CREATING HIGH-PERFORMANCE
WORK SYSTEMS
In setting up this class and chapter for students, note that other instructors (using other
textbooks) might have ended the course after each of the individual pieces of HRM were introduced
and explained. Point out to students, however, that in today’s competitive environment,
organizations are discovering that it’s how the pieces are combined that makes all the difference.
After all, managers typically don’t just focus on staffing, or training, or compensation practices in
isolation to one another. These HR practices are combined into an overall system to enhance
CHAPTER LEARNING OUTCOMES
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Discuss the underlying principles of high-performance work systems.
Identify the components that make up a high-performance work
system.
LEARNING OUTCOME 2
LEARNING OUTCOME 1
LECTURE OUTLINE
• Use Figure 16.1: Developing High-Performance Work Systems to introduce the various
elements of the system.
• In Chapter 1 we noted that organizations face a number of important competitive challenges,
such as adapting to global business, embracing technology, managing change, responding to
I. FUNDAMENTAL PRINCIPLES
• HPWS are based on principles of high-involvement organizations: sharing
information, developing employee knowledge, rewarding performance, and equalizing
power relationships.
• Use Figure 16.2: Underlying Principles of High-Performance Work Systems to
introduce the principles of high involvement.
• A. Egalitarianism and Engagement
Status and power differences tend to separate people. Point out to students that more
B. Shared Information
Without timely and accurate information about the business, employees can do
little more than simply carry out orders and perform their roles in a relatively
Chapter 16: Creating High-Performance Work Systems 229
C. Knowledge Development
• Throughout the textbook we have noted that the number of jobs requiring little
knowledge and skill is declining whereas the number of jobs requiring greater
D. Performance-Reward Linkage
• Organizations are often more effective when there is some way to align
employee interests with organizational goals. When rewards are connected to
II. ANATOMY OF HIGH-PERFORMANCE WORK SYSTEMS
• HPWS combine various work structures, HR practices, and management processes
to maximize the performance of employees and increase their well being.
A. Work-Flow Design and Teamwork
• Use Figure 16.3: Anatomy of High–Performance Work Systems to discuss how
certain practices relate to principles of high involvement.
B. Complementary Human Resources Policies and Practices
Work design, in and of itself, does not constitute a high-performance work system.
Performance and satisfaction are much higher when organizations change HR practices
along with changes in job and work flow.
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1. Staffing Practices—Recruitment tends to be both broad and intensive in order to
get the best pool of candidates. By selecting skilled individuals with the ability to
learn continuously and work cooperatively, organizations are likely to make up for
2. Training and Development
• Training helps ensure that employees have the skills needed to assume
greater responsibility in a high-performance work environment. Typically,
training focuses on technical, problem-solving, and interpersonal skills.
3. Compensation
• Because HPWS ask many different things from employees, it is difficult to
isolate one single approach to pay that works for everyone. To link pay and
performance, HPWS often include some type of employee incentives. For
example, Saturn employees have an average of 10 percent of their pay linked
to goals for quality and training.
Chapter 16: Creating High-Performance Work Systems 231
C. Management Processes and Leadership
• Leadership issues arise at several levels with HPWS. At the executive level there
D. Supportive Information Technologies
• Communication and information technologies of various kinds create an
III. FITTING IT ALL TOGETHER
• Recall that in HPWS the individual practices are valuable in terms of how they help
the system function as a whole. Careful planning helps ensure that the pieces fit
together and are linked with the overall strategic goals of the organization.
• Use Figure 16.4: Achieving Strategic Fit to discuss the external and internal linkages
needed to fit HPWS together.
A. Ensuring Internal Fit
Recall from Chapter 2 that internal fit means that all the internal elements of the
B. Establishing External Fit
• To achieve external fit, HPWS must support the organization’s goals and
strategies.
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C. Assessing Strategic Alignment: The HR Scorecard
• The HR Scorecard is a tool that helps managers evaluate linkages between
strategic goals into operational activities.
• It can be used to diagnose internal and external fit through the following three
steps:
IV. IMPLEMENTING THE SYSTEM
• Use Figure 16.5: Implementing High-Performance Work Systems to discuss the steps in
implementation. Point out to students that the steps are much more interrelated than a
A. Building a Business Case for Change
• In some organizations the idea of HPWS is something very new and radically
different from the way things have normally worked. Change can be threatening
Chapter 16: Creating High-Performance Work Systems 233
B. Establishing a Communications Plan
• The ASTD council noted that inadequate communication is the most frequent
mistake companies make during implementation of HPWS. Two-way
C. Involving Unions
• Given the sometimes radical changes involved in implementing HPWS, it makes
good sense to involve union members early and keep them as close partners in the
design and implementation process.
• Use Figure 16.6: Building Cooperation with Unions to talk about how
managers and unions can “build a bridge” that unites them around values, interests,
and goals for high-performance work systems.
1. Cultivating Mutual Gains—Management and labor should create “win–win”
2. Formalizng the Commitment—Tangible symbols of commitment, such as a
policy document, clauses in a collective bargaining agreement, and the like, help
3. Gaining the Support of Other Key Groups—Leaders must ensure that
4. Adhering to Procedures—Once processes, agreements, and ground rules are
established, they are vital to the integrity of the relationship. Procedure keeps the
parties focused.
D. Navigating the Transition to High-Performance Work Systems
As with any change activity, performance may falter as implementation gets
1. Building a Transition Structure
• Implementation of HPWS proceeds in different ways for different
organizations. In organizational startups, managers have the advantage of
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2. Incorporating the HR Function as a Valuable Partner
• Although line managers typically own the responsibility for implementation,
HR managers can be invaluable partners in managing change. As we
explained in Chapter 2, global competition in many industries has led to the
E. Evaluating and Sustaining the Success of the System
• Once HPWS are in place, several aspects of the review process should be
addressed.
• A process audit might include the following questions:
1. Are employees actually working together, or is the term “team” just a label?
2. Are employees getting the information they need to make empowered
decisions?
Chapter 16: Creating High-Performance Work Systems 235
V. OUTCOMES OF HIGH-PERFORMANCE WORK SYSTEMS
Emphasize to your students again that the best organizations find ways to achieve a
balance between employee concerns (e.g., quality–of-work-life issues and job security)
and competitive challenges (e.g., performance, productivity, and profitability).
A. Employee Outcomes and Quality of Work Life
As employees become more involved in their work, they may be more satisfied. As
B. Organizational Outcomes and Competitive Advantage
• Highlights in HRM 2 in the textbook describe the impact in companies that have
successfully used HPWS.
• To discuss the organizational benefits of HPWS, ask students to return to Chapter
ANSWERS TO END–OF-CHAPTER DISCUSSION QUESTIONS
1. The four principles of high involvement are certainly broad enough to cover many of the
people issues underlying HPWS. However, they do not necessarily cover all of the
2. HPWS could function without teams, but the ideas of information sharing and
3. This may seem to be an impossible question to answer since both types of fit are necessary. If
everything is aligned internally but not connected to strategy, performance will be focused in
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4. The most critical steps to successful implementation tend to focus on resistance to change.
People are uncomfortable with change, particularly when they cannot control it or are not
5. In the long run, employee-centered and organizational-centered outcomes have to support
ANSWERS TO USING THE INTERNET ACTIVITIES
Internet Exercise #1, page 702
Question:
Visit the Nucor Steel website and review the company’s career center. What benefits are offered
to Nucor employees? In your opinion, does the company’s treatment of employees lead to
higher performance work systems?
Answer:
Chapter 16: Creating High-Performance Work Systems 237
Internet Exercise #2, page 716
Question:
Go to the National Institute of Standards and Technology (NIST) website and visit the Baldridge
Performance Excellence Program section of the site. Search for the most recent winner of the
Baldridge National Quality Award in Manufacturing and provide an overview of what this
company has accomplished to improve and maintain quality in manufacturing.
Answer:
Student answers may vary. In 2009, the winner of the Baldridge National Quality Award in
238 Part 6: Expanding Human Resources Management Horizons
VIDEO CASE DISCUSSION GUIDE
This final video in the series provides a great opportunity to touch on a number of topics from
the entire course. You might start by guiding students through a discussion of what The Fruit
Guys’ mission and vision might be: to deliver fresh, healthy snacks to working people across
the U.S. From there, you can encourage students to look at how that creates a certain culture,
NOTES FOR END–OF-CHAPTER CASE STUDIES
Case Study 1: MGM Grand Hotel
1. Engaging employees partly occurs in connection with information sharing. Examples of
engaging include short meetings with employees, training programs, keeping them up to
2. High-performance work systems are specific combinations of HR practices, work structures,
and processes that maximize the knowledge, skills, commitment, and flexibility of
3. In question one above, some of the means of information sharing were covered. It definitely
pays off for the hotel because employees feel like they are valued and are able to participate
Case Study 2: Whole Foods Motivates Its Employees in Innovative Ways
1. Managers may have resisted HPWSs because they appear to be a threat to their old ways
(power relationships, routines, and so on). But today’s organizational dynamics are changing
Chapter 16: Creating High-Performance Work Systems 239
2. When a founder and leader of a company retires or dies, it can be a traumatic change for an
organization. Not everyone can imitate that leader or will be comfortable with the style of
3. This is partially an opinion question but probably the answer is “Why not?” High–