Deregulation, labour market, human resource management.
Literature
Askenazy and Forth (2016) mention the “literature on strategic HRM suggests that workplaces will gain additional advantages if they adopt a comprehensive strategy which includes practices across a variety of domains, utilise a bundle of HRM practices”, suggesting that implementing a range of practices that fit strategy leads to better organisational outcomes.
Hughes (2008) claims those workplaces making high investments in workforce training can expect positive benefits, “since the literature on ‘high-performance’ work practices suggests that a skilled workforce is a necessary complement to methods of work organisation which require employees to work in semi-autonomous teams and to engage in problem-solving activities”. Although not relevant to employees who don’t work in the teams described, this suggests a tailoring of practices to maximise the benefits.
Croucher, R. et al (2012) uses high turnover rates as a measure of employee commitment, recognising that overly high or low turnover rates are both negative for the firm. In linking satisfaction to turnover this firm-centric view fails to consider wider factors acting on the employee from outside the firm that cause exit.
Davidson et al (2010) state that high turnover has “immediately harmful effects and high costs”. The authors point out that their study focused on the tangible costs to firms with a specific sector. This does not take account of the intangible assets that are lost by a firm as a result of high exit rates, and raises questions of whether high turnover rates affect choices to not invest in intangible asset generation activities, which in turn increase the turnover rate.
Huselid & Becker (1998) claim HRM positively correlated to an increase in productivity through reduced turnover, and discuss how there is “a new interest in "people" as a source of competitive advantage, rather than a cost to be minimized.”. Their assertion that, ”A skilled and motivated workforce” … “has increased the strategic importance of HRM issues at a time when traditional sources of competitive advantage have become easier to imitate.” suggests that how firms utilise the intangible assets their people create becomes an indirect benefit of a deregulated labour market.
Gooderham et al. (1999) “identified two principal ways of working within the HRM paradigm: ‘calculative’ and ‘collaborative’. Firms with collaborative HRM are more centred on promoting communication as a means for greater organizational effectiveness, while firms with a calculative approach see employees as a disposable resource.” The duality of the principals fails to allow for firms selecting some collaborative and some calculative strategies, and the flexibility to shift between, but succeeds in its implication that firms enabling employees to have more power within the firm is likely to achieve greater productivity.
Deregulation of the labour market is commonly believed to increase productivity and performance, but a direct correlation remains uncertain. It seems more likely that any benefits occur indirectly through firms having the freedom to bundle HRM practices as they see fit (Askenazy and Forth 2016) in order to tackle low-trust relationships that occur in liberal market economies (Blyton & Turnbull, 2004) and contribute towards firm productivity through such mechanisms as voice to secure greater commitment from employees.
Askenazy, P. and Forth, J. (2016) “Work organisation and human resource management”. In Amosse, T. et al. (eds.) Comparative Workplace Employment Relations. London: Palgrave, pp. 141-178.
Hughes, Jason. (2008). The High-Performance Paradigm: A Review and Evaluation. Learning as Work Research Paper, No. 16. March 2008
Croucher, R. et al. (2012) “Employee turnover, HRM, and institutional contexts”, Economic and Industrial Democracy 33 (4): 605-620.
Davidson, Michael C.G.; Timo, Nils; Wang, Ying. How much does labour turnover cost?: A case study of Australian four- and five-star hotels. International Journal of Contemporary Hospitality Management, Volume 22, Number 4, 2010, pp. 451-466(16). Emerald Group Publishing Limited
Huselid, M. & Becker, E., (1998). High performance work systems and firm performance: A synthesis of research and managerial implications. Research in Personnel and Human Resource Management. 16. 53-101.
Blyton, P. & Turnbull, P., (2004) The Dynamics of Employee Relations. Macmillan International Higher Education, 6 Apr 2004.
Gooderham, Paul & Ringdal, Kristen & Parry, Emma. (2006). The impact of human resource management practices on the performance of European firms.
Farndale, E., Brewster, C., Poutsma, E. (2008) “Coordinated vs. liberal market HRM: the impact of institutionalization on multinational firms”, International Journal of Human Resource Management 19 (11): 2004-23.