High Performance Work Systems

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Table of Contents

Introduction
Use of terms
Literature Review
General benefits
Performance and turnover
Failures
Conclusion
References

Introduction

Gurbuz (2009, p. 1), says that human resource practices have experienced significant changes in the last thirty years that have transformed the practice to a new level. The forces of globalization, privatization, competition and technology changes have forced firms to adopt new approaches in their workplaces to maintain high performance and productivity of the employees.

These practices are also referred to as strategic human resource priorities, and high performance work systems in human resource studies. Additionally, they may also be referred to as high commitment management systems.

According to Appelbaum et al. (2000), these systems consist of flat hierarchical structures that emphasizes on job rotation, self administered teams, increased roles for employees in decision making, communication channels horizontal in nature and pays systems that are based on skills (p.23).

Kirkman & Rosen (1999, p. 44) defines high performance work systems as a collective human resource practices and that aid employees to optimally use their skills and knowledge towards the achievement of organizational goals.

Besides the adoption of high performance work systems, organizations are increasingly implementing job enrichment and empowerment programs that are geared towards helping them survive the competitive environment in the 21^st century. According to Kirkman & Rosen (1999, p. 58), over 70% of organizations nowadays have adopted some form of empowerment for all or at least part of the workforce.

Kirkman & Rosen (1999, p. 58) add that knowledge, new ideas, and creativity of each employee is critical in the success of organizations in todays business environment. Empowerment according to Lawler, et al (1995), helps employees to acquire initiative to serve the interest of the company without necessarily being micromanaged (p. 46).

They in other words act like owners of the business because they feel their interest have been taken care of. Wall, et al (2002) adds that empowerment in many organizations has been implemented in two levels (p.65). There has been social structural empowerment that concentrates on improving work place conditions and psychological empowerment that concentrates on empowerment at work.

The benefits that these changes have brought to the organizations cannot be overestimated. According to Freeman & Kleiner (2000), the changes encompassed by implementation of high performance work places and work enrichment as well as employ empowerment has led to higher flexibility, higher productivity, and higher performance among employee (p. 78).

Additionally, they have led to the involvement of employees in decision-making and reduced the management burden previously placed on high-ranking managers. Freeman & Kleiner (2000, p. 80), adds that these practices have a direct impact on the employee turnover, revenues make by these firms and the market value of the firms involved.

Furthermore, some HR experts argue that the benefits that high performance work systems and empowerment are not only limited to the employers but also the workers chiefly through job satisfaction. Not many researches have been carried out to determine the effect of introducing high performance work systems and employee empowerment.

Some researchers argue that job enrichment, high performance work systems and empowerment are a radical transformation in management-employee relations. Others argue that these approaches are cosmetic, having no effect on the power and reward inequalities in contemporary organizations.

However, the few that have been carried out seem to suggest the merits easily outweigh the demerits. The necessity therefore to explore the potential impacts of HPWS and empowerment among organizations forms the basic drive to carry out a literature review to ascertain if the extent to which the asserting by the researchers is true.

Use of terms

In this paper, the term High Performance Work Systems (HPWS) will be used to mean all the elements that are being discussed include employee empowerment and work or job enrichment. The initials and the full definition will be used interchangeably as applicable. Their meaning in this context will be similar.

Literature Review

This literature review will focus on the performance of the areas that HPWS are thought to exert the greatest influence; job satisfaction hence improved performance and employee turnover, productivity, customer and employee satisfaction and company revenue growth.

Due to the costs associated with implementation of HPWSs many organizations, have yet to fully implement them or have shied away altogether. However for those that have implemented the systems successfully, the benefits are visible in various levels operation of the organization.

General benefits

According to Lloyd (2000), there is enough research that supports the claim that HPWS systems have numerous benefits to organizations (p. 54). Lloyd says that the benefits include retention of employees, high job performance, improved work quality, loyalty and willingness to undertake high quantities of work.

Given that, the above variables were measure in this research and the data that was used was collected from real participants who were working in the systems, it gives impetus to the claim that HPWS really works.

One of the best examples of increased productivity according to Martha & Mark (1996) is Ames Rubber Corporation that is based in New Jersey. The company experienced a 48% jump in productivity and five years characterized by revenue growth after the implementation of HPWS.

According to Appelbaum et al. (2000), positive worker outcomes in the work place thanks to HPWS have helped boost innovation which effectively has been beneficial to labour and management in numerous organizations (p. 123).

Reduced stress among employees, reduced organizational costs and increased job satisfaction were some of the outcomes various researchers have identified are as a result of implementation of HPWS.

For instance, Connor Manufacturing Services in San Francisco reported that after implementation of the high performance work system, employee morale rose by 60% which in turn helped the company to grow by 21%. At the same time new sales orders rose by 34% while operation profits of the company grew by over 21% (Martha & Mark, 1996, p.30).

According experts the above results can only be expected from a well functioning HPWS system. It therefore serves to highlight the changes the system can bring to an organization.

Its proven that HPWS systems that include employee empowerment and job enrichment elicit discretionary efforts from workers (Appelbaum et al. 2000, p 229). There is increased participation of every employee in a high performance work system that effectively ensures problems are solved quickly through workers latent knowledge that reduces wastage.

Additionally, the increased participation helps in balancing the workload and the regulation of the production process of the organization.

The point stressed by these researchers is that in high work performance systems, workers work smarter compared to work environments that still operate within the traditional work place setting. Additionally there is a better feedback system in high performance work systems that help minimize wastage while increasing productivity (Mohrman et al, 1992).

Freeman & Kleiner (2000) say that managers and workers have positively reacted to improved employee wellbeing. This is compared to employee involvement that had little effect on the productivity (p. 43). The flexibility that high performance work environments accorded employees helped employees come up with their own styles of working that tremendously led to a significant change of attitude (Gollan & Davis, 1999, p. 50).

In Tennessee for instance, the Eastman Division of the Eastman Chemical Company had its productivity increase by 0ver 70% when HPWS were implemented. Furthermore, it was ranked by over 75% of its customers as the chemical company of choice due to increased customer satisfaction (Martha & Mark, 1996, p. 28). HR experts agree that change of attitude is key to increased performance in any organization.

Rodgers & Ferketish, (2005, p. 3) assert that a high performance work systems creates the prefect conditions for talent maximization by employees effectively improving performance on key variable as such as labour productivity, absenteeism and flexibility. The above benefits are realized through the creation of a cooperative working environment facilitated by HPWS.

In this setting, employees are willing to work harder collaboratively with employers to share ideas for mutual benefit. For instance, Granite Rock of California implemented a high performance work system which resulted in an increase of market share of 88%.

Additionally, it improved its delivery time from 65% to 95% while their revenue per employee was ranked 30% above the national average (Martha & Mark, 1996, p. 21). One of the areas that have been touted by experts as a beneficiary of HPWS is performance and turn over.

Performance and turnover

According to (Huselid, 1995, p. 650), HPWS have enhanced human resource management strategies which complement external strategies that together help in increasing productivity, and both employee and customer satisfaction. Increased employee satisfaction is almost a sure way of improving performance of an organization. Moreover, its highly unlikely that satisfied employees will leave there place of work for competitors.

For instance One Valley Bank of Clarksburg that is based in West Virginia experienced a 48% in employee turnover while productivity increased by 24% after implementation of HPWS. Additionally, return on equity of the bank grew by over 70% while profits increased by over 100% after the high performance work system model was adopted (Martha & Mark, 1996, p. 26).

Due to HPWS therefore, the ability of organizations retaining employees is increased. Still on performance, Guthrie et al. (2002, p. 78) says that there is conclusive evidence that organizations that have implemented HPWS had attractive operating results dues to reduced costs.

Still on employee turnover and performance, HPWS according to (Batt, 2002, p. 74) aid firm in developing solid human capital that enhances knowledge of the businesss products and processes of work. This development enables employees to freely associate with customers.

According to experts, increased interaction between employees and customers helps in increasing performance and commitment from employees which in turn reduces turnover.

Jeff Arthur studied 30 steel mills and found out that after implementation of HPWS, the steel mini-mills productivity increased by 34% while employee turnover declined by 57%. At the same time the mills experienced a drop of over 60% in the scrap generated (Martha & Mark, 1996, p. 36).

The above benefits serve to highlight the successes that have come as a result of implementation of HPWS. Despite the rosy picture painted, the fact that some of the systems have not worked well cannot be ignored.

The ideal HPWS is a representation a holistic system design that utilizes interrelated features including employee empowerment, openness, trust and rewards based on performance to help in improving quality as well as customer and employee satisfaction.

However there have been hiccups characterizing the approach that serves to highlight the fact that in some cases high performance work systems have not lived up to their expectation. There is for instance a sense of resistance from middle level managers of many organizations that have implemented or are in the process of implementing HPWS.

This is because of the feeling of job insecurity due to reduced roles on the part of the managers. This forms part of the genesis of the skepticism from other researchers who term it a cosmetic operation that has no effect on the power and only rewards inequalities in contemporary organizations.

Failures

Its important to note that for HPWS to succeed there should be willingness from top management. Both the stakeholders and stockholders must fall within the same line of thinking to ensure the systems succeed. According to (Tesluk et al., 1999, p. 298), top management must believe in the skills and abilities of the workforce.

Belief on the workforce will persuade stockholders to implement changes while availing opportunities to the employees to make necessary improvements. Top management also comes in formulating reward and recognition systems that help in encouraging employee participation.

One of the biggest problems facing implementation and success of HPWS is that interference by top management. In a number of cases, workforce restructuring that accompanies such processes is used to target employees who are not in favor with top management. Skills are not considered in this situation and only top management cronies get rewarded in the structure shake up.

OToole & Lawler (2006, p. 190) cites top management as the biggest barrier to the successful implementation of HPWS. More often than not, managers are not able to implement belief systems or ideologies that they believe in. sometimes, they are forced to implement what they dont believe in. the result is partial commitment from these managers who are so critical in the success of these systems.

When the above happens, it only amounts to cosmetic operation devoid of the necessary dedication that is needed for its success.

For high performance work systems to succeed, Gollan (2005) says that is necessary for organizations to improve HRM practices (p. 187). Improved HRM practices will complement HPWS by increasing efficiency and productivity.

It also has to have the same level of support and commitment from management in terms of attention, time and resources. Unfortunately, this is not the case in most of the firms that are seeking to implement HPWS.

Many a times, firms rush to implement HPWS in response in a bid to outdo their competitors. Most of the time, the firms dont know what they are getting into (Addison, 2005, p. 276). What they fail to take into account is the labour costs that are likely to increase with more training that is needed ad may needed to maintain HPWS.

The approaches that these companies use to implement this systems more often than not are not based on comprehensive research rather, basic assumptions that later prove too costly for the organization. In cases such as the above, the benefits of HPWS are unlikely to be realized.

Conclusion

From the literature that exists on the two position fronted by various researchers, its clear that there are more merits than demerits of HPWS. There are numerous cases that illustrate the benefits of implementing HPWS in organizations. From the introduction, its clear that the role of HR in realizing a HPWS is critical.

Besides, there is emphasis on empowerment of workers and enrichment of their jobs through thorough and constant training. That way the momentum that a HPWS gives accord to the organization is maintained. The numerous benefits as illustrated above include increased productivity, employee satisfaction, customer satisfaction and retention, company growth and higher revenues.

They all are visible benefits of HPWS in many organizations as illustrated by the examples. On the other hand, there has been failure associated with implementation of HPWS. These failures are as a result of lack of planning from implementing authorities.

Many researchers have found lack of commitment and willingness on the part of top and middle level management in implementing HPWS. In cases where the implementation takes place, the process is riddled with favoritism especially through layoff of parts of the workforce that are deemed unfriendly to management.

After all is considered, it safe to conclude that HPWS have more benefits than failures hence the need for all firms to adapt them. Besides, the organizations that are yet to implement HPWS can learn from the mistakes that have been committed in order to avoid them.

References

Appelbaum, E., et al. (2000) Manufacturing Advantage: Why High-Performance Work Systems Pay Off. Ithaca: Cornell University Press.

Addison, J. T. (2005) The determinants of firm performance: Unions, work councils, and employee involvement/high performance work practices, Scottish Journal of Political Economy, 52(3).

Batt, R. (2002) Managing customer services: Human resource practices, quit rates, and sales growth, Academy of Management Journal.

Freeman, R. B., & Kleiner, M. M. (2000) Who benefits most from employee involvement: Firm or workers? The American Economic Review, 90(2).

Mohrman, S., et al. (1992) Applying employee involvement in schools, Educational Evaluation and Policy Analysis, 14(4).

Gollan, P. J. (2005) High involvement management and human resource sustainability: The challenges and opportunities. Asia Pacific Journal of Human Resource Management, 43(1).

Gollan, P. J., & Davis, E. (1999) High involvement management and organizational

Change: Beyond rhetoric. Asia Pacific Journal of Human Resource Management, 37(3).

Guthrie, J. P. et al. (2002) Correlates and consequences of high involvement work practices: the role of competitive strategy. The International Journal of Human Resource Management, 13(1).

Gurbuz, S (2009) The effect of high performance HR practices on employees jobsatisfaction. Istanbul University Journal of the School of Business Administration Cilt/Vol: 38, Say1/No:2, 2009, 110-123

Huselid, M. (1995) The impact of human resource management practices on turnover, productivity, and corporate financial performance. Academy of Management Journal, 38(3).

Kirkman, B. & Rosen, B. (1999) Beyond self-management: The antecedents and consequences of team empowerment, Academy of Management Journal, 42, 58- 71.

Lawler, E. et al. (1995) Creating high performance organizations. San Francisco: Jossey-Bass.

Lloyd, C. (2000) High involvement work systems: The only option for UK high skill sectors? SKOPE Research Paper, 11.

Martha A. G & Mark B. (1996) The Power of High Performance Work Systems. Journal of Training &Development 50, no. 10 (October 1996): 2136.

OToole, J., & Lawler, E. E.(2006) The choices managers make or dont make, The Conference Board Review, September/October.

Rodgers, R. W., & Ferketish, B. J. (2005) Creating a high-Involvement culture through a value-driven change process: Development Dimensions International.

Tesluk, P. E., et al. (1999) Examining employee involvement in the context of participative work environments. Group & Organization Management.

Wall, T. D. et al. (2002) Empowerment, performance, and operational uncertainty: A theoretical integration. Journal of Applied Psychology, 51(1).

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