DAVID J. STOREY, GEORGE SARIDAKIS, SUKANYA SEN-GUPTA, … · 2017-03-19 · SUKANYA SEN-GUPTA, PAUL K. EDWARDS, AND ROBERT A. BLACKBURN The process of managing a small ﬁ rm differs

LINKING HR FORMALITY WITH

EMPLOYEE JOB QUALITY:

THE ROLE OF FIRM AND

WORKPLACE SIZE

D A V I D J . S T O R E Y, G E O R G E S A R I D A K I S , S U K A N YA S E N - G U P TA , PA U L K . E D W A R D S , A N D R O B E R T A . B L A C K B U R N

The process of managing a small fi rm differs from managing a large fi rm, because small fi rms face distinct forms of risk and organize their human re-sources differently, often informally (Kotey & Slade, 2005; Storey, 2002). This paper introduces and tests a new variable, self-reported job quality (SRJQ), as a key link in the causal chain between HR practices and outcomes. In com-paring small fi rms with large ones, we present three key fi ndings: (1) employ-ee reports of job quality are highest in small fi rms and decrease as fi rm size increases; (2) in workplaces owned by large fi rms, job quality is highest in the smallest workplaces; and (3) workers in small workplaces owned by large fi rms report lower job quality than workers in comparable sized workplaces owned by small fi rms. Our fi ndings are partially explained by how formally HR practices are implemented. We show that formality increases with fi rm size and workplace size. Importantly, evidence suggests that employing an HR professional (a key indicator of HR formality) lowers SRJQ in single-site SMEs. Implications for small business owners, HR professionals in large and small fi rms, and policy makers are discussed. © 2010 Wiley Periodicals, Inc.

Keywords: small fi rm, job quality, workplace size, SMEs, self-reported job quality, SRJQ, HR formality

Introduction

There is growing agreement as to the causal chain linking human resource (HR) practice to organizational out-comes. Intended practices may or may not lead to actual practices; the

effects of these actual practices are mediated

by employees’ perceptions; and these per-ceptions shape employees’ attitudinal and behavioral responses (Purcell & Kinnie, 2007). Empirical research has found rela-tionships consistent with the idea of the effects of HR practices (Boselie, Dietz, & Boon, 2005; Combs, Liu, Hall, & Ketchen,

Correspondence to: David J. Storey, School of Business Management and Economics, University of Sussex, Falmer, Brighton, Sussex, United Kingdom, BN1 9RF, Phone: +44 (0) 1273 873736, Fax: +44 (0) 1273 873736, E-mail: [email protected]

Human Resource Management,Human Resource Management, March–April 2010, Vol. 49, No. 2, Pp. 305– 329

© 2010 Wiley Periodicals, Inc.

Published online in Wiley InterScience (www.interscience.wiley.com).

DOI: 10.1002/hrm.20347

306 HUMAN RESOURCE MANAGEMENT, MARCH–APRIL 2010

Human Resource Management DOI: 10.1002/hrm

2006), but many of the links remain contested (Fleetwood & Hesketh, 2008; Wall & Wood, 2005). Two limitations of the ex-isting literature inform the present study. First, many studies do not address employ-ees’ responses to HR practices. Second, very few studies have sought to link HRM poli-cies to worker satisfaction in small busi-nesses. Such businesses are important for two reasons. They are numerically signifi-cant; for example, in the country under study here, the UK, firms with up to 249 employees accounted for 59% of private sector employment. In addition, they are of analytical interest. The process of managing

a small firm differs from that of the large firm, for small firms face distinct forms of risk and they organize their human re-sources differently and often in-formally (Kotey & Slade, 2005; Storey, 2002).

Among the few studies of small firms, some report relationships between HR and performance that are similar to those observed in large firms (Way, 2002), while oth-ers suggest that distinct processes may be at work (Storey, 2002; Wel-bourne & Andrews, 1996; Wel-bourne & Cyr, 1999). None of

these studies, however, has addressed em-ployee perceptions, nor have they directly compared small and large firms. In this paper, we address what we term employee self-re-ported job quality (SRJQ) as a key variable in the causal chain between HR practices and outcomes and compare small firms with large ones.

We show that employee reports of job quality are highest in small firms and de-crease as firm size increases, such that SRJQ is lowest in the largest firms. We also show that in workplaces owned by large firms, job qual-ity is highest in the smallest workplaces. In addition, workers in small workplaces owned by large firms have lower reported job quality than workers in otherwise comparable sized workplaces owned by small firms. All these findings are powerfully—but not perfectly—explained by the concept of HRM formality.

We show formality increases with firm size and also with workplace size. Small work-places owned by large firms, therefore, ex-hibit greater formality than the same size of workplace owned by a small firm. The “easy” implication is that greater formality lowers employee job quality. As we show, however, this is not wholly consistent across all dimen-sions of formality and job quality.

These results contrast with some others. Welbourne and Cyr (1999) reported that al-though there was no direct relationship be-tween their measure of HR formality (pres-ence of a senior HR manager on the top team) and performance, in growing and smaller firms in their sample such formality was associated with performance. This study examined a very particular type of firm, that is, those making an initial public offering. These are likely to be the most “sophisti-cated” and thus the most likely to gain from formal HR systems. In the firms studied here, four-fifths of SME workplaces were partner-ships or family-owned (Forth, Bewley, & Bryson, 2006). Here, informality may be more likely to prevail. Our results support the wider implications of Welborne and Cyr (1999), however: that the specifics of context matter, and that what is true of some kind of firms may not be true of all.

This paper’s findings are also relevant for HR professionals in large enterprises that op-erate small workplaces and for public policy makers. For the former audience, our evi-dence suggests that employees in small work-places owned by large firms report lower job quality than workers in otherwise similar workplaces owned by small firms. If there is an association between reported job quality and performance, then there has to be merit in large firm HR professionals seeing what they can learn from smaller enterprises. We make some suggestions about this in the con-clusion. For the public policy audience, the results cast doubt on the presumption that small firms are less well managed than large firms are and that the greater formality that characterizes large firms in areas such as workforce training and staff recruitment should be supported by public policies. This inference needs to be reviewed.

Employees in small

workplaces owned

by large firms report

lower job quality

than workers in

otherwise similar

workplaces owned

by small firms.

LINKING HR FORMALITY WITH EMPLOYEE JOB QUALITY: THE ROLE OF FIRM AND WORKPLACE SIZE 307


The remainder of this paper is structured as follows. We first establish the importance of employees for firm performance. We make the theoretical case that the nature of em-ployment relations will differ radically in workplaces of different size; we also argue that employment relations will differ in small workplaces depending upon whether the owners are large or small enterprises. Based on this theory, the key hypotheses are de-rived. Next we describe the dataset and our measures of formality and job quality and summarize the empirical method. Following is an examination of the relationships among workplace and organization size, formality, and job quality. We then report multivariate analyses of the influences on job quality with the main focus on formality. The final sec-tions draw out the implications for the prac-tice and research communities.

Organization Size, Formality, and Employee Attitudes

This section makes the case that the nature of employment relations will differ radically in both workplaces of different size and in simi-lar sized workplaces owned by enterprises of different sizes. From this theory, hypotheses are derived.

HR Practice, Formality, and Size

Two strands of debate on the role of HR prac-tices can be identified. The first focuses on concrete practices, as in the massive literature on HR and performance, in which sets of practices, such as training, appraisal, and sys-tems of employee involvement, are analyzed. A second, smaller, literature addresses how employees might respond to such practices. That is, why might we think that an appraisal system will have positive or negative effects on employees’ views of their jobs?

Scholars have increasingly stressed the importance of the psychological contract, that is, the set of expectations that employees bring to the workplace and that shape their responses to concrete practices (Coyle-Shap-iro & Kessler, 2000; Nadin & Cassell, 2007; Turnley & Feldman, 1999). The “same” prac-

tice will have different effects depending on how employees perceive it. We argue that the extent of the formality of practices is a key element shaping these perceptions.

Idson (1990) found that workers in large workplaces were less satisfied than those in small workplaces. He saw this as a result of formality: as workplaces grow in scale, they need to formalize. The result is that the rules of any particular workplace will fail to match the expectations of a significant num-ber of workers. Kalleberg and Van Buren (1996) found a high level of job autonomy in small firms, which they attribute to the ten-dency of large firms to constrain the freedom of choice open to workers.

It is also well established that various indicators of formality are associated with the size of the workplace and of the organization as a whole. Studies in the U.S. (Kaman, McCarthy, Gulbro, & Tucker, 2001), Australia (Kotey & Slade, 2005), the UK (Kersley et al., 2006; Kitching & Blackburn, 2002), and Canada (Golhar & Deshpande, 1997) have shown that the presence of an HR man-ager, for example, is strongly linked to size. We thus need to disentangle particular practices and what they say about formal-ity, with the expectation that it is actually the formality, and not the practice itself, that is the key.

Scholars have argued that many of the behavioral differences reflected in employ-ment relations between organizations of dif-ferent sizes reflect differences in the nature of the uncertainties enterprises of different sizes face. Storey and Sykes (1996) argued that small enterprises primarily face external uncertainty. Such enterprises are much more likely to cease trading than larger enterprises (Mata & Portugal, 2002) primarily because they lack control over their external environ-ment. Small enterprises lack the market power to influence prices and are more likely

The results cast

doubt on the

presumption that

small firms are

less well managed

than large firms

are and that the

greater formality

that characterizes

large firms in areas

such as workforce

training and staff

recruitment should

be supported by

public policies.



to depend on a single or small number of customers. Their response to this uncertainty is to take actions that deliver primarily short-term payoffs and that can be adjusted at low cost in the event of changed circum-stances. They therefore, for example, do not favor formal employee training where returns tend to accrue only in the medium term (Storey & Westhead, 1997).

In contrast, large enterprises lack control over their internal environment and are viewed as facing internal uncertainty. They

are more likely than small enter-prises to experience problems communicating with their work-force. The conventional response to this problem is to develop for-mal procedures such as newslet-ters, formal meetings, and repre-sentative structures. Formality is argued, therefore, to be a response to increased size, on the grounds that it is not feasible for the ulti-mate decision taker to communi-cate directly with all those affected. A second problem for large enter-prises is to help workers at all lev-els comprehend the significance of their own actions. While work-ers in all sizes of enterprise under-stand that absenteeism, for exam-ple, causes problems for co-workers, workers in small enterprises may be more likely to understand the impact this may have upon the viability of the enterprise as a whole. To address this problem,

larger enterprises again respond by raising formality. Team spirit, which may occur more naturally in small enterprises, is pro-moted by formal communication channels and standardizing procedures. A third differ-ence is that in small enterprises, diversity is more likely to be managed flexibly. In large enterprises, diversity is more likely to be managed by formality (Ram, Edwards, Gil-man, & Arrowsmith, 2001).

In large enterprises, therefore, a central theme is to ensure that individuals are treated fairly, which means that no individual is seen to be advantageously treated when compared

with comparable co-workers. Sets of HR prac-tices are likely to reflect responses to this problem. In contrast, fairness in a small firm context is more likely to mean the workers’ personal and specific circumstances are taken into account in making decisions (Ram et al., 2001). The latter is, of course, only possible when these circumstances are known to the decision maker—which is much more likely in small than large firms. At the risk of over-simplifying: fairness in large firms means treating everyone the same; fairness in a small firm means treating everyone differ-ently.

It is also crucial to distinguish between workplace size and the size of the organiza-tion as a whole (Marginson, 1984). We might expect, for example, that a small family-owned retail outlet would exhibit less formal-ity than a similar sized retail outlet owned by a chain. The latter is likely to employ, albeit not necessarily at each outlet, HR profession-als. This may mean that formal employment contracts are issued and perhaps formal re-cruitment and grievance procedures are im-plemented. This distinction between work-place size and organization or enterprise size, however, has rarely been pursued systemati-cally in empirical work (for an exception see Ghobadian & O’Regan, 2006).

In this study, we divide the workplace and the larger organization into size catego-ries. We use the term “small” to refer to workplaces having fewer than 50 employees and medium-sized as having 51–249 em-ployees.1 This leads us to our first two hy-potheses:

Hypothesis 1: Small workplaces will exhibit less formality than large workplaces.

Hypothesis 2: Small workplaces owned by sin-gle-site enterprises (small enterprises) will exhibit less formality than small workplaces owned by a large (multi-site) enterprise.

Employee “Satisfaction”

In the UK, the link between firm size and employee “satisfaction” was memorably sum-marized by an official inquiry into small

Large enterprises

lack control over

their internal

environment and

are viewed as

facing internal

uncertainty. They

are more likely than

small enterprises

to experience

problems

communicating with

their workforce.



firms that was reported 40 years ago. The Bolton Committee (1971) said:

Although physical conditions may sometimes be inferior in small fi rms, most people prefer to work in a small group where communication presents fewer problems: the employ-ee in a small fi rm can more easily see the relation between what he is do-ing and the objectives and perform-ance of the fi rm as a whole. Where management is more direct and fl ex-ible, working rules can be varied to suit the individual. Each employee is also likely to have a more varied role, with a chance to participate in several kinds of work and better op-portunities to learn and widen his experience. (p. 21)

With hindsight, this statement reflected common ambiguities at the time as to whether it was the size of the “firm” or the size of the workplace that was important. Implicitly, the two were thought to be identical. The depen-dent variable of satisfaction was also identi-fied very loosely.

Social science research on small firms has refined this analysis. Ingham (1970) made the crucial point that small-firm employees might balance intrinsic job qualities, such as close working relationships, against relatively poor pay and conditions; thus, there may be no single dimension of satisfaction. Workers might, therefore, self-select because the small firm’s “package” emphasized flexibility and interpersonal relationships over wages and financial benefits. Kalleberg (1977) showed that satisfaction is, indeed, multi-dimen-sional. Other scholars question the validity of using size as a proxy for other more theoreti-cally relevant variables such as different ap-proaches to work and management (Kalleberg & Van Buren, 1996). For example, Curran and Stanworth (1981) argued that “size of firm is not, in itself, an important factor in explain-ing differences in levels of job satisfaction” (p. 343). More recent research has, however, rein-stated a qualified size effect. Tsai, Sen-Gupta, and Edwards (2007), in examining three con-

trasting sectors, found important similarities across the sectors. This led them to identify two kinds of size effect. The first is a “pure” effect of size, which particularly reflected di-rect personal relationships. This contradicts Curran and Stanworth (1981) by demonstrat-ing that size “in itself” can, indeed, have ef-fects. The second effect covers processes that are correlated with size, reflecting the key point that size has too often been treated as a measure that conflates many different kinds of influence. In the present analysis, we treat formality as covering the latter effect. We also address the former, testing whether there are “pure” size effects once a theoretically rele-vant variable such as formality has been taken into account.

Turning to “satisfaction” itself, we follow much recent research that has eschewed this concept. The problem with satisfaction is that it cannot be disentangled from expectations (Rose, 2005). Scholars have thus preferred to focus on measures of job quality. As Gallie (2003) noted, a “remark-able consensus” has emerged that key indicators of job quality are “variety in the task, the level of personal initiative that can be exercised, the degree of participa-tion at work, . . . the extent to which the job permits personal self-development . . . opportuni-ties for career development (through training and promotion opportunities) and . . . job secu-rity” (p. 65). Numerous studies have adduced measures of such indicators (Gallie, White, Cheng, & Tomlinson, 1998; Green, 2006; McGovern, Smeaton, & Hill, 2004).

We therefore propose a measure that is broader than satisfaction and that addresses job quality. We support the view of Gallie (2003) and Gallie, Felstead, and Green (2004) that it is appropriate to ask employ-ees about job quality because there can be no other source for personal assessments of work experience. We acknowledge that there are considerable problems with self-assessments, particularly where the assess-ments are systematically skewed according

At the risk of

oversimplifying:

fairness in large

firms means treating

everyone the same;

fairness in a small

firm means treating

everyone differently.



to the variable(s) of interest. Our judgment, however, is that workers in small work-places are, as a group, no more or no less likely to give biased evaluations than work-ers in large workplaces. Similar logic ap-plies to workers in single and multi-site workplaces. Nevertheless, to underline the fact that job quality in this study is as re-ported by workers, we introduce the term self-reported job quality (SRJQ).2 A “pure” size effect thus leads to our next two hy-potheses:

Hypothesis 3: Self-reported job quality (SRJQ) is higher in small than in large workplaces.

Hypothesis 4: SRJQ in small single-site workplac-es is higher than in small workplaces owned by a multi-site enterprise.

Formality, Size, and Job Quality

Even if a clear negative association between formality and SRJQ exists, it is more chal-lenging to demonstrate that formality is the

causal factor. It might be argued that formality is endogenous. This would result, for example, from a process whereby the “wrong” people are recruited, which pro-motes discontent, which in turn leads to formalization. Although we cannot exclude such a possi-bility, we think it unlikely. In-stead, there is much clearer evi-dence that HR formalization in the UK has been driven by exter-nal pressures, notably laws related to unfair dismissals and equal op-portunities (Edwards, 1989). A

second driver of formalization is the general one discussed above; namely, the need for formal rules as organizations become larger and more complex. A third is isomorphism (DiMaggio & Powell, 1983): firms grow alike because of (exogenous) coercive, normative, and mimetic processes. Formality will not be the only influence on SRJQ, but we ex-pect it to remain important when we con-trol for other factors. Thus, we propose our next hypothesis:

Hypothesis 5: Formality has a negative impact on SRJQ, holding workforce and establishment characteristics fi xed.

Finally, what of a pure size effect? If this oper-ates, size will continue to influence job qual-ity, even when formality is taken into ac-count. This leads to our final hypothesis:

Hypothesis 6: Size will be negatively related to SRJQ, holding formality and other workforce and establishment characteristics fi xed.

Data, Formality Measure, and Measure of SRJQ

Data

This analysis uses data from the Workplace Employment Relations Survey (WERS) 2004, which for Great Britain is a nationally repre-sentative cross-section survey. It is based on a stratified random sample of workplaces and a sample of employees at those workplaces. WERS has been widely used to measure many aspects of HR practice (see Bryson, Forth, & Kirby, 2005; Delbridge & Whitfield, 2001). A distinctive feature of the 2004 survey is that it includes workplaces with as few as five em-ployees (Blackburn, Edwards, Storey, Sarida-kis, & Sen-Gupta, 2007). A publication by the WERS research team reported overall differ-ences between workplaces owned by small and large organizations (Forth et al., 2006). It also identified a set of 22 measures of em-ployee reports of job quality, which we also use here. It simply added the measures and did not ask whether they do, in fact, reflect different dimensions. Nor did it explain the measures in terms of formality or other pos-sible determinants.

Here our focus is on private sector work-places with a minimum size of five employees. We have excluded sole British workplaces of foreign organizations; this reflected our desire not to conflate genuinely small enterprises with the single sites of potentially large over-seas enterprises. We draw on data from two sources. The first is a Management Question-naire based on face-to-face interviews with 2,295 senior managers dealing with industrial,

To underline the

fact that job quality

in this study is as

reported by workers,

we introduce the

term self-reported

job quality (SRJQ).



employee, or personnel relations at the work-place (response rate 64%). The second is an Employee Questionnaire, which was a self-completion instrument distributed to a ran-dom sample of up to 25 employees in each workplace (response rate 60%).3 The matched employer-employee data comprised 22,451 employees4 working in 1,733 workplaces.5

Size Measures

We use five bands for size of workplace, de-fined in terms of numbers of employees: 5–49, 50–99, 100–249, 250–499, and 500 and more. Two indicators of the size of the enter-prise as a whole are used. WERS asked about the number of employees in the organization of which the workplace was part. Following Forth et al. (2006), we use this measure to identify all workplaces that are parts of SMEs. We also distinguished between single work-places and those that were parts of larger or-ganizations. For the former group, workplace size and organization size are identical. We can thus use this group to test Hypotheses 1, 3, 5, and 6 in a way that does not conflate workplace and organizational measures. The comparison between single-site and multi-site organizations is necessary to test Hypoth-eses 2 and 4.

Measurement of Formality

WERS collected data on a wide range of HR practices including recruitment, appraisal, and pay. They reflected formality in relation to performance management (e.g., appraisal), training, and employee development, as well as methods of handling communication with employees.

The WERS management questionnaire was used to identify formal practices, taking only indicators that reasonably and clearly indicated a formal structure or process. Twelve measures of formality were identified, most of which relate directly to the managing of employees. These measures are presented in Table I.6 Some are self-explanatory; for ex-ample, the existence of formal procedures in such areas as equal opportunities. Also in-cluded was coverage of what was explicitly

called a “formal strategic plan.” Investors in People (IiP)7 was also a natural indicator be-cause the standard is heavily concerned with documented formal procedures and systems (Fraser, 2003; Hoque, 2003, 2008). In relation to communication with employees, two other measures were used: (1) whether meetings were held between senior managers and the workforce and (2) the use of some structured communication device such as newsletters. The latter is clearly formal; the former is less so, but nonetheless a meeting, as distinct from unplanned face-to-face interaction, is a reasonably clear indicator of a considered ap-proach.

Two other measures warrant comment. First, the existence of non-pay benefits for the largest occupational group was included. WERS listed five such benefits including an employer pension scheme and sick pay in excess of statutory minima. The logic here was that such benefits embrace “instrumental-economistic” re-wards other than basic pay and are likely to reflect a structured and long-term approach to re-wards as opposed to paying a basic wage alone. Second, one non-HR measure, the existence of a target for a long list of measures including sales, costs, quality, and labor turnover, was also included. This was used on the grounds that a stated objective of this form re-flected a structured approach.8 This measure was taken to affect employees directly in terms of cost pressures and performance stan-dards.

Measuring SRJQ

As noted, Forth et al. (2006) identified 22 measures that they labeled “employee needs.” Several of these measures were introduced in the previous wave of WERS, having under-gone considerable validation and piloting (Cully, Woodland, O’Reilly, & Dix, 1999); oth-ers were piloted in the 2004 iteration. They also draw directly on a long series of other studies (e.g., Gallie et al., 1998, 2004) and are thus considered established instruments. Em-

The matched

employer-employee

data comprised

22,451 employees

working in 1,733

workplaces.



TA

BL

E

I

Empl

oyer

For

mal

ity (0

-1, w

ith 1

= Y

es a

nd 0

= N

o; W

eigh

ted

estim

ates

%)

Fo

rmality

Measu

res

A)

Mu

lti-

Sit

e W

ork

pla

ces

B)

Sin

gle

-Sit

e W

ork

pla

ces

Wo

rkp

lace S

ize

MS

MW

(5–249)

Wo

rkp

lace S

ize

SM

Es

(5–249)

5–49

50–99

10

0–

249

250–

499

50

0+

SM

ELarg

e-

fi rm

5–49

50–99

10

0–

249

250–

499

50

0+

SM

E

Pers

on

mai

nly

co

nce

rned

wit

h H

R is

sues

28.8

538.7

061

.23

69.2

281

.73

26.5

044.7

86.6

914

.46

42.1

852

.39

80.0

711

.92

Exi

sten

ce o

f a

form

al s

trat

egic

pla

n

74.2

392.8

190.1

392.8

993

.43

56.6

590.1

239.2

265.1

369.1

160.4

389

.58

46.4

7

Inve

sto

rs in

Peo

ple

(IiP

)43.5

950.7

148.0

454.3

648

.95

20.2

753.4

712.1

222.1

915.0

827.

18

43.0

813

.94

Pres

ence

of

test

s at

ind

uct

ion

as

par

t o

f re

cru

itm

ent

90.1

999

.86

98.8

298

.86

100

83.7

498.1

976.3

694

.81

98.9

596

.70

100

81.6

7

Any

co

mm

un

icat

ion

ch

ann

els,

e.g

., n

ewsl

ette

rs, I

nte

rnet

, e-

mai

l 95.4

499

.29

100

100

100

93.7

998.8

989.1

998

.61

100

100

100

91.8

2

Any

mee

tin

g b

etw

een

man

agem

ent

and

em

plo

yee

92.0

097.

18

95.5

792

.41

98.1

90.4

395.5

680.8

485.4

393

.26

97.3

890

.26

82.9

4

Pres

ence

of

a d

isp

ute

pro

ced

ure

42.7

346

.97

54.1

067.

42

71.2

336

.43

50.0

622.4

834

.48

47.4

837.

44

58.0

227

.13

Pres

ence

of

an e

qu

al o

pp

ort

un

ity

po

licy

81.4

692.6

694

.03

97.5

695

.37

61.3

394.7

039.7

770.3

490

.79

89.5

896

.88

50.1

4

Pres

ence

of

a g

riev

ance

po

licy

92.4

999

.41

99.6

299

.08

100

86.1

998.6

068.1

197

.34

98.9

595

.14

100

75.9

6

Pres

ence

of

a p

erfo

rman

ce a

pp

rais

al p

rog

ram

84.3

192.7

990.5

599

.46

96.0

271

.14

92.4

254.1

671.5

474

.06

81.2

194

.53

59.0

1

Form

al t

arg

et

87.

64

95.7

792

.75

98.4

994

.12

77.8

694.6

962.0

192

.60

91.4

195

.10

93.7

369

.85

Any

no

n-p

aym

ent

ben

efi t

s83.7

789.6

298.9

197.

46

98.5

579.5

692.5

965.5

670.6

073.7

365.6

188

.46

67.2

4

Avera

ge f

orm

ality

74.8

083.2

785.0

089.1

489

.72

65.3

383.8

151.3

968.0

174.5

974.8

585

.71

56.4

8

Not

es: C

ompa

ring

sin

gle-

and

mul

ti-si

te-w

orkp

lace

s, th

e nu

ll hy

poth

esis

that

form

ality

is th

e sa

me

betw

een

wor

kpla

ces

of d

iffer

ent s

ize

was

not

rej

ecte

d at

the

5% le

vel i

n th

e fo

rmer

sub

-sam

ple

for

“Inv

esto

rs in

Peo

ple.”

In m

ost c

ases

, for

mal

ity in

crea

sed

sign

ifi ca

ntly

for

wor

kpla

ces

abov

e 5–

49 e

mpl

oyee

s. W

e te

sted

whe

ther

mul

ti- a

nd s

ingl

e-si

te w

orkp

lace

s of

the

sam

e si

ze a

re s

tatis

tical

ly d

iffer

ent

from

eac

h ot

her.

We

also

test

ed w

heth

er S

MM

Ws

diff

er fr

om S

MEs

. Bol

d an

d un

derl

ined

val

ues

indi

cate

whe

re th

e di

ffer

ence

was

foun

d to

be

stat

istic

ally

sig

nifi c

ant a

t the

5%

and

10%

leve

l, re

spec

tive

ly.

So

urc

e: M

anag

emen

t q

ues

tio

nn

aire

.



ployees rated these on 5-point scales. In order to produce a single composite “score,” we computed average scores for the 22 items.

The measures are listed in detail in Table II. Although Forth et al. (2006) did not distin-guish between them, we argue they comprise different dimensions of job quality. Kalle-berg’s (1977) classic study established six di-mensions of job satisfaction, and distinctions between affective and continuance commit-ment, for example, are now standard. WERS was not designed to test these distinctions directly, but it is important to bear in mind that job quality may have different dimen-sions. Accordingly, we tested for an underly-ing factor structure within the 22 measures and found three factors that we label as the nature of the job (eight items), the quality of communication from managers (four items), and the quality of the manager-employee re-lationship (10 items).9

Formality and Job Quality by Workplace Size

We address Hypothesis 1 by examining the association between formality and size within workplaces. Table I shows the responses to the 12 questions on formality, along with the av-erage for all 12. For example, the right-hand side of the table shows that about 7% of sin-gle-site workplaces with 5–49 employees had “a person mainly concerned with HR issues.” This proportion rises monotonically to 80% for single-site workplaces with more than 500 workers. For both multi- and single-site work-places on all 12 measures, it is the smallest workplaces that have the lowest formality. Note that formality rises with increases in workplace size for almost every measure.

To address Hypothesis 2, we initially compare single- and multi-site workplaces. Table I shows that every measure of formal-ity is significantly higher in 5–49 employee, multi-site workplaces than in single-site workplaces of this size. For example, in multi-site workplaces with 5–49 employees, 29% report having an HR manager, com-pared with only 7% in single-site workplaces. The differences between multi- and single-site workplaces diminish with increasing

workplace size to the point that there are no significant differences (at the 5% level) be-tween multi- and single-site workplaces with more than 500 employees.

Not all multi-site workplaces, however, are owned by large firms. To examine the im-plications of this, the final two columns of data in Table I relating to multi-site work-places distinguish between those workplaces that are owned by a small- and medium-sized enterprise (SMEs; 5–249 employees) and those that are owned by a large enter-prise. First, it shows that average formality is significantly greater in the latter (83.81) than in the former (65.33). This suggests that the size of the parent enterprise, as well as size of the workplace, matters. Second, it shows that all multi-site workplaces with 5–249 employees have greater formality than single-site enterprises of this size (65.33 compared with 56.48). Table A1 in the Appendix pro-vides more information and fur-ther evidence to support Hypoth-esis 2.

Overall, the evidence support-ing Hypotheses 1 and 2 is com-pelling. Formality clearly increases asymptotically until the size of the workplace reaches 250 em-ployees. For workplaces with fewer than 250 employees, those owned by enterprises with more than a single site—generally large enterprises—have greater formal-ity than similar sized enterprises owned by an SME.

Hypothesis 3 addresses the link between workplace size and SRJQ. Table II displays mean SRJQ scores by types of work-place. The final row shows that workers in all small workplaces were more likely to have higher average SRJQ than those in large workplaces. In multi-site workplaces, SRJQ decreases significantly with increasing size until the 250–499 em-ployee range. After that, increases in work-place size seem unrelated to SRJQ. This ef-

Formality clearly

increases

asymptotically

until the size of the

workplace reaches

250 employees.

For workplaces

with fewer than

250 employees,

those owned by

enterprises with

more than a single

site—generally

large enterprises—

have greater

formality than similar

sized enterprises

owned by an SME.



TA

BL

E

II

M

ean

of S

elf-

Repo

rted

Job

Qua

lity

by T

ype

of W

orkp

lace

and

Org

aniz

atio

n (w

eigh

ted

estim

ates

)

Self

-Rep

ort

ed

Jo

b Q

uality

(S

RJQ

)

A)

Mu

lti-

Sit

e W

ork

pla

ces

B)

Sin

gle

-Sit

e W

ork

pla

ces

Wo

rkp

lace

Siz

eS

MM

W

(5–249)

Wo

rkp

lace S

ize

SM

Es

(5-2

49)

5–4

95

0–9

910

0–

24

9

25

0–

49

9

50

0+

SM

ELarg

e

Fir

m

5–49

50–99

10

0–

249

250–

499

50

0+

SM

E

Are

a 1

: S

RJQ

reg

ard

ing

th

e n

atu

re o

f th

e jo

b (

0 =

very

dis

sati

sfi e

d; 4

= v

ery

sati

sfi e

d)

Sen

se o

f ac

hie

vem

ent

2.8

02

.73

2.69

2.5

42.5

92.

862.7

22.9

82.8

92.

642.7

92.7

12.

92

Sco

pe

for

usi

ng

init

iati

ve2

.85

2.8

22.

772

.61

2.66

2.93

2.8

03.0

42.9

32.

722.9

82.

712.

98

Th

e am

ou

nt

of

infl

uen

ce o

n jo

b2

.62

2.59

2.51

2.3

62.

402.6

92.5

42.8

62.

672.

582.6

52.

452.

79

Th

e tr

ain

ing

rec

eive

d2

.41

2.28

2.25

2.2

22.

18(2

.34)

(2.3

4)

2.5

22.

382.

272.4

42.

232.

47

Th

e am

ou

nt

of

pay

rec

eive

d1.8

31.7

81.

891.7

41.

811.9

71.8

12.1

42.0

01.

911.9

41.

922.

09

Th

e am

ou

nt

of

job

sec

uri

ty2

.69

2.68

2.52

2.4

62.3

42.

772.6

02.8

42.

762.

582.7

12.4

72.

80

Sat

isfa

ctio

n w

ith

th

e w

ork

itse

lf2

.82

2.7

52.

742

.60

2.6

12.

922.7

42.9

72.9

22.

702.8

42.7

62.

93

Am

ou

nt

of

invo

lvem

ent

in d

ecis

ion

mak

ing

at

wo

rkp

lace

2.3

62

.19

2.0

62

.00

2.04

(2.2

9)

(2.2

3)

2.6

02.3

02.2

22.2

61.

972.

51

Are

a 2

: S

RJQ

reg

ard

ing

in

form

ati

on

(0 =

ve

ry p

oo

r; 4

= v

ery

go

od

)

Man

ager

s ke

epin

g e

mp

loye

es in

form

ed a

bo

ut

chan

ges

at

wo

rk2

.49

2.38

2.21

2.1

12.2

0(2

.34)

(2.4

1)

2.6

32.

302.

202.3

72.0

22.

52

Man

ager

s ke

epin

g e

mp

loye

es in

form

ed a

bo

ut

staf

fi n

g c

han

ges

2.4

52.

232.

041.9

42.

04(2

.30)

(2.2

9)

2.6

02.

292.

092.2

11.

972.

49

Man

ager

s ke

epin

g e

mp

loye

es in

form

ed a

bo

ut

chan

ges

in w

ay jo

b is

do

ne

2.5

72.

402.

232

.16

2.18

(2.4

3)

(2.4

4)

2.6

82.

412.

292.3

42.

122.

59

Man

ager

s ke

epin

g e

mp

loye

es in

form

ed a

bo

ut

fi n

anci

al m

atte

rs2.

252.

142.

071.

992

.12

1.9

62.2

52.

162.

011.

971.

991.7

32.

11

Are

a 3

: S

RJQ

reg

ard

ing

man

ag

er-

wo

rker

exp

eri

en

ce

(0 =

ve

ry p

oo

r; 4

= v

ery

go

od

)

Man

ager

s se

ekin

g e

mp

loye

e vi

ews

2.4

42.

222.

081.

992.0

7(2

.28)

(2.3

0)

2.6

22.

312.

062.

101.8

82.

50

Man

ager

s re

spo

nd

ing

to

em

plo

yee

sug

ges

tio

ns

2.4

02.

182.

011.

931.

94(2

.25)

(2.2

4)

2.6

12.

262.

082.

101.

852.

48

Man

ager

s al

low

ing

em

plo

yees

/em

plo

yee

rep

s to

be

invo

lved

in d

ecis

ion

mak

ing

2.1

31.

891.

721.6

81.

68(1

.97)

(1.9

6)

2.3

41.

891.

801.8

91.

552.

20

Rel

atio

nsh

ip b

etw

een

em

plo

yee

and

man

agem

ent

2.8

82.

652.

482

.36

2.38

2.8

42.6

93.1

42.

742.

592.5

32.

343.

00

(0 =

str

on

gly

dis

ag

ree

; 4

= s

tro

ng

ly a

gre

e)

Man

ager

s’ a

bili

ty t

o k

eep

pro

mis

es2

.50

2.36

2.17

2.0

11.

99(2

.41)

(2.3

6)

2.7

42.

372.

302.2

22.

052.

63

Man

ager

s’ s

ince

rity

in a

ttem

pti

ng

to

un

der

stan

d e

mp

loye

e n

eed

s2

.60

2.46

2.26

2.1

42.

13(2

.50)

(2.4

6)

2.8

22.

502.

392.3

92.

132.

71

Man

ager

s d

ealin

g w

ith

em

plo

yees

ho

nes

tly

2.6

72.

502

.33

2.2

12.

182.6

12.5

22.9

02.

542.4

72.5

02.

242.

78

Man

ager

s u

nd

erst

and

ing

ab

ou

t h

avin

g t

o m

eet

resp

on

sib

iliti

es o

uts

ide

wo

rk2

.64

2.48

2.3

12

.16

2.24

2.6

22.4

92.8

82.

562.5

62.3

62.

302.

79

Man

ager

s en

cou

rag

ing

em

plo

yees

to

dev

elo

p s

kills

2.6

32

.50

2.38

2.2

82.

33(2

.52)

(2.5

4)

2.7

52.6

12.4

12.5

12.

372.

69

Man

ager

s tr

eati

ng

em

plo

yees

fai

rly

2.6

32

.47

2.2

92

.18

2.21

2.6

22.4

72.8

72.6

22.

472.5

22.

172.

78

Avera

ge s

co

re2

.52

2.3

62.

262

.15

2.18

(2.4

6)

(2.4

0)

2.7

42.4

92.

272.3

42.

192.

65

No

tes:

We

test

ed w

het

her

th

e m

ean

s o

f si

ng

le-

and

mu

lti-

site

wo

rkp

lace

s ar

e st

atis

tica

lly d

iffer

ent

fro

m e

ach

oth

er. W

e al

so t

este

d w

het

her

th

e m

ean

s o

f m

ult

i-si

te e

nte

rpri

ses

that

are

ow

ned

by

an S

ME

diff

er f

rom

m

ult

i-si

te e

nte

rpri

ses

that

are

ow

ned

by

a la

rge

ente

rpri

se a

nd

sta

tist

ical

ly d

iffer

ent

fro

m s

ing

le-s

ite

SM

Es.

Bo

ld a

nd

un

der

lined

val

ues

ind

icat

e w

her

e th

e d

iffer

ence

was

fo

un

d t

o b

e st

atis

tica

lly s

ign

ifi ca

nt

at t

he

5%

and

10%

leve

l, re

spec

tive

ly. P

aren

thes

es s

ho

w t

hat

th

e d

iffer

ence

bet

wee

n m

ult

i-si

te w

ork

pla

ces

ow

ned

by

an S

ME

an

d t

ho

se o

wn

ed b

y a

larg

e o

rgan

isat

ion

are

sta

tist

ical

ly in

sig

nifi

can

t at

th

e 5%

or

10%

leve

l.S

ou

rce:

Em

plo

yee

qu

esti

on

nai

re.



fect is not apparent in single-site workplaces, where the SRJQ continues to decrease as workplace size increase. Single-site work-places with 100–249 and 250–499 employ-ees, however, seem to have similar SRJQ.

The finding that a significant difference exists in SRJQ between single- and multi-site workplaces with fewer than 250 employees provides support for Hypothesis 4. Most no-tably, on 21 of the 22 measures, workers in single-site workplaces with 5–49 employees evaluated their job quality as higher than those in multi-site workplaces of the same size. In contrast, for workplaces with more than 500 workers, there were significant dif-ferences at the 5% level on only six dimen-sions. Next, examining only multi-site work-places of 5–249 employees, no significant differences were observed between those owned by a large enterprise and those owned by an SME in 11 of the 22 SRJQ measures. On all the remaining criteria except for one SRJQ was significantly higher in workplaces owned by an SME.10 Finally, SRJQ was significantly higher in SMEs than in multi-site enterprises. This is also the case whether or not they are owned by an SME (Table A2 in the Appendix provides a more detailed picture).

The above findings clearly support Hy-potheses 3 and 4. The key results thus far are depicted in Figure 1. This figure plots SRJQ

and formality on the y-axes and workplace size on the x-axis. Figure 1 also distinguishes between single- and multi-site workplaces. The diagram illustrates several key points:

SRJQ declines with workplace size. Formality increases with workplace size. SRJQ and formality level off as the work-

place becomes larger. SRJQ is considerably higher and formal-

ity lower in single-site than in multi-site workplaces.

These ownership differences in SRJQ evap-orate as the workplace becomes larger.

The Relationship Between Formality and SRJQ

To complete our analysis in relation to Hy-potheses 5 and 6, we now examine the asso-ciation between the SRJQ and management formality, taking into consideration a wide range of workforce and establishment charac-teristics.11 To create an overall SRJQ index, the observations were grouped in their near discrete values of 0, 1, 2, 3, or 4. Because only 5% of replies were in the top and 0.1% were in the bottom categories, we therefore col-lapsed the changes to scores into a three-fold scale taking the value of 1 if the employee is dissatisfied (15.2%), 2 if the employee is satis-

•••

•

•

40

50

60

70

80

90

100

5-49 50-99 100-249 250-499 500+

Workplace size

Form

alit

y

2.00

2.10

2.20

2.30

2.40

2.50

2.60

2.70

2.80

SRJQ

Formality for multi-site workplaces Formality for single-site workplaces

SRJQ for multi-site workplaces SRJQ for single-site workplaces

FIGURE 1. Formality and self-reported job quality



fied (39.5%), and 3 if the employee is very satisfied (45.3%). Table III presents the or-dered probit results for the overall SRJQ index.12 For comparison, the table also re-ports the results from an alternative ap-proach, retaining the interval-level scores in the manner of Forth et al. (2006) and deploy-ing an OLS regression. A random effects, or-dered probit is also estimated. The advantage of the last specification is that it allows for the fact that the employee level data are drawn from a number of workplaces. We find that using an ordered probit model13 or OLS regression does not alter our conclusions and that allowing for random-effects also makes very little difference.

The results confirm our findings summa-rized in Figure 1 that employees in single-site workplaces are more likely to evaluate their job quality more highly than those in multi-site workplaces. The coefficients for the work-place size measures also show strongly that SRJQ decreases as size increases.14 The results also show that “having a person mainly con-cerned with HR issues,” “communication channels,” the “presence of dispute proce-dures,” and “any non-payment benefits” are negatively associated with overall SRJQ.

In the context of this paper, the negative association between “having a person mainly concerned with HR issues” and SRJQ is par-ticularly noteworthy. These types of formal procedures emphasize that regulating the workplace through bureaucratic or docu-mented means may impinge on employee autonomy or discretion and subsequently reduce SRJQ.

Table III, however, also shows that there are some significantly positive relationships between formality and SRJQ. It shows “Inves-tors in People” (IiP), “meetings between man-agement and employee,” and the “presence of a performance appraisal program” have a positive and significant influence on SRJQ. One possible explanation is that these formal procedures are not purely rule-bound, but allow employee concerns to be taken into ac-count. IiP, for example, requires evidence of systematic training. The role of IiP, however, becomes nonsignificant when a random ef-fects ordered probit is applied, which is com-

patible with the rather mixed picture that emerges when the links between IiP small-firm performance have been examined else-where (Ram, 2000; Fraser, 2003).

Finally, the overall SRJQ model is esti-mated separately for single- and multi-site workplaces. For simplicity, we allow here for possible distinct differences between employ-ees who feel very satisfied and all other work-ers. We use a binary variable taking the value of unity if the worker reports being very satis-fied with his or her job and zero otherwise. Probit estimates (reported as marginal ef-fects)15 of the probability of being very satis-fied with job aspects are given in Table IV. Column 1 shows that employees in multi-site workplaces owned by an SME are more likely to be “very satisfied” than those in workplaces owned by a large enterprise. It also shows that having “a person mainly concerned with HR issues,” the “existence of a formal strategic plan,” and the “presence of a dispute proce-dure” all lower the probability of high SRJQ in workplaces owned by large enterprises. The “communication channels” coefficient was negative and statistically significant in both types of multi-site workplaces. Our interpreta-tion of this finding is that employees may feel either that communication should be more personal and direct or they simply dislike newsletters. In contrast, having a “formal tar-get” was associated with high levels of SRJQ. Not surprisingly, having “meetings between management and employees” increased the probability of high SRJQ in multi-site work-places owned by an SME. Also, the formality variable that captures “any non-payment benefits,” was found to be negative and statis-tically significant. Finally, the coefficient of the “presence of a grievance policy” was found to be positive and statistically signifi-cant for the large firm sub-sample.

The results for the single-site workplaces shown on the right-hand side of Table IV are very important because here, as shown in the first column, the coefficient of SMEs vari-able is not significant. That is, the size of the owning enterprise does not influence SRJQ in such workplaces. The SMEs dummy, how-ever, is highly negatively correlated with having “a person mainly concerned with HR



T A B L E I I I Estimates of the Overall SRJQSpecifi cation Ordered Probit RE Ordered Probit OLS

Variable Coeff. Coeff. Coeff.

Workplace size (5–49)

50–99 –0.178** –0.207** –0.100**

0.039 0.060 0.024

100–249 –0.226** –0.271** –0.165**

0.038 0.059 0.024

250–499 –0.259** –0.322** –0.191**

0.045 0.071 0.029

500+ –0.259** –0.288** –0.196**

0.043 0.068 0.027

Establishment (w/pls that are part of a multi-plant fi rm)

Single workplace fi rm 0.127** 0.172** 0.109**

0.034 0.051 0.021

Formality

Person mainly concerned with HR issues –0.089** –0.080* –0.046**

0.028 0.045 0.018

Existence of a formal strategic plan 0.001 0.008 –0.006

0.038 0.057 0.024

Investors in People (IiP) 0.053** 0.062 0.048**

0.026 0.041 0.017

Presence of tests at induction as part of recruitment –0.043 –0.052 –0.023

0.064 0.090 0.039

Any communication channels, e.g., e-mail –0.484** –0.513** –0.339**

0.131 0.165 0.073

Any meeting between management and employee 0.122** 0.134* 0.110**

0.051 0.076 0.032

Presence of a dispute procedure –0.078** –0.066 –0.031*

0.028 0.042 0.017

Presence of an equal opportunity policy 0.028 0.018 0.017

0.042 0.063 0.026

Presence of a grievance policy –0.069 –0.098 –0.032

0.073 0.102 0.044

Presence of a performance appraisal program 0.074* 0.054 0.054*

0.044 0.066 0.027

Formal target 0.034 0.046 0.016

0.046 0.068 0.028

Any non-payment benefi ts –0.102** –0.118* –0.064**

0.049 0.069 0.029

Controls Yes Yes Yes

Log likelihood –8,964.0 –8,807.9

Chi2 [degrees of freedom] 1,081.4[50] 714.3[50]

Rho – 0.144

0.012

R-squared 0.138

Observations 9,370 9,370 9,370

Note: Standards errors are reported beneath parameter estimates (in italic).** Signifi cant at the 5% level.*Signifi cant at the 10% level.



issues.”16 We therefore re-estimated the model by including interactions between the two dummies. We found the interaction be-tween SMEs and not having “a person mainly concerned with HR issues” increased the prob-ability of reporting high SRJQ, when com-pared with a large enterprise that does have “a person mainly concerned with HR issues.”

One interpretation of this result is closely aligned with the explanation Welbourne and Cyr (1999) provided. In SMEs, HR “profes-sionals” change informal procedures that the workforce may have felt worked well in the past. The extent to which informal proce-dures change may also be influenced by the prior experience of the HR professional. It suggests that someone coming into an SME and applying “large firm procedures” is likely to encounter problems. Again, this could only be verified through tracking a panel of firms; still, our explanation is compatible with SRJQ declining with greater formality.

In relation to H6, Table IV shows that a size effect is present even after formality and control variables are taken into ac-count. In other words, we found, as did Kalleberg and Van Buren (1996), that even after controlling for “theoretically interest-ing” variables, size continued to be associ-ated with SRJQ. This is consistent with the presence of a pure size effect as identified by Tsai et al. (2007).

In summary, the formality measures point consistently in a monotonic direction for single-site workplaces. The three formal-ity variables found to be statistically signifi-cant all carry a negative sign. This is not the case for the multi-site workplaces, where the direction was more mixed. We also found that some formality variables associ-ated with SRJQ in multi-site workplaces owned by a large enterprise were also associ-ated with SRJQ in large, single-site enter-prises, but in a different direction. For ex-ample, employees working in large, single-site workplaces with a “formal strate-gic plan” are more likely to be “very satis-fied” than those who work in a large single-site enterprise with no “formal strategic plan.” The opposite is found in multi-site workplaces owned by large firms. Perhaps in

single, large workplaces this may proxy for the management having a clear vision for the enterprise and the ability to ensure this is shared by the workforce.

Implications for Practice

Our results have implications for business owners, HR professionals, and public policy makers. For the business owner whose enter-prise exceeds 100 workers, a key decision is when to employ an HR professional for the first time. While clear advantages exist for employing such an individual (most notably a greater awareness of and com-pliance with legislation), this paper shows that costs are likely to stem from lower job quality among a workforce that feels the enterprise has become overly bu-reaucratic. The “easy” conclusion is that additional formality in small workplaces imposes a clear price in terms of lowered SRJQ. The finding is not wholly consis-tent, however, across all tests, and the nature of that formality and the circumstances in which it is applied have to be considered. Hence, we would not conclude that all formality should be avoided in SMEs, because extreme informality can be a cover for autocracy (Rainnie, 1989).

There are also instances where formaliza-tion is consistent with the firm’s direction. Ram et al. (2001) provided such an example. They discussed a food manufacturing firm that had grown in size and rationalized and modernized its production process. The re-sult in HR terms was, as a manager memora-bly noted, a shift from being “very laid back” to being “laid back.” Formal procedures for discipline were now used, for example, but the shop floor atmosphere remained personal and workplace relations were generally good. In this case, therefore, a “fit” was achieved. This paper showed that as firms grow, they become more formalized. In doing so, how-ever, they risk having a negative effect on their employees’ work experience. Achieving

This paper showed

that as firms grow,

they become more

formalized. In

doing so, however,

they risk having a

negative effect on

their employees’

work experience.



TA

BL

EI

V P

robi

t Est

imat

es o

f Ove

rall

SRJQ

Sam

ple

Wo

rkp

lace

s t

ha

t a

re p

art

of

a m

ult

i-sit

e

fi rm

Sin

gle

-wo

rkp

lace fi

rm

s

Mo

del

III

III

III

III

IV1

Org

an

izati

on

siz

e:

Ove

rall

SM

Es

La

rge

fi rm

s

Ove

rall

Overa

ll S

ME

sLarg

e

fi rm

s

Vari

ab

leM

EM

EM

EM

E

ME

ME

Fir

m s

ize (

Larg

e fi

rm

s)

S

ME

s0.

059*

*—

—0.

049

——

—0.

022

0.03

8Fir

m s

ize &

HR

(Larg

e fi

rm

wit

h a

pers

on

main

ly c

on

cern

ed

wit

h H

R i

ssu

es)

S

ME

s w

ith

a p

erso

n m

ain

ly c

on

cern

ed

wit

h H

R is

sues

——

——

0.00

4

0

.053

——

S

ME

s w

ith

ou

t a

per

son

mai

nly

co

nce

rned

w

ith

HR

issu

es—

——

—0.

115*

*

0.

044

——

La

rge

fi rm

s w

ith

ou

t a

per

son

mai

nly

co

nce

rned

wit

h H

R is

sues

——

——

0.02

8

0.

054

——

Fo

rmality

Pe

rso

n m

ain

ly c

on

cern

ed w

ith

HR

issu

es

–0.0

42**

–0.0

39–0

.041

**–0

.082

**—

–0.1

16**

0.07

80.

014

0.05

10.

014

0.03

3

0.04

00.

078

Exi

sten

ce o

f a

form

al s

trat

egic

pla

n

–0.0

77**

0.00

0–0

.095

**0.

055*

*0.

055*

*0.

031

0.29

1**

0.02

30.

063

0.02

70.

028

0.02

80.

030

0.10

1In

vest

ors

in P

eop

le (

IiP)

0.02

6*0.

071

0.01

70.

017

0.01

40.

030

0.01

10.

013

0.05

10.

014

0.02

90.

029

0.03

40.

093

Pres

ence

of

test

s at

ind

uct

ion

as

par

t o

f re

cru

itm

ent

–0.0

220.

040

–0.0

290.

061

–0.0

950.

062

–0.0

300.

042

–0.0

280.

042

–0.0

490.

042

0.03

20.

403

Any

co

mm

un

icat

ion

ch

ann

els,

e.g

., n

ewsl

et-

ters

, in

tern

et, e

-mai

l –0

.337

**

0.

073

–0.3

01**

0.09

2–0

.333

**

0.

107

–0.0

84

0.

079

–0.0

84

0.

079

–0.0

73

0.

079

—



TA

BL

E

IV

Pr

obit

Estim

ates

of O

vera

ll SR

JQ (c

ontin

ued)

Any

mee

tin

g b

etw

een

man

agem

ent

and

em

plo

yee

0.03

7

0.

029

0.12

6*

0.

075

0.00

4

0.

033

0.01

3

0.

042

0.01

7

0.

043

0.06

8

0.

047

–0.1

84

0.

162

Pres

ence

of

a d

isp

ute

pro

ced

ure

–0

.050

**–0

.027

–0.0

51**

–0.0

07–0

.007

–0.0

05–0

.017

0.01

40.

045

0.01

50.

026

0.02

60.

029

0.09

0Pr

esen

ce o

f an

eq

ual

op

po

rtu

nit

y p

olic

y0.

031

0.05

60.

032

–0.0

25–0

.020

–0.0

13–0

.032

0.02

50.

053

0.03

20.

029

0.03

00.

031

0.14

2Pr

esen

ce o

f a

gri

evan

ce p

olic

y 0.

123*

*0.

024

0.23

2**

–0.0

89**

–0.0

87**

–0.0

94**

–0.4

140.

045

0.07

90.

063

0.04

30.

043

0.04

20.

359

Pres

ence

of

a p

erfo

rman

ce a

pp

rais

al

pro

gra

m0.

033

0.02

60.

070

0.06

00.

036

0.03

1–0

.012

0.03

3–0

.016

0.03

3–0

.013

0.03

5–0

.335

**

0.

134

Form

al t

arg

et

0.07

8**

0.10

5*0.

055*

–0.0

54*

–0.0

52–0

.035

–0.4

72**

0.02

60.

057

0.03

20.

033

0.03

30.

035

0.10

6A

ny n

on

-pay

men

t b

enefi

ts

–0.0

37–0

.114

*–0

.002

–0.0

74**

–0.0

78**

–0.0

61**

–0.4

40**

0.03

30.

063

0.04

10.

031

0.03

10.

032

0.13

9Fo

rmal

ity

du

mm

ies

(p-v

alu

e)p

=0.0

07p

=0.0

07p

=0.0

00p

=0.0

01p

=0.0

06p

=0.0

01p

=0.0

03In

tera

ctio

n d

um

mie

s (p

-val

ue)

——

——

p=0

.006

——

Log

like

liho

od

–4,3

19.2

0–5

37.3

–3,7

38.8

–1,4

22.4

–142

1.6

–1,1

43.6

–242

.7C

hi2

[deg

rees

of

free

do

m]

585.

6[46

]13

2.8[

44]

504.

7[45

]31

1.6[

46]

313.

1[47

]24

5.2[

45]

98.2

7(41

)Pr

edic

ted

pro

bab

ility

0.42

0.52

0.41

0.54

0.54

0.58

0.39

Ob

serv

atio

ns

6,75

387

25,

881

2,28

52,

285

1,85

143

4

No

tes:

All

mo

del

s co

ntr

ol f

or

per

son

al a

nd

wo

rkp

lace

ch

arac

teri

stic

s. F

ull

tab

les

are

avai

lab

le f

rom

au

tho

rs o

n r

equ

est.

Sta

nd

ard

s er

rors

are

rep

ort

ed b

enea

th p

aram

eter

est

imat

es (

in it

alic

).

SM

Es

in m

ult

i-si

te fi

rms

incl

ud

e sm

all a

nd

med

ium

siz

ed w

ork

pla

ces

that

bel

on

g t

o s

mal

l an

d m

ediu

m s

ized

fi rm

s.

Larg

e fi

rms

in m

ult

i-si

te fi

rms

incl

ud

e sm

all,

med

ium

siz

ed, a

nd

larg

e w

ork

pla

ces

that

bel

on

g t

o la

rge

fi rm

s.1 T

he

vari

able

“A

ny c

om

mu

nic

atio

n c

han

nel

s, e

.g.,

new

slet

ters

, In

tern

et, e

-mai

l” d

rop

ped

du

e to

co

linea

rity

.**

Sig

nifi

can

t at

th

e 5%

leve

l.*S

ign

ifi ca

nt

at t

he

10%

leve

l.



the balance of Ram et al.’s (2001) food manufacturer is a challenge few growing firms seem to surmount.

Our second audience is HR professionals themselves. The clear message to an HR profes-sional leaving a large firm and becoming the first-ever HR professional in a small firm is that notions of good practice are likely to be very different. A workforce that has grown with flexibility is not likely to tolerate procedure, bureaucracy, and what it perceives as slow and possibly ill-informed decision making. The challenge for the HR professional is to impose order and legislative compliance in an unob-trusive manner. Another key challenge is to introduce legislative compliance that will posi-tively contribute to employees’ perceptions of fairness. The HR professional must exercise his or her judgment regarding the extent to which legislation will achieve effective workforce management without compromising SRJQ.

The second group of HR professionals for whom our findings are relevant are those in large enterprises that operate small work-places. Our key finding is that workers in small workplaces owned by large enterprises report lower job quality than workers in simi-lar sized workplaces owned by small firms. Our view is that if worker job quality is linked to performance, then large enterprises should learn from the good practices of small firms. A simple example might be to explore whether workplace managers can have greater discre-tion in employment-related matters, without having to refer to a “head office.” As Purcell, Kinnie, Hutchinson, Rayron, & Swart (2003) found on the basis of a study of a retail chain, “the ways in which store managers exercised their discretion affected the willingness of employees to go ‘beyond contract’” (p. 55). Allowing managers in small workplaces to use such discretion may be a means to raise SRJQ and, possibly, business performance.

Our third target audience is public policy makers. In some countries, government pres-sure encourages smaller firms to embrace for-mality. This is done on the (perhaps misguided) principle that formality characterizes HRM in large firms; therefore, it must also be appropri-ate for SMEs, which are considered less well managed. Two examples of this illustrate our

point. First, government funding tends to be provided only for formal training, with infor-mal training remaining broadly unsupported. This clearly signals that governments favor formality, and if small firms wish to receive public funding, then they must shift toward greater formality. Second, examining the out-come from UK Employment Tribunals, which handle claims for unfair dismissal and other individual employment matters, shows that small firms are more likely to win their cases if they have—but more importantly actually use—formal disciplinary procedures (Saridakis, Sen-Gupta, Edwards, & Storey, 2008). In this case, there is an effective premium on evidence of formality in the workplace, providing a powerful incentive for small firms to become more formal. In our view, what has not been adequately debated is whether the costs of for-mality, particularly the risk of lower SRJQ, are worthwhile for all parties.

Implications for Research

Formality and the size of the organization both affect job quality as perceived by em-ployees. This result is consistent with the idea of the distinctive nature of HR processes in the small firm. The implication thus differs from the work of Way (2002), who found links be-tween HR systems and performance in small firms that were similar to those in large firms. Our research question differs, however, by fo-cusing on the employee rather than systems. It is thus possible that the HR-performance link as a whole is similar in large and small firms, with the route through formality and the nature of the employee response differing. We have argued, however, that there are theo-retical grounds for seeing HR practice in the small firm as distinctive (Storey, 2002). Fur-thermore, our results are consistent with the emerging view that the HR-performance link is contingent on specific contexts and not a universal (Fleetwood & Hesketh, 2008; Purcell & Kinnie, 2007). Overall, we conclude that the relevant processes in the small firm are likely to differ from those in large firms.

The importance of these findings implies the need for a deeper understanding of any causal link between SRJQ and formality in the



small entrepreneurial firm. Further research should focus on understanding the factors that influence growing firms’ decisions to introduce greater formality into their employment rela-tions. The possibility that deteriorating SRJQ causes firms to implement greater formality cannot be excluded from our data. Our view, however, is that formality is driven by exoge-nous factors such as legislation and the growth of the firm itself, rather than as a direct re-sponse to the level of SRJQ. There is a need to examine the direction of causality, which will emerge from a deeper understanding of the relevant processes at the firm level. Creating a longitudinal panel could be one approach. An-other would be to compare in more detail matched pairs of cases, examining how SRJQ is shaped by managerial practice and addressing the meaning of informality in practice.

All this, however, looks at only part of the causal chain that leads eventually to perfor-mance outcomes. We have insisted on ad-dressing the connections via employee per-ceptions rather than assuming that HR practices work automatically on employees. There is now the need to return to the causal chain as a whole to tease out the complex ways in which HR affects performance.

Acknowledgments

We are most grateful for the comments of Theresa Welbourne and Judy Tansky. Earlier versions of this paper benefi ted from the insights of Andy Charl-wood, James Curran, Kim Hoque, and others fol-lowing presentations at the International Academy of Business and Economics in Sweden, the European Academy of Management Conference (EURAM) in Ljubljana, Slovenia, and staff seminars at the Tech-nological University of Lisbon and Cardiff, Lough-borough, Sheffi eld, Glasgow, and De Montfort Uni-versities in the UK.

Paul K. Edwards and Sukanya Sen-Gupta were funded by the UK Economic and Social Research Council (ESRC) through the Advanced Institute of Management Research. The data come from the UK Workplace Employment Relations Survey 2004. We acknowledge the sponsors of the survey: the (then) Department of Trade and Industry, the ESRC, the Advisory, Conciliation and Arbitration Service, and

the Policy Studies Institute. The views expressed are those of the authors alone.

Finally we would like to thank Sharon West at CSME, Warwick Business School, who has coordi-nated the editorial efforts of fi ve authors at four dif-ferent institutions.

Notes

1. Regarding what constitutes a small enterprise, na-

tional definitions vary. In the U.S., “small” em-

braces firms with as many as 500 employees, a

ctategory too undifferentiated for our purposes.

The standard European Union definition is more

appropriate and is the one used here, but the raw

data tables also enable the U.S.-defined small busi-

ness to be identified.

2. We are very grateful to Andy Charlwood for sug-

gesting this label.

3. Information regarding the sample design, selec-

tion, details concerning the interviews, and weight-

ing can be found in the technical report (Chaplin.

Mangla, Purdon, & Airey, 2005). A detailed discus-

sion of how this related to SMEs is found in Black-

burn et al. (2007).

4. The personal characteristics of these individuals

are provided in Table A3 in the Appendix.

5. The number of observations was reduced by

36% because we excluded public sector work-

places and sole UK workplaces of a foreign

organization as well as missing values for key

variables.

6. The employees’ perception and companies’ use

regarding formal practices are also interesting is-

sues, but our data do not allow us to extract such

information.

7. Investors in People (IiP) is a government-funded

program that “helps organisations improve perfor-

mance and realise objectives through the manage-

ment and development of their people” (IiP Web

site, www.investorsinpeople.co.uk, accessed July

2008). There is a formal set of standards that lead

to accreditation; about 30,000 organizations of all

sizes are accredited.

8. These measures are not the only possible ones.

The most obvious other candidates include the

use of standard induction schemes for new em-

ployees and the presence of job evaluation

schemes. We already had measures related to

recruitment and appraisal, however, and did not



wish to overburden the analysis. In addition, in-

cluding these other measures might bias the

index of formality toward a particular element.

9. These results were derived from a principal-compo-

nent factor model and are available upon request.

10. The exception was “Managers keeping employees

informed about financial matters.”

11. The workforce and establishment characteristics

considered in the model are shown in Table A3 in

the Appendix. We also provide a summary of the

results for the overall SRJQ model.

12. Table A4 in the Appendix provides more detail. It

disaggregates the overall SRJQ into three compo-

nents. While these do offer some additional insights,

they do not alter the central findings. Of the insights,

it is noteworthy that the negative sign on “person

mainly concerned with HR issues” is strongly influ-

enced by the element of SRJQ referred to as the

“relationship between manager and employee.” It is

unrelated to the “nature of job” or the “information

provided by managers.”

13. We also estimated our ordered probit model using

weighted data. We found that the changes in the

magnitude of the coefficients were moderate. As

expected, the weighted regression did generally

inflate the standard errors, but the coefficients re-

mained statistically significant at the 5% or 10%

level.

14. A joint test for exclusion of the four size dummies

takes a value of x2(4)=38.22, x2(4)=50.54, x2(4)=70.37,, respectively. This suggests that the hypothesis of

zero restrictions on the coefficients of size variable

is rejected for each model.

15. Marginal effects are useful for interpreting the

magnitude of the effect of each variable enabling

inferences to be made about the importance of

statistically significant relationships. The problems

of focusing solely on the probability levels of sig-

nificance tests as measures of the strength of rela-

tionships are discussed by Ziliak and McCloskey

(2008).

16. (corr. = –0.47).

DAVID J. STOREY has been professor at Warwick Business School since 1988. He is a member of the Centre for Small and Medium Sized Enterprises. He is co-author, with Francis Greene, of Small Business and Entrepreneurship, published by Pearson in 2010.

GEORGE SARIDAKIS is a lecturer in business economics at Loughborough University. He is also an associate fellow at Warwick Business School and honorary fellow at Sir Arthur Lewis Institute of Social & Economic Studies at the University of the West Indies. He received his Ph.D. in economics from the Institute for Social and Economic Research at the University of Essex. His research interests are primarily in the economics of entre-preneurship and small fi rms along with a further interest in the economics of crime.

SUKANYA SEN-GUPTA has recently returned to the Industrial Relations and Organisa-tional Behaviour Group at Warwick Business School. Her research interests include em-ployee share ownership, performance management, and small and medium enterprises. She is an associate editor for a special issue of Human Relations, to be published in 2010. She has recently published in British Journal of Industrial Relations, International Jour-nal of Human Resource Management, and Industrial Relations Journal.

PAUL K. EDWARDS is professor of industrial relations at Warwick Business School, Uni-versity of Warwick. His research interests include HRM in small fi rms and HR strategies in multinational companies. He has published many journal papers on these topics and is co-author of The Politics of Working Life (2005). He is an associate editor of Human Relations.

ROBERT A. BLACKBURN is director of research, Faculty of Business and Law, and di-rector of the Small Business Research Centre, Kingston University. He is interested in sociological and economic analyses of entrepreneurship and small fi rms. Robert is edi-tor of the International Small Business Journal. His publications include Small Business and Entrepreneurship, 5-Volume Major Work (Sage, 2008) (ed. with Candida Brush);



References

Blackburn, R. A., Edwards, P. K., Storey, D. J., Saridakis, G., & Sen-Gupta, S. (2007). The analysis of SMEs and some methodological challenges. In K. Whitfi eld & K. Huxley (Eds.), Innovations in the 2004 Workplace Employment Relations Survey (pp. 119–145). Cardiff, UK: Cardiff University.

Bolton Committee. (1971). Report of the Committee of Inquiry on small fi rms, Cmnd 4811. London: Her Majesty’s Stationery Offi ce.

Boselie, P., Dietz, G., & Boon, C. (2005). Commonali-ties and contradictions in HRM and performance research. Human Resource Management Journal, 15(3), 67–94.

Bryson, A., Forth, J., & Kirby, S. (2005). High-involve-ment management practices, trade union repre-sentation and workplace performance in Britain. Scottish Journal of Political Economy, 52(3), 451–491.

Chaplin, J., Mangla, J., Purdon, S., & Airey, C. (2005). The Workplace Employment Relations Survey (WERS) 2004: Technical report (cross-section and panel surveys). London: National Centre for Social Research.

Combs, J., Liu, Y., Hall, A., & Ketchen, D. (2006). How much do high-performance work practices matter? A meta-analysis of their effects on performance. Personnel Psychology, 59, 3, 501–558.

Coyle-Shapiro, J., & Kessler, I. (2000). Consequences of the psychological contract for the employment relationship. Journal of Management Studies, 37(7), 903–930.

Cully, M., Woodland, S., O’Reilly, A., & Dix, G. (1999). Britain at work. London: Routledge.

Curran, J., & Stanworth, J. (1981). A new look at job satisfaction in the small fi rm. Human Relations, 34(5), 343–365.

Delbridge, R., & Whitfi eld, K. (2001). Employee percep-tions of job infl uence and organizational participa-tion. Industrial Relations, 40(3), 472–490.

DiMaggio, P., & Powell, W. (1983). The iron cage revisited: Institutional isomorphism and collective rationality in organizational fi elds. American Socio-logical Review, 48(2), 147–160.

Edwards, P. (1989). The three faces of discipline. In K. Sisson (Ed.), Personnel management in Britain. Oxford: Blackwell.

Fleetwood, S., & Hesketh, A. (2008). Theorising under-theorisation in research on the HRM-performance link. Personnel Review, 37(2), 126–144.

Forth, J., Bewley, H., & Bryson, A. (2006). Small and medium-sized enterprises: Findings from the 2004 Workplace Employment Relations Survey. London: Department of Trade and Industry.

Fraser, S. (2003). The impact of Investors in People on small business growth: Who benefi ts? Environment and Planning C, 21(6), 793–812.

Gallie, D. (2003). The quality of working life: Is Scan-dinavia different? European Sociological Review, 19(1), 61–79.

Gallie, D., Felstead, A., & Green, F. (2004). Changing patterns of task discretion in Britain. Work, Employ-ment and Society, 18(2), 243–266.

Gallie, D., White, M., Cheng, Y., & Tomlinson, M. (1998). Restructuring the employment relationship. Ox-ford: Oxford University Press.

Ghobadian, A., & O’Regan, N. (2006). The impact of ownership on small fi rm behaviour and perform-ance. International Small Business Journal, 24(6), 555–586.

Golhar, D., & Deshpande, S. (1997). HRM practices of large and small Canadian manufacturing fi rms. Jour-nal of Small Business Management, 35(3), 30–38.

Green, F. (2006). Demanding work: The paradox of job quality in the affl uent economy. Princeton, NJ: Princeton University Press.

Hoque, K. (2003). All in all, it’s just another plaque on the wall: The incidence and impact of the Investors in People standard. Journal of Management Stud-ies, 40(2), 543–571.

Hoque, K. (2008). The impact of Investors in People on employer-provided training, the equality of training provision and the training apartheid phenomenon. Industrial Relations Journal, 39(1), 43–62.

Idson, T. (1990). Establishment size, job satisfaction and the structure of work. Applied Economics, 22(8), 606–628.

Researching the Small Enterprise (Sage, 2001) (with James Curran); and Intellectual Property and Innovation Management in Small Firms (ed., Routledge, 2003). His latest research involves understanding the role of community organizations and small fi rms, and public policy interventions for entrepreneurship more broadly.



Ingham, G. K. (1970). Size of industrial organization and worker behaviour. Cambridge: Cambridge University Press.

Investors in People (IiP Web site). Retrieved July 2008, from www.investorsinpeople.co.uk

Kalleberg, A. L. (1977). Work values and job rewards: A theory of job satisfaction. American Sociological Review, 42(1), 124–143.

Kalleberg, A. L., & Van Buren, M. E. (1996). Is bigger better? Explaining the relationship between organi-zation size and job rewards. American Sociological Review, 61(1), 47–66.

Kaman, V., McCarthy, A. M., Gulbro, R. D., & Tucker, M. (2001). Bureaucratic and high commitment human resource practices in small service fi rms. Human Resource Planning, 24(1), 33–39.

Kersley, B., Alpin, C., Forth, J., Bryson, A., Bewley, H., Dix, G., et. al. (2006). Inside the workplace: Find-ings from the 2004 Workplace Employee Relations Survey. Abingdon, UK: Routledge.

Kitching, J., & Blackburn, R. (2002). The nature of train-ing and motivation to train in small fi rms (DFES Research Report 330). London: Department for Education and Skills.

Kotey, B., & Slade, P. (2005). Formal human resource management practices in growing small fi rms. Journal of Small Business Management, 43(1), 16–40.

Marginson, P. (1984). The distinctive effects of plant and company size on workplace industrial relations. Brit-ish Journal of Industrial Relations, 22(1), 1–14.

Mata, J., & Portugal, P. (2002). The survival of new do-mestic and foreign owned fi rms. Strategic Manage-ment Journal, 23(4), 323–343.

McGovern, P., Smeaton, D., & Hill, S. (2004). Bad jobs in Britain. Work and Occupations, 31(2), 225–249.

Nadin, S., & Cassell, C. (2007). New deal for old? Exploring the psychological contract in a small fi rm environment. International Small Business Journal, 25(4), 417–443.

Purcell, J., & Kinnie, N. (2007). HRM and business per-formance. In P. Boxall, J. Purcell, & P. Wright (Eds.), The Oxford handbook of human resource manage-ment. Oxford: Oxford University Press.

Purcell, J., Kinnie, N., Hutchinson, S., Rayron, B., & Swart, J. (2003). Understanding the people and performance link. London: Chartered Institute of Personnel and Development.

Rainnie, A. (1989). Industrial relations in small fi rms. London: Routledge.

Ram, M. (2000). Investors in People in small fi rms. Personnel Review, 29(1), 69–91.

Ram, M., Edwards, P., Gilman, M., & Arrowsmith, J. (2001). The dynamics of informality: Employment relations in small fi rms and the effects of regula-tory change. Work, Employment and Society, 15(4), 845–861.

Rose, M. (2005). Job satisfaction in Britain: Coping with complexity. British Journal of Industrial Rela-tions, 43(3), 455–467.

Saridakis, G., Sen-Gupta, S., Edwards, P., & Storey, D. J. (2008). The impact of enterprise size on Employ-ment Tribunal incidence and outcomes: Evidence from Britain. British Journal of Industrial Relations, 46(3), 469–499.

Storey, D. J. (2002). Education, training and devel-opment policies and practices in medium-sized companies in the UK: Do they really infl uence fi rm performance? Omega, 30(4), 249–264.

Storey, D. J., & Sykes, N. S. (1996). Uncertainty, inno-vation and management. In P. Burns & J. Dewhurst (Eds.), Small business and entrepreneurship (pp. 73–93). London: Palgrave.

Storey, D. J., & Westhead, P. (1997). Management train-ing in small fi rms: A case of market failure? Human Resource Management Journal, 7(2), 61–72.

Tsai, C.-J., Sen-Gupta, S., & Edwards, P. (2007). When and why is small beautiful? The experience of work in the small fi rm. Human Relations, 60(12), 1779–1808.

Turnley, W., & Feldman, D. (1999). The impact of psy-chological contract violations on exit, voice, loyalty and neglect. Human Relations, 52(7), 895–922.

Wall, T. D., & Wood, S. (2005). The romance of human resource management and business performance, and the case for big science. Human Relations, 58(4), 429–462.

Way, S. (2002). High performance work systems and intermediate indicators of fi rm performance within the US small business sector. Journal of Manage-ment, 28(6), 765–785.

Welbourne, T. M., & Andrews, A. O. (1996). Predicting the performance of initial public offerings: Should human resource management be in the equation? Academy of Management Journal, 39(4), 891–919.

Welbourne, T. M., & Cyr, L. A. (1999). The human re-source executive effect in Initial Public Offering fi rms. Academy of Management Journal, 42(6), 616–629.

Ziliak, S., & McCloskey, D. (2008). The cult of statistical signifi cance: How the standard error cost us jobs, justice, and lives. Ann Arbor: University of Michi-gan Press.



T A B L E A 1Average Formality by Workplace and Firm Size (0–1 with 1 = Yes and 0 = No; weighted estimates %)

Firm size OwnershipWorkplace Size

Ho:

Proportions

are equal

(p-value)

5–49 50–99 100–249 250–499 500+

5–49 Multi-workplace (51.64) — — — — —Single workplace 51.39 — — — — —

50–99 Multi-workplace 64.28 76.81 — — — p = 0.025Single workplace — 68.01 — — —

100–249 Multi-workplace 72.23 80.85 (76.00) — — p = 0.243Single workplace — — 74.59 — — —

250–499 Multi-workplace 71.61 (74.42) 84.15 (77.49) p = 0.003Single workplace — — — 74.85 — —

500+ Multi-workplace 82.72 85.81 86.51 90.44 (89.91) p = 0.000Single workplace — — — — 85.71 —

Ho: proportions are equal (p-value)

Multi-workplace p = 0.000

p = 0.000 p = 0.008 p = 0.023 — —

Single workplace — — — — — —

Note: Within each workplace size, we tested whether the proportions of single-site workplaces and multi-site workplaces, with the same or different fi rm size, were statistically different from each other. Parentheses show that the difference is statistically insignifi cant at the 5% level.

T A B L E A 2Average SRJQ by Workplace and Firm Size (0 = very dissatisfi ed; 4 = very satisfi ed; weighted estimates)

Firm size OwnershipWorkplace Size

Ho:

Proportions

are equal

(p-value)

5–49 50–99 100–249 250–499 500+

5–49 Multi-workplace 2.55 — — — — —Single workplace 2.74 — — — — —

50–99 Multi-workplace 2.36 (2.55) — — — p = 0.112Single workplace — 2.49 — — — —

100–249 Multi-workplace 2.50 (2.44) (2.23) — — p = 0.008Single workplace — — 2.27 — — —

250–499 Multi-workplace 2.17 2.17 (2.26) 2.08 — p = 0.322Single workplace — — — 2.34 — —

500+ Multi-workplace 2.56 2.36 (2.27) 2.15 (2.17) p = 0.000Single workplace — — — — 2.19 —

Ho: proportions are equal (p-value)

Multi-workplace p = 0.000

p = 0.001 p = 0.852 p = 0.417 — —

Single workplace — — — — — —

Note: Within each workplace size, we tested whether the proportions of single-site workplaces and multi-site workplaces, with the same or different fi rm size, were statistically different from each other. Parentheses show that the difference is statistically insignifi cant at the 5% level.



T A B L E A 3 Description of the Individual and Establishment Characteristics (N = 9,370)1

Mean

(%)

Asso-

ciation

Mean

(%)

Asso-

ciation

Individual Characteristics Establishment Characteristics

Male 54.19 pos. Ln(Establishment age) 3.21 insign.Age (Less than 21) Gender diversity (uneven) Age (22–49) 69.09 neg. Equally by men and women 36.69 pos. Age (50 and over) 24.36 insign. % of Employees working

part time20.44 pos.

White 95.08 insign. Training (0 or less than 1 day over the past 12 months)

Single 22.59 insign. 1 to less than 5 day) 59.23 insign.No child 83.08 insign. 5 days or more 26.10 pos.No qualifi cation 15.73 pos. Sector (Public administration

and education)Job Contract (Permanent) Manufacturing 21.61 neg. Temporary 3.38 pos. Electricity, gas, and water 2.66 insign. Fixed 2.22 insign. Construction 6.49 pos.Tenure (More than 10 years) Wholesale and retail 14.24 insign. Less than 1 year 14.83 pos. Hotels and restaurants 3.67 insign. 1–2 years 12.26 pos. Transport and communi

cation7.45 insign.

2–5 years 28.21 insign. Financial services 8.08 insign. 5–10 years 19.69 insign. Other business services 16.56 insign.Occupational Status (Non-managerial duties)

Health 8.55 pos.

Manager or supervisor 38.37 pos. Other community services 6.30 insign.Occupational Tasks (Computer is needed) No need to use computer 23.48 neg.Ln(Income) 5.74 pos.Ln(Working hours) 3.58 neg.Member of Trade Union (Never or not recently)

Recent Member of Trade Union

24.88 neg.

1The fi gures that are reported are based on the overall SRJQ model.



T A B L E A 4 Ordered Probit (I) and Ordered Probit Random Effects (II) Estimates of SRJQ

Measures of Satisfaction Nature of the JobInformation Provided

by Managers

Relationship

Between Manager

and Employee

Model: I II I II I II

Variable Coeff. Coeff. Coeff. Coeff. Coeff. Coeff.

Workplace size (5–49) 50–99 –0.082** –0.082* –0.098** –0.127** –0.170** –0.200**

0.036 0.048 0.035 0.058 0.037 0.059 100–249 –0.135** –0.146** –0.207** –0.262** –0.227** –0.270**

0.035 0.047 0.034 0.058 0.036 0.059 250–499 –0.145** –0.159** –0.244** –0.297** –0.311** –0.375**

0.041 0.057 0.040 0.069 0.043 0.070 500+ –0.243** –0.254** –0.158** –0.189** –0.278** –0.311**

0.040 0.055 0.039 0.067 0.042 0.068

Establishment (w/pls that

are part of a multi-

plant fi rm)

Single workplace fi rm 0.141** 0.158** 0.076** 0.095* 0.130** 0.178**

0.031 0.041 0.030 0.049 0.032 0.050

Formality Person mainly concerned with HR issues

–0.016 –0.008 –0.019 –0.009 –0.085** –0.082*0.026 0.036 0.026 0.044 0.027 0.044

Existence of a formal strate-gic plan

0.015 0.017 0.011 0.012 –0.050 –0.0490.034 0.046 0.034 0.055 0.036 0.057

Investors in People (IiP) 0.043* 0.041 0.076** 0.076* 0.031 0.0390.024 0.033 0.024 0.040 0.025 0.041

Presence of tests at induc-tion as part of recruitment

0.001 –0.015 –0.060 –0.041 –0.052 –0.0460.058 0.074 0.057 0.086 0.061 0.088

Any communication channels, e.g., e-mail

–0.533** –0.572** –0.615** –0.661** –0.376** –0.403**0.117 0.137 0.113 0.149 0.122 0.158

Any meeting between man-agement and employee

0.021 0.012 0.233** 0.229** 0.151** 0.149**0.046 0.061 0.045 0.072 0.048 0.074

Presence of a dispute procedure

–0.040 –0.031 –0.075** –0.060 –0.055 –0.0420.025 0.034 0.025 0.041 0.026 0.042

Presence of an equal opportunity policy

–0.004 –0.020 0.067* 0.061 0.035 0.0250.038 0.051 0.037 0.061 0.040 0.063

Presence of a grievance policy

0.018 0.001 0.028 0.008 –0.133* –0.1400.065 0.082 0.063 0.095 0.068 0.099



T A B L E A 4 Ordered Probit (I) and Ordered Probit Random Effects (II) Estimates of SRJQ (Continued)Presence of a performance appraisal programme

0.027 0.024 0.109** 0.079 0.134** 0.118**0.040 0.053 0.040 0.064 0.042 0.065

Formal target –0.051 –0.047 0.072* 0.072 0.002 –0.0030.042 0.055 0.041 0.065 0.043 0.067

Any non-payment benefi ts –0.072* –0.074 –0.101** –0.102 –0.070 –0.0920.044 0.056 0.043 0.065 0.046 0.067

Controls Yes Yes Yes Yes Yes Yes Log likelihood –10,352.7 –10,271.7 –11,734.1 –11,474.1 –10,154.3 –9,958.1Chi2 [degrees of freedom] 1,078.5[50] 807.9[50] 884.8[50] 533.4[50] 1,273.4[50] 760.1[50]Rho — 0.079 — 0.157 — 0.153

0.009 0.011 0.012

Observations 11,507 11,213 10,226Notes: Standard errors are reported beneath parameter estimates (in italic). Evaluations of the job: 1 if the employee is dissatisfi ed (10.3%); 2 if satisfi ed (40.4%) and 3 if very satisfi ed (49.3%); Evaluations of information: 1 if the employee is dissatisfi ed (26.2%); 2 if satisfi ed (34.1%) and 3 if very satisfi ed (39.7%); Evaluations of manager-worker relationships: 1 if the employee is dissatisfi ed (20.9%); 2 if satisfi ed (34.4%) and 3 if very satisfi ed (44.7%).**Signifi cant at the 5% level.*Signifi cant at the 10% level.

Documents

DAVID J. STOREY, GEORGE SARIDAKIS, SUKANYA SEN-GUPTA, … · 2017-03-19 · SUKANYA SEN-GUPTA, PAUL K. EDWARDS, AND ROBERT A. BLACKBURN The process of managing a small ﬁ rm differs