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o b j e c t i v e 9 9 NEL chapter PART 6 Expanding Human Resources Management Horizons 16-1 Creating High- Performance Work Systems 16 Discuss the underlying princi-ples of high-performance worksystems. After studying this chapter, you should be able to Identify the components thatmake up a high-performancework system.Recommend processes forimplementing high-performancework systems.Discuss the outcomes for bothemployees and the organization. o b j e c t i v e 1 1 o b j e c t i v e 2 2 o b j e c t i v e 3 3 o b j e c t i v e 4 4 o b j e c t i v e 5 5 Describe how the components fittogether and support strategy. NEL Explain how the principles ofhigh-performance work systemsapply to small and medium-sized organizations. o b j e c t i v e 6 6 o, you’ve finished reading 15 (or so) chapters on HRM. Congratulations—textbooks do not always make for the most gripping reading. And if youread this one cover to cover, you were probably cramming for an exam.But before you close this book, think about the following question: Whatis more difficult—designing effective HR practices or managing them alltogether as one system?In the past, HR textbooks simply ended after each individual aspect ofHRM was introduced and explained. But in today’s competitive environment,many organizations are discovering that it’s how the pieces are combined thatmakes all the difference. After all, managers typically don’t focus on staffing,training, and compensation practices in isolation from one another. These HRpractices are combined into an overall system to enhance employee involve-ment and performance. So now that we have talked about the individualpieces, we thought it might be useful to spend some time talking about howthey fit together into high-performance work systems. A high-performance work system (HPWS) can be defined as a specific combinationofHR practices,work structures,and processes that maximizes employee knowledge,skill,commitment,and flexibility.Although some noteworthy HR practices andpolicies tend to be incorporated within most HPWSs,it would be a mistake for us tofocus too much,or too soon,on the pieces themselves.The key concept is the system. High-performance work systems are composed ofmany interrelated parts that com-plement one another to reach the goals ofan organization,large or small.We will start by discussing the underlying principles that guide the developmentofhigh-performance work systems and the potential benefits that can occur as a result.Then we will outline the various components ofthe system,the work-flow design,HR practices,management processes,and supporting technologies.(See Figure 16.1.) Wewill also describe the ways in which organizations try to tie all the pieces ofthe systemtogether and link them with strategy.We end the chapter with a discussion oftheprocesses organizations use to implement high-performance work systems as well asthe outcomes that benefit both the employee and the organization as a whole. Fundamental Principles In Chapter 1,we noted that organizations face a number ofimportant competitivechallenges such as adapting to global business,embracing technology,managingchange,responding to customers,developing intellectual capital,and containing costs.We also noted some very important employee concerns that must be addressed,suchas managing a diverse workforce,recognizing employee rights,adjusting to new work attitudes,and balancing work and family demands.We now know that the best organ-izations go beyond simply balancing these sometimes competing demands;they creatework environments that blend these concerns to simultaneously get the most fromemployees,contribute to their needs,and meet the short-term and long-term goals of the organization.The notion ofhigh-performance work systems was srcinally developed by DavidNadler to capture an organization’s “architecture”that integrates technical andsocial aspects ofwork.Edward Lawler and his associates at the Center for EffectiveOrganization at the University ofSouthern California have worked with Fortune 1000 PART 6 Expanding Human Resources Management Horizons 16-2 S NEL high-performance work system (HPWS) A specific combination ofHR practices, work struc-tures, and processes thatmaximizes employeeknowledge, skill, commit-ment, and flexibility o b j e c t i v e 1 1 CHAPTER 16 Creating High-Performance Work Systems 16-3 corporations to identify the primary principles that support high-performance work systems.There are four simple but powerful principles,as shown in Figure 16.2:Shared informationKnowledge developmentPerformance–reward linkageEgalitarianism 1 In many ways,these principles have become the building blocks for managers whowant to create high-performance work systems.More important,they are also quickly becoming the foundation for current theories ofhuman resources management.Wewill use them as a framework for the rest ofthe chapter. The Principle of Shared Information The principle ofshared information is critical for the success ofempowerment andinvolvement initiatives in organizations.In the past,employees traditionally werenot given—and did not ask for—information about the organization.Peoplewerehired to perform narrowly defined jobs with clearly specified duties,and notmuch else was asked ofthem.One ofthe underlying ideas ofhigh-performancework systems is that workers are intimately acquainted with the nature oftheir own NEL Developing High-Performance Work Systems Figure 16.1 OUTCOMES •Organizational•Employee SYSTEM DESIGN •Work flow•HRM practices•Support technologyTheImplementationProcessPrinciplesof HighInvolvementLinkagestoStrategy PART 6 Expanding Human Resources Management Horizons 16-4 work and are therefore in the best position to recognize problems and devise solu-tions to them.Today organizations are relying on the expertise and initiative of employees to react quickly to incipient problems and opportunities.Withouttimely and accurate information about the business,employees can do little morethan simply carry out orders and perform their roles in a relatively perfunctory way.They are unlikely to understand the overall direction ofthe business orcontribute to organizational success.On the other hand,when employees are given timely information about busi-ness performance,plans,and strategies,they are more likely to make goodsuggestions for improving the business and to cooperate in major organizationalchanges.They are also likely to feel more committed to new courses ofaction if they have input in decision making.The principle ofshared information typifies ashift in organizations away from the mentality ofcommand and control toward onemore focused on employee commitment.It represents a fundamental shift in therelationship between employer and employee.Ifexecutives do a good job ofcom-municating with employees and create a culture ofinformation sharing,employeesare perhaps more likely to be willing (and able) to work toward the goals for theorganization.They will “know more,do more,and contribute more.” 2 At FedEx Canada,at every single station across Canada,company officers and managingdirectors meet with employees at 5:30 a.m.and 10:00 p.m.to review the businessdata and answer questions. 3 NEL U nd e rlyin g P rin c i p l es o f H i g h -Pe rf o rman ce W o rk S y s t e m s Figure 16.2 EgalitarianismKnowledgeDevelopment H P W S H P W S H P W S H P W S Performance–RewardLinkageSharedInformation CHAPTER 16 Creating High-Performance Work Systems 16-5 The Principle of Knowledge Development Knowledge development is the twin sister ofinformation sharing.As RichardTeerlink,former CEO ofHarley-Davidson,noted,“The only thing you get when youempower dummies is bad decisions faster.”Throughout this text,we have noted thatthe number ofjobs requiring little knowledge and skill is declining while thenumber ofjobs requiring greater knowledge and skill is growing rapidly.As organi-zations attempt to compete through people,they must invest in employee develop-ment.This includes both selecting the best and the brightest candidates available inthe labour market and providing all employees opportunities to continually honetheir talents.High-performance work systems depend on the shift from touch labour toknowledge work.Employees today need a broad range oftechnical,problem-solving,and interpersonal skills to work either individually or in teams on cutting-edge projects.Because ofthe speed ofchange,knowledge and skill requirementsmust also change rapidly.In the contemporary work environment,employees mustlearn continuously.Stopgap training programs may not be enough.Companies suchas DaimlerChrysler and Roche have found that employees in high-performancework systems need to learn in “real time,”on the job,using innovative new approaches to solve novel problems.Likewise,at Ocean Spray’s Henderson,Nevada,plant,making employees aware ofthe plant’s progress has been a major focus.Areal-time scoreboard on the Henderson plant floor provides workers withstreaming updates ofthe plant’s vital stats,including average cost per case,casevolumes filled,filling speeds,and injuries to date.When people are better informed,they do better work.“We operate in real time and we need real-time information tobe able to know what we have achieved and what we are working towards,”says anOcean Spray manager.(See Case Study 1 at the end ofthe chapter for more on OceanSpray’s HPWS initiative.) 4 The Principle of Performance–Reward Linkage A time-tested adage ofmanagement is that the interests ofemployees and organiza-tions naturally diverge.People may intentionally or unintentionally pursue outcomesthat are beneficial to them but not necessarily to the organization as a whole.A corol-lary ofthis idea,however,is that things tend to go more smoothly when there is someway to align employee and organizational goals.When rewards are connected toperformance,employees naturally pursue outcomes that are mutually beneficialtothemselves and the organization.When this happens,some amazing things canresult.For example,supervisors don’t have to constantly watch to make sure thatemployees do the right thing.But in fact,employees may go out oftheir way—aboveand beyond the call ofduty,so to speak—to make certain that co-workers are gettingthe help they need,systems and processes are functioning efficiently,and customersare happy.At Clearwater Seafoods,a global Canadian company of2200 employeesbased in Bedford,Nova Scotia,nearly all employees participate in a bonus plan basedon the volume offood that is packaged.Connecting rewards to organizational performance also ensures fairness andtends to focus employees on the organization.Equally important,performance-basedrewards ensure that employees share in the gains that result from any performanceimprovement.For instance,Lincoln Electric has long been recognized for its efforts inlinking employee pay and performance. 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