Content uploaded by Henry A. Hornstein
Author content
All content in this area was uploaded by Henry A. Hornstein on Mar 10, 2016
Content may be subject to copyright.
THE WATSON WYATT HUMAN CAPITAL INDEX® AND COMPANY
PERFORMANCE:
A DEFINITE IMPACT ON SHAREHOLDER WEALTH
Henry Hornstein
Concordia University
Richard Luss
Watson Wyatt Worldwide
Owen Parker
Watson Wyatt Worldwide
Paper presented at the 2002 International Management Conference, Society for Advancement of
Management, McLean, Virginia, April 5 – 8, 2002
Abstract
There has been renewed interest in identifying the contribution of sound human resource
management to increasing organizational value. Watson Wyatt’s Human Capital Index® (HCI)
has been described as an effort to quantify the links between superior human capital
management and a firm’s financial performance. Specifically, it has been suggested that
significant improvement in thirty key HR practices that are organized into five dimensions is
associated with a considerable increase in shareholder value. The information presented here
has clearly demonstrated the sizable, financial advantage contributed by the effective
management of human resource management systems.
Introduction
For much of the latter part of the twentieth and the beginning of the twenty-first
centuries, the paradigm change that seems to have swept the marketplace has called on
organizations to either find innovative ways to survive or pass into oblivion. Nonetheless, the
newspapers and business magazines, like Fortune, are replete with examples of organizations
that have used significant downsizings (Florian, 2001) as cost-saving measures in reaction to
their drastically reduced sales and income. According to the Bureau of Labor Statistics from the
U.S. Department of Labor, mass layoffs increased 36% from 2000 to 2001. Notwithstanding that
there are circumstances in which “rightsizing” is an appropriate response to business conditions,
there are many others when, instead of facing the challenge inventively, have reacted as has been
their habit for decades. That is, they have bet that the one best way to ensure their future survival
and prosperity is compliance to “tried and true” control-based practices. In fact, there is evidence
to indicate that significant restructurings are only likely to be successful in the long run when
combined with more participatory practices. In fact, it has been argued that successful firms
actually pursue a contrarian strategy of increasing investments and building stronger
relationships with other industry stakeholders during periods of a downturn (e.g., Rigby, 2001).
Business academics, analysts, commentators, economists, and the popular press have
32
continuously noted that something is going on that is unpredictable and that largely defies
unequivocal explanation. The implication then becomes that one must try new ways of
generating wealth in order to counteract this downward spiral. George Elton Mayo catalogued
his observations of the significant influence of interpersonal and person-workspace interactions
on the effectiveness of employee performance during his time at the Hawthorne Works of the
General Electric Company in Chicago between 1924 and1927; this can be construed as one of
the seminal demonstrations of how “people factors” could contribute to positive organizational
performance (Mayo, 1945; Weisbord, 1987).
In the current paper, an attempt is made to argue for the robustness of the relationship
between the presence of certain human resource management practices and firm financial
performance as measured by objective financial indicators such as three- and five-year total
returns to shareholders (TRS) and Tobin’s Q, a ratio which allows one to determine an
organization’s ability to create value beyond its physical assets. Specific reference is made to the
efforts that have been undertaken by Watson Wyatt Worldwide in this vein because of their
diligence in undertaking quantitative analyses over time and identifying reliable results.
Although the current recession has led organizations to place a particular emphasis on cost
reductions leading, as we have seen, to sharp increases in layoffs, past experience indicates that
the recession is likely to be short in duration and will have little discernable impact on the long
run demand for labor. For demographic reasons alone, developed countries are likely to face
substantial labor shortages as baby boomers retire unless they are able to achieve higher levels of
productivity growth or significantly increase labor force participation rates. Either of these would
likely require innovative approaches on the part of organizations.
Some History of the Value of People to Organizational Performance
With the earliest Human Relations theorists, workers' needs were for sociability. For
example, Kurt Lewin, who was one of the most influential forces in the development of
participative work design and reorganization during the 20th century, integrated the examination
of scientific thinking with democratic values and suggested that all organizations are systems
whose performance requires a joint consideration of work and social processes (Lewin, 1947,
1952). Then, following Maslow's postulation of a hierarchy of needs, attention focused on
responsibility and autonomy, the opportunity to self-direct, self reward and self-actualize
(Herzberg, Mausner, & Snyderman, 1959; MacGregor, 1960). Later, work motivation was
closely tied to workers' needs for a participative or democratic leadership style supported by a
flat organizational structure (Likert, 1976). Following these observations, there have been
numerous bursts of attention devoted to identifying the relationship between human resource
management and organizational effectiveness. As an example, Sociotechnical Systems (STS)
theory (Cherns, 1976, 1987; Emery & Trist, 1960; Pasmore, 1988; Trist, 1981; Trist & Bamforth,
1951) proposes that work design should jointly optimize the social and technical systems of an
organization. STS proponents argue that work designs based upon purely technical perspectives
are sub-optimal. This holistic approach to work and organization design emphasizes fit and
interdependence (Lawler, 1996; Macy, Thompson, & Farias, 1995) between the design features
of the organization as well as between the organization and its environment. According to Trist
(1981), the STS perspective represents a paradigm shift in the design of work and organizations.
33
STS has been applied in a variety of settings throughout the world (Cummings & Worley,
1997; Pasmore, 1988) and has achieved positive results as measured by dependent variables such
as productivity, product quality, employees’ quality of work life, and employee behaviors (such
as safety, absenteeism, and turnover). In addition, the rubric “High Performance Organization”
(Hanna, 1988; Lytle, 1998; Varma, Beatty, Schneier, & Ulrich, 1999) recently has been coined to
describe organizations that deliver high quality products and customer service, while
contiguously building community among their employees, the realization being that persistent
organizational performance improvement is a consequence of devoting attention to the
continuous improvement of the employee work environment as well as to the continuous
improvement of work process.
This examination of the importance of social system components of an organization
together with the impact on organizational effectiveness manifested itself in the 1980s as the
adoption of the “new plant model” (high performance/high commitment work systems, flat
structure, team-based, etc.) by between 300 and 500 manufacturing organizations (Lawler,
1990). Arguably, Procter & Gamble has been the most frequent implementer of this model. Since
the company first used the model in the late 1960s, every new plant it has built has been model-
based, giving it a total of more than 15 new participative plants (Hanna, 1988; Lawler, 1990).
Converting old plants to the new plant model has proved to be a difficult challenge. This
is because they tend to have deeply-entrenched control-oriented cultures; their managers and
employees were selected and socialized to work in a non-participative setting; and their physical
layouts often prevent the formation of teams. Nonetheless, conversions have occurred with
increasing frequency in such companies as Amoco, Eaton Corporation, General Mills, Inc., The
Mead Corporation, The Procter & Gamble Company, and TRW, Inc. Each of them has
successfully converted a number of their older facilities (Lawler, 1990).
Organizations that have been most successful at converting older facilities (like those
mentioned above), those that have successfully undertaken new plant start-ups (e.g., Nova
Chemicals Ltd., Procter & Gamble, Saturn), and those that have maintained new-model facilities
(e.g., the seminal Gaines Dog Food plant in Topeka, Kansas, Nova Chemicals Ltd.-Red Deer,
Shell-Sarnia, Shell-Scotford, and Syncrude) are typically the ones that have paid particular
attention to systemic change management, the integration of the work and social systems through
work re-organization (which includes team effectiveness, job rotation, and multiskilling),
redesign of pay systems, the institution of formal participatory mechanisms (e.g., quality circles,
town hall meetings, large-group decision-making and planning processes), and the altered role of
the manager. These so-called alternative work practices (AWPs) are usually complemented by a
variety of HR management practices, among them, sophisticated selection procedures, intensive
training, a no lay-off policy, and reductions in pay and status differentials (Godard, 2001;
Lawler, 1988, 1990; Pfeffer, 1998). The preceding seems to provide ample support for the
existence of a positive relationship between the presence of HR practices that sustain high
involvement-high commitment organizational systems and improved organizational
effectiveness. Notwithstanding this, however, critical scholars have suggested that the positive
effects of AWPs are largely restricted to managerial outcomes and obtained at the expense of
employees through work intensification and “management by stress” (Delbridge & Turnbull,
1992; Parker & Slaughter, 1995; Turnbull, 1988; Wells, 1993). Others have suggested that the
relationship between AWPs and performance improvement is more complex, depending on
34
whether employers adopt a “commitment” or “sociotechnical” approach that they associate with
a “team” organization rather than the control or “low-cost” approach that they associate with a
“lean” organization (e.g., Berggren, 1992; Matthews, 1994; Shaiken, Lopez, & Mankita, 1997).
The former rely on truly autonomous teams performing enriched tasks that include psychosocial
factors such as belongingness, task involvement, and empowerment. The latter demonstrate few
changes in authority relations or the actual content of work and, instead, focus on cost cutting
and intensification of the work process. Godard (2001) has suggested that negative effects may
be attributable to a failure on the part of employers to adopt complementary HRM policies that
would ensure that workers are able to cope with high levels of discretion and responsibility.
Luss & Nyce (2002) examined a sample of firms that engaged in significant restructuring efforts
in the early 1990s. They categorized firms based on their ability to achieve their restructuring
goals and on the impact of the restructuring on the firm’s ability to attract and retain quality
employees. They found that the industry-adjusted TRS over the subsequent five-year period
following a restructuring is only substantially higher when these firms have achieved their goals
without impairing their ability to attract and retain quality employees. Luss & Nyce (2002)
demonstrated that these firms are more likely to emphasize the importance of communications,
employee and managerial involvement, and training programs than unsuccessful restructurers.
HR Practices and Firm Performance
Pettigrew, Woodman, and Cameron (2001) have reported on two programs of
international comparative work underway involving groups of international scholars led from the
United States and Britain. The current most notable examples of such work are the New
Organizational Forms for the Information Age (NOFIA) program coordinated by Lewin
(Lewin, Long, & Caroll 1999; Lewin & Volberda, 1999) and INNFORM program coordinated
by Pettigrew (Pettigrew & Fenton, 2000). The NOFIA program is building a database of
organizational change events occurring within the largest corporations in Germany, Japan,
Korea, the Netherlands, Scandinavia, Switzerland, the United Kingdom, and the United States,
using business-related information and news sources available from the Lexis Nexis on-line
database. The INNFORM researchers aim to examine the extent to which new forms of
organizing have been implemented among large and medium-sized firms across Europe, the
United States, and Japan, to test the performance effects of adopting new organizational forms
and to examine the managerial processes of moving from more traditional forms of organizing.
The complete findings of these programs of research are beyond the scope of this paper,
but the interested reader is referred to Pettigrew and Fenton (2000), Pettigrew, Massini, and
Numagami (2000), Ruigrok, Pettigrew, Peck, and Whittington (1999), and Whittington,
Pettigrew, Peck, Fenton, and Conyon (1999) for more detail. However, a number of findings are
important to note:
1. The trend data comparing the adoption of innovative forms of organizing in Europe,
Japan, and the United States have shown a common direction of change with different
starting points and involving different paces. Broadly, the findings indicate an
incremental rather than a radical pattern of innovation in organizations. Organizations
across the three regions appeared in the 1990s to be supplementing existing
organizational forms rather than supplanting them.
35
2. However, within this pattern of homogeneity, there were big, statistically significant
differences in some of the indicators of innovation within Europe, between Europe and
Japan and the United States and Japan.
3. In the 1990s, the pace of organizational change was appreciably more incremental in
Japan than in Europe and the United States, but the pace of innovation was generally
much faster in Europe than in Japan.
4. In Europe, exploration of the complementarities theory indicated a strong association
between whole-system change and firm performance. Whole-system change here meant
changing structures, processes, and boundaries. Firms that made part-system and/or
programmatic changes, notably those that changed structures and boundaries but not
processes, revealed a negative association with organizational performance. This finding
is consistent with work in North America that indicates successful system-wide change
requires use of multiple change levers, many of which involve various work processes
(Macy & Izumi, 1993; Robertson, Roberts, & Porras, 1993).
There have been few published accounts that have specifically explored the quantitative
relationship between HR practices and firm financial performance in the United States and
Canada. However, the increasing size of this literature reflects the growing awareness of its
importance. Ichniowski (1990), using survey data that sampled the presence or absence of
particular HR management practices, obtained results consistent with the hypothesis that High
Performance Work Practices positively influence market measures of firm performance (Tobin’s
Q). Huselid (1995) showed a positive relationship between two measures (Employee Skills and
Organizational Structures, and Employee Motivation) and an index similar to Tobin’s Q.
However, only the Employee Skills and Organizational Structures dimension had a statistically
and economically significant influence on a measure of accounting profits. Huselid & Becker
(1997) used a sample of publicly-held domestic firms that had more than 100 employees and $5
million in sales drawn from Compact Disclosure, a commercial database comprised of annual
corporate 10-K filings. They focused on a variant of the familiar Tobin’s Q as their dependent
variable (Hirschey & Wichern, 1984), and their final sample consisted of 548 firms. They
concluded, “[H]igh performance HR system will have an economically positive and significant
effect on firm performance” (p. 12). In fact, they maintained that a one standard deviation
increase in the occurrence of the factors linked with a High Performance Work System was
associated with a $42,000 per employee increase in market value. Moreover, Becker and
Huselid’s (1998) and Macy and Izumi’s (1993) work has buttressed the notion that systems of
HRM practices, rather than individual practices and policies in isolation should be the most
appropriate level of analysis because they more accurately reflect the multiple paths through
which HRM policies and work practices will influence successful strategy implementation.
The preceding seems to provide ample support for the existence of a positive relationship
between the presence of certain HR practices that sustain high involvement-high commitment
organizational systems and improved organizational effectiveness and financial performance.
The following section demonstrates how results obtained by Watson Wyatt Worldwide in three
consecutive surveys support this relationship.
36
Watson Wyatt Worldwide and the Human Capital Index ® (HCI)
Watson Wyatt Worldwide is a global consulting company formed in 1995 by the
amalgamation of two actuarial and benefits firms, the United Kingdom’s R. Watson and Sons
and U.S.-based The Wyatt Company. Today, it is a global consulting firm focused on human
capital and financial management.
In 1999, Watson Wyatt Worldwide reported the results from a survey that was
administered to 405 U. S.- and Canada-based companies that were publicly traded had at least
three years of shareholder returns and had sales or market value in excess of $100 million as of
their most recent fiscal year end. Financial performance information and other control variables,
such as R&D and Advertising expenses, and annual sales and leverage were culled from
Standard and Poor’s Compustat® dataset. Items measuring human resource practices in five
areas--recruiting excellence; clear rewards and accountability; a collegial, flexible workplace;
communications integrity; and prudent use of resources--were combined into a set of factor
scores to be used to estimate the effect of HR practices and policies on overall firm performance,
as measured by the natural log of Tobin’s Q. These five HR practice areas and the particular
survey items that appear in each are consistent with the high performance work practices that
have been identified by Becker and Huselid (1998) as impacting positively on firm financial
performance. Moreover, Watson Wyatt found that practices such as developmental training and
360-degree feedback, which were grouped together as those requiring a prudent use of resources,
were associated with lower firm performance, perhaps due to difficulties in their implementation.
The estimated betas for the HR dimensions were then used as weights for those dimensions, and
each company received a standardized index score on a scale of 0 to 100, with 100 representing
ideal human capital management. This standardized score was designated the Human Capital
Index® (HCI) score (Watson Wyatt Worldwide, 1999). In addition to reporting the relationship
between HR practices and current performance, Watson Wyatt found that High HCI firms (those
with HCI scores above the mean) continued to outperform Low HCI firms over the two years
following the administration of the HCI questionnaire (see Figure 1).
Figure 1: 1999 HCI Scores and Subsequent Firm Performance
HCI Score 1999 TRS 2000 TRS Cumulative
High HCI 46.2% 9.3% 59.8%
Low HCI 0.2% 3.2% 3.4%
In 2000, a European HCI survey was conducted to gain a more global perspective on
these issues. More than 250 responses from 16 countries were received. The survey included
over 200 questions, was available in six languages, and covered companies of all sizes and from
all sectors of the economy --although more than a third of participants were in the Euro
500 and more than a quarter were in the Global 500. The findings from the European study were
similar to the North American results, with improvements in 19 key HR practices associated with
a 26% increase in market value (Watson Wyatt Partners, 2000). It is noteworthy that there were
other important similarities between the European and North American studies.
37
1. Employee stock ownership drives value. The use of shares as employee remuneration is
increasingly common in North America and has recently emerged in Europe. Although
the norms were higher for North American firms than for European firms, the practice
has a similar positive consequence on both continents and is associated with increases of
approximately 1.7% to 1.8% in value.
2. Excellent recruiting adds value. Recruiting has a stronger association with increased
shareholder value in the North American study. It is thought that this reflects both the
“employment at will” culture and comparatively higher staff turnover in the U.S., where
individuals may only have a very short time to make a contribution and where rapid
economic growth combined with skill shortages have created a fluid recruitment market.
3. 360-degree feedback needs to be an integrated initiative. Both the North American and
European studies initially found 360-degree feedback associated with a loss of value. The
additional data available in Europe allows the demonstration that 360-degree feedback
can be positive but only when it is carefully integrated with other leadership programs.
4. Employee focus communications integrity. Providing employees with business
information together with the authority to put that information to work are critical factors
associated with creating shareholder value.
In early 2001, the HCI research was conducted again; this time including responses from
more than 500 North American companies. In this most recent research, the participants reflected
a broader view of business and included some larger, more prominent firms --with average
annual sales of $4.68 billion, $8.45 billion in market value, and 18,697 employees on average.
Fifty-one of these companies participated in both the 1999 and 2001 surveys. The European and
new North American data were then merged. The result is a complete respondent base of more
than 750 companies in the United States, Canada, and Europe with at least three years of
shareholder returns, 1,000 or more employees, and a minimum of $100 million in revenues or
market value. The results of this research are remarkably congruent with those obtained in the
previous two. That is, the better an organization performs in managing its human capital (as
measured by the HCI), the better its returns for shareholders. Figure 2 shows that those
companies that scored in the low HCI group averaged a 21% five-year return. The medium group
averaged 39%. Those with high HCI scores returned 64% over five years.
Figure 2: Five -Year Total Returns to Shareholders (April 1996-April 2001)
HCI Score Financial Performance
Low HCI companies 21% TRS
Medium HCI companies 39% TRS
High HCI companies 64% TRS
38
Also, similar to the previous findings, the five HR practice areas continued to positively
impact a company’s market value. Figure 3 specifies the exact relationship demonstrated by the
collected data (Watson Wyatt Worldwide, 2001). Although the results are not exactly
comparable since the survey was extended between 1999 and 2001 to include an analysis of the
role of technology, the impact of benefits, and the effect of reducing voluntary employee
turnover, the results are reasonably similar.
Figure 3: Key Links Between Human Capital and Shareholder Value Creation
Practice Impact on market
value 1999
Impact on market value 2001
Total Rewards and Accountability 9.2% 16.5%
Collegial, Flexible Workplace 7.8% 9.0%
Recruiting and Retention Excellence 10.1% 7.9%
Communications Integrity 4.0% 7.1%
Focused HR Service Technologies n.a. 6.5%
There was another notable result. Some practitioners and scholars have argued that the
positive relationship between company financial performance and HR best practices is more a
reflection of successful firms financing HR practices out of their abundant profits than excellent
HR practices leading to better performance. It seems intuitive that high performance HR
practices would contribute to improved company economic performance. It is also intuitive to
predict that this result would encourage increased investment in even better HR practices, richer
benefits packages, and higher performance-contingent pay which would attract better employees,
in effect, creating a virtuous cycle. Nonetheless, Watson Wyatt set out to investigate the truth of
this hypothesis explicitly. There were 51 companies that had participated in both the original and
the follow-up HCI studies. Moreover, Watson Wyatt possessed the HCI scores and financial
performance information for these organizations for 1999 and 2001. To determine the direction
of the relationship between HCI scores and financial performance, two correlations were
calculated:
1. Between the 1999 HCI score and 2001 financial performance, and
2. Between 1999 financial performance and 2001 HCI scores.
Correlation one was .41, while Correlation two was only .19. The analysis was interpreted to
demonstrate that HR practices are not only associated with business outcomes, but also create
them, rather than merely being created by them. A conclusion was that human capital practices
were seen as a leading--rather than a lagging--indicator of business success (Watson Wyatt
Worldwide, 2001).
In summary, then, Watson Wyatt has suggested, “[I]t pays to manage people right”
(Watson Wyatt Worldwide, 2001, p. 11). They believe that the survey results obtained from both
the European and North American samples since 1999 have confirmed that superior HR
practices drive financial results more than superior financial results drive HR practices.
39
Moreover, they maintain that, if the right people are hired and if an environment is created that
supports creative thinking and increased productivity leveraged by technology, rewards to the
organization in the form of superior financial performance will result.
Conclusion
This paper has demonstrated that there is a strong foundation for the expectation that
superior human capital strategies will be reflected in valued firm-level outcomes. Applebaum,
Bailey, Berg, and Kalleberg (2000) have suggested that participative practices, incentives, and
skills will result in employee discretionary effort which is the mediating factor in the HR
practice-firm performance relationship. Their analyses have supported the work of Watson Wyatt
Worldwide and the others that have been cited above and have verified that the institution of
high performance work practices do indeed have a positive effect on the competitiveness of the
adopting firms, increasing efficiency and providing for greater firm capacity for responsiveness
to their consumers, for customization of product and delivery to suit customer needs, and for
high-quality production. Moreover, Becker, and Huselid (1998) have suggested that the
discretionary application of employee “local knowledge” constitutes the firm’s intellectual
capital.
There is tentative evidence to suggest that it is more effective to adopt a systemic and
holistic approach to the improvement of the HRM system than to optimize individual elements.
For example, Watson Wyatt Worldwide’s (2001) survey data demonstrated a 47% improvement
in an organization’s market value if it adopted the entire five HR dimensions (total rewards and
accountability; collegial, flexible workplace; recruiting and retention excellence;
communications integrity; and focused HR service technologies) as opposed to a maximum of
16.5% for the adoption of only one dimension (total rewards and accountability).
It was stated earlier that organizations that default to economically negative approaches
to improve financial performance and competitiveness may be needlessly squandering
potentially useful social resources while missing opportunities that could lead to substantial
future growth. The reviewed literature taken together with the Watson Wyatt research results
presented here have clearly demonstrated the sizable, financial advantage contributed by the
effective management of human resource management systems, thereby questioning an often
“knee-jerk” response by business to challenging economic times. That is, it seems that a strategic
decision that could be contemplated if not adopted is that organizations be more deliberate about
considering alternatives that balance the impact on human and technical resources rather than
leaping to the conventional approach to dealing with downturns, which may reduce costs in the
short-run but lead to increased costs or lost opportunities in the long-run. All of this is not to say,
however, that CEOs of an organization can hope to realize fiscal benefit by solely targeting the
HRM system for change. Human resource management sits in an organizational context that
includes many other subsystems. Relatively little work has been devoted to the attempt to
identify those other elements of the organizational context that might complement the HR
management system. The identification of this range of complementarities is important work that
still needs to be done (Huselid & Becker, 1997).
40
REFERENCES
Applebaum, E., Bailey, T., Berg, P., & Kalleberg, A. L. (2000). Manufacturing advantage: Why
high-performance work systems pay off. Ithaca, NY: Cornell University Press.
Becker, B. E., & Huselid, M. A. (1998). High performance work systems and firm performance:
A synthesis of research and managerial implications. Research in Personnel and
Human Resources Journal, 16, 53-101.
Berggren, C. (1992). Beyond lean production. Ithaca: ILR Press.
Bloom, D. E., Canning, D., & Sevilla, J. (2001). Economic growth and the demographic
transition. NBER Working Paper 8685.
Boersch-Supan, A. (2001). Labor market effects of populations aging. NBER Working Paper
8640.
Cherns, A. B. (1976). The principles of sociotechnical design. Human Relations, 29, 783-792.
Cherns, A. B. (1987). Principles of sociotechnical design revisited. Human Relations, 40, 153-
162.
Cummings, T. G., & Worley, C. G. (1997). Organization development and change (6th ed.).
Cincinnati: South Western College Publishing.
Delbridge, R., & Turnbull, P. (1992). Human resource maximization: The management of labor
under just-in-time manufacturing systems. In P. Blyton & P. Turnbull (Eds.),
Reassessing human resource management. London:Sage.
Emery, F. E., & Trist, E. L. (1960). Socio-technical systems. In C. W. Churchman et al. (Eds.),
Management sciences, models, and techniques. London: Pergamon.
Florian, E. (2001). Layoff count. Fortune, 144, 40.
Godard, J. (2001). High performance and the transformation of work? The implications of
alternative work practices for the experience and outcomes of work. Industrial &
Labor Relations Review, 54, 776-805.
Graig, L., Haley, J., Luss, R., & Schieber, S. (2002). The perfect (demographic) storm: The
impact of a maturing workforce on benefit costs. Compensation & Benefits
Management, 18, 16-26.
Hanna, D. P. (1988). Designing organizations for high performance. Reading: Addison-Wesley.
Herzberg, F., Mausner, B., & Snyderman, B. (1959). The motivation to work. New York: Wiley.
Hirschey, M., & Wichern, D. W. (1984). Accounting and market-value measures of profitability:
41
Consistency, determinants, and uses. Journal of Business and Economic Statistics, 2,
375-383.
Huselid, M. A. (1995). The impact of human resource management practices on turnover,
productivity, and corporate financial performance. Academy of Management Journal,
38, 635-672.
Huselid, M. A., & Becker, B. E. (1997). The impact of high performance work systems,
implementation effectiveness, and alignment with strategy on shareholder wealth.
Paper presented at the 1997 Academy of Management Annual Conference, Boston,
MA.
Ichniowski, C. (1990). Human resource management systems and the performance of U.S.
manufacturing businesses. NBER working paper series 3449. National Bureau of
Economic Research: Cambridge, MA.
Lawler, E. E. (1988). Choosing an involvement strategy. Academy of Management Executive,
2 (19), 204.
Lawler, E. E. (1990). The new plant revolution revisited. Organizational Dynamics, 19, 5-14.
Lawler, E. E. (1996). From the ground up. San Francisco: Jossey-Bass.
Lewin, A. Y., Long, C. P., & Carroll, T. N. (1999). The co-evolution of new organizational
forms. Organization Science, 10, 535-550.
Lewin, A. Y., & Volberda, H. W. (1999). Prolegomena on co-evolution: A framework for
research on strategy and new organizational forms. Organization Science, 10, 519-
534.
Lewin, K. (1947). Frontiers in group dynamics, concept, method and reality in social science.
Human Relations, 1, 5-41.
Lewin, K. (1952). Field theory in social science. London: Tavistock.
Likert, R. (1967). The human organization: Its management and value. New York: McGraw-
Hill.
Lofgren, E., Nyce, S., & Schieber, S. (in press). Designing total reward programs for tight labor
markets. Benefits Quarterly.
Luss, R., & Nyce, S. (2002). How to cut costs without cutting off future growth: Lessons from
the restructurings of the early 1990s. Watson Wyatt Working Paper.
Lytle, W. O. (1998). Designing a high-performance organization: A guide to the whole-systems
approach. Clark, NJ: Block, Petrella, Weisbord, Inc.
42
MacGregor, D. (1960). The human side of enterprise. New York: McGraw-Hill.
Macy, B. A., & Izumi, H. (1993). Organizational change, design, and work innovation: A meta-
analysis of 131 North American field studies--1961-1991. In R. W. Woodman & W.
A. Pasmore (Eds.), Research in organizational change and development (vol. 7).
Greenwich, CT: JAI Press.
Macy, B. A., Thompson, R., & Farias, G. F. (1995, August). Describing and assessing high
performance work practices in innovative organizations: A benchmarking study of 82
North American organizations. Paper presented at National Academy of Management
Meetings, Vancouver, British Columbia, Canada.
Matthews, J. (1994). Catching the wave: Workplace reform in Australia. Ithaca: ILR Press.
Mayo, E. (1945). The social problems of an industrial civilization. Boston: Harvard Graduate
School of Business Administration.
OECD. (1996). Future global capital shortages – Real threat or pure fiction?
Nyce, S., Orszag, M., & Schieber, S. (2002). The decade of the employee: The workforce
challenges facing the developed economies of the world over the next ten years.
Watson Wyatt working paper.
Parker, M., & Slaughter, J. (1995). Unions and management by stress. In S. Babson (Ed.), Lean
work: Empowerment and exploitation in the global auto industry. Detroit: Wayne
State University Press.
Pasmore, W. (1988). Designing effective organizations: The socio-technical systems perspective.
New York: John Wiley & Sons.
Pettigrew, A. M., & Fenton, E. M. (2000). The innovating organization. London: Sage.
Pettigrew, A. M., Massini, S., & Numagami, T. (2000). Innovative forms of organizing in
Europe and Japan. European Management Journal, 18, 259-273.
Pettigrew, A. M., Woodman, R. W., & Cameron, K. S. (2001). Studying organizational change
and development: Challenges for future research. Academy of Management Journal,
44, 697-713.
Pfeffer, J. (1998). The human equation. Boston: Harvard University Press.
Rigby, D. (2001). Moving upward in a downturn. Harvard Business Review, 79, 99-105.
Robertson, P. J., Roberts, K. R., & Porras, J. (1993). An evaluation of a model of planned
organizational change: Evidence from meta-analysis. In R. W. Woodman & W. A.
43
Pasmore (Eds.), Research in Organizational Change and Development, 7, 1-39.
Ruigrok, W., Pettigrew, A. M., Peck, S., & Whittington, R. (1999). Corporate restructuring and
new forms of organizing: Evidence from Europe. Management International Review,
39 (special issue 2), 41-64.
Shaiken, H., Lopez, S., & Mankita, I. (1997). Two routes to team production: Saturn and
Chrysler compared. Industrial Relations, 36, 17-46.
Trist, E. L. (1981). The evolution of socio-technical systems. Toronto: Quality of Working Life
Center.
Trist, E. L., & Bamforth, K. W. (1951). Some social and psychological consequences of the
longwall method of coalgetting. Human Relations, 4, 3-38.
Turnbull, P. (1988). The limits to Japanization, just-in-time, labor relations, and the U. K. auto
industry. New Technology, Work and Employment, 3, 7-20.
Varma, A., Beatty, R.W., Schneier, C.E., & Ulrich, D.O. (1999). High performance work
systems: Exciting discovery or passing fad? Human Resource Planning, 22, 26-37.
Watson Wyatt Worldwide. (1999). The Human Capital Index: Linking human capital and
shareholder value. Catalog W-292.
Watson Wyatt Partners. (2000). The Human Capital Index European survey report 2000:
Linking human capital and shareholder value. Ref. 2000291
Watson Wyatt Worldwide. (2001). Human Capital Index: Human capital as a lead indicator of
shareholder value –2001/2002 survey report. Catalog # W-488.
Weisbord, M. R. (1987). Productive workplaces: Organizing and managing for dignity,
meaning, and community. San Francisco: Jossey-Bass.
Whittington, R., Pettigrew, A. M., Peck, S., Fenton, E., & Conyon, M. (1999). Change and
complementarities in the new competitive landscape: A European panel study, 1992-
1996. Organization Science, 10, 583-600.
44