management

49? PART 5 Meeting Other HR Goals

L:.11 Define high- performance work

systems, and identifY

the elements of such a system.

hligh-Per{otmcnce Wurk Systern The right combination of people, technologY,

and orqanizational structure that makes full use of the organization's resources and opportunities in

achieving its goals.

TT

'lThis chapter summarizes the role of human lesolrrce lnanagement in creatingan organization that achieves a higl-r level of pelforrrance, measuted in such terms u, loJg-t..r11 profits, q'ality, and clistomer satisfaction. We begin with a defi'itio' of higi-perforionr, *ork sire.*, ar-rd a description of these systetns' elements and or-rtcJmes."Next, ure identify the conditions that contlibr-rte to high lSrformarrce' \(/e

explain how the various HRM fturctions can contribute to high perf6imance' FinaL[1',

.". ir-rt.od.,." \\rays to 1-neasule the effectiveness of httman resoulce lnanagelnent'

F*tgh-Fenf*nmanee W*rk SYstems The challenge facing managers today is horv to rnake their organizations into high-

performani. *o"t systems, rvith the right cornbilatio,n of people, technology, and organirational structure to nake full use of resottrces and oppoltunities in achiev-

ing thelir orgalizations' goals. To function as a high-performance r,vork systetn, each of

th"ese elerne"n$ must fit well rvith the others iu a smoothly functioning u'hole' Many

rnannfacturers Llse the iatest in processes including flexible manufacturing technol-

ogy, total quaiity manage[ient, and just-in-titne inventory control (meaning parts

ur:-rJ r.rppli", "r. nt,ro^"iica11y restocked as needed), but of cottfse these processes do

,'ro, *ort on their orvn; they must be run by qualified people. Organizations need to determine u,hat kinds of people fit their needs, and then locate, train, and motirzate

*1.r" rp..i"f people.2 A..oriirlg to researcir, orgauizations that introdqce integrated high-performur-r.l *ork practicls usually experience increases in productivity ancl lorlg-i"t* financial pet{ormance.s

d.eating a high-perforfiIance work system co1'ttlasts q'ith traditional tnanagement

pracrices. ir-r ,h" p^ri, decisions about technology, organizational structure' and human

resollrces r.l,ere tr.eated as if they rvere unrelated. An organization might acquire a 1ew infortnation System, restructllre iobs, or add an office in anothel cotllllry withor'rt

considering tl-re impact on its peop1e.4 Mor" recentiy, lnanagers have lealizecl that

sLtccess d"i"r-r,1, on hon,u'ell ali thl eleinents work togethet' For-instance, as l-realth .ur" pro.,i'd.rs feel increasing pressnre to rein in costs, some are finding solutions it'l

.o*bir-r^ti,t.rs of information technoiogy' irnproved staffing, and the redesign of u'ork

processes. A Louisiana hospital chain began running a softrvare system to analyze and fill staffing neecls. E*p1oye., use the system to bid for the hours they want to work, and the iysrem automaticaiiy assigns thern to sfiifts, filling all)r elnpiJ' positions

u,ith contract r.vorkers. Autornating the staffing process sa\tes mol-Iey and frees rnarrag-

ers froin irours of paperwork each-week. A health care chain basecl in Denver took technology .,r" u 51"p fr,rrther with an enterprise resource planning systelr'I that links

together iecisions about patierrt needs, staffing, finances, ai-rd purchases of s'-rpplies.

Elements of a High-Performance Work System As shor.vn in Figure 16.1, in a high-performance nork s),stetn, the eletnents that mttst

,r'g.k tog.rher irrcl,-rde orgar-riraiior-ral srructure, task design, peopie (the selection,

training]ancl elevelopment of ernployees), reu'ard systems, ancl inforn-ration systems'

and hurnan fesollrce managemenf playt an itnportant role in establishing all these'

OrganiTational s*'uctLLre-is the ,"ay tl're organization groups its people ir-rto useful

di'isiJr-rs, clepartments, and reporting relationships. The orgairization's top ma[r-

agement rouk., inost rlecisior-r, "bo.,i StrllctLlre, fOr instance, hou' many ernploy-

"1, 1"r.,o* to each superyisor ar-rc1 whether en-rpioyees are grouped ac6ording to the

ft,nctic,r-rs they carry out or the cllstolrers they serve. Such decisions affect hora' rvel1

.l ;t

.lr

ii

,

j 'l)

::

emprl

lvork im1',1

Tc

be gi 5)rste I

rve cii

T1

a sigr jobs.

the r-r these

Re

for ol the p. perfor SLlCCei

in cle, Chap,

TIln organ abour inforn shoult the int ing th tion q' i( ) gl\'( ing o1-r later ir

CHAPTER 16 Creating and Maintaining High-Performance Organizations 493

elnployees coordinare their :rctii'ities and reslrond to change. In a high-pelfolnance

rvork systen, organizational sttr.rclr-rre plolnotes coopelatiol-I' learning' anJ co1-rtinllous

Figure '16. i Elements of a High-

Performance Work

System

t 1

a

rt

rt h n k ze

to .1S

g'

rk ks

lmilro\re lnel-It. Task deslgn derenlit'res hou, the,cletails of the orgat-rizatiot-t's necessatl'

actilities u'ill

be groupecl, rvhether rnto jobs or tean .esponsibilities. In a high-perforlnance u'otk

;r:** ;;;k .lesigr-, ,-,-,"t ., lolx effici"r-rt. ,hil" encouraging high t1ua1irv. h'r Cl-rapter 4'

l,e cliscr,rssed hou, to.ur.y o.,, tl-ris HRM ftu-rction throirgh job an:rlvsis anJ iob tlesrgn'

Tl-re rig6t peopLe are J.k;; ;i;ur;;t; of hig6-perfor'''o,,.. *'ork,s1'stet's F{Rir'[ has

a significanr role in pro.,idir-rg people niro aie $'ell suite'-l antl Nell prepare(.1 {or their

jobs. Hr,rn-ran resollrce p.rrur-t"n"l h"ip tl-r. organiualiol-l rect'rtit and selecr people with

the needed qualifications. Tiaining, i"rr.lop*.r-rt, an.l caLee' nanagernent ensLlfe that

ii-r"* p".pf" are able to perfo'n tleir cr,rrent and future jobs rvith rhe organizatio''

Rewarcl s)sreirls .o*.ibur" to high performa'rce by encouragi.g people to strive

for objecrive, ,l,ro, ,.,pf.,li',1't" .rt-"totio.. overall goals.,Rervard tf'"rtT ::ll:1: the perfor'-iar.,." ,T\"u..,r", by rul1iJh employees are

judgetl, the n-rethods of measr-rring

fr".fo.,rrur"t.., and the incentive pay and other lervards linked to TEE

g ,.r.aa.r. Human resollrce managelnent plays an important role

ust

ll1, lts,

'frrl illl- r)\--

tl're leli

ir-r developir-rg and atlministerir-rg lelvard systens' as \\'e saw ln

Chapters B through 12. The flual element of high'perforn-Iance work s)/sterns is the

organization's information s)stem-s Vlanagers llrake decisions

"fr.-i *-t" t1,pes of inforrnation to gather al-rd the sortrces o{

ir-Lformation. Thel' also tnltst clecii'1e ri'l-ro in ll-re orgauization shoulcl have access ro the informatiou and ho$' they u'ill rnake

th. lr-rfo.,r-r"tior-r ayailable. Moclen ilfoll'ratiot-L systents, inclgd-

ir-rg the internet, l-rave* qnal-.,ldd .or gani:at ions to sl-Iare infortna-

tio"n widely. HR ,:lepar.tmen[s rake a.lr.a.tage of this tecl-rnolog1'

to giYe employees n.."r, to infornation about benefits, train- ing'opp.,rt.,t-,ities, jtlb opellings, ancl lnore, as ri'e ri'ill tlescribe later in this cl-rapter.

ln a high-performance lvotk system' all the

elenrents-peopie, techtrology, and organizational

structure-work toqether for success'

-

l_--

4g4 PART 5 Meeting Other HR Goais

i-*3 Summarize the outcomes of a high-

performance work

system.

i tEL;f{-' i: .,'

O*o*a, of a High-Perfortlatlce \!ork Systetrl

Outcomes of a High-Performance Work System

consider the practices of steel minimills in the United States' Some of these rnills

have Stfategies based orr keeping their costs \:lorv cornpetitors, costs; low costs

let them operare at a profit u,hile rvinnir-rg ..,rrt*.rs 'virh low prices' other steel

;;i;iii, i.cus o11 "differentiation," tneaning they set themseh'es apart in some

way other 4ran low p.i.;-i.. example, by offlrir-rg'higher quality or unusual prod-

uct lines. Research has for-rnd that ihe minirnillJlvith cost'related goals tend to

have highly centralized structules, so fi]anagefs can foctts or-r controlling throlrgh

a tight line of commanr-1. These organizations have low employee participalion in

decisions, rerati'el.v r"; *;.; ^r,,jb"r-r.fi,r, and pay highly conringenr on.perfor-

.r-ror-r...5 At minirnill, it-ru, fJ.r* on differentiation, strltctllres are more compiex and

dece'rralized, .o u.,ri'rorli; ir;; spread-out. These rninirnills encourage employee

participation ur-ra f,url't-,ieh;; t;;dt.a.d rnore generous benefits' Thev are higl-r'

performance *,o.k ,yrirr-,rl-i,', g";?r"t, th"se .iifi"re1ltiatol' rniils enjoy higher pro'

ductivity, Iorver scrap;;;, ;;;1;*"r',.*ploy"e rLrrnover than the mills tl-rat foctrs

on lolv costs. Outcomes of a high-performance \'vork system

thus include highet productivity ancl

efficiency. Tt,"r" o.,r.J,',',". lor'rrrrl",. to 'higher

profits' A high-peLforrirance rvork

;;'r;^;"u ho,r" orh..o.,tcomes, including high product quality, greal customer sat-

is{action, and 1o*, ernployee tumover. Son-re of ih.r" o.rr.o*es lneet intermediate

goals that lead to 1rig#, p*ii, (r.. rig.,r" 16.2). For example, high quality contrib-

utes to customer salisfaction, and customer satisfaction contribr'rtes to growth of the

brrsiness.Liker'vise,irnprol,ingprocluctivityletstheorganizationdomorervithless, r.r,hich satisfies price-conscious customers and

rnay help the. organization rvin over

customers from its .o*f"titorr. Other u'ays to lower cost and irnpro'e quality are to

Ie

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dL

gr,

tt ir

olt ori m(

ll rf

n .\l oI rf

lr

LL

\-e

a

a

a

Prac rribr auto Ethi, to gc

Tea As u' empl, rnost teami prodt ing dr ning' rvhen ideas r

Foi rolesi ager sl nlerlrs

:sTffiiffi,

[1s

;ts

:el ne

d- to gh in Jr- nd ree

;h- ro- lus

reduce absenteeism ancl turnover, providing the organization with a steqdy supply

,f *p"ii.".ed workers. In the pr"uiou, example of minimilis, some-emplqyers keep turnover and scrap rares low. Meeting those goals heips the minimills improve

pro'

ductivity, rvhich helps them earn more profits' ln a

'high-p..fo.**. tork ,yr,.*, the, outcomes of each employee and work

d;;;;ttr. . ,h* system's or,".uli high performance. The organization's indi'

viduals and groups *ork "ffl.i"r,tly,

provide high-quality goods and services, and so

"", ^"a ir-, rf,i, *uy, th.y contribute'to meeting the organization's goals' S/hen the

o.eJ;rio* adds o. ct anges goals, people are flexible and make changes as needed to meet the new goals.

Conditi0ns That Contribute to High Performance Certain conditions underiie the formation of a high-perfotmance work system:6

. Teams perform rvork. ' Employees participate in selection'. Employees receive io.*"l performance feedback and are actively involved in the

performance improvetnent process. . bngoing training is emphasized and rewarded' . il;i;Gr' ,e.,.uari, urrdto*p".rration relate to the company's financial performance' . fqrip-."t and work pro..rr", are structured, and technology is used to encourage

*"*i*rl* flexibility and interaction among employees' . Employee, puni.ip"i" in planning chang"s in equipment, layout, and work

methods. o \Uork design allows employees to use a variety of skills' . Employees"understand how their jobs contribute to the finished product or service' . Ethlcai behavior is encouraged.

Practices involving rewards, employee empowerment, and jobs with v4riety con'

tribute to hgh performance by giviqg employees skills, incentives, (nowledge'

;;;;;;*y-uid suti*f".tion, anor{er .ondition associated with high performance' Ethical behavior is a necessary condition of high performance because it contributes

i" g."a long.term relationships with employees' customers, and the pubiicr

Teamwork and EmPowerment As rve discussed in Chapter 2, today's otganizations empolver employees. They expect

employees to make more decisior-t. "bo".,t

how they perform their jobs. Qne of the

,ooit pop.rluf ways ro empower employees is to design work so that ir.is pe6formed by

reams. on a work ream, employ.", brir-rg together Various skills and expqtiences to produce goods or provide serrrices. The oiganlzation may charge the team rvith mak-

irrg d..iriom traditionally made by *"',ug!rr, such as hiriug team T".Tb.T and plan'

nir:-rg work schedules. Teamwork and empowertnent contribute to high performance

u,hJn they inprove job satisfaction and give the organization fuller use of errployees'

ideas and expertise. For emporverment to succeed, lnanagers must serve in linking and coordinating

trl;J";J;;ovide th. team with the resourceg it needs to carry out its work" The man- ag.r rhoul,l help the ream and its members interact with employees from other depart-

,ri"rlrc o, t."ro, "rrd

should make sure communication flows in both directions-the

CHAPTER 16 Creating and Maintaining High-Performance organizations 495

103 Ilescribe the conditions that create

a high-performance work system.

,nd rrk iat- ate :ib- the ess,

rVef

lto

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