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LECTURE 12 – 15 : INVESTMENT PERSPECTIVE OF HR : WHY SHOULDORGANIZATIONS INVEST IN HR ?
The answer lies in the contribution of high performance work practices. Many studies haveshown the substantial economic benefits of adopting high-commitment or high-performancework practices in contrast to conventional ‘scientific’ management typical of ‘modernist’organizations. Often described as ‘Japanese” management practices, the case for implementingsuch approaches is strong. The “assembly plants which had adopted flexible or leanmanufacturing methods and associated employment-relation practices far outperformed othersusing mass production methods.These high commitment work practices are characterized by• Suggestion schemes, Quality Circles, Problem-solving groups or other forms of employee participation in idea generation• Employee participation in decision making• Freedom of expression• Extensive teamwork including self-managing teams• Reformulation of work to make best use of upgraded skills.Participation and involvement means that power shifts from middle managers to further downthe organizational hierarchy – those closest to the customer or the production process.Companies operating such approaches include Levi Strauss, Motorola and Honeywell. What iscommon about high performing companies in their agenda to create relationships withemployees which support their business objectives. Employee relations are therefore a priorityand ‘to push the execution of employee relations policies down to the lowest level possible,compatible with t he organization’s overall values.’ Corporate values are most clearly visible inreward policies which are sometimes used to instill specific values. Profit-related pay and shareownership are obvious manifestations of value statements about the worth of the people to theorganization. Similarly, formal communication transmit values, through usually more isunderstood by behavior of the people conveying the message then by the words used.
 
Despite the evidence from the organizations which practice Total Quality that these practiceswork, diffusion seems to be slow. The main barrier appears to be that traditionally the focus of management has been on the financial and strategic aspects of the business, rather than onemployee relations. Since high-commitment work practices require major up-frontinvestments, such as in training and higher rates of pay, a willingness to take risk that thesemeasures will pay off is required; and many management teams are risk averse. Political and power barriers can get in the way of implementing high-commitment work practices.
How can HR help to implement high performance work practices?
I By creating a culture which is supportive of high performanceHigh performances does not occur in vacuum. The organization’s culture must be conductive to productivity and the quality improvement.II By influencing attitudesHR professionals can be effective in bringing about change through their cross-organizationalinfluence, ability to design structures and processes which support the business strategy andhelping to create the culture changes through values and communication which supports newways of working. HR can help set up benchmarking visits to organizations which are achievingoutstanding results through people. Skillful use of data can stimulate the need for changeamongIII By designing and implementing HR processes which support the business strategyAt a practical level to create the conditions for high performance, HR processes such as rewardsystems need to be aligned to the new ways of working. The following HR processes aretypical of ‘vanguard’ companies described by O’toole:
Highly selective recruitment
Extensive training and skill development
 
Contingent or performance-related pay , at high rates
Employee share ownership
Benefits tailored to individual needs
Providing some degree of employment security
Sharing information about a firm’ goals and results.Performance managementManaging performances is perhaps the key responsibility of the line managers and an areawhere a partnership between line and HR can be most beneficial. Hr can help managers tounderstand how to define roles in the light of business drivers and how to identify thecapabilities required to do the job. The key performance indicators for each role should derivefrom business drivers and are then built into role processes. This makes each job roleresponsive to the changing business environment.The four key elements of performance management are:
A common understanding of the organizations goals
Shared expectations of how individuals can contribute
Employee with the skill and ability to meet expectations
Individuals who are fully committed to the aims of the organizationIn managing performances mangers should ensure that the employees are appropriatelyfocused into roles, developed and managed.Job fit and job design – what role can HR play?HR can develop assessment processes to ensure that the ‘right’ people are selected for roles.HR can work with the line to develop self-assessment process. The pace of change is so fastthat job description, which create boundaries, are inappropriate. Important responsibilities fall between the gaps and the most job descriptions are not current for more than few months. Whatis needed is a broad role description, with some ‘fuzzy’ boundaries to allow for growth.
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