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The Wage Effects of High Performance Work Organization in Manufacturing

Author

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  • Paul Osterman

Abstract

An unresolved question about now-widespread innovative work systems such as teams and quality programs is whether they influence wage determination. This study examines that possible association in manufacturing. The author uses data from the 1997 National Establishment Survey that allow examination of how new work systems affected not only employees who were directly involved in them but other workers as well. The key finding is that for core blue-collar manufacturing employees, higher wages were associated with High Performance Work Organization (HPWO) systems. While higher skill levels and computer-based technologies were associated with higher wages, the key mechanism appears to have been productivity gains, independent of skill and technology , that were shared via various across-the-board wage payment systems. HPWO systems appear to have increased managers' wages as well, although through different channels. The author finds no evidence that HPWO-related wage gains led to greater wage inequality among the directly involved employees.

Suggested Citation

  • Paul Osterman, 2006. "The Wage Effects of High Performance Work Organization in Manufacturing," ILR Review, Cornell University, ILR School, vol. 59(2), pages 187-204, January.
    • Handle: RePEc:sae:ilrrev:v:59:y:2006:i:2:p:187-204
    DOI: 10.1177/001979390605900201
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    References listed on IDEAS

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    2. Mane, Ferran & Miravet, Daniel, 2016. "Using the job requirements approach and matched employer-employee data to investigate the content of individuals' human capital," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 49(2), pages 133-155.
    3. Flores-Fillol, Ricardo & Iranzo, Susana & Mane, Ferran, 2017. "Teamwork and delegation of decisions within the firm," International Journal of Industrial Organization, Elsevier, vol. 52(C), pages 1-29.
    4. Rocio Bonet, 2014. "High-Involvement Work Practices and the Opportunities for Promotion in the Organization," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 53(2), pages 295-324, April.
    5. Oded Stark & Walter Hyll, 2011. "On the Economic Architecture of the Workplace: Repercussions of Social Comparisons among Heterogeneous Workers," Journal of Labor Economics, University of Chicago Press, vol. 29(2), pages 349-375.
    6. Annalisa Cristini & Tor Eriksson & Dario Pozzoli, 2013. "High-Performance Management Practices and Employee Outcomes in Denmark," Scottish Journal of Political Economy, Scottish Economic Society, vol. 60(3), pages 232-266, July.
    7. Ota, Hitoshi, 2018. "Adoption of High Performance Work Organization, trade unions and employment redundancy in India," IDE Discussion Papers 723, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    8. Riccardo Leoni & Paola Gritti, 2017. "Institutional Wage Setting, Distinctive Competencies and Wage Premia," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 3(1), pages 71-111, March.
    9. John Godard, 2007. "Unions, Work Practices, and Wages under Different Institutional Environments: The Case of Canada and England," ILR Review, Cornell University, ILR School, vol. 60(4), pages 457-476, July.
    10. Alex Bryson & Michael White, 2016. "When does HRM 'Work' in Small British Enterprises?," DoQSS Working Papers 16-01, Quantitative Social Science - UCL Social Research Institute, University College London.
    11. Beckmann, Michael & Kuhn, Dieter, 2010. "Complementarities between workplace organisation and human resource management : evidence from Swiss firm-level panel data," Working papers 2010/03, Faculty of Business and Economics - University of Basel.
    12. Uwe Jirjahn & Kornelius Kraft, 2010. "Teamwork And Intra‐Firm Wage Dispersion Among Blue‐Collar Workers," Scottish Journal of Political Economy, Scottish Economic Society, vol. 57(4), pages 404-429, September.
    13. Hauff, Sven & Kirchner, Stefan, 2014. "Changes in workplace situation and work values. Relations and dynamics within different employment regimes," management revue - Socio-Economic Studies, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 25(1), pages 27-49.
    14. Riccardo Leoni, 2013. "Organization of work practices and productivity: an assessment of research on world- class manufacturing," Chapters, in: Anna Grandori (ed.), Handbook of Economic Organization, chapter 17, Edward Elgar Publishing.
    15. Petri Böckerman & Alex Bryson & Pekka Ilmakunnas, 2013. "Does high involvement management lead to higher pay?," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 176(4), pages 861-885, October.
    16. Constantin ANGHELACHE & Marius POPOVICI, 2017. "Financial market analysis models," Romanian Statistical Review Supplement, Romanian Statistical Review, vol. 65(6), pages 174-183, June.
    17. Lollo, Niklas & O’Rourke, Dara, 2018. "Productivity, Profits, and Pay: A Field Experiment Analyzing the Impacts of Compensation Systems in an Apparel Factory," Institute for Research on Labor and Employment, Working Paper Series qt31c4j2hz, Institute of Industrial Relations, UC Berkeley.
    18. Rosemary Batt & Hiroatsu Nohara & Hyunji Kwon, 2010. "Employer Strategies and Wages in New Service Activities: A Comparison of Co‐ordinated and Liberal Market Economies," British Journal of Industrial Relations, London School of Economics, vol. 48(2), pages 400-435, June.
    19. Peter B. Doeringer & Pacey Foster & Stephan Manning & David Terkla, 2013. "Project-based industries and craft-like production: structure, location and performance," Chapters, in: Frank Giarratani & Geoffrey J.D. Hewings & Philip McCann (ed.), Handbook of Industry Studies and Economic Geography, chapter 4, pages 99-151, Edward Elgar Publishing.
    20. Rocio Bonet & Tor Eriksson & Jaime Ortega, 2019. "Up for Review: Unravelling the Link between Formal Evaluations and Performance‐Based Rewards," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 58(1), pages 108-137, January.
    21. Aurelian DIACONU & Alexandru BADIU & Doina AVRAM & Doina BUREA & Marius POPOVICI, 2017. "Operational Risk Management," Romanian Statistical Review Supplement, Romanian Statistical Review, vol. 65(5), pages 221-229, May.

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