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Effectively management of people can produce substantially enhanced economic performance. A plethora of terms have been used to describe such management practices: high commitment, high performance, high involvement, and so forth. I use these terms interchangeably, as they all tap similar ideas about how to obtain profits through people. I extract from the various studies, related literature, and personal observation and experience a set of seven dimensions that seem to characterize most if not all of the systems producing profits through people.
Employment security.
Selective hiring of new personnel.
Self-managed teams and decentralization of decision making as the basic principles of organizational design.
Comparatively high compensation contingent on organizational performance.
Extensive training.
Reduced status distinctions and barriers, including dress, language, office arrangements, and wage differences across levels.
Extensive sharing of financial and performance information throughout the organization.
This list is somewhat shorter than my earlier list of sixteen practices describing "what effective firms do with people,"1 for two reasons. First, this list focuses on basic dimensions, some of which, such as compensation and reduction of status differences, have multiple components that were previously listed separately. Second, some of the items on the previous list have more to do with the ability to implement high-performance work practices-such as being able to take a long-term view and to realize the benefits of promoting from withinthan with describing dimensions of the practices themselves. It is, however, still the case that several of the dimensions of high-performance work arrangements listed, for instance employment security and high pay, appear to fly in the face of conventional wisdom. This article outlines these practices, provides examples to illustrate both their implementation and their impact, and explains their underlying logic.
Employment Security
In an era of downsizing and rightsizing-or, as Donald Hastings, CEO of Lincoln Electric, called it in a speech to the Academy of Management in 1996, "dumbsizing"-how can I write about employment security as a critical element of high-performance work arrangements? First, because it is simply empirically the case that most research on the effects of high-performance management systems have incorporated employment security as one important dimension in their description of these systems. That is because "one of the most widely accepted propositions . . . is that innovations in work...