High Performance Working and Company Practices - Research Paper Example

 HIGH PERFROMNACE WORKING High Performance Working and Company Practices EXECUTIVE SUMMARY Change is always a challenge as well as an opportunity. Today’s Human resource managers face great challenge to accustom with the changing business and workplace contexts and thus they try to convert their organizations in to High Performance Working systems with the right combination of people, process, technology and organizational structure. The HPW has recently gained growing attention from the Human Resource managers and organizations. Becoming a HPW organization is considered to be a difficult task because all the relevant and necessary elements must fit with others so that the system can function smoothly. The HPW system is a corrective measure because many other tools and measures of management like just-in-time manufacturing, customizing, total quality management and flexible manufacturing technology can be better functioned only when there are people who fit the specific requirements. No process can work out when right people are not there. High Performance Working system looks not only at technology or process, but it seeks to find talented and qualified people who can meet the specific requirements. Organizations with High Performance Working have been found to be successful as they have made tremendous changes from the very bottom line and experienced increase in productivity and very static long term profitability. This research work identifies IBMi and Canon Incii as an organization that has effectively used High Performance Working which made great changes in its success path. This piece of research work is a report prepared based on a speaker’s detailed description about the notion of High Performance Working and how it has made tremendous changes on the bottom of his/her organization’s bottom line. This report examines the fundamental principles and theories of High Performance working and it analyses how an effective high performance working can help an organization achieve its goals. Various theories of High Performance Working are compared and contrasted in this paper. This work identifies various elements of high performance working in an organization and how these can help the organization to become adjusted with changes and thus to achieve its goals. The research paper concludes that it is imperative that an organization like Delliii must consider HPW as a strategy that it can achieve further developments in its market and its overall performance. TABLE OF CONTENTS INTRODUCTION ……………………………………………………………..….. 5 High Performance Working-Definition………………………………………... 5 Facts and Figures from Research Surveys…………………………………. 6 THEORIES OF HIGH PERFORMANCE WORKING………………………….. 7 Bundling and Internal-fit theory………………………………………….. 7 Purcell’s AMO theory ……………………………………………………...8 Other views on High Performance Working ……………………………… 9 Comparison and Critical Review of theories of High Performance Working… 9 HIGH PERFORMANCE WORKING AND COMPANY PRACTICES ……….. 10 Benefits and Barriers ………………………………………………………… 12 How has HPW made huge changes at IBM? ………………………………… 13 Implementing High Performance Working …………………………………… 13 EVALUATIVE CONCLUSION ………………………………………………….. 14 RECOMMENDATIONS …………………………………………………….……. 15 REFERENCES …………………………………………………………………… 16 BIBLIOGRAPHY ………………………………………………………………… 19 APPENDICES ……………………………………………………………………. 20 INTRODUCTION When compared with momentous changes that occurred over the recent years in technology, lifestyles, workplace environment and business contexts, the Human Resource Management seems to have accustomed with the changes and it has evolved major developments by implementing various strategies. The changes in the technology and in the business contexts cause changes in the workplace. High Performance Working is thus a new interdisciplinary model of Human Resource Management that comprises of people, technology, and process. Noe, Hollenbeck and Gerhert (2003) stated that Human Resource Management has been playing its vital role helping organizations gain the competitive advantages over their competitors by becoming HPW organization. This report analyses the features and underlying principles of high performance working and it examines the impacts of HPW on the levels of management systems within IBM and Canon that have recently achieved HPW. This research work presents an in-depth analysis of HPW and its advantages to the organization in which it is implemented. High Performance Working- Definitions According to Noe, Hollenbeck and Gerhert (2003), HPW is a system in which an organization has best possible fit between their social system (people and their interaction) and technical system (equipment and processes). Pfeffer (2001) stated that implementing HPW requires major up-front investments including training, more selective recruiting, higher wages and so forth. HPW system promises an increase of around 20 percent in the productivity if staffs are motivated, involved and offered autonomy (Research Forum, 2006). HPW generally includes selective hiring, extensive training, pay based on performance, workplace empowerment and sharing of organizational knowledge (Yalabik and Chen, 2008). Several organizational outcomes including higher productivity, increased profitability, lower costs, better responsiveness to customer and greater flexibility are the outcomes of HPW. Implementing HPW has become a difficult task because it cannot easily be copied from other organizations (Bohlander and Snell, 2009). Facts and Figures from Research Surveys According to Chow (2005), the HPW has been widely studied and its impacts on various types of organizations have been investigated including steel mills (Berg -1999), automobile industries (Mac Duffie- 1995), manufacturing industries (Ichniowski- 1990) and service sectors (Varma- 1990). All these studies have concluded that HPW system and practices have positively correlated with both productivity and financial performance. A survey conducted in 1993 by Center for Effective Organization has proved that companies that used employee involvement and HPW had substantially higher levels of financial success than those companies that didn’t use same strategies. Companies that increasingly used HPW excelled at return on sales return assets and return on investments as well (Gephart and Buren, 2002). THEORIES OF HIGH PERFORMANCE WORKING Bundling and Internal-fit theory Boxall and Purcell (2003) argued that internal consistency in HRM is largely affected by the reality of strategic tensions in an organization. It is between the short-term productivity and long-term agility. Internal fit theory of High Performance Working states that internal consistency should be maximized. Internal fit or Bundling is the idea that whenever the business oriented direction is established by the HRM, the practices should be integrated to form a coherent system of practices that are more supportive as well (Macky and Boxall, 2007). With the help of above figure, Boxall and Purcell (2007) emphasized that a misfit on or between any of the HRM activities levels is likely to cause problems within the HRM structure. Bundling and Internal fit have been gained prominence by MacDuffie (1995) in his study of automobile manufacturing in relation to High Performance Working. The notion of internal fit states that some of the HR practices will need to integrate various works in different directions so as to reinforce different themes in a more complicated environment where employees face different messages (Macky and Boxall, 2007). According to Internal fit theory, the employees play mediating role in the high performance working system. The literatures show that High Performance Working is linked to a number of employee practices and employee responses (Macky and Boxall, 2007, Boxall and Macky,2009). Purcell’s AMO theory Macky and Boxall (2007) identifies AMO theory which was first described by Purcell (2003) as one of the basic theory of High Performance Working. AMO theory was also described as ‘the performance equation’ theory. AMO stands for ability, motivation and opportunity (Gerhart and Barry, 2005). Ability can achieved through selective hiring and training, motivation through pay or incentives and opportunity through teamwork and suggestions (Kabst and Matiaske, 2005). Other views on High Performance Working Pfeffer (1994) argued that the success in dynamic and highly competitive market environment depends less on advantages associated with economies of scale, technology, patent, access to capital, but, it depends more on innovation, speed and adaptability. According to him (1994), innovation, speed and adaptability are derived from the employees within an organization and from the way they are managed. Organizations seek to adapt to the changes by adopting a number of managerial practices that are called high performance or high involvement human resource system (Guthrie, Flood and Liu, 2009). Research evidences show that the best-performing companies in a wide range of industries perform well because of their high performance working (Dessler and Varkkey (2009). Many researchers have proved HPW is positively influencing the overall performance of the employees by increasing their productivity. While an organization implements HPW, it may have to develop effective training programs, recruiting people for specific skills and encouraging organizational learning and teamwork (Noe, Hollenbeck and Gerhert, 2003). Comparison and Critical Review of theories of High Performance Working The literatures on HPW assume that there is a casual link between internal fit and HR practices of organizational performance through employees’ ability, motivation and opportunity (Macky and Boxall, 2007). It can be found that Pfeffer and Boxall hold same view of High Performance Working in relation to the ‘need for adaptability to changes’. According to Pfeffer (1994), high performance working is a system that brings success to a business depending more on the innovation, speed and adaptability. He found the significance of ‘adaptability to changes’ in the high performance working. The ‘speed’ and ‘innovation’ factors that are considered by Pfeffer as significant is quite similar to the view of Boxall and Macky (2009), because, they viewed that these two factors are highly influential to bring superior organizational performance. Boxall and Dessler hold same view point with relation to the outcome of High Performance Working as it results in superior work performance. According to Boxall and Macky (2009), the notion of HPW represents a system of work practices that lead to superior organizational performance. More specifically, HPW system leads to superior organization performance. Dessler and Varkkey (2009) have opinioned that HPW organization perform well and show superior working performance. Boxall and Macky (2009) identified three basic concepts that are embedded in the above stated theory; they are performance, work practices and systemic efforts. This view of high performance working can be seen to be identical with that of Noe, Hollenbeck and Gerhert (2003) that HPW is a system where organization has best possible fit of people and its technical system. Nadler and Grestein (1992) had put forward almost same concepts. According to them (quoted from Chow, 2005), a HPW is “an organizational architecture that brings together work, people, technology and information in a manner that optimizes the congruence or fit among them”. HPW is also termed as high-involvement system, flexible work system and high commitment management system etc (Chow, 2005). HIGH PERFORMANCE WORKING AND COMPANY PRACTICES The organizational learning of IBM is basically a customer-driven strategy which has been considered to be effective as it can enable the company adapt to the environmental, cultural and other changes and thus to enhance HPW. A HPW is a system where there is a best fir of workers, process and technology (Noe, Hollenbeck and Gerhert, 2003). As far as IBM is concerned, it is an illuminating example of highly advanced technology and it always keeps excelled employees who are talented to work in the advanced technology. From the words of Ted Hoff, the vice president of the organizational learning system, IBM has a very special heritage and commitment to learning. This culture is ingrained in all the senior executives (Sosbe, 2003). IBM was always a learning oriented workplace through a number of strategies started from its 360 new line computers and this organizational learning still goes on as strategic movement to achieve HPW (Lipshitz, Popper and Friedman, 2006). As discussed by Ashton and Sung (2002), organizational learning is a step forward to become HPW system in an organization. Organizational learning and its strategies enhance employee learning and employee motivation which was considered to be a basic element of HPW by Purcell and Boxall (2003). Finding right people for the fit for specific requirements is the very crucial stage in HPW (Noe, Hollenbeck and Gerhert, 2003 and Pfeffer - 1994). But, organizational learning is an easy way to find and make use of right people for the right need. Instead of searching people from outside, organizational learning and knowledge managementiv can help organizations get right people from within the employees. Canon Inc* is another example for High Performance Working organization. From the words of Yuichi Ishizuka, senior vice president of Canon, providing incentives and rewards for employees is a practice that Canon continues to focus on and Canon believes that it is an essential part of conducting business successfully (Canon Press Release, 2010). AMO theory suggests motivation is the one of the basic element of HPW (Boxall, Boxall and Purcell, 2007). Canon’s success story is not only the result of its cooperative strategy at market, but the HPW system that it achieved through employee motivation, ability and opportunities. Benefits and Barriers IBM and Canon have gained a vast range of competitive advantages and organizational improvements even though they have faced greater challenges in implementing HPW. The benefits include its greater achievements in productivity, customer satisfaction, brand loyalty, skilled and experienced employees, growing markets and increased market share etc. The challenges that IBM and Canon faced due to the implementation of HPW include high costs involved in selective training, and recruitment, and employee layoffs. IBM has often dismissed employees whenever it feels them as not fit with the requirements. As Noe and Hollenbeck (2003) discussed, HPW is a system where there is best fit employees and technology. IBM has often sent many employees citing the reason for non performance (The FT times.com). How has HPW made huge changes at IBM and Canon? IBM has become best known for technology and best fit of people who are right for the right purposes. Canon has become the No- 1 in the photocopier market through various strategies including HPW According to Noe, Hollenbeck and Gerher (2003) HPW results higher productivity and increased efficiency and these in turn contribute to higher profits. An organization with the help of HPW can achieve high product quality, better customer service and customer satisfaction, lower rate of employee turnover and increased employee involvement and cooperation (Luthans, 2005). The HPW at IBM and Canon has helped them achieve high product and service qualities, better customer satisfaction and increased employee involvement. The example of IBM shows that it gave greater emphasis on organizational learning and thus to motivate employees. Knowledge management and organizational learning are the two most effective tools for motivating employees (Noe, 2002 and Jackson and Hitt, 2003). According to Rothwell and Sterns (2008), employees can be motivated and encouraged by team learning by fostering interaction among older and younger workers. This will enable each employee learn from his or her counterparts and therefore it helps foster knowledge share among the workers. IBM has focused on ‘organizational learning’ as a tool for achieving HPW because, organizational learning is a tool for motivation. The same strategy was implemented at Canon to make it a HPW organization. As is stated earlier, Purcell’s (2003) AMO theory of HPW stated that motivation and opportunities play vital role the High Performance Working. Implementing High Performance Working According to Purcell (2003) ability, motivation and opportunity can be considered to be the basic elements of HPW and these can help implement high performance working in an organization. There are various methods to motivate employees like team work, reward and recognition and so forth that can help achieve HPW. Dell, a highly successful computer manufacturer with its ‘direct go’ strategy, can further enhance its marketing and competitive advantages through HPW. It would be a wise step to implement HPW through motivating employees, by providing them with opportunities and through selective hiring and training. Dell Inc, a USA based company, has become the largest PC maker and seller in the world by 1990 with its strong vision of going direct. Dell has always focused on great services (Holzner, 2005). By 2008, Dell could hold second spot in the worldwide computer market behind Hewlet-Packard Company. It was ranked as 34th in the Fortune 500 companies and it employs more than 63,000 people in more than 170 countries (Hruska, 2008) Dell can further achieve great success in the market with HPW and through increased productivity of the customers. Noe, Hollenbeck and Gerhert (2003) identified certain factors that can help Dell implement high performance working. According to him, Teamwork (, Knowledge share, incentives, employee empowerment and reward are the main factors that directly influence the High Performance Working. Noe and Hollenbeck (2003) considered team work (the ability of staffs to work together and their expertise in cooperation, (Austin and Claassen, 2008) as a tool to achieve HPW. EVALUATIVE CONCLUSION This research work presents the theories of High Performance Working and it examines various practices of HPW. Theories of Internal fit and AMO are detailed in this report. These theories and practices are applied with the company practices of IBM and Canon Inc. According to Purcell (2003), ability, motivation and opportunities form to be the integral part of HPW. As far as internal fit theory is concerned, if there is an unfit in the HRM practices it can cause serious problems in the business. This work concludes that IBM and Canon have been successful organizations with the help of organizational learning and motivation strategies which in turn helped them achieve HPW according to the view of Purcell (2003). This paper outlines the benefits and challenges that Dell Inc may face while implementing High Performance Working. RECOMMENDATIONS It is very obvious that companies with High Performance Working are found more productive, highly successful in customer satisfaction, improved product and service qualities and so forth than those companies that didn’t use High Performance working. IBM and Canon prove that HPW can bring better outcome in the overall efficiency of the business. Action plan for Dell Organizations like Dell necessarily need to consider HPW as one of their most significant strategy so that they can improve the employee productivity. Organizations that seek further development by implementing HPW can first take actions of selective hiring, training and employee development practices. It may have to encourage workplace learning. An effective knowledge management can help implement HPW. Motivating employees with incentives must be a significant part in the action. 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