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INTRODUCTION
Research has shown that high-involvement work practices can lead to development of positive beliefs and attitudes linked to employee engagement. The practices generate the kind of discretionary behaviors that lead to enhanced job performance. Engaged employees who conceive, design and implement workplace and process changes are more likely to achieve high level of performance.
High performance work systems are firms that utilize a fundamental diverse approach to management and relation of employees than the traditional legacy and hierarchical approach associated with mass production and scientific management. At the heart of HPWS is a radically irregular employer-employee relationship.
Leading organizational behavior experts belief that HPWS has unparalleled benefits in providing sustainable competitive advantage to firms adopting it. Thus, human resource managers and scholars as well as economist are more interested in this approach.
This paper implores the primary economic performance of HPWS in respect to firm and employee relationships. The HRM/ organizational behavior literature contains important explanation regarding the economic performance of HPWS. However there is hardly any economic literature that explicitly focuses on HPWS. Economic theory such as the x-efficiency theory can partly be adopted for this purpose. The explanations that can make most sense of the economic performance of HPWS are intertwined between economic and organizational behaviors.
There have been numerous literatures focusing on the impacts of the firm’s industrial relations and human resource behavior and management. A number of texts have appeared to promote the advantages of using high involvement or high performance systems and practices. Further, recent studies have shown an empirical linkage between the use of these norms and firm performance.
While the literature is developing rapidly, there are some significant concerns. Of more relevance is the fact that few studies have concentrated between high performance systems and employee turnover. Consistent with the work of Arthur (1992) this study examines the relationship between the organizations use of high involvement work practices and employee productivity and retention. Arthur (1992) found evidence of the impacts of human capital investments used in high performance systems and employee retention and subsequently firms productivity.
HIGH PERFORMANCE WORK SYSTEMS
High performance work systems sometimes referred to as high involvement or high commitment organizations are firms that use distinctive managerial approach that enables high performance of its workforce. Although different HRM scholars have emphasized diverse features and management practices of HPWS, the identifiable characteristics are identified by Pfeiffer in his “The Human Equation” book. This includes employment security, rigorous and selective hiring in the employment of new personnel, extensive training, self managed teams and decentralization of decision making as the fundamental principle of organizational design. Other includes;
- Comparatively inflated compensation contingent on organizational performance
- Decreased status distinction and barriers including language, dressing code, office arrangements and wage imbalance across diverse levels.
- Extensive sharing of financial information and performance indexes across the organization.
The main objective of HPWS lies in the creation of a firm based on employee involvement, commitment and empowerment rather than control. The particular standards of management differ from company to company. As a matter of fact they are tailor made to suit a particular purpose or mission. An example of such as an organization involves a small business unit that controls its business functions and operations to meet its objectives. In doing so, it endears to create the best business image for the involvement-oriented approach. In high involvement firms, Pfeiffer concurs that the workforce “feels responsible for and involved in its success” and “know more, do more, contribute more”. They exhibit high level of power and control over information, knowledge and rewards to achieve the best performances. Firms and entities such as Procter and Gamble, Wal-Mart, Virgin Atlantic and Southwest Airlines are credited with this kind of employee approach and management. HPWS is distinctively different from Total Quality Management but both can be used along each other in an organization.
The extensive use of HIPW indicates a considerable investment in human capital. Economic theories suggest that investment in human capital is justified when investments exceed offsets by future returns in the form of increased productivity. Organizations derive numerous benefits from HIPWs when the workforce is vital to business success. Thus with utilization of this critical human assets, increased use of HIPW has implications.
An apparent implication indicates enhanced employee retention. However it is more likely that the greater use of HIWPS increase firms exposure to disruptions associated with the loss of employees. As outlined above, firms are more likely to use HIPWs when human workforce is critical to the business operations. Thus the use of HIPW and concomitant investment in the workforce will magnify this effect. This is because, employees will become more pivotally and fundamentally central to the organization.
Employees are more central in high-involvement organizations because decision making is spread throughout the organization. Thus to facilitate the approach, firms use human resource practices tandem with self-programming and self-managing staff. They rely on the invisible knowledge of employee. This approach is in contrast with the control-oriented model where the thinking and controlling part of the work is different from the working personnel. A control oriented approach emphasizes narrow, well-defined work and centralized decision making. The model requires low skill demands, less training and less interdependence than the high performance model. The use of the systems minimizes the impact of the labor on the labor process as workers are treated relatively like commodities and thus irreplaceable.
The use of HIPWs tends to increase the cost of employee departures. According to Barney (1991) HR practices contribute to competitive advantaged. Firms achieve competitive advantage by creating a workforce that is unique, valuable and difficult to imitate. Thus HIPWs increase competitive advantage in organizations. In spite of this, the uniqueness and value of employees increases the overall cost associated with the loss of employees. Arthur (1994) proposes that the organizational centrality of each of each individual employee is inflated in this model and as such high involvement firms have a higher skill requirement thereby equating high performance with greater levels of tenure and experience. The demands associated with employee training and acquisition of advanced skills for individual capacity has an impact on the effectiveness and performance of an individual. Employees are specialized according to their areas of interest and knowledge-ability. The HIPW structure demands individualized decision making and support. This renders many well performing workforces irrelevant in their areas of interest. Multitasking bars employees from following a streamlined career which could be beneficial in the long run due to the demand of an individualized approach.
Thus turnover is increasingly detrimental to the organizational performance. Thus implies that the use of HIWPs have an overall dysfunctional effect to the firm as compared to the functional effects. The explanation given by Barney (1991) is the HR systems interact with turnover to create a negative effect of employee turnover on the productivity of an organization. On the employee part, numerous job shifts taints their personal image as persons of unsettled nature and deprives them of other suited and qualified careers.
Individualization advocated by the HPW models is seen as pivotal to the formation of work practices which engender enterprise success. According to the HRM approach and especially HPWs are not necessarily inconsistent with the collectivism or union-based partnership but it more of endorses individualism in the employment relation and facilitates a non-union principled. In contrast unionist approaches are based on the economic theory that free and open competitive markets through collective bargaining leads to efficient outcomes. Thus individualized approaches as argues serves to merely restore areas of job control and management previously shared with unions which in the long run remove the collective power and distorts the market outcomes of free economic theory.
Finally, despite the superiority associated with HPWs, it is wrong to assume that they can be installed and singly used to derive the best business practices. Making investments in HPWS creates intangible, unique and company-specific organizational capabilities. Becker and Gerhart (1996) conclude that the diverse component does not necessarily produce superior performance in isolation. Favorable results are obtained in combination of the controlled and individualized models of human resources. Employees working in isolation tend to be underproductive than when teamwork and centralized management is approached.
CONCLUSION
In conclusion, the use of HPWS is not a plug and use kind of method that guarantee instant results. It commits organizations to profound changes that can be unfavorable to employees. Various laws and regulations such as the US labor laws remains an impending barrier. Although the model is cited as the best in terms of management and overall production, it presents a number of challenges to the organizations and the human workforce.
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