The influence of calculative (“hard”) and collaborative (“soft”) HRM on the layoff‐performance relationship in high performance workplaces

• DOI: http://doi.org/10.1111/1748-8583.12291
• Author: Timothy Bartram,Carol T. Kulik,Stewart Johnston,Christina Cregan
• Published date: 01 January 2021
• Date: 01 January 2021

ORIGINAL ARTICLE

The influence of calculative (“hard”)

and collaborative (“soft”) HRM on the layoff-

performance relationship in high performance

workplaces

Christina Cregan

1

| Carol T. Kulik

2

| Stewart Johnston

1

|

Timothy Bartram

3

1

Department of Management and Marketing,

University of Melbourne, Parkville, Victoria,

Australia

2

University of South Australia Business

School, Adelaide, South Australia, Australia

3

School of Management, RMIT University,

Melbourne, Victoria, Australia

Correspondence

Christina Cregan, Department of

Management and Marketing, University of

Melbourne, Parkville, Victoria, Australia 3010.

Email: ccregan@unimelb.edu.au

Abstract

We investigate the effect of employment systems on the

layoff-performance relationship. We construct a typology

of two types of HPWS (Calculative or “hard”HRM and

Collaborative or “soft”HRM) and two non-high perfor-

mance systems (Traditional HRM and Low HRM). We use

attribution theory as a framework from which to draw

hypotheses. We examine survey responses from two

waves of panel data. We employ cluster analysis to iden-

tify distinctive configurations o f employment pract ices

used in UK workplace s. We use the cluster ou tcomes as

explanatory variables in moderator regression analysis.

Following layoffs, we find that Calculative workplaces

experience lower subsequent performance than Collabora-

tive workplaces. Over the next five years, Calculative and

Collaborative workplaces experience equivalent amounts

of performance change but Calculative workplaces fail to

make a full recovery.

KEYWORDS

attribution theory, cluster analysis, collaborative and calculative

HRM, high performance work systems, layoff-performance

relationship, mutual gains, soft and hard HRM

Received: 25 July 2018 Revised: 17 January 2020 Accepted: 3 March 2020

DOI: 10.1111/1748-8583.12291

202 © 2020 John Wiley & Sons Ltd Hum Resour Manag J. 2021;31:202–224.wileyonlinelibrary.com/journal/hrmj

1|INTRODUCTION

In recent decades, a management strategy of large-scale layoffs has become the norm in many countries, causing

upheaval and stress to countless thousands of employees, their families and local communities (De Meuse &

Dai, 2012; Goyer, Clark, & Bhankaraully, 2016; Munoz-Bullon & Sanchez-Bueno, 2014). In the three months prior to

June 2019 in the UK, a monthly average of 101,000 people was laid off and quarterly redundancy figures had rarely

fallen below this level in the previous two decades (Office for National Statistics, 2018). Managers frequently justify

this activity by arguing that a “leaner and meaner”structure will ensure that the organisation maintains its competi-

tive edge (Datta, Guthrie, Basuil, & Pandey, 2010). Brockner and colleagues provide extensive evidence that layoff

survivors respond vicariously to the treatment of co-workers (e.g., Brockner et al., 2004; Brockner, DeWitt, Grover, &

Reed, 1990; Brockner, Grover, Reed, Dewitt, & O'Malley, 1987). Their findings suggest that survivors perceive unfair

treatment and often react with lowered motivation and effort. Other research shows that employee reactions are

not universal and the influence of layoffs on company performance is therefore uncertain (Schenkel &

Teigland, 2017; for reviews, see Datta et al., 2010; Datta, Basuil, & Radeva, 2012). Such differences in survivor per-

formance have been associated with different contexts or employment systems (Luan, Tien, & Chi, 2013).

We focus on employment systems in UK workplaces that consist of configurations of HRM practices which seek

to engender high commitment and involvement from employees. These practices form part of a broader high perfor-

mance work system (HPWS) that may also include other practices such as work design. In this article, we use the

term HPWS with reference to high performance HRM practices. In an HPWS workplace, management aims to

achieve the internal fit of its HRM practices as part of a Strategic HRM strategy. It establishes these practices to

elicit employee investment in company skills, proactivity, and innovation by offering long-term employment with

high wages (Wood & Wall, 2007). As employees in such workplaces are prompted to contribute by promises of

ongoing future rewards, following layoffs, survivors might be the most demotivated of employees. Yet while HPWS

has been extensively examined in relation to performance outcomes, there is scant evidence of its influence on the

layoff-performance relationship. Further, there are two major types of high performance HRM that may be associ-

ated with different employee responses to layoffs. Calculative (“hard”) HRM emphasises financial employee motiva-

tion or incentive practices, while Collaborative (“soft”) HRM emphasises humanising motivation practices

(e.g., Gooderham & Nordhaug, 2011). No major study has examined whether, following layoffs, these different types

of HPWS are associated with different performance outcomes.

Our primary aim, therefore, is to compare the layoff-performance relationship in both Calculative and Collabora-

tive contexts. We investigate the following research question: “are different types of HPWS associated with differ-

ent layoff-performance relationships?”In recent years, researchers have applied attribution theory in studies of

business organisations (e.g., Harvey, Madison, Martinko, Crook, & Crook, 2014). Using attribution theory, we develop

a framework in which to hypothesise the influence of layoff severity on workplace performance in the context of dif-

ferent employment systems both in the short term and over a longer period. In order to capture the severity of lay-

offs, we measure the proportion of employees who are laid off (Trevor & Nyberg, 2008). In most countries, one type

of HRM tends to predominate but a stream of studies has identified the co-existence of Calculative and Collabora-

tive HRM as a long-term distinguishing feature of the UK (e.g., Cook, MacKenzie, & Forde, 2016; Gooderham,

Nordhaug, & Ringdal, 1999; Jenkins & Delbridge, 2013; Legge, 2005; Machin & Wood, 2005; Storey, 1989). “The

British regime appears to be unique in that both Calculative and Collaborative practices are widespread”

(Gooderham et al., 1999:p. 526). Thus, to make our comparison, we conduct analyses of UK datasets, in the form of

two Workplace Employment Relations Surveys (WERS1998 and WERS2004).

We begin by employing cluster analysis to sort the entire range of major employment practices used in UK work-

places in 1998 into distinctive configurations, that is, employment systems. We use layoffs and the employment sys-

tem outcomes of the clustering process as explanatory variables in the regression analyses. First, we examine the

association of layoffs and employment systems with subsequent or short-term performance in 1998. Initially, we

examine layoffs and employment systems as main effects. Then our contribution is to combine these variables as

CREGAN ET AL.203