performance

5OO PART 5

Le4 Explain how human resource management can

contribute to high performance.

Table 16"1

HRM Practices That Can Help 0rganizations Achieve High Performance

Meeting Other HR Goals

HRM's Contribution to High Perfarmanee Management of human resources plays a ctitical role in d"ter*inidg companies' success in meeting the challenges of a rapidly changing, highiy comferitive envi- ronment.zZ Compensation, staffing, training and development, perfoirnance lnan- agement, and other HRM practices are investments that directly affelr ernployees' motivation and abihty to provide products and services that are valued lby c,rsto*ers. Table 16.1 lists examples of HRM practices that contribute to high perfprmance.

Research suggests that it is more effective to improve HRM practides as a whole than to focus on one or two isolated practices, such as the organization! Rav structure or selection ryrt.*.?l Also, to have the intended influence on perfonnarjrce, the HRM practices must fit well with one another and the organization as a whol$.za

Job Design For the organization to benefit from teamwork and employee.*po*..*prrt, jobs n-rust be designed appropriately. Often, a high-performance work system pla{es employees in work teams where employees collaborate ro make decisions and so[r'e problems. Individual empioyees also may be empowered to serve on teams that d$sign jobs and work processes.

Job design emphasizing teamwork and empowerment is a fundam{ntal piece of improving i.rfor*urr.. aJnlrsing homes suctr-as Mercy Nursing Facili{v and Beech- wood Continuing Care, located near Buffalo, New York. Applying a philosophy known as "culture change," these nursing homes are moving toward gilaing residents more choices and personal attention in a homier atmosphere. Deiivefing this type of care requires less rigid job descriptions than have developed in th{ highly regu- lated nursing home industry. Mercy, Beechwood, and other facilities adopting culture

change have srructured rvork into teams of employees who are given gre{rer flexibility and authority for how they carry out their jobs. Aides are assigned to $roups of resi' dents, rarher than to a few specialized duties, so they can develop carin! relationships with ihe residents.z5

Recruitment and Selection At a high-performance organization, recruitment and selection aim at obtaining rhe kinds of employees who can thrive in this type of setting. These $mployees are enthusiastic about and able to contribute to teamwork, empowermeni, and knowl- edge sharing. Qualities such as creativity and abiiity to cooperate as fl".t of a team

. HBM practices match organization's ' Performance management syitem mea- goals. sures customer satisfaction afld quality.

. lndividuals and groups share ' Organization monitors emplolees' knowledge. satisfaction.

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CHAPTER 16 Creating and Maintaining High-Performance Organizaticns 501

may play a iarge role in selection decisions. High-per{ormance organizations need selectior-r inethods that identify more than te.hnical skilis like

"b'rlity to p"r{o.,r1

accounting ar-id engineering tasks. Ernployers may use group interviewp, ope,l-ended questions, and psychological tests to find employees -ho i..o,rute, shire ideas, and take irritiative.

Training and Development '$Uhen

organizations base hiring decisions on qualities like decision-making and ream- u,ork skills, training may be required ro reach employees the specific skills they need to perform the duties of their job. Extensive trair-ring and developmenr also are parr of a learnir-rg organization, described earlier in this chapter. And when organizations delegate rnany decisions to work teams, the members of rhose rearns likely r.l'ill benefit from participating in team development activities rhat prepare thern for their roles as tearn rnernbers.

Training programs at Whirlpool have been aiigned with the cornpany's commiL- ment to innovation. After rhe company defined the role innovarion would play in the company's strategy, ir trained 75 employees to be "Masters of Inrrovation"- experts in the qualities and Lrrocesses that enable new ideas to contribute to Whirl- pool's success. The Masters of Innovation are charged with rraining the rest of Whirl- pool's employees to be innovative. Their lessons are supplemented btr or-rline and classrooin training ptograms in innovation skills such as tappir-rg into nerv resources and thinking about projects from various points of view. Ernployee developmenr also focuses on knowledge sharing. Project teams conplete five-question surveys that ider-rtify team members' networks of professionai contacts. The results help the tearns develop action plans for using their networks to come up with more creafive and suc- cessfirl ideas.26

Performance Management In a high-performance_ organization, empioyees knorv the organization's goals and what they must do to heip achieve thor" goulr. HR dep".t,',enrs can contritute to this ideal through the..design of the organization's pe.fo.*ar-r.e managemenr sysrei,' As we discussed in Chapter B, performance managernent should l"'..r"i.a i" iir. organizarion's goals. Flagstar Bank, based in Tioy, Mlhig"rr, develops goals for brur-r.h managers by using analytical software frorn pitney B;;. pitnei B."o*., ,r., Juiu about households in each branch's geographic area ancl comparative data about other bank branches, combined wrth Flagstai's ;ustomer data, to predict *n", e".1, u*".1, can achieve in rerms of types of pioducts sold, arrerage bulur-r.., i" b;L ;;;;;;; growth in the number of custorners, and so on. The"bank then sers goals ,hut u." achievable for rhe branch, given economic conditions and the needs oflhe clients i. its.area' This gets ernployees in the branches focused on the best opportunities avail- able to them. Branch managers can see the criteria used to set theii goalrl;;-;h"y;; motivared by the fairness of th" system.z?

To set up a performance nanagemerlt system that supports the organization's goals, managers need to understand the process of employee pe.fonnarr-ce. As shown in Figure 16.3, individual employees biing a set of rkillr'"njubilities to ,h" j"b;;;J ;; appiying a set of behaviors, they use those skills to achieve cerrain resuks. iBr; r;...r; is more than the product of individual efforrs. The organizarionb goals should influ- ence each step of the process. The organization's culture and othei factors influence

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502 PART 5 Meeting Other HR Goals

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the employees' abilities, behaviors, and results. It mustn't be forgotten that sometimes

uncontrollable forces such as the current economic conditions enter the picture-{or

example, a salesperson can probably sell more during an economic expansion than

during an economic slowdown' Th"is model sllggesrs some guidelines for performance management. First, each

aspecr of pe.forman.. ,ou.rugJ*ent should_Le related to the organization's goals'

B;rl;.r; g'oals .ho.lld influenle the kinds of employees selected and their training' ,l*,"q"ft*ents of each iob, and the-measures used for evaluating results. Gener- ,ily, ,hi, means the organizarion idenlifies what each department must do to achieve

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ln a business, profitability and the company's stoc* price pro- vide some obvious measures of success. A nonprofit organization . needs to apply and adapt some more creative measures of success.

. Performance measures for individuals and groups in the organization should support the achievement of the organi- zation's mission. The mission is more than the products and services provided; it extends to the desired outcomes of those products and services- o say, visiting a health clinic or participating in a tutoring pro- gram.These outcomes, in turn, should be associated with an impact on society, such as a reduction in the prevalence of

a disease or the increase in the proportion of high school stu- dents who graduate. Financial measures, such as a cost reduction or improvement in efficiency, are important. Howevel they should be related to the organization's ability to fulfill its mission-for example, because they are needed for acquiring resources or carrying out activities associated with the desired outcomes and impact on society. When possible, measures should be expressed in mon- etary units (dollars in the United States). For example, if the organization places unemployed people in jobs, it can measure the decrease in

public assistance Pale :i:- i:i* govern ment. Dol la r 5r*5-r- : -. ments of success are us='- because they can be vacr.+: over time and cleariY corni'r-.;- nicated to donors and other stakeholders,

. Other measurements can be expressed as percentages, such as the percent of the tar- get population who ParticiPate in a program or the percent of parlicipants who report achiev- ing an organizational goal, such as earning a professionai designation or disconti nuing use of drugs or alcohol.

Source: Based on Marc J. Epstein and Adriana Rejc Buhovac, "lmproving Per- formance Measurement: Not-{or-Profit Organizations, " CM A M a n agement, November 2009, pp. 16-21 .

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the desired results, then defines how indii'idual employees should contribute to their departrnent\ goals. More specifically, the following guidelines describe how to make the performance lnanagement system support organizatioaal goa1s,28

o Define and measure pet'formance in precise ferms-Focus on outcomes that can be defined in terms of how frequently certain behaviors occur. Include criteria that describe lr'ays employees can add value to a product or service (such as through quantity, quality, or timeliness). Include behaviors that go beyond the mirrimum required to perform a job (such as helping co-workers).

t Link performance measures to meettng custotner nss6l5-"Qu5tomers" may be the organization's external customers, or they rnay be intemal customers (employees receiving services from a co-worker). Service goals for internal customers should be reiated to satisfying external customers.

o Measure and correctfor the effect of situational g6n57vqins5-Monitor economic condi- tions, the organization's culture, and other influences on performance. Measures of employees'performance should take these influences into account.

This approach gives ernployees the information they need to behave in ways that cot-r- tribute to high per{ormance. ln addition, organizations si-rould help empioyees identifii and obtain the abilities they need to meet their performance goals. The "HR How To" box pror.ides additionai guidelines for per{ormance management in nonprofit organizations.

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