Performance management & Best practices

 

Performance management & Best practices

Definition of human resource best practices

As soon as organizations realized the importance of employees, they started to search for a way to benefit from their huge capabilities. If employees are trained, motivated, and encouraged, they can differentiate organizations by increasing organizational creativity, innovation, productivity, and profitability (Lee, Mazzei, & Kim, 2018). This focuses on human potential gave birth to people management within organizations, or in other words, what we call now “human resources management”. Even though the importance of human abilities is not understood at companies’ emersion era, nowadays, organizations know that employees’ output can be improved through management tactics and practices leading to better organizational performance (Ibidunn, Osibanjo, Adeniji, Salau, & Falola, 2015).

 

These practices are mainly called “high performance work practices” (HPWPs) (Pittino, Visintin, Lenger, & Sternad, 2016). “high performance work practices” (HPWPs) appeared in the United States in the nineties and were introduced to many industries such as textile and manufacturing (Karatepe & Olugbade, 2016). However, HPWPs concept underwent several changes in its interpretation. At the beginning it focused on the individual discretionary efforts as a major instigator to organizational performance. Nowadays, the use of HPWPs is to improve both individuals’ lives and organizational performance (Ashton & Sung, 2002) and (Murphy, Torres, Ingram, & Hutchinson, 2018). By adopting HPWPs substantial effects such as increased performance, productivity, and profits appeared on organizations. Naturally, many researchers attempted to cover this interesting topic, however most of those research and studies focused on how to connect HPWPs with organizational performance.

 

 

 

 

 

 

Theory of High-Performance Work Practices

From the time of the industrial revolution, researchers and business leaders have tried to describe and evaluate specific work-related practices and methods that can increase productivity and give a competitive edge to organizations. All the efforts exerted in this area gave birth to many terms such as “high-performance practices”, “employee involvement”, “employee participation” and “flexible work organizations”. What is in common between all previously mentioned terms is that all of them are used to describe workplace practices that underline employees’ contribution role in improving organizational performance. The relationship between HPWPs and organizational performance was mentioned and was found positively correlated by many researchers such as (Combs, Liu, Hall, & Ketchen, 2006), (Shin & Konrad, 2017), (Garg, 2019), and many others. The use of “high performance” assumes that employees’ participation always has a positive impact on organizational productivity and performance (Parks, 1995).

 

The Relationship between HPWPs and Organizational Performance

 

Despite the debate about high performance work practices definition, HPWPs are not considered as a new concept; they are simply work practices that can be intentionally presented to improve organizational performance. They may consist of a mixture of innovative human resources practices which will properly use employee knowledge, skills, and abilities with an aim to achieve organizational performance enhancements. Additionally, HPWPs affect employee engagement and their sense of accomplishment and can be seen as a set of human resource practices that give the organization a competitive advantage (Huselid, 1995) and (Albrecht, Bakker, Gruman, Macey, & Saks, 2015). A broadly accepted definition is that HPWPs are a set of complementary work practices covering three broad areas. These broad areas, as per Sung and Ashton (2005), are: first, high employee involvement practices, second, human resources practices and third, reward and commitment practices.

The concrete fact assuring the positive link between HPWPs and organizational performance was not easy to demonstrate at the begining. However, many researchers tried and succeeded like (Combs, Liu, Hall, & Ketchen, 2006), (Obeidat, Mitchell, & Bray, 2016), and (Garg, 2019) to demonstrate a progressive correlation between HPWPs and organizational performance. They mentioned in their analysis that there is no doubt about the existence of such relationship whereby organizations can increase employee’s performance by implementing HPWPs. Combs, Liu, Hall, and Ketchen (2017) also mentioned that according to strategic human resources theory, the mediators that drive the relation between HPWPs, which should be formalized through organizational systems known as high performance work practices systems, and performance are: research design, context, and organizational strategy. Their analysis showed an increase of 20 standardized units for each unit increase in HPWP use i.e., once HPWPs are applied, organizations who implement them can have 20% increase in their performance in comparison to the previous performance. Several researchers demonstrated the same.

 

 

Organizational Performance

 

Significantly higher levels of performance were found in large firms with a strong human resources management (HRM) system (Wu, Hoque, Bacon, & Bou Llusar, 2015). This clearly demonstrates that a strong HRM system that contains bundles of well selected HPWPs is more likely to have a greater impact on performance (Bowen & Onsoff, 2004) and (Garg, 2019). Therefore, it is useful to emphasize again that the “best” set of HPWPs in a given organization can depend on many criteria and steps preceding their implementation. Then, one of the fundamental steps is inserting HPWPs in the organizational strategy and systems in order to enhance organizational performance (McAlearney, Hefner, Robbins, & Garman, 2016). This enhancement of organizational performance must reach all aspects of the organization, especially human resource management. This is why strategic human resources management (SHRM) theories assert that HPWPs affect organizational performance by increasing employees’ knowledge, skills and abilities, by empowering and motivating them to apply their competencies in the workplace. Applying HPWPs in an organization provides employees with better probabilities of developing and improving their skills than an organization which does not apply them (Ogbonnaya & Valizade, 2018). HPWPs can also increase motivation between employees encouraging them to perform better. As a result, HPWPs can benefit organizations in higher performance which can generate additional profits to both employer and employee (Godard, 2004) and (Shin & Konrad, 2017).

 

 

Ashton, D. N., & Sung, J. (2002). Supporting Workplace Learning for High Performance Working. International Labour Organization.

Albrecht, S. L., Bakker, A. B., Gruman, J. A., Macey, W. H., & Saks, A. M. (2015). Employee Engagement, Human Resource Management Practices and Competitive Advantage. Journal of Organizational Effectiveness: People and Performance, 2, 7-35. https://doi.org/10.1108/JOEPP-08-2014-0042

 

Ashton, D. N., & Sung, J. (2002). Supporting Workplace Learning for High Performance Working. International Labour Organization.

Bowen, D. E. and Ostroff, C. (2004). Understanding HRM-Firm Performance Linkages: The Role of the “Strength” of the HRM System. Academy of Management Review, 29, 203-221. https://doi.org/10.5465/amr.2004.12736076

Combs, J., Liu, Y., Hall, A., & Ketchen, D. (2006). How Much do High-Performance Work Practices Matter? A Meta-Analysis of Their Effects on Organizational Performance. Personnel Psychology, 59, 501-528. https://doi.org/10.1111/j.1744-6570.2006.00045.x

Godard, J. (2004). A Critical Assessment of the High-Performance Paradigm. British Journal of Industrial Relations, 42, 349-378. https://doi.org/10.1111/j.1467-8543.2004.00318.x

Garg, N. (2019). High Performance Work Practices and Organizational PerformanceMediation Analysis of Explanatory Theories. International Journal of Productivity and Performance Management, 68, 797-816. https://doi.org/10.1108/IJPPM-03-2018-0092

Huselid, M. A. (1995). The Impact of Human Resource Management Practices on Turnover, Productivity, and Corporate Financial Performance. Academy of Management Journal, 38, 635-672. https://doi.org/10.2307/256741

Ibidunn, S., Osibanjo, A. O., Adeniji, A. A., Salau, O. P., & Falola, H. O. (2015). Talent Retention and Organizational Performance: A Competitive Positioning in Nigerian Banking Sector. Periodica Polytechnica Social and Management Sciences, 24, 1-13. https://doi.org/10.3311/PPso.7958

Karatepe, O. M., & Olugbade, O. A. (2016). The Mediating Role of Work Engagement in the Relationship between High-Performance Work Practices and Job Outcomes of Employees in Nigeria. International Journal of Contemporary Hospitality Management, 28, 2350-2371. https://doi.org/10.1108/IJCHM-03-2015-0145

Ketchen Jr, D. J., Crook, T. R., Todd, S. Y., Combs, J. G., & Woehr, D. J. (2017). Managing Human Capital. The Oxford Handbook of Strategy Implementation (pp. 283-311). Oxford University Press.

Lee, Y., Mazzei, A., & Kim, J. N. (2018). Looking for Motivational Routes for Employee-Generated Innovation: Employees’ Scouting Behavior. Journal of Business Research, 91, 286-294. https://doi.org/10.1016/j.jbusres.2018.06.022

McAlearney, A. S., Hefner, J., Robbins, J., & Garman, A. N. (2016). Toward a High-Performance Management System in Health Care, Part 4: Using high-Performance Work Practices to Prevent Central Line-Associated Blood Stream Infections—A Comparative Case Study. Health Care Management Review, 41, 233-243. https://doi.org/10.1097/HMR.0000000000000067

 

Murphy, K., Torres, E., Ingram, W., & Hutchinson, J. (2018). A Review of High Performance Work Practices (HPWPs) Literature and Recommendations for Future Research in the Hospitality Industry. International Journal of Contemporary Hospitality Management, 30, 365-388. https://doi.org/10.1108/IJCHM-05-2016-0243

Ogbonnaya, C., & Valizade, D. (2018). High Performance Work Practices, Employee Outcomes and Organizational Performance: A 2-1-2 Multilevel Mediation Analysis. The International Journal of Human Resource Management, 29, 239-259. https://doi.org/10.1080/09585192.2016.1146320

Obeidat, S. M., Mitchell, R., & Bray, M. (2016). The Link between High Performance Work Practices and Organizational Performance. Employee Relations. https://doi.org/10.1037/t53260-000

Pittino, D., Visintin, F., Lenger, T., & Sternad, D. (2016). Are High Performance Work Practices Really Necessary in Family SMEs? An Analysis of the Impact on Employee Retention. Journal of Family Business Strategy, 7, 75-89

Parks, S. (1995). Improving Workplace Performance: Historical and Theoretical Contexts. Monthly Labor Review, 118, 18.

Shin, D., & Konrad, A. M. (2017). Causality between High-Performance Work Systems and Organizational Performance. Journal of Management, 43, 973-997. https://doi.org/10.1177/0149206314544746

Wu, N., Hoque, K., Bacon, N., & Bou Llusar, J. C. (2015). High-Performance Work Systems and Workplace Performance in Small, Medium-Sized and Large Firms. Human Resource Management Journal, 25, 408-423. https://doi.org/10.1111/1748-8583.12084