High-Performance Work System in HRM - Assignment Example

High Performance Work System in HRM Introduction Over the of the past several years following the mainstreaming of human resource management practices, there has been considerable scholarly interest in the extent to which HRM has affected employees’ job satisfaction and general wellbeing. One of the key elements of modern human resource management is high performance work systems (HPWS). These take radically different approaches from the traditional management approach associated with the fields of science management and mass production (Wood and Wall, 2005). They are characterized by a non-convectional employer–employee relationship that is not founded on traditional hierarchical systems. Many top organisational behaviour specialists believe that it can be relied on to provide companies that adopt it with a reliable and sustainable competitive edge. Given the popularity and endurance of the concept, it is understandable that it should be seen as a revolutionary method of handling human resources. In addition, quite a number or retrospective and contemporary studies posit that the effect of HRM on job satisfaction and, by extension, organisational performance is positive. However, this is not universal; some studies have portrayed job satisfaction as a primary mediator between HRM practices and organisational performance. On the other hand, others postulate that the implementation of HR practices is associated with increased levels of work intensity, which can translate into better performance but not necessarily higher job satisfaction (Green, 2004). There have also been claims that HRM practices that are adopted as part of high performance work system are not either designed to increase job satisfaction or tend not to have that effect (Appelbaum, 2002). However, some scholars have speculated that HRM tends to impact on separate components of job satisfaction such as a sense of achievement or contentment with ones pay (Green, 2006). However, what cannot be disputed is the fact that, despite the common assumption that HPWS are good for business, many organisations have failed to apply or implement them. This begs the question: If it is that good, why do more people not use it? Literature Review A great deal has been written about the HPWS in HMR literature, however, despite this, little attention is given to it individually even though it concerns organisational economic; critical area in general economics. High performance work systems can be defined as high involvement or commitment organisations; these use a distinctive managerial approach to facilitate performance through people (Bohlander & Snell, 2004). Although different HRM scholars have proposed definitions with minor distinctions to the above, they all have a set of seven common attributes as identified by Jeffery Pfeffer. These are; employment security, selective hiring, self-management and decentralized decision making, higher wages based on organisations performance minimization of status distinction barriers in matters such as language dress code and arrangement and extensive sharing of financial performance throughout the organization (Pfeffer, 1998). Primarily, HPWS is meant to create organisations that are grounded on the universal participation, dedication and empowerment of employees as opposed to controlling their every move and micromanaging them. People tend to take the “management” in HRM in a literal sense; they assume that managing implies controlling or even manipulating people to get the best out of them. However, the concept of HPWS intends for exactly the opposite of this, it wants employees to be more in control or the work they do and decisions they make (Bach and Edwards, 2013). This way, the role of the manager is only to give guidance allocate resources and evaluate performances rather than tell the staff what to do. Nevertheless, the specific sets of practices are bound to vary from company to company depending on their line of business, culture or interpretation of ethics. When HPWS is applied in organisations, the staffs tends to feel responsible and involved in the success of the business because they have direct access to information that helps then understand the extent of their success. In addition, they tend to contribute more in form of decisions and the fact that they get to share in the benefits directly makes them feel a part of the company (Torrington, Hall and Taylor, 2008). With the power, knowledge and rewards to perform to the highest levels, the employees are more effective and have a greater sense of responsibility. Among the firms that use this approach, ear Northwest, Southwest airlines, Proctor and Gamble, Proctor and Virgin Atlantic Airways (Pfeffer, 1998). A key different between these firms and others is that everyone is as involved as possible in the day-to-day operations. However, the traditional structure is such that the individuals at the lowest level more so in mass production are unthinking agents whose only role is to carry out their simplified and highly specialized tasks without understanding or even being concerned about the impact of their activity on the firm. Conversely, the ideal structure from a HPWS should be such that every member of the firm understands its specific objectives and the role they play in helping to bring them to fruition (Muller-Camen, Croucher and Leigh, 2008). Direct Impacts of HPWS on employees In HPWS, workers have a significant level of self-control and management, working hand in hand with their leaders; they develop the visions missions and goals of their specific roles. Therefore, they can react in a non-programmed or controlled way to changing circumstance, which makes them more versatile and adaptive. Ultimately, workers are expected to shed the idea of being agents and think of themselves as owners or at least core stakeholders (Bryson, Forthand Kirby, 2005). Given the apparently advantageous nature of HPWS evinced so far, one has to revert to the initial question; which is why they are not as popularly used, as one would expect? To get an answer to this, one will first have to investigate if empirical studies of organisations that apply the method have proven to be more successful than those that do not. This way, it can be established why only a few mainstream companies use this technique. Admittedly, several studies have investigated if firms using specific HPWS techniques realize better and more sustainable results than traditionally managed ones. This notwithstanding, there have been comparatively few studies that have examined the concept rigorously in regard to the extent to which a group of HPWS practices can be associated with higher financial returns for organisations. One of the studies reviewed by Pfeffer (1998), was by Mark Huselid who used data from 968 firms in various industries that is consistent with the assumption that HPWP contribute to reduced employee turnover (Huselid, 1995). In addition, the productivity and sales tended to go up and this could be proved in terms of sales per employee as well as corporate financial performance and stock market value. The conclusion was: “The magnitude of the returns for investment in High Performance Work Practices is Substantial. A one standard deviation increase in such practices is associated with a... 7.05 percent decrease in turnover and, on a per employee basis, $27,044 more in sales and $18,641 and $3,814 more in market value and profits, respectively” (Huselid 1995, p.667). Past Research Studies on HPWS MIT researchers who compared motor vehicle manufacturing plants that employ HPWS with convectional mass production techniques in a different study found that flexible methods that emphasize the use of teams and giving the employees more autonomy tended be more productive (Pfeffer, 1998). Another major study was carried out in the steel industry where HR policies were rated on a scale of one to four with one indicating progressivism while four indicated the traditional Tayloristic methodology. It was found that the level of progressivism in a company tended to be associated with significantly lower costs of production and low staff turnover. Fifteen semiconductor fabrication plants were also surveyed and found that using an index for power information knowledge and reward the researchers discovered that there is a clear line between defect, density, line yield and cycle time (Pfeffer, 1998). John Paul MacDuffie (1995) carried out studies on over 62 auto assembly plants across the world through questionnaires visiting the individual sites, some of the target firms used HR bundles associated with mass production while others were HPWS. The former associated with mass production or narrow division of labour and commitment policies while the latter has to do with flexible production systems, which have orientation that is more multi-skilled and high commitment, and employees have to carry out more team-based activity (MacDuffie, 1995). The study also came up with robust and decisive statistical evidence supporting the hypothesis that the HPWS practices have a positive connection to both productivity and quality. Ichniowski, Shaw and Prennushi carried out similar studies in 1997 on steel production lines; they studied 36 steel plants under the control or 17 different companies to see if clusters of complementally HRM practices improve productivity. Four practices were identified, these included; the traditional one with no added innovation, then there was a one where worker involvement and enhanced management practices had been involved. The other two added extensive training and worker involvement and full incorporation of innovative and flexibility practices in all policy areas respectively (Ichniowski and Shaw, 1999). The study determined productivity through a measure of percentage uptime excluding delays. Their result showed that after an examination or regression analysis, systems where innovative HR practices are used were statistically more productive and the level of enthusiasm from the workers much higher than the traditional ones. Taking to account the studies discussed above, it is self-evident that specific HMWP practices generally tend to result in higher production levels, worker satisfaction and generally more efficient and sustainable organisations (Brown, Forde and David, 2008). Nonetheless, Tomer (1999) contends that the mainstream organisational experience discussed above may not provide a comprehensive understanding of the alleged superiority of HPWS. Analysing mainstream organisations is an examination of the behaviours and tendencies in control-oriented organisations where the relationship between the agent and controller has been clearly defined (Brown, Charlwood and Spencer, 2007). Therefore, organisational and personal economics involve methods of devising incentives to get employees or agents to be willing to work harder despite their being reluctant or unwilling to do so. The underlying assumption is that since the employer wants them to exert extra effort they will have to provide rewards, which are mostly pecuniary in nature to distract them from activities; they would rather be taking part in such as leisure. From anecdotal and statistical evidence, the superiority of HPWS appears to be undisputable in comparison with tradition control centred HR methodologies. For better understanding of the notion, one can considered the x-efficiency theory, which is a critical aspect of behavioural economics. Although not explicitly applicable to HPWS, some of the 10 perspectives of e-efficiency theory can be essential in deconstructing and understanding HPWS. Take for instance the presupposition that employees are discrete concerning their efforts and exert significantly less effort that they could if they wished to be productive. Using the x efficiency theory, scholars suggest that HPWS insights can be derived by investing time and energy to develop a more co-operative and integrative system of labour relations which in the end results in higher worker effort and motivation (Tomer, 1999). Challenges of HPWS implementation Despite all this evidence on the apparent superiority of HPWS over traditional model, it would be a mistake to assume that HPWS can simply be installed by imitating the best practices by other companies. Its adaptation and implementation have been found to be extremely expensive and unsustainable many organisations, which has led to its low uptake. The development of HPWS systems in organisations often brings about intangible and unique organisational capabilities that tend to be generated and controlled by the organisations specific internal dynamics. This is not easily replicated since in a different firm the impact on worker morale or productivity may not be the same as in some of the success stories examined previously. For HPWS to be used to develop a firm’s competitive advantage, there must be harmony between the internal systems, which need to be aligned with the prevailing external, conditions which determine strategic objectives in the industry. Therefore having the requisite resources and conditions for HPWS implementation does not necessarily produce good results, the organization must also combine them to create sustainable and coherent well-integrated systems. On the contrary, many firms are actually moving away from the use of high commitment management claiming that changes in the practice are often short lived and even when they are implemented, it is in a partial and truncated manner (Boselie, Dietz and Boone, 2005). Furthermore, even though it may appear HPWS is an effective way of motivating employees by giving them more autonomy some do not actually want this (Bryson, Charlwood and Forth, 2006). For some employees, working in highly specialized jobs and in positions from where they have no notion of the bigger picture is not necessarily a good thing. They might fear being involved in decisions making or setting objective because they cannot be sure if they will do the right thing (Forde, Gary and David, 2006). Furthermore, for some it is easier just to do the job normally without caring much about how it affects to rest of the organization as long as they are being paid. Installing HPWS is a highly complicated process that is often hampered with challenges since it is more than a matter of simply acquiring and using the best technology practices or method (Boselie, 2010). It brings about a profound organisational change that involves transforming the relationship between the employer and employee; if the current method in a firm is based on a Tayloristic technique founded on control-centric employers and submissive employees, there is bound to be a deficiency in mutual respect and trust (Bryson, Charlwood and Forth, 2006). Many employer employee relationships are founded on highly structured and hierarchical systems that empower the employer in such a way that they can force the employee to work through both positive and negative reinforcement. HPWS, implementation cannot therefore be successfully implemented in a system where there is absence of mutual trust since the employees will be suspicious of the intentions of the employers and vice versa. The bigger task is therefore not just the implementation but also the changing the relationship and perceptions between the workers and their managers, which might be grounded in years of practice and mutual distrust making a radical turn around a complex and even undesirable idea (Pfeffer, 1998). In addition, there are several other barriers such as the initial training cost, difficulties in satisfying the demands of investors and stakeholders in the short run. In addition to the changing roles of staff, in a HPWS environment managers are also in highly unfamiliar territory. They will be accountable for results but instead of depending on authority, they have to use soft power and rely more on mutual trust and collaborative relationships. When one has to use these tools to settle disagreements, it can often be much more complicated than the traditional use of direct authority. Container-Board Case Study An example of such a scenario is a recycled containerboard in the Midwestern United States where after three years of operation, the status of technicians changed to the salaried non-exempt category. They lost some vacation time but as a result got better retirement benefits and earn overtime pay. They worked as independent teams with the authority to control how fast a machine can operate as well as when to take down one for repairs and upgrades. While many managers recognized that this autonomy made the mill more effective, some decided to restructure the teams to minimize the power of the employees. However, this only brought about conflict between the two sides since each saw the other as seeking to dominate the production and “ownership”. Had the managers understood the concept of HPWS, they would have instead worked towards improving the current structure so the employees could be more intrinsically motivated and independent. Among the reasons for low uptake of HPWS is the fact that managers appear to hold similar opinions on employee power, which is seen as a threat rather than advantage. The complicated and often unfriendly relationships between employers and unions make it difficult for them to see each other as partners rather than opponent. For most part, unions operate on the Marxist idea that for wealth to be generated by the industrialist in a capitalist economy the workers have to be exploited and therefore they try as hard as possible to reduce the exploitation. To them, the new responsibilities may be misconstrued as a way to hold workers accountable for more than the specific outcomes of their jobs. Moreover, in the United Kingdom, for example, many firms are responding to the pressures of the competitive market by attempting to make minor alterations in mass production so it can be flexible and at the same time consistent with low skill low wage labour (Green and Tsitsianis, 2005). In addition, there is always the temptation by employers to underpay and overwork their staff, which is incompatible with HPWS. Conclusion Ultimately, HPWS are a form of HRM where employees neither are agents of principles nor are their controlled though structures or incentive; instead, they are co-owners or principles. Such workers can satisfy their need for self-actualization and experience the same motivation, as owners hence become fully committed participants in the organisations (Cartwright and Holmes, 2006). Their efforts are expected to be much higher and effective than their contemporaries in control oriented situations whose primary motivation is likely to be money or promotions. However, that this system has not been as widely accepted in organisations can be attributed to reluctance by managers in majority organisations to cede so much power to employees. Other fail to realize that to realize the full potential of HPWS, they must go beyond simple imitating other organisations and come up with coherent and fully inclusive internal systems which require a profound change in attitude from both the staff and employer. While the potential payoffs to the investment in organizational capital tend to be substantial, the change from past practice is often a difficult hurdle for many employers, which understandably results in their reluctance to make the shift. References Appelbaum, E., 2002. ‘The impact of new forms of work organization on workers’, in: G. Murray, J. Belanger, A. Giles and P. Lapointe (eds), Work and Employment Relations in the High-Performance Workplace, London: Routledge. Bach, S. and Edwards, M., 2013. Managing Human Resources: Human Resource Management in Transition. New Jersey: Wiley. Ch. 2 Bohlander, G., & Snell, S., 2004. Managing human resources. 13th ed. Mason, OH: Thomson/South-Western Boselie, P., 2010. 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