Role of high performance work systems in organizational performance - Essay Example

Role of high performance work systems in organizational performance Introduction A high performance work system is developed as a practice included in the hard human resource management approach in which the "management" part of human resource management is focused upon. A high performance oriented work system has been traditionally used by organizations across all sectors as a means of achieving higher involvement and commitment on the part of the employee groups. The high performance work systems (HPWS) are employed in organizations with the aim of utilizing a fundamentally distinct approach for managing the human resource groups as compared to the traditional hierarchical approach of human resource and performance management which are commonly used in mass production and scientific management. The core concept of the high performance work system is based on the development of an employer and employee relationship which is radically different from the Tailorysm management techniques of human resource and performance management in which a controlling and dictating approach is taken up. This work system aims at developing high involvement through the development of an adequate degree of commitment among all levels of human resources working in the organization. The notion of the high performance work system are supported by claims that this system of work practices lead to the creation of superior performance at the individual as well as organizational levels. However, it can be argued that the system of high performance work systems often makes an organization shift from the conventional and eclectic selection of the best practices employed in human resource management which ensures the creation of higher organizational performance outcomes but does not necessarily add to the performance outcomes of individual employees in an organization. Developing the work on these lines of analysis, this essay is prepared with the objective of critically discussing the role of high performance work systems in organizational and individual performances. Discussion The scholars across various fields of study like industrial relations labor economics, organizational behavior, and strategic human resource management and operations management who have presented varied views regarding the effectiveness of the high performance work systems in the contemporary business organizations. As per the views of many scholars and researchers, the high performance work systems are extremely useful form an organizational as well as individual performances. However, the works of other scholars suggest that the role of these work systems have become much constrained in the present scenario of the competitive business environment wherein concentrating on the people factor of human resource management has assumed a more crucial role that concentrating on the management of the people resources. Dynamics of the high performance work systems High performance work systems can be defined as the specific combinations of work structures, human resource practices and processes which are aimed at maximizing the knowledge, commitment, skills and flexibility of the employee groups in an organization. A basic model of a high performance work system incorporates one or more of the following structural, strategic, behavioral and procedural features: Higher complexity in the job roles, multi skilling and multi tasking. Development of employee skills through appropriate training and development processes. Increased level of skills and qualification of the employees. Developing minimum hierarchy levels in the organizational structure. Enhanced horizontal communications. Proper distribution of responsibility through team development. Horizontal links developed in the intra firm perspective for outsourcing and subcontracting activities. More focus given on the core abilities of an organization. Compensation incentives designed for skills acquisition and higher performances in the long term scenarios. There are four main underlying principles on which the high performance work systems are developed. These are knowledge development, sharing of information, egalitarianism and performance reward linkage (Figure 1). Figure 1: Underlying principles of the high performance work systems (Source: Wright, Gardner, Moynihan and Allen, 2005). The high performance work systems are extremely reliant on the factor of performance and reward linkage because it takes up rewarding and empowering the employees as a way of elevating the performance level of different groups of employees working in the organization. However, the other three principles also play a key role in enabling this system to ensure higher organizational productivity and efficiency. The key concept on which the high performance work systems are based on is systematic integration in which the work system designs, organizational strategies, involvement of the employee groups are linked with the organizational and individual outcomes (Figure 2). These kinds of work systems involve the use of many interrelated components and strategies that complement each other and are employed for the achievement of the short term as well as the long term objectives of an organization. Figure 2: Implementation of high performance work systems (Source: Wright, Gardner, Moynihan and Allen, 2005) An organization which employs the high performance work systems generally focuses on enhancing the impact of the methods, processes, physical and organizational environment, tools and technology as well as the influence of the human resources on the productivity, profitability as well as the efficiency of the business. These kinds of organizations implement an overall holistic organizational management approach based on the creation of flat hierarchical structures, self responsible groups, job rotation, involvement of all levels of employees in the decision making processes and multi tasking and multi skilling (Godard, 2004). The high performance organization invests highly in the human resource development initiatives and supports the employees in different aspects of their job requirements. However, the high performance work systems are criticized for focusing on the hard human resource management approaches and ignoring the soft human resource management approaches which is extremely necessary for functioning in the dynamic contemporary business environment (Guthrie, 2001). Role of high performance work systems in organizational performance The high performance work systems are found to have a wide range of positive effects on the performances of an organization. This kind of work system is extremely significant in improving the financial and economic performances of organizations across different sectors. The use of the high performance work systems as a part of strategic human resource management can improve the productivity of an organization and as such can have significant economic effects on the business performance levels. There are no evidences in any sector regarding the indication of an organization suffering by adopting and employing a high performance work system (Daniels, 2006). On the other hand, evidences from some sectors including the service sector and manufacturing sectors of various nations show that the heavy emphasis on organizational restructuring and downsizing of workforces as a part of establishing the high performance work systems is a major cause of the development of stressful and insecure work environments. One of the primary aims of the high performance work systems is to empower the employees to make autonomous decisions, but in real life implementation, the impacts of establishing these systems are far from the empowerment of workers. Instead, these systems often lead to the employees making autonomous decisions and displaying uncontrollable behaviors which have derogatory effects on the individual and organizational performances (Wright, Gardner, Moynihan and Allen, 2005). Role of high performance work systems in individual performance The high performance work systems, though much useful in the context of an organization, is found to be much less beneficial for employee management (Harley, 2001). It can be found that the workers who are interested towards getting rewards and higher incentives are highly motivated while working in a high performance workplace. But, in case of the workers who look for job satisfaction on non monetary terms, are often less motivated to perform well while working in the high performance oriented workplace. In such cases, the performances of the employees at the individual level generally decreased rather than being increased (Blyton and Turnbull, 2004). Although the role of high performance work systems in organizational performance is found to be highly beneficial, yet the impacts of this kind of work system in individual performances are much debated. The high performance work systems are much stringent in nature and thus, create less scope for flexibility in the function of the individual employees. The high performance work systems are also found to have negative impacts on the motivation and involvement level of the individual employees with the organizational objectives functions and achievements (Godard, 2001). Additionally, the employment of the high performance work systems generally lead to the creation of pressure on the employees to perform better when the management of the organizations focus on pursuing higher levels of performances without considering the impacts of these practices on the employee behaviors and performances (Forth and Millward, 2004). The paradigm of the high performance working is characterized by the human resource managers treating the employee groups as valuable assets, decisive components in the production systems and resources which need to be developed and supported. However, this kind of work system design neglects the need for responding to the needs of the employees. The employees working in the high performance work systems often find great difficulty in maintaining the work life balances, motivation and proactive involvement in their work because of the extreme pressure to perform better. The productivity gain from an organizational perspective may be much more in a high performance work system design than in any other performance generating work system. But the focus on people management approaches like employee well being, employee relationships and development of commitment and involvement through support are primarily lacking in this work environment (Warr, 2007). The high performance work systems helps organizations to achieve higher performance levels through the increasing level of autonomy and empowerment of the employee groups as the development of an autonomous and empowered group of employees ensures that these employees are able to use their creativity, knowledge and initiatives in the interest areas of the respective organizations. This fosters innovation, higher productivity and efficiency at an organizational context. But the productivity gains at the organizational level are mostly achieved at the expense of the mental health and well being of the employee groups. Also, it can be noted in many industries including the Japanese automobile industry that the adoption of such stringent work procedures have ultimately led to the development of stressful and insecure work environment characterized by waves of increased pace of work and downsizing, the heavy demands being forced by the management on the workers regarding performing better and increasing reliance of the organizational productivity on outsourcing activities. The stringent and highly controlled pattern of work system is also found to have adverse effects on the social and physical work environment of an organization which result in increased safety and health risks and deterioration in the quality of work as well as the work life in the medium to long term scenarios (Celiory and Shaw, 2001). The high performance work systems generally function on the basis of the concept of high commitment on the part of the employees leading to high involvement of the employees in the work processes and organizational objectives and achievements (Evans and Davis, 2005). But the development of high commitment does not necessarily ensure the development of high involvement on the part of the employees. In a high performance oriented work environment, the employees are forced to perform in an efficient manner through the employment of high performance demands from the employees wherein the quality of work life, the needs of the employees and the mental and physical health of the employees are not considered by the management while setting the performance goals. Barriers to the employment of the high performance work systems The performance superiority of the high performance work systems cannot be denied because of the varied benefits of developing a high performance workplace. Nevertheless, there may be a number of challenges associated with the implementation of this system. Also, the appropriate use of this system design calls for a number of ancillary support systems like sustainable managerial practices, adoption of best practices in human resource management, alignment of the work system with other verticals and existing features of the organization (Haynes and Fryer, 2000). The workers in a high performance oriented organization are able to satisfy their needs of inner motivation and self actualization. In contrast, the level of satisfaction that these employees derive from their respective functions and job roles are not adequately satisfied. Because these employees are committed to, identified with and fully participating in the organizational functions, therefore, the efforts on their part are expected to be much more effective and higher than the employees performing in a control oriented organization. The payoffs’ from such work systems may be high in tiers of organizational performance and effectiveness but fail to satisfy the basic needs of the employees related to mental health, work life balance, involvement and motivation on the basis of flexibility and supportive work culture. The outcomes of a high performance work environment as evaluated on the basis of the key objectives and elements of this work system are given in Figure 3. It can be seen that the evaluation of this work system with respect to work flow shows positive results for shared information development and egalitarianism but shows much less positive impacts on performance reward linkages and knowledge development. Also, the aspect of training is not fully supported by all the four aspects of a high performance work system. The factor of training and leadership also seem to be less influential when a high performance work system is employed because the effects on knowledge development, information sharing, egalitarianism and performance and reward linkages are negligible from the performance view of the individual employees. Figure 3: Outcomes of the high performance work system measured on the basis of the key factors of the system. (Source: Daniels, 2006) The high involvement work system as compared to high performance work system. The high involvement work systems can be identified to be a more useful approach for developing a work environment and work process in a modern organization. The employees in traditionally operated and large organizations are generally found to be motivated by the use of a high performance work system. In contrast, the employees working in the modern organizations are likely to be more motivated and involved through the use of the high involvement work practices which is a soft HRM approach that concentrates more on the people approach of management (Armstrong, 2006). High performance work systems generally form an organizational culture in which the employees do not act as the agents of principals and are also not controlled by the incentive structures. Instead, this kind of work system creates employee groups which become the principals or owners in their outlook and display an undesirable level of autonomous behavior (Boxall, Purcell and Wright, 2004). The high involvement work systems are more advantageous when it comes to the management of performances of individual employees because the personal interests, objectives and requirements of the employees are adequately considered in this work system development practice. Figure 3: High involvement work systems and organizational performances (Source: Kalleberg, Marsden, Reynolds and Knoke, 2006) Conclusion Thus, it can be concluded from the above analysis that the high performance work systems are extremely efficient as a hard HRM approach and generally lead do the creation of a wide array of benefits including competitive advantage, economic profits and financial benefits for an organization which are necessary measurements of the performances of an organization as a single functioning unit. But when evaluating the impacts of this work system on the performances of individual employees, it can be inferred that the positive impacts of working in this system are limited. Whereas, the high performance work systems create the scope for improving the effectiveness and performance levels of an organization as a whole unit, the positive impacts of these types of work systems on the individual performances are found to be much lesser. Additionally, the many challenges and ancillary supporting factors associated with the employment of high performance work systems makes it more difficult to achieve satisfaction and motivation an individual level. In contrast, the high involvement work system can act as a much more effective and value reaping work system for enhancing the productivity of a business both from an organizational and an individual perspective. References Armstrong, M., 2006. A handbook of human resource management practice, 10th ed. London: Kogan Page. Blyton, P. & Turnbull P., 2004. The Dynamics of Employee Relations. London: Macmillan. Boxall, P., Purcell, J. & Wright, P., 2004. The Oxford Handbook of Human Resource Management. Oxford: Oxford University Press. Celiory, J. & Shaw, J., 2001. The strategic management of people in work organizations: review, synthesis, and extension. Research in Personnel and Human Resources Management, 20, 2, pp. 165–197. Daniels, K., 2006. 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