High performance work practices

High-performance Work Systems (Boselie, 2014)

A high-performance Work System is a bundle of HRM practices that increases organisational performance. This could be in terms of labour productivity, service quality or flexibility. An other definition describes high-performance Work System as:

Bundle of specific HR practices that create employee abilities in therms of knowledge and skills, employee motivation through a sophisticated incentive structure, and employee opportunity to participate in decision making.

Modern high-performance Work System approaches build upon classic management models as Taylorism. They contain "flavours of the past models"; however these modern approaches go beyond them by including other HR practices. These newly included practices are aimed at achieving high employee commitment levels through internal market principles, autonomous teamwork and advanced performance-related pay.

AMO model

The workings of a high-performance Work System is best described by diving into the theory of the AMO model. Bailey (1993) presented the underlying principles which were extended by Appelbaum et al (2000). The AMO model argues that organisational interests are best served by an HR system that attends to employees' interests. This means taking into account their skill requirements, motivation and the quality of their job. As such the overall performance is considered to be a function of employees' abilities, employees' motivation and employee's opportunities to participate.

According to Boxall and Purcell (2003) people perform well when:

• they are able to do so
• they have the motivation to do so
• their work environment provides the necessary support and avenues for expression

In concrete practices one can think of the following practices:

• Ability
  • Selective recruitment
  • Training and development
• Motivation
  • Performance-related pay
  • Coaching & mentoring
  • Employment security
• Opportunity
  • Autonomy
  • Employee involvement
  • Job rotation
  • Self-directed teamwork
  • Decentralisation of decision making

Boselie, following Walton (1985), categorises management control in two categories. Watson distinguishes control strategies from commitment strategies. Control strategies are about division of work into small, fixed jobs where individuals can be held accountable. Commitment strategies are meant to provide challenges for employees. Creating involvement in the decision-making process and extensive teamwork.

Boselie discovered five key high-performance working practices that are essential for an high-performance work system. These practices are:

1. selective recruitment and selection
2. compensation and performance-related-pay
3. appraisal & performance management
4. training & development
5. employee involvement

Managing individual employment relationships (Boxal and Purcel, 2011)

Effective management of individual performance depends on understanding the factors behind it. The AMO model argues that performance is some function of a individuals ability, motivation and opportunity. Resulting into the following performance equation:

P = f(A, M, O)

The implication of this performance equation leads us to remind to hire for motivated capability. Meaning hiring people who have the can do and the will do factors relevant for the job.

Managing employee ability

Across the human population levels and types of ability vary greatly. Due to education, physical strength or other factors individual abilities to perform a job vary. Two underpinning effects that affect our potential to acquire knowledge and skills are 1) state of physical and mental health and, 2) intelligence.

As a consequence organisations have two main methods to influence the available abilities in an organisation:

• Recruitment and selection
  • Definitions:
    • Selection is the process of choosing between job candidates. How do we make fair assessments
    • Recruitment strategy is about the way a firm tries to source and attract people whom it ultimately select.
  • Literature on selection is full of best practices. It is important to realises these best practices differ per culture.
  • Recruitment literature has many gaps.
• Development and training
  • Development and training can not entirely replace recruitment and selection. Large differences of abilities can't be solved by development and training alone.
  • Types of training exists
    • Informal learning and short-term learning; Learning on the job, for example via a buddy.
    • Long-term development through balanced mix of formal training and education, and informal coaching and team-building.

From an employee perspective an employee is often keen on ensuring that their knowledge and skills are fully deployed in the work that they do. Employees are drawn to work that makes use of their potential. For employers it is important to get a good match between people's skills and the demands of the job. How greater the alignment is, the larger the possibility of a long-term engagement between employee and employer. As one's knowledge and skills develop the demand of the job has to evolve as well.

Managing employee motivation

Motivated capability is the most needed quality that firms need from individuals. The abilities of an individual are only of value when the are willing to use those abilities. Partly this motivation stems from a balance of relationship investment between employee and employer by both parties.

Intrinsic and extrinsic motivators are another factor. An intrinsic factor is associated with the work itself. For example the employee sees the work as enjoyable and interesting. Extrinsic factors cover the material and social rewards. Pay is one of them, but also any display of status. Research shows that both motivators are important for employee motivation.

Money is still the main reason to work, We all have material needs and a primary motive for switching jobs is receiving a higher pay. As such, pay is the most important extrinsic factor. A pay system fulfils three objectives, in the Anglo-American world:

• Ensuring that the pay system supports the recruitment and retention of suitable qualified people
• Internal equity; An hierarchy in pay exists in any organisation which is judged to be fair by the employees.
• Performance equity; Forms of variable performance related pay for high-performers.
  • This could entail the transition from time-based to piece-based wage

Performance appraisal are formal methods of planning and evaluating employee performance. Typically this involves interviewing the employee to discuss work goals or behavioural standards, and the individuals achievement in terms of them. Frequently the line manager makes a recommendation about pay and goals are agreed for next year.

PA systems are growing as a way of managing individual performance.These system can form a base to discuss individuals job and career development. However, outcomes can be disappointed. Huge variability can be found in the way formal interviews are held, next to the existence of rater bias. As such a distinction is made between 'objective' and 'rated' performance.

Psychological contracting and employee commitment. Psychological contracting is about the individuals belief about the terms of the relationship between employee and employer. In other words, variables as the emotional attachment, the level of involvement in the relationship from the organisation. A clear example of a psychological contract is that when I work above average this year, I will be promoted,

David Grant points out that the concept of psychological contracting stem from expectancy theories of motivation. Central in this viewpoint is that our ongoing motivation at work is affected by the expectations that we form and our experience of these are met over time.

High performance work practices in small firms (Kroon et. al., 2013)

The application of high performance work practices are not widespread in organisations. The authors researched if the implementation of these work bundles, based on the AMO model, depend on the size of the organisation, and on the strategic decision-making in relation to the owner's expertise and attitudes. Describing

• resource poverty; the constraints in time & money
• strategic decision making;

The authors were able to validate the set hypothesis:

• Fewer ability and motivation practices were found in smaller organisations
• The orientation of entrepreneurs determines the practices regarding ability
• When entrepreneurs had greater knowledge of best practices, more practices were adopted in the firm
• Entrepreneur that aim to be innovative with their HR strategy have found to have more practices in place, but not necessarily for all employees
• At innovative entrepreneurs the scope of motivation practices was most prominent. For example, at smaller companies above-average could be found. An counter-intuitive finding as these kind of practices are relatively more costly for small firms.

Overall taken the cost of implementing all AMO elements can be too hard for small organisations, given their available resources. The entrepreneurial orientation, awareness of best practice and the HR innovativeness lead to different preferences when high performance work practices are adopted.

References

Appelbaum, E., Bailey, T., Berg, P., Kalleberg, A. L., & Bailey, T. A. (2000). Manufacturing advantage: Why high-performance work systems pay off. Cornell University Press.

Boselie, P. (2014). Strategic Human Resource Management: A Balanced Approach. McGraw Hill.

Boxall, P., & Purcell, J. (2011). Strategy and human resource management. Macmillan International Higher Education.

Kroon, Brigitte, Karina Van De Voorde, and Jules Timmers. “High Performance Work Practices in Small Firms: A Resource-Poverty and Strategic Decision-Making Perspective.” Small Business Economics 41, no. 1 (2013): 71–91.

Walton, R. E. (1985). From Control to Commitment in the Workplace (March-April). Harvard Business Review.