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IJOPM
20,8
932
International Journal of Operations &
Production Management,
Vol. 20 No. 8, 2000, pp. 932-958.
# MCB University Press, 0144-3577
An empirical study of human
resource management
strategies and practices in
Australian just-in-time
environments
Damien Power and Amrik S. Sohal
Monash University, Caulfield East, Victoria, Australia
Keywords Human resource management, Australia, Just-in-time
Abstract This study seeks to further examine the extent and emphasis of particular human
resource management strategies in Australian JIT companies through an empirical analysis of
survey data. The results indicate that the management of the human variable in Australian JIT
environments can be characterised by a stronger emphasis on a number of factors, including, for
example: change management; participative decision making; flexibility and multi-skilling; and
open and effective communication processes. What was particularly striking from this analysis
was the evidence gained not only of the added emphasis on these issues in the JIT companies, but
of the potential for ``adding value'' through combining management strategies. It is evident that
the companies identified as being more heavily involved in JIT practices appear to be more
focused on particular human resource management strategies, and as a result see the
management of the human variable as critical to the success of their operation. It could perhaps
be further hypothesised as a result that there is a process of organisational learning going on in
these companies, creating conditions enabling these organisations to more completely and
effectively tap into and develop their human potential.
Introduction
Background
During the 1970s it was becoming apparent that there had been major
advances in productivity and quality in Japanese manufacturing. Basic
assumptions underpinning the operations of Western manufacturing
organisations were being challenged by apparently simple (and to some,
simplistic) philosophies relating to operational, inventory and quality control
issues. Long runs of one product line, large buffer stocks, acceptance of
tolerable scrap levels based on statistical samples and the use of multiple
suppliers in order to secure the lowest unit cost characterised the Western
manufacturing mindset. In Japan, by contrast, these assumptions had long
been regarded as excessively wasteful and in fact compounding, rather than
solving, the problems they were intended to resolve. Japanese companies had
dedicated considerable time and effort to the development of systems aimed at
maximising customer service with minimum inventory and at high quality
levels. The Toyota production system was one such example. Developed at
Toyota after the Second World War, it provided the basis for what was to
become known popularly as just-in-time (JIT). Up until this time the thrust of Australian
much of the analysis of Japanese production systems had focused on cultural just-in-time
differences and concluded that there was a particular Japanese ``mindset'' that environments
facilitated their success.
Schonberger (1982) championed the notion that these systems were based on
a set of procedures and techniques that could be implemented independent of
any particular cultural or environmental conditions. In fact it was Schonberger 933
who provided the most enduring definition of the just-in-time manufacturing
system:
The JIT idea is simple: Produce and deliver finished goods just in time to be sold, sub-
assemblies just in time to be assembled into finished goods, fabricated parts just in time to go
into sub-assemblies, and purchased materials just in time to be transformed into fabricated
parts (Schonberger, 1982, p. 1).

As such, JIT can be identified as a philosophy aimed at minimising total costs

through the pursuit of continuous improvement, the application of specific
manufacturing and purchasing techniques, a commitment to total quality and
the unlocking of the full potential of an organisation's human resources. It must
therefore be viewed as a total solution, the effectiveness of which is dependent
on the interaction of all component parts. At the heart of this approach was the
requirement for not only changes to production systems and techniques, but
also a fundamental change in decision-making processes, attitudes to employee
development and involvement and quality improvement initiatives. This
approach was further developed by authors such as Hall (1986), who put
forward the notion of total people involvement alongside the techniques of JIT
and total quality management (TQM) to create a concept of ``manufacturing
excellence''.
The three aspects were seen to both interact and be complementary, but the
``people involvement'' factor was seen to be the one that was critical to the
success of both JIT and TQM. How this factor was to be best managed was also
tackled to some degree in implementation texts such as that by Sandras (1989).
The traumatic nature of change was recognised as a factor that needed to be
understood and managed. Despite the fact that changing to a JIT system meant
an overall simplification of processes and systems, the impact of these changes
on the organisation's human resources was profound and lasting. It was
recognised that the importance of ``people involvement'' had to be balanced
against an understanding of what this change in involvement meant both to the
individuals involved and the organisation itself. The human dynamics of the
organisation in a JIT environment are altered, with different skills and abilities
required, changed management approaches used, management structures
altered and control processes re-assessed.
Stating that JIT requires and facilitates greater levels of employee
involvement that will be critical to success (or otherwise) oversimplifies the
profound nature of these changes and their attendant difficulties. It is therefore
surprising (although not entirely unexpected given their more obvious and
visible nature) that much of the research carried out prior to 1990 concentrated
IJOPM on the manufacturing techniques employed in a just-in-time environment,
20,8 rather than the more subtle people and quality related aspects. Golhar and
Stamm (1991) found that of 180 articles reviewed only 12 related to human
resource management issues and six to total quality control. They further
found that key issues such as cross training, group decision making and
continuous quality improvement only became prominent in the research
934 literature in the late 1980s.
Contrasted with this is the fact that many of the early authors on Japanese
manufacturing techniques, and just-in-time in particular, stressed the
importance of these variables. Monden (1983) proposed that for JIT
implementation to be successful three areas needed to be addressed: quality
control; quality assurance; and respect for humanity. In the latter area he
emphasised employee involvement, cross training, job re-design and
enrichment, allowing greater control of processes at the shop floor level and
more open lines of communication (both vertical and horizontal).
In more recent times there has been an increase in research into the effect on
and importance of the human variable to the success of just-in-time. Davy et al.
(1992) have identified the importance of cultural change within an organisation
for the success of JIT (this factor was also highlighted in earlier studies by
Ansari (1986) and Lee and Ebrahimpour (1984)). Hiltrop (1992) has
recommended that (among other things) when firms implement just-in-time
they should invest in long term training programs, review reward systems,
involve all employees and understand how important good communication is
to the whole process.
Sumukadas and Piper (1995) suggest further that real and sustainable
continuous improvement over time may be linked to levels of employee
involvement (particularly in the area of operator maintenance), while
McLachlin and Piper (1991) have found links between JIT outcomes such as set-
up time reduction, small lot production, level production, kanban control and
synchronised production and what they call management support activities; i.e.
promoting teamwork, enhancing capabilities and increasing employee
responsibility.
Similar themes have been identified by Sohal et al. (1993a, 1993b), Harber et
al. (1989), Chan et al. (1989) and Sriparavastu and Gupta (1997) and are further
supported by Wafa and Yasin (1998), who found as a result of a survey of 130
US manufacturers and 15 site visits that firms that reported improvements in
supplier relationships, customer service and quality after implementation of
JIT were also companies where management supported implementation,
workers were involved and trained and supplier cooperation established.
It is this issue that is at the heart of the research project reported in this
paper. Given that JIT has been practised in various manufacturing
organisations in Australia for up to 15 years it was thought appropriate to look
at some of these organisations to examine how they have dealt with the human
factor.
Research objectives Australian
The prime objective of this project was therefore to examine Australian just-in-time
manufacturing organisations practising JIT to determine how they have dealt environments
with these issues, and to test for differences in approach and emphasis with
organisations not using JIT.
In order to provide a structure against which to conduct this research the
following questions were developed: 935
. To what extent are team-based structures and employee involvement
used within JIT environments?
. How important are multi-skilling and flexibility in JIT environments?
. How much influence do employees have at various levels of the
organisation in a JIT company, what degree of empowerment is present
in the JIT organisation and how is this facilitated?
. Are JIT companies characterised by a particular human resource
management style?
. Is communication characterised by different norms and processes in JIT
organisations?

Structure of the paper

This paper commences with a description of the methodology used. The
research design is outlined and the source of the data explained. The
methodologies employed for selection of variables, preparation of the data and
analysis are also detailed. The results of the analysis then follow in two
separate sections covering both factor and multiple regression analysis
outcomes. An extensive comparison of these results between identified JIT and
non-JIT companies is also included. The paper concludes with a summary of
the findings and an assessment of possible opportunities for further research.

Methodology
AMC data base
Secondary data in the form of the results of a survey carried out in Australia
and New Zealand during 1994 were used (Australian Manufacturing Council,
1994). For the purposes of this study only the data supplied from Australia
were used. A total of 3,000 Australian sites were sent a copy of the
questionnaire, of which 962 responded (a response rate of 32 per cent). The
questionnaire consisted of a total of 246 questions developed by a committee of
academics, site managers and prominent members of the Australian Quality
Awards Foundation. The focus of the questions was on the degree to which
``best practice'' had been adopted, implemented and developed within
Australian manufacturing firms and the extent to which organisational
performance had been affected. This study was seen to be appropriate for the
following reasons:
IJOPM . the large number of responses along with the breadth of the
20,8 questionnaire provided a sample of sufficient weight to justify
confidence that quantitative analysis would be fruitful;
. the results of the survey were subjected to testing for response bias,
respondent fatigue and awareness of respondents. In all cases little
evidence was found of either type of bias, leading the researchers to
936 conclude that: ``. . . the length and complexity of the survey instrument
did not seriously erode the quality of the replies'' (Ergas and Wright.
1994);
. the focus of the study was specifically trained on areas of best
manufacturing practice (e.g. JIT, teams, management initiatives in
employee involvement etc).

Design
In abstract the research design employed entailed the following:
. identification of relevant independent and dependent variables;
. factor analysis on the independent variable group to identify latent
variables or factors;
. testing for association between the identified factors (and their
combinations) and the dependent variables using regression analysis.

Identification of variables
From the data captured through the ``Australian and New Zealand
manufacturing practices survey'' (Australian Manufacturing Council, 1994), 33
variables were identified as being human resource management strategy
related or indicative of expected JIT practices and outcomes. These variables
were then separated into independent and dependent categories. The
independent variables were identified as relating to human resource
management strategies, while the dependent group was composed of variables
that measured expected JIT related practices or performance outcomes.

Data preparation and evaluation

The initial screening of the data identified and eliminated missing values,
transformed non-normal distributions and tested for univariate outliers.
Further screening covering issues such as linearity, homoscedascity,
multicollinearity and further tests for outliers and normality were conducted as
required during the analysis.

Factor analysis
The purpose of using factor analysis was to determine whether underlying
constructs or factors could be derived from the independent variable data set.
This would facilitate complex relationships between many variables being
summarised and simplified leading to a better and more accurate
understanding. This analysis was conducted initially on the whole database, Australian
and subsequently on two sub-sets of the database representing JIT and non-JIT just-in-time
companies. The purpose of this was twofold. Initially, any factors identified environments
from the full database indicating underlying human resource management
strategies would be used as independent variables in the regression analysis.
The purpose here was to test for associations between these factors and
expected JIT practices and outcomes in JIT and non-JIT companies. The second 937
factor analysis using two sub-sets of the whole database was done in order to
test for differences in the factors identified between the two groups. The
purpose here was to establish whether there were any differences in emphasis
or content between the factors in the JIT and non-JIT groups. This could
indicate possible differences in strategic approach between the two groups.

Multiple regression
The purpose of proceeding with regression analysis was to test for identifiable
human resource management strategies employed within JIT companies and to
compare these strategies with those employed in non-JIT companies by:
. determining the existence (or otherwise) of relationships between the
identified factors and expected JIT practices and outcomes in nominated
JIT and non-JIT firms;
. comparing the strength of this association between separate segments
within the JIT group;
. comparing the strength of this association between segments of the JIT
group and the non-JIT group.

Stratification of the data

In order to facilitate the analysis it was necessary to divide the data into a
number of separate groupings. This was achieved by applying a set of criteria
that reflected varying levels of performance across the dependent variable set
based on the Likert scale responses. A graphical representation of the different
case groups created through this process is included in Figure 1.
The rationale for the breakdown of the data in this way was as follows:
Group one: all JIT companies (99 cases). The selection criteria for this group
were based on responses indicating some involvement in JIT and some
involvement in set-up time reduction activities. In addition, there was a
requirement to also be working in teams, be using flexible manufacturing cells
or systems, be involved in total quality management (TQM) and be achieving
an acceptable level of quality performance. This method was chosen due to the
importance placed in the literature on the interdependence of all components in
a JIT system (Schonberger et al., 1982; Sakakibara, 1993; Wafa and Yasin, 1998;
Hall, 1986).
Group two: non-JIT companies (863 cases). This group comprised all the
companies that did not fit into the above group. It should be noted though that
it is quite possible that companies involved in some JIT practices were
IJOPM
20,8

938

Figure 1.
Breakdown of AMC
database for
quantitative analysis

contained in this group, and that by definition they were excluded from the JIT
groups. It was judged to be important that the selection criteria for the JIT
cases reflected the holistic nature of JIT and the interdependence of all
component activities (as noted above). As such, only those companies that met
all the selection criteria were included in the JIT groups.
Within the all JIT company grouping a further set of criteria were applied to
establish sub-categories:
Sub-category one: strong JIT companies (42 cases). This group was
differentiated by the removal of the variable relating to the use of value added
management (VAM), the requirement for involvement in all the other JIT
activities and the tightening of the quality criteria. This created a group of 42
cases with a higher degree of involvement and performance in the elements of
JIT covered by the questionnaire.
Sub-category two: pure JIT companies (26 cases). This group of companies
was differentiated on the basis of their involvement in all of the activities
covered by the survey that are indicative of the JIT methodology, as well as a
very high level of performance on all of the performance variables relating to
quality. This was to reflect the evidence from the literature indicating that
companies with a high involvement in JIT were involved in all aspects of the
JIT methodology. The tightening of the quality criteria also reflected the
importance placed on quality initiatives and continuous improvement in JIT
companies (Sohal et al., 1993b; Hall, 1986; Oakland, 1989; White, 1993; Flynn et
al., 1995). These 26 cases were a sub-group of the 42 strong JIT cases.
Sub-category three: JIT companies (57 cases). These cases were the balance
of JIT companies that did not fit into the strong category (i.e. the balance of the
original 99).
The following groupings were used for factor and multiple regression
analyses and are included in Figure 2 and Figure 3.
Multiple regression procedure Australian
Multiple regression was conducted using the four factors identified from the just-in-time
original analysis of the full database as independent variables. This was to environments
provide a baseline for comparison between the pure JIT, JIT and non-JIT cases.
The primary reason for using this method was to generate values for R, R
squared and adjusted R squared for comparison of strength of relationship and
strength of contribution to variance. The adjusted R squared value was 939
particularly useful in comparing the contribution to variance in the dependent
variables accounted for by the factors and their combinations across varying
sample sizes.

Comparison and analysis

The primary focus of the analysis was on establishing if and where there are
signs of significant associations between the sets of independent variables
(factors/combinations of factors representing human resource management
strategies) and the dependent variables (expected JIT practices and outcomes)
within each of the company groups. Comparisons of levels of association
between groups followed from this analysis. In comparing associations within
the non-JIT sub set, eight of the 11 dependent variables were identified as being
appropriate. These were variables that, although identified as being indicative
of JIT practices and outcomes, are also typical objectives of manufacturing
companies generally. They therefore lent themselves to analysis and
comparison with the JIT groupings for strength of association with the
identified human resource management strategies.

Figure 2.
Groupings used for
factor analysis

Figure 3.
Groupings used for
multiple regression
analysis
IJOPM Factor analysis
20,8 Factor analysis of the full data set
The 22 independent variables were used to generate a correlation matrix of all
combinations. Examination of this matrix revealed 41 of the 231 (18 per cent)
correlations with absolute values larger than 0.30 along with seven (3 per cent)
greater than 0.50. As a preliminary check this indicated that the matrix was
940 suitable for factor analysis. Inspection of the matrix also revealed it to be free
from multicollinearity or singularity as there were no coefficients greater than
0.90. This was further supported by the value of the determinant of the
correlation matrix being larger than 0.00001 (actual value 0.0012726). The
Kaiser-Meyer-Olkin (KMO) measure of sampling adequacy tests the reliability
of the relationships between the pairs of variables in the matrix. This test also
indicated the suitability of the matrix for factor analysis with a value of 0.81932
indicating a high number of significant relationships. The Bartlett test of
sphericity also indicated that the matrix was not an identity matrix with a
highly significant (0.00000) result.

Factors identified
As a result of this analysis the following factors were identified.
Factor 1 (alpha = 0.608). The seven variables contained in this grouping are
listed below:
PM1 Senior managers actively encourage change and implement a culture
of trust, involvement and commitment in moving towards ``best
practice''
PM2 There is a high degree of unity of purpose throughout our site, and
we have eliminated barriers between individuals and/or departments
PM3 ``Champions'' of change are effectively used to drive ``best practice'' at
this site.
PM4 At this site we pro-actively pursue continuous improvement rather
than reacting to crisis/``fire-fighting''.
PM5 Ideas from production operators are actively used in assisting
management.
PM6 Employee satisfaction is formally and regularly measured
PM7 Our site has effective ``top-down'' and ``bottom-up'' communication
processes.
PM8 Employee flexibility, multi-skilling and training are actively used to
support improved performance.
This grouping was given the label ``Participative management'' to reflect the
fact that they represented as a group a style or approach to managing people
that attempts to maximise the human potential of the organisation and
encourages involvement at all levels.
Factor 2 (alpha = 0.7997). The three variables contained in this grouping
are listed below:
 ED1 On average, how much ongoing training would each of the following Australian
employees receive per year?: Senior management. just-in-time
ED2 On average, how much ongoing training would each of the following environments
employees receive per year?: Middle management/supervisors.
ED3 On average, how much ongoing training would each of the following
employees receive per year?: Production operators.
941
The logical nature of this grouping was self evident and identified as
``employee development''.
Factor 3 (alpha = 0.9052). The three variables contained in this grouping
are listed below:
TEAM1 Please indicate your site's current performance level for each of
the listed categories. Proportion of production operators involved
in process improvement/problem solving teams.
TEAM2 Please indicate your site's current performance level for each of
the listed categories. Proportion of production operators involved
in self managing and/or cellular work teams.
TEAM3 Please indicate your site's current performance level for each of
the listed categories. Proportion of production operators involved
in quality circles/employee involvement groups.
Again, the logical nature of this grouping was obvious and was given the factor
label ``teams''.
Factor 4 (alpha = 0.7099). The three variables contained in this grouping
are listed below:
EMP1 The following factors are important barriers to achieving improved
business performance: ability to implement change by senior
management.
EMP2 The following factors are important barriers to achieving improved
business performance: ability to implement change by middle
management/supervisors.
EMP3 The following factors are important barriers to achieving improved
business performance: ability to implement change by production
operators.
It was also apparent that this was a grouping with a common thread.
In some ways this factor could be seen to be a logical extension of Factor 1
as it would not be inconsistent with an open and participative management
style.
It is, however, also meaningful that they have been separated. It is one thing
in an organisation to open channels of communication and break down
barriers. To facilitate change through empowerment is quite another thing. To
reflect this, Factor 4 was given the label ``Empowerment''.
IJOPM Factor analysis of stratified data
20,8 Data stratification
The criteria used to stratify the data in this way were those described in the
methodology section based on the degree of involvement and/or performance
level across the dependent variable set. This gave two distinct groups
consisting of the following possible total number of cases:
942 . JIT sites: 99;
. non-JIT sites: 863
Factor analysis was performed on these two groups using the same procedures
for missing data, extraction and rotation etc. and the same set of variables. The
object of this exercise was to compare the output of the analysis across the two
groups and check for major differences in content or emphasis between them.

Comparison of patterns and magnitude of loadings

Participative management. The rotated factors and loadings from the three
separate analyses are included in Table I.
The JIT companies have two less variables included in Factor 1. These two
variables load into a separate factor along with variable PM1, giving the
following composition:
PM3 ``Champions'' of change are effectively used to drive ``best practice'' at
this site.
PM6 Employee satisfaction is formally and regularly measured.
PM1 Senior managers actively encourage change and implement a culture
of trust, involvement and commitment in moving towards ``best
practice''.
This indicates the presence of a separate latent variable within the original
factor ``Participative management'' that could perhaps be called ``Change
management''. This is interesting in the context of JIT requiring substantial
effort directed at the management of the transition. The literature emphasises
that many implementations have failed due to resistance from employees to

Factor 1 ± Participative management

All sites JIT sites Non-JIT sites
Variable Loading Variable Loading Variable Loading

PM1 ±0.70777 PM1 ±0.51446 PM1 ±0.68673

PM2 0.69301 PM2 0.62413 PM2 0.67281
PM3 0.61191 PM4 0.68697 PM3 0.61461
PM4 0.75599 PM5 ±0.76285 PM4 0.75978
PM5 ±0.68649 PM7 0.74678 PM5 ±0.67653
PM7 0.67265 PM8 ±0.69869 PE2 0.53072
Table I. PM6 0.50265 PM7 0.68077
Comparative loadings PM8 ±0.58506 PM6 0.54075
for Factor 1 PM8 ±0.59306
being asked to participate more in the traditional management decision-making Australian
domain (see Brown and Mitchell, 1991; Hiltrop, 1992; Klein, 1989; Oliver, 1991; just-in-time
Sewell and Wilkinson, 1992; Delbridge et al., 1992; Oliver and Davies, 1990). environments
The requirement that JIT places on changing roles and functions within an
organisation to tap into the hidden expertise within the workforce is not always
welcomed. Successful implementation is often highly dependent on how these
processes are managed. By contrast, the non-JIT sites do not have this separate 943
element. Comparison of the loadings is also revealing. Variable PM1 (the degree
to which senior management actively facilitate change) has a much lower
correlation with the factor (``participative management'') within the JIT group
than the non-JIT group. On the face of it this seems to be in contradiction of
some of the literature, which often stresses the need for senior management to
be actively driving JIT implementations (see Oliver and Davies, 1990; Cooke
and McPhee, 1988; Sohal et al., 1993b; Sohal, 1991; Technology Transfer
Council, 1987). Further analysis though reveals that the loading of this variable
is actually split almost equally between this factor and the new ``Change
management'' factor just discussed in the JIT group. This perhaps indicates a
requirement for senior management to not only be facilitating the participative
management process, but, equally importantly, the change management
process. Three other variables load substantially more highly on this factor
within the JIT group than the non-JIT group:
PM5 Ideas from production operators are actively used in assisting
management.
PM7 Our site has effective ``top-down'' and ``bottom-up'' communication
processes.
PM8 Employee flexibility, multi-skilling and training are actively used to
support improved performance.
These elements again are often stressed in the literature on JIT as being critical
to successful implementation, so it is not surprising to see that they load more
highly on this factor within JIT environments (see Schonberger, 1982; Hall,
1986; Samson et al., 1993).
Employee development. The rotated factors and loadings from the three
separate analyses are included in Table II.
The notable difference in the loadings within this factor is the comparatively
higher emphasis placed on middle management and supervisors (variable ED2)

Factor 2 ± Employee development

All sites JIT sites Non-JIT sites
Variable Loading Variable Loading Variable Loading

ED1 0.80783 ED1 0.72298 ED1 0.8112 Table II.

ED2 0.87603 ED2 0.86768 ED2 0.87368 Comparative loadings
ED3 0.75464 ED3 0.64978 ED3 0.77025 for Factor 2
IJOPM in the JIT companies as against the non-JIT group. Along with this there is an
20,8 apparent lower emphasis placed on the development and training of production
operators and senior management in the JIT companies. The role of the
supervisor in a JIT environment is significantly different to that in a non-JIT
one and this is well documented in the literature (see Hall, 1986; Joy and Joy,
1993; Bicheno, 1991; Kumar and Nonis, 1990; Westbrook, 1988; Juran, 1981; Im
944 et al., 1994). The need for a range of new skills in team facilitation, stock
management, kanban control and flexibility are consistent with this emphasis
on the training of middle management.
Teams. The rotated factors and loadings from the three separate analyses
are included in Table III.
The major difference noticeable in this comparison lies in the lower
correlation within the JIT group for variable TEAM3 (proportion of production
operators involved in quality circles/employee involvement groups). This is
counter-balanced by a higher comparative correlation in variable TEAM1
(proportion of operators involved in process improvement/problem solving
teams).
This may reflect the requirement that JIT places on the production system
for problems to be solved quickly and at the source due to the lack of inventory
in the system. It must be said though that the differences are small and less
conclusive.
Empowerment. The rotated factors and loadings from the three separate
analyses are included in Table IV.
It is noticeable that variable EMP1 (the ability of senior management to
implement change) does not load sufficiently highly within the non-JIT group
to feature in the analysis. The relative weightings are again interesting,
emphasising the importance of empowerment of middle management and
supervisors over production operators in the JIT group.

Factor 3 ± Teams
All sites JIT sites Non-JIT sites
Variable Loading Variable Loading Variable Loading

Table III. TEAM1 ±0.76497 TEAM1 ±0.79124 TEAM1 ±0.75147

Comparative loadings TEAM2 0.7682 TEAM2 0.7592 TEAM2 0.75756
for Factor 3 TEAM3 0.8315 TEAM3 0.77405 TEAM3 0.82447

Factor 4 ± Empowerment
All sites JIT sites Non-JIT sites
Variable Loading Variable Loading Variable Loading

Table IV. EMP1 0.52678 EMP1 0.56555 EMP2 0.89392

Comparative loadings EMP2 0.89508 EMP2 0.93382 EMP3 0.88818
for Factor 4 EMP3 0.88355 EMP3 0.88886
Comparison of percentage of variance attributable to each factor Australian
Table V compares the percentage of variance attributable to each factor across just-in-time
the three groups (only the first four factors are included). environments
Within the JIT group Factor 1 (Participative management) appears to be less
significant comparatively, whereas Factors 2 and 4 (Employee development
and Empowerment respectively) are more important. The reduction in
comparative reliance on management style balanced by an increased focus on 945
devolving power throughout the organisation compared with non-JIT sites is
also of interest. Successful JIT operation is predicated on improving customer
service and quality with as little stock as possible. This is unachievable
without very low reject rates at all points in the supply chain and as few as
possible interruptions to processes. In such an environment decisions (that is
correct ones) have to be made and implemented quickly and at the lowest
practicable level in the organisation. In this environment empowerment
becomes more an imperative than in one where JIT is not being practised (see
Sohal et al. 1993b; Matthews, 1995; Samson et al. 1993; Sumukadas and Piper,
1995; McLachlin and Piper, 1991).

Multiple regression
Combined analysis
Reliability and validity of the factors. The four factors extracted from the full
database were used as dependent variables across the three sub-groups.
Although slightly different factors were extracted from these three groups
during the subsequent comparative factor analysis, it was decided to use these
original factors to provide a common set of reference variables for comparison.
Table VI shows the alpha values derived from the total database, and from the
pure JIT, JIT and non-JIT cases, for the four factors.
On the basis of these values it was decided to leave the factors intact to
ensure the preservation of construct validity. The deletion of some variables
created marginally higher alpha values for Factor 1 within all four samples.
Sample comparative testing using the results of multiple regression revealed
only minor differences in predictive outcomes between the original factors and
those with variables deleted. It was decided though that the small increase in
predictive reliability obtained would not justify the weakening of the
constructs described by the factors.

Percentage of variance attributable to each factor

All sites JIT sites Non-JIT sites
Factor Percentage Factor Percentage Factor Percentage

1 23.1 1 20.0 1 22.5 Table V.

2 10.7 2 11.9 2 10.8 Comparative variance
3 7.7 3 7.2 3 7.6 attributable to each
4 7.3 4 10.2 4 7.4 factor
IJOPM Overview. A comparison across the three groups of the scores for multiple R
20,8 and adjusted R sq. indicates the level of association between the factors and the
dependent variables.
Figure 4 contains these results in tabular and graphical form. The results
indicate that the pure JIT group has more instances of association between the
factors (and their combinations) and the dependent variables than the JIT and
946
non-JIT groups. Further analysis of the spread of the results across the
dependent variables and the factor combinations (See Table VII) shows more
dependent variables and factors to be associated within the JIT groups than the
non-JIT group (i.e. the results in the pure JIT group are not concentrated in a
small number of dependent variables ± conversely, a small group of factor
combinations are not creating all the associations).
Pure JIT group ± JIT group ± non-JIT group. Five of the eight dependent
variables showed varying levels of association with the factor combinations
across the three survey groups.
Dependent variable FO1C (see Figure 5). The following factors have
improved our factory operations: machine set-up time reduction.

Alpha co-efficients
Factors Pure JIT JIT Non-JIT All cases

Table VI. 1 0.6395 0.5308 0.6041 0.608

Alpha coefficients for 2 0.7288 0.6264 0.8045 0.7997
the four factors across 3 0.9337 0.9594 0.8088 0.9052
the three samples 4 0.7296 0.7846 0.6994 0.7099

Figure 4.
Comparison of
associations by
company group
An examination of the adjusted R sq. scores for this variable indicates some Australian
very strong relationships in the pure JIT group. The comparative contributions just-in-time
across the three groups are striking, as are the apparent synergies between environments

Company Multiple Multiple Adjusted Adjusted

groups R > 0.70 R > 0.50 R sq. > 0.40 R sq. > 0.25 947
Percentage spread of results for dependent variables
Pure JIT 91 100 18 45
JIT 9 82 9 18
Non-JIT 0 25 0 13
Percentage spread of results for factor combinations Table VII.
Pure JIT 67 93 33 87 Comparison of spread
JIT 27 80 27 53 of associations by
Non-JIT 0 67 0 53 company group

Figure 5.
Comparison of adjusted
R sq. for DV FO1C
IJOPM particular factor combinations in the pure JIT group. The combination of
20,8 Factors 1 and 2 (Participative management and Employee development)
appears to be particularly potent as a determinant of reduction in machine set
up time. Factor 4 (Empowerment) appears marginal although some value is
added in combination with Factor 1 (Participative management), while Factor 3
(Teams) has no impact. Contrasted with this there is no relationship of any
948 significance with any factor combination in the other two groups.
Dependent variable FO1I (see Figure 6). The following factors have
improved our factory operations: self-managing and/or cellular work teams.
Examination of the results across the three groups shows there to be similar
results in the non-JIT and pure JIT groups and weaker associations in the JIT
group. Factor 3 (teams) is not surprisingly the primary determinant in both the
non-JIT and pure JIT groups and there are no apparent synergies in any group

Figure 6.
Comparison of adjusted
R sq. for DV FO1I
(although they look better in the non-JIT group). The largest single contribution Australian
from Factor 3 (teams) is in the pure JIT group, perhaps indicating a greater just-in-time
level of involvement in this group. environments
Dependent variable TE1D (see Figure 7). Please indicate whether the
following manufacturing technologies are used at your site, and if so the extent
to which they have contributed to your competitive position: flexible
manufacturing cells (FMC) or systems (FMS). 949
For this variable within the pure JIT group there is almost no apparent
association between it and the factors (after adjustment). In contrast, the JIT
and non-JIT groups have some moderate associations, the highest single
contribution being by Factors 1 and 4 (Participative management and
Empowerment) in the JIT group. The combination of all four factors accounts
for around 22 per cent of the variation in this variable in both groups, but the
JIT group has higher associations with other combinations (Factors 1 and 4
mentioned above and Factors 1, 2 and 4 (Participative management, Employee
development and Empowerment) at 27 per cent). The combination of Factors 1
and 4 also appears more potent in terms of potential to add value compared to
the non-JIT group.

Figure 7.
Comparison of adjusted
R sq. for DV TE1D
IJOPM Dependent variable PO8B (see Figure 8). Please indicate your site's current
20,8 performance level for each of the listed categories: warranty claims cost a
percentage of total sales.
Results for this variable indicate a much stronger contribution within the
pure JIT group compared to the JIT and non-JIT groups. Coupled with the fact
that the levels of association are stronger in the pure JIT group is the way the
950 adjusted R sq. value increases in this group compared to those in the other
groups. The calculation of this adjusted value is particularly rigorous as
sample sizes decrease and numbers of predictor variables increase. Despite
this, the value in the pure JIT category grows as factors are added again well
above the additive value of the combined factors. The JIT group shows some
evidence of moderate contribution but on a decreasing scale as extra variables
are added. There is practically no association in the non-JIT group.
Dependent variable PO8C (see Figure 9). Please indicate your site's current
performance level for each of the listed categories: cost of quality (error, scrap,
rework and inspection) as a percentage of total sales.
The results for this variable are similar to those of PO8B, with an increase in
the contrast between the three groups, and greater magnitude of contribution
within the pure JIT group. There is a strong contribution from Factor 4
(Empowerment) and a large increase in contribution from the combination of
Factors 2 and 4 (Employee Development and Empowerment), providing further

Figure 8.
Comparison of adjusted
R sq. for DV PO8B
 Australian
just-in-time
environments

951

Figure 9.
Comparison of adjusted
R sq. for DV PO8C

evidence of potential synergies in the pure JIT group. There is again very little
evidence of association between the factors and this variable in the JIT and
non-JIT groups.
Pure JIT ± JIT ± non-JIT: comparison by factor. An examination of the
highest contributions by factor (or factor combination) (Figure 10) across the
three categories shows the factors to have higher individual scores in the pure
JIT and JIT groups.Further to this, the pure JIT and JIT groups have a higher
number of contributions greater than 15 per cent per factor combination across
the range of dependent variables. In the pure JIT group there are 27 separate
cases of variance greater than 15 per cent against 17 in the JIT group and 14 in
the non-JIT group. In the pure JIT and JIT categories, Factors 1 and 4
(Participative management and Empowerment), 1, 3 and 4 (Participative
Management, Teams and Empowerment), 1, 2 and 4 (Participative
management, Employee development and Empowerment) and 1, 2, 3 and 4
appear to have the most influence across the widest range of dependent
variables. The highest individual contributions come from Factors 1 and 2
(Participative management and Employee development) and 1, 2 and 4
IJOPM
20,8

952

Figure 10.
Comparison of highest
contribution per factor
using adjusted R sq.

(Participative Management, Employee Development and Empowerment) in the

pure JIT group and Factors 1, 2, 3 and 4 in the JIT group. The highest
contribution in the non-JIT group is less than half that in the pure JIT group
and would rank tenth in that category or sixth in the JIT group.

Summary
Conclusions
By the use of factor analysis, four underlying processes or ``factors'' were
identified that summarise human resource management strategies used in
Australian manufacturing companies. This analysis was also performed on
two separate company groups differentiated on the basis of their involvement
in JIT practices. The original four factors identified were also used as
independent variables to test for association with JIT practices and outcomes
across three further groups also differentiated on the basis of involvement in
JIT practices. The results of this analysis indicate that there is a stronger
emphasis on managing the human variable in JIT environments, particularly in
the areas of:
 Change management. The factor analysis showed that there was a separate Australian
factor extracted in the JIT group of companies identified as ``Change just-in-time
management''. Further analysis and comparison of this factor indicated a need environments
for senior management to be either managing or driving this process.
Participative decision making. The initial comparative factor analysis
identified that the JIT companies were likely to be involving their workforce in
the decision-making processes of the firm. The strength of the loadings of the 953
components of the factor ``Participative management'' within the JIT group of
companies indicated that this factor represented an important underlying
process. The regression analysis also indicated some strong associations
between this factor and some of the dependent variables in the JIT companies,
particularly in combination with other factors in the pure JIT companies. By
contrast, there were no indications from the non-JIT companies of even
moderate associations between this factor (or its elements) and the dependent
variables.
Flexibility and multi-skilling. The factor analysis showed a higher loading for
the variable relating to multi skilling and flexibility with the JIT companies,
but perhaps the strongest support for this proposition from the quantitative
analysis came from the regression analysis. A very strong association was
recorded between the combination of Factors 1 and 2 (Participative
management and Employee developmen) and the dependent variable relating
to the contribution of machine set-up time reduction to improved factory
operations within the pure JIT companies. This provided contrast with the non-
JIT companies where there were no significant associations recorded at all.
Open and effective communication processes. The comparative factor
analysis showed the JIT companies to be more inclined toward using ideas
from production operators, more likely to have effective ``top down'' and
``bottom up'' communication processes and be actively working to eliminate
barriers between individuals and departments. This was further supported by
the regression analysis, with strong associations reported between these
variables and expected JIT practices and outcomes in the pure JIT and JIT
companies. This was contrasted with the non-JIT companies, where no
significant relationships between these variables and comparative outcomes
were found.
Empowerment of many different levels of the organisation. Both the
comparative factor analysis and the regression analysis indicated the factor
identified as ``Empowerment'' to be an important determinant. The comparison
of the individual loadings for the variables making up this factor showed there
to be a greater emphasis within the JIT companies. Further, when comparing
the percentage of variance attributable to each of the four factors between the
JIT and non-JIT groups, this factor became a more significant contributor
within the JIT companies. There were further indications of the importance of
this factor provided by the regression analysis. In the pure JIT group it was
strongly associated with outcomes related to quality, particularly in
combination with training strategies. In the JIT companies it showed strong
IJOPM association with the potential contribution of JIT to the competitive position of
20,8 the enterprise, and again provided even stronger associations in combination
with the other three factors. Within the non-JIT companies there were no
indications of any significant associations between this factor and any of the
dependent variables.
Employee development and training. The regression analysis indicated that
954 the impact of the factor identified as ``Employee development'' is far more
noticeable in combination with other factors than on its own. The highest
single contribution to variance in any of the company groups comes from the
combination of Factors 1 and 2 (Participative management and Employee
development) with the dependent variable relating to the degree to which
machine set-up time had contributed to improved factory operations (63 per
cent). This was an increase from 25 per cent for Factor 1 and 10 per cent for
Factor 2 individually.
Working in teams. The regression analysis showed the factor identified as
``Teams'' to have stronger association with the contribution of teams to
improved factory operations in the Pure JIT companies compared with the non-
JIT group.
Synergies created through combined strategies. The effect of combining
different factors during the regression analysis provides evidence that specific
combinations are potentially very powerful. In many cases when the identified
factors were combined in the pure JIT company group the contribution of the
combined group of independent variables far exceeded the combined additive
scores. In the JIT companies this was also the case, although less frequently.
This indicated the potential for synergies to be created within the JIT
framework perhaps not available outside of it. There was also evidence to
suggest that the combination of particular factors could significantly affect the
competitive position of JIT companies. Within the non-JIT group it was also
interesting to see that there was not one instance where this was the case. This
finding supports earlier work in the auto industry identifying the need to
integrate human resource systems and production strategies by using groups
of interrelated and internally consistent human resource practices (MacDuffie,
1995).

Opportunities for further research

As a result of this project there have been a number of issues raised pointing to
areas where further research is warranted.
(1) There was evidence gained that certain combinations of the identified
factors created powerful synergies in the JIT groups. Further
investigation of these relationships in order to establish a model (or
group of models) for implementation would be useful.
(2) Empowerment was identified as an important component of the strategy
mix. Further research into the conditions required for and primary
 drivers of effective empowerment in JIT environments would also be Australian
warranted. just-in-time
(3) In both the pure JIT and JIT companies some strong relationships were environments
recorded between particular factor combinations and some of the
dependent variables. It is worthwhile pursuing these associations
further to establish the likelihood of some predictive relationships. In
particular, it would be useful to further explore the link between the use 955
of particular human resource management strategies (and combinations
of strategies), and business performance.
(4) The lack of association between certain factor combinations and the
dependent variables is also worthy of further investigation. The extent
to which these variables appear not to be important strategies employed
in non-JIT Australian manufacturers is also interesting.
(5) There was evidence obtained that the management of change assumes
extra importance in JIT companies. The dynamic nature of an
environment that thrives on continuous improvement requires a
particular set of management skills. It would be worthwhile
investigating the nature of these skills and how they can be best applied.
(6) The research identified a number of factors that summarised strategies
employed in JIT environments to manage human resource issues. This
was not a definitive list, and it would be valuable to pursue this further
in order to broaden understanding of the full range of variables of
importance.
(7) The apparent commitment in the JIT companies to the promotion of the
identified factors (and their individual elements) indicates that there is a
process of organisational development in place. It could perhaps be
further hypothesised as a result that there is a process of organisational
learning going on in these companies, creating conditions that enable
them to more completely and effectively tap into and develop their
human potential. The dynamics of this learning process bear further
study, not just for the operation of JIT companies, but also for the
broader study of change management and continuous improvement in
all organisations.

Summary
What was particularly striking from this project was the evidence gained not
only of the added emphasis on these issues in the JIT companies, but of the
potential for ``adding value'' through combining management strategies. The
companies identified as the pure JIT group exhibited not only stronger
associations between the factors and the dependent variables, but also showed
evidence of creating powerful synergies when certain combinations of factors
were combined. There was also evidence of this in the JIT group but no
evidence from the non-JIT companies. The evidence indicates there is a process
IJOPM of organisational learning going on in these companies creating conditions that
20,8 enable them to more completely and effectively tap into and develop their
human potential. Whatever the true determinants of this phenomenon are it is
evident that the companies identified as being more heavily involved in JIT
practices also appear to be more focused on particular human resource
management strategies, and as a result see the management of the human
956 variable as critical to the success of their operation.
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