hpws and hrd paper-scott thor

HPWS & HRD 1 Scott Thor – BUSG 708 – HR in High Performance Organizations

High Performance Work System and Human Resource Development

Scott Thor

George Fox University

Doctor of Management

BUSG 708 Human Resources in High Performance Organizations

November 1, 2009


High Performance Works System and Human Resource Development

The modern organization is being challenged like never before to constantly

improve as global competitive pressures continue to rise. The challenge facing

organizational leaders has led to a number of theories and techniques for improving

performance. A summation of the characteristics leading to improved performance is

offered by deWaal (2007) in his literature review of high performance organizations

(HPOs). A HPO is defined by deWaal as:

An organization that achieves financial results that are better than those of

its peer group over a longer period of time, by being able to adapt well to

changes and react to these quickly, by managing for the long term, by

setting up an integrated and aligned management structure, by

continuously improving its core capabilities, and by truly treating the

employees as its main asset. (p. 3)

Many of the characteristics identified by deWaal (2007) used to describe a HPO

can be attributed to what is known as a high performance work system (HPWS). This

paper seeks to provide an understanding of a HPWS, its link to the elements of human

resource development (HRD), and how they contribute to creating a HPO.

The paper begins with a brief overview of scientific management and

bureaucracy, two management theories, that despite being developed nearly a century

ago, still have a significant influence on modern organizations. With these theories as

the foundation most modern businesses are built upon, the paper transitions into

defining and describing a HPWS that addresses some of the key weaknesses of

scientific management and bureaucracy. Also discussed are a set of principles for

HPWS & HRD 3 Scott Thor – BUSG 708 – HR in High Performance Organizations designing a HPWS and critical success factors for implementing a HPWS. Next, the

paper describes the link between a HPWS and HRD in addition to how HRD plays a

critical role in the implementation and success of a HPWS. The paper concludes with a

discussion of the positive and negative aspect to a HPWS.

The Foundation of Modern Organizations

An argument can be made that the modern organization is based on principles

developed nearly a century ago. In the first part of the twentieth century Fredrick

Winslow Taylor developed what he called “scientific management”. During this time

period Taylor began an effort to divide labor, leading to the creation of scientific

management. Taylor is best known for his research on studying workers and doing time

and motion studies, which were used to increase efficiency in the workplace. Taylor’s

(1916) scientific management consisted of four key elements:

1. Gathering of knowledge about the work (time and motion studies)

2. Selection of the workman

3. Bringing of the workman and the science together

4. Division of work

The knowledge Taylor spoke of gathering began by studying workers and

breaking down the work they were doing into its simplest form. Time and motion

studies were also conducted to understand how long it took for a particular task to be

completed. The first element gave Taylor the basis for improvement by providing a

baseline of performance.

With an understanding of the work, Taylor believed the selection of the workman

was of great importance to achieving maximum efficiency. He believed it was

HPWS & HRD 4 Scott Thor – BUSG 708 – HR in High Performance Organizations management’s job to select the workers best suited for the work. If workers were not

matched with the jobs they were doing he believed productivity would suffer.

The third element of scientific management consisted of bringing the worker and

science together. Without bringing the two together companies using the scientific

management principles could not realize the benefits they offered. In order to bring the

two together Taylor suggested management should offer the workman something he felt

was worthwhile for working under the conditions, essentially an incentive to make the

workman want to work under the scientific management principles.

The final aspect of scientific management is the division of work. As Taylor

(1916) described, under the old system of management the workman did most of the

work, but with the new system work was divided into two parts. One component of the

work was now given to management, leaving the other for the workman. Taylor argued

by dividing the work it created an atmosphere of teamwork between management and

the workman because each group was dependant on the other. Taylor’s work benefited

the workman greatly, increasing his earnings and also lowering the cost of goods

produced.

During the same time period Winslow developed scientific management Max

Weber, a German sociologist, established a management model called bureaucracy.

Weber believed that rules were the basis for decision-making and could replace the

need for individual judgment, ultimately leading to increased organizational efficiency.

Weber’s (1946) model was based on seven key characteristics:

1. Division of labor

2. Hierarchy


3. Rationality of rules

4. General rules

5. Written documentation

6. Technical expertise

7. Full and continuous employment

Weber, like Taylor, believed that labor needed to be divided and specializations

created so that specific training could be given for each task. This would then lead to

greater organizational efficiency. Weber also believed that, like division of labor,

hierarchy needed to be created and divided amongst the organization to establish the

specific authority for each functional group within the organization.

To create consistency Weber believed that rational rules should be established to

minimize variation in performance and special treatment of individuals. He also believed

that having rational rules would displace the tendency of emotions playing into making

decisions. General rules were also a belief of Weber in which he believed that published

guidelines would replace the need for administrative systems and unpredictable

subjective decisions. Documentation was also a key element to Weber’s model of

bureaucracy, aiding in the ability to trace actions taken by others that could be reviewed

for compliance and investigation when problems arose.

Weber’s model also addressed the issue of recruitment. The technical expertise

of the individual, according to Weber, should be the basis for selection and promotion

as opposed to personal relationships. With the right fit between the individual and the

job, Weber believed that full and continuous employment could be realized, leading to

HPWS & HRD 6 Scott Thor – BUSG 708 – HR in High Performance Organizations assurance that customer’s expectations would be achieved and the success of the

organization.

One could easily argue that much of the foundation in the modern organization is

based on the principles defined by Winslow and Weber nearly a century ago. Their work

created a model of efficiency, and is the basis of how many organizations still believe is

the most logical way to create a productive environment. Despite the success of the

model based on the work done by Winslow and Weber, it left little room for capturing the

motivation and creativity of workers. Jobs were based on narrow objectives and

repetitive tasks, leaving minimal opportunities for workers to contribute with their ideas

for improvement. Although the model led to a significant improvement in organizations it

also had three key weaknesses (Nadler & Gerstein, 1992):

1. The model was based on managing stable and predictable situations, and

as businesses developed and needed to change rapidly, the model became

less effective.

2. The model was based on the assumption that workers were uneducated,

had little mobility in changing jobs, and were driven entirely by economic

needs. As the workforce began a transformation to one of educated

individuals seeking more than just a paycheck the model began to break

down.

3. Organizations using the model began to develop greater complexity, focus

more inwardly, and become less manageable.

Beginning in the 1940’s management theorist and practitioners began to uncover

several weaknesses in the style of management grounded in scientific management

HPWS & HRD 7 Scott Thor – BUSG 708 – HR in High Performance Organizations and bureaucracy (Roethlisberger, 1941; Maslow, 1943; McGregor, 1957). Based on the

belief that people wanted to contribute their ideas to help achieve the objectives of the

organization and find meaning in their work, several new concepts such as participative

management, team building, and job enrichment and enlargement began to take shape

in organizations, creating the foundation for the HPWS.

Defining a High Performance Work System

The HPWS has been described and defined by several researchers, scholars,

and authors. There is no generally accepted definition of the HPWS, but many

similarities exist between the experts. Nadler, Gerstein, and Shaw (1992) define a

HPWS as:

An organizational architecture that brings together work, people,

technology and information in a manner that optimizes the congruence of

fit among them in order to produce high performance in terms of the

effective response to customer requirements and other environmental

demands and opportunities. (p. 118)

Bohlander and Snell (2004) define a HPWS as “a specific combination of HR

practices, work structures, and processes that maximize employee knowledge, skill,

commitment and flexibility” (p. 690). They add to the definition by suggesting that a

HPWS is a system of several interrelated components that contribute to the goals of an

organization.

The central idea of a HPWS is to create an organizational environment that is not

based on employee control, but that of one based on employee participation,

dedication, and empowerment (Tomer, 2001). The primary difference between the

HPWS & HRD 8 Scott Thor – BUSG 708 – HR in High Performance Organizations models previously defined grounded in the work of Winslow and Weber, commonly

referred to as the control-oriented approach, and a HPWS, is based on how the control

of work is organized and managed at the lowest level in the organization.

Companies that utilize the control-oriented approach assume that work must be

standardized, simplified, and specialized, and that management should use incentives

to motivate individuals (Lawler, 1992). As Lawler describes, “the thinking and controlling

part of work is separated from the doing of the work” (p. 28). Employees, especially

those in high volume mass production environments, are considered as simply

unthinking agents of the owners (Tomer, 2001). To the opposite, Lawler argues that in

organizations utilizing a HPWS, employees should be responsible for improving

processes and procedures, solving problems that lead to improvements, and

coordinating their work with others in the organization. Lawler also describes the

environment of one in which employees should be expected to work without the need of

a supervisor directing their daily activities.

By defining a clear vision, mission, and objective, management sets the direction

for employees operating in a HPWS environment without the need to define step-by-

step instructions for achieving the goals of the organization. By doing so management

allows for the full utilization of each employee’s unique talents, which not only helps the

organization achieve its objectives, but also creates a system in which everyone can

self-actualize, bringing a greater sense of meaning to ones work.

In an influential study conducted by Appelbaum et al. (2000) thirteen practices

were compiled to define a HPWS. From the thirteen practices Appelbaum et al. have

HPWS & HRD 9 Scott Thor – BUSG 708 – HR in High Performance Organizations established what they describe as four unique “bundles”. Table 1 illustrates the

practices and bundles.

Practices Bundles Group Problem Solving

Group Working Group Control

Teamwork

Group Incentives Merit Pay

Profit Sharing Individual Incentives Workplace Incentives

Incentives

Appraisal for Pay Appraisal for Promotion Appraisal for Training

Development

Briefing Groups Two-way Meeting Communications

Table 1

At the heart of a HPWS is teamwork. As Appelbaum et al (2000) describe,

teamwork involves individuals from all levels and creates an environment of

empowerment where employees have the ability to make decisions and contribute to

problem solving activities that have an impact on their work. This ultimately leads to

creating greater commitment from all those involved in the decision making process,

and should lead to improved performance.

Incentives also play a key part in creating and sustaining a successful HPWS.

Organizations need to provide incentives to employees to stimulate an environment

where everyone is willing to provide ideas for improving the performance of the system

they work in, which results in overall improvement of the organization’s performance.

Incentives can take on a number of different forms, but in most cases are linked to

group performance.

To improve performance individuals need to increase their abilities through

developmental activities. These activities are generally linked to training and

HPWS & HRD 10 Scott Thor – BUSG 708 – HR in High Performance Organizations educational initiatives that lead to improving the potential of employees, resulting in

increased responsibilities and taking on more challenging and rewarding work.

A final bundle described by Appelbaum et al. (2001) is communication. This

bundle can also be viewed as the data that drives a HPWS. With increased

communication making better decisions becomes easier, and when the information

driving those decisions is readily available it increases the velocity at which they can be

made and the impact of their results realized.

In theory, no two HPWS are identical. The needs of an organization should

determine the practices utilized in the creation of a HPWS. Gephart and Van Buren

(1996) argue that not all practices need to be implemented to achieve high

performance. What Gephart and Van Buren believe is required to achieve high

performance is synergy. Synergy is the result of alignment and fit of the practices along

with people who are committed and passionate about their work. Critical to creating

synergy is the design of a HPWS.

Designing a HPWS

HPWS design must be based on the organization’s needs. Despite this, HPWS

design is guided by specific principles that focus on employee involvement and

empowerment (Farias & Varma, 1998). Implementing a HPWS typically signifies a shift

from employee control to employee involvement. Gephart (1995) suggests that to be

successful, a HPWS should focus on self-directed teams, quality circles, flatter

organizational structures, unique incentive systems, increased training, and continual

improvement.


Perhaps most critical to the design of a HPWS is alignment. Gephart and Van

Buren (1996) suggest that a HPWS is more than high performance work, and an

organization will not achieve high performance unless their efforts are in alignment with

the organization’s mission. Alignment comes from ensuring several organizational

elements are in position with one another, thereby creating the potential for high

performance. Gephart and Van Buren suggest the following as a list of key elements

that should be in alignment with the design of the HPWS:

• Strategy, vision, mission, and goals

• Beliefs and values

• Management practices

• Organizational structure

• Work practices and processes

• Human resource systems

• Other systems such as technology (p. 24)

The alignment starts at the design stage and continues on through

implementation, but is never fully complete. Gephart and Van Buren (1996) suggest that

full alignment is never achieved and the organization should always be “fine tuning” the

system to improve alignment. The design of the HPWS should allow for a continual

feedback mechanism to help improve alignment based on lessons learned.

Nadler, Nadler, and Tushman (1997) have similar design principles to the

concept of alignment suggested by Gephart and Van Buren (1996), although they place

additional emphasis on the sharing of information and flexible work systems. Nadler et

al. identify the following ten principles for the design of a HPWS:


1. Clear link to organizational strategy

2. Empowered and autonomous units at different levels of analysis

3. Clear vision, mission, and goals that help create a boundary within which the

autonomous units work

4. Control variance at the source

5. Integration of social and technical systems

6. Information sharing and access

7. Multi-skilling that enables team members to rotate jobs

8. Human resource practices that support empowerment

9. An empowering management structure

10. Capacity to reconfigure and renew

Nadler et al. (1997) suggest the design of a HPWS starts with establishing a

clear link to the organization’s strategy. This begins by focusing outward on the

requirements of customers and then starting the process of developing the appropriate

organizational work processes. Teams are the second element of design and the core

of a HPWS. Nadler et al. argue that they should be designed around whole pieces of

the work.

Without clear boundaries problems are likely to arise. Establishing the

boundaries ensures work teams understand where their decision-making ability starts

and ends. Controlling variance at the source allows teams to catch quality problems

early and implement solutions to prevent them from recurring. This design element also

creates ownership of the problems by the teams in which they originate.


Integration of both social and technical systems is a consideration Nadler et al.

(1997) believe is a critical component in designing a HPWS. A HPWS should optimize

the needs of the employees in the organization with the demands of the technical

system. Better decisions come from having the right data at the right time. Sharing of

information within a HPWS not only creates better results it gives ownership of

decisions to those with the data.

Multi-skilling creates flexibility in the system by allowing all team members to

rotate through multiple assignments. It not only benefits the organization in the ability to

make rapid changes, but also in creating greater challenge and variety in the work of

employees. Human resource (HR) practices also need to be considered when designing

a HPWS to ensure the selection, incentive, and reward systems are congruent to the

HPWS.

The management structure, culture, and processes all need to support and

embrace the HPWS for it to be successful. A HPWS is typically a drastic departure from

most organizational management structures where employees are directed instead of

doing the directing, and without the support of management a HPWS will likely fail. A

final aspect to the design of a HPWS is the ability to change. No HPWS is perfect and

changes are simply part of the process. Like any system, the HPWS must have a

mechanism in place to allow for flexibility based on changes in the environment the

HPWS exists within.

An argument could be made that even more difficult than designing a HPWS is

the task of implementation. The concept of HRD and HPWS have many similarities. HR

HPWS & HRD 14 Scott Thor – BUSG 708 – HR in High Performance Organizations professionals play a critical role in merging the two concepts that can ultimately lead to

high performance if implemented effectively.

HRD and HPWS

Before establishing the link between HRD and a HPWS it is important to

understand the basic elements defining HRD. HRD combines the primary component of

HR, people, with the development of both people and the organization. Gilley, Eggland,

and Gilley (2002) refer to development of people as the increase in knowledge, abilities,

and competencies with the purpose of improving the overall effectiveness of an

organization. This development encompasses the first two areas defining HRD,

individual development (ID) and career development. By developing people within an

organization, performance improvement, the third element of HRD, helps improve

productivity and quality, which create a higher probability of increased financial

performance. The final element of HRD is organizational development (OD). Gilley et al.

describe OD as continuous improvement of an organization’s culture through

intervention activities related to the vision, mission, values, policies, procedures, and

overall working environment.

For an organization to be competitive and productive a continuous cycle of

improvement and change needs to exist. With this, the primary goal of HRD is

performance improvement and organizational change (Gilley et al., 2002). Bringing ID,

career development, performance management, and OD together as the foundation of

HRD, Gilley and Maycunich (2000) define HRD as, “the process of facilitating

organizational learning, performance, and change through organized (formal and

informal) interventions, initiatives, and management actions for the purpose of

HPWS & HRD 15 Scott Thor – BUSG 708 – HR in High Performance Organizations enhancing an organization’s performance capacity, capability, competitive readiness,

and renewal” (p. 6). Figure 1 illustrates the four key elements of HRD.

Figure 1 Elements of HRD

Reviewing the previously described four key bundles related to a HPWS

(Appelbaum et al., 2000), teamwork, development, incentives, and communications,

one can begin to visualize the connection between HRD and a HPWS. The most

evident commonality between the two is a central focus on performance improvement

and organizational results, but also common to both systems is increasing the capacity

of individuals, ensuring alignment between individuals and the organization, creating

reward, recognition, and incentive systems based on performance results, empowering

teams to solve problems that increase performance, and a strategic focus based on

external demands and opportunities.

ID and HPWS

The primary focus of ID is placed on individual growth and development through

both formal and informal activities (Gilley et al., 2002). Gilley et al. state that the

purpose of ID is, “to increase employee knowledge, skills, and competencies and/or to

•  Improvingperfomancecapacity,growth,andcompe66veness

•  Strategydevelopment•  Macroperspec6ve

•  Appraisalprocess•  Alignmentoforganiza6onandindividualgoals

•  Crea6ngchallengingandrewardingwork

•  Con6nualimprovement•  Incen6ves•  Rewards•  Recogni6on

•  Training•  Educa6on•  Crea6ngalearningenvironment

•  Microperspec6ve

IndividualDevelopment

PerformanceManagement

Organiza6onalDevelopment

CareerDevelopment

HPWS & HRD 16 Scott Thor – BUSG 708 – HR in High Performance Organizations improve behaviors in current jobs, at the same time addressing the immediate needs of

the organization as well as that of the employee” (p. 30). Appelbaum et al. (2000) state

that employees in a HPWS can only tap into their initiative, creativity, and knowledge if

they have the appropriate skills and knowledge, much of which comes through training

and educational initiatives. Both ID and a HPWS thrive on creating a learning

environment where individuals are challenged each day to increase their ability and

value to an organization. Increasing individual capacity also leads to a stronger team on

which the individual participates, playing a key role in developing a robust HPWS.

Career Development and HPWS

Gilley et al. (2002) define career development as, “an organized, planned effort

comprised of structured activities or processes that result in a mutual career plotting

effort between employees and the organization” (p. 59). A similar alignment needs to be

in place for an effective HPWS to deliver results (Gephart & Van Buren, 1996). Without

alignment between the individuals utilizing the HPWS the expected results are less

likely to materialize. Also common between HRD and a HPWS is the use of an

appraisal process. One could argue that this process is the most important aspect of

each system, providing the feedback mechanism that translates into continual

improvement of not only the individual, but the entire system as well.

Performance Management and HPWS

The importance of performance management is a relatively new development in

HRD (Gilley et al., 2002). Gilley et al. contend that performance management is strongly

connected to human performance technology (HPT). Fuller and Farrington (1999)

describe HPT as a way of identifying barriers to success faced by employees, and the

HPWS & HRD 17 Scott Thor – BUSG 708 – HR in High Performance Organizations process of removing them to allow improvement, and the full realization of employee

potential. In a HPWS employees are constantly faced with the barriers Fuller and

Farrington describe. Gilley et al. also prescribe the strategy of developing self-directed

employees, which is at the heart of a HPWS. A final similarity lies in the use of incentive

systems for recognizing and rewarding performance. Gilley et al. suggest a strategy of

rewarding team performance rather than individual performance that will lead to

improved teamwork and cooperation amongst individuals, which is also a key

component in a HPWS incentive system.

OD and HPWS

The final component in HRD is OD. There are several definitions of OD, but most

share common characteristics and only differ in scope and the intention of change

(Dunn, 2006). OD requires involvement from all employees to be effective and the

support of top management (Conner, 1992; Kotter, 1996), views organizations from a

system-wide perspective and includes planned initiatives directed by third party change

agents that are ongoing (Burke, 1992; French & Bell, 1995), and focuses on

measurable results that are strategically based (French & Bell, 1995; Kotter, 1996;

Nadler, 1998). The primary goal of OD is to improve the performance of organizations

(Burke, 1992; Nadler, 1998). Similar to OD, a HPWS is focused on organizational

improvement (Gephart & Van Buren, 1996; Nadler et al., 1997; Hanna, 1988), requires

commitment from all levels of the organization (Nadler et al., 1997), and supports the

effective implementation of strategy, leading to the realization of organizational

objectives (Dyer, 1993; Pfeffer, 1994; Becker & Huselid, 1998).


Communication, a fourth bundle of a HPWS, not only encompasses verbal and

written communication, but also the data used in decision-making. There is no doubt

that communication and quality data are critical to all elements of HRD. Table 2

summarizes the commonalities between the elements of HRD and the HPWS bundles.

HRD Elements HPWS Bundles

Individual Development Teamwork

Development Communications

Career Development Development Communications

Performance Management Teamwork Incentives

Communications

Organizational Development

Teamwork Development

Incentives Communications

Table 2

Positive and Negative Aspects of a HPWS

A HPWS has the potential to create significant positive results such as improved

productivity and increased quality levels. They can also lead to increased stress levels

and a more intense work environment. Implementation can also prove to be a

challenging task with several potential problems.

King (1995) summarizes the results of several studies related to HPWS. The

studies he discusses demonstrate correlation between firm performance and specific

work practices. The work practices examined include skill training, compensation

policies, and workplace participation.

Skill training focuses on quality and the prevention of errors, which requires

employees to have a broader understanding of the processes they use and the

technology used to measure them. Researchers found that training helped reduce scrap

rates, and by doubling the initial training time of workers from 15 to 30 hours resulted in

a seven percent decrease in scrap. Eight of the studies also showed an increase in

HPWS & HRD 19 Scott Thor – BUSG 708 – HR in High Performance Organizations wages by up to 12 percent for those employees who participated in a training program

sponsored by their employer (King, 1995).

Incentive programs are a key component to a HPWS. A majority of the studies

showed a significant positive correlation between productivity and profit sharing. In

organizations that offered profit sharing productivity was three to five percent higher

than in those without a program. The use of profit sharing was also linked to increased

productivity in 841 manufacturing organizations in Michigan (King, 1995).

Workplace participation was reviewed in 29 studies, of which 14 indicated

participation resulted in increased productivity. Participation was measured based on

the existence of quality teams, work teams, and work councils and the number of

employees participating in them. King (1995) concludes that work teams were more

likely to be successful when they have decisions making power, such as in work teams

and councils, rather than consultative power more common to quality teams.

The overwhelming majority of the literature on HPWS praise the positive aspects

of implementing such a system, and most research points to very few negative

attributes of creating a high performance work environment, but an argument can be

made that by increasing the responsibilities of workers and putting less burden on

management could lead to a more stressful and intense environment. Workers need to

be ready to deal with this added stress as they transition from executing decisions made

by management to making the decisions themselves.

Despite all the positive related to a HPWS most organizations have been slow to

implement (Tomer, 2001). Several potential reasons for the slow adaption include high

initial costs for training, difficulty in satisfying investor’s short-term expectations,

HPWS & HRD 20 Scott Thor – BUSG 708 – HR in High Performance Organizations management resistance, relationships with labor unions, and institutional barriers such

as U.S. labor laws (Appelbaum & Batt, 1993).

Conclusion

Why should organizations implement a HPWS? Perhaps the most compelling

argument for a HPWS is to create a strategic competitive advantage that results in a

HPO. One of the keys to creating strategic advantage is developing what cannot be

easily replicated. Many components of an organization are easy to duplicate by

competitors when they are viewed individually, but the advantage and the power in a

HPWS lies in the fact that not one individual HPWS practice can return the results

combining several of them can. Combining the right compilation of HPWS practices not

only has the potential to generate substantial results, it also has the potential to create

what is difficult to replicate by competitors.

A HPWS also present a great opportunity for HR professionals to position

themselves in a strategic role within an organization by combining the power in the

elements making up HRD and the practices of a HPWS. By taking on this role the

traditional view of HR will continue to navigate away from the cost-driven transactional

activities commonly associated with HR, and provide an opportunity to build value in the

organization and the role of the HR professional.


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