CHAPTER 16: CREATING HIGH-PERFORMANCE WORK SYSTEMS

Kirsti Kompus Richard Stefan Omar Sagor

Topics:
PRINCIPLES OF HIGH-PERFORMANCE WORK SYSTEMS
COMPONENTS OF A HIGH-PERFORMANCE WORK SYSTEM HOW COMPONENTS FIT TOGETHER AND SUPPORT STRATEGY

PROCESSES FOR IMPLEMENTING HIGHPERFORMANCE WORK SYSTEMS

OUTCOMES FOR EMPLOYEES AND THE ORGANIZATION

PRINCIPLES OF HIGHPERFORMANCE WORK SYSTEMS

A high performance work system can be defined as a specific combination of HR practices, work structures, and processes that maximizes the knowledge, skills, commitment, flexibility, and resilience of employees.

4 Simple but powerful principals:

- Egalitarianism and engagement
- Shared Information - Knowledge development

- Performance-reward linkage

PRINCIPLES OF HIGHPERFORMANCE WORK SYSTEMS

4 Simple but powerful principals:
Egalitarianism and engagement
- Sense of being members, not just workers, in an organization - Egalitarian work environments eliminate status and power differences

- Increase collaboration and teamwork

- Productivity improves through working together - Employee engagement: Involving employees in decision-making and giving them the power - Engaged employees: performing at high levels, are enthusiastic about what they do, and look for better, more efficient ways of doing things

PRINCIPLES OF HIGHPERFORMANCE WORK SYSTEMS

4 Simple but powerful principals:
Shared Information
- The principal of shared information is critical to the success of employee empowerment and involvement initiatives in organizations

- In the past employees traditionally were not given and did not ask information about the organizations
- Information helps employees make good suggestions for improving the business and to cooperate in major organizational changes - The principal of shared information typifies a shift in the relationship between employer and employee in organizations

PRINCIPLES OF HIGHPERFORMANCE WORK SYSTEMS

4 Simple but powerful principals:
Knowledge development
- Knowledge development: the twin sister of information sharing - The only thing you get when you empower dummies, is bad decisions faster. - The number of jobs requiring little knowledge and skill is declining - The number of jobs requiring greater knowledge and skill is growing

- High-performance work systems depend on the shift from touch labor to knowledge work
- Employees today need a broad range of skills

- Knowledge and skill requirements must also change rapidly

PRINCIPLES OF HIGHPERFORMANCE WORK SYSTEMS

4 Simple but powerful principals:
Performance-reward linkage
- People may intentionally or unintentionally pursue outcomes that are beneficial to them but not necessarily to the organization as a whole

- When companies reward their employees based on their performance, workers naturally pursue outcomes that are mutually beneficial to themselves and the organization

COMPONENTS OF A HIGHPERFORMANCE WORK SYSTEM

Work-flow design and teamwork
By redesigning the work-flow around key business processes, companies can:
- Establish a work environment that facilitates teamwork

- Takes advantage of employee skills and knowledge

- Empowers employees to make decisions - Provides employees with more meaningful work

COMPONENTS OF A HIGHPERFORMANCE WORK SYSTEM

Staffing
Companies can improve their staffing practices by selecting one of the following:
- Potential job applicants that are drawn from a pool of individuals who have been trained at the state's expense and who seem best suited to work in high performance teams - Team members select their teammates

COMPONENTS OF A HIGHPERFORMANCE WORK SYSTEM

Training and development:
- Training focuses on ensuring that employees have the skills needed to assume greater responsibility in a high-performance work environment. Companies can develop training by the following points:
- Provide pre-hire training program of instruction and testing in subject based on companies specific business needs. - Apprenticeship program that focuses on key areas based on companies specific business needs.

- Training certification process; the teams have to certify their abilities to function effectively by demonstrating knowledge.
- "Cross-cultural sensitivity and team building"

COMPONENTS OF A HIGHPERFORMANCE WORK SYSTEM

Compensation
- Many companies are experimenting with alternative compensation plans in order to link pay and performance, high-performance work systems often include some type of employee incentives.
- Incorporating skill-based pay plans (based on the number of different job skills) - "Intracapital" method: a pool of money an employee can spend on capital improvements if the company meets profitability goals

- Egalitarianism: implementing an all-salaried workforce

- ''Pay-for-performance'' philosophy: high performance organizational culture that translates into better business results and company profitability

COMPONENTS OF A HIGHPERFORMANCE WORK SYSTEM

Management processes and leadership:
- Maximizes staff engagement, development, and performance
- Is consistent across units to enhance full development and utilization of talent

- Remains flexible, efficient, measurable, fair, and transparent

- Provides better alignment of staff roles and goals with the universitys mission - Promotes on-going and proactive succession management. - Cornells Performance Management Philosophy.

COMPONENTS OF A HIGHPERFORMANCE WORK SYSTEM

Management processes and leadership (cont)
- Addresses the relationship of employees to the institution, from the time they are recruited, through their growth and development, to the time they depart
- Engages and develops employees throughout the year - Establishes goals and measures performance to those goals - Depends on the supervisor giving clear, developmental feedback - Includes a review of past performance and goals and focuses on future development opportunities that are aligned to individual, unit, and university goals

COMPONENTS OF A HIGHPERFORMANCE WORK SYSTEM

Supportive information technologies
- Technologies of various kinds create an infrastructure for communicating and sharing information vital to business performance

- But IT need not always be so high-tech

- The richest communication occurs face to face - The important point is that high-performance work system cannot succeed timely and accurate communication

HOW COMPONENTS FIT TOGETHER AND SUPPORT STRATEGY

The pieces of the system are important only in terms of how they help the entire system function. When all the pieces support and complement one another, high-performance work systems achieve internal fit. When the system is aligned with the competitive priorities of the organization as a whole, it achieves external fit as well.

Internal fit
- Occurs when all the internal elements of the work system complement and reinforce one another

- Changes in one component affect all the other components

- Horizontal fit: testing to make certain that all of the HR practices, work designs, management processes, and technologies complement one another

HOW COMPONENTS FIT TOGETHER AND SUPPORT STRATEGY

External fit
- To achieve external fit, high-performance work systems must support the organizations goals and strategies
- Analysis and discussion of competitive challenges, organizational values, and the concerns of employees and - Statement of the strategies being pursued by the organization - Objectives: cost containment, quality enhancement, customer service, and speed to market directly influence what is expected of the employees and the skills they need to be successful

HOW COMPONENTS FIT TOGETHER AND SUPPORT STRATEGY

Assessing Strategic Alignment: The HR Scoreboard
Uses - Is used to diagnose internal fit and external fit in a relatively straightforward way - Is used to engage a broader set of managers and employees in the discussion of how to best implement the system Procedure Consists of analyzing and comparing internal and external fit, key strategic performance drivers, HR practices, employment, stability and teamwork

IMPLEMENTING HIGHPERFORMANCE WORK SYSTEMS

Actions necessary for success
- Making a compelling case for change linked to the company's business strategy
- Ensuring that change is owned by senior and line managers

- Allocating sufficient resources and support for the change effort

- Ensuring early and broad communication - Ensuring that teams are implemented in a systemic context

- Establishing methods for measuring the results of change

- Ensuring continuity of leadership and champion of the initiative

IMPLEMENTING HIGHPERFORMANCE WORK SYSTEMS

Implementing High-Performance Work Systems
Building a Business Case for Change
- Managers have to build a case that changes are needed for the success of the organization

- Top managers spending time to communicate with employees about the reasons and approaches of change
- Major transformations should not be be left only to middle managers. CEO and senior management team need to establish the context for change and communicate the vision tot he entire organization

IMPLEMENTING HIGHPERFORMANCE WORK SYSTEMS

Processes for Implementing High-Performance Work Systems
Establishing a Communications Plan - Two-way communication: diminishing fears and concerns of employees

- Two-way communication: open discussions, sharing information

Unions

- Cultivating Mutual Gains: creating win-win situations and building trust

- Formalizing Commitment: sign of managers' commitment and institutionalizing the initiative

IMPLEMENTING HIGHPERFORMANCE WORK SYSTEMS

Processes for Implementing High-Performance Work Systems
- Gaining the support of other key groups: within the company and outside the company - Adhering to Procedures: keeping the parties focused

Navigating Transition to High-Performance Work Systems

- Building a transition structure: keeps everyone on track and prevents the system from failing
- Incorporating the HR function as valuable partner: enabler of a company's human capital that helps employees through the transition

IMPLEMENTING HIGHPERFORMANCE WORK SYSTEMS

Evaluating the Success and Sustaining it - Process audit: determine whether the system has been implemented as it was designed and principles of highperformance work systems being reinforced - Sustaining: motivating and retaining the workforce to avoid burnout and employee poaching by other companies - Evaluations: high-performance work systems should be periodically evaluated in terms of new organizational priorities and initiatives

OUTCOMES FOR EMPLOYEES AND THE ORGANIZATION

Progressive organizations of all sizes have successfully implemented high-performance work systems. When implemented effectively, highperformance work systems benefit both employees and their organizations.

Employee Outcomes and Quality of Work Life

- In high-performing workplaces, employees have greater latitude to decide how to achieve their goals. Employees become more engaged and empowered to make decisions, experience greater career growth and satisfaction, and become more valuable contributors to their firms. -When employees are underutilized, the performance of an organization suffers, and employees develop poor work attitudes and habits.

OUTCOMES FOR EMPLOYEES AND THE ORGANIZATION

Organizational Outcomes and Competitive Advantage
Organizations benefit from higher productivity, quality, flexibility, and customer satisfaction. These features together can provide a company with sustainable competitive advantage Competitive advantage by developing competencies in employees: 1) Valuable: High-performance work systems increase value by establishing ways to increase efficiency, decrease costs, improve processes, and provide something unique to customers.

OUTCOMES FOR EMPLOYEES AND THE ORGANIZATION

Organizational Outcomes and Competitive Advantage (cont)
2) Rare: High-performance work systems help organizations develop and harness skills, knowledge, and abilities that are not equally available to all organizations 3) Difficult to imitate: High-performance work systems are designed around a team of processes and capabilities that cannot be transported, duplicated, or copied by rival firms

4) Organized: High-performance work systems combine the talents of employees and rapidly deploy them in new assignments with maximum flexibility