The Concept of High Commitment Human Resource Management - Term Paper Example

High Committment HRM Introduction: The present day business scenario is characterized by rapid changes in the economic environment, largely brought about by the phenomenon of globalization and the deregulation of markets. Organizations have to survive and be profitable in a fiercely competitive product market, with changing customer and investor demands. This has necessitated a continual improvement in performance by reduction in costs, continuous innovation of products and services as well as improvements in productivity, quality of products and speed in getting these improved products into the market. There is an ever increasing trend for quality to be the major criterion that determines productivity, rather than a singular focus on costs which was the guiding principle prior to globalization. The new organizational approach therefore focuses on employee participation in decision making and a new set of human resource practices have evolved, focusing upon improvement in employee welfare through training, compensation and profit sharing, to motivate them in achieving this objective. These human resource practices are collectively referred to as high commitment HRM. The concept of High Committment HRM: In the present day competitive environment, people are viewed as an organization’s most valuable resource. While it may not be difficult for competitor companies to imitate products that are produced by one Company, it is next to impossible for one organization to imitate the people or replicate their skills. Human resource strategies within an organization are difficult to imitate because of path dependency, i,e, they are based upon organizational policies that have evolved over time. This is the reason why human resource management and its associated practices have come to be recognised as one of the most important factors that could impart a strategic advantage to an organization in competing in the global marketplace.(Boxall and Purcell, 2003). The scope of High Commitment HRM encompasses the notion of best practices in human resource management and the underlying premise is that there are some HR practices which have the potential to bring about improved organisational performance for all organisations (Marchington and Wilkinson, 2005:72). According to Baron and Kreps (1999), high commitment HRM is characterized by three kinds of goals. Firstly, employees need to clearly understand what the best interests of their organization are and work towards the achievement of those ends. Secondly, in order to achieve these best interests, employees should also be flexible enough to take on assignments that may be different from the normal work routines. Thirdly, employees must engage both mental and motor skills in the performance of their jobs; they should not hesitate to exercise their own judgment where necessary in determining what needs to be done and contribute any ideas they may have for improvement of their organizations (Baron and Krepps, 1999:189). Hence, High performance HRM requires a much higher level of participation from employees in the current global environment, as compared to earlier trends. In order to facilitate increased employee participation and benefit from the skills and knowledge that employees can contribute, most organizations are developing a set of human resource practices geared towards improving employee motivation, performance and productivity at the workplace. Improving employee participation through representation in unions as well as direct participation in decision making may be “complementary vehicles for employee voice at work.” (Batt, 2002:589). Components of High performance HRM: The components of such a high commitment HR system, as set out by Marchington and Wilkinson, based upon the views offered by Pfeffer (1998) include: (a) Selective hiring and sophisticated selection of applicants while recruiting (b) Providing extensive training to employees, as well as opportunities for learning and development (c) Employee involvement in company operations, sharing of information and worker voice (d) Working in teams which are self managed by the employees themselves (e) High levels of compensation which are contingent upon levels of performance (f) Harmonisation among employees and reduction in employee differentials (g) Employment security and internal labour markets (Marchington and Wilkinson, 2005:72) Of all the above elements Pfeffer(1998) views the offer of employment security as being the most important Human Resource practice, based upon which all other components are derived, because the higher the level of job security that is offered, the more likely the employee is to contribute his or her hard work, skill and commitment to the job. According to Pfeffer, when an organization resorts to practices such as compulsory lay-offs and downsizing, it is likely to undermine employment security and employers can consider alternative provisions such as reduction in working hours, reduction in wages, halting new recruitment and transferring production workers into sales to drum up demand. (Pfeffer, 1998:183). On the other hand, companies that offer job security to their employees may be providing an indirect signal to the employees about the organization’s concern for their welfare and demonstrating a long term commitment to them, which in turn provides a powerful motivating force to the employees to put in their best performance and apply their skills in the best interests of the organization. In an uncertain business atmosphere however, and especially for example in an environment characterized by a recession as is the case at present, it may not always be possible for an organization to assure job security to its employees; even in a normal business environment, there may be limits to the extent of job security that can be guaranteed to employees. It would not be practical or realistic for an employee to expect that s/he will have a job for life, but providing an assurance of job security does provide a sense of stability to an employee that job reductions will be limited as far as possible and that an employee can expect to continue with the organization on a long term basis. Such assurance of employment security are however are based upon the understanding that while the organization will strive to retain an employee as far as possible, the employee is also obliged to share in the responsibility to achieve a consistently superior organizational performance. One of the goals of high commitment HRM practices is to recruit employees of the best calibre. Boxall characterizes this as “capturing a stock of exceptional human talent”. (Boxall, 1996: 66-67). This may be achieved through selective hiring and the use of sophisticated selection criteria. Some of these would include (a) defining the job criteria correctly, so that only candidates with the appropriate qualifications apply for it (b) using employment tests prior to hiring, to get an idea of employee performance potential and (c) the use of polymetric tests and realistic job previews. (Marchington and Wilkinson, 2005:75). Once the best employees have been hired, imparting effective training may also be necessary to extract the best performance out of them. According to Boxall, the process of training can help to synergise the talents of skilled employees and provide the organization with an “organisational process advantage” and contribute towards a sustain competitive advantage in the global market. (Boxall, 1996:67). Allowing employees to share in information about the Company, its goals and operations, etc, produces a higher level of motivation in them. Sharing of information about company strategy and performance provides employees with the sense that they are trusted. Additionally, it also enables employees to use the knowledge residing within the firm to its fullest potential (Pfeffer, 1998).Thirdly, team working among employees is likely to be more successful if workers are provided a base of information on which to base their suggestions and make contributions to improve organizational performance and productivity.(Marchington and Wilkinson, 2005:77). One of the significant aspects of high performance HRM is improving employee motivation through offering monetary incentives. In the case of skilled employees in particular where there is a dearth, one of the most commonly used methods used by employers to attract the best candidates to their firm is to offer good monetary rewards, such as high salaries, signing bonuses and attractive benefits (Pfeffer, 1998). There are two components to providing high compensation that is contingent on the performance of the employee; higher salary that what is normally paid for a comparable job and specific performance related incentives, such as bonuses. Lastly, introducing egalitarianism in the workplace through minimizing status differences and harmonizing employee status may help improve employee motivation. Through a reduction of these differences, employees on the lower ranks in the organizational hierarchy, such as manual workers and lower grade level office staff get the feeling that they are also as valuable to the organization as higher level employees. This can be exemplified through HRM practices such as harmonisation in employment conditions, i.e, sick leave, holidays, pensions and hours of work. The objective of such harmonisation is to break down the hierarchal barriers and promote higher levels of team-working and networking among employees to enhance productivity. Harmonisation can also be achieved by allowing staff members t share uniformly in share allocation schemes, whereby they also gain some level of profit participation in the organization. Pffeffer has argued that this allows employees to gain some measure of ownership in the Company which, if “effectively implemented, can align the interests of employees with those of shareholders, by making employees shareholders too.” (Pfeffer, 1998:38). This could contribute towards enhancing the motivation of employees to provide their best efforts in the firm’s interests. Support for and criticism of the High performance HRM model: According to Pfeffer(1998), investing in its employees can be very profitable for an organization in terms of increased productivity. He states that “substantial gains, on the order of 40 percent or so in most of the studies reviewed, can be obtained by implementing high performance management practices.” (Pfeffer, 1998: 32). The beneficial impact of high commitment HRM also appears to be substantiated in another study that was carried out by Batt (2002). She examined the relationship between the quit rates of employees in call centres and their organizational performance to the kind of human resource practices that were being used at the firm. The findings in this study showed that quit rates were lower and there were high levels of sales growth in those call centres where employees participated in decision making and were offered HR incentives such as job security and high levels of pay. Criticism has been levelled on the notion of high performance HRM as a factor contributing to increased organizational productivity. Theories that have been offered in this context are viewed as being unsubstantial, because they are inadequately backed up by empirical research and thereby constitute merely theoretical data.(Guest, 1997). For instance, the argument that providing employees with high levels of information about the Company is likely to enhance the value of their contributions has been contested on the basis that providing a cascade of information from management is unlikely to be helpful in eliciting worker contributions. Rather, since such a flow of information is primarily one way, i.e, from management to employees, and is selectively imparted, it may be viewed as a controlling measure by management that emasculates employees.(Marchington and Wilkinson, 2005:78). High compensation may also not necessarily achieve its goal of motivating employees to remain with a particular organization; on the contrary, the focus on pay-related incentives could impel an employee to purely use monetary benefits as a criterion in work related performance and leave a job if s/he is offered better pay elsewhere. Employees may be motivated to higher levels by satisfying their intrinsic needs, such as the need for recognition and respect.(Herzberg, 1968). Hence, the question of whether performance related incentives can achieve the desired objectives is questionable. While high commitment HRM appears to be a desirable practice theoretically, in actual practice there may be wide levels of disparity in the kind of employee harmonisation and motivation schemes in place at different firms. This makes it difficult to arrive at one standard, universal set of practices that may be successfully applied across firms in different countries and different industry segments. Bibliography Baron, J. and Kreps, 1999. “Consistent human resource practices”, California Management Review, 41(3): 29-53. Batt, Rosemary, 2002. “Managing Customer Services: Human Resource Practices, Quit Rates, and Sales Growth.” Academy of Management Journal. 45(3):587-597. Boxall, P. and Purcell, J, 2003. “Strategy and human resource management”, London: Palgrave Macmillan. Boxall, P., 1996. “The strategic HRM debate and the resource-based view of the firm”, Human Resource Management Journal, 6(3): 59-75 Guest, David E, 1997. “Human Resource management and performance: A review and research agenda”, International Journal of Human resource Management, 8:263-276 Herzberg, F, 1968. “ One More Time: How Do You Motivate Employees”, pp 85-95 in Harvard Business Review: “Breakthrough Ideas: 15 Articles That Define Business Practice Today”, Boston: Harvard Business School Publishing. Marchington, Mick and Wilkinson, Adrian, 2005. “Human resource management at work: People management and development”, CIPD Publishing Read More