A high-performance work system (HPWS) can be defined as a specific combination of HR practices, work structures, and processes aimed at enhancing employee knowledge and improving his or her skills. Although some noteworthy HR practices and policies tend to be incorporated within most HPWSs, it would be a mistake to focus too much, or too soon, on the pieces themselves. The key concept in this respect is the system. High-performance work systems are composed of many interrelated parts that complement one another to attain the goals of an organization.
The concept of High Performance Working can be described as ‘High performance work practices that consist of new ways of organizing work, reward performance and as well as involving employees in the decision-making process’.
The general idea of HPWS constitutes a claim that there exists a system of work practices that leads in some way to superior organizational performance. There are three concepts explicitly embedded in this proposition: performance, work practices and systemic effects. To understand what is meant by an HPWS, we need to examine each of these concepts separately.
‘ Organizational Performance
The dependent variable in HPWSs, is more complicated to pin down because it is a pessimistic term, similar to ‘organizational effectiveness’. It is something that can be conceived in a variety of ways, incorporating short- and long-run economic outcomes and wider notions of social legitimacy or corporate social responsibility. In terms of HPWSs, however, most researchers have focused on economic performance criteria. This implies that HPWSs, to be deemed successful, need primarily to enhance cost-effectiveness. If the financial benefits do not exceed the costs, then HPWSs are not economically rational for organizations.
‘ Work Practices
Workplace performance is influenced by team performance and, prior to that, individual job performance, which in turn is a function of interactions between employee ability, optional effort and performance opportunities. The question posed here is this: do the benefits to workers (e.g. skill development and wage increases) exceed their costs (e.g. in work stress and work overload), and thereby motivate individual employees to up skill themselves and seek to apply additional performance effort when opportunities exist for them to do so? In much of the leading research, assessments of the performance effects of HPWSs therefore depend on obtaining relevant data on both company and worker outcomes While the dependent variable in HPWSs is complicated, there is even greater difficulty with the independent variable. How such practices as appraisal and merit pay are actually implemented varies enormously, leading to very different impacts on employee trust, satisfaction, commitment and performance. A firm may originally have a practice in place but in a very demoralized or dysfunctional condition. To make genuine theoretical progress, researchers must therefore go beyond the construction of lists of practices and seek to identify the processes and mediating variables which a set of practices is supposed to influence.
‘ Systemic Effects
Systemic Effects entails the combination of practices into a bundle, rather than individual practices, which shapes the pattern of interactions between and among managers and employees. At any rate, the idea that there are systemic or synergistic effects in the cluster of chosen HR practices is a key part of the HPWS proposition. For example, what tends to vary in the literature, however, is the extent to which this systemic notion reaches out to companion elements of a business: its technology or propriety knowledge, product or service mix, financing, supply chain and governance. From a narrow view, bundling is seen as an issue of design within the components of an HR system: i.e. rendering training consistent with a change to self-directed teams, for example. From a broader view, it entails complimentarity between changes in HR systems and other strategic changes in the workplace or productive unit: For example, moving to a high-involvement HR model because management is making a major investment in advanced technology in the workplace, will not realize its potential unless operating workers are more highly engaged in technical problem solving. Given the embeddedness of work systems within wider production or operational strategies the narrow conception of synergy is too limiting. Complementarity needs to be considered within the domain of HR policies and practices but, more importantly, it needs to be understood within the broader management system of the workplace or business unit.
High Performance Working (HPW) practices can result in good outcomes. Some examples of best HR practices which could result in good benefits include:
‘ Improved Productivity
‘ Satisfied employees and less customer complaints
‘ Enhanced employees attendance
‘ Better resourcing
‘ Better rates of turnover and safety
‘ Better talents
‘ Improved employee engagement
2. Identification and explanation of the key components of HPW
All the components of the HPWS are important in terms of how they help the entire system to function. The effectiveness of HPWS requires the system to have both the internal and external fit. To make sure the system is fit internally, all the components should support and complement each other and like the leadership team, should work in conjunction with the human resource practices and the work flow should be supported by well-developed technology and when the system is aligned with the competitive urgencies of the organization such as enhanced employee satisfaction, well developed company values and competitive urgencies, it challenges the system as a whole and achieves external fit as well. Two fundamental mechanisms on which high-performance work systems influence performance outcomes are based on human capital and skills on the one hand, and motivation and commitment on the other. Over time various studies have been performed to understand the direct effect of High performance HR practices on the performance of different functions in an organization.
Moreover studies have been performed to understand the indirect effect of HPWS practices by influencing employee attitudes and optional behaviors. HPWS have a significant and a positive impact on attitudes or behaviors of employees and these attitudes subsequently create what is called the organizational citizenship behavior (OCB) of the employees. These studies have also concluded that the functional performance was affected both directly and indirectly by HPWS through organizational citizenship behavior (OCB) of the employees.
The effective implementation of high performance work systems benefits both the employees and the organization. Employees are found to be more involved in the organization, experience better growth and satisfaction, and become more valuable as contributors. The organization also benefits from high productivity, quality, flexibility, and customer satisfaction. A multi-dimensional change initiative is required from all the stakeholders of an organization to implement high-performance work systems. This provides an organization with a sustainable competitive advantage. It is very important for an organization to consistently measure and evaluate the satisfaction and commitment of its employees. If employees are not performing up to the expectations of the organization, it is very possible that they not happy with their jobs and they are not committed to the organization. The reason for their lack of satisfaction and commitment can most likely be a result of an underperforming HR practice or system of practices. Therefore an organization should improve the systems if it wants to improve attitudes, behaviors and performance.
The concepts that arise out of such confused situations are elements that eventually would become key components of a high performance work system.
‘ The first component is the concept of increased opportunity for employees to participate in decisions. The ability for an employee to participate in the decision making process is considered to be one of the key elements of an HPWS because it allows the employee to make decisions that affect their immediate environment, which in turn affect the entire organization. This participation leads to employees feeling more empowered, which in turn leads to a more committed workforce, at least in theory.
‘ The second component is training. Training provides employees with the necessary skills to perform their jobs in a more effective manner as well as the opportunity to assume greater responsibility within an organization. Training also gives organizations a way to cross-train employees in different skills and roles to ensure that employees understand many roles within an organization.
‘ The third component is employee incentives. The two previous elements help to prepare employees and organizations for successful HPWS implementation and operation, but without incentives, the system will most likely fail. Organizations need to find a way to link pay with performance in order to incentivize an employee to focus ‘on outcomes that are beneficial to themselves and the organization as a whole. Incentives can take many forms, with some examples being stock options and other equity plans, profit sharing plans, pay raises, bonuses for meeting performance targets and other monetary incentives. In addition, incentives can take the form of non-monetary options such as time off, flextime and other special employee benefits.
Following are some examples of how these components of HPW work together to ensure High Performance Working:
‘ A good example of HR professionals’ effective practices (e.g.: management across an organization’s departments) compromise the weekly reports and meetings between Recruitment and other departments. HR ideally sends detailed weekly reports of the appointment cases status requested by different departments. They also run meetings with them to get their requirements and update on a regular basis.
‘ Another example of effective performance management systems is the annual performance appraisals. Organization implies dealing with managers with regard to their employee’s performance appraisals. They are responsible for coaching managers on how to use systems, evaluate employees, and relate to (mission, vision, objectives and values) with their employees objectives, grade performance and all information related to performance management in general.
In addition to the three components of involvement, training and incentives, there is also a fourth element that makes up another key component of modern day high performance work systems. Technology is everywhere in the world today and must be considered as part of any organizational development exercise. Within high performance work systems, technology does not have to be leading edge technology solutions, but it does provide an ‘infrastructure for communicating and sharing information vital to business performance.