To What Extent Do High Performance Work Practices Improve Organizational Performance - Coursework Example

To What Extent do High performance Work Practices Improve Organizational Performance? Introduction Employees play a critical role in the success of the organization. In the current globalized economy organizations are subjected to competition from well-established corporations around the world (Thornton, Rupp & Hoffman, 2014). Furthermore, increasing market liberalization and fluctuations in customer requirements are compelling the organizations to devise approaches for improving performance and competitiveness. In response to intense pressure from the global organizations, managers are focusing on building up strong staff that can increase performance and productivity. Managers perceive human resources as the highest operating expenses (Combs, Liu, Hall & Ketchen, 2006, P. 34). Furthermore, workers are “strategic drivers of value creation that can have significant economic effects on the overall organizational results. In order to improve business performance, there is a need to control the cost of human resources and improve their productivity. This is achieved through the deployment of high-performance work practices (HPWPs) based on the established organizational objectives (King & Wang, 2009a). This essay seeks to examine the extent to which implementation of HPWPs contributes towards organization performance. The scope of the article will also focus on various HPWPs adopted by the organizations and how they contribute to team performance. Considering that different organizations use various HPWPs to achieve desired outcome there is no single bundle of practices that can be recommended for any particular group for a particular outcome (King & Wang, 2009b). However, organizations use a mixture of bundles or particular bundles for a targeted outcome. Furthermore, a single practice can exert an effect on various levels of employee motivations. According to Ashton & Sung (2005. p.3), high-performance work practices refers to the “work practices that can be deliberately introduced in order to improve organizational performance.” HPWPs include employee’s appraisal, selective hiring, reducing status differentials, flexible working time and other activities that can contribute to the improvement in business performance. Although there are no specific HPWPs that can be recommended as the most essential for achieving effective performance most of the advocates of this model have a common believe regarding certain characteristics of HPWPs. For example, HPWP aims to improve performance through the deployment of practices which secure shared improvements for both workers and the organizations (Thornton et al., 2014). The managers treat workers as treasured assets and that the model encompasses bundling of practices which produce mutual gains that are greater than the summation of specific amounts. HPWP are purposefully introduced to achieve improved organizational performance. The knowledge about the effects of HPWPs contributions to organizations performance is essential to the employers because it determines the extent in which they can influence group performance in a better working environment (Guion & Highhouse, 2014). Hunan resource is about managing employees to achieve organizational performance according to the organizational goals. Studies indicate that human resource management is one of the hardest tasks in the management (Kozlowski, 2012, p. 123). There is rising concern among the researchers on how effective human resources can be managed to increase productivity and enhance the inventiveness while minimizing the cost (Thornton et al., 2014). This has led to the rise of a body of research known as strategic human resource management (SHRM) that is focused to determine how the human resource practices affect the overall outcome of organizations. SHRM values specific high-performance work practices as responsible for enhancing organizational performance. These include employee participation, flexible working arrangements, incentive compensation, worker participation, training and selectivity. “SHRM theory proclaims that these HPWPs increases employees knowledge, skills and abilities (KSAs), empower employees to leverage their KSAs for organizational benefit and increase their motivation to do so” (Combs et.al, 2006, p.502). Implementation of the HPWPs in the organizations contributes to increased job satisfaction, higher productivity, improved decision-making and lower workers turnover which contribute to improved organizational performance. In addition, HPWPs function through organization’s social internal structures to increase flexibility and efficiency (Kozlowski, 2012, p. 183). For instance, HPWPs such as flexible work designs and self-regulated groups brings together personnel who do not characteristically intermingle with one another thus aiding exchange of information and resources. HPWPs are categorized into three broad areas also known as “bundle of practices.” The three categories of work practices include “high employee involvement practices, human resource practices, and reward and commitment practices” (Ashton & Sung, 2005, P. 6). Various studies have shown that the modern organizations in UK and the rest of the world have adopted specific work practices to influence the organizational performance. Though some organizations have adopted more practices than others, studies indicate that those organizations that have used a combination of most of these practices have better performance than the organizations with fewer practices (Ashton & Sung, 2005, P. 8). This is because a combination of these methods results in greater employee involvement hence they are more efficient in providing satisfactory training provision, management of change, staff motivation and promoting opportunities for career growth. Furthermore, such practices result in more employees earning higher salaries and other financial incentives within the organizations. Some bundles of HPWPs work better than others in influencing specific performance (Cappelli & Neumark, 2001, p. 739). Furthermore, the specific work environment affects the particular bundles that can be applied to achieve desired performance. Human Resource Practices Most of the human resource practices focus on building human capital and skill formation in the organization. More skilled workers offer efficient performance to the organization and result to increased output. Building the capacity of employees is crucial to better productivity and employees’ creativity. Through human resource development (HRD) an organization provides appropriate training to the workers. The training is tailored to suit the group strategy with an aim of improving the productivity of employees who fail to meet the required performance standards (Thornton, Rupp & Hoffman, 2014). In addition, this helps in building the workers capacity to make better decisions and increase job satisfaction which translates to organizations benefits as a result of increased productivity and low workers turnover. Recruiting employees who possess both technical and cultural requirements is one of the most challenging tasks facing the human resource managers. Companies are focusing on hiring employees having the relevant skills to drive organizations performance (Gittell, 2009). For example, Aspect Capital recruits workers who have competence in programming and mathematics to carry out tasks in research and information technology (IT). Such competence is crucial for the company’s quantitative approach to hedge funds management and realization of new financial products (Thornton & Rupp, 2006). Considering the competitive nature of these careers, Aspect Capital offers attractive salary packages to attract those employees who have competence in the respective field. However, financial incentive alone is inadequate to attract and maintain a competent workforce because some employees value other aspects such as career growth and teamwork (Ashton & Sung, 2005). It is for this reason that Aspect Capital offers progress training to their employees as a prospect for future growth. Recruitment of selective competent workers is only used as a stepping ground for building a team of a skilled workforce. It is essential for managers to understand the various issues associated with management and the role they play in promoting the performance of the organization. They have to keep pace with the changes occurring at the workplace to ensure employees are performing efficiently and contribute to the betterment of the organization (Dutton & Golden-Biddle, 2012). The human resource personnel should ensure effective employees recruitment process and improve their performance in order to achieve better performance and increase employees’ productivity. However, sometimes the successfulness of employee recruitment is influenced by the human resource tools and their capability to survive in the working environment (Gittell & Godwyn, 2011). Therefore, hiring of competent workforce plays a critical role in achieving high-performance work practices. In addition to recruitment and selection of qualified workforce, the management should also ensure they offer incentive compensation and employee involvement and training in order to achieve high performance in the workplace (Dutton & Ragins, 2007). The technological advancement and changing nature of the global market oblige the organizations to exercise all necessary precautions to recruit and select competent personnel. Human resource development improves employees’ interpersonal skills, knowledge, and ability to perform according to organizations expectations. The human resource development promotes on the job training and development of workers (Farr & Tippins, 2013). The organization achieves on-the-job training and development through informal mentorship and coaching programs that bring together employees from diversified background. Since there is no coercion or threat to undergo, these training employees get motivated and develop a positive attitude towards their jobs which results in increased organization performance. It is imperative for the organization to strive to attract and select the best-talented employees because it is easier to develop their capability and make them valuable assets to the firm. Recruitment involves human resource activities to search for and acquire the most suitable candidate for the available positions (Ashton & Sung, 2005). Therefore, organizations should exercise much caution in order to ensure they obtain the most competent personnel who have skills that match the job specifications. Effective recruitment and selection process enables the organization to obtain and retain competent workers thus reducing rate of employees’ turnover. The challenge facing multinational corporations is the effort to obtain and retain skilled personnel in a dynamic environment by offering appropriate motivations. Despite the increasing unemployment across the globe, organizations have continued to experience shortage of a skilled workforce that can influence their performance (Ashton & Sung, 2005). It is apparent that human resources personnel have a hard task of acquiring and retaining competent workforce to achieve organizations performance. The nature of products and services the company deals with can motivate or demotivate the workers. For example, in the case of Aspect Capital they deal with complex financial products which require very competent personnel (Ashton & Sung, 2005). It is time-consuming and requires much care to ensure training provide the employees appropriate skills. Ensuring employees have relevant training involves company’s strategic plans and much efforts. For example, Aspect Capital offers external course on hedge funds and financial market to the new recruits in the research team. Furthermore, fresh graduates can spend some time in the Financial Engineering Team where they get an opportunity to learn the quantitative approaches the Aspect Capital uses to hedge fund management, various research areas and how they relate to sales team and investors’ expectations. The time employees take in research training offers the Aspect Capital an opportunity to prepare and fine-tune the employees’ competence with the company requirement (Ashton & Sung, 2005). Have attained this level the organization can boast to have a competent workforce which understands the goals of the organization and has what it takes to deliver the organizational requirements. Although employees have different talents, skills, and competencies, the organization has to recognize the significance of each employee as paramount for the success of the organization. It is for this reason that successful organizations have great regard for teamwork and focus on group achievements rather than individual achievement. For example, in Aspect Capital individual employees can join respective teams of IT, flight researchers, etc. and offer their contributions to the success of the organizations (Ashton & Sung, 2005). Having well-managed teams or work groups plays a crucial role in employee and organization performance. The teams must be headed by competent personnel who can influence change and unite other members. Workgroups contribute towards growth and development of the workers since individuals learn from each other, and they encourage each other to pursue organizational goals. The groups’ focus on their achievements results to improved organizational performance. Human resource managers provide employees motivation by ensuring job security, financial incentives, teamwork, and cooperation. These incentives are based on the philosophy of participation resulting in greater results and fewer conflicts between workers and their colleagues or employers (Ashton & Sung, 2005). The philosophy of teamwork is based on believing that employees working in a group can generate greater contributions than individuals performing similar tasks. The use of human resource, reward and management practices are considered to be superior tools to employee involvement practices. These provide better support for employees and promote organizational effectiveness (Krone & Putnam, 2006). Just as mentioned earlier some HPWPs work better in some firms than others depending on the nature of work environment. For example, in the financial sector the use of financial incentives seems to function better than in other departments. On the other hand, business services and manufacturing sectors rely more on high involvement practices (Macey et al., 2011). The top performing companies are the leaders in their industries. They tend to develop best practices for their employees instead of following the existing practices. Also, some firms adopt various practices right from the moment they are initiated to create business success (King & Wang, 2009c. However, these companies must modify their practices in line with the business goals in order to achieve desired outcome. Organizational leaders play a critical role in driving employees towards organizational performance. The corporate leaders have a role to play in developing skills of the employees which contribute towards improvement of performance. They equip employees with relevant skills focused and designed to accomplish exact specific business outcomes and level of performance. According to Machin and Wood (2005), all managers expect more than just technical skills from the workers. An example is the case of W L Galore where all recruits join induction programme where the managers expect them to follow a course in communication and listening skills which are regarded as crucial skills for the success of the organization. In another case, St. Luke’s which is an advertising agency emphasizes on learning and personal development as most the essential to sustain innovation and high skills levels vital for business growth. Therefore, employers develop policies that help in creating work environment in which employees can undergo training during their ordinary work and where they can enjoy the advantage of the system to influence performance and innovation. High Employee Involvement High employee involvement practices refer to the extent in which the employees interact with the employees or management. In an organization with a high level of employee involvement, there is an increased level of trust and interaction between the workers and their leaders (Noumair et al., 2013). In such organizations, the leadership recognizes the significant roles played by the employees and involve them in decision-making process. Through employees involvement, the organization empowers its workers and experts discretion to its workforce (Noumair & Shani, 2014). In such situations, the leaders have a trust in their workforce and are not much worried about the decisions they make. Furthermore, it gives the leaders an opportunity to focus on more critical issues such as expansion of business operations while employees take charge of other routine matters in the organization (Sparham & Sung, Nd). Therefore, as leaders share decision-making responsibilities with the employees, it creates mutual trust between workers and the managers. Consequently, the workers devote more effort towards increasing their productivity which results in improvement in overall performance of the organization. In order for managers to successfully run an organization, they require formulation of organization objectives and effective decision-making on how they can achieve those goals. However, the decision-making process involves approving the course of action to be undertaken in quest for achieving individual goals (Reynolds & Scott, 2010). This is mainly a prerogative of the upper administrative level within the organization. This is because managers are charged with the responsibility for making decision. Management involves working with people to achieve organizational goals. The leadership style influences the decision-making approach of the organization to achieve strategic objectives of the organization (Prien & Schippmann, 2003). This decision-making approach in the organization requires employee involvement. Therefore, although managers have the responsibility to make decisions they should always create a room to accommodate the views of other workers irrespective of the positions or ranks they hold in the organization (Prien & Schippmann, 2003). That will ensure the organization is in a better position to implement HPWPs by building mutual understanding of the organizational goals and objectives. The corporate managers can achieve improved organizational performance by ensuring workers are aware of what is required of them. They should be aware of the organizational goals and objectives and work towards achieving them. Management can use various approaches to ensure implementation of HPWPs in their organizations (Sofijanova & Zabijakin-Chatleska, Nd.). For example, they should ensure workers have adequate, relevant training. Employee training helps improve the knowledge, skills and attitude towards their specific tasks in order for the organization to achieve better performance in accordance with the set standards. The training practice involves an assessment of the needs of employee training and the specific areas they need to be trained to increase performance (Reynolds & Scott, 2010). The management should set the training objectives and expected standard of employees’ performance after achieving the training. It is for these reasons that management should plan carefully the nature of training which is essential for the employees (Schmitt, 2012). They should offer employees relevant training in order to achieve expected goals and improve employees’ motivation. In order to have adequate training, the manager should conduct an examination of training requirements by formulating goals of training and the required competencies after the employees have completed the training program. Since the analysis requires expertise, and it consumes time and money, it can be ineffective and lower motivation of workers if not implemented carefully (Ployhart, Schmitt, & Schneider, 2005). Therefore, managers should be careful when applying HPWPs in the workplace to take into consideration the factors that may affect employees’ motivation. Reward and Commitment Practices Reward and commitment practices is where the managers engage employees in sharing of business returns and organization ownership through options for buying shares and giving incentives based on the employees performance (Bierema, Dean & Gilley, 2013, p. 67). They motivate employees and create a sense of belonging and assurance to the organization. Such incentives and commitment links the workers with the organization and makes the workers devote more effort towards achievement of better performance as co-owner of the organization. According to Hertzberg’s theory of motivation, to work, financial incentives and better pay is a hygienic factor that can contribute to increasing in employee performance. According to Ashton & Sung (2005. p.3), the workers’ earnings has a positive correlation with the employee performance. Studies indicate that employee performance contributes better employees earning. Even if employees start working with small salaries the same increases with time as managers offer financial incentives for better performance. This implies that although some job seekers are attracted to the organizations that provide better remunerations this does not come automatically since the employee earning should be commensurate with their output. However, the desire to receive more salaries drives workers to increase their output towards achieving better performance. Better pay increases employees’ commitment to the organization hence increase in productivity (Cox, Higgins & Speckesser, 2009). However, even with better salaries there are other underlying factors that affect employees’ performance in an organization. For example, the work environment affects the employees’ relationship with the organization and affects their long-term commitment to the organization. The leadership plays critical role in motivating employees and promoting organizational performance. Leaders are involved in designing roles of the employees in an organization and collating or devolving various tasks in the organization according to their importance or order in which the organization intends to achieve them. Furthermore, leaders engage employees in making decisions within the organization (Combs, Liu, Hall, & Ketchen, 2006). Through employee involvement in the decision-making process, the team leaders build trust among the employees increases their level of commitment towards achievement of the organizational goals. For that reason, leaders are responsible for identifying business strategies and bundle of practices that can help deliver the desired outcome (Hunt, 2007). For example, in W L Galore the leadership influence in employee performance is an experience at various levels of management. They delegate the authority to make a decision to all workers and have a significant commitment to organizational principles. Another example is the case of Flight centre that applies egalitarian culture to promote the idea that everyone in the organization is a leader (Ashton & Sung, 2005. p.34). Therefore, organizational leaders are utilizing HPWP in the organizations to promote employee productivity and increase organizations performance (Dutton & Golden-Biddle, 2012). They do so by influencing organizational culture in which the employees work and determining the desired outcome thus motivating employees to contribute towards improving organizational performance. According to a survey conducted by the “Sunday Times 100 Best Companies to Work For 2004” about 93% of the employees had perception that leaders have significant impact in inspiring the workers (Ashton & Sung, 2005. p.16). Also, 90% of the employees confessed that they trust their colleagues have capacity to achieve excellent performance. They survey portrayed that although Aspect Capital is one of the companies with strict work environment based on high-performance expectations the employee rewards offer excellent job satisfaction to the employees (Ashton & Sung, 2005). This implies that the good employee rewarding system offers attract most competent employees who drive organizational performance. Some organizations value the relationship between leaders and the employees as work practices that can drive performance (Bierema et al., 2013). For instance, Bacardi-Martini a UK based company has developed its culture they refer as PACT (Productivity, Accountability, Creativity, and Teamwork) through which they use to judge the performance of their workers. The senior managers interact with the staff freely either during mealtime to have meals together or through “back to the floor approach” (Ashton & Sung, 2005. p.23). The latter is where the top managers get back to the working ground and start listening to other seniors and the workmates. The intention of these approaches is to bring the top managers close to the workers where they can listen keenly, share and understand the workers concerns. These close the gap between senior managers and junior workers thus resulting in employee motivation. Furthermore, the approach creates a sense of employees’ recognition (Cox et al., 2009). The employees enjoy various benefits such as free hot meals, sports facilities, final salary pension scheme, private healthcare, etc. The managers believe that offering employees packages of benefits creates an impression that a better performing organization is capable of creating job security and contribute to the welfare of employees and their families. Managers should implement practices that can influence increase employee performance and achieve desired outcome. In some industries such as manufacturing and business services, the managers are using high employee involvement practices to improve performance (Barbera, 2014). However, the manufacturing sector applies all the three bundles in order to achieve creativity and development of new ideas. On the other hand, business service industry uses human resource, reward and commitment to achieve creativity and generate new ideas. Irrespective of the bundle of practices used by the organizations to achieve creativity and create new ideas researchers advocate the importance of such practices in organizational performance (Hughes, 2008). Due to the competitiveness of the business environment around the globe organizations value the employees’ contributions towards innovation and generation of new ideas (Cooke, 2000). The achievement of organizational performance depends on its objectives. Creativity and new idea generation are an essential tool for achieving the organizational goals. Innovative organizations increase performance by creating customer satisfaction. Therefore, by increasing employees innovation and capacity to generate new ideas organizations have been able to increase their competitiveness through increased customer satisfaction. Recognition of individual performance contributes to employees’ motivation in the organization. Some companies offer financial incentives to individuals who have achieved excellent performance within a specific period. Individual recognition of employees is related to the organizational goals in order to ensure the cost of motivating employees supersede the incremental input of the respective employees hence the overall output of the organization (Guion & Highhouse, 2014). For instance, in the famous case of Aspect Capital the company has a Quarterly Individual Bonus (QUIB) for effective planning (Ashton & Sung, 2005. p.47). Under this bonus program, the company establishes objectives for each department which are agreed by employees. Each undergoes peer review based on specific characteristics to determine individual contributions 50%, and they invest the same in assortments of Aspect funds. These practices may enable the organization to establish a balance attaining the target performance and other issues such as communication, people management skills and teamwork (Cristini, Eriksson & Pozzoli, 2012). The use of financial incentives in employee motivation enables the organization to influence performance of the organization on a fair ground where both employees and the organization enjoy the input of the workers. Through setting of performance standards acceptable to the organization, it ensures that workers whose performance if below the set standards do not continue offering their services to the organization. Such employee motivation practices ensure employees can enjoy working for the organization and at the same time the organization continues to benefit from increasing performance. Other practices such as training, selectivity and information sharing assist in establishing shared mental models among the workers. However, motivation of employees does not automatically translate to improved organization performance because various hindrances. For example, most employees are unionized thus the workers unions influence the motivation approaches used by the organizations without considering the effects it will have on the organizational performance (Barbera, 2014). For instance, unions have bargaining power that results to better financial incentives to the workers and better working environment without considering their contribution to the organization. Also, government regulations, workforce diversity, wage inequality, environmental concerns affect economic development and innovations. Therefore, employees’ motivation approaches should take into consideration the benefit of the HPWPs to the individual employees and the organization (Cappelli & Neumark, 2001). Furthermore, the approaches should take into account other factors such as government regulations, the level of economic development, environmental sustainability and diversity of the workforce. Conclusion HPWPs improve organizations performances in two main processes. For instance, the practices provide employees with knowledge, skills and abilities essential for performance of job tasks while creating opportunities and offering motivation to do so. In addition, these exercises improve the organization’s internal structure thus promoting formation exchange and collaboration among the workers. Collectively, these practices create job satisfaction and improve employees productivity and decision-making ability. Furthermore, implementation of HPWPs increases employee satisfaction and reduces employees’ turnover thus resulting in improving employees productivity and organization performance. Organization managers believe that the collective and synergic effects among underlining bundles of HPWPs can leverage positive workplace outcomes. However, studies indicate that the impact of these bundles of practices has varying effects on organization performance depending on sector and product market strategy. Managers use a mixture of bundles to influence the employee input and groups output. For example, development of employee leadership qualities has great significance in influencing organizational performance. However, studies indicate that various organizations apply different approaches to developing employee leadership. For example, some organization use human resource and reward and management as is the case of manufacturing, wholesale and retail industries. 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