labour productivity. The

Hosmer and Lemeshow test recorded a value of .008, thus indicating that the model was not

significant in predicting the association of the practice with the dependent variable of labour

productivity. The Cox & Snell and Nagelkerke R square statistic indicates that the model explains

21 per cent to 28.1 per cent variability the dependent variable. The results further indicate that the

practice of additional pay or pay rise due to job performance or work in a team has a positive

association with above average labour productivity. The Hosmer and Lemeshow test with a value

of .009 did not support the model as being statistically significant. The Cox & Snell and Nagelkerke

R square statistic indicates that the model explains 21.4 per cent to 28.6 per cent of the variability

in the dependent variable. The variance explained by the PRP practices is almost equal to amount

of the variance explained by other HPWS practices investigated for the associations with

dependent variable of labour productivity and is comparable to the variance explained by HCM

practices explored by Koch and McGrath (1996). The results perhaps suggest that employees

248 working for the local establishments perceive performance related rewards as valuable and this

leads to required organizational behaviour that motivates the employees to increase their

productivity. Thus a performance related reward system signals the importance of activities or

employee behaviour that is valuable for the establishment and has a strong motivational impact

that has the potential to increase employee productivity. Thus the evidence from the local

establishments in Pakistan is consistent with the findings of number of high performance workplace

studies that support a positive and significant effect of PRP practices on labour productivity (Way,

2002; Combs et al., 2006; Wood and de Menezes, 2008; MacDuffie, 1995; Huselid, 1995; Guest et

al., 2003; Guthrie et al., 2009).

The results indicate that the practice of reduction of status differences and harmonization has a

significant positive association with above average labour productivity. The association is

significant at the one per cent level. The Hosmer and Lemeshow test with a value of .063 indicates

that the model was significant in predicting the association of the practice with dependent variable

of labour productivity. The Cox & Snell and Nagelkerke R square statistic indicates that the model

explains 22.1 per cent to 29.4 per cent variability in the dependent variable. The variance explained

by the practice of reduction of status differences is within the range of variances explained by other

HPWS practices investigated by the study. Establishments reducing status differences at their

workplace are two times more likely to have above average labour productivity. A possible

explanation is that equality at work and single status captures the works hearts and minds, and

they feel a sense of ownership for their work and for the wider organization and respond back by

improving their productivity. The results from the establishments in Pakistan are consistent with the

existing high performance studies that have extensively investigated the practice and found that

harmonized terms and conditions and single status in establishments has significant and positive

association with labour productivity (Guest and Hoque, 1994; MacDuffie, 1995; Wood and de

Menezes, 1998; Hoque, 1999 and Guest et al., 2000).

The results with regard to practice allowing non-managerial employees’ career breaks indicate that

the practice has a significant and positive association with above average labour productivity. The

Hosmer and Lemeshow test with a value of .001did not support the model as being statistically

significant. The Cox & Snell and Nagelkerke R square statistic indicates that the model explains

30.2 per cent to 40.3 per cent variability in the dependent variable. Though the Hosmer and

Lemeshow test did not support the model, the variance explained by the practice is relatively high

as compared to the amount of variance explained by other HPWS practices measured by the

249 study. There are few existing studies that examine the effect of the practice on labour productivity

and the practice is under researched. The results with regard to practice association with labour

productivity are thus not conclusive. A study by Ramsay et al. (2000) did not find any significant

association of family friendly elements of work-life balance practices with labour productivity.

However a study by Konard and Mangel (2000) found that work-life balance practices increase

labour productivity but the association is dependent upon higher percentage of women and

professionals working for a firm. In the case of local establishments in Pakistan, the current study

findings indicate a non-significant positive association with labour productivity, thus the results

suggests that if the employees are given an opportunity to avail a career break for their personal

interests or to attend their family matters, the break has a positive association with improvement in

labour productivity of the establishment. A possible explanation is that such a gesture increases

employee morale and psychological well-being and they reciprocate by increasing their efficiency

at work.

On the basis of empirical evidence it is safe to argue that a number of HPWS practices have a

significant positive association with the dependent variable of labour productivity. In particular the

local establishments policy to expect non-managerial employees to stay till retirement, the practice

to conduct employment tests prior to hiring, training non-managerial employees in variety of jobs

and generic skills, sharing strategic information and conducting attitude surveys to correct

employee morale problems have a significant positive association with above average labour

productivity. In case of these practices the Hosmer and Lemeshow test also supported the model

as statistically significant. The findings are consistent with the prevalent arguments of HPWS

theory and existing empirical evidence. The Chapter next examines the effects of HPWS practices

on dependent variable of labour productivity growth

7.2.2 Labour Productivity Growth

Labour productivity growth is a vital performance outcome that can indicate the success of

implementing high performance workplace practices in the long term. Though the growth in labour

productivity is considered as an important measure of firm performance, not many high

performance studies measure the effect of the HRM practices on the change in labour productivity.

In absence of actual workplace performance figures, the responding establishment managers were

250 asked to make an assessment of growth in labour productivity on a five point scale. The scale was

later converted to a categorical variable with 0 indicating about average labour productivity growth

and 1 indicating above average labour productivity growth. The detail results are available in

Appendix I (I1 to I14).

Table 7.5 shows the summary results for logistic regressions with control and individual HPWS

practices as predictors of above average labour productivity growth. The results indicate that a

large number of high performance practices have a significant positive association with the above

average growth in labour productivity. An important point to note is that Hosmer and Lemeshow

test supported the model for all the individual practices as being statistically significant. The table

7.5 also provides values for pseudo R statistic indicated by Cox & Snell R square and Nagelkerke

R square. It is worth noticing that a study by Wood and de Menezes (1998) suggests that HCM

practices explain 7 per cent of the variance in the dependent variable of growth in labour

productivity. A study by Guest et al. (2003) using ordinary least square regression reports that

HRM practices explain around 7.6 per cent of the variance in change in labour productivity.

A review of high performance workplace practices indicates that not many studies explore the

association between HRM practices and change in labour productivity, and even if few studies

explore the relationship using a longitudinal approach they do not find any significant association

between HRM practices and change in labour productivity.

An earlier study by Wood and de Menezes (1998) found no association between usage of HPWS

practices and change in labour productivity of the workplace. Similarly a very important high

performance study Cappelli and Neumark (2001) concludes that the productivity gains results are

rarely significant, though the effects are positive, in the long the implementation of HPWS practices

rather increases the labour cost.

A major high performance study by Guest et al. (2003) that measures the change in productivity by

using longitudinal approach did not find any association between greater use of HRM and

productivity gain, however it is important to note that the study also did not find any significant

association between HRM and labour productivity in cross sectional analysis.

The findings of the current study indicate that the only HPWS practice that has a significant

negative association with above average growth in labour productivity is the policy of no

compulsory redundancy. The association is significant at the one per cent level. The Hosmer and

Lemeshow test recorded a value of .164 indicating that the model was significant in predicting

association of the practice with the dependent variable of change in labour productivity. The Cox &

251 Snell and Nagelkerke R square statistic indicates that the model explains 20.7 per cent to 28.4 per

cent of the variability in the dependent variable. The current study thus explains a relatively high

amount of variance in the dependent variable of growth in labour productivity as compared to

around 7 per cent of the variance explained by Wood and de Menezes (1998) and Guest et al.

(2003). The odds ratio indicates that establishments having such a policy are 1.7 times less likely

to have above average growth in labour productivity.

This is quite in line with other findings of the current study that indicated that the practice does not

result into any human resource or productivity gain for establishments in Pakistan. Perhaps the

situation with regard to local establishments that offer a promise of no compulsory redundancy is

much more complex and needs further investigation as to why the implementation of the practice

does not result into desired outcomes for the establishments.

Apart from the policy of no compulsory redundancy and selectivity in hiring, rest of the practices

have a positive association with dependent variable of growth in labour productivity indicating that

there is a likelihood that implementation of best practice HRM is going to result into above average

growth in labour productivity. The results also indicate that for a number of HRM practices the

association is strongly significant. The results thus are amazing and unexpected, as few high

performance studies that capture the HRM practices association with growth in labour productivity

do not find any significant associations.

Table 7.5 shows that an expectation on the behalf of the establishment that employees will stay till

retirement has a significant positive association with above average growth in labour productivity.

The association is significant at the one per cent level. The Hosmer and Lemeshow test recorded a

significant value of .339. The Cox & Snell and Nagelkerke R square statistic indicates that the

model explains 17.6 per cent to 24.1 per cent variability in the dependent variable of change in

labour productivity. Again the variance explained by the practice in the dependent variable of

growth in labour productivity is relatively greater than the 7 per cent variance explained by HRM in

case of Wood and de Menezes (1998) and Guest et al. (2003).

252 Table 7.5 HPWS Practices and Dependent Variable of Labour Productivity Growth

HPWS Practices B Values Odds ratio

H& L C&S R

2

Nagel R

2

The organization has a formal policy of no compulsory redundancy

-.954*** .385 .164 .207 .284

The firm expects all employees to stay till retirement

.825*** 2.282 .339 .176 .241

Recruitment process generates as many good/qualified applicants as the establishment needs

-.410 .664 .266 .159 .217

One or more employment test is conducted prior to hiring

.843*** 2.322 .846 .183 .251

Non-managerial employees receive training in variety of jobs or skills and/ or routinely perform more than one job

1.636*** 5.137 .274 .289 .400

Non-managerial employees receive intensive/extensive training in generic skills

1.399*** 4.051 .844 .246 .339

Non-managerial employees are involved in participation and involvement programmes

.788*** 2.200 .386 .180 .246

Non-managerial employees are provided with relevant strategic information

.922** 2.515 .362 .156 .213

Routinely conducts Attitude surveys to correct employee morale problems

1.685*** 5.394 .896 .266 .366

Receive Formal feedback from more than one source (i.e. feedback from several individuals such as supervisors, peers etc.

.499 1.647 .354 .164 .224

Non-managerial employees participate in profit sharing or share ownership schemes

.956*** 2.602 .788 .192 .263

Offered additional pay or offered pay rise in past year as result of job performance or work in a team

.996*** 2.708 .487 .207 .284

There are few status differences in the establishment between managers and the rest of the employees

1.378*** 3.966 .304 .185 .253

The establishment allows career breaks to employees for child care, elder care and leisure activities

.573** 1.773 .310 .167 .229

***Significant at one per cent, **Significant at five per cent, *Significant at ten per cent

H&L = Hosmer and Lemeshow Test

C&S = Cox and Snell R Square

Nagel = Nagelkerke R Square

253 The odds ratio indicates that such establishments are two times more likely to have above average

growth in labour productivity. The results suggest that local establishments that are able to promote

the best workers within the firm are likely to experience above average growth in labour

productivity. Perhaps in presence of internal labour markets employees feel motivated enough and

change their behaviour so that they can develop their career within the firm. The results of the

current study are contrary to the only major high performance study that discusses the effects of

standalone HRM a practice on change in labour productivity is that of Wood and de Menezes

(2008). Wood and de Menezes (2008) do not report any significant association between internal

labour market practices and change in labour productivity. In a similar manner a study by Guest et

al (2003) measuring the internal labour markets as a part of the HRM bundle did not find any

significant association.

The results further show that an establishment practice to conduct employment test prior to hiring

has a significant and positive association with above average growth in labour productivity. The

association is significant at the one per cent level. The Hosmer and Lemeshow test recorded a

significant value of .846. The Cox & Snell and Nagelkerke R square statistic indicates that the

model explains 18.3 per cent to 25.1 per cent of the variability in the dependent variable of change

in labour productivity. The variance thus explained by the recruitment practice of conducting

employment tests prior to hiring is roughly equal to the amount of the variance explained by other

HPWS practices investigated for their associations with growth in labour productivity by the current

study. The establishments conducting employment tests are two times more likely to have above

average growth in labour productivity. However unexpectedly and contrary to predicted link in

theory the practice of selectivity in hiring that is an establishment recruitment process capability to

generate as many good/ qualified applicants has a non-significant negative association with

change in labour productivity. Again the results with respect to the practice of employment tests are

contradictory to existing studies. Wood and de Menezes (2008) capture motivation as selection

criteria and did not find any significant association between selective hiring practices with change in

productivity. In a similar manner studies by Guest et al. (2003) and Wood and de Menezes (1998)

do not find any significant association between recruitment practices as part of HRM bundle and

growth in labour productivity.

The results further indicate that training non-managerial employees in a variety of jobs and generic

skills has a significant positive association with above average growth in labour productivity. The

associations are significant at the one per cent level. The Hosmer and Lemeshow test recorded a

254 significant value of .274. The Cox & Snell and Nagelkerke R square statistic indicates that the

model explains 28.9 per cent to 40 per cent of the variability in the dependent variable. The training

practice explains a high amount of variance in the dependent variable of growth in labour

productivity. The odds ratios indicate that establishments training non-managerial employees in

variety of jobs are five times more likely to have above average growth in labour productivity and

similarly establishments training non-managerial employees in generic skills are four times more

likely to have an above average growth in labour productivity. The results thus highlight the

importance of training non-managerial employees in enhancing organizational performance

outcomes. Perhaps training employees, in particular cross training and utilization and training in

generic skills changes the production function in such a way as to it not only changes the labour

productivity also the change in labour productivity of local establishments in Pakistan. The findings

are consistent with an important earlier study by Bartel (1994) that looked at training and increase

in labour productivity over a period of three years in US and found a significant growth in labour

productivity as a result of investment in training activities. However an important study by Cappelli

and Neumark (2001) did not find any significant association between cross training and growth in

labour productivity. It is safe to argue that results with respect to training associations with change

in labour productivity are under researched and rather inconclusive.

The regression results with regard to EIP practices indicate a significant positive association of the

practices with above average growth in labour productivity. The associations are significant at one

per cent level, apart from the practice of sharing strategic information with non-managerial

employees that recorded significance at five per cent level. The odds ratios indicate that

establishments implementing employee input programmes like quality circles or suggestion

schemes are two times more likely to have above average growth in labour productivity. The

Hosmer and Lemeshow test recorded a significant value of .386. The Cox & Snell and Nagelkerke

R square statistic indicates that the model explains 18 per cent to 24.6 per cent of the variance in

the dependent variable. The variance explained by the EIP practices in the dependent variable of

growth in labour productivity is almost equal to the amount of variance explained by other HPWS

measured by the study. In a similar way, establishments sharing strategic information with non-

managerial employees are also two times more likely to have above average growth in labour

productivity. The Hosmer and Lemeshow test recorded a significant value of .362. The Cox & Snell

and Nagelkerke R Square indicate that the model explains 15.6 per cent to 21.3 per cent of the

variability in the dependent variable. The establishments conducting attitude surveys are five times

255 more likely to have above average growth in labour productivity. The Hosmer and Lemeshow test

recorded a significant value of .896. The Cox & Snell and Nagelkerke R Square statistic explains

26.6 per cent to 36.6 per cent variability in the dependent variable. The results from the local

establishments in Pakistan with regard to EIP practices are consistent throughout the regression

analyses and in general are in accordance to the hypothesized link argued in HPWS theory. The

findings are consistent with the existing study by Wood and de Menezes (2008) that examines the

links between HR practices and change in labour productivity; however Wood and de Menezes

(2008) argue that though EIP practices have a significant positive association with growth in labour

productivity, the association between high involvement orientation and productivity change is

moderated by presence of variable pay. However an important study by Cappelli and Neumark

(2001) reports a non-significant positive association of EIP practices with growth in labour

productivity. It is generally assumed that EIP practices improve performance in teams and thus a

significant positive association in case of local establishments that implement such practices was

expected.

The results further show that appraisal practice of feedback from more than one source did not

have any significant association with above average growth in labour productivity. However the

sign of the B value is positive a pattern the study expected. The Hosmer and Lemeshow test

recorded a significant value of .354. The Cox & Snell and Nagelkerke R square statistic indicates

that the model explains 16.4 per cent to 22.4 per cent of the variance in the dependent variable of

change in labour productivity. The pseudo R square statistic indicates that the appraisal practice

explains comparatively low amount of variance as compared to other HPWS practices investigated

by the study for their association with dependent variable of growth in labour productivity. The

results suggest that if employees receive a constructive 360 degree feedback with an objective to

improve their performance it is highly likely that such establishments can expect above average

growth in labour productivity. Findings are quite in line with Wood and de Menezes (2008) study

that also indicates that the appraisal practice has a non- significant positive association with growth

in labour productivity. However the studies by Guest et al. (2003) and Wood and de Menezes

(1998) do not find any association with greater use of HRM including appraisal practices and

change in labour productivity.

The regression results further indicate that PRP practices such as profit sharing and additional pay

or pay rise as result of job performance or work in team have a significant positive association with

above average labour productivity. The establishments sharing profit with non-managerial

256 employees are two times more likely to have above average growth in labour productivity. The

Hosmer and Lemeshow test recorded a significant value of .788. The Cox & Snell and Nagelkerke

R square statistic explains 19.2 per cent to 26.3 per cent of the variability in the dependent

variable. In a similar manner, establishments offering additional pay or pay rise are also two times

more likely to have above average growth in labour productivity. The Hosmer and Lemeshow test

recorded a significant value of .487. The Cox & Snell and Nagelkerke statistic indicates that the

model explains 20.7 per cent to 28.4 per cent of the variance in the dependent variable. Again the

PRP practices explain relatively low amount of variance as compared to other practices

investigated by the study. However the variance explained is much higher as compared to existing

evidence reported by Wood and de Menezes (1998) and Guest et al. (2003), though the data

analysis methods of the current study are not directly comparable to Wood and de Menezes (1998)

and Guest et al. (2003) studies. The results suggest that performance related pay is an important

extrinsic motivational component of HPWS practices that enhances the growth in labour

productivity of the establishments that implement such practices perhaps by motivating the

employees to benefit from additional earning opportunities provided by the establishment. The

results are quite in line with Wood and de Menezes (2008) study that indicates that variable pay

has a strong significant and positive association with growth in labour productivity.

The results further indicate that the practice of reduction of status differences has a significant

positive association with above average growth in labour productivity. Establishments reducing

status differences at their workplaces are three times more likely to have above average growth in

labour productivity. The Hosmer and Lemeshow test recorded a significant value of .304. The Cox

& Snell and Nagelkerke R square statistic indicates that the model explains 18.5 per cent to 25.3

per cent of the variance in the dependent variable. The variance explained is quite comparable to

the variance of practices such as employee participation, profit sharing, additional pay as a result of

performance or team work and recruitment practices. On the whole the findings are consistent with

Wood and de Menezes (2008) study that indicates that practice of single status has a significant

positive association with labour productivity. Thus it adds credence to the theoretical argument of

Pfeffer (1998) that single status is the most important gesture to workers that makes them feel

valuable and aligns the employee commitment and effort in direction of the firms’ objectives.

The results with regard to practice of allowing career breaks to non-managerial employees indicate

that the practice has significant positive association with above average growth in labour

productivity. The association is significant at the five per cent level. The Hosmer and Lemeshow

257 test recorded a significant value of .310. The Cox & Snell and Nagelkerke R square statistic

indicates that the model explains 16.7 per cent to 22.9 per cent of the variance in the dependent

variable. Again the variance explained is within the range of the variance explained by other HPWS

practices investigated by the study for their association with dependent variable of growth in labour

productivity. Such establishments are 1.7 times are more likely to have above average growth in

labour productivity. The pattern was quite expected as ordinarily a career breaks should improve

employee commitment towards its organization and thus it can be expected that the employees will

further improve their performance ultimately leading to above average growth in labour productivity.

An important point to note is that the results of the current study with regard to HRM practices

association with change in labour productivity are quite in line with theoretical assumptions of

implementing HPWS practices in workplaces. However, only few studies incorporate change in

labour productivity as dependent variable in their investigation of HRM practices association with

performance outcomes, moreover the studies that do so take a longitudinal design and in general

do not support the association of HRM with performance outcomes. Contradictory to evidence of

few major studies, the current study results indicate that the HRM practices have the potential to

improve the growth in labour productivity. However further research is needed before a conclusion

to the practices association with change in labour productivity is reached. The Chapter next

discusses the association of HRM practices with dependent variable of financial performance, the

most researched variable in high performance studies.

7.2.3 Financial Performance

The association of high performance workplace practices with the financial performance of a firm is

the most popular performance outcome measured by the existing studies. The variable faces the

critiques of being a distant outcome, meaning a number of theorists consider it to be a variable not

directly affected by HRM practices (Purcell and Kinnie, 2007). Moreover it has been argued that

public corporate accounts have problems of their own since they cover different business units for

the same firm (Purcell and Kinnie, 2007). However keeping in view, non-availability of published

accounting information with respect to number of participating establishments, comparative

subjective assessment of financial performance of the establishment by senior manager provided

the required data. Establishment managers were asked to rate their workplace financial

258 performance on a five point scale in comparison with other establishments in the same industry on

the pattern of prominent British survey WERS. The scale was later converted into a categorical

scale with 0 indicating about average financial performance and 1 indicating above average

financial performance. The models contained control and individual HPWS practices as the

predictor of above average financial performance. The detail results are available in Appendix J (J1

to J14). The results provide B values, odds ratio, and Hosmer and Lemeshow test, Cox and Snell

R square and Nagelkerke R square. A number of studies exploring the associations of individual

high performance workplace practices with dependent variable of financial performance provide

values for R Square statistic. The study by Delaney and Huselid (1996) subjectively measures

performance and provides R square values for the dependent variable of organization performance

(R2 = 0.182) and for the dependent variable of perceived market performance (R

2 = .263). A

number of other studies also provide the values of R square for example, (Wright et al., 1999, R2 =

.43) and (Cappelli and Neumark, 2001, R2 = .239 to .407). However it is very important to keep in

mind the methodological differences between the current study and the above mentioned existing

studies while making any comparisons.

Table 7.6 shows the summary results of the logistic regression. The Hosmer and Lemeshow test

indicates that the model is statistically significant for all the practices tested for their association

with the dependent variable of financial performance.

The results of the logistic regression indicate that the policy of no compulsory redundancy did not

have any significant association with above average financial performance. The B value recorded a

negative sign, indicating that such establishments are rather more likely to have an about average

financial performance. The Hosmer and Lemeshow test recorded a significant value of .228. The

Cox & Snell and Nagelkerke R square indicate that the model explains 18.2 per cent to 24.9 per

cent of the variability in the dependent variable of financial performance. The variance explained is

quite consistent with the findings of wider HPWS literature for example Delaney and Huselid (1996)

provide a R square value of 18 per cent and Cappelli and Neumark (2001) provide a range from

23.9 per cent to 40.7 per cent.

259 Table 7.6 1HPWS Practices and Dependent Variable of Financial Performance

HPWS Practices B Values Odds ratio

H&L C&S R

2

Nagel R

2

The organization has a formal policy of no compulsory redundancy

-.003 .997 .228 .182 .249

The firm expects all employees to stay till retirement

1.024*** 2.784 .623 .213 .292

Recruitment process generates as many good/qualified applicants as the establishment needs

-.023 .977 .479 .185 .254

One or more employment test is conducted prior to hiring

.587* 1.798 .658 .197 .269

Non-managerial employees receive training in variety of jobs or skills and/ or routinely perform more than one job

1.144*** 3.139 .055 .262 .361

Non-managerial employees receive intensive/extensive training in generic skills

1.499*** 4.476 .278 .280 .385

Non-managerial employees are involved in participation and involvement programmes

.362 1.436 .280 .190 .260

Non-managerial employees are provided with relevant strategic information

.573 1.77 .539 .184 .251

Routinely conducts Attitude surveys to correct employee morale problems

1.112*** 3.039 .149 .240 .330

Receive Formal feedback from more than one source (i.e. feedback from several individuals such as supervisors, peers etc.

.417 1.518 .798 .188 .257

Non-managerial employees participate in profit sharing or share ownership schemes

1.595*** 4.928 .088 .276 .379

Offered additional pay or offered pay rise in past year as result of job performance or work in a team

.112 1.119 .089 .183 .250

There are few status differences in the establishment between managers and the rest of the employees

.348 1.416 .308 .190 .260

The establishment allows career breaks to employees for child care, elder care and leisure activities

.367 1.444 .829 .187 .256

***Significant at one per cent, **Significant at five per cent, *Significant at ten per cent

H&L = Hosmer and Lemeshow Test

C&S = Cox and Snell Cox & Snell and Nagelkerke R square

Nagel = Nagelkerke R Square

260 In short, the study did not find any significant association of the policy of no compulsory

redundancy with human resource or performance outcomes in Pakistan. However the policy of

maintaining internal labour markets measured as an expectation that employees will stay until

retirement has a significant positive association with above average financial performance. The

association was significant at the one per cent level. The Hosmer and Lemeshow test recorded a

significant value of .623. The Cox & Snell and Nagelkerke R square statistic explains 21.3 per cent

to 29.2 per cent of the variability in the dependent variable of financial performance. The variance

explained is comparable to the variance explained by other HPWS practices investigated by the

current study for their association with dependent variable of financial performance and are

consistent with the reported variance of wider HPWS studies, for example Cappelli and Neumark

(2001). The establishments implementing such a policy are two times more likely to have above

average financial performance. Findings of the existing studies with regard to association of

practice of no compulsory redundancy with financial performance are rather inconclusive. Findings

of the studies by Ahmad and Schroeder (2003) and Bryson et al. (2005) indicate that there is no

direct relationship between offer of job security and financial performance. However a number of

major HPWS studies do find a strong positive association between practice of job security and firm

financial performance (Huselid, 1995; Delery and Doty, 1996; Delaney and Huselid, 1996; Hoque,

1999; Ramsay et al., 2000; Wright et al., 2003; Guest et al., 2003). The results of the current study

are thus in line with findings of number of existing studies.

The results further indicate that an establishment ability to generate as many good/ qualified

applicants as needed did not have any significant association with above average financial

performance of the establishment, rather unexpectedly the B value has a negative sign, indicating

the likelihood that the practice is going to result into about average financial performance. The

Hosmer and Lemeshow test recorded a significant value of .479. The Cox & Snell and Nagelkerke

statistic indicates that the model explains 18.5 per cent to 25.4 per cent of the variability in the

dependent variable of financial performance. The variance explained is quite in line with the

reported variance of studies such Delaney and Huselid (1996). The result is surprising as ordinarily

selectivity ratio helps hire the best people that can help the establishment attain best performance

outcomes. The negative association of the practice needs further investigation for a definite

answer; however a possible explanation can be that financial performance of an establishment may

depend on many other business factors, apart from the type of workers hired. Moreover the

financial performance may also depend upon the use of other motivation enhancing practices that

261 might affect the business outcomes. The results of the current study are thus contradictory to the

findings of a number of high performance studies that report a positive and significant association

of availability of pool of candidates to select from with firm financial performance (Huselid, 1995;

Bae and Lawler, 2000; Combs et al., 2006; Takeuchi et al., 2007; Subramony, 2009). However

findings of studies by Wright et al. (1999) and Wood et al. (2006) fail to account for any variance in

financial performance due to selective hiring and sophisticated selection. The results with regard to

an establishment practice to conduct employment tests prior to hiring indicate that the practice has

a significant positive association with above average financial performance. The association is

weak and significant at ten per cent level only. The Hosmer and Lemeshow test recorded a

significant value of .658. The Cox & Snell and Nagelkerke R square statistic indicates that the

model explains 19.7 per cent to 26.9 per cent of the variability in the dependent variable of financial

performance. Thus for the practice of conducting employment tests prior to hiring, the results are

consistent with findings of number of existing high performance workplace studies that also report a

significant positive effect of the practice with a firm financial performance (Huselid, 1995; Bae and

Lawler, 2000; Combs et al., 2006; Takeuchi et al., 2007; Subramony, 2009).

The logistic regression results further indicate that training non-managerial employees in variety of

jobs and generic skills has a significant positive association with above average financial

performance. The associations are significant at the one per cent level. The Hosmer and

Lemeshow test recorded a significant value of .055. The Cox & Snell and Nagelkerke R square

statistic indicates that the model explains 26.2 per cent to 36.1 per cent of the variability in the

dependent variable. The odds ratio indicates that establishments providing training to non-

managerial employees in variety of jobs are three times more likely to have above average

financial performance. In a similar manner establishments training non-managerial employees in

generic skills are four times more likely to have above average financial performance. The Hosmer

and Lemeshow test recorded a significant value of .278. The Cox & Snell and Nagelkerke R square

statistic indicates that the model explains 28 per cent to 38.5 per cent of the variability in the

dependent variable. The training practices thus explain quite comparable amount of variance in the

dependent variable as explained by wider HPWS practices such as Wright et al. (1999). The

results are quite understandable as an effect of investment in human capital not only improves

labour productivity but also potentially increases the firm financial performance (Ottersten et al.,

1999). The results are thus consistent with the findings of number of high performance workplace

practices that investigate training association with firm financial performance (Russell et al., 1985;

262 Kalleberg and Moody, 1994; Delany and Huselid, 1996; Garcia, 2005). However a number of

studies do not support the link between training as an individual standalone practice and financial

performance of a firm (Delery and Doty, 1996; Cunha et al., 2003; Nikandrou et al., 2008; Apospori

et al., 2008). Thus it is safe to argue that finding of the existing HPWS studies regarding the

training association with a firm financial performance are rather inconclusive.

From the employee involvement and participation practices a number of EIP practices have a non-

significant positive association with above average financial performance. The practices are

programmes designed to generate employee participation and input such as quality circles,

problem solving groups and sharing of relevant strategic information with non-managerial

employees. The EIP practice of conducting attitude surveys to correct employee morale problems

has a significant positive association with above average financial performance. The Hosmer and

Lemeshow test recorded a significant value of .149. The Cox & Snell and Nagelkerke R square

statistic indicates that the model explains 24 per cent to 33 per cent variability in the dependent

variable of financial performance. The variance explained by EIP practices is quite comparable to

the reported variance range of 23 per cent to 40 per cent by Cappelli and Neumark (2001). On the

whole the empirical studies consider the EIP practices to be an integral part of HPWS system for

effective implementation and performance effects of other HPWS practices (Wright et al., 1999). A

seminal study by Huselid (1995) found a significant and positive effect of EIP practices on

corporate financial performance. Similarly a study by Bae and Lawler (2000) supports the strong

link of EIP practices with firm performance. However a number of high performance workplace

studies do not find any significant association between EIP practices and financial performance

(Delery and Doty, 1996; Fey et al., 2000, Cappelli and Neumark, 2001). Though the current study

did not find any significant association of EIP practices with financial performance of an

establishment, the association is positive indicating the likelihood that EIP practise have a potential

to improve the financial performance of local establishments that implement them in Pakistan.

The appraisal practice of feedback from more than one source though did not have a significant

association, the positive beta sign indicates that the implementation of the practice is likely to result

in above average financial performance. The Hosmer and Lemeshow test recorded a significant

value of .798. The Cox & Snell and Nagelkerke R square statistic indicates that the model explains

18.8 per cent to 25.7 per cent of the variability in the dependent variable of financial performance.

Existing HPWS studies reporting R square statistic indicate that HRM explains 18 per cent

(Delaney and Huselid, 1996) to 23 per cent to 40 per cent of the variation in the dependent variable

263 of financial performance. Evidence from descriptive statistic indicated that other appraisal practices

such as formal performance appraisal on routine basis, proportion of pay determined by

performance appraisal and performance feedback provides information on how employees do their

job were in widespread use in establishments in Pakistan. In general it is assumed that

performance appraisal practices do result into improvement in employee performance and

productivity as a result of employee identification and commitment with the firm objectives, and

thus a have a potential to improve the firm financial performance. A major high performance study

by Guest et al. (2003) found that appraisal practices such as formal appraisal on routine basis,

proportion of pay determined by appraisal and feedback from more than one source are associated

with higher profitability. A number of high performance studies support a significant positive

association between appraisal practices and financial performance (Delery and Doty, 1996; Wright

et al., 1999; Huselid, 1995; Ramsay et al., 2000; Subramony, 2009). However a number of studies

are sceptical about the association of appraisal practices with financial performance (Wood and de

Menezes, 2008, Vandenberg et al., 1999; Combs et al., 2006). The results of the existing studies

with regard to appraisal practices association with financial performance can be interpreted as mix,

however the current study did not find any significant association of the practice with above

average financial performance in case of the local establishments that implemented the practice.

The results of the logistic regression indicate that one practice from the high compensation

contingent performance category that is practice of profit sharing or share ownership has a positive

and significant association with above average financial performance. The Hosmer and Lemeshow

test indicates a significant value of .088. The Cox & Snell and Nagelkerke R square statistic

indicates that the model explains 18.3 per cent to 25 per cent of the variability in the dependent

variable of financial performance. The odds ratio indicates that such establishments are four times

more likely to have above average financial performance. The association is significant at the one

per cent level. The results suggest that PRP practices as part of management practises are better

than incremental systems as they motivate the workers and fulfil the management motive of

achieving above average financial performance. The other practice of additional payment or pay

rise as a result of job performance or work in a team, though did not have any significant

association recorded a positive beta sign, indicating the likelihood that practice has the potential to

increase an establishment financial performance. The Hosmer and Lemeshow test recorded a

significant value of .089. The Cox & Snell and Nagelkerke R square statistic indicates that the

model explains 18.3 per cent to 25 per cent of the variability in the dependent variable of financial

264 performance. The variance explained by the PRP practices is quite in line with the amount of

variance explained by other HPWS practices investigated for their association with dependent

variable of financial performance. Findings of a number of major HPWS practices are consistent

with the results of the current study. Prominent among such studies are (Huselid, 1995; Delery and

Doty, 1996; Bae and Lawler, 2000; Guest et al., 2003; Bryson et al., 2005; Combs et al., 2006).

The findings of these studies indicate that the incentive compensation practices have a significant

positive association with financial performance as is the case for the local establishments in

Pakistan.

Table 7.6 further indicates that the practice of reduction of status differences/ harmonization has a

positive association with above average financial performance of an establishment. The Hosmer

and Lemeshow test recorded a significant value of .308. The Cox & Snell and Nagelkerke R square

statistic indicates that the model explains 19 per cent to 26 per cent of the variability in the

dependent variable of financial performance. The variance explained by the practice of status

reduction is quite in range and comparable to variance explained by other HPWS practices

investigated by the study. A possible explanation can be that a system of symbolic egalitarianism

creates an atmosphere that increases employee effort to achieve organizational objectives and

thus ultimately it has a positive effect on firm performance. A number of existing studies indicate

that the practice has a significant positive association with financial performance (Hoque, 1999 and

Guest et al., 2000). Though the current study did not find a significant association, the positive

association indicates the practice potential to increase an establishment financial performance.

Finally the results indicate that the practice of allowing career breaks to non-managerial employees

has a positive association with above average financial performance. The Hosmer and Lemeshow

test recorded a significant value of .829. The Cox & Snell and Nagelkerke R square statistic

indicates that the model explains 18.7 per cent to 25.6 per cent of the variability in the dependent

variable of financial performance. The variance explained by the practice of career breaks is quite

in line with the amount of variance explained by other practices investigated for their association

with dependent variable of financial performance. The results perhaps suggest that local

establishments in Pakistan that allow non-managerial employees career breaks avoid unnecessary

turnover and thus retain the valuable employees who return the favour with increase effort and thus

the practice has a positive association with above average financial performance and the firm thus

benefits potentially because gains from the implementation of the practice perhaps outweigh the

investment. The high performance workplace literature in general argues that work-life balance

265 practices improve corporate performance (Guest et al., 2002). Similarly findings of studies by

Perry-Smith and Blum (2000) and Arthur and Cooke (2004) indicate that firms implementing work-

life balance practices have higher financial performance. However studies by Ramsay et al. (2000)

and Giardini and Kabst (2008) suggest that work-life balance practices have no association with a

firm financial performance. The evidence from the local establishments in Pakistan indicates a

positive association, thus indicating the practice potential to create an above average financial

performance for the establishments allowing career breaks to non-managerial employees.

7.3 Conclusion

This Chapter has presented the results for performance associations of high performance

workplace practices for reduced sample of local firms in Pakistan. The decision to explore the

performance associations for local firms was primarily taken due to technical reasons as running

regression for the whole sample would have violated the basic principle of independent variables.

However, by doing so the Chapter highlighted more meaningful associations of HRM practices with

performance outcomes, as preliminary analysis had indicated that despite less number of

multinationals in the sample, they were more likely not only to have the practices but also to have

better performance outcomes. Thus to assess the possibility that the practices had the potential to

improve the local establishments’ performance outcomes, it was decided to run a series of

regression analysis for individual standalone high performance practices for a sample of local firms.

It has been argued in literature that in Pakistan local firms benchmark against multinational

management practices and follow the management trends introduced by multinational firms (Khilji,

2002). By examining the performance outcomes associated with such practices the Chapter was

able to evaluate the most important argument of the high performance paradigm whether the local

establishments that have introduced HPWS practices in Pakistan have better performance

outcomes or not.

The results of the current study indicate that universalistic assumptions are valid as the practices

have a significant association with human resource and performance outcomes across the local

establishments operating in different industrial sectors in Pakistan. The conclusion summarizes the

results for the associations where the logistic regression model proved to be statistically significant.

The results are consistent with outcomes of many existing studies that indicate that HRM practices

have a significant association with performance outcomes. The results showed that three HRM

266 practices, an establishment’s recruitment process ability to generate good/ qualified applicants,

training non-managerial employees in variety of job and conducting attitude surveys to correct

employee morale problems had a significant negative association with above average loss in

working days due to employee sickness or absence without permission and voluntary employee

turnover. For the dependent variable of employees discharged, the HPWS practice of conducting

employment tests prior to hiring was the only practice that had a significant negative association

with above average discharge of employees.

A number of HRM practices also had a significant association with establishment performance

outcomes. The results indicated that practices such as an establishment policy to expect

employees to stay till retirement, conducting employment tests prior to hiring, training non-

managerial employees in variety of jobs and generic skills, sharing relevant strategic information,

conducting attitude surveys and practice of reducing status differences had a significant positive

association with above average labour productivity. A number of HRM practices also had a

significant positive association with above average growth in labour productivity. The practices

were: an expectation that all employees will stay till retirement, one or more employment tests prior

to hiring, training non-managerial employees in variety of jobs and generic skills, EIP practise such

as employee input programmes, sharing of relevant strategic information and conducting attitude

surveys, performance related pay practices as profit sharing an pay rise due to job performance

and work in a team, reduction of status differences and career breaks. In a similar manner a

number of HRM practices have a significant positive association with above average financial

performance of the firm. The practices were: the firm expectation that employees will stay till

retirement, employment tests, training in variety of jobs and generic skills, attitude surveys and

participation in profit sharing schemes.

The results also indicated a consistent pattern of association of control variables with performance

outcomes. With regard to the human resource and establishment performance indicators, several

control variables show a relatively consistent pattern, as expected across the regression models

(see Appendix E to J for details). For the dependent variables of loss in working days due to

sickness or absence without permission, voluntary turnover and employees discharged the

regression results indicate that the control variable of number of employees has a significant

positive association with dependent variables, thus indicating that more the number of employees

an establishment has, the more likely it was to suffer from the problem of absence, voluntary and

involuntary turnover.

267 For the dependent variables of labour productivity and labour productivity growth, the control

variables indicate that service sector establishments and the age of the establishment is

significantly and positively associated with the dependent variables. For the dependent variable,

financial performance, the nature of the company that is service sector firms, age and the number

of employees working for the establishment have a significant and positive association with the

financial performance. A possible explanation is that in a developing country, specifically in

Pakistan the control variables, in particular the age and size of the firm play an important role, not

only in adoption of an HPWS practices but also in their association with the human resource and

performance outcomes.

On the whole the evidence does indicate that the local establishments that implement high

performance workplace practices are highly likely to have a low rate of absenteeism, voluntary and

involuntary turnover. In a similar manner such establishments can expect to have above average

labour productivity, growth in labour productivity and an above average financial performance.

Overall the results suggest that HPWS practices have the potential to improve the establishment

performance outcomes and can act as agent of change and can be further incorporated as part of

the Government of Pakistan guidelines to improve the productivity and profitability of Pakistani

establishments. The study results thus have important implications for the policy makers in

Pakistan as the odds ratio suggest that the establishments that have implemented the high

performance workplace practices in Pakistan show a considerable improvement in the performance

outcomes. Thus making innovative human resource management practices as part of policy

guidelines to improve labour productivity can be one of the way for the Government to achieve its

objectives. The results also have practical implications for establishments working in other sectors

in Pakistan; in particular if workplaces want to remain competitive keeping in view the regional and

global changes, the establishments in Pakistan have to focus on their human resource

management policies and practices, as one of the mechanisms to improve their performance. The

establishments still waiting or thinking about adopting HPWS practices in Pakistan, must realize

that modern organizations require a different type of workforce, a workforce that has to be

innovative and create, exercise discretion and responsibility and be highly skilled and committed in

order to be flexible and responsive to changing markets and consumer demands (Holman and

Wood, 2003). It has generally been accepted that HPWS practices by improving employee and

establishment outcomes can help an establishment retain the best employees and compete in its

268 product markets. The results can substantiate Pfeffer (1998) arguments that people are a

company’s most valuable assets and high performance workplace practices can be adopted by

every type of industrial set up to enhance organizational performance. The results of the study thus

confirm that the local establishments that treat their employees as valuable can expect higher

performance gains.

269

Chapter 8 Conclusion

The evidence presented by the study has shed light on the state of human resource management

practices in Pakistan. In particular it has provided evidence on the state of the diffusion/adoption of

high performance workplace practices. The study from a large-scale survey provides evidence

about the coverage of such practices amongst the establishments of multinational and local firms in

Pakistan. It also explores the differences among the two types of establishments with regard to

coverage of HPWS practices at their respective workplaces. In doing so the study evaluates the

evidence whilst keeping in mind, the arguments universalistic perspective in high performance

workplace practices theory. The issue of performance outcomes is of utmost importance and has

been a concern of almost all the HPWS studies. The current research also provides evidence with

respect to performance associations of HRM practices in Pakistan.

In recent years a number of studies have emerged from South and South East Asia that indicate

that establishments in the region are increasingly implementing the latest human resource

management practices that have often been termed as high performance workplace practices

(Budhwar and Debrah, 2009). In Pakistan, it is generally assumed that multinational firms are the

leaders in introducing latest management trends and practices and the local firms try to follow

similar patterns (Khilji, 2002). A review of private sector establishments in Pakistan indicated a

sizeable presence of multinational and local private firms in industries such as banking, information

technology and pharmaceuticals. Moreover most of these multinational and local firms have

entered the market in the last decade or so as direct consequence of deregulation of banking

sector and emergence of the IT sector in South Asia and subsequent foreign direct investment by

major UK and US companies in Pakistan. In light of recent emphasis on high performance

workplace practices in the US and the UK and the emerging Asian economies, the study

anticipated and found that such practices have diffused to establishments both foreign-owned and

domestic ones in Pakistan. Thus the sectors provided a sufficient number of establishments to

compare and contrast the diffusion of HPWS practices on the basis of ownership of a firm, that is, a

subsidiary of a multinational or a local firm.

The data presented in Chapter 5 indicate that, on the whole, a number of high performance

workplace practices have diffused to a large number of establishments in all three sectors

examined here (banking, information technology and the pharmaceutical industry). High

performance workplace practices, such as employment security and internal labour markets:

270 selective hiring: intensive/extensive training in company specific skills: EIP practices such as

sharing of relevant operating and strategic information: access to grievance and complaint

resolution procedure: use of self-directed teams: performance review and appraisal practices such

as appraisal on routine basis: proportion of pay determined by performance appraisal: performance

feedback on how they do their job and reduction of status differences and harmonization have

diffused to more than 80 percent of workplaces surveyed in Pakistan.

The evidence thus confirmed that establishments in Pakistan have move forward from the days of

bureaucratic management model as depicted by the small-scale study of Khilji (2002). This can be

considered as an important development as till now it was generally assumed that establishments

in Pakistan reflect a bureaucratic management approach. The evidence from the current study

refutes such assumptions and confirms that establishments in Pakistan are quite similar to many

other countries in their adoption of high performance workplace practices.

The evidence also confirmed many important assumptions of the best practice or universalistic

approach. In particular the evidence substantiated the arguments of Huselid (1995) and Pfeffer

(1998) that HPWS practices are applicable in all sort of organizations regardless of geographical or

cultural differences. The evidence with regard to overwhelming presence of number of HPWS

practices also substantiates the arguments of Pfeffer (1998) and Barney and Wright (1998) that a

simple and straightforward application of HPWS practices is more prevalent in organizations as

they do not want to ignore the best practices in order to avoid any competitive disadvantage.

Chapter 5, based on the Chi-square analysis, presented a comparison of multinational and local

firms with regard to the diffusion of the HPWS practices in Pakistan. The Chi-square results

indicate important differences with respect to the diffusion of HPWS practices among the two set of

establishments in Pakistan. Overall the evidence indicates that establishments of multinationals

firms have adopted a greater number of HPWS practices as compared to domestically owned

establishments. The workplaces of multinational firms were more likely to have a recruitment

process that generates good/ qualified applicants as compared to local firms. The multinational

firms were more likely to train their non-managerial employees in a variety of jobs or skills and in

generic skills. In a similar manner multinational establishments were more likely to encourage

employee participation and input and allow participation in profit sharing, provide feedback from

more than one source, determine a proportion of pay based on a performance appraisal and

provide performance feedback on the job done. This, in turn, suggests that perhaps multinational

271 establishments in Pakistan are trend setters in management as has been argued by Khilji (2002).

However the evidence also suggests that local firms follow similar patterns of adoption, in particular

in designing their selective hiring, employee involvement and participation: worker voice, self-

directed work teams, performance review, appraisal and career development and reduction of

status differential/harmonisation practices.

The differences were further explored alongside control variables using logistic regressions that

produced more rigorous evidence and a clear pattern of coverage of HPWS practices and

association of control variables with the likelihood of an adoption of a practice by an establishment

of multinational or a local firm in Pakistan. Chapter 6 presented the results of the logistic

regressions. The results showed that the differences identified in Chapter 5 remained. Indeed,

many of the differences continued to be statistically significant despite the presence of control

variables. The results indicated that domestic firms retained their significance with regard to policy

of no compulsory redundancy and expectation on behalf of the establishment to stay till retirement.

The multinational firms retained their significance with regard to practices of training non-

managerial employees in variety of jobs and generic skills, employee input programmes and

attitude surveys and profit sharing.

A number of control variables such as the nature of the business (manufacturing or services

establishment), age and size of the firm and proportion of workforce made up of non-managerial

employees have a significant positive or negative association with an adoption of a practice by an

establishment. In particular the size and age of the firm had a significant positive association with

the adoption of HPWS practices by establishments in Pakistan. This is perhaps not surprising as

high performance studies have found that age of the firm plays an important role in adoption of a

practice (Datta et al., 2005; Wright et al., 1999; MacDuffie, 1995). Cappelli and Neumark (2001)

research findings indicate that as firms become successful and establish viable business they are

more likely to adopt sophisticated and innovative HR policies and practices. The evidence of the

current study suggests that this seems to be case in Pakistan too, where firms as they grow in size

and age are more likely to adopt HPWS practices, that perhaps require more financial resources to

adopt, for example attitude surveys, training non-managerial employees in generic and

communication skills, providing feedback from more than one source, additional payment or pay

rise due to job performance or work in a team and career breaks.

272 Chapter 7 explored the much claimed performance associations of high performance workplace

practices with various performance outcomes, such as working days lost due to employee sickness

or absence without permission; voluntary and involuntary turnover; labour productivity; growth in

labour productivity and financial performance of the establishment. The associations were explored

for a reduced sample of local firms as the previous results of the Chi-square test and logistic

regressions showed that the ownership of the firm matters for the adoption of HR policies and

practices in Pakistan and thus exploring the associations for the whole data set would have

violated the principle of independent variable used in regression analyses not being correlated with

one another.

The results of the Chapter showed that a number of high performance workplace practices have a

significant negative association with employee absence and turnover. In a similar manner a

number of HPWS practices have a significant positive association with establishment performance

outcomes across the three sectors investigated in Pakistan. Using the odds ratios to assess the

practices associations, the results indicate that local establishments that have adopted HPWS

practices were highly likely to perform better than their counterparts on all the human resource and

performance outcomes included in this study.

To summarize, the results showed that local establishments that have adopted practices such as

selective hiring and sophisticated selection, extensive training, learning and development,

employee involvement and participation, performance review and appraisal, profit sharing and

reduction in status differences enjoyed better performance outcomes as compared to those local

workplaces that have not implemented such policies. The results strengthen the universalistic

assumptions as the practices have statistically significant association with performance outcomes

across the sectors in Pakistan. The results of the Chapter were consistent with the findings of

number of major high performance studies undertaken in US and UK (Arthur, 1994; Guest and

Hoque, 1994; Huselid, 1995; MacDuffie, 1995; Delery and Doty, 1996; Hoque, 1999; Wood, 1999;

Wright et al., 1999 & 2003; Way, 2002; Purcell et al., 2003; Guest et al., 2003; Datta et al., 2005;

Wood and de Menezes, 1998 & 2008; Wood et al., 2006). The results suggest that high

performance workplace practices seem to work and have the same desired associations with

performance outcomes as found by studies conducted in advanced industrial economies and by

the studies conducted in emerging Asian economies (Wei and Lau, 2008; Akhtar et al., 2008;

Zhang and Li, 2009; Som, 2008; Singh, 2010; Chand, 2010; Cooke and Saini, 2010; Lee et al.,

273 2010). The results of the study also indicate that the associations are not only statistically

significant but are also managerially relevant, as the evidence clearly indicates that the local

establishments that have adopted the HPWS practices have a better performance record with

respect to key performance measures as employee absence and turnover, labour productivity and

growth in labour productivity and financial outcome. This in turn suggests that there is an

opportunity for the local establishments as one of the ways forward to improve their performance is

by adopting HPWS practices. The current research findings, in agreement with Delaney and

Huselid’s (1996) results indicate that people are an important resource and key to organizational

performance. On the basis of evidence from the establishments of Pakistan the current research

supports the Huselid (1995, 668) argument that, ‘a simple adoption of practices is more important

than any effort to ensure these policies are internally consistent or aligned with firm competitive

strategy’.

The findings of the study have some important implications for the firms already operating in

Pakistan and for those who intend to invest in Pakistan. At the same time the findings also have

important implications for the policy makers in Pakistan who want to improve the productivity of the

local firms in Pakistan and intend to increase the flow of foreign direct investment into different

industrial sectors in Pakistan.

8.1Implications for the Firms

First and foremost the study, by drawing on a largest survey as yet undertaken on Pakistan, has

documented the state of diffusion of latest human resource management practices. The study

provides empirical evidence to global business firms about the changing trends of human resource

management in Pakistan. There is a scarcity of information regarding HRM practices in Pakistan,

including those of subsidiaries of multinational and local firms in Pakistan. Such information may be

vital for HR managers and may pose a major challenge for multinationals that intend to invest in

emerging economies such as Pakistan as in general there is lack of any information regarding

management and human resource trends in Pakistan. This study thus by highlighting the state of

diffusion of latest human resource management practices termed as high performance workplace

practices in subsidiaries of multinational and local firms in Pakistan provides a clear picture as to

274 state of HRM in Pakistan to potential multinational firms that intend to invest in Pakistan in the near

future. Such information could be used by global businesses to develop more appropriate HRM

policies for their affiliates in Pakistan; in particular the new firms intending to invest in Pakistan can

have an idea of the state of human resource policies of multinationals already operating in

Pakistan. Specifically the new entrants can judge that most of the multinationals operating in

Pakistan use the best practice recruitment and selection policies and practices, have a systematic

approach towards training their non-managerial employees, encourage employee participation and

input and organize work in self-directed teams. At the same time they use a clearly structured and

formal appraisal system that is based upon best practices used by firms in the US and the UK.

Many MNCs use compensation contingent on performance systems to reward their employees in

Pakistan. As it can be hoped that more and more MNCs will invest in Pakistan in near future and as

local firms are also in close competition with them in implementing and adopting the latest HRM

practices in order to compete with foreign firms, the management of human resources has become

crucial in Pakistan. An attempt has been made by this research to fill the gap of information

regarding the organization of work and human management practices in Pakistan with respect to

MNCs already operating in Pakistan and their local competitors in three important sectors of

banking, information technology and pharmaceuticals.

Apart from implications for the international firms, the study has important lessons for the local

competitors. Though successive governments in Pakistan have introduced various reforms and

deregulated many business sectors in Pakistan, the country has a long way to go as compared to

immediate neighbouring emerging economies. Though the country has enjoyed a reasonable

growth rate of 5 or 6 percent in the last decade, it faces many problems mainly political instability,

power shortages and the so called war on terror. Nevertheless, a number of multinational firms

entered the Pakistani market in different sectors in the last decade or so. This had major direct

implications for the human resource policies and practices of local firms in Pakistan in order to

cope with the challenges created by the new national, regional and global economic environment.

This has forced local firms to closely monitor and benchmark their policies against multinational

firms operating in Pakistan. This research by documenting the best practices and by providing

information on differences between the MNCs state of adoption of HPWS practices and local firms

provides much needed information to local firms to reassess and revaluate their HRM policies and

practices.

275 Moreover the evidence with regard to performance associations of HPWS practices may

encourage those local firms that lack such policies and practices to rethink and redesign their

human resource practices in Pakistan. The redesign of human resource practices may provide the

local firms a faster solution to many challenges of modernizing and updating their business

processes and the subsequent issues of motivating, retaining and developing an efficient

workforce. The faster the Pakistani establishments can implement the latest HRM policies and

practices at their establishments along the lines in West, in particular keeping in view the latest

HPWS models being implemented in the US and the UK the greater the chances of success in the

global and regional business environment.

8.2 Implications for the Policy Makers

The study findings have some important implications for the policy makers in Pakistan. As

discussed in the introduction Chapter the Government of Pakistan introduced a new labour policy

in 2008 to improve the productivity of workforce and establishments in Pakistan. The labour policy

2008 later became the Industrial Relations Act 2010. Keeping in view the salient features of the

labour policy 2008 and the IRA 2010, the thesis suggests a number of recommendations to policy

makers in Pakistan.

A very important finding of the study is that local establishments that implement HPWS practices

are likely to have better performance outcomes across a range of measures. An essential element

of the current Labour Policy of the Government of Pakistan is that it requires establishments to

focus on employee training and other management practices that can enhance the labour

productivity of the establishment. The evidence presented in Chapter 7 clearly indicates that many

individual high performance workplace practices have significant associations with performance

outcomes. Apart from this, a number of other high performance workplace practices have the right

B value, thus increasing the likelihood that the practice has a potential to improve the performance

outcomes. The Government can take into consideration the empirical evidence this study has

produced and commission other large scale studies to assess the situation and potential of HPWS

practices to improve the performance outcomes in important sectors in Pakistan and thus create

further policy guidelines for local firms to follow in Pakistan. However it must be understood that

276 HRM is one way to improvement and it requires many other factors to make a successful industrial

policy.

Another important implication for the policy makers is that the current study provides an

assessment of the state of unions in the multinational and local private sector firms in Pakistan.

Though the Government of Pakistan acknowledges the right of workers to form unions and requires

under the law that an institutional framework should be available to facilitate the process. However

the reality is that apart from one or two multinational establishments in pharmaceutical sector, none

of the establishments allows their workers to form or engage with any union-related activities. The

situation perhaps requires the Government to rethink its policy on right to workers to form unions or

the mechanism to facilitate unionization.

A very important finding is with respect to work-life balance policy of establishments in Pakistan.

Though in coming years such policies will find their way to establishments in Pakistan, at this

moment in time their use is almost non-existent. Pakistan is one of the countries of the world

where the general perception is that women are not treated in the same way as men within

workplaces. In light of current study findings, a recommendation to the Government of Pakistan can

be that it must make it part of its policy and encourage establishments that they must implement

work-life balance practices to encourage the women to develop and flourish at work and at the

same time strike a balance in their work-life.

On the policy of job security and internal labour markets, the findings of the current research

suggest that both multinational and local firms had a policy of internal labour market for existing

employees; however the multinational firms were reluctant to provide an explicit promise of job

security though they expected their employees to stay till retirement. On the other hand local firms

had a clear policy of no compulsory redundancy. This may suggest that they are keen to follow the

Government policy; however as already discussed in previous chapters that any promise of job

security is linked to product-market conditions of the firms. However, the Government can rethink

alternative methods of providing some sort of financial security to workers in case of downsizing or

retirement.

For the Government policy of proper and expeditious grievance procedure the current study can

confirm that almost every establishment surveyed agreed that they had a proper complaint

resolution procedure implemented at their workplaces.

277 Overall, the most important implication of the current research for the policy makers is that the

study provides empirical evidence that local establishments are fast adopting latest human

resource management practices that are being practiced by firms in the US and the UK and their

affiliates operating in Pakistan. In particular the survey evidence showed that employee

involvement and input practices and self-directed teams were quite extensively used by the local as

well as multinational establishments. This is an important finding as it signals that Pakistani

establishments have recognized the importance of open communication and direct participation at

work which were non-existent a decade ago. This can be interpreted as a positive sign that may

result into adoption other HPWS practices by local establishments in due course which are at the

moment used by relatively fewer number of local firms. This means that the local firms are on their

way to successful implementation of modern way of organizing work and perhaps this also reflects

their competiveness and their effort to modernize processes and technology.

8.3 Contribution to the High Performance Workplace Practices Theory

The developments in the field of Western human resource management have been well

documented (see, for example, Legge, 1995; Schuler and Jackson, 2007). The existing literature

on strategic human resource management also acknowledges the contribution of HRM towards

improving organizational performance (see, for example, Guest, 1997; Wood, 1999; Pfeffer, 1998;

Huselid, 1995; Huselid and Becker, 1996; Wood and Wall, 2005; Wood and Wall, 2007;

Marchington and Wilkinson, 2008; Boxall and Macky, 2009). Budhwar and Debrah (2009) highlight

the need of extensive research on high performance workplace practices and performance issue in

Asian context. Given the significant role of emerging markets in the global economy the need for

information on HRM in general and HPWS paradigm in particular is now of the utmost importance.

Over the past decade a number of research articles have gradually appeared from the regions that

examine the issue of HRM and performance in the Asian context. For China there are, for

example, studies, Xiao and Bjorkman (2006), Wei and Lau (2008), Akhtar et al. (2008), Zhang and

Li (2009), Shanshi et al. (2007); For India, Som (2008), Singh (2010), Guchait and Cho (2010),

Chand (2010), Cooke and Saini (2010); for Singapore, Taiwan, Korea and Thailand, Khatri (2000),

Bae and Lawler (2000), Bae et al. (2003), Haung (1998), Lee et al. (2010). Expectedly the

278 evidence from Asian countries is mixed and less conclusive and a great opportunity exists for

researchers to examine HRM and performance debate and to weigh the arguments of different

school of thoughts i.e. universalistic—best practice or contingency—best fit and evaluate evidence

with respect to their applicability to Asian organizations and multinational firms operating in these

countries (Budhwar and Debrah, 2009). However to the best of the current study’s understanding

there is no previous study that has attempted to examine the issue of HRM and performance in

Pakistan, an emerging Asian economy. The current study has attempted to fill this gap in literature

by undertaking the exploration of high performance workplace practices in establishments of

multinational and local firms in Pakistan. By doing this, the current study evaluated and weighed

the arguments of universalistic and contingency perspectives in Pakistan and found that both

perspectives added strength to the study understanding of the paradigm in Pakistan. A number of

high performance workplace practices had a universal application in Pakistan whereas others were

influenced by contingency factors affecting their diffusion/adoption and performance associations.

The current study for the first time has also examined in detail as to what are the multinational

HRM policies and practices in Pakistan, in particular the state of diffusion of HPWS practices in

multinational establishments in Pakistan. The current study thus fills a gap in the literature that

takes into account the state of diffusion of HPWS practices in establishments of multinational and

their close local competitors in Pakistan. The study also examined the performance associations of

HPWS practices for the local firms and found a strong evidence of performance associations of

practices. It is thus, based on this evidence, reasonable to argue that HPWS practices have a

universal application and have the ability to improve the performance outcomes irrespective of the

geographic or cultural or sectoral differences. Thus the study found that arguments of many

proponents of high performance paradigm bear weight that a simple adoption of HPWS practices is

important for improving the performance outcomes.

279 8.4 Limitations of the Study and Directions for Future Studies

The study draws attention to few substantive issues that cropped up during the course of the

research and subsequent presentation of the findings that need further detailed investigation by a

future study. The first and the foremost issue is the state of union recognition at the sampled

establishments. A part from few two or three multinational establishments the rest of the

establishments indicated that they as a policy do not allow their employees to form a union or join

one. The state of unionization at the establishments of private sector banking, IT and

pharmaceutical companies can be cause of serious concern for the policy makers in Pakistan.

Though successive Military Governments in Pakistan have not been in favour of Unions, the

constitution of Pakistan and Industrial Relations Act (2010) allows the workers to organize and

encourages developing institutional frameworks to foster close cooperation and consult workers on

matters of interest to them. Though the establishments overwhelmingly acknowledged that they

have well established procedures to address the worker complaints, the company provided

mechanisms cannot substitute the presence of a union at the workplace. However this aspect

needs a full scale investigation as to why the employers are reluctant to comply with the law at the

first place, how they avoid union formation at their establishments and how in absence of unions

they address the issues of concern to the non-managerial employees. The Second important

substantive issue that the study came across is that of self-managed teams at the workplaces.

Again more than 80 per cent of the establishments indicated presence of self-managed teams or

use of team working in performing a major part of their work. However the evidence indicated a low

coverage of practices such as training in variety of jobs and generic skills in local establishments in

Pakistan. In addition the evidence also indicated a low coverage of programmes designed to elicit

employee involvement and participation such as quality circles, problem solving or similar groups.

In absence of low coverage of such practices which prepare employees for self-managed teams, it

is rather surprising that a large number of establishments indicated the coverage of the practice for

their non-managerial employees. It is thus very important that a future carefully planned study looks

deeper into issue of team working and tries to ascertain what the establishment in Pakistan

understand by team working. A third issue that has important implications for the future workforce

trends in Pakistan is that of work-life balance initiatives adopted by establishments in Pakistan. At

the moment the evidence indicates a low coverage of such practices at establishments in Pakistan.

The Government in Pakistan perhaps can conduct few studies to ascertain the importance of such

280 practices keeping in view the increased participation of women in workforce in Pakistan. In light of

further investigation the policy makers can decide whether such practices are important for the

economic development, viability of the establishments and well-being of the workforce in Pakistan

or not.

Though the current study produced a comprehensive account of the diffusion of high performance

workplace practices in Pakistan, the study was not without some limitations. First of all, in common

with many high performance studies, the current exploration is cross-sectional in nature;

consequently, the research is not in a position to establish any causal inferences. Perhaps a future

longitudinal research will be in a better position to make any causal inferences. Secondly the

current research captures the managerial point of view on issues of diffusion and performance

outcomes at establishment level. Wright and Gardner (2003) argue that there is no right or wrong

level of analysis for studying HR-performance relationship; however, perhaps future studies can

also incorporate employee’s perspective as well. The current study used subjective measures to

collect data on performance outcomes, though the subjective measures have their own

advantages, the future studies in Pakistan can also collect objective data to verify the claims of the

managers. Due to the research design, the current study could not compare the early and late

respondents; perhaps the future studies can use a more sophisticated research design to correct

such a limitation.

While examining the diffusion of the practices and their performance outcomes a number of

interesting issues came to light that require further research, the future studies can using large

scale surveys or case studies investigate such issues, in particular the processes underpinning the

diffusion of HPWS practices in Pakistan. The current research was a preliminary evidence of the

diffusion and performance associations of HPWS practices in Pakistan, the future research studies

can explore the issues in much detail by incorporating the contextual elements that may shed more

light on underlying reasons and rationale of implementing certain practices and avoiding other

practices in Pakistan. The future research studies can also focus on the role of multinationals as

diffusers of best practice human resource management in Pakistan. The future research can focus

on the processes, preconditions and factors that may have contributed to any such diffusion. The

current study analysis was preliminary and exploratory in nature and is the most comprehensive

study of HRM practices and their links to performance in establishments in Pakistan; it can be

conceived as the starting point for the future research and analysis.

281 Appendix A Study Questionnaire

NOTES FOR THE COMPLETION OF THE QUESTIONNAIRE

All the questions relate to the establishment at the site to which this questionnaire has been sent.

High performance work practices refer to selective group of HR practices. These practices have been specified in Section 2.

If you would like to receive feedback or would like to participate in a follow up telephone interview as a specialist in your sector please kindly provide contact details at the end of the questionnaire and we would ring you from Manchester Business School in August/ September 2010.

Company name and location is being asked for ease of data collection only and to avoid contacting the same establishment again. The findings from this research will be anonymized.

Please understand that your participation is entirely voluntary and by answering and returning the questionnaire you agree to take part in the study.

Company Name: ________________________________ Location: ______________________________________ Section 1: General Information 1.1 Which of the following categories best describes the sector that your establishment works in?

Please tick one: Retail Banking Financial services (insurance, brokerage, leasing and investment banking) Telecommunication services (mobile, landline) Telecommunication (equipment) Information Technology- Software - Hardware Fast Moving Consumer Goods Pharmaceuticals Others, please indicate __________________________ 1.2 What is the main nature of the business at this establishment? Please tick one: Manufacturing Services Sales / Distribution 1.3 Are you a subsidiary of a multinational or are you a local company? Please tick one: MNC subsidiary Local company 1.4 If you are a subsidiary of an MNC, where is its headquarters? ______________________________

282 1.5 How long has your establishment been working in Pakistan? Up to 1 year 1-4 years 5-10 years 11 to 20 years more than 20 years 1.6 Would you tell us about the estimated number of employees at this establishment? Number of employees _______________________ 1.7 What proportion of your workforce is made up of non-managerial employees? Percentage ___________________________ 1.8 What proportion of your workforce is unionized? Percentage__________________________ Section 2: High performance workplace practices 2.1 The organization has a formal policy of no compulsory redundancy. (Yes / No) 2.2 The firm expects all employees to stay until retirement. (Yes / No) 2.3 When jobs become vacant, management normally first tries to fill them with people from inside the organization rather than recruiting from outside. (Yes / No) 2.4 Does your recruitment process generate as many good / qualified applicants as you need? Strongly disagree Disagree Neither agree nor disagree Agree Strongly agree 2.5 Are one or more employment tests (e.g. skills tests, aptitude tests, mental / cognitive ability tests) used prior to hiring? Strongly disagree Disagree Neither agree nor disagree Agree Strongly agree Have non-managerial employees: 2.6 Been trained in a variety of jobs or skills (are cross trained) and/ or routinely perform more than one job (are cross utilized)? (Yes / No) 2.7 Received intensive / extensive training in company specific skills (e.g. task or firm specific training)? (Yes / No) 2.8 Received intensive / extensive training in generic skills (e.g. problem solving, communication skills, etc)? (Yes / No) Are non-managerial employees: 2.9 Involved in programmes designed to elicit participation and employee input (e.g. quality circles, problem solving or similar groups)? Strongly disagree Disagree Neither agree nor disagree Agree Strongly agree

283 2.10 Provided with relevant operating performance information (e.g. quality, productivity, etc)? Strongly disagree Disagree Neither agree nor disagree Agree Strongly agree 2.11 Provided with relevant strategic information (e.g. strategic mission, goals, tactics, competitor information etc.)? Strongly disagree Disagree Neither agree nor disagree Agree Strongly agree 2.12 Routinely asked to fill out attitude surveys to identify and correct employee morale problems? Strongly disagree Disagree Neither agree nor disagree Agree Strongly agree 2.13 Are organized in self-directed work teams in performing a major part of their work role? Strongly disagree Disagree Neither agree nor disagree Agree Strongly agree 2.14 Receive formal performance appraisal or evaluations on routine basis? Strongly disagree Disagree Neither agree nor disagree Agree Strongly agree 2.15 Receive formal performance feedback from more than one source (i.e. feedback from several individuals such as supervisors, peers etc)? Strongly disagree Disagree Neither agree nor disagree Agree Strongly agree 2.16 Do they have access to formal grievance / complaint resolution procedure? (Yes / No) 2.17 Can they participate in profit sharing or share ownership schemes based on their job performance or team performance? Strongly disagree Disagree Neither agree nor disagree Agree Strongly agree 2.18 Are they offered additional pay or have they been offered a pay rise in the past year as a result of job performance or work in team? Strongly disagree Disagree Neither agree nor disagree Agree Strongly agree 2.19 Is the proportion of pay determined by performance appraisal? (Yes / No) 2.20 Performance feedback provides information on how they do their job? Strongly disagree Disagree Neither agree nor disagree Agree Strongly agree

284 2.21 There are few status differences in the establishment between managers and the rest of the employees. They are all on the same level. Strongly disagree Disagree Neither agree nor disagree Agree Strongly agree 2.22 The establishment allows career breaks to employees for child care, elder care and leisure activities. Strongly disagree Disagree Neither agree nor disagree Agree Strongly agree The establishment provides flexible working arrangements such as: 2.23 Change in shift pattern. Strongly disagree Disagree Neither agree nor disagree Agree Strongly agree 2.24 Increase / decrease in working hours. Strongly disagree Disagree Neither agree nor disagree Agree Strongly agree 2.25 Job sharing Strongly disagree Disagree Neither agree nor disagree Agree Strongly agree 2.26 Home working Strongly disagree Disagree Neither agree nor disagree Agree Strongly agree Section 3: HR and Establishment outcomes 3.1 Over the last 12 months approximately what percentage of working days was lost through employee sickness or absence without permission? ________________________% 3.2 During the last 12 months approximately what percentage of non-managerial employees left the establishment voluntarily i.e. resigned? __________________________% 3.3 During the last 12 months approximately what percentage of non-managerial employees at this establishment were discharged? ___________________________%

285 3.4 How would you assess your establishment’s current performance compared with other establishments in the same industry? ___________________________________________________ A lot better Better than About average Below A lot below then average average average average ___________________________________________________ Labour Productivity Labour Productivity Growth ___________________________________________________________________ Financial Performance 3.5 Which of the measures below correspond most closely with your interpretation of financial performance? Profit or Value Added Cost or Expenditure Sales/ Fee/ Budge Other Optional Section: If you would like to receive feedback please provide your e-mail ___________________________________________________ Contact me for follow up telephone interview to discuss my sector results, if yes please provide your: Name: ________________________________________________ E-mail: ________________________________________________ Or Tel NO: ________________________________________________

286 Appendix B Descriptive statistics for explanatory variables

N Per cent Mean

Statistic

No/Disagree Yes/Agree

Statistic

CR1 392 42.9 57.1 .5714

RTD2 392 32.7 67.3 .6735

Internal recruitment3 392 8.9 91.1 .9107

Trained in variety of jobs 4 392 48.2 51.8 .5179

Company specific5 392 .5 99.5 .9949

Trained in generic skills6 392 31.6 68.4 .6837

Formal grievance 7 392 . . 1.0000

POP by perf appraisal 8 392 2.8 97.2 .9719

GA9 390 11 89.0 .8897

ET10

390 43 55.9 .5615

EP11

388 48.7 50.3 .5077

op12

386 5.6 92.9 .9430

SI 13

383 8.2 89.5 .9164

SDT14

380 2.6 94.4 .9737

FPA15

391 3.8 95.9 .9616

PS16

385 54.1 44.1 .4494

AP17

391 61.0 38.8 .3887

JF18

388 3.6 95.4 .9639

SD19

388 15.6 83.4 .8428

ShP20

172 29.6 14.3 .3256

WH21

359 53.6 38.0 .4150

JS22

348 70.2 18.6 .2098

HW23

298 58.2 17.9 .2349

CB24

392 41.3 58.7 .5867

PF25

392 58.9 41.1 .4107

AS26

392 52.3 47.7 .4770

Valid N (listwise) 116

287

Notes: The superscript numerals refer to:

27. Formal policy of no compulsory redundancy 28. Expectation to stay till retirement 29. Internal labour market 30. Training in variety of jobs 31. Training in company specific skills 32. Training in generic skills 33. Formal grievance/complaint resolution procedure 34. Proportion of pay determined by performance appraisal 35. Recruitment process generates applicants 36. One or more employment tests used prior to hiring 37. Programmes designed to elicit participation and employee input 38. Provided with relevant operating performance 39. Provided with strategic information 40. Team working 41. Formal performance appraisal on routine basis 42. Profit sharing or share ownership schemes 43. Additional pay as a result of job performance or work in a team 44. Performance feedback provides information on how they do their job 45. Reduction of status differences 46. Change in Shift pattern 47. Change in working hours 48. Job sharing 49. Home Working 50. Career breaks 51. Feedback from more than one source 52. Attitude surveys to correct employee morale problems

288 Appendix C Results of the Chi-square tests

C.1 A formal policy of no compulsory redundancy

Comptype * Compulsory redundancy Crosstabulation

Compulsory redundancy

NO Yes Total

Comptype MNC Count 81 50 131

Expected Count 56.1 74.9 131.0

% within Comptype 61.8% 38.2% 100.0%

% within Compulsory

redundancy 48.2% 22.3% 33.4%

% of Total 20.7% 12.8% 33.4%

Local Count 87 174 261

Expected Count 111.9 149.1 261.0

% within Comptype 33.3% 66.7% 100.0%

% within Compulsory

redundancy 51.8% 77.7% 66.6%

% of Total 22.2% 44.4% 66.6%

Total Count 168 224 392

Expected Count 168.0 224.0 392.0

% within Comptype 42.9% 57.1% 100.0%

% within Compulsory

redundancy 100.0% 100.0% 100.0%

% of Total 42.9% 57.1% 100.0%

Note: N = 392

289

Chi-Square Tests

Value df

Asymp. Sig. (2-

sided)

Exact Sig. (2-

sided)

Exact Sig. (1-

sided)

Pearson Chi-Square 28.926a 1 .000

Continuity Correctionb 27.774 1 .000

Likelihood Ratio 28.941 1 .000

Fisher's Exact Test .000 .000

Linear-by-Linear

Association 28.852 1 .000

N of Valid Cases 392

a. 0 cells (.0%) have expected count less than 5. The minimum expected count is 56.14.

b. Computed only for a 2x2 table

290 C.2 Firm expects all employees to stay till retirement

Comptype * Expectation to stay till retirement Crosstabulation

Expectation to stay till retirement

NO Yes Total

Comptype MNC Count 56 75 131

Expected Count 42.8 88.2 131.0

% within Comptype 42.7% 57.3% 100.0%

% within Expectation to stay till

retirement 43.8% 28.4% 33.4%

% of Total 14.3% 19.1% 33.4%

Local Count 72 189 261

Expected Count 85.2 175.8 261.0

% within Comptype 27.6% 72.4% 100.0%

% within Expectation to stay till

retirement 56.2% 71.6% 66.6%

% of Total 18.4% 48.2% 66.6%

Total Count 128 264 392

Expected Count 128.0 264.0 392.0

% within Comptype 32.7% 67.3% 100.0%

% within Expectation to stay till

retirement 100.0% 100.0% 100.0%

% of Total 32.7% 67.3% 100.0%

Note: N = 392

291

Chi-Square Tests

Value df

Asymp. Sig. (2-

sided)

Exact Sig. (2-

sided)

Exact Sig. (1-

sided)

Pearson Chi-Square 9.118a 1 .003

Continuity Correctionb 8.441 1 .004

Likelihood Ratio 8.950 1 .003

Fisher's Exact Test .003 .002

Linear-by-Linear

Association 9.095 1 .003

N of Valid Cases 392

a. 0 cells (.0%) have expected count less than 5. The minimum expected count is 42.78.

b. Computed only for a 2x2 table

292 C.3 Internal recruitment: When a job becomes vacant, management normally tries to fill them with people from inside the organization rather than recruiting from outside

Comptype * Internal recruitment Crosstabulation

Internal recruitment

NO Yes Total

Comptype MNC Count 15 116 131

Expected Count 11.7 119.3 131.0

% within Comptype 11.5% 88.5% 100.0%

% within Internal recruitment 42.9% 32.5% 33.4%

% of Total 3.8% 29.6% 33.4%

Local Count 20 241 261

Expected Count 23.3 237.7 261.0

% within Comptype 7.7% 92.3% 100.0%

% within Internal recruitment 57.1% 67.5% 66.6%

% of Total 5.1% 61.5% 66.6%

Total Count 35 357 392

Expected Count 35.0 357.0 392.0

% within Comptype 8.9% 91.1% 100.0%

% within Internal recruitment 100.0% 100.0% 100.0%

% of Total 8.9% 91.1% 100.0%

Note: N = 392

293

Chi-Square Tests

Value df

Asymp. Sig. (2-

sided)

Exact Sig. (2-

sided)

Exact Sig. (1-

sided)

Pearson Chi-Square 1.539a 1 .215

Continuity Correctionb 1.108 1 .292

Likelihood Ratio 1.486 1 .223

Fisher's Exact Test .260 .146

Linear-by-Linear

Association 1.535 1 .215

N of Valid Cases 392

a. 0 cells (.0%) have expected count less than 5. The minimum expected count is 11.70.

b. Computed only for a 2x2 table

294 C.4 Recruitment process generates good/qualified applicants

Comptype * Generates applicants Crosstabulation

GA1

Disagree Agree Total

Comptype MNC Count 14 117 131

Expected Count 14.4 116.6 131.0

% within Comptype 10.7% 89.3% 100.0%

% within GA1 32.6% 33.7% 33.6%

% of Total 3.6% 30.0% 33.6%

Local Count 29 230 259

Expected Count 28.6 230.4 259.0

% within Comptype 11.2% 88.8% 100.0%

% within GA1 67.4% 66.3% 66.4%

% of Total 7.4% 59.0% 66.4%

Total Count 43 347 390

Expected Count 43.0 347.0 390.0

% within Comptype 11.0% 89.0% 100.0%

% within GA1 100.0% 100.0% 100.0%

% of Total 11.0% 89.0% 100.0%

Note N = 392

295

Chi-Square Tests

Value df

Asymp. Sig. (2-

sided)

Exact Sig. (2-

sided)

Exact Sig. (1-

sided)

Pearson Chi-Square .023a 1 .879

Continuity Correctionb .000 1 1.000

Likelihood Ratio .023 1 .879

Fisher's Exact Test 1.000 .514

Linear-by-Linear

Association .023 1 .879

N of Valid Cases 390

a. 0 cells (.0%) have expected count less than 5. The minimum expected count is 14.44.

b. Computed only for a 2x2 table

296 C.5 One or more employment tests are used prior to hiring

Comptype * Employment Test Crosstabulation

ET1

Disagree Agree Total

Comptype MNC Count 52 78 130

Expected Count 57.0 73.0 130.0

% within Comptype 40.0% 60.0% 100.0%

% within ET1 30.4% 35.6% 33.3%

% of Total 13.3% 20.0% 33.3%

Local Count 119 141 260

Expected Count 114.0 146.0 260.0

% within Comptype 45.8% 54.2% 100.0%

% within ET1 69.6% 64.4% 66.7%

% of Total 30.5% 36.2% 66.7%

Total Count 171 219 390

Expected Count 171.0 219.0 390.0

% within Comptype 43.8% 56.2% 100.0%

% within ET1 100.0% 100.0% 100.0%

% of Total 43.8% 56.2% 100.0%

Note: N = 392

297

Chi-Square Tests

Value df

Asymp. Sig. (2-

sided)

Exact Sig. (2-

sided)

Exact Sig. (1-

sided)

Pearson Chi-Square 1.172a 1 .279

Continuity Correctionb .949 1 .330

Likelihood Ratio 1.176 1 .278

Fisher's Exact Test .330 .165

Linear-by-Linear

Association 1.169 1 .280

N of Valid Cases 390

a. 0 cells (.0%) have expected count less than 5. The minimum expected count is 57.00.

b. Computed only for a 2x2 table

298 C.6 Non-managerial employees trained in variety of jobs or skills and cross utilized

Comptype * Trained in variety of jobs or skills Crosstabulation

Trained in variety of jobs or skills

NO Yes Total

Comptype MNC Count 44 87 131

Expected Count 63.2 67.8 131.0

% within Comptype 33.6% 66.4% 100.0%

% within Trained in variety of

jobs or skills 23.3% 42.9% 33.4%

% of Total 11.2% 22.2% 33.4%

Local Count 145 116 261

Expected Count 125.8 135.2 261.0

% within Comptype 55.6% 44.4% 100.0%

% within Trained in variety of

jobs or skills 76.7% 57.1% 66.6%

% of Total 37.0% 29.6% 66.6%

Total Count 189 203 392

Expected Count 189.0 203.0 392.0

% within Comptype 48.2% 51.8% 100.0%

% within Trained in variety of

jobs or skills 100.0% 100.0% 100.0%

% of Total 48.2% 51.8% 100.0%

Note: N = 392

299

Chi-Square Tests

Value df

Asymp. Sig. (2-

sided)

Exact Sig. (2-

sided)

Exact Sig. (1-

sided)

Pearson Chi-Square 16.858a 1 .000

Continuity Correctionb 15.990 1 .000

Likelihood Ratio 17.108 1 .000

Fisher's Exact Test .000 .000

Linear-by-Linear

Association 16.815 1 .000

N of Valid Cases 392

a. 0 cells (.0%) have expected count less than 5. The minimum expected count is 63.16.

b. Computed only for a 2x2 table

300 C.7 Intensive/extensive training in company specific skills

Comptype * Intensive/extensive training in company specific skills Crosstabulation

Intensive/extensive training

NO Yes Total

Comptype MNC Count 0 131 131

Expected Count .7 130.3 131.0

% within Comptype .0% 100.0% 100.0%

% within Intensive/extensive

training .0% 33.6% 33.4%

% of Total .0% 33.4% 33.4%

Local Count 2 259 261

Expected Count 1.3 259.7 261.0

% within Comptype .8% 99.2% 100.0%

% within Intensive/extensive

training 100.0% 66.4% 66.6%

% of Total .5% 66.1% 66.6%

Total Count 2 390 392

Expected Count 2.0 390.0 392.0

% within Comptype .5% 99.5% 100.0%

% within Intensive/extensive

training 100.0% 100.0% 100.0%

% of Total .5% 99.5% 100.0%

301

Chi-Square Tests

Value df

Asymp. Sig. (2-

sided)

Exact Sig. (2-

sided)

Exact Sig. (1-

sided)

Pearson Chi-Square 1.009a 1 .315

Continuity Correctionb .064 1 .800

Likelihood Ratio 1.632 1 .201

Fisher's Exact Test .554 .443

Linear-by-Linear

Association 1.006 1 .316

N of Valid Cases 392

a. 2 cells (50.0%) have expected count less than 5. The minimum expected count is .67.

b. Computed only for a 2x2 table

302

C.8 Intensive/extensive training in generic skills

Comptype * Intensive/extensive training in generic skills Crosstabulation

Intensive/extensive training in generic skills

NO Yes Total

Comptype MNC Count 24 107 131

Expected Count 41.4 89.6 131.0

% within Comptype 18.3% 81.7% 100.0%

% within Intensive/extensive

training in generic skills 19.4% 39.9% 33.4%

% of Total 6.1% 27.3% 33.4%

Local Count 100 161 261

Expected Count 82.6 178.4 261.0

% within Comptype 38.3% 61.7% 100.0%

% within Intensive/extensive

training in generic skills 80.6% 60.1% 66.6%

% of Total 25.5% 41.1% 66.6%

Total Count 124 268 392

Expected Count 124.0 268.0 392.0

% within Comptype 31.6% 68.4% 100.0%

% within Intensive/extensive

training in generic skills 100.0% 100.0% 100.0%

% of Total 31.6% 68.4% 100.0%

Note: N = 392

303

Chi-Square Tests

Value df

Asymp. Sig. (2-

sided)

Exact Sig. (2-

sided)

Exact Sig. (1-

sided)

Pearson Chi-Square 16.122a 1 .000

Continuity Correctionb 15.211 1 .000

Likelihood Ratio 17.067 1 .000

Fisher's Exact Test .000 .000

Linear-by-Linear

Association 16.081 1 .000

N of Valid Cases 392

a. 0 cells (.0%) have expected count less than 5. The minimum expected count is 41.44.

b. Computed only for a 2x2 table

304 C.9 Employee participation and input

Comptype * Employee participation and input Crosstabulation

EP1

Disagree Agree Total

Comptype MNC Count 51 78 129

Expected Count 63.5 65.5 129.0

% within Comptype 39.5% 60.5% 100.0%

% within EP1 26.7% 39.6% 33.2%

% of Total 13.1% 20.1% 33.2%

Local Count 140 119 259

Expected Count 127.5 131.5 259.0

% within Comptype 54.1% 45.9% 100.0%

% within EP1 73.3% 60.4% 66.8%

% of Total 36.1% 30.7% 66.8%

Total Count 191 197 388

Expected Count 191.0 197.0 388.0

% within Comptype 49.2% 50.8% 100.0%

% within EP1 100.0% 100.0% 100.0%

% of Total 49.2% 50.8% 100.0%

305

Chi-Square Tests

Value df

Asymp. Sig. (2-

sided)

Exact Sig. (2-

sided)

Exact Sig. (1-

sided)

Pearson Chi-Square 7.263a 1 .007

Continuity Correctionb 6.694 1 .010

Likelihood Ratio 7.305 1 .007

Fisher's Exact Test .007 .005

Linear-by-Linear

Association 7.244 1 .007

N of Valid Cases 388

a. 0 cells (.0%) have expected count less than 5. The minimum expected count is 63.50.

b. Computed only for a 2x2 table

306

C.10 Provided with relevant operating performance information

Comptype * Operating performance information Crosstabulation

op1

Disagree Agree Total

Comptype MNC Count 3 127 130

Expected Count 7.4 122.6 130.0

% within Comptype 2.3% 97.7% 100.0%

% within op1 13.6% 34.9% 33.7%

% of Total .8% 32.9% 33.7%

Local Count 19 237 256

Expected Count 14.6 241.4 256.0

% within Comptype 7.4% 92.6% 100.0%

% within op1 86.4% 65.1% 66.3%

% of Total 4.9% 61.4% 66.3%

Total Count 22 364 386

Expected Count 22.0 364.0 386.0

% within Comptype 5.7% 94.3% 100.0%

% within op1 100.0% 100.0% 100.0%

% of Total 5.7% 94.3% 100.0%

Note: N = 392

307

Chi-Square Tests

Value df

Asymp. Sig. (2-

sided)

Exact Sig. (2-

sided)

Exact Sig. (1-

sided)

Pearson Chi-Square 4.196a 1 .041

Continuity Correctionb 3.298 1 .069

Likelihood Ratio 4.847 1 .028

Fisher's Exact Test .060 .029

Linear-by-Linear

Association 4.185 1 .041

N of Valid Cases 386

a. 0 cells (.0%) have expected count less than 5. The minimum expected count is 7.41.

b. Computed only for a 2x2 table

308

C.11 Provided with relevant strategic information

Comptype * Strategic Information Crosstabulation

SI 1

Disagree Agree Total

Comptype MNC Count 4 127 131

Expected Count 10.9 120.1 131.0

% within Comptype 3.1% 96.9% 100.0%

% within SI 1 12.5% 36.2% 34.2%

% of Total 1.0% 33.2% 34.2%

Local Count 28 224 252

Expected Count 21.1 230.9 252.0

% within Comptype 11.1% 88.9% 100.0%

% within SI 1 87.5% 63.8% 65.8%

% of Total 7.3% 58.5% 65.8%

Total Count 32 351 383

Expected Count 32.0 351.0 383.0

% within Comptype 8.4% 91.6% 100.0%

% within SI 1 100.0% 100.0% 100.0%

% of Total 8.4% 91.6% 100.0%

Note: N = 392

309

Chi-Square Tests

Value df

Asymp. Sig. (2-

sided)

Exact Sig. (2-

sided)

Exact Sig. (1-

sided)

Pearson Chi-Square 7.309a 1 .007

Continuity Correctionb 6.294 1 .012

Likelihood Ratio 8.517 1 .004

Fisher's Exact Test .006 .004

Linear-by-Linear

Association 7.289 1 .007

N of Valid Cases 383

a. 0 cells (.0%) have expected count less than 5. The minimum expected count is 10.95.

b. Computed only for a 2x2 table

310

C.12 Conducts attitude Surveys to correct employee morale problems

Comptype *Attitude Surveys Crosstabulation

AS

Disagree Agree Total

Comptype MNC Count 42 89 131

Expected Count 68.5 62.5 131.0

% within Comptype 32.1% 67.9% 100.0%

% within AS 20.5% 47.6% 33.4%

% of Total 10.7% 22.7% 33.4%

Local Count 163 98 261

Expected Count 136.5 124.5 261.0

% within Comptype 62.5% 37.5% 100.0%

% within AS 79.5% 52.4% 66.6%

% of Total 41.6% 25.0% 66.6%

Total Count 205 187 392

Expected Count 205.0 187.0 392.0

% within Comptype 52.3% 47.7% 100.0%

% within AS 100.0% 100.0% 100.0%

% of Total 52.3% 47.7% 100.0%

Note: N = 392

311

Chi-Square Tests

Value df

Asymp. Sig. (2-

sided)

Exact Sig. (2-

sided)

Exact Sig. (1-

sided)

Pearson Chi-Square 32.292a 1 .000

Continuity Correctionb 31.085 1 .000

Likelihood Ratio 32.777 1 .000

Fisher's Exact Test .000 .000

Linear-by-Linear

Association 32.210 1 .000

N of Valid Cases 392

a. 0 cells (.0%) have expected count less than 5. The minimum expected count is 62.49.

b. Computed only for a 2x2 table

312 C.13 Organized in self-directed teams in performing a major part of their work role

Comptype * Self-directed teams Crosstabulation

SDT1

Disagree Agree Total

Comptype MNC Count 1 128 129

Expected Count 3.4 125.6 129.0

% within Comptype .8% 99.2% 100.0%

% within SDT1 10.0% 34.6% 33.9%

% of Total .3% 33.7% 33.9%

Local Count 9 242 251

Expected Count 6.6 244.4 251.0

% within Comptype 3.6% 96.4% 100.0%

% within SDT1 90.0% 65.4% 66.1%

% of Total 2.4% 63.7% 66.1%

Total Count 10 370 380

Expected Count 10.0 370.0 380.0

% within Comptype 2.6% 97.4% 100.0%

% within SDT1 100.0% 100.0% 100.0%

% of Total 2.6% 97.4% 100.0%

Note: N = 392

313

Chi-Square Tests

Value df

Asymp. Sig. (2-

sided)

Exact Sig. (2-

sided)

Exact Sig. (1-

sided)

Pearson Chi-Square 2.627a 1 .105

Continuity Correctionb 1.644 1 .200

Likelihood Ratio 3.193 1 .074

Fisher's Exact Test .174 .094

Linear-by-Linear

Association 2.620 1 .106

N of Valid Cases 380

a. 1 cells (25.0%) have expected count less than 5. The minimum expected count is 3.39.

b. Computed only for a 2x2 table

314 C.14 Formal performance appraisal on routine basis

Comptype * Formal Performance Appraisal Crosstabulation

FPA1

Disagree Agree Total

Comptype MNC Count 0 130 130

Expected Count 5.0 125.0 130.0

% within Comptype .0% 100.0% 100.0%

% within FPA1 .0% 34.6% 33.2%

% of Total .0% 33.2% 33.2%

Local Count 15 246 261

Expected Count 10.0 251.0 261.0

% within Comptype 5.7% 94.3% 100.0%

% within FPA1 100.0% 65.4% 66.8%

% of Total 3.8% 62.9% 66.8%

Total Count 15 376 391

Expected Count 15.0 376.0 391.0

% within Comptype 3.8% 96.2% 100.0%

% within FPA1 100.0% 100.0% 100.0%

% of Total 3.8% 96.2% 100.0%

Note: N = 392

315

Chi-Square Tests

Value df

Asymp. Sig. (2-

sided)

Exact Sig. (2-

sided)

Exact Sig. (1-

sided)

Pearson Chi-Square 7.769a 1 .005

Continuity Correctionb 6.290 1 .012

Likelihood Ratio 12.422 1 .000

Fisher's Exact Test .003 .002

Linear-by-Linear

Association 7.749 1 .005

N of Valid Cases 391

a. 1 cells (25.0%) have expected count less than 5. The minimum expected count is 4.99.

b. Computed only for a 2x2 table

316 C.15 Feedback from more than one source

Comptype * Feedback from more than one source Crosstabulation

PF

Disagree Agree Total

Comptype MNC Count 73 58 131

Expected Count 77.2 53.8 131.0

% within Comptype 55.7% 44.3% 100.0%

% within PF 31.6% 36.0% 33.4%

% of Total 18.6% 14.8% 33.4%

Local Count 158 103 261

Expected Count 153.8 107.2 261.0

% within Comptype 60.5% 39.5% 100.0%

% within PF 68.4% 64.0% 66.6%

% of Total 40.3% 26.3% 66.6%

Total Count 231 161 392

Expected Count 231.0 161.0 392.0

% within Comptype 58.9% 41.1% 100.0%

% within PF 100.0% 100.0% 100.0%

% of Total 58.9% 41.1% 100.0%

Note: N = 392

317

Chi-Square Tests

Value df

Asymp. Sig. (2-

sided)

Exact Sig. (2-

sided)

Exact Sig. (1-

sided)

Pearson Chi-Square .834a 1 .361

Continuity Correctionb .647 1 .421

Likelihood Ratio .831 1 .362

Fisher's Exact Test .385 .210

Linear-by-Linear

Association .832 1 .362

N of Valid Cases 392

a. 0 cells (.0%) have expected count less than 5. The minimum expected count is 53.80.

b. Computed only for a 2x2 table

318 C.16 Access to formal grievance procedure

Warnings

No measures of association are computed for the crosstabulation of Comptype * Formal

grievance / complaint procedure. At least one variable in each 2-way table upon which

measures of association are computed is a constant.

Comptype * Formal grievance / complaint procedure Crosstabulation

Formal grievance / complaint

procedure

Yes Total

Comptype MNC Count 131 131

Expected Count 131.0 131.0

% within Comptype 100.0% 100.0%

% within Formal grievance /

complaint procedure 33.4% 33.4%

% of Total 33.4% 33.4%

Local Count 261 261

Expected Count 261.0 261.0

% within Comptype 100.0% 100.0%

% within Formal grievance /

complaint procedure 66.6% 66.6%

% of Total 66.6% 66.6%

Total Count 392 392

Expected Count 392.0 392.0

% within Comptype 100.0% 100.0%

% within Formal grievance /

complaint procedure 100.0% 100.0%

% of Total 100.0% 100.0%

Note: N = 392

319

Chi-Square Tests

Value

Pearson Chi-Square .a

N of Valid Cases 392

a. No statistics are computed because Formal grievance / complaint procedure is a constant.

320 C.17 Participation in profit sharing or share ownership schemes

Comptype *Profit Sharing Crosstabulation

PS1

Disagree Agree Total

Comptype MNC Count 57 73 130

Expected Count 71.6 58.4 130.0

% within Comptype 43.8% 56.2% 100.0%

% within PS1 26.9% 42.2% 33.8%

% of Total 14.8% 19.0% 33.8%

Local Count 155 100 255

Expected Count 140.4 114.6 255.0

% within Comptype 60.8% 39.2% 100.0%

% within PS1 73.1% 57.8% 66.2%

% of Total 40.3% 26.0% 66.2%

Total Count 212 173 385

Expected Count 212.0 173.0 385.0

% within Comptype 55.1% 44.9% 100.0%

% within PS1 100.0% 100.0% 100.0%

% of Total 55.1% 44.9% 100.0%

Note: N = 392

321

Chi-Square Tests

Value df

Asymp. Sig. (2-

sided)

Exact Sig. (2-

sided)

Exact Sig. (1-

sided)

Pearson Chi-Square 9.984a 1 .002

Continuity Correctionb 9.311 1 .002

Likelihood Ratio 9.973 1 .002

Fisher's Exact Test .002 .001

Linear-by-Linear

Association 9.958 1 .002

N of Valid Cases 385

a. 0 cells (.0%) have expected count less than 5. The minimum expected count is 58.42.

b. Computed only for a 2x2 table

322 C.18 Additional pay or pay rise as a result of job performance or work in a team

Comptype * Additional Pay Crosstabulation

AP1

Disagree Agree Total

Comptype MNC Count 74 56 130

Expected Count 79.5 50.5 130.0

% within Comptype 56.9% 43.1% 100.0%

% within AP1 31.0% 36.8% 33.2%

% of Total 18.9% 14.3% 33.2%

Local Count 165 96 261

Expected Count 159.5 101.5 261.0

% within Comptype 63.2% 36.8% 100.0%

% within AP1 69.0% 63.2% 66.8%

% of Total 42.2% 24.6% 66.8%

Total Count 239 152 391

Expected Count 239.0 152.0 391.0

% within Comptype 61.1% 38.9% 100.0%

% within AP1 100.0% 100.0% 100.0%

% of Total 61.1% 38.9% 100.0%

Note: N = 392

323

Chi-Square Tests

Value df

Asymp. Sig. (2-

sided)

Exact Sig. (2-

sided)

Exact Sig. (1-

sided)

Pearson Chi-Square 1.447a 1 .229

Continuity Correctionb 1.194 1 .274

Likelihood Ratio 1.439 1 .230

Fisher's Exact Test .271 .137

Linear-by-Linear

Association 1.444 1 .230

N of Valid Cases 391

a. 0 cells (.0%) have expected count less than 5. The minimum expected count is 50.54.

b. Computed only for a 2x2 table

324 C.19 Proportion of pay determined by performance appraisal

Comptype * Proportion of pay determined by performance appraisal Crosstabulation

Proportion of pay determined by performance

appraisal

NO Yes Total

Comptype MNC Count 0 131 131

Expected Count 3.7 127.3 131.0

% within Comptype .0% 100.0% 100.0%

% within Proportion of pay

determined by

performance appraisal

.0% 34.4% 33.4%

% of Total .0% 33.4% 33.4%

Local Count 11 250 261

Expected Count 7.3 253.7 261.0

% within Comptype 4.2% 95.8% 100.0%

% within Proportion of pay

determined by

performance appraisal

100.0% 65.6% 66.6%

% of Total 2.8% 63.8% 66.6%

Total Count 11 381 392

Expected Count 11.0 381.0 392.0

% within Comptype 2.8% 97.2% 100.0%

% within Proportion of pay

determined by

performance appraisal

100.0% 100.0% 100.0%

% of Total 2.8% 97.2% 100.0%

Note: N = 392

325

Chi-Square Tests

Value df

Asymp. Sig. (2-

sided)

Exact Sig. (2-

sided)

Exact Sig. (1-

sided)

Pearson Chi-Square 5.680a 1 .017

Continuity Correctionb 4.240 1 .039

Likelihood Ratio 9.107 1 .003

Fisher's Exact Test .019 .011

Linear-by-Linear

Association 5.666 1 .017

N of Valid Cases 392

a. 1 cells (25.0%) have expected count less than 5. The minimum expected count is 3.68.

b. Computed only for a 2x2 table

326 C.20 Performance feedback provides information on how they do their jobs

Comptype * Performance feedback Crosstabulation

PF

Disagree Agree Total

Comptype MNC Count 73 58 131

Expected Count 77.2 53.8 131.0

% within Comptype 55.7% 44.3% 100.0%

% within PF 31.6% 36.0% 33.4%

% of Total 18.6% 14.8% 33.4%

Local Count 158 103 261

Expected Count 153.8 107.2 261.0

% within Comptype 60.5% 39.5% 100.0%

% within PF 68.4% 64.0% 66.6%

% of Total 40.3% 26.3% 66.6%

Total Count 231 161 392

Expected Count 231.0 161.0 392.0

% within Comptype 58.9% 41.1% 100.0%

% within PF 100.0% 100.0% 100.0%

% of Total 58.9% 41.1% 100.0%

Note: N = 392

327

Chi-Square Tests

Value df

Asymp. Sig. (2-

sided)

Exact Sig. (2-

sided)

Exact Sig. (1-

sided)

Pearson Chi-Square .834a 1 .361

Continuity Correctionb .647 1 .421

Likelihood Ratio .831 1 .362

Fisher's Exact Test .385 .210

Linear-by-Linear

Association .832 1 .362

N of Valid Cases 392

a. 0 cells (.0%) have expected count less than 5. The minimum expected count is 53.80.

b. Computed only for a 2x2 table

328 C.21 Reduction of status differences and harmonization

Comptype *Reduction of status differences Crosstabulation

SD1

Disagree Agree Total

Comptype MNC Count 15 116 131

Expected Count 20.6 110.4 131.0

% within Comptype 11.5% 88.5% 100.0%

% within SD1 24.6% 35.5% 33.8%

% of Total 3.9% 29.9% 33.8%

Local Count 46 211 257

Expected Count 40.4 216.6 257.0

% within Comptype 17.9% 82.1% 100.0%

% within SD1 75.4% 64.5% 66.2%

% of Total 11.9% 54.4% 66.2%

Total Count 61 327 388

Expected Count 61.0 327.0 388.0

% within Comptype 15.7% 84.3% 100.0%

% within SD1 100.0% 100.0% 100.0%

% of Total 15.7% 84.3% 100.0%

Note: N = 388

329

Chi-Square Tests

Value df

Asymp. Sig. (2-

sided)

Exact Sig. (2-

sided)

Exact Sig. (1-

sided)

Pearson Chi-Square 2.723a 1 .099

Continuity Correctionb 2.258 1 .133

Likelihood Ratio 2.846 1 .092

Fisher's Exact Test .107 .064

Linear-by-Linear

Association 2.716 1 .099

N of Valid Cases 388

a. 0 cells (.0%) have expected count less than 5. The minimum expected count is 20.60.

b. Computed only for a 2x2 table

330 C.22 Allows career breaks to non-managerial employees

Comptype * Career breaks Crosstabulation

CB

Disagree Agree Total

Comptype MNC Count 51 80 131

Expected Count 54.1 76.9 131.0

% within Comptype 38.9% 61.1% 100.0%

% within CB 31.5% 34.8% 33.4%

% of Total 13.0% 20.4% 33.4%

Local Count 111 150 261

Expected Count 107.9 153.1 261.0

% within Comptype 42.5% 57.5% 100.0%

% within CB 68.5% 65.2% 66.6%

% of Total 28.3% 38.3% 66.6%

Total Count 162 230 392

Expected Count 162.0 230.0 392.0

% within Comptype 41.3% 58.7% 100.0%

% within CB 100.0% 100.0% 100.0%

% of Total 41.3% 58.7% 100.0%

Note: N = 392

331

Chi-Square Tests

Value df

Asymp. Sig. (2-

sided)

Exact Sig. (2-

sided)

Exact Sig. (1-

sided)

Pearson Chi-Square .466a 1 .495

Continuity Correctionb .329 1 .566

Likelihood Ratio .467 1 .494

Fisher's Exact Test .516 .284

Linear-by-Linear

Association .464 1 .496

N of Valid Cases 392

a. 0 cells (.0%) have expected count less than 5. The minimum expected count is 54.14.

b. Computed only for a 2x2 table

332 C.23 Change in shift pattern

Comptype * Shift pattern Crosstabulation

ShP1

Disagree Agree Total

Comptype MNC Count 40 25 65

Expected Count 43.8 21.2 65.0

% within Comptype 61.5% 38.5% 100.0%

% within ShP1 34.5% 44.6% 37.8%

% of Total 23.3% 14.5% 37.8%

Local Count 76 31 107

Expected Count 72.2 34.8 107.0

% within Comptype 71.0% 29.0% 100.0%

% within ShP1 65.5% 55.4% 62.2%

% of Total 44.2% 18.0% 62.2%

Total Count 116 56 172

Expected Count 116.0 56.0 172.0

% within Comptype 67.4% 32.6% 100.0%

% within ShP1 100.0% 100.0% 100.0%

% of Total 67.4% 32.6% 100.0%

Note: N = 172

333

Chi-Square Tests

Value df

Asymp. Sig. (2-

sided)

Exact Sig. (2-

sided)

Exact Sig. (1-

sided)

Pearson Chi-Square 1.658a 1 .198

Continuity Correctionb 1.254 1 .263

Likelihood Ratio 1.643 1 .200

Fisher's Exact Test .240 .132

Linear-by-Linear

Association 1.649 1 .199

N of Valid Cases 172

a. 0 cells (.0%) have expected count less than 5. The minimum expected count is 21.16.

b. Computed only for a 2x2 table

334 C.24 Increase/decrease in working hours

Comptype * Working hours Crosstabulation

WH1

Disagree Agree Total

Comptype MNC Count 59 56 115

Expected Count 67.3 47.7 115.0

% within Comptype 51.3% 48.7% 100.0%

% within WH1 28.1% 37.6% 32.0%

% of Total 16.4% 15.6% 32.0%

Local Count 151 93 244

Expected Count 142.7 101.3 244.0

% within Comptype 61.9% 38.1% 100.0%

% within WH1 71.9% 62.4% 68.0%

% of Total 42.1% 25.9% 68.0%

Total Count 210 149 359

Expected Count 210.0 149.0 359.0

% within Comptype 58.5% 41.5% 100.0%

% within WH1 100.0% 100.0% 100.0%

% of Total 58.5% 41.5% 100.0%

Note: N = 359

335

Chi-Square Tests

Value df

Asymp. Sig. (2-

sided)

Exact Sig. (2-

sided)

Exact Sig. (1-

sided)

Pearson Chi-Square 3.604a 1 .058

Continuity Correctionb 3.182 1 .074

Likelihood Ratio 3.583 1 .058

Fisher's Exact Test .066 .038

Linear-by-Linear

Association 3.594 1 .058

N of Valid Cases 359

a. 0 cells (.0%) have expected count less than 5. The minimum expected count is 47.73.

b. Computed only for a 2x2 table

336 C.25 Job sharing

Comptype * Job sharing Crosstabulation

JS1

Disagree Agree Total

Comptype MNC Count 73 41 114

Expected Count 90.1 23.9 114.0

% within Comptype 64.0% 36.0% 100.0%

% within JS1 26.5% 56.2% 32.8%

% of Total 21.0% 11.8% 32.8%

Local Count 202 32 234

Expected Count 184.9 49.1 234.0

% within Comptype 86.3% 13.7% 100.0%

% within JS1 73.5% 43.8% 67.2%

% of Total 58.0% 9.2% 67.2%

Total Count 275 73 348

Expected Count 275.0 73.0 348.0

% within Comptype 79.0% 21.0% 100.0%

% within JS1 100.0% 100.0% 100.0%

% of Total 79.0% 21.0% 100.0%

Note: N = 348

337

Chi-Square Tests

Value df

Asymp. Sig. (2-

sided)

Exact Sig. (2-

sided)

Exact Sig. (1-

sided)

Pearson Chi-Square 22.975a 1 .000

Continuity Correctionb 21.650 1 .000

Likelihood Ratio 21.825 1 .000

Fisher's Exact Test .000 .000

Linear-by-Linear

Association 22.909 1 .000

N of Valid Cases 348

a. 0 cells (.0%) have expected count less than 5. The minimum expected count is 23.91.

b. Computed only for a 2x2 table

338 C.26 Home working

Comptype * Home Working Crosstabulation

HW1

Disagree Agree Total

Comptype MNC Count 82 28 110

Expected Count 84.2 25.8 110.0

% within Comptype 74.5% 25.5% 100.0%

% within HW1 36.0% 40.0% 36.9%

% of Total 27.5% 9.4% 36.9%

Local Count 146 42 188

Expected Count 143.8 44.2 188.0

% within Comptype 77.7% 22.3% 100.0%

% within HW1 64.0% 60.0% 63.1%

% of Total 49.0% 14.1% 63.1%

Total Count 228 70 298

Expected Count 228.0 70.0 298.0

% within Comptype 76.5% 23.5% 100.0%

% within HW1 100.0% 100.0% 100.0%

% of Total 76.5% 23.5% 100.0%

Note: N = 298

339

Chi-Square Tests

Value df

Asymp. Sig. (2-

sided)

Exact Sig. (2-

sided)

Exact Sig. (1-

sided)

Pearson Chi-Square .374a 1 .541

Continuity Correctionb .221 1 .638

Likelihood Ratio .372 1 .542

Fisher's Exact Test .573 .317

Linear-by-Linear

Association .373 1 .541

N of Valid Cases 298

a. 0 cells (.0%) have expected count less than 5. The minimum expected count is 25.84.

b. Computed only for a 2x2 table

340 Appendix D Logistic Regressions: Control variables and the adoption of HPWS practices

D.1 Formal policy of no compulsory redundancy

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag -.518 .271 3.662 1 .056 .596 .351 1.013

Natureofcomp -1.306 .394 11.013 1 .001 .271 .125 .586

Subsidiaryorlocal 1.308 .254 26.558 1 .000 3.697 2.248 6.079

NOE .633 .345 3.359 1 .067 1.882 .957 3.703

NewDura -1.772 .281 39.771 1 .000 .170 .098 .295

Constant 1.534 .542 8.004 1 .005 4.639

Note: N = 388 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .857 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Cox & Snell R Square = .215 Nagelkerke R Square = .289

341 D.2 Firm expects all employees to stay till retirement

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag -1.652 .312 28.117 1 .000 .192 .104 .353

Natureofcomp -.805 .374 4.627 1 .031 .447 .215 .931

Subsidiaryorlocal .891 .274 10.596 1 .001 2.439 1.426 4.171

NOE .388 .378 1.051 1 .305 1.474 .702 3.092

NewDura .982 .276 12.643 1 .000 2.671 1.554 4.590

Constant 1.547 .532 8.445 1 .004 4.696

Note: N = 385 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .005 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Cox & Snell R Square = .206 Nagelkerke R Square = .289

342

D.3 Recruitment process generates as many good/qualified applicants as needed

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag -1.582 .765 4.271 1 .039 .206 .046 .922

Natureofcomp 1.532 .522 8.605 1 .003 4.629 1.663 12.886

Subsidiaryorlocal .788 .483 2.669 1 .102 2.200 .854 5.665

NOE .410 .562 .531 1 .466 1.506 .500 4.535

NewDura 2.629 .784 11.245 1 .001 13.860 2.982 64.434

Constant 1.430 .966 2.193 1 .139 4.178

Note: N = 381 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .497 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Cox & Snell R Square = .110 Nagelkerke R Square = .251

343 D.4 One or more employment tests conducted prior to hiring

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag -.126 .284 .198 1 .656 .881 .505 1.537

Natureofcomp 3.559 .569 39.145 1 .000 35.127 11.520 107.110

Subsidiaryorlocal .177 .272 .424 1 .515 1.194 .700 2.036

NOE 1.500 .471 10.133 1 .001 4.480 1.779 11.280

NewDura 2.670 .344 60.402 1 .000 14.445 7.366 28.325

Constant -4.073 .739 30.421 1 .000 .017

Note: N = 385 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .024 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Cox & Snell R Square = .319 Nagelkerke R Square = .427

344 D.5 Training in variety of jobs

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag -.089 .245 .131 1 .718 .915 .566 1.479

Natureofcomp .626 .326 3.683 1 .055 1.870 .987 3.543

Subsidiaryorlocal -.852 .240 12.572 1 .000 .426 .266 .683

NOE -.571 .312 3.347 1 .067 .565 .307 1.042

NewDura 1.024 .245 17.484 1 .000 2.785 1.723 4.502

Constant -.109 .469 .054 1 .816 .897

Note: 392 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .097 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Cox & Snell R Square = .121 Nagelkerke R Square = .161

345 D.6 Training in generic skills

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag -.281 .293 .918 1 .338 .755 .425 1.341

Natureofcomp 1.055 .377 7.837 1 .005 2.872 1.372 6.013

Subsidiaryorlocal -1.162 .308 14.254 1 .000 .313 .171 .572

NOE .315 .385 .669 1 .414 1.370 .644 2.916

NewDura 1.688 .302 31.337 1 .000 5.409 2.995 9.767

Constant .348 .561 .383 1 .536 1.416

Note: N = 386 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .000 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Cox & Snell R Square = .192 Nagelkerke R Square = .271

346 D.7 Employee participation and input

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag 1.250 .282 19.676 1 .000 3.489 2.009 6.060

Natureofcomp .320 .352 .825 1 .364 1.377 .690 2.746

Subsidiaryorlocal -.843 .254 10.979 1 .001 .430 .261 .709

NOE .988 .338 8.563 1 .003 2.685 1.386 5.204

NewDura 1.734 .272 40.687 1 .000 5.662 3.324 9.646

Constant -1.414 .512 7.624 1 .006 .243

Note: N = 391 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .273 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Cox & Snell R Square = .179 Nagelkerke R Square = .239

347 D.8 Provided with strategic information

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 NOE -.770 .575 1.795 1 .180 .463 .150 1.428

NewDura 2.037 .778 6.856 1 .009 7.670 1.669 35.244

Constant 2.729 .318 73.471 1 .000 15.324

Note: N = 376 Omnibus Test of Model Coefficients = .005 Hosmer and Lemeshow Test = .997 NOE = Number of employees NewDura = Age of the establishment Cox & Snell R Square = .028 Nagelkerke R Square = .094

348 D.9 Attitude surveys to correct employee morale problems

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag -.050 .244 .043 1 .837 .951 .590 1.533

Natureofcomp .369 .338 1.193 1 .275 1.447 .746 2.806

Subsidiaryorlocal -1.262 .241 27.537 1 .000 .283 .177 .453

NOE .559 .320 3.043 1 .081 1.748 .933 3.274

NewDura .694 .239 8.405 1 .004 2.002 1.252 3.201

Constant .035 .475 .005 1 .942 1.035

Note: N = 392 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .169 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Cox & Snell R Square = .118 Nagelkerke R Square = .157

349 D.10 Formal performance feedback from more than one source

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag 1.053 .263 16.084 1 .000 2.866 1.713 4.794

Natureofcomp 1.343 .358 14.055 1 .000 3.830 1.898 7.729

Subsidiaryorlocal -.076 .234 .104 1 .747 .927 .587 1.466

NOE -.058 .327 .031 1 .860 .944 .497 1.792

NewDura 1.140 .255 20.057 1 .000 3.127 1.898 5.149

Constant -2.549 .518 24.226 1 .000 .078

Note: N = 391 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .001 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Cox & Snell R Square = .100 Nagelkerke R Square = .135

350 D.11 Participation in Profit sharing or share ownership schemes

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag .589 .253 5.438 1 .020 1.802 1.099 2.957

Natureofcomp -.406 .326 1.555 1 .212 .666 .352 1.261

Subsidiaryorlocal -.947 .244 15.107 1 .000 .388 .241 .625

NOE .575 .310 3.451 1 .063 1.778 .969 3.262

NewDura 1.006 .243 17.181 1 .000 2.734 1.699 4.398

Constant -.256 .463 .306 1 .580 .774

Note: N = 392 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .000 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Cox & Snell R Square = .117 Nagelkerke R Square = .156

351 D.12 Additional pay or pay rise due to job performance or work in a team

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag .692 .251 7.585 1 .006 1.998 1.221 3.271

Natureofcomp -.381 .314 1.469 1 .226 .683 .369 1.265

Subsidiaryorlocal -.462 .240 3.710 1 .054 .630 .393 1.008

NOE 1.001 .306 10.691 1 .001 2.721 1.493 4.959

NewDura -.117 .240 .235 1 .628 .890 .556 1.426

Constant -.504 .458 1.213 1 .271 .604

Note: N = 392 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .012 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Cox & Snell R Square = .089 Nagelkerke R Square = .121

352 D.13 Reduction in status differences

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag 1.464 .371 15.541 1 .000 4.325 2.088 8.958

Subsidiaryorlocal -1.199 .397 9.118 1 .003 .302 .138 .657

NOE 2.657 .749 12.568 1 .000 14.248 3.280 61.889

NewDura -.666 .366 3.312 1 .069 .514 .251 1.053

Constant 2.018 .448 20.307 1 .000 7.526

Note: N = 383 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .056 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Cox & Snell R Square = .141 Nagelkerke R Square = .256

353 D.14 Allows career breaks to non-managerial employees

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag .304 .246 1.528 1 .216 1.355 .837 2.195

Natureofcomp -.143 .325 .193 1 .660 .867 .458 1.639

Subsidiaryorlocal -.253 .236 1.148 1 .284 .777 .489 1.233

NOE .638 .318 4.018 1 .045 1.892 1.014 3.531

NewDura .881 .238 13.697 1 .000 2.414 1.514 3.850

Constant -.093 .461 .041 1 .840 .911

Note: N = 342 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .675 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Cox & Snell R Square = .068 Nagelkerke R Square = .091

354 Appendix E Logistic Regression Results for HRM practises and dependent variable of Loss

in working days due to employee sickness or absence without permission

E.1 Policy of no compulsory redundancy

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag .618 .331 3.489 1 .062 1.855 .970 3.546

Natureofcomp -.384 .363 1.115 1 .291 .681 .334 1.388

NOE 1.063 .417 6.491 1 .011 2.896 1.278 6.564

NewDura -.751 .338 4.924 1 .026 .472 .243 .916

Redundancy -.342 .315 1.182 1 .277 .710 .383 1.316

Constant -.451 .544 .689 1 .407 .637

Note: N = 261 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .001 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Redundancy = Formal policy of no compulsory redundancy Cox & Snell R Square = .096 Nagelkerke R Square = .131

355 E.2 Firm expects employees to stay till retirement

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag .570 .332 2.945 1 .086 1.769 .922 3.393

Natureofcomp -.403 .363 1.229 1 .268 .669 .328 1.362

NOE 1.010 .411 6.049 1 .014 2.747 1.228 6.145

NewDura -.568 .334 2.896 1 .089 .566 .294 1.090

Retirement -.407 .318 1.643 1 .200 .665 .357 1.240

Constant -.423 .535 .625 1 .429 .655

Note: N = 261 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .027 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Retirement = Firm expects employees to stay till retirement Cox & Snell R Square = .097 Nagelkerke R Square = .133

356 E.3 Recruitment process generates as many good/qualified applicants as needed

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag .592 .339 3.045 1 .081 1.807 .930 3.514

Natureofcomp -.282 .369 .584 1 .445 .754 .366 1.555

NOE 1.070 .422 6.425 1 .011 2.914 1.275 6.662

NewDura -.541 .340 2.536 1 .111 .582 .299 1.133

GenApplicants -1.179 .441 7.155 1 .007 .307 .130 .730

Constant .180 .603 .089 1 .766 1.197

Note: N = 261 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .012 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment GenApplicants = Recruitment process generates as many good/qualified applicants as needed Cox & Snell R Square = .123 Nagelkerke R Square = .169

357 E.4 One or more employment tests are conducted prior to hiring

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag .577 .333 2.995 1 .084 1.781 .926 3.423

Natureofcomp -.295 .370 .634 1 .426 .745 .361 1.538

NOE .997 .410 5.906 1 .015 2.711 1.213 6.059

NewDura -.638 .343 3.457 1 .063 .528 .270 1.035

EmpTest -.110 .305 .131 1 .717 .896 .493 1.627

Constant -.687 .481 2.037 1 .154 .503

Note: N = 261 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .000 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment EmpTest = One or more employment test are conducted prior to hiring Cox & Snell R Square = .091 Nagelkerke R Square = .125

358 E.5 Non-managerial employees trained in Variety of jobs or skills and cross utilized

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag .661 .336 3.871 1 .049 1.937 1.003 3.743

Natureofcomp -.202 .368 .301 1 .584 .817 .397 1.681

NOE .950 .417 5.197 1 .023 2.585 1.143 5.851

NewDura -.530 .335 2.509 1 .113 .589 .305 1.134

Jobvariety -.777 .289 7.221 1 .007 .460 .261 .810

Constant -.585 .486 1.446 1 .229 .557

Note N = 261 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .205 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Jobvariety = Non-managerial employees trained in variety of jobs or skills or cross utilized Cox & Snell R Square = .117 Nagelkerke R Square = .160

359 E.6 Non-managerial employees trained in generic skills

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag .579 .331 3.047 1 .081 1.783 .931 3.415

Natureofcomp -.267 .362 .543 1 .461 .766 .376 1.558

NOE 1.003 .411 5.947 1 .015 2.727 1.218 6.108

NewDura -.558 .335 2.768 1 .096 .572 .297 1.104

Genericskills -.386 .290 1.777 1 .182 .679 .385 1.199

Constant -.578 .491 1.389 1 .238 .561

Note: N = 261 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .037 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Genericskills = Non-managerial employees trained in generis skills Cox & Snell R Square = .098 Nagelkerke R Square = .134

360 E.7 Employee participation and input

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step

1

Nonmanag .578 .334 3.000 1 .083 1.782 .927 3.426

Natureofcomp -.347 .359 .937 1 .333 .707 .350 1.427

NOE 1.001 .413 5.878 1 .015 2.720 1.211 6.107

NewDura -.654 .345 3.588 1 .058 .520 .264 1.023

ParticipationandInvolvement .009 .299 .001 1 .977 1.009 .562 1.811

Constant -.701 .477 2.156 1 .142 .496

Note: N = 261 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .004 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment ParticipationandInvolvement = Employee participation and input Cox & Snell R Square = .091 Nagelkerke R Square = .124

361 E.8 Provided with relevant strategic information

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag .576 .333 2.986 1 .084 1.779 .926 3.419

Natureofcomp -.296 .375 .623 1 .430 .744 .356 1.552

NOE .923 .422 4.790 1 .029 2.517 1.101 5.753

NewDura -.611 .329 3.445 1 .063 .543 .285 1.035

StrataInfo -.336 .442 .579 1 .447 .714 .300 1.699

Constant -.422 .555 .577 1 .448 .656

Note: N = 261 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .014 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment StrataInfo = Provided with relevant strategic information Cox & Snell R Square = .085 Nagelkerke R Square = .116

362 E.9 Regularly conducts attitude surveys to correct employee morale problems

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag .756 .345 4.814 1 .028 2.130 1.084 4.184

Natureofcomp -.208 .369 .318 1 .573 .812 .394 1.674

NOE 1.247 .430 8.418 1 .004 3.478 1.499 8.074

NewDura -.500 .343 2.123 1 .145 .607 .310 1.188

Asurvey -1.128 .322 12.296 1 .000 .324 .172 .608

Constant -.707 .489 2.090 1 .148 .493

Note: N = 261 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .064 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Asurvey = Regularly conducts attitude surveys to correct employee morale problems Cox & Snell R Square = .143 Nagelkerke R Square = .197

363 E. 10 Formal performance feedback from more than one source

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step

1

Nonmanag .646 .332 3.774 1 .052 1.907 .994 3.658

Natureofcomp -.295 .361 .667 1 .414 .744 .367 1.512

NOE .944 .415 5.184 1 .023 2.571 1.140 5.797

NewDura -.585 .332 3.100 1 .078 .557 .290 1.068

Feedbackmorethanone -.354 .291 1.483 1 .223 .702 .397 1.241

Constant -.672 .480 1.960 1 .162 .511

Note: N = 261 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .026 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Feedbackmorethanone = Formal feedback from more than one source Cox & Snell R Square = .097 Nagelkerke R Square = .133

364 E.11 Participation in profit sharing or share ownership schemes

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag .604 .334 3.273 1 .070 1.829 .951 3.518

Natureofcomp -.324 .358 .819 1 .366 .723 .358 1.459

NOE 1.004 .419 5.733 1 .017 2.729 1.200 6.209

NewDura -.631 .327 3.737 1 .053 .532 .280 1.009

PShare -.155 .291 .284 1 .594 .856 .484 1.515

Constant -.665 .481 1.917 1 .166 .514

Note: N = 261 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .036 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment PShare = Participation in profit sharing or share ownership schemes Cox & Snell R Square = .085 Nagelkerke R Square = .116

365 E.12 Additional payment or pay rise as a result of job performance or work in a team

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag .613 .330 3.441 1 .064 1.846 .966 3.527

Natureofcomp -.324 .359 .815 1 .367 .723 .358 1.461

NOE .966 .419 5.307 1 .021 2.628 1.155 5.978

NewDura -.642 .330 3.793 1 .051 .526 .276 1.004

AdPayment .112 .288 .150 1 .698 1.118 .636 1.964

Constant -.787 .491 2.568 1 .109 .455

Note: N = 261 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .001 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment AdPayment = Additional payment or pay rise as a result of job performance or work in a team Cox & Snell R Square = .092 Nagelkerke R Square = .126

366 E.13 Reduction of status differences

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag .457 .338 1.820 1 .177 1.579 .813 3.065

Natureofcomp -.262 .361 .528 1 .467 .769 .379 1.561

NOE .899 .414 4.724 1 .030 2.458 1.092 5.530

NewDura -.617 .326 3.588 1 .058 .539 .285 1.022

Statdiff .709 .441 2.580 1 .108 2.031 .856 4.822

Constant -1.263 .597 4.484 1 .034 .283

Note: N = 261 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .036 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Statdiff = reduction of status differences Cox & Snell R Square = .095 Nagelkerke R Square = .130

367 E.14 Allows career breaks to non-managerial employees

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag .602 .331 3.311 1 .069 1.825 .955 3.489

Natureofcomp -.305 .360 .718 1 .397 .737 .364 1.492

NOE .958 .413 5.382 1 .020 2.607 1.160 5.857

NewDura -.725 .334 4.725 1 .030 .484 .252 .931

Cbreak .296 .292 1.027 1 .311 1.345 .758 2.385

Constant -.882 .497 3.158 1 .076 .414

Note N = 261 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .004 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Cbreak = Allows career breaks to non-managerial employees Cox & Snell R Square = .095 Nagelkerke R Square = .131

368 Appendix F Regression Results for HRM practices and dependent variable voluntary

turnover

F.1 Policy of no compulsory redundancy

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag .552 .322 2.934 1 .087 1.736 .923 3.265

Natureofcomp .255 .365 .487 1 .485 1.290 .631 2.641

NOE 1.572 .433 13.175 1 .000 4.818 2.061 11.261

NewDura -1.439 .346 17.279 1 .000 .237 .120 .467

Redundancy .243 .312 .604 1 .437 1.275 .691 2.352

Constant -.574 .542 1.123 1 .289 .563

Note: N = 261 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .060 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Redundancy = Formal policy of no compulsory redundancy Cox & Snell R Square = .160 Nagelkerke R Square = .213

369 F.2 Firm expects all employees to stay till retirement

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag .367 .361 1.036 1 .309 1.444 .712 2.927

Natureofcomp -.148 .390 .143 1 .705 .863 .401 1.854

NOE 1.820 .453 16.167 1 .000 6.174 2.542 14.993

NewDura -1.118 .369 9.162 1 .002 .327 .159 .674

Retirement -2.435 .388 39.501 1 .000 .088 .041 .187

Constant 1.549 .605 6.553 1 .010 4.709

Note: N = 261 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .008 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Retirement = Firm expects all employees to stay till retirement Cox & Snell R Square = .301 Nagelkerke R Square = .402

370

F.3 Recruitment process generates applicants as many good/qualified applicants as needed

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag .567 .345 2.706 1 .100 1.763 .897 3.465

Natureofcomp .252 .385 .430 1 .512 1.287 .606 2.734

NOE 2.221 .481 21.323 1 .000 9.214 3.590 23.649

NewDura -1.782 .382 21.794 1 .000 .168 .080 .356

GenApplicants -1.455 .551 6.976 1 .008 .233 .079 .687

Constant .922 .686 1.807 1 .179 2.515

Note: N = 261 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .439 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment GenApplicants = Recruitment process generates as many good/qualified as needed Cox & Snell R Square = .232 Nagelkerke R Square = .310

371 F.4 One or more employment tests are conducted prior to hiring

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag .416 .342 1.485 1 .223 1.516 .776 2.962

Natureofcomp .575 .386 2.223 1 .136 1.777 .835 3.785

NOE 1.999 .458 19.021 1 .000 7.382 3.006 18.126

NewDura -1.470 .382 14.806 1 .000 .230 .109 .486

Employment test -1.041 .312 11.146 1 .001 .353 .192 .651

Constant -.093 .491 .036 1 .849 .911

Note: N = 257 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .471 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Employment test = One or more employment tests are conducted prior to hiring Cox & Snell R Square = .224 Nagelkerke R Square = .300

372 F.5 Non-managerial employees trained in variety of jobs or skills and cross utilized

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag .743 .347 4.582 1 .032 2.102 1.065 4.151

Natureofcomp .541 .391 1.919 1 .166 1.718 .799 3.695

NOE 1.612 .447 13.011 1 .000 5.012 2.088 12.035

NewDura -1.332 .355 14.107 1 .000 .264 .132 .529

Jobvariety -1.631 .304 28.798 1 .000 .196 .108 .355

Constant -.102 .500 .041 1 .839 .903

Note: N = 261 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow = .260 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Jobvariety = Non-managerial employees trained in variety of jobs or skills and cross utilized Cox & Snell R Square = .253 Nagelkerke R Square = .338

373 F.6 Non-managerial employees trained in generic skills

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag .560 .361 2.405 1 .121 1.751 .863 3.556

Natureofcomp .535 .393 1.858 1 .173 1.708 .791 3.689

NOE 2.065 .467 19.571 1 .000 7.882 3.158 19.672

NewDura -1.306 .376 12.072 1 .001 .271 .130 .566

Genericskills -1.906 .326 34.137 1 .000 .149 .078 .282

Constant .388 .531 .534 1 .465 1.475

Note N = 258 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .008 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Genericskills = Non-managerial employees trained in generic skills Cox & Snell R Square = .298 Nagelkerke R Square = .397

374 F.7 Employee participation and input

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step

1

Nonmanag .636 .335 3.605 1 .058 1.889 .980 3.643

Natureofcomp .199 .368 .292 1 .589 1.220 .593 2.507

NOE 1.938 .452 18.410 1 .000 6.945 2.865 16.833

NewDura 1.422 .366 15.124 1 .000 .241 .118 .494

ParticipationandInvolvement -.625 .307 4.136 1 .042 .535 .293 .978

Constant -.206 .478 .186 1 .666 .814

Note: N = 259 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .006 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment ParticipationandInvolvement = Employee participation and input Cox & Snell R Square = .189 Nagelkerke R Square = .252

375 F.8 Non-managerial employees provided with relevant strategic information

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag .588 .332 3.141 1 .076 1.801 .940 3.451

Natureofcomp .497 .395 1.586 1 .208 1.644 .758 3.565

NOE 1.776 .460 14.906 1 .000 5.907 2.398 14.553

NewDura -1.339 .344 15.185 1 .000 .262 .134 .514

StrataInfo -1.548 .525 8.685 1 .003 .213 .076 .595

Constant .694 .619 1.259 1 .262 2.003

Note: N = 261 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .023 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment StrataInfo = Non-managerial employees provided with relevant strategic information Cox & Snell R Square = .176 Nagelkerke R Square = .235

376 F.9 Regularly conducts attitude surveys to correct employee morale problems

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag .749 .372 4.058 1 .044 2.116 1.020 4.387

Natureofcomp .603 .405 2.219 1 .136 1.828 .827 4.040

NOE 2.676 .515 26.987 1 .000 14.531 5.294 39.886

NewDura -1.628 .393 17.127 1 .000 .196 .091 .424

Asurvey -2.325 .380 37.420 1 .000 .098 .046 .206

Constant -.244 .517 .223 1 .636 .783

Note: N = 257 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .110 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Asurvey = Regularly conducts attitude surveys to correct employee morale problems Cox & Snell R Square = .326 Nagelkerke R Square = .436

377 F.10 Performance feedback from more than one source

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step

1

Nonmanag .699 .334 4.388 1 .036 2.011 1.046 3.867

Natureofcomp .334 .372 .804 1 .370 1.396 .673 2.898

NOE 1.500 .436 11.840 1 .001 4.479 1.907 10.524

NewDura -1.317 .344 14.620 1 .000 .268 .136 .526

Feedbackmorethanone -1.055 .296 12.752 1 .000 .348 .195 .621

Constant -.198 .483 .168 1 .682 .820

Note: N = 261 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .002 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Feedbackmorethanone = Performance feedback from more than one source Cox & Snell R Square = .199 Nagelkerke R Square = .266

378 F.11 Participation in profit sharing or share ownership schemes

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag .723 .354 4.165 1 .041 2.060 1.029 4.122

Natureofcomp .049 .389 .016 1 .901 1.050 .490 2.251

NOE 2.524 .502 25.321 1 .000 12.475 4.668 33.340

NewDura -1.917 .384 24.915 1 .000 .147 .069 .312

PShare -1.455 .334 19.001 1 .000 .233 .121 .449

Constant .223 .519 .185 1 .667 1.250

Note: N = 257 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .010 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment PShare = Participation in profit sharing or share ownership schemes Cox & Snell R Square = .246 Nagelkerke R Square = .328

379 F.12 Additional payment or pay rise as a result of job performance or work in a team

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag .569 .327 3.023 1 .082 1.767 .930 3.356

Natureofcomp .178 .367 .235 1 .628 1.194 .582 2.450

NOE 1.930 .460 17.639 1 .000 6.889 2.799 16.954

NewDura -1.716 .358 23.000 1 .000 .180 .089 .363

AdPayment -.316 .297 1.132 1 .287 .729 .407 1.305

Constant -.182 .492 .137 1 .712 .834

Note: N = 259 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .041 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment AdPayment = Additional payment or pay rise as a result of job performance or work in a team Cox & Snell R Square = .181 Nagelkerke R Square = .241

380 F.13 Reduction of status differences

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag .604 .335 3.246 1 .072 1.830 .948 3.531

Natureofcomp .179 .365 .239 1 .625 1.195 .584 2.446

NOE 1.628 .436 13.948 1 .000 5.095 2.168 11.975

NewDura -1.486 .339 19.222 1 .000 .226 .116 .440

Statdiff -.375 .395 .902 1 .342 .687 .317 1.490

Constant -.059 .551 .011 1 .915 .943

Note: N = 261 Omnibus Test of Model Coefficients = .005 Hosmer and Lemeshow Test = .005 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Statdiff = Reduction of status differences Cox & Snell R Square = .151 Nagelkerke R Square = .201

381 F.14 Allows career breaks to non-managerial employees

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag .560 .323 3.009 1 .083 1.750 .930 3.293

Natureofcomp .199 .364 .301 1 .583 1.221 .599 2.490

NOE 1.650 .434 14.434 1 .000 5.209 2.223 12.205

NewDura -1.471 .342 18.531 1 .000 .230 .118 .449

Cbreak -.180 .290 .385 1 .535 .835 .473 1.476

Constant -.276 .490 .317 1 .574 .759

Note: N = 261 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .012 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Cbreak = Allows career breaks to non-managerial employees Cox & Snell R Square = .159 Nagelkerke R Square = .212

382 Appendix G Regression results for HRM practices and dependent variable of employees

discharged

G.1 Policy of no compulsory redundancy

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag .545 .360 2.287 1 .130 1.724 .851 3.494

Natureofcomp -.010 .400 .001 1 .981 .990 .452 2.170

NOE 1.543 .447 11.922 1 .001 4.677 1.948 11.229

NewDura -.721 .366 3.894 1 .048 .486 .237 .995

Redundancy -.492 .337 2.129 1 .145 .611 .315 1.184

Constant -1.186 .589 4.051 1 .044 .305

Note: N = 261 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .039 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Redundancy = Policy of no compulsory redundancy Cox & Snell R Square = .087 Nagelkerke R Square = .128

383 G.2 Firm expects employee will stay till retirement

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag .394 .370 1.136 1 .287 1.483 .719 3.059

Natureofcomp -.194 .415 .219 1 .640 .823 .365 1.858

NOE 1.608 .460 12.242 1 .000 4.992 2.028 12.285

NewDura -.280 .372 .566 1 .452 .756 .364 1.568

Retirement -1.452 .361 16.189 1 .000 .234 .115 .475

Constant -.561 .593 .894 1 .344 .571

Note: N = 261 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .035 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Retirement = Firm expects employee will stay till retirement Cox & Snell R Square = .138 Nagelkerke R Square = .202

384 G.3 Recruitment process generates applicants as many good/qualified applicants as needed

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag .446 .364 1.501 1 .221 1.562 .765 3.187

Natureofcomp .060 .398 .023 1 .879 1.062 .487 2.316

NOE 1.503 .444 11.428 1 .001 4.493 1.880 10.738

NewDura -.681 .368 3.431 1 .064 .506 .246 1.040

GenApplicants -.192 .452 .181 1 .671 .825 .340 2.001

Constant -1.351 .641 4.449 1 .035 .259

Note: N = 259 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .133 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment GenApplicants = Recruitment process generates applicants as many good/qualified applicants as needed Cox & Snell R Square = .084 Nagelkerke R Square = .123

385 G.4 One or more employment tests are conducted prior to hiring

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag .650 .378 2.953 1 .086 1.916 .913 4.024

Natureofcomp .471 .429 1.206 1 .272 1.602 .691 3.714

NOE 1.629 .457 12.696 1 .000 5.100 2.081 12.498

NewDura -.161 .386 .174 1 .677 .851 .399 1.814

EmpTest -.925 .352 6.915 1 .009 .397 .199 .790

Constant -1.804 .557 10.486 1 .001 .165

Note: N = 257 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .074 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Emp Test = One or more employment tests are conducted prior to hiring Cox & Snell R Square = .114 Nagelkerke R Square = .167

386 G.5 Non-managerial employees trained in variety of jobs or skills and cross utilized

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag .557 .369 2.276 1 .131 1.745 .847 3.598

Natureofcomp .392 .422 .862 1 .353 1.480 .647 3.386

NOE 1.598 .463 11.944 1 .001 4.945 1.998 12.243

NewDura -.559 .374 2.234 1 .135 .572 .275 1.190

Jobvariety -1.012 .333 9.208 1 .002 .364 .189 .699

Constant -1.524 .549 7.716 1 .005 .218

Note: N = 260 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .033 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Jobvariety = Non-managerial employees trained in variety of jobs or skills and cross utilized Cox & Snell R Square = .118 Nagelkerke R Square = .173

387 G.6 Non-managerial employees trained in generic skills

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag .435 .366 1.408 1 .235 1.545 .753 3.168

Natureofcomp .303 .415 .533 1 .465 1.354 .601 3.050

NOE 1.551 .455 11.612 1 .001 4.715 1.932 11.504

NewDura -.276 .374 .544 1 .461 .759 .364 1.581

Genericskills -1.226 .327 14.075 1 .000 .293 .155 .557

Constant -1.184 .548 4.673 1 .031 .306

Note N= 261 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .024 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Genericskills = Non-managerial employees trained in generic skills Cox & Snell R Square = .131 Nagelkerke R Square = .191

388 G.7 Employee participation and input

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step

1

Nonmanag .556 .365 2.324 1 .127 1.744 .853 3.566

Natureofcomp .062 .396 .025 1 .875 1.064 .490 2.311

NOE 1.525 .446 11.713 1 .001 4.594 1.919 11.002

NewDura -.459 .375 1.495 1 .222 .632 .303 1.319

ParticipationandInvolvement -.389 .328 1.406 1 .236 .678 .356 1.289

Constant -1.505 .527 8.143 1 .004 .222

Note: N = 259 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .158 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment ParticipationandInvolvement = Employee participation and input Cox & Snell R Square = .085 Nagelkerke R Square = .124

389 G.8 Non-managerial employees provided with relevant strategic information

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag .565 .369 2.348 1 .125 1.759 .854 3.623

Natureofcomp .350 .424 .679 1 .410 1.419 .618 3.258

NOE 1.670 .465 12.873 1 .000 5.310 2.133 13.217

NewDura -.391 .363 1.155 1 .283 .677 .332 1.379

StrataInfo -1.095 .460 5.663 1 .017 .334 .136 .824

Constant -1.008 .592 2.898 1 .089 .365

Note: N = 252 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .039 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment StrataInfo = Non-managerial employees provided with relevant strategic information Cox & Snell R Square = .098 Nagelkerke R Square = .143

390 G.9 Regularly conducts attitude surveys to correct employee morale problems

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag .569 .362 2.471 1 .116 1.766 .869 3.590

Natureofcomp .144 .400 .130 1 .719 1.155 .527 2.530

NOE 1.558 .449 12.030 1 .001 4.749 1.969 11.454

NewDura -.507 .363 1.949 1 .163 .603 .296 1.227

Asurvey -.585 .329 3.155 1 .076 .557 .292 1.062

Constant -1.539 .528 8.507 1 .004 .215

Note: N = 261 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .001 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Asurvey = Regularly conducts attitude surveys to correct employee morale problems Cox & Snell R Square = .091 Nagelkerke R Square = .133

391

G.10 Performance feedback from more than one source

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step

1

Nonmanag .593 .362 2.685 1 .101 1.810 .890 3.682

Natureofcomp .151 .406 .139 1 .710 1.163 .525 2.577

NOE 1.393 .448 9.644 1 .002 4.026 1.672 9.697

NewDura -.481 .363 1.756 1 .185 .618 .303 1.259

Feedbackmorethanone -.620 .329 3.559 1 .059 .538 .282 1.024

Constant -1.505 .534 7.951 1 .005 .222

Note: N = 261 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .015 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Feedbackmorethanone = Performance feedback from more than one source Cox & Snell R Square = .093 Nagelkerke R Square = .136

392 G.11 Participation in Profit sharing or share ownership schemes

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag .599 .367 2.655 1 .103 1.820 .886 3.738

Natureofcomp .034 .396 .007 1 .932 1.035 .476 2.248

NOE 1.615 .453 12.735 1 .000 5.027 2.071 12.204

NewDura -.573 .361 2.525 1 .112 .564 .278 1.143

PShare -.668 .329 4.122 1 .042 .512 .269 .977

Constant -1.392 .535 6.780 1 .009 .249

Note: N = 255 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .023 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment PShare = Participation in Profit sharing or share ownership schemes Cox & Snell R Square = .090 Nagelkerke R Square = .131

393

G.12 Additional pay or pay rise due to job performance or work in a team

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag .529 .360 2.155 1 .142 1.697 .838 3.437

Natureofcomp .050 .395 .016 1 .900 1.051 .484 2.281

NOE 1.542 .451 11.709 1 .001 4.676 1.933 11.312

NewDura -.652 .361 3.264 1 .071 .521 .257 1.057

AdPayment -.289 .318 .824 1 .364 .749 .402 1.397

Constant -1.468 .540 7.406 1 .007 .230

Note: N = 261 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .059 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment AdPayment = Additional pay or pay rise due to job performance or work in a team Cox & Snell R Square = .083 Nagelkerke R Square = .121

394 G.13 Reduction of status differences

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag .756 .384 3.879 1 .049 2.130 1.004 4.521

Natureofcomp -.030 .404 .005 1 .941 .971 .439 2.144

NOE 1.615 .456 12.562 1 .000 5.029 2.059 12.285

NewDura -.671 .367 3.353 1 .067 .511 .249 1.048

Statdiff -.871 .425 4.209 1 .040 .418 .182 .962

Constant -.999 .604 2.731 1 .098 .368

Note: N = 256 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .003 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Statdiff = Reduction of status differences Cox & Snell R Square = .097 Nagelkerke R Square = .142

395 G.14 Allows Career breaks to non-managerial employees

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag .640 .371 2.983 1 .084 1.897 .917 3.921

Natureofcomp .008 .403 .000 1 .983 1.009 .457 2.223

NOE 1.679 .460 13.338 1 .000 5.361 2.177 13.202

NewDura -.507 .370 1.875 1 .171 .602 .292 1.244

Cbreak -.738 .330 5.000 1 .025 .478 .250 .913

Constant -1.356 .550 6.083 1 .014 .258

Note N = 260 Omnibus Test of Model coefficients = .000 Hosmer and Lemeshow Test = .041 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Cbreak = Allows Career breaks to non-managerial employees Cox & Snell R Square = .105 Nagelkerke R Square = .153

396 Appendix H Regression results for HRM practices and dependent variable of labour

productivity

H.1 Policy of no compulsory redundancy

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag -.245 .331 .546 1 .460 .783 .409 1.498

Natureofcomp 1.235 .454 7.394 1 .007 3.439 1.412 8.375

NOE .699 .492 2.021 1 .155 2.012 .767 5.275

NewDura 1.590 .333 22.744 1 .000 4.904 2.551 9.427

Redundancy -.571 .320 3.185 1 .074 .565 .302 1.058

Constant -1.145 .617 3.443 1 .064 .318

Note: N = 261 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .068 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Redundancy = Policy of no compulsory redundancy Cox & Snell R Square = .218 Nagelkerke R Square = .291

397 H.2 Firm expects employees to stay till retirement

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag -.135 .345 .154 1 .695 .874 .445 1.716

Natureofcomp 1.491 .450 10.983 1 .001 4.443 1.839 10.732

NOE .438 .488 .806 1 .369 1.550 .596 4.032

NewDura 1.535 .346 19.654 1 .000 4.639 2.354 9.143

Retirement 1.274 .350 13.223 1 .000 3.574 1.799 7.101

Constant -2.622 .636 16.988 1 .000 .073

Note: N = 260 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .052 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Retirement = Firm expects employees to stay till retirement Cox & Snell R Square = .256 Nagelkerke R Square = .342

398 H.3 Recruitment process generates as many good/qualified applicants as needed

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag -.276 .333 .689 1 .407 .758 .395 1.457

Natureofcomp 1.444 .473 9.303 1 .002 4.238 1.676 10.721

NOE .744 .505 2.169 1 .141 2.104 .782 5.659

NewDura 1.630 .334 23.872 1 .000 5.105 2.654 9.817

GenApplicants .729 .507 2.066 1 .151 2.073 .767 5.602

Constant -2.366 .750 9.949 1 .002 .094

Note: N = 258 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .026 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment GenApplicants = Recruitment process generates as many good/qualified applicants as needed Cox & Snell R Square = .223 Nagelkerke R Square = .297

399 H.4 One or more employment tests are conducted prior to hiring

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag -.175 .345 .259 1 .611 .839 .427 1.649

Natureofcomp .959 .459 4.355 1 .037 2.608 1.060 6.418

NOE .585 .490 1.426 1 .232 1.794 .687 4.684

NewDura 1.373 .345 15.820 1 .000 3.948 2.007 7.767

EmpTest 1.064 .312 11.641 1 .001 2.898 1.573 5.341

Constant -1.818 .576 9.963 1 .002 .162

Note: N = 260 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .089 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Emp Test = One or more employment tests are conducted prior to hiring Cox & Snell R Square = .243 Nagelkerke R Square = .324

400 H.5 Non-managerial employees trained in variety of jobs or skills and cross utilized

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag -.315 .337 .872 1 .350 .730 .377 1.414

Natureofcomp 1.167 .455 6.571 1 .010 3.211 1.316 7.835

NOE .691 .494 1.953 1 .162 1.995 .757 5.256

NewDura 1.600 .335 22.783 1 .000 4.952 2.568 9.553

Jobvariety .930 .296 9.900 1 .002 2.534 1.420 4.523

Constant -1.846 .574 10.338 1 .001 .158

Note: N = 261 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .074 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Jobvariety = Non-managerial employees trained in variety of jobs or skills and cross utilized Cox & Snell R Square = .239 Nagelkerke R Square = .318

401 H.6 Non –managerial employees trained in generic skills

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag -.159 .345 .213 1 .645 .853 .433 1.678

Natureofcomp 1.087 .450 5.828 1 .016 2.966 1.227 7.169

NOE .588 .492 1.430 1 .232 1.801 .687 4.721

NewDura 1.450 .343 17.909 1 .000 4.264 2.178 8.346

Genericskills 1.219 .307 15.781 1 .000 3.385 1.855 6.179

Constant -2.141 .587 13.278 1 .000 .118

Note: N = 261 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .567 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Genericskills = Non –managerial employees trained in generic skills Cox & Snell R Square = .256 Nagelkerke R Square = .342

402 H.7 Employee participation and input

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step

1

Nonmanag -.390 .340 1.311 1 .252 .677 .348 1.320

Natureofcomp 1.320 .457 8.357 1 .004 3.745 1.530 9.165

NOE .428 .493 .753 1 .386 1.534 .584 4.030

NewDura 1.497 .345 18.869 1 .000 4.470 2.274 8.783

ParticipationandInvolvement .788 .307 6.580 1 .010 2.198 1.204 4.012

Constant -1.732 .574 9.105 1 .003 .177

Note: N = 261 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .000 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment ParticipationandInvolvement = Employee participation and input Cox & Snell R Square = .234 Nagelkerke R Square = .312

403 H.8 Non-managerial employees are provided with relevant strategic information

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag -.220 .336 .430 1 .512 .802 .415 1.550

Natureofcomp 1.486 .506 8.611 1 .003 4.417 1.638 11.914

NOE .808 .534 2.289 1 .130 2.243 .788 6.385

NewDura 1.638 .335 23.889 1 .000 5.146 2.668 9.927

StrataInfo 1.027 .569 3.257 1 .071 2.792 .915 8.514

Constant -2.768 .777 12.706 1 .000 .063

Note: N = 250 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .175 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment StrataInfo = Non-managerial employees are provided with relevant strategic information Cox & Snell R Square = .224 Nagelkerke R Square = .298

404 H.9 Regularly conducts attitude surveys to correct employee morale problems

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag -.357 .348 1.052 1 .305 .700 .354 1.384

Natureofcomp 1.199 .463 6.700 1 .010 3.317 1.338 8.225

NOE .460 .497 .857 1 .355 1.584 .598 4.192

NewDura 1.529 .341 20.084 1 .000 4.616 2.364 9.010

Asurvey 1.267 .312 16.473 1 .000 3.551 1.926 6.549

Constant -1.789 .587 9.296 1 .002 .167

Note: N = 261 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .094 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Asurvey = Regularly conducts attitude surveys to correct employee morale problems Cox & Snell R Square = .259 Nagelkerke R Square = .346

405 H.10 Performance feedback from more than one source

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step

1

Nonmanag -.633 .371 2.913 1 .088 .531 .257 1.098

Natureofcomp 2.520 .676 13.908 1 .000 12.433 3.306 46.755

NOE 1.588 .709 5.013 1 .025 4.893 1.219 19.645

NewDura 2.084 .388 28.919 1 .000 8.037 3.760 17.178

Feedbackmorethanone 1.134 .351 10.464 1 .001 3.108 1.563 6.177

Constant -2.997 .785 14.573 1 .000 .050

Note N = 250 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .011 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Feedbackmorethanone = Performance feedback from more than one source Cox & Snell R Square = .341 Nagelkerke R Square = .455

406 H.11 Participation in profit sharing or share ownership schemes

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag -.305 .335 .830 1 .362 .737 .382 1.422

Natureofcomp 1.338 .449 8.887 1 .003 3.810 1.581 9.179

NOE .431 .492 .767 1 .381 1.538 .587 4.032

NewDura 1.695 .334 25.817 1 .000 5.444 2.832 10.467

PShare .621 .309 4.035 1 .045 1.861 1.015 3.411

Constant -1.815 .569 10.182 1 .001 .163

Note: N = 255 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .008 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment PShare = Participation in profit sharing or share ownership schemes Cox & Snell R Square = .210 Nagelkerke R Square =.281

407 H.12 Additional pay or pay rise as a result of job performance or work in a team

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag -.250 .330 .572 1 .449 .779 .408 1.488

Natureofcomp 1.343 .455 8.720 1 .003 3.829 1.571 9.334

NOE .464 .494 .880 1 .348 1.590 .603 4.189

NewDura 1.805 .337 28.722 1 .000 6.078 3.141 11.759

AdPayment .417 .306 1.857 1 .173 1.517 .833 2.764

Constant -1.810 .588 9.471 1 .002 .164

Note: N = 261 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .009 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment AdPayment = Additional pay or pay rise as a result of job performance or work in a team Cox & Snell R Square = .214 Nagelkerke R Square = .286

408 H.13 Reduction in status differences

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag -.479 .351 1.855 1 .173 .620 .311 1.234

Natureofcomp 1.447 .459 9.939 1 .002 4.252 1.729 10.454

NOE .505 .490 1.063 1 .303 1.658 .634 4.333

NewDura 1.771 .337 27.550 1 .000 5.874 3.032 11.378

Statdiff 1.062 .428 6.155 1 .013 2.893 1.250 6.694

Constant -2.456 .661 13.828 1 .000 .086

Note: N = 261 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .063 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Statdiff = Reduction in status differences Cox & Snell R Square = .221 Nagelkerke R Square = .294

409 H.14 Allows non-managerial employees career break

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag -.247 .352 .493 1 .483 .781 .392 1.556

Natureofcomp 2.677 .673 15.798 1 .000 14.540 3.884 54.432

NOE 1.283 .682 3.541 1 .060 3.609 .948 13.739

NewDura 1.976 .368 28.775 1 .000 7.216 3.505 14.856

Cbreak .887 .329 7.258 1 .007 2.427 1.273 4.626

Constant -3.531 .814 18.804 1 .000 .029

Note: N = 254 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .001 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Cbreak = Allows non-managerial employees career break Cox & Snell R Square = .302 Nagelkerke R Square = .403

410 Appendix I Regression results for HRM practices and dependent variable of growth in

labour productivity

I.1 Policy of no compulsory retirement

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag -.181 .361 .252 1 .615 .834 .411 1.692

Natureofcomp .228 .408 .311 1 .577 1.256 .564 2.796

NOE .868 .483 3.223 1 .073 2.382 .923 6.143

NewDura 1.463 .354 17.050 1 .000 4.317 2.156 8.643

Redundancy -.954 .342 7.788 1 .005 .385 .197 .753

Constant .441 .591 .557 1 .455 1.555

Note: N = 259 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .164 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Redundancy = Policy of no compulsory Cox & Snell R Square = .207 Nagelkerke R Square = .284

411 I.2 Firm expects its employees to stay till retirement

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag -.116 .353 .107 1 .743 .891 .446 1.778

Natureofcomp .513 .398 1.663 1 .197 1.671 .766 3.646

NOE .570 .459 1.538 1 .215 1.768 .718 4.349

NewDura 1.397 .343 16.601 1 .000 4.042 2.065 7.915

Retirement .825 .320 6.668 1 .010 2.282 1.220 4.270

Constant -.995 .573 3.018 1 .082 .370

Note: N = 261 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .339 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Retirement = Firm expects its employees to stay till retirement Cox & Snell R Square = .176 Nagelkerke R Square = .241

412 I.3 Recruitment process generates as many good/qualified applicants as needed

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag -.178 .350 .258 1 .612 .837 .421 1.663

Natureofcomp .387 .400 .938 1 .333 1.473 .673 3.225

NOE .607 .462 1.723 1 .189 1.834 .742 4.537

NewDura 1.642 .344 22.756 1 .000 5.164 2.631 10.139

GenApplicants -.410 .437 .882 1 .348 .664 .282 1.562

Constant -.057 .609 .009 1 .925 .944

Note: N = 259 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .266 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment GenApplicants = Recruitment process generates as many good/qualified applicants as needed Cox & Snell R Square = .159 Nagelkerke R Square = .217

413 I.4 One or more employment tests prior to hiring

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag -.226 .359 .397 1 .529 .797 .394 1.612

Natureofcomp .081 .411 .039 1 .843 1.085 .485 2.427

NOE .658 .471 1.951 1 .162 1.931 .767 4.860

NewDura 1.287 .354 13.228 1 .000 3.622 1.810 7.246

EmpTest .843 .319 6.959 1 .008 2.322 1.242 4.343

Constant -.416 .525 .629 1 .428 .660

Note: N = 259 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .846 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Emp Test = One or more employment tests prior to hiring Cox & Snell R Square = .183 Nagelkerke R Square = .251

414 I.5 Non-managerial employees trained in variety of jobs or skills and cross utilized

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag -.620 .409 2.303 1 .129 .538 .241 1.198

Natureofcomp .223 .448 .248 1 .619 1.250 .520 3.004

NOE .494 .533 .858 1 .354 1.638 .576 4.656

NewDura 2.072 .410 25.574 1 .000 7.937 3.556 17.716

Jobvariety 1.636 .352 21.650 1 .000 5.137 2.578 10.234

Constant -.499 .585 .728 1 .394 .607

Note: N = 252 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .274 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Jobvariety = Non-managerial employees trained in variety of jobs or skills and cross utilized Cox & Snell R Square = .289 Nagelkerke R Square = .400

415 I.6 Non-managerial employees trained in Generic skills

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag -.148 .381 .151 1 .698 .863 .409 1.819

Natureofcomp .065 .423 .023 1 .878 1.067 .466 2.443

NOE .980 .510 3.691 1 .055 2.665 .980 7.246

NewDura 1.414 .365 15.041 1 .000 4.114 2.013 8.409

Genericskills 1.399 .317 19.456 1 .000 4.051 2.176 7.543

Constant -.887 .566 2.455 1 .117 .412

Note: N = 251 Omnibus test of Model coefficients = .000 Hosmer and Lemeshow Test = .844 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Genericskills = Non-managerial employees trained in Generic skills Cox & Snell R Square = .246 Nagelkerke R Square = .339

416 I.7 Employee participation and input

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step

1

Nonmanag -.346 .358 .934 1 .334 .707 .351 1.427

Natureofcomp .355 .402 .783 1 .376 1.427 .649 3.135

NOE .422 .469 .809 1 .368 1.524 .608 3.820

NewDura 1.356 .355 14.560 1 .000 3.882 1.934 7.791

ParticipationandInvolvement .788 .311 6.408 1 .011 2.200 1.195 4.051

Constant -.421 .520 .654 1 .419 .657

Note: N = 259 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .386 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment ParticipationandInvolvement = Employee participation and input Cox & Snell R Square = .180 Nagelkerke R Square = .246

417 I.8 Non-managerial employees provided with relevant strategic information

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag -.189 .351 .290 1 .590 .828 .416 1.647

Natureofcomp .132 .415 .102 1 .750 1.141 .506 2.573

NOE .481 .470 1.046 1 .307 1.618 .643 4.067

NewDura 1.414 .339 17.431 1 .000 4.113 2.117 7.988

StrataInfo .922 .461 3.996 1 .046 2.515 1.018 6.211

Constant -.926 .602 2.364 1 .124 .396

Note: N = 252 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .362 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment StrataInfo = Non-managerial employees provided with relevant strategic information Cox & Snell R Square = .156 Nagelkerke R Square = .213

418 I.9 Regularly conducts attitude surveys to correct employee morale problems

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag -.770 .388 3.939 1 .047 .463 .216 .990

Natureofcomp .154 .431 .127 1 .721 1.166 .501 2.716

NOE .168 .513 .108 1 .743 1.183 .433 3.232

NewDura 1.696 .382 19.768 1 .000 5.454 2.582 11.519

Asurvey 1.685 .379 19.779 1 .000 5.394 2.567 11.337

Constant -.092 .552 .028 1 .868 .913

Note: N = 255 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .896 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Asurvey = Regularly conducts attitude surveys to correct employee morale problems Cox & Snell R Square = .266 Nagelkerke R Square = .366

419 I.10 Performance feedback from more than one source

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step

1

Nonmanag -.254 .349 .528 1 .467 .776 .392 1.538

Natureofcomp .336 .398 .711 1 .399 1.399 .641 3.056

NOE .693 .470 2.171 1 .141 2.000 .795 5.029

NewDura 1.470 .341 18.645 1 .000 4.351 2.232 8.482

Feedbackmorethanone .499 .303 2.710 1 .100 1.647 .909 2.984

Constant -.452 .515 .773 1 .379 .636

Note: N = 261 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .354 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Feedbackmorethanone = Performance feedback from more than one source Cox & Snell R Square = .164 Nagelkerke R Square = .224

420 I.11 Participation in profit sharing or share ownership schemes

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag -.434 .367 1.397 1 .237 .648 .315 1.331

Natureofcomp .293 .405 .524 1 .469 1.341 .606 2.966

NOE .488 .480 1.032 1 .310 1.629 .635 4.175

NewDura 1.610 .351 21.030 1 .000 5.004 2.514 9.958

PShare .956 .320 8.928 1 .003 2.602 1.390 4.872

Constant -.442 .530 .696 1 .404 .643

Note: N = 253 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .778 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment PShare = Participation in profit sharing or share ownership schemes Cox & Snell R Square = .192 Nagelkerke R Square = .263

421 I.12 Additional pay or pay rise due to job performance or work in a team

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag -.395 .365 1.172 1 .279 .673 .329 1.378

Natureofcomp .282 .412 .467 1 .494 1.325 .591 2.973

NOE .391 .490 .637 1 .425 1.479 .566 3.866

NewDura 1.882 .363 26.956 1 .000 6.568 3.227 13.367

AdPayment .996 .327 9.289 1 .002 2.708 1.427 5.138

Constant -.512 .543 .888 1 .346 .599

Note: N = 258 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .487 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment AdPayment = Additional pay or pay rise due to job performance or work in a team Cox & Snell R Square = .207 Nagelkerke R Square = .284

422 I.13 Reduction in status differences

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag -.529 .381 1.934 1 .164 .589 .279 1.242

Natureofcomp .502 .405 1.535 1 .215 1.653 .747 3.659

NOE .455 .468 .948 1 .330 1.577 .630 3.944

NewDura 1.662 .352 22.325 1 .000 5.272 2.645 10.505

Statdiff 1.378 .434 10.092 1 .001 3.966 1.695 9.279

Constant -1.352 .602 5.041 1 .025 .259

Note: N = 261 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .304 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Statdiff = Reduction in status differences Cox & Snell R Square = .185 Nagelkerke R Square = .253

423 I.14 Allows Career breaks to non-managerial employees

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag -.229 .348 .431 1 .511 .796 .402 1.575

Natureofcomp .412 .400 1.059 1 .303 1.510 .689 3.307

NOE .508 .466 1.187 1 .276 1.662 .666 4.144

NewDura 1.477 .339 18.920 1 .000 4.378 2.251 8.517

Cbreak .573 .292 3.850 1 .050 1.773 1.001 3.142

Constant -.610 .529 1.327 1 .249 .544

Note: N = 261 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .310 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Cbreak = Allows Career breaks to non-managerial employees Cox & Snell R Square = .167 Nagelkerke R Square = .229

424 Appendix J. HRM practices and the dependent variable of financial performance

J.1 Policy of no compulsory redundancy

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag -.260 .352 .544 1 .461 .771 .387 1.538

Natureofcomp .811 .424 3.654 1 .056 2.251 .980 5.171

NOE 1.492 .506 8.683 1 .003 4.444 1.648 11.984

NewDura 1.411 .346 16.671 1 .000 4.101 2.083 8.074

Redundancy -.003 .325 .000 1 .993 .997 .527 1.885

Constant -.725 .595 1.486 1 .223 .484

Note: N = 261 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .228 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Redundancy = Policy of no compulsory redundancy Cox & Snell R Square = .182 Nagelkerke R Square = .249

425 J.2 Firm expects employees to stay till retirement

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag -.150 .362 .173 1 .678 .860 .423 1.748

Natureofcomp .998 .426 5.493 1 .019 2.713 1.178 6.252

NOE 1.473 .505 8.515 1 .004 4.363 1.622 11.737

NewDura 1.190 .348 11.679 1 .001 3.287 1.661 6.504

Retirement 1.024 .326 9.879 1 .002 2.784 1.470 5.271

Constant -1.539 .601 6.558 1 .010 .215

Note N = 261 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .623 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Retirement = Firm expects employees to stay till retirement Cox & Snell R Square = .213 Nagelkerke R Square = .292

426 J.3 Recruitment process generates as many good/qualified applicants as needed

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag -.253 .359 .496 1 .481 .777 .384 1.569

Natureofcomp .846 .427 3.924 1 .048 2.330 1.009 5.381

NOE 1.475 .506 8.491 1 .004 4.370 1.621 11.786

NewDura 1.453 .347 17.566 1 .000 4.277 2.168 8.438

GenApplicants -.023 .444 .003 1 .958 .977 .409 2.332

Constant -.721 .641 1.265 1 .261 .486

Note: N = 259 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .479 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment GenApplicants = Recruitment process generates as many good/qualified applicants as needed Cox & Snell R Square = .185 Nagelkerke R Square = .254

427 J.4 One or more employment tests prior to hiring

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag -.173 .364 .226 1 .635 .841 .413 1.715

Natureofcomp .662 .433 2.340 1 .126 1.940 .830 4.532

NOE 1.458 .507 8.257 1 .004 4.297 1.590 11.618

NewDura 1.282 .356 12.977 1 .000 3.603 1.794 7.237

EmpTest .587 .323 3.301 1 .069 1.798 .955 3.385

Constant -.915 .552 2.749 1 .097 .401

Note: N = 257 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .658 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Emp Test = One or more employment tests prior to hiring Cox & Snell R Square = .197 Nagelkerke R Square = .269

428 J.5 Non-managerial employees trained in variety of job or skills and cross utilized

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag -.635 .392 2.626 1 .105 .530 .246 1.142

Natureofcomp .834 .456 3.345 1 .067 2.303 .942 5.632

NOE 2.101 .578 13.213 1 .000 8.174 2.633 25.374

NewDura 1.382 .369 14.053 1 .000 3.984 1.934 8.208

Jobvariety 1.144 .329 12.116 1 .000 3.139 1.648 5.978

Constant -.904 .587 2.370 1 .124 .405

Note: N = 255 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .055 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Jobvariety = Non-managerial employees trained in variety of job or skills and cross utilized Cox & Snell R Square = .262 Nagelkerke R Square = .361

429 J.6 Non-managerial employees trained in generic skills

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag -.228 .388 .344 1 .558 .797 .372 1.704

Natureofcomp .754 .454 2.757 1 .097 2.126 .873 5.177

NOE 2.316 .597 15.069 1 .000 10.136 3.148 32.639

NewDura 1.106 .373 8.787 1 .003 3.022 1.455 6.279

Genericskills 1.499 .330 20.651 1 .000 4.476 2.345 8.543

Constant -1.479 .601 6.050 1 .014 .228

Note: N = 257 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .278 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Genericskills = Non-managerial employees trained in generic skills Cox & Snell R Square = .280 Nagelkerke R Square = .385

430 J.7 Employee participation and input

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step

1

Nonmanag -.345 .360 .919 1 .338 .708 .350 1.434

Natureofcomp .813 .425 3.665 1 .056 2.255 .981 5.185

NOE 1.397 .507 7.583 1 .006 4.042 1.496 10.925

NewDura 1.317 .356 13.666 1 .000 3.732 1.856 7.501

ParticipationandInvolvement .362 .315 1.320 1 .251 1.436 .775 2.660

Constant -.749 .543 1.901 1 .168 .473

Note: N = 259 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .280 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment ParticipationandInvolvement = Employee participation and input Cox & Snell R Square = .190 Nagelkerke R Square = .260

431 J.8 Provided with relevant strategic information

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag -.173 .357 .234 1 .628 .841 .418 1.693

Natureofcomp .638 .439 2.112 1 .146 1.892 .801 4.470

NOE 1.442 .509 8.021 1 .005 4.230 1.559 11.475

NewDura 1.357 .339 16.047 1 .000 3.883 1.999 7.542

StrataInfo .573 .466 1.510 1 .219 1.773 .711 4.419

Constant -1.187 .626 3.588 1 .058 .305

Note: N = 252 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .539 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment StrataInfo = Provided with relevant strategic information Cox & Snell R Square = .184 Nagelkerke R Square = .251

432 J.9 Regularly conducts attitude surveys to correct employee morale problems

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag -.502 .374 1.802 1 .179 .605 .291 1.260

Natureofcomp .820 .448 3.342 1 .068 2.270 .943 5.468

NOE 1.863 .560 11.066 1 .001 6.442 2.150 19.308

NewDura 1.165 .357 10.632 1 .001 3.206 1.592 6.459

Asurvey 1.112 .343 10.488 1 .001 3.039 1.551 5.955

Constant -.820 .566 2.100 1 .147 .440

Note: N = 258 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .149 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Asurvey = Regularly conducts attitude surveys to correct employee morale problems Cox & Snell R Square = .240 Nagelkerke R Square = .330

433 J.10 Feedback more than one source

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step

1

Nonmanag -.306 .355 .744 1 .388 .736 .367 1.476

Natureofcomp .804 .424 3.591 1 .058 2.234 .973 5.128

NOE 1.594 .514 9.607 1 .002 4.922 1.797 13.485

NewDura 1.320 .341 14.953 1 .000 3.744 1.917 7.309

Feedbackmorethanone .417 .308 1.839 1 .175 1.518 .830 2.774

Constant -.829 .542 2.337 1 .126 .436

Note: N = 261 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .798 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Feedbackmorethanone = Feedback more than one source Cox & Snell R Square = .188 Nagelkerke R Square = .257

434 J. 11 Participation in profit sharing or share ownership schemes

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag -.541 .397 1.855 1 .173 .582 .267 1.268

Natureofcomp .958 .462 4.299 1 .038 2.607 1.054 6.450

NOE 1.860 .588 9.991 1 .002 6.424 2.027 20.356

NewDura 1.550 .377 16.862 1 .000 4.709 2.248 9.866

PShare 1.595 .359 19.781 1 .000 4.928 2.440 9.952

Constant -1.206 .598 4.061 1 .044 .299

Note: N = 251 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test =. 088 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment PShare = Participation in profit sharing or share ownership schemes Cox & Snell R Square = .276 Nagelkerke R Square = .379

435 J.12 Additional pay or Pay rise due to job performance or work in a team

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag -.262 .352 .555 1 .456 .769 .386 1.534

Natureofcomp .812 .424 3.678 1 .055 2.253 .982 5.169

NOE 1.456 .513 8.072 1 .004 4.291 1.571 11.718

NewDura 1.431 .339 17.801 1 .000 4.183 2.152 8.132

AdPayment .112 .309 .132 1 .717 1.119 .611 2.050

Constant -.768 .549 1.955 1 .162 .464

Note: N = 261 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .089 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment AdPayment = Additional pay or Pay rise due to job performance or work in a team Cox & Snell R Square = .183 Nagelkerke R Square = .250

436 J.13 Reduction in status differences

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag -.373 .374 .996 1 .318 .688 .331 1.433

Natureofcomp .806 .427 3.559 1 .059 2.239 .969 5.171

NOE 1.559 .515 9.166 1 .002 4.753 1.733 13.039

NewDura 1.408 .339 17.214 1 .000 4.087 2.102 7.946

Statdiff .348 .411 .714 1 .398 1.416 .632 3.171

Constant -.934 .612 2.329 1 .127 .393

Note: N = 256 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .308 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Statdiff = Reduction in status differences Cox & Snell R Square = .190 Nagelkerke R Square = .260

437 J.14 Allows career breaks to non-managerial employees

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95.0% C.I.for

EXP(B)

Lower Upper

Step 1 Nonmanag -.278 .353 .620 1 .431 .757 .379 1.512

Natureofcomp .850 .426 3.987 1 .046 2.340 1.016 5.389

NOE 1.448 .507 8.161 1 .004 4.255 1.575 11.492

NewDura 1.345 .339 15.733 1 .000 3.837 1.974 7.457

Cbreak .367 .295 1.551 1 .213 1.444 .810 2.574

Constant -.905 .556 2.646 1 .104 .405

Note: N = 261 Omnibus Test of Model Coefficients = .000 Hosmer and Lemeshow Test = .829 Nonmanag = Proportion of workforce made of non-managerial employees Natureofcomp = Main nature of business either manufacturing or services Subsidiaryorlocal = Subsidiary of multinational or a local firm NOE = Number of employees NewDura = Age of the establishment Cbreak = Allows career breaks to non-managerial employees Cox & Snell R Square = .187 Nagelkerke R Square = .256

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