Suzanne J. Konzelmann

Corporate Governance and Human Resource Management

This paper investigates the effect of different forms of corporate governance on the structure and nature of stakeholder relationships within organizations and the consequent impact on human resource management (HRM) policy and outcomes. The analysis shows that while performance advantages can be derived from commitment-based HRM systems, a corporate governance regime that privileges remote stakeholders may operate as a constraint on such systems. The empirical analysis is based on the UK Workplace Employee Relations Survey (WERS98).

After Enron: An Age of Enlightenment?

The fall of Enron has again focused attention on the failure of mechanisms of corporate governance to protect investor interests. However, financial scandals of this kind are nothing new, particularly in periods of ‘correction’ following stock market bubbles. Moreover, there is no consensus on the wider implications of the Enron affair. Three distinct positions might be taken. According to the first, Enron’s collapse simply tells us that the existing corporate governance system is working. As The Economist put it, the unraveling of the corporate scandals ‘might actually be a reason to be more confident about corporate America’.1 Enron’s share price nosedived once news of its earnings restatements surfaced: ‘what is interesting about Enron is not the fact that the energy giant collapsed, but how fast the market brought it down’.2 Market sanctions, in the form of reputational damage to its senior managerial team and to its auditors, Arthur Andersen, served as an effective disciplinary device. Enron’s bankruptcy offers an appropriate lesson: ‘in the drama of capitalism, bankruptcy plays an essential part’.3 On this basis, there is nothing to be gained and much to be lost from wider reforms to the corporate governance system. The second point of view is more skeptical. It acknowledges that the company’s corporate governance exhibited serious failures of monitoring, which can be traced back to conflicts of interest on the part of board members and its auditors. Changes are needed: ‘if corporate America cannot deliver better governance as well as better audit, it will have only itself to blame when the public backlash becomes both fierce and unpleasant’.4 This is the agenda that shaped the Sarbanes-Oxley Act, passed by the US Congress in the summer of 2002. As a result, audit partners (although not audit firms) must now be rotated every five years and audit firms may not supply services to a Volume 10(3): 583–587 Copyright

The Export of National Varieties of Capitalism: The Cases of Wal-Mart and Ikea

Using the cases of Wal-Mart and IKEA, this paper takes a productive systems approach to examine ‘varieties of capitalism’ from the perspective of the ways by which production and market relations are structured and prioritized. It considers the nature of these relations and their interaction within the domestic economy and the ways that firms and national systems interact with each other in the global economy. It examines the processes by which trading standards are transported via supply chain relationships, which ultimately become embedded in products and recognized by consumers at various stages. In this analysis, the cases of Wal-Mart and IKEA provide insight into the ways by which national systems extend themselves globally, their contrasting effects on the business environments in host localities, and the impact of the resulting supply chain relations on organizational performance.

Varieties of Capitalism: Production and Market Relations in the USA and Japan

During the 1980s, Japan’s macroeconomic strength encouraged widespread interest in the competitive advantages associated with its organizationorientated micro-level institutions. However, with Japan’s more recent macroeconomic difficulties and prolonged stagnation, and in the light of America’s relative success, pressure for institutional reform in the direction of the American model is mounting. Liberalization of trade and capital movements has contributed to increasing economic interdependence and integration of the world’s advanced nations. Customers and investors in Japan and the USA alike are demanding that firms be increasingly responsive to changes in technologies and market requirements and that they deliver consistently high quality products and services at low prices. At the same time, the increase in foreign equity investment in Japan means that, like their American counterparts, Japanese firms are being urged to prioritize shareholder interests, deliver continuous improvement in short-term financial results and be transparent in their reporting. However, despite very similar pressures to those faced by American firms, Japan is evolving incrementally and developing a hybrid system that continues to maintain its emphasis on a resource-based approach to productive system effectiveness and organizational competitiveness. Focusing on the contrasting cases of Japan and the USA, The Embedded Corporation: Corporate Governance and Employment Relations in Japan and the United States describes developments in corporate governance and human resource management (HRM) — analysing the influence of globalization, shifts in macroeconomic performance and declining union strength on employment practices, the strategic role of HRM and the professional status of the HR executive in this context. Traditionally, Japanese firms have been what Jacoby describes as ‘organisation oriented’ while American firms have been more ‘market oriented’. This is reflected in the dominant features of their respective systems of corporate governance and work organization, where despite movement towards the American model, the Japanese system

Markets, Corporate Governance and Creative Work Systems: the Case of Ferodyn

This paper examines the difficulties associated with implementing and maintaining a ‘creative,’ human-resource based work system in a market-based system of corporate governance using the case of Ferodyn.* In response to difficult industry conditions and sagging performance, American-owned Landis* Steel Corporation and Japanese-owned Daiichi* Steel Corporation jointly financed and built Ferodyn, a state-of-the-art high quality steel finishing facility. Although the joint venture was extremely successful in terms of quality, productivity and industrial relations, it came under severe stress from both external and internal pressures. Institutional investor demands for improvements in short run shareholder value ultimately resulted in the sale of Landis to Maxi-metal*, a global steel conglomerate, committed to a strategy of cost minimisation. In effect, the American system of corporate governance and the nature of power relations in the corporation served to weaken both Landis and Daiichi’s ability to support the joint venture and Ferodyn’s ability to survive in a hostile corporate, industry and macro-economic environment.

Work Systems, Corporate Strategy and Global Markets: Creative Shop Floors or a Barge Mentality?

In the US, corporate restructuring of financial and physical assets as well as work systems has been widespread. Our study examines the inter-relationship between creative work systems and destructive markets, using a sample of US manufacturing firms in the metalworking, jet engine production and steel processing industries.

Partnership, ownership and control

Prevailing patterns of dispersed share ownership and rules of corporate governance for UK listed companies appear to constrain the ability of managers to make credible, long‐term commitments to employees of the kind needed to foster effective labour‐management partnerships. We present case study evidence which suggests that such partnerships can nevertheless emerge where product market conditions and the regulatory environment favour a stakeholder orientation. Proactive and mature partnerships may also be sustained where the board takes a strategic approach to mediating between the claims of different stakeholder groups, institutional investors are prepared to take a long‐term view of their holdings, and strong and independent trade unions are in a position to facilitate organisational change.

Corporate Governance, Stake-Holding and the Nature of Employment Relations Within the Firm

This paper investigates the effect of different forms of corporate governance on the structure and nature of stakeholder relationships within organizations and the consequent impact on employment relations within the firm. In this, HRM assumes a dual role in delivering improvements in production efficiency and in fostering employee commitment to the organization and its objectives. However, different forms of corporate governance prioritise stakeholder interests in ways that may bring these two objectives into conflict. To address these questions, we examine the interrelationship between corporate governance, HRM practices and HRM outcomes in a comparative analysis of companies operating under alternative forms of governance, including private sector, public sector and family-owned firms. The empirical analysis is based on the UK Work and Employment Relations Survey (WERS98).

Partnership in Practice

This paper examines human resource management practices adopted in a group of eight case study firms and their tendencies towards versus away from partnership. The analysis is based on data collected during interviews with 124 employees (75 in organisations tending towards partnership and 49 in organisations tending away from partnership) and senior managers, conducted in 1997-1998 for the Job Insecurity and Work Intensification Survey (JIWIS). Drawing on the perspectives of senior managers and employees, we examine the tendency of firms towards and away from partnership in employment relations; and in keeping with the JIWIS methodology (Burchell et.al., 2001) we combine quantitative and qualitative evidence in our analysis. Specifically, we are interested in what partnership looks like in these different contexts, the reasons it is pursued (or not), the degree to which companies have been successful in achieving their partnership objectives (from the perspective of both management and employees), and the conditions that have either facilitated or impeded partnership in relationships with employees.

NHS Reforms and the Working Lives of Midwives and Physiotherapists

From 2000 the NHS was subjected to a series of far reaching reforms, the purposes of which were to increase the role of the primary care sector in commissioning and providing services, promote healthier life styles, reduce health inequality, and improve service standards. These were seen as requiring a greater leadership role from health professionals, closer and more cooperative working between health professionals, and between health professionals, social services, and community and other service providers. The project surveyed a random sample of midwives and physiotherapists to investigate their perceptions of the effectiveness of the reforms, and their effects on working lives. The predominant perception was that NHS reforms had negatively affected the funding of their services; and had done little to improve service quality, delivery or organisation. Although the potential existed for the reforms to improve services, the necessary resources and required staffing were not made available and the objectives of the reforms were only partially secured by intensifying of work. The downside of this was a deterioration of the socio-psychological wellbeing of midwives and physiotherapists, especially the former, exacerbating the shortage of skilled and experienced. Shortage of staff and the associated increased work burdens were demoralising and demotivating; morale and job satisfaction declined, and job insecurity and labour turnover increased.