What three conditions underlie the formation of a high-performance work system

Presentation on theme: "Chapter 16 Creating and maintaining high- performance organizations"— Presentation transcript:

1 Chapter 16 Creating and maintaining high- performance organizations
Fundamentals of human resource management 5th edition By R.A. Noe, J.R. Hollenbeck, B. Gerhart, and P.M. Wright Chapter 16 Creating and maintaining high- performance organizations Does HRM really help an organization meet its business goals? This chapter summarizes the role of HRM in creating an organization that achieves a high-level of performance, measured in such terms as long-term profits, quality, and customer satisfaction.

2 Need to Know High-performance work systems and their elements and outcomes. Conditions that create a high-performance work system. How HRM can contribute to high performance. Role of HRM technology in high-performance work systems. Ways to measure the effectiveness of HRM. After reading and discussing this chapter, you need to know:

3 High-Performance Work Systems
High-performance work system – right combination of people, technology, and organizational structure that makes full use of the organization’s resources and opportunities in achieving its goals. Each of these elements must fit well with the others in a smoothly functioning whole. The challenge facing managers today is how to make their organizations into high-performance work systems.

4 Figure 16.1: Elements of a High-Performance Work System
As shown in Figure 16.1, in a high-performance work system, the elements that must work together include: Organizational structure Task design People (the selection, training, and development of employees) Reward systems Information systems Human resource management plays an important role in establishing all of these.

5 5 Elements of a High-Performance Work System
Organizational structure: way organization groups its people into useful divisions, departments, and reporting relationships. Task design: determines how details of the organization’s necessary activities will be grouped, whether into jobs or team responsibilities. People: well suited and well prepared for their jobs. Reward systems: encourages people to strive for objectives that support organization’s overall goals. Information systems: enables sharing information widely.

6 In a high-performance work system, all the elements – people, technology, and organizational structure – work together for success. 16-6

7 Outcomes of a High-Performance Work System
Outcomes of a high-performance work system include: higher productivity and efficiency that contribute to higher profits high product quality great customer satisfaction low employee turnover

8 Figure 16.2: Outcomes of a High-Performance Work System
Outcomes of a high-performance work system include higher productivity and efficiency. These outcomes contribute to higher profits. A high-performance work system may have other outcomes, including: High product quality Great customer satisfaction Low employee turnover

9 Outcomes of a High-Performance Work System
Outcomes of each employee and work group contribute to the system’s overall high performance. Organization’s individuals and groups work efficiently, provide high-quality goods and services, etc., and contribute to meeting the organization’s goals. When the organization adds or changes goals, people are flexible and make changes to as needed to meet the new goals.

10 10 Conditions that Contribute to High Performance
Teams perform work. Employees participate in selection. Employees receive formal performance feedback and are involved in performance improvement process. Ongoing training is emphasized and rewarded. Employees’ rewards and compensation relate to company’s financial performance. Equipment, work processes and technology encourage maximum flexibility and interaction among employees Certain conditions underlie the formation of a high-performance work system as listed.

11 10 Conditions that Contribute to High Performance
Employees participate in planning changes in equipment, layout, and work methods. Work design allows employees to use variety of skills. Employees understand how their jobs contribute to finished product or service. Ethical behavior is encouraged. Practices involving rewards, employee empowerment, and jobs with variety contribute to high performance by giving employees skills, incentives, knowledge, autonomy—and satisfaction, another condition associated with high performance. Ethical behavior is a necessary condition of high performance because it contributes to good long-term relationships with employees, customers, and the public. Also, teamwork and empowerment contribute to high performance when they improve job satisfaction and give the organization fuller use of employees’ ideas and expertise.

12 Learning Organizations
Learning organization – an organization that supports lifelong learning by enabling all employees to acquire and share knowledge. Employees have resources for training, and they are encouraged to share their knowledge with colleagues. Managers take an active role in identifying training needs and encouraging the sharing of ideas. For more than a decade, managers have been interested in creating a learning organization, that is, an organization in which the culture values and supports lifelong learning by enabling all employees to continually acquire and share knowledge.

13 5 Key Features of Learning Organizations
Continuous learning – each employee’s and each group’s ongoing efforts to gather information and apply the information to their decisions. Knowledge is shared – one challenge is to shift the focus of training away from teaching skills and toward a broader focus on generating and sharing knowledge. Critical, systematic thinking – is widespread and occurs when employees are encouraged to see relationships among ideas and think in new ways. Ultimately, people are the essential ingredients in a learning organization. They must be committed to learning and willing to share what they have learned. A learning organization has several key features as listed.

14 5 Key Features of Learning Organizations
Learning culture – a culture in which learning is rewarded, promoted, and supported by managers and organizational objectives. Employees are valued – the organization recognizes that employees are the source of its knowledge. It therefore focuses on ensuring the development and well-being of each employee. The organization recognizes that employees are the source of its knowledge. It therefore focuses on ensuring the development and well-being of each employee.

15 Passion and occupational intimacy
Passionate people are fully engaged with something so that it becomes part of their sense of who they are. Feeling this way about one’s work has been called occupational intimacy. HR has a significant role in creating these conditions In a recent survey, only about half of employees said they love their job and that their company cares about them. In spite of a slow economy, almost four in ten said they intended to look for a new job. But whether or not they intend to stay, solid majorities said they would work harder if their employer better recognized and appreciated their efforts. Some organizations are moving beyond concern with mere job satisfaction and are trying to foster employees’ passion for their work. Feeling this way about one’s work has been called occupational intimacy. People experience occupational intimacy when they love their work, when they and their co-workers care about one another, and when they find their work meaningful. HR managers have a significant role in creating these conditions. For example, they can select people who care about their work and customers, provide methods for sharing knowledge, design work to make jobs interesting, and establish policies and programs that show concern for employees’ needs, increasingly important for employee empowerment, teamwork, and knowledge sharing to build flexible organizations.

16 Test Your Knowledge Charlotte is a manager overseeing the work of a team. Which of the following behaviors would empower the team the least? Opening lines of communication between the team and other groups within the organization. Directing the team and monitoring their day-to-day activities. Ensure the team has the resources they need. Keep the team informed as new, relevant information becomes available. Charlotte is a manager overseeing the work of a team. Which of the following behaviors would empower the team the least? Opening lines of communication between the team and other groups within the organization. Directing the team and monitoring their day-to-day activities. Ensure the team has the resources they need. Keep the team informed as strategy changes or new, relevant information becomes available. Answer - B

17 Test Your Knowledge Kamran has worked for the same company for 3 years, is enthusiastic and passionate about his work, hasn’t missed a day in two years, and has several close friends he enjoys working with. Which of the following best describes Kamran? He is satisfied with his job. He is empowered. He is experiencing occupational intimacy. He is probably going to quit soon. Kamran has worked for the same company for 3 years, hasn’t missed work in two years, and has several close friends he enjoys working with. Which of the following best describes Kamran? He is satisfied with his job. He is empowered. He is experiencing occupational intimacy. He is probably going to quit soon. Answer - C

18 ETHICS Organizational systems can promote ethical behavior, including
a written code of ethics performance measures that include ethical standards swift discipline for misdeeds channels for employees to seek help training in ethical decision making Ethical behavior is a HRM concern. Systems that promote ethical behavior include such HRM functions as training, performance management, and discipline policies. A reputation for high ethical standards can help a company attract workers—and customers— who share those high standards Many efforts can be started or be supported by HR. Creating a climate of trust provides a strong foundation for all kinds of business relationships, including purchase contracts, labor-management agreements, and employees’ confidence in the fairness of supervisors’ decisions. People are more likely to trust an organization, manager, or employee when they see evidence of competence, openness and honesty, concern for stakeholders including employees and the community, reliability in keeping commitments, and identification with the organization so that an individual’s values match up with the values expressed by the organization. HR professionals can provide performance feedback, training, coaching, and rewards to foster the development of many of these drivers of trust. Job design in which employees are empowered to deliver excellent customer care, make well-crafted products, or deliver other valued outcomes helps to align individual practices with an organization’s highest Values. To maintain an ethical culture, ethical conduct should be defined and ethical abuses responded to and punished when detected. Ethical conduct should be rewarded. Employee development programs should include goals for trust-building. HR professionals can support these objectives with performance measures and pay policies that reward ethical conduct, never ethical lapses.

19 Table 16.1: HRM Practices that Help Organizations Achieve High Performance
Management HR plays a critical role in determining companies’ success in meeting the challenges of a rapidly changing, highly competitive environment. Table 16.1 list examples of HRM practices that contribute to high performance. HRM contributes most to building high-performance organizations when HR professionals understand the goals of the business and clearly demonstrate how they can help achieve those goals. As provided in text’s HR How To box, six other ways that HR professionals can collaborate better with line managers and top executives include: Learn about the organization’s business. Follow and analyze the trends affecting the business. Avoid using HRM jargon when talking to the organization’s leaders. If HR professionals have not been included in strategy or planning meetings, identify specific contributions the profession can make to achieving strategic goals. Communicate honestly and respectfully. Be assertive in expressing the value of effective HRM.

20 Performance Management
Each aspect of performance management should be related to the organization’s goals. Business goals should influence the: kinds of employees selected and their training requirements of each job measures used for evaluating results The organization: identifies what each department must do to achieve the desired results defines how individual employees should contribute to their department’s goals In a high-performance organization, employees know the organization’s goals and what they must do to help achieve those goals. HR can contribute to this ideal through the design of the organization’s performance management system.

21 Figure 16.3: Employee Performance as a Process
To set up a performance management system that supports the organization’s goals, managers need to understand the process of employee performance. As shown in Figure 16.3, individual employees bring a set of skills and abilities to the job, and by applying a set of behaviors, they use those skills to achieve certain results. The organization’s goals influence each step of the process. The organization’s culture and other factors influence the employee’s abilities, behaviors, and results.

22 Performance Management
Guidelines to make the performance management system support organizational goals: Define and measure performance in precise terms. Link performance measures to meeting customer needs. Measure and correct for the effect of situational constraints. Organizations can reinforce the impact of this kind of performance management by linking compensation in part to performance measures Organizations can increase empowerment and job satisfaction by including employees in decisions about compensation and by communicating the basis for decisions about pay.

23 HRM NEW Technologies Transaction Processing: Computations and calculations used to review and document HRM decisions and practices, including documenting employee relocation, payroll expenses, and training course enrollments. Decision Support Systems: Systems designed to help managers solve problems that usually include a "what if" feature. Expert Systems: Computer systems incorporating decision rules of people deemed to have expertise in a certain area. Relational Databases: Stores data in separate files that can be linked by common elements. Organizations depend on HR to help prepare employees for training, career development, performance management, and benefits packages that meet the need for flexibility and help employees manage stress. HR can improve their own and their organization’s performance by appropriately using new technology. New technology usually involves automation and collaboration —that is, using equipment and information processing to perform activities that had been performed by people and facilitating electronic communication between people. Transaction processing includes documenting employee relocation, payroll expenses, and training course enrollments. Summarized information can be provided for government reports such as EEO‑1. Companies can automate aspects of job design, such as schedules, delivery routes, and production layouts. Online appraisal or talent management systems provide data that can help managers spot high performers to reward or types of skills where additional training is a priority. Many types of training can be conducted online.

24 HRM Online: E-HRM Improving HRM effectiveness through online technology. Speed requirements of business force HRM managers to explore how to leverage technology for delivery of HRM activities. With Internet technology, organizations use E- HRM to let all employees help themselves to HR information whenever needed. E-HRM uses social media applications. Cloud computing enables access to information that’s delivered on demand from any device 24/7. E-HRM combines company-specific information on a secure intranet with links to resources on the Internet. Most administrative and information-gathering activities in HRM can be part of e-HRM. As Internet use has increasingly taken the form of social-media applications, e-HRM has moved in this direction as well. Social media bring networks of people together to collaborate on projects, solve problems, or socialize. Social-media applications for HRM include YouTube access to instructional videos, Facebook-style networking sites where employees can share project updates and ideas for improvement, Web pages where employees can praise peers’ accomplishments and deliver rewards, and crowdsourcing tools for performance appraisals. Social media can promote teamwork by providing an easy means of collaboration, and for recruiting over great distances social media allow virtual job fairs and/or selection interviews. An essential part of the HR professional’s job involves communicating with employees about company policies and benefits. Traditionally, those messages have been distributed in , displayed on posters, and presented in meetings. But more employers are also using social media to deliver messages aimed at building involvement and promoting collaboration. A recent survey found that about three-quarters of employers have a presence on social media, and 40 % use it for communicating with employees. Some companies are offering access to online coaching. Cloud computing involves using a network of remote servers hosted on the Internet to store, manage, and process data. These services are offered by data centers around the world (and not within an organization’s offices) and are collectively called “the cloud.” These services offer the ability to access information that’s delivered on demand from any device, anywhere, at any time.

25 Measuring HRM Effectiveness
Customer-oriented approach to HRM HRM audit Analyzing the effect of HRM programs HRM audit – a formal review of outcomes of HRM functions, based on identifying key HRM functions and measures of business performance. may look at any other measure associated with successful management of HR, e.g., legal compliance, safety, labor relations

26 Customer-Oriented Perspective of HRM
Who Are Our Customers? Line managers Strategic planners Employees What Do Our Customers Need? Committed employees Competent employees How Do We Meet Customer Needs? Qualified staffing Performance Management Rewards Training and Development In recent years, HRM at some organizations has responded to the quest for total quality management by taking a customer-oriented approach. Taking this customer-oriented approach, HRM defines its customer groups, customer needs, and the activities required to meet those needs. This slide is adapted from Table 16.2 in the text.

27 Table 16.3: Key Measures of Success for an HRM Audit
Table 16.3 lists examples of key measures of success for a variety of HRM functions: Staffing Compensation Benefits Training Employee appraisal and development Overall effectiveness

28 Analyzing the Effect of HRM Programs
HR should be able to improve their performance through some combination of greater efficiency and greater effectiveness. Greater efficiency – HR uses fewer and less-costly resources to perform its functions. Greater effectiveness – what HR does has a more beneficial effect on employees and the organization’s performance. HR analytics measure HRM efficiency and effectiveness. Computing power available to today’s organizations, coupled with people who have skills in HR analytics, enables companies to find more ways than ever to identify practices associated with greater efficiency and effectiveness. For example, organizations can measure patterns in employees’ social networks—who is talking to whom, how often—and combine that with performance data. Analysis can measure a measure the dollar value of the program’s costs and benefits and it’s success in terms of whether it: achieved its objectives and delivered value in an economic sense. Successful programs should deliver value that is greater than the program’s costs. HR analytics, a process that measures a program’s success in terms of whether it achieved its objectives and whether it delivered value in an economic sense. For example, if the organization sets up a training program, it should set up goals for that program, such as the training’s effects on learning, behavior, and performance improvement (results). Analysis would then measure whether it achieved preset goals.

29 Test Your Knowledge The HR director of a medium-sized corporation spends 90% of his time meeting and working with fellow HR staff. He is primarily concerned with ensuring the company meets all legal requirements with regard to HR activities. This HR director: Is a major contributor to a high-performance organization Has a strategic focus Is concerned with customer satisfaction Has limited the utility and value he could bring to the organization The HR director of a medium-sized corporation spends 90% of his time meeting and working with fellow HR staff. He is primarily concerned with ensuring the company meets all legal requirements with regard to HR activities. This HR director: Is a major contributor to a high-performance organization Has a strategic focus Is concerned with customer satisfaction Has limited the utility and value he could bring to the organization Answer - D

30 Summary A high-performance work system is the right combination of people, technology, and organizational structure that makes full use of the organization’s resources and opportunities in achieving its goals. A high-performance work system achieves the organization’s goals, typically including growth, productivity, and high profits. Elements of a high-performance work system are organizational structure, task design, people, reward systems, and information systems. These elements must work together in a smoothly functioning whole. High performance work system meets such intermediate goals as high quality, innovation, customer satisfaction, job satisfaction, and reduced absenteeism and turnover. Many conditions contribute to high-performance work systems by giving employees skills, incentives, knowledge, autonomy, and employee satisfaction. In a high-performance organization, employees experience job satisfaction or even “occupational intimacy.” For long-run high performance, organizations and employees must be ethical as well. Organizations can improve performance by creating a learning organization, in which people constantly learn and share knowledge so that they continually expand their capacity to achieve the results they desire.

31 Summary By taking a customer-oriented approach, HRM can improve quality by defining internal customers who use its services and determining whether it is meeting those customers’ needs. Auditing HRM and measuring HRM effectiveness to analyze specific programs or activities can determine if a program met its objectives and whether it delivered value in an economic sense. HRM’s potential to affect employees’ well-being and the organization’s performance makes HRM an exciting field. Every HRM function calls for decisions that have the potential to help individuals and organizations achieve their goals. For HR managers to fulfill that potential, they must ensure that their decisions are well grounded. The field HRM provides tremendous opportunity to future researchers and managers who want to make a difference in many people’s lives.

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What is the condition that underlies the formation of a high performance work system?

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