Download The Impact of High-Performance Work Systems

16
© 2010 South-Western, a part of Cengage Learning
All rights reserved.
PowerPoint Presentation by Charlie Cook
The University of West Alabama
Chapter Objectives
After studying this chapter, you should be able to
Discuss the underlying principles of highperformance work systems.
Identify the components that make up a highperformance work system.
Describe how the components fit together and
support strategy.
Recommend processes for implementing highperformance work systems.
Discuss the outcomes for both employees and
the organization.
© 2010 South-Western, a part of Cengage Learning. All rights reserved.
16–2
High-Performance Work System (HPWS)
• HWPS
 Is a specific combination of HR practices, work
structures, and processes that maximizes employee
knowledge, skill, commitment, and flexibility.
 Is composed of many interrelated parts that
complement one another to reach the goals of an
organization, large or small.
© 2010 South-Western, a part of Cengage Learning. All rights reserved.
16–3
FIGURE
16.1
Developing High-Performance Work Systems
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16–4
FIGURE
16.2
Underlying Principles of High-Performance Work Systems
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16–5
Principles of HPWS
• Egalitarianism and Engagement
 Egalitarian work environments eliminate status and
power differences and, in the process, increase
collaboration and teamwork.
 When this happens, productivity can improve if
people who once worked in isolation from (or
opposition to) one another begin to work together.
© 2010 South-Western, a part of Cengage Learning. All rights reserved.
16–6
Principles of HPWS (cont’d)
• Shared Information
 A shift away from the mentality of command and
control toward one more focused on employee
commitment.
 Creating a culture of information sharing where
employees are more willing (and able) to work
toward the goals for the organization.
© 2010 South-Western, a part of Cengage Learning. All rights reserved.
16–7
Principles of HPWS (cont’d)
• Knowledge Development
 Employees in high-performance work systems need
to learn in “real time,” on the job, using innovative
new approaches to solve novel problems
 The number of jobs requiring little knowledge and
skill is declining while the number of jobs requiring
greater knowledge and skill is growing rapidly.
© 2010 South-Western, a part of Cengage Learning. All rights reserved.
16–8
Principles of HPWS (cont’d)
• Performance-Reward Linkage
 It is important to align employee and organizational
goals. When rewards are connected to performance,
employees will naturally pursue outcomes that are
mutually beneficial to themselves and the
organization.
© 2010 South-Western, a part of Cengage Learning. All rights reserved.
16–9
FIGURE
16.3
Anatomy of High-Performance Work Systems
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16–10
Complementary Human Resources
Policies and Practices
Training and
Development
Staffing Practices
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Compensation
16–11
Assessing Strategic Alignment:
Fitting It All Together
• The HR Scorecard
 Assessing Internal fit

Do all internal elements of the HR system complement and
reinforce one another?
 Assessing HR Practices

Do HR practices significantly enable key workforce
deliverables such as employment stability and teamwork?
 Assessing External Fit

Are workforce deliverables connected with key strategic
performance drivers?
© 2010 South-Western, a part of Cengage Learning. All rights reserved.
16–12
FIGURE
16.4
Achieving Strategic Fit
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16–13
1B
Diagnosing Internal Fit
Please indicate the degree to which each HR deliverable in the following chart would
currently enable each strategic driver, on a scale of –100 to +100. Empty cells indicate
this is not a key deliverable for a particular driver. Examples of the extremes and
midpoints on that continuum are as follows:
–100:
0:
+100:
DNK:
This deliverable is counterproductive for enabling this driver.
This deliverable has little or no effect on this driver.
This deliverable significantly enables this driver.
Don’t know or have no opinion.
© 2010 South-Western, a part of Cengage Learning. All rights reserved.
16–14
1C
Testing the Alignment of HR Deliverables
Please indicate the degree to which each HR deliverable in the following chart would currently
enable each strategic driver, on a scale of –100 to +100. Empty cells indicate this is not a key
deliverable for a particular driver. Examples of the extremes and midpoints on that continuum are
as follows:
–100:
0:
+100:
DNK:
This deliverable is counterproductive for enabling this driver.
This deliverable has little or no effect on this driver.
This deliverable significantly enables this driver.
Don’t know or have no opinion.
© 2010 South-Western, a part of Cengage Learning. All rights reserved.
16–15
Implementing the System
• Necessary Actions for a Successful HPWS:
 Ensure that change is owned by senior and line
managers.
 Allocate sufficient resources and support for the
change effort.
 Ensure early and broad communication.
 Ensure that teams are implemented in a systemic
context.
 Establish methods for measuring the results of
change.
 Ensure continuity of leadership and champions of
the initiative.
© 2010 South-Western, a part of Cengage Learning. All rights reserved.
16–16
FIGURE
16.5
Implementing High-Performance Work Systems
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16–17
FIGURE
16.6
Building Cooperation with Unions
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16–18
Benefits of HPWS
• Employee Benefits
 Have more involvement in the organization.
 Experience growth and satisfaction, and become
more valuable as contributors.
• Organizational Benefits
 High productivity
 Quality
 Flexibility
 Customer satisfaction
© 2010 South-Western, a part of Cengage Learning. All rights reserved.
16–19
Benefits of HPWS
• Employee Benefits
 Have more involvement in the organization.
 Experience growth and satisfaction, and become
more valuable as contributors.
• Organizational Benefits
 High productivity
 Quality
 Flexibility
 Customer satisfaction
© 2010 South-Western, a part of Cengage Learning. All rights reserved.
16–20
Navigating the Transition to
High-Performance Work Systems
Build a Transition
Structure
Implement
High-performance Work
Incorporate the HR Function
as a Valuable Partner
© 2010 South-Western, a part of Cengage Learning. All rights reserved.
16–21
Evaluating the Success of the System
• Process audit
 Determining whether a high-performance work
system has been implemented as designed:

Are employees actually working together, or is the term
“team” just a label?

Are employees getting the information they need to make
empowered decisions?

Are training programs developing the knowledge and skills
employees need?

Are employees being rewarded for good performance and
useful suggestions?

Are employees treated fairly so that power differences are
minimal?
© 2010 South-Western, a part of Cengage Learning. All rights reserved.
16–22
Evaluating the Success of the System (cont’d)
• To determine if a HPWS program is reaching its
goals:
 Are desired behaviors being exhibited on the job?
 Are quality, productivity, flexibility, and customer
service objectives being met?
 Are quality-of-life goals being achieved for
employees?
 Is the organization more competitive than in the
past?
© 2010 South-Western, a part of Cengage Learning. All rights reserved.
16–23
Outcomes of High-Performance Work Systems
• Employee Outcomes and Quality of Work Life
 More involved in work
 More satisfied and find that needs for growth are
more fully met
 More informed and empowered, feel that they have
a fuller role to play in the organization and that
their opinions and expertise are valued more
 Have a greater commitment that comes from higher
skills and greater potential for contribution
© 2010 South-Western, a part of Cengage Learning. All rights reserved.
16–24
Outcomes of High-Performance Work Systems
(cont’d)
• Organizational Outcomes and Competitive
Advantages
 Higher productivity
 Lower costs
 Better responsiveness to customers
 Greater flexibility
 Higher profitability
© 2010 South-Western, a part of Cengage Learning. All rights reserved.
16–25
Achieving Sustainable Competitive Advantage
through Employees
Valuable
Rare
Characteristics
of Employees’
Competencies
Organized
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Difficult to Imitate
16–26
2
The Impact of High-Performance Work Systems
•
Ames Rubber Corporation, a New Jersey–based manufacturer of rubber products and office
machine components, experienced a 48 percent increase in productivity and five straight years of
revenue growth.
•
Sales at Connor Manufacturing Services, a San Francisco firm, grew by 21 percent, while new
orders rose 34 percent and the company’s profit on operations increased 21 percent to a record
level.
•
Over a seven-year period, Granite Rock, a construction material and mining company in
Watsonville, California, experienced an 88 percent increase in market share, its standard for ontime delivery grew from 68 to 95 percent, and revenue per employee was 30 percent above the
national average.
•
At One Valley Bank of Clarksburg, West Virginia, employee turnover dropped by 48 percent,
productivity increased by 24 percent, return on equity grew 72 percent, and profits jumped by 109
percent in three years.
•
The Tennessee Eastman Division of the Eastman Chemical Company experienced an increase in
productivity of nearly 70 percent, and 75 percent of its customers ranked it as the top chemical
company in customer satisfaction.
•
A study by John Paul MacDuffie of sixty-two automobile plants showed that those implementing
high-performance work systems had 47 percent better quality and 43 percent better productivity.
•
A study by Jeff Arthur of thirty steel minimills showed a 34 percent increase in productivity, 63
percent less scrap, and 57 percent less turnover.
•
A study by Mark Huselid of 962 firms in multiple industries showed that high-performance work
systems resulted in an annual increase in profits of more than $3,800 per employee.
© 2010 South-Western, a part of Cengage Learning. All rights reserved.
16–27
external fit
high-performance work system (HPWS)
internal fit
process audit
© 2010 South-Western, a part of Cengage Learning. All rights reserved.
16–28