Ch14-Building High-Performance Working Systems and Improving Strategic Results

Fundamentals of
Human Resource
Management
2e
Gary Dessler
Building High-Performance
Work Systems and
Improving Strategic Results
Chapter 14
14-2
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
When you finish studying this chapter,
you should be able to:
1. Define high-performance work system.
2. List four characteristics of high-performance work
systems.
3. Give an example of using evidence-based
management.
4. Discuss, with examples, how to conduct an HR
audit.
5. List and explain at least five HR metrics.
6. Explain the process you would use to select an
outsourcing vendor.
14-3
What Are High-Performance Work
Systems?
High-performance
work system
∟ An integrated set of
human resources
policies and practices
that together produce
superior employee
performance
14-4
High-Performance Human Resource
Policies and Practices
Human resource metric
∟ The quantitative measure of some human
resource management yardstick, such as
employee turnover, hours of training per
employee, or qualified applicants per position
14-5
Comparison of HR Practices in High-Performance
and Low-Performance Companies: Table 14.1
14-6
How High-Performing Firms Organize
Their HR Practices: Table 14.1
1. Helps show why metrics are important
2. Illustrates the things human resource systems must
do to be high-performance systems
3. Shows that high-performance work practices
usually aspire to help workers manage themselves
4. Highlights the measurable differences between the
human resource management systems in high-
performance and low-performance companies
14-7
Evidence-Based Human Resource
Management
Evidence-based human resource
management
∟ The use of data, facts, analytics, scientific rigor,
critical evaluation, and critically evaluated
research and case studies to support human
resource management proposals, decisions,
practices, and conclusions
14-8
What Are HR Audits?
HR audit
∟ An analysis by which an organization measures
where it currently stands and determines what it
has to accomplish to improve its HR function
14-9
What Areas Should the HR Audit
Cover?
• Roles and head count • Payroll
• Legal issues • Documentation and
• Recruitment and record-keeping
selection • Training and
• Compensation development
• Employee relations • Employee and internal
• Mandated benefits communication
• Group benefits • Termination and
transition policies
14-10
Types of Audits
Compliance audits
∟ How well is our company complying with current
federal, state, and local laws and regulations?
Best practices audits
∟ Are our recruitment practices, hiring practices,
performance evaluation practices, and so on
comparable to those of companies with
exceptional practices?
14-11
Types of Audits
Strategic audits
∟ Are our human resource management practices
helping our company achieve its strategic goals
by fostering the required employee behaviors and
organizational outcomes?
Function-specific audits
∟ Audits of one or more specific human resource
management areas, such as compensation or
training and development.
14-12
Some Issues Prompting HR Audits
 Are we in legal compliance?

 Are our human resource department’s practices
supporting our company’s strategy?
 Are we administering our human resource
management functions as productively as we
might be?
 Did our key human resource projects or
initiatives last year produce the results we
intended?
14-13
Some Issues Prompting HR Audits
(cont.)
 Are there issues, such as low morale or poor
performance, that might respond to improved
HR practices?
 What improvements can we institute within HR
to reduce costs?
 How can HR improve the company’s
performance management process?
 Have we instituted policies and practices that
ensure fair treatment of all employees?
14-14
Sample Legal Issues to Audit:
Figure 14.1
14-15
High-Risk Compliance Areas to Audit
Employee Employee
Hiring
evaluations discipline
Inadequate
Inaccurate
Terminations personnel
time records
files
14-16
When to Audit?
 Threshold employee numbers (15, 20, 100) at

which point various federal, state, and local
regulations and laws become applicable
 Business grows to the point where line managers
can no longer make their own hiring, discipline,
and promotion decisions without HR
management’s assistance
 Employer creates or modifies an employee
handbook
14-17
When to Audit? (cont.)
New head of human resource management

arrives
Employee morale, turnover, attendance, or
excessive discipline problems seem to signal
the need to evaluate HR practices
Company becomes a government contractor
or a subcontractor
14-18
The HR Audit Process
1. Decide on the scope of the audit

2. Draft an audit team
3. Compile the checklists and other tools that
are available
4. Know your budget
5. Consider the legalities
6. Get top management support
14-19
The HR Audit Process
7. Develop the audit checklist

8. Collect the data about the company and its
HR practices
9. Benchmark the findings
10. Provide feedback to your firm’s HR
professionals and senior management
11. Create action plans
14-20
Sample Metrics from SHRM
Measurements Library: Figure 14.3
14-21
HR-to-Employee Ratios
(by Organizational Size): Figure 14.2
14-22
Highlights of SHRM® Customized
Benchmarking Service: Figure 14.4
14-23
Strategy and Strategy-Based Metrics
Strategy-based metrics
∟ Metrics that specifically focus on measuring the
activities that contribute to achieving a
company’s strategic aims
14-24
Improving Productivity through HRIS Tracking
Talent Management Applicant Metrics
Recruitment effectiveness measurement process

involves two basic steps:
1. The employer (and vendor) decide how to measure
the performance of new hires
2. The Applicant Tracking System enables the
employer to track the recruitment sources that
correlate with superior hires
14-25
Two Ways to Reduce the Emphasis
on Day-to-Day Operational HR Activities
1. Use more technology
2. Outsource one or
more specific services
14-26
Percent of Surveyed Employers that Outsource
HR Functions Completely, Partially, or Not at All
14-27
Some Top HR Outsourcing Vendors:
Figure 14.5
14-28
Making the Decision to Outsource
The decisions regarding whether to outsource

and what to outsource depend on three things:
Employer size
Financial pros and cons
Strategic issues
14-29
Outsourcing Checklist
14-30
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All rights reserved. No part of this publication may be reproduced, stored in a

retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording, or otherwise, without the prior written
permission of the publisher. Printed in the United States of America.
14-31

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Fundamentals of

 Are we in legal compliance?

 Threshold employee numbers (15, 20, 100) at

New head of human resource management

1. Decide on the scope of the audit

7. Develop the audit checklist

Recruitment effectiveness measurement process

The decisions regarding whether to outsource

All rights reserved. No part of this publication may be reproduced, stored in a

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