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A high-performance work system (HPWS) is a set of management practices that attempt to create an environment within an organization where employees have greater involvement and responsibility and thus perform better. An HPWS is all about determining what jobs a company needs done, designing the jobs, identifying and attracting the type of employee needed to fill the job, and then evaluating employee performance and compensating them appropriately so that they stay with the company.
Research shows that employees who are highly involved in conceiving, designing, and implementing workplace processes are more engaged and perform better. For example, a study analyzing 132 U.S. manufacturing firms found that companies using an HPWS had significantly higher labor productivity than their competitors. The key finding was that when employees have the power to make decisions related to their performance, can access information about company costs and revenues, and have the necessary knowledge, training, and development to do their jobs—and are rewarded for their efforts—they are more productive.
Another study demonstrated that productivity rates were significantly higher in manufacturing plants where the HRM strategy focused on enhancing human capital. Delery and Doty found a positive relationship between firm financial performance and a system of HRM practices. Researchers found that increased HRM effectiveness corresponded to an increase in sales per employee, cash flow, and company market value.
HPWS can even be used globally to good result. For example, a study of foreign-based firms operating in Russia found significant linkages between HWPS practices, such as incentive-based compensation, job security, employee training, and decentralized decision making, and subjective measures of firm performance.
Creating a high-performance work system (HPWS) involves a series of strategic steps designed to maximize employee performance, engagement, and overall organizational productivity. Here’s a detailed outline of the key steps:
The first step in designing an HPWS is to define what the goals will be. These should be specific, attainable, relevant, and timebound, and focus on continuous improvement in the organization. It isn’t enough, however, to just set clear goals. The goals need to be communicated to employees, and better yet, engaging employees in the process of goal setting can help attain buy-in to the goals.
Once goals and objectives are set, reviewing and analyzing the job design roles is important, to ensure they are aligned with the goals set. Each role should have clear responsibilities, required skills, and expectations for performance. After the roles are reviewed, it is key to implement a recruitment and selection process to hire people with the right mix of skills and abilities to meet the goals.
Ongoing training programs can help enhance knowledge and skills to help meet goals. This might include software training, safety training, or other training that will help meet goals. For example, orientations, job-specific training, and even leadership development training are components of an HPWS and successful companies.
A positive organizational culture is key to ensuring an HPWS. Fostering trust, collaboration, feedback, continuous improvement, and innovation are all hallmarks of an HPWS. This can be achieved by open communication, recognizing and rewarding achievements, and ensuring a positive work environment for all.
Companies that have an HPWS have a culture of regular formal performance evaluations and a culture of continuous feedback. All employees should know what is expected of them and are supported with effective coaching and provided with the tools needed to be successful. Employees should also be empowered to perform their jobs in the way that works for them and be allowed to suggest changes to the way things are done to focus on continuous improvement.
A competitive compensation and benefits package, along with a culture that focuses on work-life balance, is necessary to ensure an HPWS. For example, companies can provide retirement plans, remote work options, and employee wellness programs which contribute to a culture of work-life balance.
Technology can help streamline processes and improve efficiency. For example, software for project management, metrics tracking, and human resource management are all examples of how technology can be utilized to create an HPWS.
As with every other aspect of operations management, technology is changing how job design is done. Technology can aid in almost every aspect of an HPWS, such as providing online screening and assessments for selective hiring, allowing employees to manage benefits, delivering on-demand training to employees, gathering and sharing information among departments to support decision making and transparency, and gathering information from employees or managers to inform decisions about compensation.
While none of these benefits are limited to HPWS-style systems, they are particularly relevant since they address many of the biggest concerns about implementing a system.
When a company focuses on continuous improvement, innovation occurs. Encouraging employees to suggest improvements and review processes can assist in the development of employees, and also a better organization. Constantly measuring progress toward goals and celebrating wins while making changes to systems as needed is important.
Let’s look at Gordon’s e-bike company and consider how he might implement an HPWS.
- Define Clear Goals and Objectives: Gordon establishes clear production targets and quality standards for the e-bike manufacturing process.
- Design Effective Job Roles: Job roles such as welders, assembly line workers, and quality inspectors are clearly defined with specific responsibilities and required skills.
- Recruit and Select the Right People: Gordon uses structured interviews and skills assessments to hire skilled workers who enhance the company culture.
- Provide Comprehensive Training and Development: Continuous training programs are implemented to keep employees updated on new technologies and processes and safety in the manufacturing process.
- Foster a Positive Organizational Culture: Gordon and his management team create a culture of collaboration, and innovation is promoted through team-building activities and open communication channels. Gordon’s “door is always open,” and he is available for feedback, and actually implements feedback given by employees on how processes can be improved.
- Implement Performance Management Systems: Regular performance reviews and feedback sessions are conducted to ensure employees meet performance standards. This is done using a variety of technology tools.
- Empower Employees: Employees are given the autonomy to make decisions and suggest improvements to their work processes. For example, one of the welders suggests moving his station to nearer the warehouse doors, for more fresh air, given the high-heat task they perform. Gordon agrees, and the production team meets to determine the best way to go about this move.
- Create a Competitive Compensation and Benefits Package: Gordon’s company offers competitive salaries, bonuses for meeting production targets, and comprehensive health benefits.
- Enhance Work-Life Balance: Flexible working hours for some of the staff and wellness programs are introduced to support employees’ work-life balance. For example, the production team can choose their preferred shift based on their personal responsibilities.
- Use Technology to Enhance Productivity: Advanced manufacturing software and tools are implemented to streamline production processes. The company also uses technology to assist with HR processes like performance management.
- Encourage Innovation and Continuous Improvement: Employees are encouraged to propose new ideas and improvements, with a focus on continuous innovation. Gordon hosts an “idea” meeting every month, where employees discuss “pain points” and consider how the pain points might be minimized.
- Measure and Analyze Performance: Key performance indicators (KPIs) are tracked, and employee feedback is regularly gathered to assess the effectiveness of the HPWS.
- Adapt and Evolve: Gordon regularly reviews and adjusts the goals and metrics based on performance data and feedback to ensure it continues to meet organizational goals and market demands.
By following these steps, Gordon’s company can create a high-performance work system that enhances productivity, employee satisfaction, and overall organizational success. Note that much of the basics of an HPWS includes the need for effective job design.
Part of the process of an HPWS involves looking at measuring performance, which will be one of the topics in our next tutorial.
Source: This tutorial has been adapted from Saylor Academy and NSCC “Operations Management”. Access for free at https://pressbooks.nscc.ca/operationsmanagement2/. License: Creative Commons Attribution 4.0 International.
