With the current rising competitive landscape together with the global economic crisis, firms are under obligation to come up with ways that would ensure they remain at the top while at the same time offering high-value products and services. A conventional approach implemented by numerous organizations is to focus their efforts on ways to maximize productivity. Based on that, high performance is crucial to organizational success. The human resource management literature considers high-performance work practices (HPWP) and human resource management (HRM) effectiveness as alternatives for one another concerning their relationship with the firm's performance (Combs, Liu, Y., Hall & Ketchen, 2006). HPWP and HRM act as both complements and substitutes. Nevertheless, the interaction between HPWP and HRM positively associates to both market performance and innovation in support of our assumption. In our discussion, we would examine high-performance work practices and its aspects that aid in impacting of a firms performance.
Types of High-Performance Work Practices
All of them address specific areas of employment relationships. One can classify HPWP into two dimensions namely workers motivation and skill. Similarly, other researchers identified seven HPWPs from their assessment namely employee participation, profit sharing, appraisals, job description, job security and career opportunities (Tamkin, 2004). A different class of HPWP is administrative human resource system, and human capital enhancing the system. An alternative five basic human resource practices include job rotation, employee involvement practices, online teamwork, problem-solving skills and the decentralization of suggestion and effort programs. The other seven identified areas include employee security, sharing financial performance, minimal status distinction, hiring selectively, extensive training, self-managed teams and high rewards.
The other categories obtainable from the classification of HPWPs are those supporting employee performances, rewards, knowledge and information sharing and decision making. Research conducted by Chow (2004) identified thirty HPWP but condensed them into seven primary groups (Chow, 2004). They include promotion and career development, recruitment and selection, training and development, compensation, strategic orientation of human resource management, employee relations and formalized human resource systems. Zhang and Li (2009) identified the six techniques of HPWP involving well-defined jobs, participation, training, fair sharing of returns, promotion and performance appraisal (Zhang, Y. C & Li, 2009). The other categories realized were three common areas namely the competency of using information, organizing the data and analyzing competency information. An observed characteristic is that HPWP gets practiced addressing employment relationships, and the human resource policies guiding the relations.
Components of HPWP
High-performance work practices are employee management tactics and techniques that increase the productivity and earnings of enterprises (Combs, Liu, Y., Hall & Ketchen, 2006). The primary goal of any contemporary firm is to increase productivity and maintain a continuous advantage without harmful impacts on the workers. An assumption revolves around the models that strive to address the challenge. HPWP involves procedures such as formal employee training, self-directed teams and group-based performance pay. When appropriately implemented and put into consideration, they result in better-performing organizations in areas such as employee and financial outcome. CIPD defined the components of high performance as a vision based on increasing customer value by differentiating an organizations products and services, leadership from the top and throughout the firm to create momentum. Besides, support system and culture which includes performance and people management process, fair treatment of those who leave the organization and engage in the community needs, and decentralized decision-making process.
The various definitions while covering the same ground are also significantly different. Clarity never resulted from the apparent shifts in terminology. The use of the term high performance is frequent in suggesting the link between performances is casual and not proven in practice. Interest in the involvement of human resource (HR) practices and personal, organizational performance is evident in other studies. The outcome of the findings reveals that the full effects of workforce development and improvement realize when put together with a diverse package of aspects such as re-organization and human resource practices, and workplace changes to form the systems (Tamkin, 2004). The systems of HR practices receive many terms ranging from good people management systems to strategic human resource management (HRM).
HPWPs, through significant investment in employees, receive publication as ways to make firms more efficient and flexible. They emerge as an alternative approach to traditional production systems rooted in scientific management principles. Nevertheless, there is an agreement that having efficient human resource structures can develop the return on HPWPs because they require a substantial investment in human capital that disappears when a firm is unable to attract and retain skilled employees. Additionally, efficient human resource management systems can take advantage of innovative capabilities of HPWP that improve the organizations ability to change.
Applebaum et al. (2000) argued that application of the three segments of human resource practices theoretically involves the building of an HPWP system (Appelbaum, 2000). The categories comprise employee enhancing methods such as skill training and development. The other is employee motivation-enhancing practices such as top-down information sharing, improved remuneration and career development. Opportunities that give the employee the ability to advance an extra mile such as teamwork and employee involvement are the other category. The three ways are in unison known as the AMO model of HPWP (Kroon, Van De Voorde & Timmers, 2013). Despite there being no distinction between the elements, current research has established that each component strives to achieve a different objective. The relation between the three parts could form a basis for discussion on the association between human resource management and performance in enterprises.
HPWPs and the AMO Model
An HPWP system is the entire application of only the most appropriate practices related to HRM. It gets based on the consideration that the individual HRM practices are thoroughly researched to contribute to the enhancement of employee output. An illustration is the restrictive selection procedure. Similarly, other ways such as self-managed teams, higher salaries and employee involvement in organization strategy form different suitable approaches (Tamkin, 2004). Additionally, the integration of best practices on organizational performance and employee beyond the combination of individual effects each impact the method. The situation creates a synergic effect that spurs progress. Based on available evidence, systematic strategies are in place to prove that they have higher influence than personal practices. Nonetheless, recent research on HPWP reveals the existence of numerous problems.
An initial observation is the minimal number of the organizations implementing the approach. The other challenge is the varying nature of HPWP between projects. The argument on the existence of synergy between the best practices is usually not in place, and the theoretical foundations of the synergies do not get well analyzed. A theoretical framework for the synergy exists in the AMO model which is an acronym for ability, motivation and opportunity. Each of the elements firmly anchors in work psychology, industrial/organizational psychology and human capital theory. In unison, the AMO components stimulate personal employee performance. At the corporate level, it assists in enhancing the workforce and their attitudes that contribute to institutional outcomes (Macky & Boxall, 2007). Therefore, the HPWP relate to certain types of performance as it is possible to introduce employment practices but fail to have an impact on the work system.
Considering that, there are variations in firms depending on how they uptake different sets of the HPWP system. The differences range from cost minimizers to resource makers, to resource buyers and commitment maximizers. The variation is due to the different type of performance and that not all kind of practices influences the same goals. The synergy effects of the HPWP system only take place when they occur to realize a mutual objective. From the analysis, the three aspects of the AMO Model strive to serve a distinct goal although the performance types can merge to enable boosting of the overall performance (Kroon, Van De Voorde & Timmers, 2013). The circumstance would not allow the integration and solving of the needs of a specific firm.
How HPWP Work
There exist different types of HPWPs identified by scholars from a Contingency, Universalist and the Configurational viewpoint. High-performance working is an emerging organizational model that is still in its infancy. It concerns the competing perspectives of how it operates and its practices. The Universalist approach suggests that the best human resource practices are likely to create maximum output when implemented regardless of the nature and type of firm or workers. On the other hand, the Contingency supporters consider that a combination of work practices will only realize the intended results if applied within a particular organizational setting or a certain group of employees (Tamkin, 2004). Advocates of the Universalist view believe that the HPWP can be embraced to improve employee output in enterprises around the society. Nevertheless, the situation can only realize when one can identify the bundles of best fit and efficiently diffuse the gains in the firm. Research conducted by Thompson (2002) noted that the number of HR activities adopted and the fraction of the workforce covered were differentiating components regarding performance (Thompson, 2000).
The Contingency advocates believe that a combination of the right bundles is not necessarily the main ingredient of producing the required results, but rather the extent to which the practices align to the context of their use. Despite the three viewpoints describing the structures, boundaries and relationships through which an enterprise operates, there is a general relation. Complementing the contingency model, are other aspects such as the resource-based view of the company. It argues that the resources internal to the firm are a competitive advantage to the extent that they are complicated to substitute. HPWPs possess two characteristics that relate to the aspect of inimitability namely casual ambiguity and path dependency. The perspectives match the unique abilities that differentiate a firm from its competitors.
An element of the contingency theory argues for internal likelihood and suggests that practices need to get bundled into meaningful groups of activities. The evidence is available on the bundling phenomenon that makes the difference but the degree to which they align with each other to come up with a meaningful bundle of practice. An illustration is a recent research on HPWP that found a package of activities labelled as workers skill and direction' positively influenced the employees to work beyond terms of the contract (Tamkin, 2004). About that, the bundle of practice negatively impacted employees absence and positively perceived economic performance of the enterprise. Differe...
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