Flexibility and Fairness in Liberal Market Economies: The Comparative Impact of the Legal Environment and High‐Performance Work Systems

Abstract

This paper compares management flexibility in employment decision-making in the United States and Canada through a cross-national survey of organizations in representative jurisdictions in each country, Pennsylvania and Ontario respectively, that investigates the impact of differences in their legal environments. The results indicate that, compared to their Ontario counterparts, organizations in Pennsylvania have a higher degree of flexibility in employment outcomes, such as higher dismissal and discipline rates, yet do not experience any greater flexibility or simplicity in management hiring and firing decisions. One explanation for this result may lie in the finding that organizations in Pennsylvania experience greater legal pressures on decision making, reflecting the generally more intense conflict in the employment law system in the United States. By contrast, high performance work systems, which some have looked to as a possible management-driven mechanism for enhancing fairness in employment, had more modest effects. Pennsylvania have a higher degree of flexibility in employment outcomes, such as higher dismissal and discipline rates, yet do not experience any greater flexibility or simplicity in management hiring and firing decisions. One explanation for this result may lie in the finding that organizations in Pennsylvania experience greater legal pressures on decision making, reflecting the generally more intense conflict in the employment law system in the United States. By contrast, high performance work systems, which some have looked to as a possible management-driven mechanism for enhancing fairness in employment, had more modest effects.2

American workplace dispute resolution in the individual rights era

“…Even though strikes were, and are even more so now, relatively infrequent occurrences, the threat of strikes provided the underpinning of labor bargaining power at the negotiating table and the key to achieving union goals for labor contracts (Katz, Kochan and Colvin 2008). In the new individual rights employment relations system, the threat of lawsuits provides a parallel role in exerting pressure on the employers to ensure fair treatment of employees in the 1997-1998, 1998-1999, and 1999-2000), which may sound large, but only represents an annual rate of 50.5 complaints per 100,000 residents of the state (Colvin 2006). This rate suggests that a discrimination complaint or lawsuit is an unusual event for an individual employee.…”

Convergence in Industrial Relations Institutions: The Emerging Anglo-American Model?

“…Canadian employment law provides for protection against unfair dismissal through a combination of employment standards legislation and common law rights against wrongful dismissal. Rather than reinstatement, however, the standard remedy for unfair dismissal in Canadian employment law (as in our other countries) is damages equivalent to lost salary or wages for a period equal to what the employer should have provided in reasonable notice before dismissal (Colvin 2006). This can be a substantial amount, as much as one month per year of service under common law rights.…”

“…Employment discrimination claims can be pursued through the general court system, commonly involving jury trials with the potential for much larger damage awards than found in other countries. Given concerns over major damage awards if an employment decision is found to be tinged by discriminatory motives, American employers tend to exercise a degree of caution in dismissal decision making that does not reflect the seemingly high degree of flexibility inherent in the employment-at-will rule (Colvin 2006).…”

The Effects of National Institutions and Collective Bargaining Arrangements on Job Quality in Front-Line Service Workplaces

“…According to this view, distinct national patterns of production m ethods and vocational training differentiate coordinated economies (Mau rice, Sellier, and Silvestre 1986), and varied labor law and union organization patterns differentiate liberal economies (Colvin 2006;Godard 2002). For example, U.K. legislation on working time and employm ent protection is increasingly influenced by EU social direc tives, which impose employer constraints not present in the U nited States.…”