Module: Management Practice Module Code: EB415020S Submission date: 19/04/2012 S.I.

D: Lecturers Name: Michael Coffey Faculty of Science and Technology Department of the Built Environment

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Propose and critically discuss the human resource management required to produce high-performance. Introduction High Performance is produced by employees if they are valued as an integral mechanism for achieving the organisations objectives and are reciprocated for their efforts to enable commitment and motivation towards producing a high performance work culture. Best Practice versus Best Fit Debate HRM academics such as Pfeffer (1998), Guest (1999) and Delery and Doty (1996) made contributions to a list of best practice solutions, with a one size fits all approach towards managing the organisations people in order to obtain high performance. However, Capelli and Crocker-Hefter (1996), and Purcell (1999) appear to have been strongly influenced by the Contingency perspective (the theory that claims that there is no best way to organise a firm) to management and have criticised best practice/high commitment HRM models for their lack of flexibility, and further elaborated on the issue that, an organisation in any particular industry may have its own distinct management practices that may not be in accord with the best practice route to managing human resources and therefore a one size fits all approach to HR practice may not suit every organisation. However, it is important to recognise that a factor that is critical of the best fit model is that HRM is governed by institutional forces and therefore it cannot be assumed that employees are free agents able to make independent decisions (Armstrong 2010). From the above argument the author has considered and agreed that both sides of the argument are valid when constructing a HRM strategy to produce high performance. Therefore, when proposing a HRM approach to produce high performance the author considers that best practice HR models should be considered as a starting point in the development of a HRM strategy and adapted to suit the overall business requirements of the organisation by Bundling McDuffie (1995) several HR practices to mould a best fit solution to produce a high performance work environment.

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Proposal High performance is achieved by taking a strategic approach towards managing human resources. The human resource function of an organisation is recognised and considered as an important strategic resource for facilitating the implementation of the corporate strategy. This means that the HRM function must be considered as a strategic partner in the implementation of the organisations corporate strategy and should be considered as a value-added activity rather than a functional support discipline. The means in which HRM can exert its influence upon an organisation and generate high performance is to facilitate the implementation of the organisations strategy by recruiting and selecting, retaining, and investing in training the right people, for the appropriate positions, who possess the necessary characteristics, motivation, and abilities to continuously improve and maintain a high performance environment, by being engaged in the work they carry out and the commitment they make towards the betterment of the organisation. The organisation in return makes an institutional commitment to value the well being of those people and compensates them with financial incentives, rewards and recognition, based on their performances. Competitive advantage is achieved by ensuring that the firm has higher quality people than its competitors' (Purcell et al, 2003) Pfeffer (1998) outlines a set of coherent HR practices that may be used to produce high performance in the work place (which strongly influences the proposal being put forward in this report, to enable a high performance work environment) and states that effective management of people can produce substantially enhanced economic performance and that the closer organisations get to implementing the best practice approach to HRM the greater their performance is likely to be. To enable a committed workforce requires a reciprocating and positive psychological contract (Armstrong 2010) in which the organisation promotes confidence in the workforce by offering employment security and regards employees as critical assets to enable the long term viability and success of the organisation. Whilst employment Page | 3

security may be subject to market forces, an organisation that makes a commitment to retaining and nurturing its people in a positive manner promotes a sense of loyalty towards the organisation thus generating a responsive work place attitude. The benefits of employment security and a concern for the future careers of its workforce have a two-fold advantage to an organisation 1) it generates a committed workforce that releases ideas and hard work towards achieving the business objectives of the organisation, 2) retains a talented workforce and reduces the cost of turnover in terms of finding, replacing and training that lost talent. However, the retention practice is subject to the continued growth and prosperity of the organisation. Layoffs put important strategic assets on the street for the competition to employ (Pfeffer 1998) If the organisations goal is to avoid laying-off people and therefore retaining its talent, then it is imperative that the organisation hire very sparingly and place strategic importance in the implementation of a comprehensive and structured recruitment policy. HR must engage in a sophisticated recruitment and selection process for hiring outstanding human talent, that possess the necessary characteristics to aid the achievement of the corporate goals of the organisation. The definition of outstanding talent in a HR context is people who possess a range of social, interpersonal and team working skills, in addition to technical ability and a high level of drive and motivation. The recruitment campaign may consist of utilising appropriate advertising mediums to attract suitable candidates for the positions being filled. Once a batch of suitable candidates has been shortlisted using a process of elimination, the object is then to subject candidates to a battery of tests such as personality, intelligence, motivation and technical competency testing (Guest, 1999) alongside background and reference checks to assess their suitability for the positions in order to facilitate and justify selection. To attract the best and brightest talent to the organisation, requires a comprehensive and sophisticated reward strategy that is fair, consistent, and transparent (Armstrong 2010) and which is reflective of the added value that talented individuals bring to the organisation. The organisation is required to make a firm commitment to providing

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sufficient compensation to employees for their knowledge, skills, abilities, and performance accomplishments. The aim of reward management is to develop a performance culture that allows the motivation and commitment of its staff, retain high performing individuals, promote autonomous working and develops a positive employment relationship and psychological contract (Armstrong 2010). The success of a pay system depends on linking organisational objectives and strategies to compensation so that individuals are encouraged to work in a manner that benefits the company and the stakeholders (Mathis and Jackson 2011) In organisations with high performance work practices, compensation is disbursed equitably with fairness and the amount of benefits that individuals receive is subject to the value they generate for the organisation. Reports show that in organisations where poor practices are implemented in disbursing employee compensation, such as in situations where employees are not paid equitably compared to employees performing similar jobs in other organisations, or where a high performing individual receives the same benefits as an individual who has a poor record may be received with contempt and frustration by the high performing individual. Organisations which portray such practices usually complain of high turnover and may lack the talent that is needed to compete effectively in the marketplace. Thompson (2002) however, states that a reward structure is not just confined to salary and benefits but includes non monetary benefits such as autonomous working and responsibility, career advancement opportunities, learning and development, intrinsic motivation and quality of working life. Therefore it is not only advantageous to consider implementing good practice in reward management but is essential to the well being of the organisation in its ability to attract and retain the best possible talent. Once the right people have been recruited, the object then is to provide the newly acquired talent with an extensive training, learning and development (Pfeffer 1998) environment that facilitates the enhancement of that talent. Wright and Gardner (2003) note that an organisation that invests in providing a committed learning environment Page | 5

for its people which allows the broadening of their skills and abilities possess a competitive edge in the marketplace and therefore talent development is considered as an important HR practice to produce a high performance work culture. Pedler et al, (1991) also agree on the importance of sustaining an effective training and learning environment for its members and state that a learning organisation is one which facilitates the learning of all its members and continually transforms itself. As stated earlier with regard to job security and retention practice, the organisation can only sustain worthwhile investment in training and development if it is doing well. The problem that presents itself is when an organisation is doing well the expectation is that the workforce will be busiest and under pressure to meet the extra demand and therefore not able to participate in extra training and learning activities. The flipside to this dilemma is that in times of less demand, members of the organisation will have the extra time to participate in furthering their skills but may find that training and development resources are least likely to be available due to spending cuts and budgetary restraints. However, learning and development is considered to be an essential component of high performance work systems and therefore to produce high performance requires a multi skilled workforce that is up to date with the latest work practices, innovations and technology to allow the organisation to improve its overall performance through its people and therefore a vital source of gaining a competitive advantage in the marketplace. The fundamental premise of high performance management systems is that organisations perform at a higher level when they are able to tap the ideas, skills and effort of all their people. (Pfeffer, 1998) To enable the above premise to hold true, the organisation needs to reduce status differentials and organise people into self managed teams who work together and retain membership for an extended length of time; utilising the same technologies and act interdependently to achieve success, and are accountable collectively for achieving common goals, and receive rewards contingent on performance. The objective of reducing status differences is to make individuals feel that they are an integral asset for Page | 6

enhancing operations and are therefore a valued member of the organisation. Reducing status differences is a major contributor towards promoting intrinsic motivation among individuals, who feel that the work they are doing is worthwhile and is being received with appreciation by the organisation. An example where success has been achieved in reducing status differences can be found at Kingston Technology (Pfeffer 1998), an organisation which supplies memory chips for personal computers. The CEOs at Kingston Technology sit in open cubicles without personal secretaries, or private offices and dont have reserved parking spaces for senior members of staff. Management interact closely with other members of the organisation, which is said to encourage open communication, essential in organisations where learning and adaptation are encouraged. Working in a team based culture with reduced status differences is an essential component in high performance organisations, which promotes the flow of communication and sharing of information. Organisations implementing high performance HR practices have found that sharing detailed financial and performance information with every employee enables a feeling of trust for the organisation among those employees, which is essential for promoting a sense of oneness between the organisation and its employees thus promoting best intentions for the organisation. Studies have shown (Marchington 2005) that an advantage of embracing a team based culture leads towards better decision making, achievement of more creative solutions and employees report higher levels of satisfaction. Observations have shown that employees also work harder in team working environments where the group are rewarded with performance related incentives, than those working under more traditional work systems. Another advantage of placing individuals in teams is that peer pressure becomes the driving force that motivates the individuals to maintain the highest possible standard in work performance in fear that their actions may fail the team. This type of work environment has reported a reduced need for supervision due to the teams feeling of empowerment and self determination, and therefore a step towards reducing status differences within organisations.

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Bibliography and References Armstrong, M. Armstrongs Handbook of Human Resource Management Practice (11th edn) London, Kogan Page (2010) Cappelli, P and Crocker-Hefter, A Distinctive human resources are firms core competencies, Organizational Dynamics, Winter, pp 722 (1996) Delery, J E and Doty, H D Modes of theorizing in strategic human resource management: tests of universality, contingency and configurational performance predictions, Academy of Management Journal, 39 (4), pp 80235 (1996) Guest, D E The role of the psychological contract, in (eds) S J Perkins and St John Sandringham, Trust, Motivation and Commitment, Strategic Remuneration Centre, Faringdon (1999) MacDuffie, J P Human resource bundles and manufacturing performance, Industrial Relations Review (1995) Mathis L.R and Jackson J.H, Human Resource Management (13thedn) South-Western CENGAGE Learning, Mason, Ohio (2011) Marchington, M and Wilkinson, A, Human Resource Management at Work. CIPD, London (2005) Pfeffer, J The Human Equation, Harvard Business School Press, Boston, MA (1998) Purcell, J Best practice or best fit: chimera or cul-de-sac, Human Resource Management Journal, 9 (3), pp 2641(1999) Purcell, J, Kinnie, K, Hutchinson, Rayton, B and Swart, J People and Performance: How people management impacts on organisational performance, CIPD, London (2003)

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