Speech by Minister Kelleher at the launch of the High Performance Work Systems Report

22 January 2008

Ladies and Gentlemen,

I am grateful for the opportunity to visit you here in the Offices of the National Centre for Partnership and Performance to launch this important Report on “New Models of High Performance Work Systems”.

The report enhances our appreciation of the relationship between a range of workplace and management practices, such as partnership and diversity, and business performance outcomes including labour productivity, workforce innovation and employee turnover. It confirms our understanding that a compelling business case can be made for the greater use of High Performance Work Systems in Irish workplaces.

Defining high performance work systems

For ordinary companies and organisations, the goal of having “high performance work systems” may appear challenging. However, in my view, it simply means workplaces that are committed to progressive, open approaches to management and development of the relationship between employers and employees. Having high performance work systems means getting the basics right: for example managers with good communication skills who are capable and willing to open a dialogue and steer changes through; staff that are open to new ideas and flexible in their responses; work systems that support in equal measure productivity, profitability and dignity in the workplace.

Achieving a “high performance work system” does not mean having to scrap what is already there and build from scratch. To my mind, it means building incrementally in different areas such as

• development of trust and dialogue,
• progressive human resource management policies,
• investment in people,
• creatively managing and unlocking the talents of a diverse workforce,
• good communications which build camaraderie and trust,

In the words of the NCPP’s recent campaign it is about being “open to change, open to partnership”.

Findings of the Report

This is not just about a “feel good factor” – it is backed up by a hard-edged business case. This Report adds to the growing body of research, both in Ireland and abroad which confirms the link between progressive work systems and bottom-line productivity gains:

• In terms of labour productivity, the Report found that companies implementing High Performance Work Systems to an advanced degree were 14.8% more productive than other companies.
• Similarly, employee turnover rates in companies implementing High Performance Work Systems to an advanced degree were 7.7% lower than in other companies.

National Workplace Strategy

As Minister for Labour Affairs, I have a particular interest in this study and its contribution to the continuing roll out of the Government’s National Workplace Strategy. I firmly believe that the quality of Irish workplaces and the levels of innovation and change in them are critical to Ireland’s ongoing transition to a more dynamic, highly skilled and knowledge economy. The National Workplace Strategy focuses on stimulating workplace change and innovation, and recognizes the critical role that social partnership can play in this process.

The Strategy has identified five strategic priority areas in which action is currently being concentrated:

• Commitment to Workplace Innovation
• Capacity for Change
• Developing Future Skills
• Access to Opportunities
• Quality of Working Life

The Strategy identifies the need for greater innovation in products and processes but also the need for more organisational innovation and related improvements in internal workplace cultures.

That is important because we tend to think of innovation only in terms of product or market innovation but innovative techniques in the human resource area are just as important. The National Workplace Strategy is focussing the attention of policy-makers and practitioners in a co-ordinated way on shaping workplaces that are adaptable, agile, knowledge-intensive, customer-centred and, crucially, inclusive of employee’s perspectives.

Funding

We have reached an important juncture with the National Workplace Strategy, where the messages and objectives agreed and adopted at national level by the Government and the social partners are now being targeted at workplace level, across the public and private sectors. The new Workplace Innovation Fund, with funding totalling €9 million over a three year period, is playing an important role in supporting this process.

I am pleased to say that my Department, through Enterprise Ireland in conjunction with the NCPP, targets support under the Fund for companies that seek to improve their competitiveness and productivity by introducing new organisational processes, practices and arrangements. It is important that we track the tangible improvements that are being made in these companies and I know that the NCPP is doing important work in identifying the key learning points from these case studies so that they can be translated into actions in other companies and enterprises.

In addition, my Department is directly supporting the Social Partners in building their own capacities to progress the National Workplace Strategy and I would encourage them to continue to maximise available funds and to use them productively to help equip our workplaces for the challenges that lie ahead.

Challenges ahead

It is not surprising that this Report has identified partnership as one of a bundle of work practices and policies that are found more extensively in high performing organisations. Let us be under no illusion, partnership at national and workplace level has contributed immensely to this country’s development over the past twenty years.

Undoubtedly, there are challenging times ahead - pay talks will begin next month against an economic backdrop which is more challenging than we have had in many years. However, the Taoiseach – and this Government - remains as committed as ever to the goal of inclusive, open dialogue with the social partners. It is crucially important now that we hold our nerve and stick with the approaches that have seen us gain so much in the past. If partnership got us out of the rut in the late 1980’s and gave us a fairer distribution during the high performance years, it can surely see us through the period of more sustainable growth that lies ahead.

Conclusion

In Ireland, in the EU and across the world, all sectors are affected by change and restructuring. It is not just a cliché to say that “change is the only constant” – especially when it comes to the economy and the workplace.

The structure of employment is moving ever more away from traditional sectors to new, rapidly expanding service activities, many of which require different forms of work organisation. This Report highlights the benefits of developing general and HR management capabilities for Irish business and employers, and demonstrates the practical rewards that companies can gain by becoming more open to partnership, innovation, diversity and change as we move forward. It presents a compelling business case for the greater use of this bundle of practices in Irish workplaces and shows that the establishment of High Performance Work Systems is an investment, rather than just a cost, and it can generate substantial returns.

Finally, I would like to congratulate Peter Cassells, Lucy Fallon-Byrne and the NCPP team and Niall Crowley and his colleagues at the Equality Authority for their commissioning this important piece, which is part of an ongoing joint programme of work to explore the business case for workplace innovation strategies.

Professor Patrick Flood, Professor James Guthrie and Dr Victor Liu must also get a special mention for their time and effort in heading up teams of researchers from Dublin City University, Limerick University and Kansas University to work on the project.. believe that this Report, in reinforcing and building on the existing evidence, is essential reading for all Irish companies and all of us who are committed to maintaining and improving productivity and competitiveness.

ENDS/LA 267