Strategic HRM—RIFs and the Effectiveness of High Involvement Management Practices*

1. Strategic HRM—RIFs and the Effectiveness of High Involvement Management Practices* Dr. Stan Malos *aka High Performance Work Systems [HPWS]

2. Article PresentedHigh-Involvement Management and Workforce Reduction: Competitive Advantage or Disadvantage? Zatzick & Iverson, Simon Frazer Univ. Academy of Management Journal October, 2006

3. Overview of Article: -What are High-Involvement Management Practices [HIMPs] in the Strategic HRM context? -How can HIMPs impact Productivity or otherwise offer a source of Strategic Competitive Advantage? -How is the relationship between HIMPs and Productivity affected by Workforce Reductions? -What are the corresponding practical implications for Strategic Human Resource Management?

4. What are High-Involvement Management Practices [HIMPs] in the Strategic HRM context? -HIMPs: Systems of management practices giving employees skills, information, motivation, and latitude -Examples: Team-based training and incentives, flexible job design, and information sharing to facilitate effective interaction and improve productivity

5. How can HIMPs impact Productivity or otherwise offer a Strategic Competitive Advantage? -By generating and sustaining firm-specific human capital development -By developing dynamic capabilities to integrate, build, and reconfigure internal and external competencies based on that firm-specific human capital

6. How is the relationship between HIMPs and Productivity affected by Workforce Reductions? -Layoffs and other workforce reductions can be perceived as psychological contract violations that decrease motivation and commitment -Loss of firm-specific human capital and high-involvement competencies undercut gains otherwise realized through HIMPs

7. Hypotheses: • H1: Layoffs moderate the relationship between HIMPs and productivity (i.e., more extensive HIMPs will relate to greater productivity losses from RIFs) • H2: Continued investments in HIMPs after RIFs will lessen these effects

8. Methods: How this study was conducted -Archival survey data from Canadian government labor statistics used to assess Productivity, HIMPs, and layoffs -Productivity measured using revenues less expenditures per employee -HIMP intensity measured as extent of flexible job design, problem-solving teams, self-directed work groups, training, employee information sharing, and gainsharing

9. Results: Support for the hypothesized relationships—Hierarchical Regression Results H1: Layoff rates were negatively related to productivity as predicted [counter-intuitive?!] H2: Interactions indicate effects are less when HIMPs are continued after RIFs [see Table 2 and Interaction Figures 1, 2a & 2b]

10. Take-home message: Practical implications for Strategic Human Resource Management RIFs may cut short-term costs but can also reduce productivity and overall performance If RIFs become necessary, consider unit-level retention to maintain work group synergies & other benefits of HIMPs Don’t give up on HIMPs after RIFs; investments in training and development may reassure layoff survivors and reinstate productivity gains

11. Questions?