The Relationships of Informal High Performance Work Practices to Job Satisfaction and Workplace Profitability

• Published date: 01 July 2014
• DOI: http://doi.org/10.1111/irel.12066
• Author: Yoshio Yanadori,Danielle D. Jaarsveld
• Date: 01 July 2014

The Relationships of Informal High Performance

Work Practices to Job Satisfaction and

Workplace Profitability

*

YOSHIO YANADORI and DANIELLE D. VAN JAARSVELD

Recent empirical evidence reveals considerable divergence between management

reports and employee reports regarding organizational high performance work

practices (HPWPs). This divergence implies that employees may not participate in

some HPWPs that are formally present in their organizations, but also, that

employees may participate in HPWPs that are not formally present in their orga-

nizations. In this study, we examine the implication of the latter case (i.e.,

employee participation in “informal”HPWPs) for employee-level and organiza-

tion-level outcomes. Our analyses, using data from the Statistics Canada Work-

place and Employee Survey, suggest that employee participation in informal

HPWPs is associated with enhanced job satisfaction and workplace profitability in

a similar way as employee participation in formal HPWPs is associated with these

outcomes.

Introduction

Over the past two decades, many researchers in the human resource (HR)

field have devoted considerable effort to understanding the relationship

between HR practices and organizational performance (Blasi and Kruse 2006).

These research endeavors helped to identify high performance work practices

(HPWPs), which consist of HR practices that improve employee human capi-

tal, motivate employees to use their human capital for organizational goals,

and provide employees with opportunities to do so (Batt 2002; Huselid 1995).

Empirical studies typically capture these practices as a set and develop an

index that measures the extensiveness of HPWPs. These studies consistently

* The authors’affiliations are, respectively, School of Management, The University of South Australia,

Adelaide, Australia. Email: yoshio.yanadori@unisa.edu.au; Sauder School of Business, University of British

Columbia, Vancouver, British Columbia, Canada. Email: vanjaarsveld@sauder.ubc.ca.

The authors would like to thank Ariel Avgar, John Benson, Alexander Colvin, and Carol Kulik for helpful

comments on earlier versions of this paper, and also Tina Morganella for her editorial assistance. While the

research and analysis are based on data from Statistics Canada, the opinions expressed do not represent the

views of Statistics Canada. Lee Grenon of Statistics Canada provided valuable assistance on the project.

INDUSTRIAL RELATIONS, Vol. 53, No. 3 (July 2014). ©2014 Regents of the University of California

Published by Wiley Periodicals, Inc., 350 Main Street, Malden, MA 02148, USA, and 9600 Garsington

Road, Oxford, OX4 2DQ, UK.

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find that a higher score on these HPWP indices is associated with better orga-

nizational performance (Combs et al. 2006), and with positive individual-level

outcomes such as organizational commitment (Kehoe and Wright 2013), citi-

zenship behavior (Godard 2001), and job satisfaction (Mohr and Zoghi 2008).

Empirical research on HPWPs generally relies on two information sources:

management and employees. The studies that use information collected from

management commonly ask management to report whether or not a specific

practice is present in their organizations (e.g., Huselid 1995; Walsworth and

Verma 2007). Other studies use information collected from employees. In

these studies, employees are asked to report the extent to which the practices

they participate in are aligned with high performance HR policies (e.g., Avgar,

Givan, and Liu 2011; Godard 2001; Liao et al. 2009). These two approaches

capture the extensiveness of HPWPs in organizations from different perspec-

tives, examining the presence of formal practices from the view of manage-

ment or examining employee participation in these practices.

Several researchers have acknowledged the divergence between the presence

of formal practices and employee participation in them (Arthur and Boyles

2007); i.e., the presence of formal practices does not necessarily lead to

employee participation in these practices. Some practices may not be imple-

mented successfully and remain inaccessible to employees (Diez, Wilkinson,

and Redman 2009; Glew et al. 1995). These practices, if implemented, may

only be accessible to some employees because organizations often develop dis-

tinct HR practices for different employee groups (Lepak and Snell 1999).

We contend that divergence can also occur when employees participate in

HPWPs on an informal basis. That is, employees participate in workplace

activities even though their organizations do not formally adopt these activities

as their formal HR practices (Eaton 2003). Some activities may be spontane-

ous in the sense that line managers or employees initiate the practices without

their organizations’formal endorsement. Indeed, by examining the effects of

employee participation in HPWPs on job satisfaction, Mohr and Zoghi (2008)

found that employees often report participating in HPWPs that do not formally

exist in their organizations.

Recognition that employees participate in HPWPs both on formal and infor-

mal bases raises the following question: Is employee participation in informal

HPWPs (i.e., HPWPs that are not formally present in organizations) associated

with positive employee-level and organization-level outcomes in a similar

manner as employee participation in formal HPWPs (i.e., HPWPs that are for-

mally present in organizations) is associated with these outcomes? On the one

hand, despite their informal nature, employees still participate in practices that

are instrumental to the mechanisms by which positive employee-level and orga-

nization-level outcomes are stimulated. On the other hand, employee reactions

502 / YOSHIO YANADORI,AND DANIELLE D. VAN JAARSVELD

to HR practices may differ depending on how they interpret their organiza-

tions’HR policies (Bowen and Ostroff 2004). An ambiguous link between

organizations’formal policies and actual workplace practices may weaken the

positive impact of informal HPWPs on employee-level and organization-level

outcomes. To address this theoretical conflict, this study investigates the impli-

cations of employee participation in informal HPWPs by exploring relation-

ships to job satisfaction and workplace profitability. In so doing, we compare

these relationships to the relationships of employee participation in formal

HPWPs to the same outcomes.

To achieve our goal, we undertake two analyses with data from the Statis-

tics Canada Workplace and Employee Survey (WES). The WES consists of

two surveys with matching reports from management and employees located

in the same workplace: (1) the Workplace Survey asks management about

their workplaces with a primary emphasis on their work practices, and (2)

the Employee Survey asks employees about their degree of participation in

these practices. The matched design of WES facilitates an investigation of

divergence between management and employee reports. Comparing manage-

ment reports to the WES Workplace Survey with employee reports to the

WES Employee Survey enables us to distinguish among different types of

HPWPs. Our particular interest is in distinguishing between (1) employee

participation in formal HPWPs (i.e., employees report participating in HPWPs

that their management reports are present in the workplace), and (2)

employee participation in informal HPWPs (i.e., employees report participat-

ing in HPWPs that their management reports are not formally present in the

workplace).

Our first analysis investigates the relationship between informal HPWPs and

employee job satisfaction. Job satisfaction is a key employee-level reaction to

their work experiences that predicts turnover (Tett and Meyer 1993), absentee-

ism (Scott and Taylor 1985), and performance (Judge et al. 2001), as well as

workers’subjective well-being (Bowling, Eschleman, and Wang 2010).

Although Mohr and Zoghi (2008) have already demonstrated that employee

participation in HPWPs is associated with higher job satisfaction using the

WES, they did not examine formal HPWPs and informal HPWPs separately,

obscuring the extent to which employee participation in informal HPWPs con-

tributed to enhanced job satisfaction. The second analysis aggregates the

reports from employees to the workplace level, and examines the relationship

between informal HPWPs and workplace profitability. Since the seminal work

of Huselid (1995) and MacDuffie (1995), the impact of HPWPs on organiza-

tional performance has been the central focus of HPWP research. Yet, to our

knowledge, no research has considered the implications of employee participa-

tion in informal HPWPs for organizational performance.

Informal HPWPs / 503