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Employees exposed to high involvement management (HIM) practices have higher subjective wellbeing, fewer accidents but more short absence spells than “like” employees not exposed to HIM. These results are robust to extensive work, wage and sickness absence history controls. We highlight the possibility of higher short-term absence in the presence of HIM because it is more demanding than standard production and because multi-skilled HIM workers cover for one another's short absences thus reducing the cost of replacement labour faced by the employer. We find direct empirical support for this. In accordance with the theoretical framework we find also that long-term absences are independent of exposure to HIM, which is consistent with long-term absences entailing replacement labour costs and with short absences having a negative effect on longer absences.

What people do affects how they feel at the time and how they subsequently evaluate themselves and their life more generally (Kahneman and Krueger, 2006). What happens at work matters partly because working individuals spend so much of their time at work, but also because it is salient in the way they think about themselves and the value they attach to their lives. This is borne out in empirical research. For instance, studies focusing on reflexive wellbeing indicate that job satisfaction is strongly positively associated with life satisfaction, even after controlling for satisfaction with other aspects of one's life (Rice et al., 1980). Job satisfaction is also strongly associated with better mental health measured in a variety of ways (Warr, 2007 and Llena-Nozal, 2009). However, recent research paints a more nuanced picture. Day reconstruction method (DRM) studies show that time spent with one's supervisor is often among the most stressful and least enjoyable parts of the day (Kahneman et al., 2004). So paid employment can be both good and bad for wellbeing. The type of work one undertakes also appears to be important. Thus, although moving into employment from non-employment is usually associated with improvements in mental health, the gains to entering non-standard employment contracts are often much lower (Llena-Nozal, 2009). Standard models assume that employers make adjustments to the production process to maximise profits, rather than employee wellbeing. Consistent with this, there is empirical evidence that management practices will be adopted if their productivity benefits exceed the costs of introducing and maintaining them (Bloom and Van Reenen, 2007) and that firms will switch management practices – even if they are productivity enhancing – if the costs outweigh the benefits (Freeman and Kleiner, 2005). However, the way jobs are designed can also have a profound impact on workers’ mental and physical wellbeing (Wood, 2008 and Pouliakas and Theodoropoulos, in press). There is also evidence that happier workers are more productive at work (Oswald et al., 2009 and Böckerman and Ilmakunnas, 2012). It does not follow, however, that employers will invest to maximise the wellbeing of their workers since such investments are themselves costly. In recent decades many employers have introduced practices designed to maximise employees’ sense of involvement with their work, and their commitment to the wider organisation, in the expectation that this will improve their organisation's performance. Although there is a good deal of debate as to the precise set of practices that are deemed “high involvement practices”, core components include teams, problem-solving groups, information sharing, incentive pay, and supportive practices such as training and associated recruitment methods (Wood and Bryson, 2009). Collectively they constitute “high involvement management” (HIM). Rarely do analysts believe single practices constitute the presence of HIM. Rather, it is “bundles” of practices – often incorporating greater autonomy or control and greater performance-based pay – which analysts believe can help transform the working environment (Ichniowski et al., 1997, Ichniowski and Shaw, 2009 and Shaw, 2009). A sizeable literature explores the links between these practices and firm performance (for a review see Bloom and Van Reenen, 2011), but far less is known about the effects of HIM on employees’ health and other measures of wellbeing. The investigation of links between HIM and worker wellbeing is timely because HIM has become increasingly common in developed industrialised economies (Wood and Bryson, 2009) while, at the same time and perhaps coincidentally, there are indications of a decline in worker wellbeing (Oswald, 2010, Green, 2006 and Green, 2009). A priori, it is uncertain what impact HIM is likely to have on employee wellbeing. On the one hand, if HIM enriches employees’ working lives by offering them greater job autonomy, more mental stimulation, team-based social interaction, and a heightened sense of achievement, this may improve worker wellbeing. On the other hand, if HIM is simply a means of intensifying worker effort, this may lead to a higher incidence of illness, injury, absence and stress. In this paper, we explore the impact of HIM practices on worker wellbeing using an innovative combination of survey and register data. The use of linked data is a methodological advance over the existing studies. The key problem in previous research is that workers are not randomly assigned into HIM. This may bias the estimates of HIM on employee wellbeing considerably. If workers with ‘good’ work histories are more likely to be found in HIM jobs, the estimates of HIM on employee wellbeing are upwardly biased.1 The size of this bias is not known. We tackle the problem caused by sorting of employees into HIM status by controlling for a particularly rich set of employees’ work and sickness absence histories. This provides us with a better identification strategy than the ones that have been used previously. Using linked data we contribute to the literature in five ways. Firstly, we establish whether healthier workers sort into jobs that involve using high involvement practices, as one might expect if HIM jobs demand more of workers than non-HIM jobs. We do so by linking register data on Finnish workers’ absence histories to a nationally representative survey in which employees identify which, if any, high involvement practices they are exposed to in their jobs. Secondly, we estimate the impact of HIM practices on employee wellbeing having controlled for worker sorting into HIM jobs by conditioning on sickness absence histories and work and wage histories. Data limitations mean this has not been possible in the literature until now. Thirdly, we present theoretical arguments on why higher short-term absences in the presence of HIM are consistent with no association between HIM and long-term absences. Fourthly, unlike most of the literature that tends to focus on specific aspects of worker wellbeing we explore HIM effects across a broad range of wellbeing measures. Specifically, we estimate the effects of HIM on three types of wellbeing measure, namely sickness absences, both short-term and long-term; subjective wellbeing (job satisfaction, work capacity, the state of one's health, and feelings of tiredness); and physical discomfort at work, as measured by the experience of pain in four different parts of the body (lumbar, legs, arms and neck). Finally, we estimate the empirical models for a complete set of different “bundles” of HIM practices. The remainder of the paper is structured as follows. Section 2 reviews the theoretical and empirical literatures linking HIM to employees’ wellbeing. Section 3 introduces the data. Section 4 reports our results and Section 5 concludes.

Using nationally representative survey data for Finnish employees linked to register data on their work, wage and sickness absence histories we observe that high involvement management (HIM) practices are generally positively and significantly associated with various aspects of employee wellbeing. In particular, HIM is strongly associated with higher evaluations of subjective wellbeing including higher job satisfaction and non-tiredness. HIM is also associated with a lower probability of having a workplace accident. However, HIM exposure – especially performance-related pay and training – is also associated with having more short absence spells. We tackle the problem that workers are not randomly assigned to HIM by using an innovative combination of survey and register data. In the empirical specifications work and sickness absence histories of the employees are used to control for individual effects that might be correlated with exposure to HIM. This extension of previous analyses brings two important insights. Firstly, we show that links between HIM exposure and worker wellbeing are not for the most part biased by the omission of work and sickness absence histories. Thus, in this sense the role played by these controls is relatively small. Secondly, it is nevertheless important to control for work and sickness absence histories since conditioning on them has a sizeable quantitative impact on the HIM coefficients in our models. The point estimates of HIM on employee wellbeing can be biased without these controls that account for sorting of employees into HIM status. The positive association between HIM and the incidence of short absence spells is consistent with the view that for firms using HIM practices zero absences may not be optimal. Rather, the optimal absence rate may involve short spells if the firm can meet production schedules by intensifying work using multi-tasking workers. On the other hand, avoiding long absences is likely to be beneficial for all firms. We find no strong evidence that HIM reduces the number of long-term absences, but we do find clear evidence that HIM practices are associated with a lower probability of having accidents at work. Our results are rather positive from the employee point of view whereas the previous literature presents more mixed findings. It is plausible that the co-operation between employees and employers which characterises employment relations in Finland, together with the strong role of trade unions in implementing work reorganisation, results in mutual gains for firms and workers (see also Kalmi and Kauhanen, 2008). That said the combination of PRP and team working, which is central to notions of devolved responsibilities underpinned by incentive structures, is also the HIM “bundle” most clearly associated with negative outcomes for employee wellbeing. Short-term absences and workplace accidents have positively correlated unobservable components, but the former is positively and the latter negatively correlated with HIM. This result might be driven by unobservable features of the working environment, such as having a “good” employer capable of investing in HIM, keeping absences low and minimising accidents all by virtue of good management rather than HIM per se. Future research on this issue would benefit from taking into account employer unobserved heterogeneity which may simultaneously affect worker wellbeing and the propensity for HIM adoption. 21 Our data have only a few observations from many of the firms, thus preventing us from exploring this issue.