High-Performance Work Practices and Organisational Performance - Essay Example

HIGH PERFORMANCE WORK PRATICES AND ORGANISATIONAL PERFORMANCE By University Date : Introduction It is true high-performance work practices lead to improved organisational performance. The paper explores into this area to give evidence that indeed high-performance work practices lead to improved organisational performance. The business environment is very dynamic and each day organisations are trying to come up with new technologies coupled up with changes in policy so as to be in line with the changes in the market as well as maintain a competitive edge over their market rivals. However, recent research conducted by a number of scholars indicate technological advancement on its own cannot enable a firm to be ahead of its competitors unless it is integrated with other parameters to make a perfect combination (Kirkman and Young, 2009). Human resource is a very vital asset for any given organisation and the overall success of a firm is mainly inclined to the manner in which the workforce preforms its duties in line with an organisation’s goals. Thus, it has been a common trend that organisations are investing heavily on their personnel so as to ensure quality output by enabling them to leverage on their skills and knowledge (Sung and Ashton, 2005). Thus, many organisations are currently turning to high performance work practices policy to ensure their employees are more responsible for business processes by ensuring there is better control and coordination among organisational personnel. High-performance work practices are an emerging trend that seeks to make employees more responsible for the general running of the organisation by giving them extra mandate to determine the mode of operations and ensuring flexibility in decision-making. Employees are not limited to what their supervisors direct them to do but can go an extra mile and work to ensure the organisation leverages more from their skills and knowledge beyond their job requirements (Deeringer, Lorenz and Terkla, 2003). It is the desire of every organisation to enhance its performance; thus, it is likely to implement a number of policies to ensure its overall performance improves and beats its competitors in the market. High-performance work practice is a combination of policies and activities that an organisation performs in order to realise an improvement in the organisation either or in a particular department or section (Deeringer, Lorenz and Terkla, 2003). It is prudent to note that if the high-performance work practices are implemented appropriately and in a timely manner the organisation is going to leverage from its benefits and thus, result in the overall improvement in organisational performance. There are a number of ways in which high-performance work practices are implemented in different organisation this report is going to take a close look at a number of manners in which these practices are implemented and their likely impact on the organisation’s performance (Godard, 2004). I do agree with the statement that high performance work practices does improve the overall performance of organisations due to the great impact that effective implementation of high performance work practices has on the output of organisations. To support this notion the following is an in-depth analysis and elaboration of how the organisations’ performance is being improved as a result of implementation of high performance work practices. Human resource practices The human resource department of any organisation is the one that is tasked with implementing the policies of the organisation to ensure the objectives of the firm are met. Thus, in implementing the high performance work practices focus will be in the human resource department as this is the area that will be responsible for transforming the performance of the organisation to improve by implementing high-performance work practices. There are a number of human resources practices that the management of organisations will implement that are considered to be performance enhancing some of them are elaborated as follows (Allen and Leisa, 2007). Incentive compensation It is widely known that to ensure high performance from employees they need to be motivated. Employee motivation comes in a number of ways depending on the strategies that the organisation may opt to implement. Incentive is one common technique of motivating employees. Employees who are paid handsomely for their services tend to be more dedicated to their job and will work beyond their job requirements to ensure the objectives of the company are met so as with improved performance they will likely benefit from an increased incentive. That notwithstanding, employees are likely to dedicate their time, skills and knowledge to ensuring they give the best for the organisation since they feel the organisation is concerned about their welfare by extending an incentive compensation which is favourable and they are happy with. The employees will not have any issues distracting them from their core functions and thus, they will tend to dedicate much of their time working for the organisation and this will translate to the overall improved organisational performance (Ramirez and Beale, 2007). Training Organisations engage in employee training to ensure their employees are up to date with the dynamism of the business environment and thus, they possess the prerequisite skills and knowledge to ensure they perform their duties exemplarily and to the required market standard to improve quality of goods and services (Deeringer, Lorenz and Terkla, 2003). It is a costly exercise but most organisation prefer it as it ensures the organisation’s workforce is equipped with the relevant knowledge and skills to tackle any emerging issues in the market (Sparham and Sung, 2007). In a nutshell training will improve the knowledge and skills that the employees possess and thus ensure the organisation will leverage from their skills in terms of improved organisation performance since they will be able to make informed decisions that will impact positively on the overall performance of the firm. However, it is prudent for the management of organisation to embrace selective recruitment before they embark on the process of training as it will save the organisation a considerable amount of resources that it uses to train employees by employing personnel that already possess the skills and knowledge in question (Sung and Ashton, 2005). Employee participation Even with the best skills and knowledge no single employee will make the organisation’s performance positively turn around it requires the participation of every single employee to realise the objectives of the firm effectively (Deeringer, Lorenz and Terkla, 2003). Teamwork is very crucial for improved performance of any given organisation, the firm should invest in team building by ensuring the employees interact and socialise with each other thus building ad hoc teams that are able to tirelessly work for a common objective of ensuring the goals of the organisation are achieved. Teamwork will ensure each employee within the team makes a contribution and since the members freely interact it will lead to better communication within the organisation and also the resources of the organisation will be better utilised as the members will be working collectively as teams (Godard, 2004). Selectivity The management should embrace a policy that it only recruits employees who satisfy the niche that exists in the organisation in terms of skills and knowledge. This will ensure the cost of fresh training of employees is reduced and the only training exercise that the organisation will indulge in is that which educate its employees with the current market trends and emerging issues in the business environment. This will ensure employees are well equipped with the desired skills and knowledge and in the process, the organisation can leverage from those skills thus enhancing organisational performance (Ramirez and Beale, 2007). Flexible work arrangements The primary feature of high-performance work practices is that employees are given more responsibility for the organisation’s operations and they can make decisions promptly to ensure they utilise their skills to ensure they increased performance. Flexibility in work arrangements ensure that the senior manager do not give rigid work orders to the junior employees but they give them room for decision changes where need be as long as the said decisions are meant to ensure smooth running of operations and in the long run contribute to increased performance by the organisation (Kirkman and Young, 2009). The sole objectives of the human resource objectives are to ensure the employees are equipped with relevant skills and knowledge and at the same time, the organisation can fully leverage from those skills. If the practices are implemented efficiently the overall result will be that the employees with have a greater sense of job satisfaction which will in turn motivate them to work harder thus ensuring improved organisational performance (Allen and Leisa, 2007). Employee turnover will likely be low since the employees will exhibit a sense of job satisfaction thus they will be content with their current jobs hence commit their efforts to the organisation for a long period. This will ensure the frequency in which new employees replace the latter is low thus the team will be more focused in achieving the set goals than familiarising with new faces. Better decision-making and higher productivity are the other possible results of the human resource practices all which are aimed at improving the performance of the organisation (Sung and Ashton, 2005). Ways in which high-performance work practices affect organisational performance High-performance work practices improve the level of knowledge and skills in employees through such activities as training of staff. Employees who are equipped with relevant skills and knowledge, tend to make more informed choices, which in the long-run enable the organisation to increase its productivity and improve on the quality of goods and services produced (Ashton and Sung, 2002). That notwithstanding, employees with improved knowledge and skills will design techniques of conducting organisational operations in a clean manner by utilising less time and minimum resources that overly can translate to sound financial position and high productivity, which not be possible without knowledgeable personnel (Sparham and Sung, 2007). Moreover, the primary aim of organisations indulging in training its employees is to ensure the quality of goods and services is improved so that the firm can have a competitive advantage over its market rivals; thus, drawing more clients to its products and services, which in the long run leads to profit maximisation (Sung and Ashton, 2005). For instance, some employees have the potential of achieving individual goals but lack a sense of empowerment for to enable them leverage from their abilities. Therefore, training empowers employees not only by instilling additional knowledge and skills but also motivates them to increase their productivity potential because they will not be afraid to express themselves and explore their talents; hence, leading to improved organisational performance (Ramirez and Beale, 2007). That notwithstanding, it training also helps employees to develop a mentality of being their bosses; they do not have to wait for direction from senior management to give orders and instructions for them to act. Thus, as long as the employees fully understand that whatever they are doing is meant for the benefit of the organisation and is done in a rational manner they will always go ahead to accomplish it. This will reduce the workload that is bestowed on supervisors since the employees can manage themselves; thus, enabling the organisation to improve its performance in the long-run since less time will be wasted in waiting for directions from seniors before undertaking any assigned responsibility (Allen and Leisa, 2007). Despite the above being ways in which high-performance work practices affect the general performance of an organisation they do not work in isolation; the internal structure of the organisation also contributes immensely on how the above factors influence performance (Kirkman and Young, 2009). For instance, self-managed teams within the organisation and flexibility in terms of how jobs are designed in the organisation will provide ground for linking people who are naturally not social with the job environment and provide them with a forum to freely interact with their colleagues (Sung and Ashton, 2005). This will thus, facilitate cohesion among the employees as they will be united for a common course geared towards achieving organisational objectives. That notwithstanding, the teams will ease the process of information sharing as the proximity among team members ensures that information dissemination is quick and thus orders from top management will be communicated quickly to their destinations and thus, prompt action will be taken to their effect (Sparham and Sung, 2007). The resources of the organisation will also be utilised in an optimal manner since the employees will be using them as teams rather than individuals this will cut the overall cost at the same time ensuring resources are utilised for their intended purpose. Organisations implement the high-performance work practices in two levels so as to leverage the best results from them. However, some intertwine the two levels into one but they fuse all the elements of the two levels so as to realise the benefits of the high-performance work practices. The two levels of implementation include work practices and work systems (Ramirez and Beale, 2007). Work practices Work practices are essentially the actual practices that managers implement so as to enhance performance they may be human resource based or process based in the case of manufacturing organisations. Skill training Staff training is a process of adding value to the employees of the organisation by subjecting them to vocational trainings in a form of seminars, workshops or school-based course training. The objective of these trainings is to improve the knowledge of employees whose skills seems to be inadequate as compared to their job obligations or aged employees whose skills have become obsolete with the continued market dynamism. Once the employees have been trained in their relevant areas of need it is expected that they are going to perform their jobs better and the organisation will in turn leverage the additional skills and knowledge in terms of improved quality of goods and services and the overall performance of the organisation will improve. The employees are expected to make informed decisions once they have acquired training that will be of benefit to the organisation in turn since the informed decisions will be aimed at making a positive impact on the organisation (Ramirez and Beale, 2007). Compensation Policy Different organisations have different modes of compensating their employees for the services that they render to them. For instance, some organisations may choose to implement a fixed salary policy whereby the employees will receive a monthly salary which is fixed all year round. Others may opt to implement a compensation policy that includes a fixed salary plus some bonus for extra individual employee efforts. The bonus is awarded according to each employee’s extra effort to his/her work for the organisation. Finally, other will implement a compensation policy that only involves a commission on the revenue that an employee brings to the organisation (Allen and Leisa, 2007). This is mainly implemented for the case of salespeople. The type of compensation policy, that an organisation implements, determines the level to which they want to motivate their employees in enhancing their performance, which will in turn translate to improved organisational performance. For instance, an organisation that only pays its employees a fixed salary will not motivate its employees as much as the one that pays a fixed salary and an additional bonus to award individual efforts. In this case employees, will strive to work hard so that at the end of the month they receive huge bonuses by dedicating much of their efforts in proving service to the organisation. It is also prudent to note that increased employee motivation is directly proportional to improved performance of the organisation (Kirkman and Young, 2009). Workplace participation The degrees to which the employees are motivated to contribute or offer participation to the operations of the organisation affect the overall performance of the organisation. If elaborate frameworks are instituted that brings employees together to work as team members it will be of the advantage of the organisation since some members would not have unleashed the potential they possess by working individually but in a group they will interact and freely put their skills and abilities to work. Participation of all members means that the organisation has a pool of skills and talent at its disposal thus it is capable of ensuring quality of work which will be translated to improved output and hence enhancing the performance of the organisation (Sung and Ashton, 2005). Work systems Work systems are policies and strategies that come from the management of organisations that seek to provide an enabling environment for the high-performance work practices to thrive in the organisation’s setting (Ramirez and Beale, 2007). Human resource policy The policies that organisations implement concerning their personnel tend to vary depending on their particular needs. Each policy that is implemented seeks to achieve a certain objective for the organisation that in turn will lead to enhancing the performance of that organisation. Common elements that are contained in policies concerning personnel include the level of selectivity to be utilised in the recruitment exercise, compensation and incentives for the employees as well as the terms of employment. For instance, some organisations will adopt a policy that ensures a new employee to work on contract for two years before he/she is confirmed as a permanent employee of the organisation. This will tend to instil a challenge to the new employees to work hard so as to please their managers to recommend for their permanent contract with the organisation, and in the process the employees will be enhancing the performed by the organisation through their efforts (Allen and Leisa, 2007). Employee’s skills and organisational structure The type of skills that an organisation’s employees possess should be compatible or in line with the structure of that organisation. Some organisations have employees with skills, which do not match with the work environment in which they are working thus the organisation will end up not leveraging from the knowledge and skills that its employees possess. It is prudent that when recruiting new employees organisations must first assess the skills and knowledge which are missing or are needed in the organisation so as to bring them on board to avoid cases where the skills that employees possess are disjoint with the organisational structure thus leading those employees to be idling in the organisation as their skills are not of any importance to the organisation. That notwithstanding, the organisation should continually restructure to ensure it meets the needs from the market and those from its employees to ensure service delivery is enhanced thus improving performance (Kirkman and Young, 2009). Employment security Employees need a guarantee that their jobs are safeguarded thus they cannot be axed from their positions anyhow. That guarantee gives them satisfaction and tends to motivate them to be devoted to their work by working hard to achieve for the organisation. Otherwise when their job security is not safeguarded they will not be concerned much about the kind of service they are giving the organisation as they have in mind that despite working hard anytime their services can be terminated. Hence they will not be devoted to working towards enhancing the organisation’s performance. Job security is crucial since it gives the employees peace of mind and thus they will direct all their energy and mind to their work without any disruption affecting them and the result of this will be improved organisational performance since all efforts are uninterrupted and directed towards a single objective (Allen and Leisa, 2007). Conclusion It is prudent to note that in the dynamic business world where organisations have embraced technological advancement in their operations; it is only those that have embraced high-performance work practices that have survived intense market competition and gained competitive advantage of their rivals. Conversely, high-performance work practices are an emerging trend in the business world and firms that will utilise them efficiently are likely to improve their overall performance. Research has also indicated that indeed high-performance work practices enhance organisational performance but the degree to which these practices influence organisational performance depends on how well management of organisations integrate them with organisational structures. Therefore, the analysis above it is evident that high performance work practices does improve the general performance of organisations if they are implemented efficiently. Bibliography Allen, c., and Leisa, D.S., 2007. High Performance Work Systems and Employee Experience of Work in the Service Sector: The Case of Aged Care. Deeringer, P., Lorenz, E., and Terkla, D.G., 2003. The adoption and Diffusion of High-Performance Management: Lessons from Japanese Multinationals in the West’, Cambridge Journal of Economics, 27(2), pp. 265-286. Godard, J., 2004. A Critical Assessment of the High-Performance Paradigm. British Journal of Industrial Relations, 42(2), pp. 349–378. Kirkman, B. L., Lowe, K. B., & Young, D. P., 2009. High-performance work organisations: definitions, practices, and an annotated bibliography. Greensboro, NC, Center for Creative Leadership. Ramirez, M., Guy, F., and Beale, D., 2007. Contested resources; unions, employers, and the adoption of new work practices in US and UK telecommunications, British Journal of Industrial Relations, 43(3), pp. 495-517. Sparham, E., and Sung, J., 2007. High performance work practices –work intensification or win-win? CLMS Working paper, No. 50. Leicester: Centre for Labour Markets Studies University of Leicester. Sung, J., & Ashton, D. N., 2005. High performance work practices: linking strategy and skills to performance outcomes. [London], Department of Trade and Industry. Read More