High-Performance Work Systems - Assignment Example

Also, more involvement in the organization makes the employees more empowered leading to a more committed workforce which in turn affects the productivity and effectiveness of the organization. According to Kling (1995), training, which is the second component of HPWS makes the company more adaptable to changes and enables it to improve the quality of output that leads to an increase in profitability. The third component, incentives, motivates employees to come with "outcomes that are beneficial to themselves and the organization as a whole" (Brown 2006).

This results in a more productive workforce and a more effective organization. There are also specific reasons why HPWS can enhance the firm's HRM, effectiveness, productivity, and profitability. There were studies that linked HPWS with 14.8% growth in productivity, 12.2% improvement in workforce innovation and a 7.7% reduction in employee turnover (FAS). These increases in the significant aspects of the organization can have substantial effects that enhance the organization's status. One specific reason is workplace participation.

Since HPWS allows workers to participate in decision making, a culture of decentralization and responsibility will be present in the workplace (Kling 1995). This can create job rotation and cross-training that result in more job satisfaction, reduced absenteeism and employee turnover. Also, decentralization will allow for more employee involvement. This is a good thing because better decisions will be made since the employees have direct involvement with the issues at the workplace, so they know exactly what to do (Kling 1995).

Together with the knowledge of the management and the experience of the employees, the organization can come up with better decisions. There are also pieces of evidence that prove HPWS as successful in enhancing the organizations' productivity, effectiveness, and profitability. In 1995, Huselid and Becker conducted a study that would assess the strategic impacts of HPWS. They estimated that one standard deviation change in the firm's HPWS will lead to an increase in the firm's market value of $38,000-$73,000 per employee.

On the other hand, a study by Scotti, et al., (2007) found out that for every one standard deviation increase in HPWS in the healthcare sector, the organization will show a 0.29 standard deviation in customer satisfaction. The study also found out that there is a strong relationship between employee perceptions and quality customer service. There is also a study by Bartel in 1994, as cited by Kling (1995), that concluded that training with HPWS increases a firm's productivity by 9 percent. In relation to this, Kling also reviewed a study by Holzer in 1993 that doubling the training will decrease scraps in production by 7%.

Another one by Tyson and Levine (1993) concluded that employee participation and involvement is positively correlated with productivity. Cooke (1994), as cited by Kling (1995), found out that establishments increase its value-added by 5% to 25% if the employees have incentive pay. According to FAS, the University of Limerick and the University of Kansas, USA conducted a study and concluded that HPWS "can make a significant contribution to profitability, productivity and staff retention".