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2010 South-Western, a part of Cengage Learning

All rights reserved.

PowerPoint Presentation by Charlie Cook

The University of West Alabama

Chapter Objectives
After studying this chapter, you should be able to
Discuss the underlying principles of highperformance work systems.
Identify the components that make up a highperformance work system.
Describe how the components fit together and
support strategy.
Recommend processes for implementing highperformance work systems.
Discuss the outcomes for both employees and
the organization.
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High-Performance Work System (HPWS)

HWPS
Is a specific combination of HR practices, work

structures, and processes that maximizes employee

knowledge, skill, commitment, and flexibility.
Is composed of many interrelated parts that

complement one another to reach the goals of an

organization, large or small.

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FIGURE

16.1

Developing High-Performance Work Systems

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FIGURE

16.2

Underlying Principles of High-Performance Work Systems

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Principles of HPWS
Egalitarianism and Engagement
Egalitarian work environments eliminate status and

power differences and, in the process, increase

collaboration and teamwork.
When this happens, productivity can improve if

people who once worked in isolation from (or

opposition to) one another begin to work together.

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Principles of HPWS (contd)

Shared Information
A shift away from the mentality of command and

control toward one more focused on employee

commitment.
Creating a culture of information sharing where

employees are more willing (and able) to work

toward the goals for the organization.

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Principles of HPWS (contd)

Knowledge Development
Employees in high-performance work systems need

to learn in real time, on the job, using innovative

new approaches to solve novel problems
The number of jobs requiring little knowledge and

skill is declining while the number of jobs requiring

greater knowledge and skill is growing rapidly.

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Principles of HPWS (contd)

Performance-Reward Linkage
It is important to align employee and organizational

goals. When rewards are connected to performance,

employees will naturally pursue outcomes that are
mutually beneficial to themselves and the
organization.

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FIGURE

16.3

Anatomy of High-Performance Work Systems

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Complementary Human Resources

Policies and Practices
Training
Trainingand
and
Development
Development

Staffing
StaffingPractices
Practices

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Compensation
Compensation

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Assessing Strategic Alignment:

Fitting It All Together
The HR Scorecard
Assessing Internal fit

Do all internal elements of the HR system complement and

reinforce one another?

Assessing HR Practices

Do HR practices significantly enable key workforce

deliverables such as employment stability and teamwork?

Assessing External Fit

Are workforce deliverables connected with key strategic

performance drivers?

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FIGURE

16.4

Achieving Strategic Fit

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1B
Diagnosing Internal Fit
Please indicate the degree to which each HR deliverable in the following chart would
currently enable each strategic driver, on a scale of 100 to +100. Empty cells indicate
this is not a key deliverable for a particular driver. Examples of the extremes and
midpoints on that continuum are as follows:
100: This deliverable is counterproductive for enabling this driver.
0:This deliverable has little or no effect on this driver.
+100: This deliverable significantly enables this driver.
DNK: Dont know or have no opinion.

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1C
Testing the Alignment of HR Deliverables
Please indicate the degree to which each HR deliverable in the following chart would currently
enable each strategic driver, on a scale of 100 to +100. Empty cells indicate this is not a key
deliverable for a particular driver. Examples of the extremes and midpoints on that continuum are
as follows:
100: This deliverable is counterproductive for enabling this driver.
0:This deliverable has little or no effect on this driver.
+100: This deliverable significantly enables this driver.
DNK: Dont know or have no opinion.

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Implementing the System

Necessary Actions for a Successful HPWS:
Ensure that change is owned by senior and line

managers.
Allocate sufficient resources and support for the
change effort.
Ensure early and broad communication.
Ensure that teams are implemented in a systemic
context.
Establish methods for measuring the results of
change.
Ensure continuity of leadership and champions of
the initiative.
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FIGURE

16.5

Implementing High-Performance Work Systems

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FIGURE

16.6

Building Cooperation with Unions

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Benefits of HPWS
Employee Benefits
Have more involvement in the organization.
Experience growth and satisfaction, and become

more valuable as contributors.

Organizational Benefits
High productivity
Quality
Flexibility
Customer satisfaction

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Benefits of HPWS
Employee Benefits
Have more involvement in the organization.
Experience growth and satisfaction, and become

more valuable as contributors.

Organizational Benefits
High productivity
Quality
Flexibility
Customer satisfaction

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Navigating the Transition to

High-Performance Work Systems
Build a Transition
Structure

Implement
High-performance Work

Incorporate the HR Function

as a Valuable Partner

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Evaluating the Success of the System

Process audit
Determining whether a high-performance work

system has been implemented as designed:

Are employees actually working together, or is the term

team just a label?

Are employees getting the information they need to make

empowered decisions?

Are training programs developing the knowledge and skills

employees need?

Are employees being rewarded for good performance and

useful suggestions?

Are employees treated fairly so that power differences are

minimal?

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Evaluating the Success of the System (contd)

To determine if a HPWS program is reaching its
goals:
Are desired behaviors being exhibited on the job?
Are quality, productivity, flexibility, and customer

service objectives being met?

Are quality-of-life goals being achieved for

employees?
Is the organization more competitive than in the

past?

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Outcomes of High-Performance Work Systems

Employee Outcomes and Quality of Work Life
More involved in work
More satisfied and find that needs for growth are

more fully met

More informed and empowered, feel that they have

a fuller role to play in the organization and that

their opinions and expertise are valued more
Have a greater commitment that comes from higher

skills and greater potential for contribution

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Outcomes of High-Performance Work Systems

(contd)
Organizational Outcomes and Competitive
Advantages
Higher productivity
Lower costs
Better responsiveness to customers
Greater flexibility
Higher profitability

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Achieving Sustainable Competitive Advantage

through Employees
Valuable
Valuable

Rare
Rare

Characteristics
Characteristics
of
ofEmployees
Employees
Competencies
Competencies

Organized
Organized

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Difficult
Difficultto
toImitate
Imitate

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2
The Impact of High-Performance Work Systems

Ames Rubber Corporation, a New Jerseybased manufacturer of rubber products and office
machine components, experienced a 48 percent increase in productivity and five straight years of
revenue growth.

Sales at Connor Manufacturing Services, a San Francisco firm, grew by 21 percent, while new
orders rose 34 percent and the companys profit on operations increased 21 percent to a record
level.

Over a seven-year period, Granite Rock, a construction material and mining company in
Watsonville, California, experienced an 88 percent increase in market share, its standard for ontime delivery grew from 68 to 95 percent, and revenue per employee was 30 percent above the
national average.

At One Valley Bank of Clarksburg, West Virginia, employee turnover dropped by 48 percent,
productivity increased by 24 percent, return on equity grew 72 percent, and profits jumped by 109
percent in three years.

The Tennessee Eastman Division of the Eastman Chemical Company experienced an increase in
productivity of nearly 70 percent, and 75 percent of its customers ranked it as the top chemical
company in customer satisfaction.

A study by John Paul MacDuffie of sixty-two automobile plants showed that those implementing
high-performance work systems had 47 percent better quality and 43 percent better productivity.

A study by Jeff Arthur of thirty steel minimills showed a 34 percent increase in productivity, 63
percent less scrap, and 57 percent less turnover.

A study by Mark Huselid of 962 firms in multiple industries showed that high-performance work
systems resulted in an annual increase in profits of more than $3,800 per employee.

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external fit
high-performance work system (HPWS)
internal fit
process audit

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