People Management Practices that Underpin Lean Management Outcomes

Abstract

While evidence exists for an association between people management practices (PMP), firm characteristics and lean manufacturing practices (LMP), there is limited research focusing on different sized firms. What is not understood is (1) what PMP bundles are chosen by different sized firms which adopt LMP, and (2) what firm characteristics play a role in explaining these choices. The empirical evidence is based on archival data sourced from the world management dataset comprising of 299 Australian and New Zealand manufacturing firms. Using path analysis and disaggregated data on a set of commonly adopted PMP, we test for six PMP, namely, instilling a talent mindset, promoting, rewarding, retaining and attracting high performance as well as removing poor performers; and identify PMP chosen by firms which have a lean manufacturing strategy (LMS) and that adopt LMP. We find that relatively smaller firms that adopt many LMP also chose removing poor performers and promoting high performers to complement their LMS. The education level of management in those same relatively smaller sized firms is found to be a key factor explaining this PMP bundle. Deeper inspection of the results reveals differences between smaller versus larger firms. The study contributes to lean and people management literature that helps identify bundles of PMP chosen by different sized enterprises to complement their lean manufacturing strategy and practices.