Answer to Question #241266 in Management for yakskie

Question

. What are the benefits of the seven (7) high performance work system practices?

Answer 1

Seven Practices of High Performance Work Systems

1. Ensuring Employee Security

Despite the trend of many businesses to engage in downsizing and hiring part-time and contract employees to avoid creating obligations to employees, the evidence has shown that organizations who engage in these practices have rarely created new wealth or improved the long-term bottom line of their organizations.[5] HPWS systems advocate creating high-trust partnerships with employees that build commitment and promote extra-mile and extra-role behavior that are critical for success in the modern organization.

Lincoln Electric, a successful electric company, adopted a program years ago that guaranteed employment to workers after three years on the job. Employment security policies that demonstrate a commitment to employees and their welfare work best when combined with the careful selection and hiring of employees who fit the needs of organizations and who match their job requirements. A number of scholars have reported evidence that organizations that implement policies that ensure employee security build trust with the people who are hired and find that their employees perform better and are more committed to their organization’s success.

2. Selective Hiring

Carefully evaluating new hires requires that organizations are precise in identifying the critical skills and attributes of their employees in the first place. Hiring to fit requirements of the job makes more sense than simply hiring candidates with the best academic pedigrees or who look the best on paper. Identifying attributes like character, respect for others, and a service orientation that do not change through training actually improve employee retention and long-term fit.

Enterprise Rent-A-Car, now the largest car rental company in the United States, has successfully used selective hiring to identify “people people” from “the half of the college class that makes the upper half possible.” Their focus on hiring former college athletes and fraternity or sorority members with excellent interpersonal skills has helped Enterprise to succeed in creating its superb customer service reputation which has helped the company to earn its top position in the car rental industry. Focusing on hiring the right people has been cited by management scholar Jim Collins as a key difference in those companies that are “great” rather than simply “good.”

3. Decentralized Decision-Making

Organizations that establish HPWS cultures recognize the importance of clearly identifying goals and objectives. In implementing those goals, HPWS companies delegate decision-making throughout the organization and empower their employees to deliver outstanding service to customers and achieve optimal organization results. Incorporating well-trained and supported self-managed teams that enjoy autonomy and broad discretion in making decisions demonstrates the high trust in employees that characterizes HPWS.

Creating teams can lead to greater initiative, but effective self-managed teams require extensive training, accountability in reporting the progress of assignments, and ongoing support to optimize their effectiveness. Effectively using company work teams that are well trained and supported by an organization’s top management team creates accountability at the organizational level. This is where accountability among interdependent team members is most important and where vital customer-related work gets done. Creating a culture of collaborative accountability reinforces organizational values and increases personal ownership at all levels.

The Ritz-Carlton Hotel chain is famous for the quality of its customer service. Ritz-Carlton’s management approach achieves service excellence by decentralizing decision-making to all of its employees. Those employees each have the discretion to spend up to $2,500 when they believe doing so best serves the customer and meets with the hotel’s mission. A compelling body of evidence about organizations that excel in providing great service confirms that decentralizing decision-making and empowering employees can pay off with increased customer satisfaction and higher profits.

4. High Results-Based Compensation

Developing a compensation system that rewards employees at all levels when the organization succeeds promotes commitment to shared goals and increases employee awareness of their roles in contributing to profitability. Compensating employees contingent upon organization performance is most effectively adopted as part of a high-performance culture that incorporates profit sharing throughout an organization. The logic of contingent compensation is implicitly equitable and fair and confirms to employees that they will share in the fruits of their work. Group-based profit sharing or gainsharing also creates a social system of accountability to the organization and to other team members.

Whole Foods, an American supermarket chain that specializes in natural and organic food products, is an exceptional example of an organization that has created such a social system as part of its commitment to excellence and high quality. The company has been listed as one of Fortune’s “100 Best Companies to Work For” every year since that list was created and has received numerous awards for honoring company values. Paying for performance also requires companies to develop far more effective measures of what constitutes excellence, while also communicating to employees how they create value for customers and for the company.

5. Training by Commitment

Virtually every HPWS organization emphasizes training by commitment as contrasted with training focused on control-oriented management systems. Training employees in how to resolve problems, to take responsibility for quality, and to take the initiative in suggesting changes in organization work methods demonstrates trust in the quality of employees hired and an acknowledgement of employee buy-in to a results-based compensation program. In contrast with many organizations that deem training to be a frill that can be eliminated, HPWS systems carefully determine the type of training that is most needed to achieve organizational goals and then invest heavily on helping employees to optimize their ability to succeed. Research evidence suggests that engaging employees in work-related team training increases their ownership and commitment and their ability to contribute to the achievement of critical organizational goals.

The Men’s Wearhouse clothing chain is noted for investing far more heavily in employee training than its competitors and creating an employee supportive culture and has prospered by doing so—recently acquiring the Joseph A. Banks brand in 2014. In today’s highly competitive global marketplace, great companies understand that they must create a “learning culture” corporate-wide so that all members of the company can contribute to adding value and improving service quality.

6. Reduced Status Barriers

A basic assumption of an HPWS is that good ideas and organizational improvements can come from employees at all levels of the organization. Wage inequality and the use of symbols like language, dress, physical space, and benefits can send a message to employees that an organization views status hierarchically, rather than treating every employee as if he or she is both valued and valuable. Stephen R. Covey repeatedly noted that great organizations seek to build high trust cultures by nurturing and developing people, rather than by controlling them. Treating employees like valued partners by reducing status barriers, by empowering employees, and by treating employees with dignity and respect builds trust and commitment.

The two co-founders of Kingston Technology, the largest independent producer of DRAM memory modules for personal computers in the world, typify the reduction of status barriers in their highly successful and extremely profitable company by 1) working in open cubicles, and 2) not having private secretaries. Although the artifacts of an organizational culture may send a message about status barriers and how employees are valued, the most important way that leaders demonstrate their attitudes about employees is by creating a culture that values, trusts, and empowers employees. Leaders of organizations communicate the importance of how employees at all levels are valued by the policies, practices, and rewards that are provided throughout the organization.

7. Sharing Key Information

The sharing of financial, strategic, and performance information conveys to employees that they are trusted partners who can utilize this important information to assist their organization to achieve its goals. Highly motivated and well-trained employees need information to be able to contribute to their organization’s success. Sharing information and providing the training in how to use it to achieve goals makes implicit sense, yet many traditional organizations refuse to do either and pay the price in lost opportunities and reduced trust.

Springfield ReManufacturing Corporation, the highly successful employee-owned break-off of International Harvester that specializes in remanufacturing transportation products, has developed an “open book management” system that basically equates to sharing information with employees to enable them to perform their jobs, achieve common goals, and achieve greater control over their individual lives. Information shared throughout the organization is critical in a world economy that is based upon the knowledge and wisdom that the organization applies