Contemporary Case Studies in HRM Report

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High Performance Workplaces – What are they and why are they important?

Contemporary Case Studies in HRM

Definitions – What are High Performance Workplaces?

‘a general approach to managing organizations that aims to stimulate more effective employee involvement and commitment in order to achieve high levels of performance. [They are] designed to enhance the discretionary effort employees put into their work, and to fully utilize and further develop the skills that they possess’ (Belt and Giles, 2009).

‘The High Performance Workplace encourages the development of workers’ skills and taps into their emotional capital and tacit knowledge in order to enhance organizational performance’ (EEF/CIPD, 2003).

‘High performance working practices consist of new ways of organizing work, rewarding performance and involving employees in the decision-making process in the workplace’ (Ashton and Sung, 2002).

An approach to leading people and organizing work that optimises workforce capability, potential and commitment in order to achieve organizational goals ….

What’s the fuss all about - why are High Performance Workplaces important?

20 to 40% of productivity differences may be accounted for by differences in HR practices – Tamkin (2004)

Thompson (2000) found that firms increasing their use of HPW practices between 1997 and 1999 recorded increases in value added per employee between 20-34 per cent.

‘…for those wishing to flourish in an increasingly competitive environment, ignoring the potential gains from high performance working may no longer be an option… It is one of those organizational innovations from which everyone can win’ (Guest, 2006a).

A solution to the UK’s productivity deficit? – Government

A route to competitive differentiation? – employers

An opportunity for more meaningful work? – employees

But … The 2008 Employer Survey undertaken by the UK Commission for Employment and Skills found just under a third of organizations could be classified as taking a HPW approach.

Almost a fifth of the variance in productivity and profitability between firms could be attributed to HRM practices – Patterson et al (1998)

Backed up by Temkin - Less than 25% of organizations adopt these practices to a significant extent – Temkin (2004)

Key themes in the academic debate

Universalist – particular HR practices will have a positive impact whatever the context

Contingent – distinct combinations work under specific conditions, aligned ‘bundles’ of HR practices rather than practices individually

Context – competitive advantage comes from rare, inimitable and difficult to substitute resources; developed over time vs. off the shelf

Business strategy alignment – HPW more likely as part of differentiation strategies as opposed to cost leadership strategies

Causality – Is there a proven link between HPW and business performance and if so how does it operate?

The Practices of High Performance Workplaces

Broad and extensive lists of HR practices in HPW literature

Guest (2000) – 18 practices identified for CIPD

Thomson (2000) – 30 practices in three clusters of high involvement, skill and ability development and ER practices to build trust

Ashton and Sung (2005) – three dimensions; high involvement, HR practices and reward and commitment

‘what matters is the way [a range of practices] combine into a system of practices that complement and reinforce each other and also fit with and work towards the aims of the organization’ Guest (2006b)

What are the practices that distinguish a HPW?

This still leaves us with some significant practical difficulties in implementing a high performance workplace and Guest is helpful here

So we are reaching a context based approach here - an internally consistent system of people management practices relevant to an organizational context and goals

The Carillion Services Context

A £1.3bn turnover business providing support services to local and national government and private sector clients

14,000 employees spread across 100 contracts and over 1,000 UK workplaces

Blue collar, semi-skilled and skilled, approx 25% of staff paid at National Living Wage

Mix of unionised and non-union populations

A TUPE environment – not always a positive choice to join, a transient first line leadership population

Enduring cost pressure, fast paced, high change

No competitor obviously differentiated by people management practices

Lets turn now to some practical examples. I’m going to start with Carillion Services. Now, Carillion will undoubtedly be familiar to you for all the wrong reasons. Carillion’s financial problems were not in the Services business and support services is a good context in which to look at the relevance of HPW

"A Strategic Enabler to the delivery of the 2020 Strategy is people.

Our people are a strong differentiator, and through consistent, regular and planned engagement will enable the development of long-term customer relationships - 'Best Relationships'.

Our Values and Vision help create a 'culture of success' in which our people and their teams can thrive to deliver the 'Best Solutions' and 'Best Practices' delighting our customers, delivering to, and beyond their requirements."

Context for the Services People Strategy

The Services business had refreshed its business strategy in 2014 and concluded that people would be an enabler of competitive success. One of a number to be fair alongside …. But very much an intent that people would be a differentiator.

Not so surprising if you think about it – people are the principal asset of any support services business and interface daily with the customer on the customers premises. And so are fundamental to how service is delivered whether that is a hospital porter, a schools dinner assistant, a receptionist or an engineer in a white van.

So the question becomes how do you create that differentiation? How do you deliver it consistently across multiple workplaces?

This is where the High Performance Workplace becomes relevant.

Now … I should emphasise that we didn’t set out to create a HPW for the sake of it (indeed I don’t recall using the phrase) but we did set out to deliver a people strategy with same high performance outcomes.

Building the Carillion Services People Strategy

Create the EVP:

Our People Promise

Differentiated Employment Experience:

Enabling our people to be the best they can be

Values and Behaviours: Our Carillion Values, LSFs and PSFs

Fit for purpose People Tools and Processes: Selection, PDR, Talent Mangt etc

Great People Management: People Curriculum, Leadership Pathway

Developing people who are:

Qualified

Competent

Aligned

Engaged

Customer-Focussed

There were four elements to building that people strategy:

Define an employee value proposition – articulate a compelling rationale for people to want to join, remain and perform to their best with the organization. This became our ‘People Promise’. A important part of this was being able to articulate meaning or purpose in frontline service activities – a point I will return to.

Put in place the people management practices that would deliver that employee value proposition – will say more about these in due course

Ensure line managers had the skills to deliver those people management practices – this is a huge dependency. HR managers can design people management practices but in practice they are implemented by line managers so the big challenge is creating capability and consistency

Connect to the existing competency frameworks, values and culture of the broader Carillion group

The HPW Practices

The People Promise – setting out a compelling offer and clear expectations, providing meaning

Engagement – a clear framework, examples and skills for line managers

Development – toolkit for line managers and 70/20/10 model

Line of sight to business goals – the performance management process

Communication – People Forums, team talks, leadership visibility, employee surveys, customer feedback

Leadership development – People Curriculum and Transition Programmes

Recognition – linked to the Carillion values

Commitment to Safety

So let’s talk about the people management practices. It’s worth comparing these to the lists we see in the academic literature

The EVP or People Promise is what the practices need to deliver – it’s the blueprint for a differentiating employment experience with the intent that it will unlock differentiating performance

We recognised engagement as key element – leadership practices that could unlock discretionary effort. I’ll say more about that in a moment

We focussed on raising the capability of line managers to develop their people with a particular focus on on the job development given the dispersed nature of the workforce (skill flexibility, involvement in new projects, stretch etc)

Connected to this was the emphasis on the goal alignment purpose of performance management – helping people see how their tasks made a difference to business deliverables

We established a range of communication processes – again challenging across hundreds of workplaces

We focussed in particular on leadership development – both broader leadership skills and specifically competence in use of people management processes.

Our Engagement Framework

Connect day to day work to business goals – Make sure people know why their work is important

Encourage Ownership and Accountability – Provide opportunities for people to fully utilise their skills and experience and make a difference

Develop and Grow – Help your people continue to learn and build their skills

Recognise and Value – Ensure your people know their efforts are valued

Involve and Listen – Make sure your people can make their voices heard at work

Five enablers to help our people Be The Best They Can At Work

There’s clearly an overlap between most typologies of HPW practices and the drivers of employee engagement and in practice most organizations are more likely to talk about engagement.

We approached engagement as a framework of complementary people management practices intended to unlock discretionary effort and improve customer service. We saw five enablers of engagement that correlate with the HPW practice typologies….

The intention here was to provide line managers with toolkit of practices and case studies to use with their teams

A case study in getting it right

Customer Experience Centre: 250 staff providing help desk and contact centre services to accounts and customers UK wide

In crisis in 2013; absence at 10% , attrition at 4% per month, customer NPS of -63

Celebrated in 2016: absence 3%, attrition 1% per month, NPS of +83, Institute of Customer Service Employee Engagement Strategy award in 2017

Levers of success: new more visible leadership, team surveys, team forums, 121s, escalation process for customer issues, 360 feedback, individual development plans, new selection process including front line team input to manager selection

‘the front-line team knew all the problems and issues, knew most of the solutions, but were not being listened to.’

Organizational size and in particular workforce dispersion over multiple sites can be a barrier to consistent HPW implementation. It’s fair to say that we saw significant variation in workplace implementation.

However, one workplace where we can confidently see evidence of HPW practices positively impacting performance is in our Customer Experience Centre. This is a workplace of 250 staff providing….

So what were the levers of success….

All of these would appear on most typologies of HPW practices

Carillion outcomes – Is there a business case for HPW?

10 point upward movement in employee engagement survey in first year, dropping back after restructuring exercise in second year

Attrition steady and below industry average

Leadership consensus on people practices, enables continuity in people policy decision-making and articulating the EVP

A link between engagement and customer satisfaction – CEC NPS, lots of anecdotal evidence

Overall business performance? – many variables but evidence of reduced people and operating costs

Dependency on line management capability

Need to look contract by contract to get a better sense of the business impact – tangible and intangible

It becomes clear that line management capability – both will and skill – is an important enabler of successful implementation and underlines the difficulty of replicating HPW over multiple workplaces

Employee Relations Framework

I’m going to pick up on a couple of specific themes within the HPW theory at this point and offer a practitioner view. The first of these is about the coherence of people strategies

Want to build on idea of the importance of people management processes being both aligned to the business strategy and very importantly being integrated and consistent as a system

Developed this framework in BP for managing employee relations and in particular for diagnosing ER risk

Concentrate on the orange boxes, these are the principal people processes – our argument was that if the employee received inconsistent or contradictory messages from different processes then ER issues would be more likely to arise.

For example - I receive feedback from the performance management process that I am top performer but the outcome of the reward review is that I receive a middling award. I’m receiving mixed messages and I’m not well pleased.

What’s the relevance to High Performance? I’m unlikely to be performing at my best if my experience of the organizations people management process is confused and inconsistent

This again highlights the importance of line manager capability – people management processes my be designed by HR experts but they are used by line managers

Creating the opportunity for involvement and meaning

Is my role important, how do I make a difference? – the link to organizational or customer goals

Does my opinion count? – Employee voice and two way communication; team talks, consultation, town halls

Do I have variety in my work? – Task breadth and the opportunity to grow: job rotation, flexibility, skills development

Can I influence my/my team’s work? – Autonomy in how work is performed: self-directed teams, improvement groups

Increasing difficulty of implementation:

Flexibility of work processes

Line manager capability

Increasing benefits of:

Engagement

Productivity

Customer satisfaction

I’m now going to return the theme of purpose or meaning in work as I’m convinced this is an important enabler of high performance, you may recall the focus on this in the definition provided by Ashton & Sung

How can we provide meaning in roles and in particular roles that may be low paid and not highly skilled? There are a number of opportunities

The first of these is being able to show the importance of the role to business outcomes, connecting day to day tasks to business goals. This connectivity is what should come from effective use of the performance management system in goal alignment.

Employee voice - listening and acting upon employee input is the next opportunity. There are many channels for this, the question is how much value organizations put on them and again consistency of delivery. Important source of innovation and business improvement

Variety – variety in tasks seems to correlate with commitment. How can we create this?

Finally autonomy – how much control over what I do and how I do it do I have? This can be difficult with standard manufacturing or service processes but can be provided through involvement in improvement teams empowered to review and improve processes

The organizational challenge here is that the commitment and capability required to implement these practices increases. However, for the committed and rigorous, the benefits are there.

HPW and fit with Business Improvement practices

Lean, Six Sigma, CI etc

Provide opportunity for employee voice and involvement

Develop skills of the participants

Performance focussed

I highlighted involvement in improvement activities as one of the avenues of greater employee involvement and would like to develop this a little further.

We are talking here about a range of activities that include continuous improvement activities such as Lean, Six Sigma, TQM.

In Textron and British Steel my experience was of participation in Kaizen and TQM providing avenues for involvement, knowledge sharing and learning in very traditional unionised manufacturing environments. In Textron it was one element in an employee relations change programme that was recognized by a DTI Partnership Award.

In a very different non-union assembly line environment in a greenfield consumer electronics site for Samsung Electronics participation in shop floor Lean activities had the same benefits – a route for more meaningful involvement, skills development and improved employee relations.

These programmes seem to me to be an integral part of an HPW strategy precisely because they have a direct connection to performance improvement.

Lessons learned and reflections

It’s a journey……….High Performance Workplaces are built over time

Implementation over multiple and differing workplaces is challenging

Business context – recurrent cost out programmes sap energy, confidence and trust. The conundrum of the low margin support services business.

Reward is a hygiene factor – openness and fairness are key

Purpose is a great catalyst – help people to understand the importance of what they do

Mind the involvement gap – need for more systematic approach to engage people in shaping how they work

People selection – ensuring selection processes identify individuals who value a High Performance Workplace

Conclusions

Valid and valuable approach in the search for competitive advantage – optimising the value of the human capital of the enterprise

Organizations rarely set out to create HPW as an end in themselves – more likely to be a strategic enabler

Most relevant in a business context and strategy where people can be a differentiator

HPW is a system not set of individual practices, the elements may vary but have to integrate

Requires an underpinning people strategy – integrates the HPW practices, provides the story and link to business strategy

Executive buy-in is critical to maintain direction and mitigate short term pressures, line manager capability is critical to delivery

Vulnerable to change that is not explicitly addressed as part of the people strategy – e.g. strategy change, restructure, cost reduction

I thinks this explains both the low take up rate we observed earlier and also the difficulty of sustaining HPW practices in organizations undergoing change.

Do I believe HPW are worth the effort? – yes I do, my practical experience tells me that workplaces where the practices I have described are implemented effectively differ dramatically in their energy, purpose and vitality.

It’s difficult to prove a causal link to enduring business outperformance beyond specific improvement initiatives such as Lean and Six Sigma because there are simply too many other variables.

But I do believe businesses able to unlock the capabilities of their people in this way are much better positioned to succeed.

Questions for the academics….

Causality and criticality – are we any nearer to establishing causality and the conditions for this?

Task suitability – are some roles more suitable to an HPW than others?

Replication – moving from islands of excellence to enterprise-wide deployment. A fit only with a standardising business strategy?

Sustainability – what are the enablers of resilience in HPW?

Integration with other competitive enablers – HPW and the digital workplace

References

Belt V and Giles L (2009) High Performance Working: A Synthesis of Key Literature, Evidence Report 4, UKCES

Temkin P (2004) High Performance Work Practices, IES,

Patterson M, West MA, Lawthom R and Nickell S (1998), Impact of People Management Practices on Business Performance, Institute of Personnel and Development, London

Ashton, D. and J. Sung (2002) Supporting Workplace Learning for High Performance Working, Geneva, ILO.

CIPD (2003) Understanding the People and Performance Link: Unlocking the Black Box, CIPD, London.

Guest, D (2000) The Future of Work, CIPD

Guest, D. (2006a) ‘Smarter Ways of Working’, SSDA Catalyst Research Paper, Issue 3, Sector Skills Development Agency, Wath upon Dearne.

Guest, D. (2006b) ‘High performance working: HRM and performance’, Chapter 3.2 in S. Porter and M. Campbell, (eds.) Skills and Economic Performance, Caspian Publishing for the Sector Skills Development Agency, London, p.173-195

Appendix One