16-1McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All Rights Reserved.

fundamentals of

Human Resource Management 3rd editionby R.A. Noe, J.R. Hollenbeck, B. Gerhart, and P.M. Wright

CHAPTER 16Creating and Maintaining

High-Performance Organizations

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What Do I Need to Know?

1. Define high-performance work systems and identify the elements of such a system.

2. Summarize the outcomes of a high-performance work system.

3. Describe the conditions that create a high-performance work system.

4. Explain how human resource management can contribute to high performance.

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What Do I Need to Know? (continued)

5. Discuss the role of HRM technology in high-performance work systems.

6. Summarize ways to measure the effectiveness of human resource management.

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High-Performance Work Systems

• High-performance work system – the right combination of people, technology, and organizational structure that makes full use of the organization’s resources and opportunities in achieving its goals.

• To function as a high-performance work system, each of these elements must fit well with the others in a smoothly functioning whole.

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Figure 16.1:Elements of a High-Performance Work System

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Elements of a High-PerformanceWork System

• Organizational structure: the way the organization groups its people into useful divisions, departments, and reporting relationships.

• Task design: determines how the details of the organization’s necessary activities will be grouped, whether into jobs or team responsibilities.

• People: well suited and well prepared for their jobs.

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Elements of a High-PerformanceWork System (continued)

• Reward systems: contribute to high performance by encouraging people to strive for objectives that support the organization’s overall goals.

• Information systems: modern information systems have enabled organizations to share information widely.

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In a high-performance work system, all the elements – people, technology, and organizational structure – work together for success.

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Outcomes of a High-PerformanceWork System

• Outcomes of a high-performance work system include higher productivity and efficiency.

• These outcomes contribute to higher profits.• Other outcomes include:– High product quality– Great customer satisfaction– Low employee turnover

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Figure 16.2:Outcomes of a High-Performance Work System

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Outcomes of a High-PerformanceWork System (continued)

• The outcomes of each employee and work group contribute to the system’s overall high performance.

• The organization’s individuals and groups work efficiently, provide high-quality goods and services, etc., and in this way they contribute to meeting the organization’s goals.

• When the organization adds or changes goals, people are flexible and make changes to as needed to meet the new goals.

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Conditions that Contribute toHigh Performance

• Teams perform work.• Employees participate in selection.• Employees receive formal performance

feedback and are actively involved in the performance improvement process.

• Ongoing training is emphasized and rewarded.• Employees’ rewards and compensation relate

to the company’s financial performance.

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Conditions that Contribute toHigh Performance (continued)

• Equipment and work processes are structured and technology is used to encourage maximum flexibility and interaction among employees.

• Employees participate in planning changes in equipment, layout, and work methods.

• Work design allows employees to use a variety of skills.

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Conditions that Contribute toHigh Performance (continued)

• Employees understand how their jobs contribute to the finished product or service.

• Ethical behavior is encouraged.

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Learning Organizations

• Learning organization – an organization that supports lifelong learning by enabling all employees to acquire and share knowledge.

• The people in a learning organization have resources for training, and they are encouraged to share their knowledge with colleagues.

• Managers take an active role in identifying training needs and encouraging the sharing of ideas.

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Key Features of Learning Organizations

1. Continuous learning – each employee’s and each group’s ongoing efforts to gather information and apply the information to their decisions.

2. Knowledge is shared – one challenge is to shift the focus of training away from teaching skills and toward a broader focus on generating and sharing knowledge.

3. Critical, systemic thinking – is widespread and occurs when employees are encouraged to see relationships among ideas and think in new ways.

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Key Features of Learning Organizations (continued)

4. Learning culture – a culture in which learning is rewarded, promoted, and supported by managers and organizational objectives.

5. Employees are valued – the organization recognizes that employees are the source of its knowledge. It therefore focuses on ensuring the development and well-being of each employee.

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Job Satisfaction

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Test Your Knowledge

• Charlotte is a manager overseeing the work of a team. Which of the following behaviors would empower the team the least?a) Opening lines of communication between the

team and other groups within the organization.b) Directing the team and monitoring their day-to-

day activities. c) Ensure the team has the resources they need.d) Keep the team informed as new, relevant

information becomes available.

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Research has found that teachers’ job satisfaction is associated with high performance of the schools where they teach.

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Test Your Knowledge

• Kamran has worked for the same company for 3 years, is enthusiastic and passionate about his work, hasn’t missed a day in two years, and has several close friends he enjoys working with. Which of the following best describes Kamran?a) He is satisfied with his job.b) He is empowered.c) He is experiencing occupational intimacy.d) He is probably going to quit soon.

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Table 16.1: HRM’s Contribution to High PerformanceTable 16.1: HRM’s Contribution to High Performance• HRM practices match

organization’s goals• Individuals and groups

share knowledge• Work is performed by

teams• Organization

encourages continuous learning

• Work design permits flexibility in where and when tasks are performed

• Selection system is job related and legal

• Performance management system measures customer satisfaction and quality

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Table 16.1: HRM’s Contribution to High Performance (continued)

Table 16.1: HRM’s Contribution to High Performance (continued)

• Organization monitors employees’ satisfaction

• Discipline system is progressive

• Pay system rewards skills and accomplishments

• Skills and values of a diverse workforce are valued and used

• Technology reduces time and costs of tasks while preserving quality

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• To develop future leaders, new IBM managers participate in IBM’s Basic Blue program for an intensive nine-month training program.• IBM is considered one of the best companies in the development of future leaders.

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Performance Management

• Each aspect of performance management should be related to the organization’s goals.

• Business goals should influence the:– kinds of employees selected and their training– requirements of each job– measures used for evaluating results

• This means the organization:– identifies what each department must do to achieve the

desired results– defines how individual employees should contribute to

their department’s goals

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Figure 16.3: Employee Performance as a Process

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Performance Management (continued)

Guidelines to make the performance management system support organizational goals:

1. Define and measure performance in precise terms.2. Link performance measures to meeting customer

needs.3. Measure and correct for the effect of situational

constraints.

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HRM Technology

• New technologies – applications of knowledge, procedures, and equipment that have not previously been used.– Transaction Processing: Computations and

calculations used to review and document HRM decisions and practices. These include documenting employee relocation, payroll expenses, and training course enrollments.

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HRM Technology (continued)

– Decision Support Systems: These are systems designed to help managers solve problems. They usually include a "what if" feature.

– Expert Systems: Are computer systems incorporating the decision rules of people deemed to have expertise in a certain area.

– Relational Databases: Store data in separate files that can be linked by common elements.

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Human Resource Management Online:E-HRM• Improving HRM effectiveness through online

technology. • The speed requirements of business force

HRM managers to explore how to leverage technology for the delivery of HRM activities.

• With Internet technology, organizations can use E-HRM to let all the organzation’s employees help themselves to the HR information they need whenever they need it.

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Online Recruiting Offers Many Benefits

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Measuring the Effectiveness ofHuman Resource Management

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Customer-Oriented Perspective ofHuman Resource Management

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Human Resource Management Audits

• HRM audit – a formal review of the outcomes of HRM functions, based on identifying key HRM functions and measures of business performance.

• The audit may also look at any other measure associated with successful management of human resources.– e.g., legal compliance, safety, labor relations

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Table 16.3: Key Measures of Success for an HRM Audit

Table 16.3: Key Measures of Success for an HRM Audit

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Analyzing the Effect of HRM Programs

• This analysis can measure a program’s success in terms of whether it:– achieved its objectives– delivered value in an economic sense

• The analysis can measure the dollar value of the program’s costs and benefits.

• Successful programs should deliver value that is greater than the program’s costs.

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Analyzing the Effect of HRM Programs (continued)

• HR departments should be able to improve their performance through some combination of greater efficiency and greater effectiveness.

• Greater efficiency – means the HR department uses fewer and less-costly resources to perform its functions.

• Greater effectiveness – means that what the HR department does has a more beneficial effect on employees and the organization’s performance.

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Test Your Knowledge

• The HR director of a medium-sized corporation spends 90% of his time meeting and working with fellow HR staff. He is primarily concerned with ensuring the company meets all legal requirements with regard to HR activities. This HR director:a) Is a major contributor to a high-performance organizationb) Has a strategic focusc) Is concerned with customer satisfactiond) Has limited the utility and value he could bring to the

organization

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Summary

• A high-performance work system is the right combination of people, technology, and organizational structure that makes full use of the organization’s resources and opportunities in achieving its goals.

• A high-performance work system achieves the organization’s goals, typically including growth, productivity, and high profits.

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Summary (continued)

• Many conditions contribute to high-performance work systems by giving employees skills, incentives, knowledge, autonomy, and employee satisfaction.

• Organizations can improve performance by creating a learning organization, in which people constantly learn and share knowledge so that they continually expand their capacity to achieve the results they desire.

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Summary (continued)

• By taking a customer-oriented approach, HRM can improve quality by defining the internal customers who use its services and determining whether it is meeting those customers’ needs.

• One way to do this is with an HRM audit.• Another way to measure HRM effectiveness is to

analyze specific programs or activities.• This analysis can measure success in terms of

whether a program met its objectives and whether it delivered value in an economic sense.