powerpoint presentation by charlie cook the university of west alabama 16 © 2010 south-western, a...

© 2010 South-Western, a part of Cengage LearningAll rights reserved.© 2010 South-Western, a part of Cengage LearningAll rights reserved.

PowerPoint Presentation by Charlie CookThe University of West Alabama

PowerPoint Presentation by Charlie CookThe University of West Alabama

16

© 2010 South-Western, a part of Cengage Learning. All rights reserved. 16–2

Discuss the underlying principles of high-performance work systems.

Identify the components that make up a high-performance work system.

Describe how the components fit together and support strategy.

Recommend processes for implementing high-performance work systems.

Discuss the outcomes for both employees and the organization.

Chapter ObjectivesAfter studying this chapter, you should be able to


High-Performance Work System (HPWS)High-Performance Work System (HPWS)

•HWPSHWPS Is a specific combination of HR practices, work Is a specific combination of HR practices, work

structures, and processes that maximizes structures, and processes that maximizes employee knowledge, skill, commitment, and employee knowledge, skill, commitment, and flexibility.flexibility.

Is composed of many interrelated parts that Is composed of many interrelated parts that complement one another to reach the goals of complement one another to reach the goals of an organization, large or small.an organization, large or small.


FIGURE

16.1Developing High-Performance Work Systems


FIGURE

16.2Underlying Principles of High-Performance Work Systems


Principles of HPWSPrinciples of HPWS

•Egalitarianism and EngagementEgalitarianism and Engagement Egalitarian work environments eliminate status Egalitarian work environments eliminate status

and power differences and, in the process, and power differences and, in the process, increase collaboration and teamwork.increase collaboration and teamwork.

When this happens, productivity can improve if When this happens, productivity can improve if people who once worked in isolation from (or people who once worked in isolation from (or opposition to) one another begin to work opposition to) one another begin to work together.together.


Principles of HPWS (cont’d)Principles of HPWS (cont’d)

•Shared InformationShared Information A shift away from the mentality of command A shift away from the mentality of command

and control toward one more focused on and control toward one more focused on employee commitment. employee commitment.

Creating a culture of information sharing where Creating a culture of information sharing where employees are more willing (and able) to work employees are more willing (and able) to work toward the goals for the organization.toward the goals for the organization.



•Knowledge DevelopmentKnowledge Development Employees in high-performance work systems Employees in high-performance work systems

need to learn in “real time,” on the job, using need to learn in “real time,” on the job, using innovative new approaches to solve novel innovative new approaches to solve novel problems problems

The number of jobs requiring little knowledge The number of jobs requiring little knowledge and skill is declining while the number of jobs and skill is declining while the number of jobs requiring greater knowledge and skill is requiring greater knowledge and skill is growing rapidly.growing rapidly.



•Performance-Reward LinkagePerformance-Reward Linkage It is important to align employee and It is important to align employee and

organizational goals. When rewards are organizational goals. When rewards are connected to performance, employees will connected to performance, employees will naturally pursue outcomes that are mutually naturally pursue outcomes that are mutually beneficial to themselves and the organization.beneficial to themselves and the organization.


FIGURE

16.3Anatomy of High-Performance Work Systems


Complementary Human Resources Complementary Human Resources Policies and PracticesPolicies and Practices

Staffing PracticesStaffing Practices

Training and Development

Training and Development

CompensationCompensation


Assessing Strategic Alignment:Assessing Strategic Alignment:Fitting It All TogetherFitting It All Together

•The HR ScorecardThe HR Scorecard Assessing Internal fitAssessing Internal fit

Do all internal elements of the HR system complement and Do all internal elements of the HR system complement and reinforce one another?reinforce one another?

Assessing HR PracticesAssessing HR Practices Do HR practices significantly enable key workforce Do HR practices significantly enable key workforce

deliverables such as employment stability and teamwork?deliverables such as employment stability and teamwork?

Assessing External FitAssessing External Fit Are workforce deliverables connected with key strategic Are workforce deliverables connected with key strategic

performance drivers?performance drivers?


FIGURE

16.4Achieving Strategic Fit


1BDiagnosing Internal Fit

Please indicate the degree to which each HR deliverable in the following chart would currently enable each strategic driver, on a scale of –100 to +100. Empty cells indicate this is not a key deliverable for a particular driver. Examples of the extremes and midpoints on that continuum are as follows:

–100: This deliverable is counterproductive for enabling this driver.0:This deliverable has little or no effect on this driver.

+100: This deliverable significantly enables this driver.DNK: Don’t know or have no opinion.


1CTesting the Alignment of HR Deliverables

Please indicate the degree to which each HR deliverable in the following chart would currently enable each strategic driver, on a scale of –100 to +100. Empty cells indicate this is not a key deliverable for a particular driver. Examples of the extremes and midpoints on that continuum are as follows:

–100: This deliverable is counterproductive for enabling this driver.0:This deliverable has little or no effect on this driver.

+100: This deliverable significantly enables this driver.DNK: Don’t know or have no opinion.


Implementing the SystemImplementing the System

•Necessary Actions for a Successful HPWS:Necessary Actions for a Successful HPWS: Ensure that change is owned by senior and line Ensure that change is owned by senior and line

managers.managers. Allocate sufficient resources and support for Allocate sufficient resources and support for

the change effort.the change effort. Ensure early and broad communication.Ensure early and broad communication. Ensure that teams are implemented in a Ensure that teams are implemented in a

systemic context.systemic context. Establish methods for measuring the results of Establish methods for measuring the results of

change.change. Ensure continuity of leadership and champions Ensure continuity of leadership and champions

of the initiative.of the initiative.


FIGURE

16.5Implementing High-Performance Work Systems


FIGURE

16.6Building Cooperation with Unions


Benefits of HPWSBenefits of HPWS

•Employee BenefitsEmployee Benefits Have more involvement in the organization.Have more involvement in the organization. Experience growth and satisfaction, and Experience growth and satisfaction, and

become more valuable as contributors. become more valuable as contributors.

•Organizational BenefitsOrganizational Benefits High productivityHigh productivity QualityQuality FlexibilityFlexibility Customer satisfactionCustomer satisfaction


Build a Transition Structure

Implement High-performance Work

Incorporate the HR Function as a Valuable Partner

Navigating the Transition to Navigating the Transition to High-Performance Work SystemsHigh-Performance Work Systems


Evaluating the Success of the SystemEvaluating the Success of the System

•Process auditProcess audit Determining whether a high-performance work Determining whether a high-performance work

system has been implemented as designed:system has been implemented as designed: Are employees actually working together, or is the term Are employees actually working together, or is the term

“team” just a label? “team” just a label? Are employees getting the information they need to make Are employees getting the information they need to make

empowered decisions? empowered decisions? Are training programs developing the knowledge and skills Are training programs developing the knowledge and skills

employees need? employees need? Are employees being rewarded for good performance and Are employees being rewarded for good performance and

useful suggestions? useful suggestions? Are employees treated fairly so that power differences are Are employees treated fairly so that power differences are

minimal?minimal?


Evaluating the Success of the System (cont’d)Evaluating the Success of the System (cont’d)

•To determine if a HPWS program is To determine if a HPWS program is reaching its goals:reaching its goals: Are desired behaviors being exhibited on the Are desired behaviors being exhibited on the

job?job? Are quality, productivity, flexibility, and Are quality, productivity, flexibility, and

customer service objectives being met? customer service objectives being met? Are quality-of-life goals being achieved for Are quality-of-life goals being achieved for

employees?employees? Is the organization more competitive than in Is the organization more competitive than in

the past?the past?


Outcomes of High-Performance Work SystemsOutcomes of High-Performance Work Systems

•Employee Outcomes and Quality of Work Employee Outcomes and Quality of Work LifeLife More involved in workMore involved in work

More satisfied and find that needs for growth More satisfied and find that needs for growth are more fully metare more fully met

More informed and empowered, feel that they More informed and empowered, feel that they have a fuller role to play in the organization have a fuller role to play in the organization and that their opinions and expertise are and that their opinions and expertise are valued morevalued more

Have a greater commitment that comes from Have a greater commitment that comes from higher skills and greater potential for higher skills and greater potential for contributioncontribution


Outcomes of High-Performance Work Systems Outcomes of High-Performance Work Systems (cont’d)(cont’d)

•Organizational Outcomes and Competitive Organizational Outcomes and Competitive AdvantagesAdvantages Higher productivityHigher productivity Lower costsLower costs Better responsiveness to customers Better responsiveness to customers Greater flexibilityGreater flexibility Higher profitabilityHigher profitability


Achieving Sustainable Competitive Advantage Achieving Sustainable Competitive Advantage through Employees through Employees

Characteristics of Employees’ Competencies

Characteristics of Employees’ Competencies

ValuableValuable RareRare

Difficult to ImitateDifficult to ImitateOrganizedOrganized


2The Impact of High-Performance Work Systems

• Ames Rubber Corporation, a New Jersey–based manufacturer of rubber products and office machine components, experienced a 48 percent increase in productivity and five straight years of revenue growth.

• Sales at Connor Manufacturing Services, a San Francisco firm, grew by 21 percent, while new orders rose 34 percent and the company’s profit on operations increased 21 percent to a record level.

• Over a seven-year period, Granite Rock, a construction material and mining company in Watsonville, California, experienced an 88 percent increase in market share, its standard for on-time delivery grew from 68 to 95 percent, and revenue per employee was 30 percent above the national average.

• At One Valley Bank of Clarksburg, West Virginia, employee turnover dropped by 48 percent, productivity increased by 24 percent, return on equity grew 72 percent, and profits jumped by 109 percent in three years.

• The Tennessee Eastman Division of the Eastman Chemical Company experienced an increase in productivity of nearly 70 percent, and 75 percent of its customers ranked it as the top chemical company in customer satisfaction.

• A study by John Paul MacDuffie of sixty-two automobile plants showed that those implementing high-performance work systems had 47 percent better quality and 43 percent better productivity.

• A study by Jeff Arthur of thirty steel minimills showed a 34 percent increase in productivity, 63 percent less scrap, and 57 percent less turnover.

• A study by Mark Huselid of 962 firms in multiple industries showed that high-performance work systems resulted in an annual increase in profits of more than $3,800 per employee.


external fit

high-performance work system (HPWS)

internal fit

process audit

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