1. CHAPTER 16 Creating and Maintaining High-Performance Organizations
fundamentals of Human Resource Management 3rd edition by R.A. Noe, J.R. Hollenbeck, B. Gerhart, and P.M. Wright
CHAPTER 16
Creating and Maintaining
High-Performance Organizations
Does human resource management really help an organization meet its business goals?
This chapter summarizes the role of human resource management in creating an organization that achieves a high-level of performance, measured in such terms as long-term profits, quality, and customer satisfaction.

2. What Do I Need to Know?
Define high-performance work systems and identify the elements of such a system.
Summarize the outcomes of a high-performance work system.
Describe the conditions that create a high-performance work system.
Explain how human resource management can contribute to high performance.
After reading and discussing this chapter, you should be able to:

3. What Do I Need to Know? (continued)
Discuss the role of HRM technology in high- performance work systems.
Summarize ways to measure the effectiveness of human resource management.
After reading and discussing this chapter, you should be able to:

4. High-Performance Work Systems
High-performance work system – the right combination of people, technology, and organizational structure that makes full use of the organization’s resources and opportunities in achieving its goals.
To function as a high-performance work system, each of these elements must fit well with the others in a smoothly functioning whole.
The challenge facing managers today is how to make their organizations into high-performance work systems.

5. Figure 16.1: Elements of a High-Performance Work System
As shown in Figure 16.1, in a high-performance work system, the elements that must work together include:
Organizational structure
Task design
People (the selection, training, and development of employees)
Reward systems
Information systems
Human resource management plays an important role in establishing all of these.

6. Elements of a High-Performance Work System
Organizational structure: the way the organization groups its people into useful divisions, departments, and reporting relationships.
Task design: determines how the details of the organization’s necessary activities will be grouped, whether into jobs or team responsibilities.
People: well suited and well prepared for their jobs.

7. Elements of a High-Performance Work System (continued)
Reward systems: contribute to high performance by encouraging people to strive for objectives that support the organization’s overall goals.
Information systems: modern information systems have enabled organizations to share information widely.

8. In a high-performance work system, all the elements – people, technology, and organizational structure – work together for success.

9. Outcomes of a High-Performance Work System
Outcomes of a high-performance work system include higher productivity and efficiency.
These outcomes contribute to higher profits.
Other outcomes include:
High product quality
Great customer satisfaction
Low employee turnover

10. Figure 16.2: Outcomes of a High-Performance Work System
Outcomes of a high-performance work system include higher productivity and efficiency. These outcomes contribute to higher profits.
A high-performance work system may have other outcomes, including:
High product quality
Great customer satisfaction
Low employee turnover

11. Outcomes of a High-Performance Work System (continued)
The outcomes of each employee and work group contribute to the system’s overall high performance.
The organization’s individuals and groups work efficiently, provide high-quality goods and services, etc., and in this way they contribute to meeting the organization’s goals.
When the organization adds or changes goals, people are flexible and make changes to as needed to meet the new goals.

12. Conditions that Contribute to High Performance
Teams perform work.
Employees participate in selection.
Employees receive formal performance feedback and are actively involved in the performance improvement process.
Ongoing training is emphasized and rewarded.
Employees’ rewards and compensation relate to the company’s financial performance.
Certain conditions underlie the formation of a high-performance work system. These are listed on this and the following two slides.

13. Conditions that Contribute to High Performance (continued)
Equipment and work processes are structured and technology is used to encourage maximum flexibility and interaction among employees.
Employees participate in planning changes in equipment, layout, and work methods.
Work design allows employees to use a variety of skills.

14. Conditions that Contribute to High Performance (continued)
Employees understand how their jobs contribute to the finished product or service.
Ethical behavior is encouraged.

15. Learning Organizations
Learning organization – an organization that supports lifelong learning by enabling all employees to acquire and share knowledge.
The people in a learning organization have resources for training, and they are encouraged to share their knowledge with colleagues.
Managers take an active role in identifying training needs and encouraging the sharing of ideas.
For more than a decade, managers have been interested in creating a learning organization, that is, an organization in which the culture values and supports lifelong learning by enabling all employees to continually acquire and share knowledge.

16. Key Features of Learning Organizations
Continuous learning – each employee’s and each group’s ongoing efforts to gather information and apply the information to their decisions.
Knowledge is shared – one challenge is to shift the focus of training away from teaching skills and toward a broader focus on generating and sharing knowledge.
Critical, systemic thinking – is widespread and occurs when employees are encouraged to see relationships among ideas and think in new ways.
A learning organization has several key features. They are listed on this and the following slide.

17. Key Features of Learning Organizations (continued)
Learning culture – a culture in which learning is rewarded, promoted, and supported by managers and organizational objectives.
Employees are valued – the organization recognizes that employees are the source of its knowledge. It therefore focuses on ensuring the development and well-being of each employee.

18. Job Satisfaction
Details are discussed in the “Did You Know?” box on page 475 in the text.
Federal government employees who rated satisfaction with their job and work environment were most satisfied at the Nuclear Regulatory Commission.
While the top five agencies had much higher satisfaction than other government agencies, their scores weren’t much higher than the overall average for large businesses.

19. Test Your Knowledge
Charlotte is a manager overseeing the work of a team. Which of the following behaviors would empower the team the least?
Opening lines of communication between the team and other groups within the organization.
Directing the team and monitoring their day-to-day activities.
Ensure the team has the resources they need.
Keep the team informed as new, relevant information becomes available.
Charlotte is a manager overseeing the work of a team. Which of the following behaviors would empower the team the least?
Opening lines of communication between the team and other groups within the organization.
Directing the team and monitoring their day-to-day activities.
Ensure the team has the resources they need.
Keep the team informed as strategy changes or new, relevant information becomes available.
Answer - B

20. Ask students: “What are other ways in which organizations can promote and foster job satisfaction?”
Research has found that teachers’ job satisfaction is associated with high performance of the schools where they teach.

21. Test Your Knowledge
Kamran has worked for the same company for 3 years, is enthusiastic and passionate about his work, hasn’t missed a day in two years, and has several close friends he enjoys working with. Which of the following best describes Kamran?
He is satisfied with his job.
He is empowered.
He is experiencing occupational intimacy.
He is probably going to quit soon.
Kamran has worked for the same company for 3 years, hasn’t missed work in two years, and has several close friends he enjoys working with. Which of the following best describes Kamran?
He is satisfied with his job.
He is empowered.
He is experiencing occupational intimacy.
He is probably going to quit soon.
Answer - C

22. Table 16.1: HRM’s Contribution to High Performance
HRM practices match organization’s goals
Individuals and groups share knowledge
Work is performed by teams
Organization encourages continuous learning
Work design permits flexibility in where and when tasks are performed
Selection system is job related and legal
Performance management system measures customer satisfaction and quality
Management of human resources plays a critical role in determining companies’ success in meeting the challenges of a rapidly changing, highly competitive environment.
Table 16.1 (on this and the following slide) lists examples of HRM practices that contribute to high performance.

23. Table 16.1: HRM’s Contribution to High Performance (continued)
Organization monitors employees’ satisfaction
Discipline system is progressive
Pay system rewards skills and accomplishments
Skills and values of a diverse workforce are valued and used
Technology reduces time and costs of tasks while preserving quality

24. To develop future leaders, new IBM managers participate in IBM’s Basic Blue program for an intensive nine-month training program.
IBM is considered one of the best companies in the development of future leaders.

25. Performance Management
Each aspect of performance management should be related to the organization’s goals.
Business goals should influence the:
kinds of employees selected and their training
requirements of each job
measures used for evaluating results
This means the organization:
identifies what each department must do to achieve the desired results
defines how individual employees should contribute to their department’s goals
In a high-performance organization, employees know the organization’s goals and what they must do to help achieve those goals. HR departments can contribute to this ideal through the design of the organization’s performance management system.

26. Figure 16.3: Employee Performance as a Process
To set up a performance management system that supports the organization’s goals, managers need to understand the process of employee performance. As shown in Figure 16.3, individual employees bring a set of skills and abilities to the job, and by applying a set of behaviors, they use those skills to achieve certain results. The organization’s goals influence each step of the process. The organization’s culture and other factors influence the employee’s abilities, behaviors, and results.

27. Performance Management (continued)
Guidelines to make the performance management system support organizational goals:
Define and measure performance in precise terms.
Link performance measures to meeting customer needs.
Measure and correct for the effect of situational constraints.

28. HRM Technology
New technologies – applications of knowledge, procedures, and equipment that have not previously been used.
Transaction Processing: Computations and calculations used to review and document HRM decisions and practices. These include documenting employee relocation, payroll expenses, and training course enrollments.
New technologies are current applications of knowledge, proce­dures, and equipment that have not previously been used.
Transaction processing is the computations and calculations used to review and document HRM decisions and practices. These include documenting employee relocation, payroll expenses, and training course enrollments. Summarized information can be provided for government reports such as EEO‑1.
Decision Support Systems are systems designed to help managers solve problems. They usually include a "what if" feature.
Expert systems are computer systems incorporating the decision rules of people deemed to have expertise in a certain area.

29. HRM Technology (continued)
Decision Support Systems: These are systems designed to help managers solve problems. They usually include a "what if" feature.
Expert Systems: Are computer systems incorporating the decision rules of people deemed to have expertise in a certain area.
Relational Databases: Store data in separate files that can be linked by common elements.
New technologies are current applications of knowledge, proce­dures, and equipment that have not previously been used.
Transaction processing is the computations and calculations used to review and document HRM decisions and practices. These include documenting employee relocation, payroll expenses, and training course enrollments. Summarized information can be provided for government reports such as EEO‑1.
Decision Support Systems are systems designed to help managers solve problems. They usually include a "what if" feature.
Expert systems are computer systems incorporating the decision rules of people deemed to have expertise in a certain area.

30. Human Resource Management Online: E-HRM
Improving HRM effectiveness through online technology.
The speed requirements of business force HRM managers to explore how to leverage technology for the delivery of HRM activities.
With Internet technology, organizations can use E-HRM to let all the organzation’s employees help themselves to the HR information they need whenever they need it.

31. Online Recruiting Offers Many Benefits
Online recruiting offers many benefits to the company and the potential employee.
Companies are able to easily post job openings and retrieve résumés, and most importantly, it allows them to voice the message of their company.
Potential employees also benefit by having the ability to research the company, search for job openings, and submit their résumés.
The Internet is fast becoming an excellent source for recruiting.

32. Measuring the Effectiveness of Human Resource Management
Customer-oriented approach to HRM
Human resource management audit
Analyzing the effect of HRM programs

33. Customer-Oriented Perspective of Human Resource Management
Who Are Our Customers?
Line managers
Strategic planners
Employees
What Do Our Customers Need?
Committed employees
Competent employees
How Do We Meet Customer Needs?
Qualified staffing
Performance Management
Rewards
Training and Development
In recent years, human resource management at some organizations has responded to the quest for total quality management by taking a customer-oriented approach. Taking this customer-oriented approach, HRM defines its customer groups, customer needs, and the activities required to meet those needs.
This slide is adapted from Table 16.2 on page 486 in the text.

34. Human Resource Management Audits
HRM audit – a formal review of the outcomes of HRM functions, based on identifying key HRM functions and measures of business performance.
The audit may also look at any other measure associated with successful management of human resources.
e.g., legal compliance, safety, labor relations

35. Table 16.3: Key Measures of Success for an HRM Audit
Table 16.3 lists examples of key measures of success for a variety of HRM functions:
Staffing
Compensation
Benefits
Training
Employee appraisal and development
Overall effectiveness

36. Analyzing the Effect of HRM Programs
This analysis can measure a program’s success in terms of whether it:
achieved its objectives
delivered value in an economic sense
The analysis can measure the dollar value of the program’s costs and benefits.
Successful programs should deliver value that is greater than the program’s costs.

37. Analyzing the Effect of HRM Programs (continued)
HR departments should be able to improve their performance through some combination of greater efficiency and greater effectiveness.
Greater efficiency – means the HR department uses fewer and less-costly resources to perform its functions.
Greater effectiveness – means that what the HR department does has a more beneficial effect on employees and the organization’s performance.

38. Test Your Knowledge
The HR director of a medium-sized corporation spends 90% of his time meeting and working with fellow HR staff. He is primarily concerned with ensuring the company meets all legal requirements with regard to HR activities. This HR director:
Is a major contributor to a high-performance organization
Has a strategic focus
Is concerned with customer satisfaction
Has limited the utility and value he could bring to the organization
The HR director of a medium-sized corporation spends 90% of his time meeting and working with fellow HR staff. He is primarily concerned with ensuring the company meets all legal requirements with regard to HR activities. This HR director:
Is a major contributor to a high-performance organization
Has a strategic focus
Is concerned with customer satisfaction
Has limited the utility and value he could bring to the organization
Answer - D

39. Summary
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.

40. Summary (continued)
Many conditions contribute to high-performance work systems by giving employees skills, incentives, knowledge, autonomy, and employee satisfaction.
Organizations can improve performance by creating a learning organization, in which people constantly learn and share knowledge so that they continually expand their capacity to achieve the results they desire.

41. Summary (continued)
By taking a customer-oriented approach, HRM can improve quality by defining the internal customers who use its services and determining whether it is meeting those customers’ needs.
One way to do this is with an HRM audit.
Another way to measure HRM effectiveness is to analyze specific programs or activities.
This analysis can measure success in terms of whether a program met its objectives and whether it delivered value in an economic sense.