High-Performance Work Practices: Cases and Analysis - Term Paper Example

High Performance Work Practices: Cases and Analysis Introduction Human resources can be an organization’s largest and most difficult to control expense, but it can also be a central ingredient affecting organizational performance. The most challenging task for human resources researchers has been to understand how human resources can be managed to maximize productivity and enhance creativity while at the same time controlling costs. As a result of this there has emerged a field of study referred to as strategic human resource management that deals with how human resource management practices affect the organization-wide outcomes. Human resource practices that strategic human resources management scholars consider performance enhancing are referred to as high performance work practices (HPWPs).These are essentially work practices that can be introduced in the organization deliberately in order to improve organizational performance. A widely accepted definition of the term is that they are a set of complimentary work practices that cover three broad areas which are sometimes referred to as bundles of practices. They include: High employee involvement practice such as self-directed teams, quality circles and sharing/access to company information; human resource practices for example a sophisticated recruitment process, performance appraisal. Work redesign and mentoring; reward and commitment practices that include various financial rewards, family friendly policies, job rotation and flexi hours. Combs, Liu, Hall, & Ketchen (2006: 502) argue that these practices increase employee’s knowledge, skills and abilities (KSAs), empower employees to leverage their KSAs for organizational benefit, and increase their motivation to do so. The result of this is greater job satisfaction, lower employee turnover, higher productivity and better decision making all of which help to improve organizational performance (Wilson, 2005, p. 38). Aspect Capital and High performance work practices Aspect capital is a leading financial services company is the United Kingdom that applies a systematic and quantitative approach to investment management with the purpose of diversifying alpha for the company’s client portfolios. The company manages over USD 6.7 billion which it has exclusively invested in the aspect diversified program through a series of fund and client specific managed account vehicles (AC, 2012). Established 15 years ago the company has already established itself as a leading financial services company through the extensive support from a team that has extensive experience in the development and implementation of systematic investment strategies. With the traditional investment in the stocks becoming more and more uncertain, Aspect capital has continued to show significant growth in the industry and in the financial services sector. The company has not only posted impressive results in terms of returns for its investors but has also achieved tremendous success by building its profile through the use of different and more innovative approaches than other financial companies (Sung & Ashton, 2005). Aspect capital High performance work practices The firm has tremendous effort in implementing high performance work practices that have contributed greatly to the success of the organization. Among the practices first is the building of a technological system with a people strategy. The company was so engrossed with the idea of a people strategy that it wrote down a cultural plan in the year 1998. The idea came from the fact that given the nature of the business and the environment in the financial service sector it was difficult to find a people culture in most of the organizations (AC, 2012). A variety of issues are overlooked in the in the industry such as employee welfare, provision of challenging and dynamic environment, focus on team work, creating a fair, sociable and open workplace. As other companies concentrated on ensuring the achievement of financially measurable targets, aspect capital focused on developing its cultural plan that promoted nine key attributes that made aspect capital a better working place. The following are the nine attributes that the company focuses: teamwork, initiative, people management, project management, attitude, attention to detail, professionalism, communication and productivity. The company has also implemented specific social activities that are aimed at encouraging a sense of community among the staff and such include the following healthcare benefits and charity initiatives (Sung & Ashton, 2005). Secondly the company has invested a lot of efforts in recruitment and skills development. This is because of the technical and cultural requirements which make the recruitment exercise rather difficult. The company recruits some of the brightest mathematicians and programmers for its research division and the It department as they are the backbone of the hedge funds management and identification of new financial products. The company pays attractively in order to get these types of skills in order to make sure that the organization performs as expected (Sung & Ashton, 2005). Third is that the company requires complex skills in the people and this means that it has also to train them so that they reach they can poses the nine attributes put forward in the cultural plan. This is done through financial apprenticeship. New recruits have to attend external courses on hedge funds and financial markets; they also spend time in with the financial engineering team learning about the company’s qualitative approach to hedge fund management. The sales team also goes through a thorough training exercise to help the company attend to its sales initiatives. The training period will usually range from a few days to up to a year. The training is either on the job or off the job or a combination of the two and this helps the sales team to build a high understanding of the complex financial products (Sung & Ashton, 2005). The last high performance practice is linking rewards to fairness, hard work and performance. Everyone at aspect capital is regarded as essential in running the business. The company has come up with an innovative reward system in which it includes the quarterly individual bonuses and has also addressed the need to achieve a non-financial objective at the workplace (Sung & Ashton, 2005). The financial services sector tends to pay people over the odds in order to get the best people. Aspect capital uses its salaries and bonuses schemes to ensure a balance between performance and other values. Data Connection Data connection is among the world’s top most successful companies in communication technology with a very impressive performance record since its inception. The company won the number three spot of the Sunday Times 100 best companies to work for in 2004. Financial analysts have commended the company for posting profits that exceed 20% of total revenues for the last 30 years. As most of the IT industries continue to experience problems in the last decade, data connection has surprised many with its continuous impressive performance in contrast to their competitors. The company’s strategy is built on its ability to offer quality services, innovative products and world-class technical workers (DC, 2011). Most data connection clients praise the company because of the quality of their services that have attracted worldwide attention. The company has an international profile that has earned the company the Queen’s Award for export achievement twice in a raw. Analysts say that no matter the performance criterion used, data connection is a world-beater. Data Connection high performance work practices The company’s business strategy and success is due to its sustained efforts in the recruitment, developing and retaining highly exceptional talent across its operations. The company has adopted a three-pronged strategy in its current operations. First is the recruitment of the very best candidates to work for the organization to support innovation and quality in their services and products. Secondly, one its international reputation is built up; Data Connection targets return business as the basis of steady growth and a source of steady profit. Thirdly is that the company uses its profits for the purposes of supporting a balance between research products with no immediate returns and services and products that will bring revenue in the current year (Sung & Ashton, 2005). The second practice as already mentioned earlier is the recruitment of nothing but the best talent. The organizations work is structured around teams and therefore they need people with exceptional abilities such as basic competencies, technical knowledge, good interpersonal skills, energy and enthusiasm. The entire process of recruitment is difficult as the organization gets thousands of applications and the number of available slots is very few. The third practice is the process of continuous development, appraisals and performance targets. New recruits are mentored by a manager and offered day to day guidance. Apart from that each and every employee has a personal development plan that records the development process of the individual every three months (Sung & Ashton, 2005). The development includes technical skills as well as personal skills development. The process is continuous and each employee has at least one full review a year and three to four development plans each year. The third practice is based on performance, reward and stake-holding. The company has a strong notion of profit shares such that they have an employee benefit trust that essentially means that the company is owned by the employees. When the company makes profits, the profits are distributed to the employees as the company is very keen on rewarding employees handsomely based on the profits they receive each year (Sung & Ashton, 2005). The last practice is flexible working and staff retention such that the company allows for flexible working wherever possible in order to meet staff needs. The company takes into consideration the needs of its employees while relocating to a new work location. Those interested in working in that location are allowed to go. The company has made it so flexible that its employees can work anywhere even home. The essential working principle for this company is that with success, you need to reward hard work, innovation and commitment handsomely. This has worked for the organization for the past close to 30 years. A critical look at the two companies will reveals one thing that the companies love their employees a great deal and world go a long way to ensure they are satisfied with work conditions. The high performance practices for both organizations are centred on innovative business strategies that help them offer exceptionally high quality goods and services for their customers thus earning both of them a world class reputation. Secondly the two companies are obsessed with the idea of recruiting the nest talent for their jobs. The people are then developed through a series of development measures and programs that make them what the organization wants them to be. Thirdly the two organizations value the idea of rewarding their employees with the best pay and other rewards in order to motivate them. Both of them have reward schemes that are aimed at paying the worker well so that they are motivated to work and not to think about their problems. Fourth aspect is the practice of reviewing employee performance as a basis for either rewards or need for development. It is possible to see consistency in the way the two companies operate and in the practices that they have employed. While Aspect Capitals high performance practices are based on its cultural plan which differs slightly from the approach taken by data connection, essentially the two companies work on the principle of a cohesive organization culture through teamwork that fosters creativity and commitment to the organization. Challenges and implications It has been identified that high performance work practices lead to increased productivity and employee satisfaction on the job. They also reduce employee turnover in companies. However not all companies are implementing these practices because of many reasons. In the above cases it can be seen that implementing such practices is not an easy task because employees must be made aware of the changes that are being proposed on the existing work policies (Ashton & Sung, 2002, p. 23). As usual there will always be resistance at the work place whether the practices are aimed at the good of the employees or not. People fear change and anything that comes with it therefore the introduction of these measures will receive resistance from the employees at any level. The implication of this is that the leadership of the organization must be on the stand still to provide guidance on these changes and how they are going to affect the employees (Kinicki & Kreitner, 2006, p. 50). The employees should be told what is going to happen and how they are going to benefit from the introduction of such policies and practices. Once the employees are prepared, it will be easy to introduce the practices though the organization will still face a significant amount of internal resistance from employees. Another difficulty or challenge that may exist in the implementation of these practices is the kind of practices to implement. Evidence shows that HPWPs come in bundles. No single practice can be implemented on its own without the combination of others. What this essentially means is that organizations have to conduct a significant amount of research to identify what set of practices are known to work or go in line. The blind implementation of these practices could be detrimental for the organization. It can be seen from the two cases above that they have followed a similar approach and all of their practices resemble (Landy & Conte, 2009, p. 280). There are slight variations in individual organizations but essentially the methods are still the same. Scholars also say that t is not about the set of practices to be implemented but the market in which the set of practices are also being proposed for implementation. It should be noted that not all bundles work for all organizations. Some work better in some cases while others do not completely work in given markets necessitating the change of approach. The implication for this is that a thorough knowledge of the market has to be established before the management can settle on a given bundle. Without this the success rate will be quite low and the intended outcomes may not be achieved (Wilson, 2005, p. 39). The third challenge is that some of these practices need huge financial investments something which smaller companies may not be able to manage. From the two cases above it can be seen that they have invested a great deal in recruitment programs with Data Connection going through a series of processes in order to select the right candidate for them. The whole recruitment process is tedious time consuming and takes a great deal of financial resources that other smaller companies may not have. Other practices like the reward schemes that pay handsomely mean that organization must be in a better position financially in terms of revenues before they can think of implementing such schemes (Landy & Conte, 2009, p. 281). If these are implemented without a sound financial background it only means that the organization will undergo massive expenses that it may not be able to withstand. The implication for this to therefore look for practices that match the organizational financial capability in order to ensure that the organization is getting value for money. Otherwise organizations will undergo massive losses through the rewards schemes without them actually realizing. Proposals for managing the above challenges The first basic thing that can be done in any organization to manage the above mentioned challenges is building trust. As it has been established, employees dread change and would do everything to stop the introduction of new practices into the company. Such is especially true for organizations that have been in operation for a long period of time (Miner, 2007, p. 36). Once a decision has been reached to introduce these practices the employees should be consulted and actively engaged so as to gain their commitment. Scholars argue that sustainable and effective change in the organization is only possible if the organization can establish dialogue with the concerned parties, which is built on trust and cooperation. This requires a fundamental shift in the balance of power within the organization if it is to be effective (Mullins, 2005, p. 57). Secondly is that, organizations can use benchmarking as strategy in order to overcome the problem that comes with their lack of understanding of these new working practices. As mentioned earlier most organization are torn in between when it comes to identifying the correct set of practices or bundles to implement (Wilson, 2005, p. 50). This is because some of them have a limited knowledge of how these practices work or have limited knowledge of the markets within which they are operating. This means that they do not know what practices will be fruitful and which ones will not be fruitful. Companies can use benchmarking strategy by identifying those practices that have worked in a specific industry and concentrating their efforts on them. Another important strategy is introducing internal training within the organization and this centred on the customers’ needs. The traditional approach to management involved the control of the staff in order that they may produce services that they can deliver to their customers. However with the introduction of HPWPs the traditional management style has been inverted as all activities are focused on the customer and the work of the manager here is to only support the workgroups as they work on products and services to deliver to the customer (Ashton & Sung, 2002, p. 45). Training on how to interact within groups and teams is therefore an essential part of the HPWPs and any organization should strive to ensure that its work force is trained so that they are able to deal with the challenges that come with the introduction of those practices. The most important thing is to make sure that the employees have the skills they need in order to facilitate the whole process as the lack of this could spell the doom of those practices (Landy & Conte, 2009, p. 285). Conclusion High performance work practices have changed many aspects of the working environments in the 21st century. Many companies are implementing these practices because of their perceived advantages that they bring to the workplace such as improved productivity, reduced staff turnover and increased job satisfaction among others. The two case studies identified in this paper show that organizations implement a set of practices that might be similar in some way. However due to market complexities approaches may differ. A number of challenges are evident such as the type of practices to use, resistance and financial problems. However with the right approaches in place it is possible to overcome these challenges as it has been established. List of References AC. (2012). About us. Retrieved May 1, 2012, from Aspect capital: http://www.aspectcapital.com/ac-login.asp Ashton, D. N. & Sung, J. (2002). Supporting Workplace Learning for High Performance working. New York: ILO. Combs, J., Liu, Y., Hall, A., & Ketchen, D. (2006). How much do high-performance work practices matter? A meta-Analysis of their effects on organizational performance. Personnel Psychology, 59: 501-528. DC. (2011). About us. Retrieved May 1, 2012, from Data Connections: http://dataconnectionsinc.com/about Kinicki, A., & Kreitner, R. (2006). Organizational Behaviour: Concepts, Skills and Practices. New York: McGraw Hill/Irwin . Landy, F. J., & Conte, J. M. (2009). Work in the 21st Century: An Introduction to Industrial and Organizational Psychology. London: John Wiley. Miner, J. B. (2007). Organizational behaviour: From theory to practice. New York: M. E Sharpe. Mullins, L. J. (2005). Management and Organizational Behaviour. New York: Prentice Hall/ Financial Times. Sung, J., & Ashton, D. (2005, February). High Performance Work Practices: Linking strategy and skills to performance outcomes. Retrieved May 1, 2012, from Department of Trade and Industry: http://www.bis.gov.uk/files/file9338.pdf Wilson, J. P. (2005). Human Resource Development: Learning and Training for Individuals and Organizations. London: Kogan Page Publishers. Read More