report in hr

7/31/2019 Report in Hr

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Creating High-Performance Work Systems


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Defined as specific combination of HR practices, workstructures, and processes that maximizes theknowledge, skills, commitment, flexibility, andresilience of employees.

The key concept is based on the system . High

performance work systems are composed of manyinterrelated parts that complement one another toreach the goals of an organization, large or small.


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Egalitarianism and engagement

Shared information

Knowledge development

Performance-reward linkage


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People want a sense that they are members, not justworkers, in an organization. Status and power

differences tend to separate people and magnifywhatever disparities exist between them. The usversus them battles that have traditionally ragedbetween managers, employees, and labor unions

are increasingly being replaced by more cooperativeapproaches to managing work.


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Egalitarian work environments eliminate status and

power differences and, in the process, increasecollaboration and teamwork.

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


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One of the underlying ideas of high-performance worksystems is that workers are intimately acquainted withthe nature of their own work and are therefore in the

best position to recognize problems and devise solutionsto them.

When employees are given timely information aboutbusiness performance, plans, and strategies, they aremore likely to make good suggestions for improving thebusiness and to cooperate in major organizationalchanges. They are also likely to feel more committed tonew courses of action if they have input in decisionmaking.


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A shift away from the mentality of command andcontrol toward one more focused on employee

commitment. It represents a fundamental shift inthe relationship between employer and employee.

Creating a culture of information sharing where

employees are more willing (and able) to worktoward the goals for the organization.

Know more, do more, and contribute more.


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Knowledge development is the twin sister of informationsharing.

The number of jobs requiring little knowledge and skill isdeclining while the number of jobs requiring greaterknowledge and skill is growing rapidly. y. As organizationsattempt to compete through people, they must invest inemployee development. This includes both selecting the bestand the brightest candidates available in the labor marketand providing all employees opportunities to continuallyhone their talents.

Employees in high-performance work systems need to learnin real time, on the job, using innovative new approaches tosolve novel problems.


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When rewards are connected to performance,employees naturally pursue outcomes that are mutuallybeneficial to themselves and the organization. Whenthis happens, some amazing things can result.

Connecting rewards to organizational performance alsoensures fairness and tends to focus employees on the

organization. Equally important, performance-basedrewards ensure that employees share in the gains thatresult from any performance improvement.


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High-performance work systems frequently begin withthe way work is designed. Total quality management(TQM) and reengineering have driven manyorganizations to redesign their work flows. Instead of separating jobs into discrete units, most experts nowadvise manager to focus on the key business processesthat drive customer value-and then create that areresponsible for those processes.

By redesigning the work flow around key businessprocesses, companies would be able to establish a workenvironment that facilitates teamwork, takes advantageof employee skills and knowledge, empowers employeesto make decisions, and provides them with more

meaningful work.


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Staffing PracticesMany high-performance work systems begin with highly directiverecruitment and selection practices. Recruitment tends to be bothbroad and intensive in order to get the best pool of candidates fromwhich to choose. Then, by selecting skilled individuals with the abilityto learn continuously and work cooperatively, organizations are likelyto make up for the time and expense they invested in selection. Thegood news is that human resources information systems have madeit easier for firms to compile an inventory of their talent and search for employees with the specific skills they need. Talented employeescome up to speed more quickly and take less time to develop. Too

often organizations try to save money by doing a superficial job of hiring. As a consequence, they run the risk of hiring the wrong peopleand spending more on training and/or outplacement, severance, andrecruitment of replacements. Especially in organizations that try tostay lean, perhaps after a painful cycle of downsizing, HPWS can beinstrumental for effective performance.


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Training and DevelopmentLike recruitment and selection, training focuses on ensuring thatemployees have the skills needed to assume greater responsibility in ahigh-performance work environment.

CompensationAnother important piece of a high-performance work system is thecompensation package. Because high-performance work systems askmany different things from employees, it is difficult to isolate onesingle approach to pay that works for everyone. As a consequence,many companies are experimenting with alternative compensationplans. In order to link pay and performance, high-performance worksystems often include some type of employee incentives. High-performance work systems may also incorporate skill-based pay plans.By paying employees based on the number of different job skills theyhave .


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Communication and information technologies are yet onemore piece that has to be added to the framework of high-performance work systems. Technologies of various kinds

create an infrastructure for communicating and sharinginformation vital to business performance.Information technologies need not always be so high-tech.The richest communication occurs face to face. Theimportant point is that high-performance work systems

cannot succeed without timely and accuratecommunications. (Recall the principle of shared information.)Typically the information needs to be about business plansand goals, unit and corporate operating results, incipientproblems and opportunities, and competitive threats.


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Each of these practices highlights the individual pieces of ahigh-performance work system. And while we haveemphasized throughout this text that certain HR practices are

better than others, recall that in high-performance worksystems the pieces are particularly valuable in terms of howthey help the entire system function as a whole.


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Ensuring Internal Fit

The situation in which all the internal elements of the worksystem complement and reinforce one another.

[For example:]

A first-rate selection system may be of no use if it is notworking in conjunction with training and developmentactivities. If a new compensation program elicits andreinforces behaviors that are directly opposed to the goalslaid out in performance planning, the two components wouldbe working at cross purposes.


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Ensuring Internal FitChanges in one component affect all the other components.Because the pieces are interdependent, a new compensation

system may have no effect on performance if it isimplemented on its own.

Horizontal fit means testing to make certain that all of the HRpractices, work designs, management processes, andtechnologies complement one another. The synergy achievedthrough overlapping work and human resources practices isat the heart of what makes a highperformance systemeffective.


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Assessing Strategic Alignment: The HR ScorecardThe HR Scorecard can be used to diagnose internal fit and external fit in arelatively straightforward way:

1. Managers diagnose internal fit by assessing whether particular HR practices

reinforce one another or work at cross purposes.

2. Managers assess whether the HR practices significantly enable key workforcedeliverables such as employment stability and teamwork.

3. The degree of external fit is evaluated by assessing the degree to which the

workforce deliverables are connected with key strategic performance drivers.

These three assessments are extremely useful not just for deriving measures of internal and external fit of high performance work systems, but for engaging abroader set of managers and employees in the discussion of how to bestimplement the system.


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Summary of the internal and external linkages needed to fit high-performance work systems together.


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Establishing a Communications PlanManagers should participate in discussions about operational andfinancial aspects of the business, so they wont feel so threatened

by the change. Open exchange and communication at an earlystage pay off later as the systemunfolds. Ongoing dialogue at alllevels helps reaffirm commitment, answer questions that comeup, and identify areas for improvement throughoutimplementation.

Recall that one of the principles of high-performance work systemsis sharing information. This principle is instrumental to successboth during implementation and once the system is in place.


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This figure shows how to build a bridge toward a cooperativerelationship with unions in implementing high-performance worksystems:


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Cultivating Mutual Gains

In order to establish an alliance, managers and labour representatives shouldtry to create winwin situations, in which all parties gain from theimplementation of high-performance work systems.

Trust is a fragile component of an alliance and is reflected in the degree towhich parties are comfortable sharing information and decision making.

By working hard to develop trust up front, in either a union or a nonunion

setting, it is more likely that each party will understand how high-performance work systems will benefit everyone; the organization will bemore competitive, employees will have a higher quality of work life, andunions will have a stronger role in representing employees.


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Establishing Formal Commitment

Most labour management alliances are made legitimate through sometangible symbol of commitment. This might include a policy documentthat spells out union involvement, letters of understanding, clauses in acollective bargaining agreement, or the establishment of joint forumswith explicit mandates.

The types of formal commitments, with investments of tangible resources,serve two purposes:

(1) They are an outward sign of management commitment.

(2) They institutionalize the relationship so that it keeps going even if keyproject champions leave


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Fostering Support of Other Key Constituent

In addition to union leadership, it is critical to have the support of other keyconstituents. Leaders must ensure that understanding and support aresolid at all levels, not just among those in the executive suite. To achievethis commitment, some organizations have decentralized the labourrelations function, giving responsibility to local line managers and humanresources generalists, to make certain that they are accountable and arecommitted to nurturing a high-performance work environment.


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Adhering to Procedure

Once processes, agreements, and ground rules are established, they are vitalto the integrity of the relationship.

As Ruth Wright, manager of the Council for Senior Human ResourceExecutives, puts it, Procedure is the rug on which alliances stand. Pull itout by making a unilateral management determination or otherwisechanging the rules of the game, and the initiative will falter. Procedurekeeps the parties focused, and it is an effective means of ensuring thatdemocracy and fairness prevail.

In most cases, a home -grown process works better than one that isadopted from elsewhere. Each organization has unique circumstances,and parties are more likely to commit to procedures they create and own


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Navigating the Transition to High-Performance Work Systems

Building a Transition Structure

Implementation of high-performance work systems proceeds in differentways for different organizations. In organizational start-ups, managershave the advantage of being able to put everything in place at once.However, when organizations have to be retrofitted, the process mayoccur a bit more clumsily

Not every organization has the luxury of suspending operations whilechanges are put in place. Nevertheless, establishing an implementationstructure keeps everyone on track and prevents the system from boggingdown. The structure provides a timetable and process for mapping keybusiness processes, redesigning work, and training employees.


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Incorporating the HR Function as a Valuable Partner

One of the mistakes that organizations can make in implementing high-performance work systems is allocating too few resources to the effort.This means money, of course, but it also means time and expertise.Although line managers typically own the responsibility forimplementation, HR managers can be invaluable partners in leading thecharge for and managing change. Because change is difficult, HRmanagers need to understand what employees in transition are goingthrough and help them handle it. When the old ways of doing things are

abandoned, many experienced employees begin to feel like beginnersagain on the job. This can be stressful and sometimes polarize employees.As a coping mechanism, many are likely to fall back on older routines.


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Second, the evaluation process should focus on the goals of high-performance

work systems. To determine whether the program is succeeding, managers shouldlook at such issues as the following:

Are desired behaviours being exhibited on the job?Are quality, productivity, flexibility, and customer service objectives beingmet?

Are quality-of-life goals being achieved for employees?

Is the organization more competitive than in the past?


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Finally, high-performance work systems should be periodically evaluated interms of new organizational priorities and initiatives. Because high-performance work systems are built on key business processes that delivervalue to customers, as these processes and customer relationships change sotoo should the work system. The advantage of high-performance worksystems is that they are flexible and, therefore, more easily adapted. Whenchange occurs, it should be guided by a clear understanding of the businessneeds and exhibit a close vertical fit to strategy.


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Organizations achieve a wide variety of outcomes from high-performance worksystems and effective human resources management. They categorized theseoutcomes in terms of either employee concerns such as quality-of-work-lifeissues and job security or competitive challenges such as performance,productivity, and profitability. Throughout the text we have emphasized thatthe best organizations find ways to achieve a balance between these two setsof outcomes and pursue activities that improve both.


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Employee Outcomes and Quality of Work Life

High-performance work systems serve to mesh organizational objectives with

employee contributions. Conversely, when employees are underutilized,organizations operate at less than full performance, while employees developpoor work attitudes and habits.

Organizational Outcomes and Competitive Advantage

Several organizational outcomes also result from using high-performancework systems. These include higher productivity, lower costs, betterresponsiveness to customers, greater flexibility, and higher profitability.


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Organizations can create a sustainable competitive advantage through peopleif they focus on four criteria. They must develop competencies in theiremployees that have the following qualities:

Valuable : High-performance work systems increase value by establishing waysto increase efficiency, decrease costs, improve processes, and providesomething unique to customers.

Rare : High-performance work systems help organizations develop and harnessskills, knowledge, and abilities that are not equally available to allorganizations.

Difficult to imitate : High-performance work systems are designed aroundteam processes and capabilities that cannot be transported, duplicated, orcopied by rival firms.

Organized : High-performance work systems combine the talents of employees

and rapidly deploy them in new assignments with maximum flexibility


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These criteria clearly show how high-performance work systems in particular, andhuman resources management in general, are instrumental in achievingcompetitive advantage through people.

However, for all their potential, implementing high-performance work systems isnot an easy task. The systems are complex and require a good deal of closepartnering among executives, line managers, HR professionals, unionrepresentatives, and employees. Ironically, this very complexity leads tocompetitive advantage. Because high-performance work systems are difficultto implement, successful organizations are difficult to copy.

The ability to integrate business and employee concerns is indeed rare, and doingit in a way that adds value to customers is especially noteworthy.Organizations such as Wal-Mart, Microsoft, and Southwest Airlines have beenable to do it, and as a result they enjoy a competitive advantage.


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