human assets—the skills, knowledge, and attitudes of employees—become the
crucial competitive advantage.
In this context, the dominant HRM model is a human capital/high-involvement
one (Kaufman 2004 : 324 – 5 ). We would expect a strategic approach to HRM to be
marked, above all, by investment in the workforce and this would be associated with
enhanced skills, training, career structures, and skill- and knowledge-based reward
systems. Indeed, such an approach was the underlying basis of the ‘bargain’ for
employees to buy into high-performance work systems or new transactional psycho-
logical contracts (Herriot and Pemberton 1995 ). As one of the most authoritative
studies supporting HPWSs argued, workers need incentives to acquire new skills and
engage in discretionary eVort, whilst for employers, ‘increasing training, employment
security, and pay incentives for non-managerial employees has the greatest eVect on
plant performance’ (Appelbaum et al. 2000 : 8 ).
Such arguments have been augmented by claims from two other sources.
Resource-based views of theWrm see human capital as a key invisible asset that is
increasingly valuable and hard to imitate (Barney 1991 ). At a more popular level,
academic and policy discourse is now dominated by reference to the growth of a
knowledge economy in which the (thinking) skills and knowledge of the employee
are displacing the traditional factors of production as the key asset forWrms.
Research undertaken within LPT and related perspectives, however, demon-
strates that this is a hugelyXawed account of the dynamics of skill formation.
First, there is the inconvenient fact that the largest actual and projected job growth
in the USA and UK is at the lower end of the labor market. Most are in routine jobs
in hospitality and retail, or in personal services in the private and public sectors,
and few have any relation to high-tech employment (Brown et al. 2001 , Thompson
2004 ). Where does that leave high-skill or knowledge work? Despite repeated
optimistic claims that the majority of jobs fall into this category, more rigorous
analysis of oYcial occupational data indicates that those that could be classiWed as
knowledge workers with substantial ‘thinking skills’ are a relatively small minority
in the USA and UK (Brown and Hesketh 2004 ), and Australia (Fleming et al. 2004 ).
Second, there is limited evidence that employers, at least in Anglo-Saxon econ-
omies, are delivering on the commitment to invest in other aspects of human
capital. Even the mainstream business literature frequently bemoans the violation
of the traditional psychological contract as employees are exhorted to take over
responsibility for skill and career development and abandon any hope of stable,
long-term employment (Deal and Kennedy 1999 ). Whilst the outcomes of studies
are sometimes contradictory, there is evidence of long-term decline in traditional
career structures and internal labor markets, and falling investment in training
(Cappelli 2001 ). Some of this is a result of fear that such investment will be
lost through redundancy or exit from theirWrm, or lack of incentives to invest
due to greater permeability in organizational boundaries as a result of perpetual
restructuring and outsourcing (Rubery et al. 2000 ). The outcome, however, is,
158 paul thompson and bill harley