Introduction
In the recent decades, the business landscape around the world is becoming highly competitive, and dynamic in nature. Corporations, big and small, have no much choice but to become high performance organizations in the ever competitive business environment. Consistent with such trends and needs, companies are forced to become more performance oriented (Adams-Bloom, 2009). There are many theories and ideas on how to become a high performance corporation or organization, and one of these theories are through implementation of high performance work practices in organization (Etchegaray, 2011). In this article, the various examples and discussions on high performance work practices as well as its importance to organizational success, growth and performance in the competitive marketplace will be discussed. It will be argued that organizations, particularly manufacturing firms, must take the opportunity to adopt High Performance Working (HPW) practices in order to become more successful companies in the future.
Defining High Performance Work
Depending on the perceptions of the researchers or authors, the word ‘performance’ can be defined from various perspectives. In this article, a more comprehensive definition for high performance work practices will be adopted. Here, high performance work practices are referred to those work practices that can be implemented to significantly enhance organizational performance. However, it is also worth to mention that the general popular definition of high performance work practices is often referred to as a set of complementary practices that cover three of the following areas: (a) significant employee involvement practices, (b) the effective human resources practices, and (c) reward management practices (Connolly et. al., 2007). All of these practices in these areas are crucial for organizational performance, as it is not hard to observe that these practices ultimately affect the employees’ performance, commitment and motivation. When people are managed properly and allowed or leaded to perform at their best, to expect a high performance work organization is not something unreasonable.
Literature Review
‘Best-Fit’ versus ‘Best-Practices’
The theories, ideas and arguments about human resources and strategy are complex. In the field of strategic human resources management, there are various perspectives on how organizational success and performance can be achieved. Often, this lead to different school of thought in terms of best human resources management policies. One of the popular perspective on effective human resources management practices or policies are the ‘best-fit’ perspective. According to such perspective, it is argued that the many policies or practices in a firm should be designed in a way mutually supportive and internally consistent with the broad organization strategies, mission and vision. For example, when the human resources management policies are aligned properly to the organization strategies, the firm can attain competitive advantage as the organizational system and policies in the organization are supporting the implementation of intended strategies of that organization in the competitive marketplace (Kaarsemaker et. al., 2006). From another perspective, another perspective, namely the ‘best practices’ perspective suggest that there are certain human resources policies (which include the practices on reward system, employees affairs and many others), that when rightly implemented, can lead to motivated and committed workforce, which in turn will lead the organization towards better performance and success (Gittell et. al., 2010).
As can be seen above, both the argument, either the ‘best-fit’ or ‘best-practices’ are logical and make sense. Depending on the context, it is not hard to find the supporting cases to support the respective arguments. No matter how the arguments are structured, both the perspectives seek to explain the ways in which effective human resources practices and policies can be structured to superior organizational performance. However, there are distinctive differences between the two different ideas. According to the ‘best-fit’ perspective, the formulation of human resources policies and system should firstly consider the organizational strategy. It is highly important for the human resources strategies to match the intended strategies to be implemented, or the strategic directions of a particular organization. It is only after the human resources policies and system are linked to the organizational strategies, high performance is possible. Such a view emphasize on the importance of organizational strategies, because the strategic directions outlined by a firm will be influential towards the best policies and system to be implemented in a firm. In other words, business strategies will drive the other aspect of organization policies as well as human behaviors in a firm.
From another perspective, the ‘best-practices’ view argued that there are certain best practices that must be incorporated into the organization policies, for example, to the human resources management reward system to ensure effective policies being implemented for better organizational performances. Under such a view, organizational strategies are not being emphasized, in the formulation of best practices in organization. This is because when the best practices are being adopted, the talented people in the organization will be motivated and induced to perform at their best (Bae et. al., 2011), and ultimately formulating the relevant organizational strategies for the firm to compete in the complex and dynamic business environment. Ultimately, such a condition will contribute to the attainment of competitive advantages by the firm. Instead of ensuring the mutually supportive and fit between human resources practices to the organization strategies, the mutually compatibility of the various human resources practices are discussed instead (Young et. al., 2010). For examples, the many human resources management practices, such as employee selection, training and development, employment compensation, reward or punishment system, industrial relations, as well as performance management and appraisal system, must be congruent and consistent. When all of these practices are consistent and effective, people can be motivated and become more committed to perform at their best for organizational success and performance in the future.
At first glance, both the theories are contradictory in nature. However, common sense would inform us that both of the views are valid in the real business environment. Depending on the situations, different view may hold true and more viable to contribute to organizational performance. For example, when the management is very certain about the future and the corresponding organizational strategies to be implemented, the ‘best-fit’ view is relevant for the organization. However, when the business environment is too dynamic for any viable long term fixed strategies to be formulated, the ‘best practices’ may be more viable. Both perspectives can be conflict as well. Under the ‘Best Fit view, it can be assumed that the best human resources policies should change according to the organizational strategy. However, under the ‘Best Practices’ view, the respective human resources practices should be universal in nature, as the changes in organizational strategies should not change the already effectively implemented best practices in the organization. Anyway, it can be also viewed that both the ideas can be combined. In many instances, the human resources policies should not conflict with the overall organizational strategy, while at the similar time, should adhere to the best practices discovered by researchers or known to the practitioners. In deeper investigation, it can also be found that no matter which perspective it is, it is argued that congruency is important. Under the ‘Best-Fit’ perspective, both the organizational strategies and human resources policies should be congruence; while under the ‘Best-Practices’ perspective all the human resources practices should be consistent with each others. Thus, it can be induced that in the formulation of best and effective human resources system, policies and practices, the internally consistency and congruency of the various elements of organization strategies and system are crucial.
The Best Performance Work Practices
Under the theoretical framework of Best Performance Work Practices, the best human resources management practices can be separated into three areas, namely: (a) high involvement, (b) human resources practices, and (c) reward and commitment. In the following paragraphs, these areas will be discussed in greater depth.
High involvement. High degree of employee involvement is often perceived as good human resources practices, as employee involvement will enhance the employee commitment towards the job, as well as may well result in greater employees satisfaction (Camps et. al., 2009). Besides, high degree of employee involvement will also often enhance the trust between employees and management, through sincere and constructive communication process. In the era whereby the business environment is so dynamic in nature, high degree of employee involvement is often critical to the success of an organization as it will also empower the employees when they are highly involved in the decision making and implementation process in the organization (Wei et. al., 2010). Not only is that, if the human resources practices are properly implemented, high degree of employees involvement will definitely improve employee’s motivation in workplace. In order to implement the human resources practices for high degree of employee involvement in an organization, several human resources practices can be applied. For example, it is always good practices to circulate important information, such as organizational strategy and performance in a timely and open manner to the employees; having a staff suggestion scheme to collect feedback from the staffs; implementation of total quality management system; cultivating or training up self-development or self-directed team; encourage communication across functional teams; or to adopt the continuous improvement practices in workplace (Wood et. al., 2011).
Human resources practices. In the context of human resources practices, the widely discussed issues are about practices implemented or designed to develop human capital in the organization, in order to enhance the skills, competencies or the attitudes and behaviors of the people working in the organization. All these practices are closely related to the training and development function of the organization. It cannot be denied that developments of the employees are crucial because as the employees have become more competent, more capable and able to perform in a superior manner, the organizational performance will surely be enhanced (Bayo-Moriones et. al., 2010). For example, when the employees are trained to become more customers centric and adopt a better attitudes and mindset in serving customers, the services quality of the organization will be improved. As the customer service quality is enhanced, the organization performance, be it from the reputation or profitability perspective, can sooner or later be increased. Thus, it is very crucial to ensure that employees are well-trained and competent in delivering the proper services to fulfill customers’ needs, expectations and requirements. There are many human resources practices that can be implemented to enhance employees’ competencies as discussed above. For example, employee performance appraisal should be designed in a way to shape the intended employees behaviors and mindset (Zhang et. al., 2009). If the company require service oriented employees, management should appraise the service quality provided by the employees to the customers. When this is done, then it is possible for the management to shape the relevant desired behaviors among the workforce. Besides, having formal feedback session is also critically important. It is important practices to obtain constant feedback from the customers, and to ensure that the employees are informed on the customer’s perception on their services and attitudes. With such practices, employees will be guided by the customers to provide better services to fulfill the customers’ needs and requirements, which is a very important element to ensure better organizational performance in the future. Apart from that, the feedback session between employees with the management team is also very important; as such feedback session will provide the medium and opportunities for each others to understand each other’s expectations and opinions.
In fact, there are also arguments that one of the most crucial and important human resources practices is to have stringent employee selection and recruitment practices (Messersmith et. al., 2010). It is argued that for the organization to perform well, it is important to put the right people at the right place in the right time. Besides, it is also commented that by putting the right people in the right position is the essential art of leadership, as the right candidates will be able to perform the job in a satisfactory manner, with minimal supervision. This will effectively reduce the burdens on the management or leader in the organization. Apart from that, it is also very crucial to have best practices on training and development program in the organization, to enhance the employees’ skills, behaviors and competency under the dynamic business environment. Some other best practices in the context of human resources include: best practices on job design, workforce diversity, programs for continuous development, mentoring system in the organization, as well as any other sort of business models or practices to assist the workforce to perform at their best.
Reward and commitment. Reward system is one of the very important elements in terms of human resource management, as it will ultimately affect how workforce behave, and hence the competitiveness of the organization (Guthrie, 2009). There are many types of reward system. Generally, rewards can be separated into monetary reward or non-monetary rewards. Monetary reward will include salaries, bonuses, stock option, and performance related compensation or profit sharing scheme. In contrast, non-monetary rewards, often very powerful and effective in nature, can include recognition of good works by the employees, employees’ benefits and entitlement, as well as other sort of facilities provided to workforce in workplace. The best practices or effective reward structure is critical, as irrelevant or ineffective reward system will definitely affect the employees behaviors and hence their performance. For example, when employees are rewarded for meeting as much as new prospects, the employees may as well meet as much people as possible to be rewarded, instead of closing the deal, which is a more important and impactful event for the organization.
Apart from that, Pfeffer’s list of seven Human Resources practices for attaining competitive advantage via people management is also often cited ‘best practice’ theory. According to Pfeffer’s list, the seven best human resources practices include: employment security, selective hiring, self-managed team, high compensation contingent on corporate performance, extensive and comprehensive training, reduction of status differences and lastly, sharing of ideas and resources. However, as discussed before, some researchers perceive that best practices are too simplistic, and a common set of best practices can hardly be effective in human management across all types of organization. Thus, under the best-fit point of view, the best-practices are suffering from the following issues: (1) the human practices under the best-practices view may not be aligned with the workforce interests, or even consistent with the social norms or certain legal requirements in certain nations; (2) the best practices view is too simple guidelines, as the business landscape and the organization settings can be more complex (for example, to attain competitive advantage may not be necessary or can be done via those traditional strategy of innovation, cost reduction or quality enhancement); and (3) the best-practices view focus too much on enhancing existing competitive advantage, rather than to be responsive to ongoing situational changes.
Examples of Organizations Adopting High Performance Work Practices
In this section, several organizations, known to have adopted high performance work practices, which have been achieving remarkable organization success and performance, will be discussed. In order to illustrate the importance of High Performance Work Practices in the country, four organizations will be presented; whereby two of the cases will be from the services oriented industry, while another two companies selected are from the manufacturing industry. These companies will be discussed in the following paragraphs.
Aspect Capital. Aspect Capital is a financial services provider firm located in UK. There are a total of approximately 70 employees in the company. In UK, the company is famous for its ability to generate high level of returns on investment in the hedge fund category (McIntosh, 2006). The investment strategies employed by the firm is through quantitative investment techniques (Davis, 2008). The key reasons enabling the company able to achieve such a high performing status is through effective management of people and technology. For example, from the employee involvement perspective, the company has a people culture, which is implemented through a ‘cultural plan’. The company also has effective human resources practices, particularly in the job scope design and performance appraisal. The company has effective practices that demand employees to go all round in training. The company has a comprehensive training and development system, whereby employees are put under on the job training and to undergo job rotation to familiarize with the other areas in the operations of the company. The performance appraisal is also comprehensive. For example, the company appraises the employees against nine attributes, which are designed specifically to be consistent with the attributes the company demands off the workers. In fact, the nine attributes are used to shape the organization culture intended by the management. Besides, the nine attributes is designed to counter the hedge fund industry tendency to use only high pay to attract smart people. Besides, the company is also having unique reward system, which is the Quarterly Individual Bonus, or more specifically named as QUIB. Under the system, both financial and non-financial rewards are provided. For example, besides providing good pay to the employees, the company also recognizes the outstanding employees in meeting.
Bacardi & Martini UK. Bacardi-Martini UK is a famous drinks manufacturer (Mason, 2001). The company is one of the famous market leaders in the beverage segment, producing ‘ready to drink’ products. Accordingly, the company achieves great success through managing change as well as adoption of innovation (Maling, 2009). Besides, the company able manages the people effectively due to its value-based and people culture. There are many effective practices employed by the company. For example, the management consciously removes the communication barriers between senior and shop floor workforce, so that to enhance the trust and communication effectiveness between people in the organization. Besides, the company also has a value-based principles or guidance in the organization to guide and reward the employees. In many instances, the employees are expected to exercise some degree of maturity on decision making, with those organizational values as guidance on how to behave in the dynamic business environment. The organizational values are also used for recruitment purposes, whereby candidates are access if they able to cope with these values, before being selected to join the company. Not only that, the training programs are also tailored specifically, as all the materials are incorporated with the organizational values. Not only is that, the company also establish a profiling system that coordinate the recruitment, progression, training and career improvement of the employees in the organization. Overall, all the many human resources related practices are designed in a mutually supportive and internally consistent manner.
Timpson. Timpson is yet another great example on how best practices can enable organizational success in the dynamic and competitive business environment. It is a good example, to proof that even for business operating under the old economy, such as high street shoes repair and key cutting, one that Timpson is operating in, can still achieve extraordinary success through high performance work practices. Started with its humble beginning, Timpson transform itself from a family business into multi-product high street shop (Moules, 2007), through a people oriented strategy for excellent customer satisfaction and organizational performance. Timpson adopt the upside down management philosophies, in order to create strong leadership, for employees’ empowerment as well as outstanding customers’ services (Graham, 2009). In order to engage employees, the company employ company newsletter to recognize those outstanding employees; while at the same time create the internal competition between stores under the company. Besides, in house trainings are also provided for the employees. Not only is that, the company also has a strict performance related pay structure, to reward the workforce fairly and accordingly (Bridge, 2008).
WL Gore. WL Gore is the Gore-Tax manufacturer with approximately 400 employees. The company is famous for innovation of the globally used high performance fabrics; that are used in several industries, including industrial, fashion, leisure, electronics as well as medical related segment (Chubb, 2008). The company has a strong organizational culture, and with that organizational culture, the employees are managed effectively. In order to engage the workforce, the company has been utilizing autonomous team as well as adoption of kaizen improvement system. From another perspective, the company is also adopting many types so continuous improvement methods in order to define and enhance the best manufacturing as well as human resources related practices in the organization. Most important, in the performance oriented firm, the employees rewards and compensation is arranged to be 100% related to performance so that particular employees.
Business Performance and Other Factors
It is also worth to mention that the discussion presented above, on High Performance Work Practices may be simplistic in nature. In reality, there are also many other factors affecting the organization performance (Frenkel et. al., 2010). For example, the discussions above largely ignore the environmental or the external forces that may affect the performance of an organization. For instance, in the external environment, as according to the PESTLE framework, possible factors affecting the organizations including political, economic, social cultural, legal, technological and environmental factors. From a different perspective, as outlined by the famous Porter Five Forces framework, the five forces possibly affecting the organizational performance include rivalry among existing competitors, bargaining power of buyers, bargaining power of suppliers, threats of new entrants, and threats of substitute products. Thus, it can be seen that the analyses presented in section above are largely concentrated on the internal perspective of a firm. In fact, from the internal perspectives, other factors possibly affecting the performance of a firm include the marketing, financial management, strategic as well as operational management policies in the firm (McBride, 2008). Thus, it is crucial to understand that the determinants affecting organizational performance are a highly complicated one. Although human resources related best practices are one of the very important elements not to be ignored by the management for superior corporations’ performance, the other aspect that may affect organizational performance, as discussed above, should also never be neglected by the management.
Conclusion
As a concluding remark, it can be confidently commented that this essay has already demonstrate the importance of high performance work practices to organizational success and performance. It is shown that many academic researchers have been proofing or finding strong relations between organizational success and performance to the adoption of high performance work practices (Boxall et. al., 2007). Several examples are also provided. In many of the examples, it can be seen that the many high performance work practices can be implemented through a relevant and strong supporting organization culture, proper people management policies and practices, as well as the consistency of high performance work practices to the organizational goals and objectives. It can be see that the many factors of human resources practices should be linked to the performances of employees, which in turn determine the organizational performances. The many high performance work practices can be categorized as the reward practices, human resources practices as well as the practices to engage employees. All these indicate that the high performance work practices, once found and adopted, will be able to bring the company to greater heights. As shown in the cases above, different companies have different high performance work practices, depending on the organizational business nature as well as the management focus. However, several effective human resources practices are universal. For example, comprehensive recruitment, reward system and performance appraisal are not something can be missed. It is very crucial to select the best candidates, and to ensure the newly employed worker able to fit into the organization. Besides, it is also important to ensure fair and performance based reward system, so that employees will work in a more effective manner. All of these are high performance work practices worth researched by management for them to adopt in their respective organization, in the path to become a truly high performing organization in the every competitive and challenging business environment today.
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