Chapter 9

CREATING AND MAINTAINING

HIGH-PERFORMANCE
ORGANIZATIONS
 What Do I Need to Know?
LO 9-1 Define high-performance work systems, and identify
the elements of such a system.
LO 9-4 Explain how human resource management can
contribute to high performance.
 High-Performance Work Systems 1 of 4

High-performance work system

– Right combination of people, technology, and
organizational structure that makes full use of the
organization’s resources and opportunities in
achieving its goals.
– Each of these elements must fit well with the others in
a smoothly functioning whole.
Figure 9.1 Elements of a High-Performance
Work System

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 High-Performance Work Systems 2 of 4

Elements of a High-Performance Work System

1. Organizational structure: way organization groups its people
into useful divisions, departments, and reporting
relationships.
2. Task design: determines how details of the organization’s
necessary activities will be grouped, whether into jobs or
team responsibilities.
3. People: well suited and well prepared for their jobs.
4. Reward systems: encourage people to strive for objectives
that support organization’s overall goals.
5. Information systems: enable sharing information widely.
High-Performance Work Systems 3 of 4

In a high-performance work system, all the elements –

people, technology, and organizational structure – work
together for success.
HRM’s Contribution to High Performance 1 of 2
HRM Practices
– Job design
• Enable the organization to benefit from teamwork and
employee empowerment
– Recruitment and Selection
• Employees who contribute to teamwork, empowerment, and
knowledge sharing
– Training
• Teach employees the specific skills they need to perform the
duties of their job
– Performance Management
• Ensure that employees’ work contributes to achieving the
organization’s goals
– Compensation
Figure 9.3 Employee Performance as a Process

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HRM’s Contribution to High Performance 2 of 2

Guidelines for performance management

1. Define and measure performance in precise terms.
2. Link performance measures to meeting customer
needs.
3. Measure and correct for the effect of situational
constraints.
 Summary 1 of 2
• A high-performance work system is the right combination
of people, technology, and organizational structure that
makes full use of the organization’s resources and
opportunities in achieving its goals.
• A high-performance work system achieves the
organization’s goals, typically including growth,
productivity and high profits.
 CHAPTER 10
MANAGING EMPLOYEES’
PERFORMANCE
 What Do I Need to Know?
LO 10-1 Identify the activities involved in performance management.
LO 10-2 Discuss the purposes of performance management systems.
 Introduction

Performance management
– Process through which managers ensure that
employees’ activities and outputs contribute to the
organization’s goals.
– Process requires:
• Knowing what activities and outputs are desired
• Observing whether they occur
• Providing feedback to help employees meet
expectations
 Test Your Knowledge 1 of 4

If the performance management system created

competition among team members, I would
A. Make collaboration a criterion to be evaluated.
B. Nothing, competition is good.
C. Increase the specificity of the feedback.
D. Focus on personal traits rather than behaviors.
Figure 10.1: Steps in the Performance Management Process

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Purposes of Performance Management

Strategic Purpose
– Effective performance management helps the
organization achieve its business objectives
Administrative Purpose
– Ways in which organizations use the system to
provide information for day-to-day decisions about
salary, benefits, and recognition programs
Developmental Purpose
– Serves as a basis for developing employees’
knowledge and skills
Criteria for Effective Performance Management

Fit with strategy

Validity
Reliability
Acceptability
Specific feedback
Figure 10.2: Contamination and Deficiency of a
Job Performance Measure

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 Test Your Knowledge 2 of 4

Sarah is a computer programmer whose job

mainly consists of independently coding software.
Interpersonal and teamwork skills are included on
performance appraisal. Measuring these skills
most closely represents:
A.Criterion contamination
B.Criterion deficiency
C.Unreliability
 Summary 1 of 4
• Performance management is the process through
which managers ensure that employees’ activities and
outputs contribute to the organization’s goals.
• Organizations establish performance management
systems to meet three broad purposes:
1. Strategic purpose
2. Administrative purpose
3. Developmental purpose
• Performance measures should fit with the organization’s
strategy by supporting its goals and culture.
 Chapter 11
SEPARATING AND
RETAINING EMPLOYEES
 What Do I Need to Know?

LO 11-1 Distinguish between involuntary and voluntary turnover,

and describe their effects on an organization.
LO 11-2 Discuss how employees determine whether the
organization treats them fairly.
LO 11-3 Identify legal requirements for employee discipline.
LO 11-4 Summarize ways in which organizations can discipline
employees fairly.
LO 11-5 Explain how job dissatisfaction affects employee
behavior.
LO 11-6 Describe how organizations contribute to employees’
job satisfaction and retain key employees.
 Introduction

• Organizations need to manage high-performing and low-

performing employees
• Retaining employees helps retain customers and
increase sales.
• Organizations with low turnover and satisfied employees
tend to perform better
Managing Voluntary and Involuntary Turnover 1 of 3

What was the primary reason you’ve ever quit a

job?
a) I did not like my boss or coworkers
b) I was not a fit with the company culture
c) Better pay somewhere else
d) More interesting or challenging work somewhere
else
e) I was fired or laid off
f) Other
Managing Voluntary and Involuntary Turnover 2 of 3

Involuntary Turnover Voluntary Turnover

• Turnover initiated by an • Turnover initiated by
employer. employees.
• Often with employees who • Often when the
would prefer to stay. organization would prefer
to keep them.
 Table 11.1: Costs Associated with Turnover

Involuntary Turnover Voluntary Turnover

Recruiting, selecting, and Recruiting, selecting, and
training replacements training replacements
Lost productivity Lost productivity
Lawsuits Loss of talented employees
Workplace violence
Managing Voluntary and Involuntary Turnover 3 of 3

Employment-at-Will Doctrine
– If the organization and employee do not have a
specific employment contract, the employer or
employee may end the employment relationship at
any time.
– Implied contracts
– Discharge cannot violate a law or public policy
 Test Your Knowledge 1 of 5
True (A) or False (B)
1. A manager who decides to fire an employee
should quietly take action alone and then let
others know afterwards.
2. Separating employees has financial and
personal risks.
 Employee Separation 1 of 11

• Organizations must develop a standardized, systematic

approach to discipline and discharge
• Not to be left solely to the discretion of individual
managers or supervisors
• Should be based on principles of justice and law
• Should allow for various ways to intervene
 Employee Separation 2 of 11

Outcome Interactional Procedural

Fairness Justice Justice
A judgment that A judgment that A judgment that
the the organization fair methods were
consequences carried out its used to determine
given to actions in a way the
employees are that took the consequences an
just. employee’s employee
feelings into receives.
account.
Figure 11.1: Principles of Justice

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 Test Your Knowledge 2 of 5

A company whose earnings are very low has to reduce the

amount given in raises to avoid laying people off. The
amount of the raise for each employee is determined
objectively based on their performance. An employee
working for this company will most likely feel
____________ and _________________.
a) High outcome fairness; high interactional injustice
b) Low outcome fairness; high procedural justice
c) Low interactional justice, high outcome fairness
d) Low outcome fairness, low procedural justice
 Employee Separation 3 of 11
Legal Requirements
Wrongful Discharge Discrimination
Discharge may not violate • Employers must make
an implied agreement. discipline decisions
– e.g., employer had promised without regard to a
job security person’s age, sex, race,
– e.g. action inconsistent with or other protected status.
company rules.
• Evenhanded, carefully
Discharge may not violate documented discipline
public policy. can avoid such claims.
– e.g., terminating employee
for refusing to do something
illegal or unsafe.
 Employee Separation 4 of 11

Employees’ Privacy
– Information gathered and used for discipline must be
relevant.
– Privacy issues concerning the employer’s wish to
search or monitor employees.
– Employers must be prudent in deciding who will see
the information
Table 11.2 Measures for Protecting Employees’ Privacy

Ensure that information is relevant.

Publicize information-gathering policies and consequences.
Request consent before gathering information.
Treat employees consistently.
Conduct searches discreetly.
Share information only with those who need it.
 Test Your Knowledge 3 of 5
Pam Jones worked for 41 years at the same company and
had positive performance ratings and personnel records.
She needed a calculator for work which she purchased with
her own money but was not reimbursed because she lost
the receipt. Later, a security guard stopped her as she was
leaving work and discovered the calculator in her
belongings. After a brief internal investigation, she was fired
and it was announced through internal notices that she had
committed a theft. The employee sued for libel, saying the
company used her as an example to prevent other thefts.
 Employee Separation 5 of 11

Notification of Layoffs
– Organizations that plan broad-scale layoffs may be
subject to the Workers’ Adjustment Retraining and
Notification Act (WARN)
– Employers required to give notice before any closing
or layoff
 Test Your Knowledge 4 of 5
After hiring Bob for a newly created marketing specialist
position, his boss assures him that he will be secure in the
job until he retires. A year later, that department is
eliminated. Bob complains he was guaranteed
employment until retirement. Is he right?
a) No, an employer can hire or fire someone whenever they want.
b) No, there was no written contract.
c) Yes, he was given a verbal contract.
 Employee Separation 6 of 11
Progressive Discipline

Hot-Stove Rule Progressive Discipline

Principle of discipline that says
discipline should be like a hot
stove, giving clear warning and
following up with consistent,
objective, and immediate
consequences.
A formal discipline process in
which the consequences
become more serious if the
employee repeats the offense.
Figure 11.2: Progressive Discipline Responses

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 Employee Separation 7 of 11
Rules of behavior should cover disciplinary
problems such as:
1. Tardiness
2. Absenteeism
3. Unsafe work practices
4. Poor quantity or quality of work
5. Sexual harassment
6. Impaired by alcohol or drugs
7. Theft of company property
8. Cyberslacking
Figure 11.3 Options for Alternative Dispute Resolution
 Employee Separation 8 of 11
Alternative Dispute Resolution

Open-Door Policy Peer Review

An organization’s policy of
making managers available to
hear complaints.
Process for resolving disputes
by taking them to a panel
composed of representatives
from the organization at same
levels as the people in the
dispute.
 Employee Separation 9 of 11
Alternative Dispute Resolution (continued)

Mediation
Nonbinding process in
which a neutral party from
outside the organization
hears the case and tries to
help the people in a conflict
arrive at a settlement.
Arbitration
Binding process in which a
professional arbitrator from
outside the organization
(usually a lawyer or judge)
hears the case and resolves
it by making a decision.
 Employee Separation 10 of 11

Employee assistance programs (EAP)

– A referral service that employees can use to seek
professional treatment for emotional problems or
substance abuse.
– Many EAPs are fully integrated into employers’ overall
health benefits plans.
 Employee Separation 11 of 11

Outplacement counseling
– A service in which professionals try to help dismissed
employees manage the transition from one job to
another.
– Goals are to help former employee address
psychological issues associated with losing a job-
grief, depression and fear, while helping them find a
new job.
Due Process of Termination 1 of 11
 Due Process of Termination 2 of 11

Termination by the employer

• You can only terminate an employee in the
Philippines if you have a just cause or an
authorized reason.
 Due Process of Termination 3 of 11

Termination by the employer

• According to Article 282 of the Philippines Labor
Code, the following just causes by the
employee can be the basis for firing an
employee in the Philippines:
– serious misconduct or willful disobedience
– gross and habitual neglect of duty
– fraud or deliberate breach of trust
– commission of a crime or offense
– other similar reasons
 Due Process of Termination 4 of 11

Termination by the employer

• However, Article 283 states that you can also terminate an employee
for authorized causes, including business reasons such as:
– installation of labor-saving devices
– redundancy
– reduction of costs to prevent losses
– the closing or cessation of operation

• Also, if your employee suffers from a health condition that lasts

more than six months or the law prohibits them from working with
such disease or working is harmful to themselves or their co-
workers, you are entitled to terminate their contract (Article 284,
Labor Code).
 Due Process of Termination 5 of 11

Voluntary resignation by the employee

• The second type of employee termination is when the
employee decides to resign. According to Article 285 of
the Labor Code, employees in the Philippines can quit
their jobs either with or without a just cause.
• Without a cause, your employee needs to hand in a
letter of resignation with a one-month notice. If they do
not submit a notification, you can charge them for any
concurrent damages. For example, for the amount of
work they fail to deliver due to their untimely resignation.
 Due Process of Termination 6 of 11

Voluntary resignation by the employee

• However, if your employee resigns for any of the
following reasons, they do not have to submit
a resignation letter:
– a grave insult to the honor and person of the
employee
– inhuman and unbearable treatment by the employer
– crime committed against the person of the employee
or any immediate members of the employee’s family
– other similar causes
 Due Process of Termination 7 of 11

Voluntary resignation by the employee

• Note that you don’t have to pay separation
compensation if your employee leaves
voluntarily. The benefit only applies if the
employee loses their job due to reasons that are
not their fault. For example, if you close down
the business or aggregate their position.
 Due Process of Termination 8 of 11

Voluntary resignation by the employee

• Note that you don’t have to pay separation
compensation if your employee leaves voluntarily.
The benefit only applies if the employee loses their job
due to reasons that are not their fault. For example, if
you close down the business or aggregate their position.
• However, there are certain conditions where the
employee is entitled to a separation pay:
– when the employment contract or Collective Bargaining
Agreement (CBA) provides a separation payment

– when the company’s practice or policy authorize it

 Due Process of Termination 9 of 11

Termination of a probationary employee

• According to Article 281 of the Labor Code, the
probationary period in the Philippines can last for up to
six months. (Exceptions exist for this article)
• If during this period it becomes evident that the
employee fails to meet the company’s standards or any
of the above-mentioned just causes occur, you are
eligible to terminate their contract.
• Also, keep in mind that if your employee’s contract
continues after the end of the probationary period, they
automatically become a regular employee.
 Due Process of Termination 10 of 11

What are the consequences of employee’s

unfair dismissal in the Philippines?
• If you fail to follow the procedural due process in cases
of legal and authorized termination of your employee,
you may face further consequences as it will create a
legitimate ground for the employee to complain.
• In such cases, the burden to prove that the dismissal
was valid will fall on the shoulders of the employer.
 Due Process of Termination 11 of 11

What are the consequences of employee’s

unfair dismissal in the Philippines?
• Article 279 of the Philippines’ Labor Code states that if
you terminate an employee without a just cause, they
are entitled to any of the following:
– Reinstatement without loss of seniority rights
– Separation pay of one month pay for every year of service
– Full back wages, inclusive of allowances and other benefits of
their monetary equivalent from the time compensation was
withheld up to the time of reinstatement
 Employee Engagement

Employee engagement is the degree to which

employees are fully involved in their work and the
strength of their commitment to their job and
company.
• Employees who are engaged and provide a clear
competitive advantage to that firm, including higher
productivity, better customer service and lower turnover.
 Job Withdrawal 1 of 2
Job Withdrawal
– A set of behaviors with which employees try to avoid
the work situation physically, mentally, or emotionally.
– Results when circumstances such as the nature of
the job, supervisors and coworkers, pay levels, or the
employee’s own disposition cause the employee to
become dissatisfied with the job.
Figure 11.4 Job Withdrawal Process

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 Job Withdrawal/Job Dissatisfaction

Personal Negative affectivity

Dispositions Core self-evaluations

Tasks & Roles Role ambiguity, conflict and overload

Supervisors Negative behavior by managers

and Coworkers Conflicts between employees

Pay is an indicator of status

Pay & Benefits
Pay & benefits enhance self-worth
 Role conflicts
Military reservists who are sent overseas often experience
role conflict among three roles: soldier, family member, and
civilian employee. Overseas assignments often intensify
role conflicts.

© Ariel Skelley/Getty Images

 Job Withdrawal 2 of 2

Behavior change
• Whistle-blowing
• Lawsuits
Physical job withdrawal
Psychological withdrawal
• Decrease in job involvement
• Decrease in organizational commitment
 Job Satisfaction 1 of 7

Job satisfaction
– a pleasant feeling resulting from the perception that
one’s job fulfills or allows for the fulfillment of one’s
important job values.
– 3 components of job satisfaction are:
1. Values
2. Perceptions
3. Ideas of what is important
 Job Satisfaction 2 of 7

Personal Dispositions
– Negative affectivity and negative core self-evaluation,
are associated with job dissatisfaction
– A positive attitude often raises overall levels of
employee satisfaction
Figure 11.5 Increasing Job Satisfaction

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 Figure 11.6
Steps in the
Role Analysis
Technique

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 Job Satisfaction 3 of 7

Tasks and Roles

– Job complexity
– Meaningful work
– Clear and appropriate roles
• Role analysis technique - formally identifying
expectations associated with a role
 Job Satisfaction 4 of 7

Supervisors and Co-Workers

– Both can affect an employee’s job satisfaction.
– A person may be satisfied with them because they
1. share same values, attitudes, and philosophies.
2. provide social support, meaning they are sympathetic
and caring.
3. help the person attain some valued outcome.
 Job Satisfaction 5 of 7

Pay and Benefits

– HR should monitor pay levels in their industry and the
trades they employ
– Two aspects of pay satisfaction influence job
satisfaction
• Satisfaction with pay structure
• Pay raises
 Job Satisfaction 6 of 7

How can an organization measure whether efforts to have

fun at work and build positive work relationships can
actually translate to greater job satisfaction?
 Test Your Knowledge 5 of 5

Serena feels her job processing payroll checks is

boring and uninteresting. Which intervention would
be most appropriate to retain Serena?
a) Communicating the companies values
b) Increasing her pay
c) Expanding her job
d) Hiring someone she can chat with during the day
 Job Satisfaction 7 of 7

Monitoring Job Satisfaction

• Employers should be aware of satisfaction levels, so
they can make changes if employees are dissatisfied.
• Usual way to measure job satisfaction is to survey.
• A systematic, ongoing program of employee surveys
should be part of the organization’s HR strategy to
monitor trends and prevent voluntary turnover.
• The exit interview
Figure 11.7 Example of Job Descriptive Index (JDI)

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Figure 11.8 Example of a Simplified, Nonverbal Measure
of Job Satisfaction

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 Summary 1 of 4

• Involuntary turnover occurs when the organization

requires employees to leave, often when they would
prefer to stay.
• Voluntary turnover occurs when employees initiate the
turnover, often when the organization would prefer to
keep them.
 Summary 2 of 4
• Employees draw conclusions based on outcomes of
decisions regarding them, procedures applied, and way
managers treat employees when carrying out those
procedures.
• Employee discipline should not result in wrongful
discharge, such as a termination that violates an implied
contract or public policy.
• Discipline should be administered evenhandedly, without
discrimination.
 Summary 3 of 4
• Discipline should follow principles of the hot-stove rule,
meaning discipline should give warning and have
consequences that are consistent, objective, and
immediate.
• A system that can meet these requirements is
progressive discipline, in which rules are established and
communicated, and increasingly severe consequences
follow each violation of the rules.
• Organizations may also resolve problems through
alternative dispute resolution.
 Summary 4 of 4
• Circumstances involving the nature of a job, supervisors
and coworkers, pay levels, or employee’s own
disposition may produce job dissatisfaction. When
employees become dissatisfied, they may engage in job
withdrawal.
• To prevent job withdrawal, organizations need to
promote job satisfaction which is related to a person’s
values and based on perception.
– Different employees have different views of which values are
important.