The Effectiveness Of High Commitment Hrm Management Essay

Human resource management department in every organization provide services that deal with employees and the main objective is to facilitate and satisfied them. Its principles and techniques influence how the whole organisation is managed (Marchington and Wilkinson 2005). The strategic approach “HARD” to HRM gives an idea to treat workers as a resource like other resources and not taking much interest to workers concerns. The opposite approach “SOFT” is considering them as valuable assets and involving them in decision making process and this approach has binding with high commitment practices. Delery and Doty (1996) identified three perspectives among existing theories regarding HPWS. The “universalistic” perspective, “contingency” and “configurational”. There are lot of potential benefits that high commitment practices provides to an organization when implementing in synergy not in isolation. There is lot of criticism from the researchers on different issues such as synergy between given set of practices, consistency between the terms and bundle of practices, the difficulty of establishing causality, the use of single respondents in questionnaires, the lack of employee opinions, the definition of performance and the time period. HPWS, when implemented correctly, will almost always add improved productivity and quality to a firm. The key is to understand its potential benefits and communication at each and every level from top level to production floor. This process involves basing implementation around the firm as a whole, including all areas of technology, the employees themselves and their respective workplaces. Not only will firm benefit financially, but also overall morale will improve and employees will be more likely to stay with the firm, reducing turnover rates (another factor relevant to increased productivity). It has proved to be beneficial in studies time after time. Firms need to re-evaluate and realize that although HPWS take time and money to implement, they are much more successful than any number of quick fixes that may be tried. In the long term HPWS will be less costly because they have lasting effects that – once implemented – begin to flow over to all operations. Firms that have chosen HPWS are satisfied. It is only a matter of time before other firms are pushed to make the same choice or become destined to fail. Overall, high performance work systems provide substantial improvements and should be considered by all.

INTRODUCTION

Organizations face many challenges such as competition, globalization, introduction of new technology, managing change, providing customers better service and quality, developing intellectual capital, managing human resources and containing costs. These are the fundamental elements that every business takes care in order to stay and remain competitive in this ever changing business world. Smart organizations plan well ahead; foresee the future and change themselves according to circumstances. Human resource management is the key element that organizations need to understand and manage because it leads to better organizational performance.

Human Resource Management is a unitary system of management that attempts to bring out employees commitment to (Guest 2001), and involvement in (Wood 1999), the purposes and goals of the organisation. Its principles and techniques influence how the whole organisation is managed (Marchington and Wilkinson 2005). Traditionally, HRM is believed to improve business performance in response to external threat of increasing competition (Guest 1999) however (Storey 1995) argues that the strategic orientation gives HRM a “hard” utilitarian cast as it promotes the idea that workers are a resource that managers should exploit to their full potential attaching little value to worker concerns. The “hard” approach focuses on increasing efficiency and reducing labour costs through the application of rules and procedures that place emphasis on controlling workers. Contrary to this view is the developmental humanistic approach managing human resources that have been conflated with the “soft” or “high commitment” approach to HRM (Boxall 1996; Guest 1999; Pfeffer 2005).

The humanistic or “high commitment” approach suggests that effective HRM reflect attempts by management to create a work environment that emphasises practices such as participation, involvement in decision making, teamwork, effective communication and training and development. The aim of these practices is to invest in and develop innovative, flexible and committed employees who are valued and are high value-adding resources (Guest 1998). Hence, organisations adopting a “soft” or “high commitment” approach to HRM endeavour to enhance worker performance by empowering, developing and trusting workers to achieve organisational goals on the basis of common interests. Basically, the “soft” approach focuses on HRM practices where employees are proactive rather than passive inputs into productive processes (Legge 2005), are capable of development, worthy of trust and collaboration, to be achieved through participation and informed choice (Whitener 1997). Therefore the emphasis from the “soft” approach to HRM is on generating motivation (Collier and Esteban 2007), commitment via communication and leadership (Legge 2005). Thus, “high commitment” HRM practices are those that signal managements trust in employees. Therefore there is a general consensus, which is supported by the literature (Armstrong and Baron 2005; Guest et al., 2003; Purcell et al., 2003) that a link exists between HRM policies and performance. However, there is relatively insufficient evidence about how such links operate between people management and organisational performance.

HIGH COMMITMENT HRM PRACTICES AND ORGANIZATIONAL PERFORMANCE

Over the past decade, there has been much interest in the notion of best practice human resource management” sometimes referred to as “high performance work systems” (Appelbaum et al., 2000), “high commitment” (Guest 2001) or “high involvement” (Wood 1999). Many contemporary organisations use a range of high commitment HR practices and in many instances the practices themselves are not new but the underlying principle for using them has changed. For instances, managers are now focusing to develop a committed and qualified workforce in a climate of trust and comradeship (Gould-Williams 2004). Research on HRM focused on the impact of commitment seeking “high performance” HR practices that are suggested to be able to improve employee and organisational performance (Wood 1999; Legge 2005). This approach contrasts from the orthodox view in which employees were used objectively and rationally as any other capital resource (Legge 1995). Even further, employee responses to HRM practices are at the heart of all HRM-performance models (Purcell and Kennie 2006) because it is the link between employee reactions and their subsequent behaviour is critical. Furthermore, evidence suggests that when HR practices are used in conjunction with each other, the impact on performance will be greater than when used in isolation (Guest 1998). In other words, organisations attempting to introduce individual HR practices will observe minimal if any change in performance, whereas those organisations successfully introducing a range of practices (generally referred to as “bundles”) will experience a more dramatic change in performance (Gould-Williams 2004; Guest et al., 2003).

Delery and Doty (1996) identified three perspectives among existing theories regarding HPWS. The “universalistic” perspective alleges that certain HR practices are always better than others and all organizations should adopt such practices on every occasion. The “contingency” perspective argues that HR practices should be consistent with other aspects of the organization. An often-mentioned contingency is the company’s strategy (Schuler and Jackson, 1987). The “configurational” perspective asserts that multiple interdependent HR practices must cope with each other to best enhance firm performance (Wright and McMahon, 1992).

Theoretical evidence on the relationship of HR practices with organisational effectiveness indicates that HR practices influence employee commitment and other performance measures which then lead to organisational effectiveness (Reichers

1985; Williams and Anderson 1991). Therefore, employees interpret organisational actions like human resource practices (Gallie et al 2001) and the trustworthiness of management (Snape and Redman 2003) as indicative of the organisations commitment to them (Wood and Albanese 1995). This is supported by Armstrong and Barons (2005) view that people and their collective skills, abilities, knowledge and experience, coupled with their willingness to deploy these into the interests of their employing organisation, are now recognised as making a significant contribution to organisational success and as constituting a significant source of competitive advantage. Therefore, empirical studies of employees reactions to high commitment HRM practices (Guest et al 2002; Guest and Conway 2001) suggest that the employment relationship may be a key intervening variable in explaining the link between HR practices. The growing body of literature and research revealed little consensus as to which “bundle” of HRM practices should be included in the analysis of HRM practices. Wood and Albanese (1995) argue that a variation in organisation policy or bundles of HRM policies is likely to be most effective in enhancing commitment. The following represent those used by UK/European private sector managers who have successfully achieved competitive advantage through the workforce (Marchington and Wilkinson 2005). However, (Guest 1998) suggests that it is unlikely that any one organisation will utilise all these practices or even perform them equally well. The HRM practices signal managements trust in employees and include:

(1) Selection practices and internal promotion: is a critical element of HRM and when an organisation adopts a strategy of achieving superior performance through the workforce, it will need the right people and will need innovative recruitment and selection strategies to obtain the right employees. Internal promotion is generally seen as a critical way to retain key members of the workforce (Pfeffer 2005). Having recruited, developed and trained the “right” sort of people, it is unlikely that managers want to see these workers leave the organisation.

(2) Employee Voice: Employee voice has been viewed as an aspect of “high commitment” HRM, and is seen as essential that workers should have the opportunity to express their grievances openly and independently, in addition to being able to contribute to management decision-making on task-related issues (Gould-Williams 2004).

(3) Employee involvement, information sharing: Employee involvement is an essential component of the high commitment paradigm. Open communication about business matters ensures workers are informed about organisational issues and conveys a symbolic and substantive message that they are to be trusted in an open and positive manner (Marchington and Wilkinson 2005).

(4) High compensation contingent on performance: There are a growing number of managers within the private sector who now reason that if employee performance results in enhanced organisational performance, then employees should share in the benefits received. In other words, they feel that workers should be appropriately and equitably rewarded for their effort.

(5) Extensive training, learning and development: Having recruited outstanding talent, employers need to ensure that these people remain at the forefront of their field in terms of professional expertise and product knowledge gained through training which facilitates learning so that people can become more effective in carrying out aspects in their work (Bramley, 2003).

(6) Greater involvement in decision making and work teams: open communication about financial performance, strategy and operational matters not only ensures workers are informed about organisational issues, it also conveys a symbolic and important message that they are to be trusted in an open and positive manner, which in turn promoted performance. Secondly, they suggest that for team working to be successful workers require information in order to provide a basis from which to offer their suggestions and contribute to improvements in organisational performance. Participation can provide management with some legitimacy for its actions on the grounds that ideas have been put forward by workers and or at least considered by them before decision are ultimately taken. Organisations that have experienced the power of teams have often gained excellent results in performance (Pfeffer 2005) through the pooling of ideas and improving work processes. It is suggested that through team working employees are encouraged to work together rather than on their own. Consequently, it is suggested by (Guzzo and Noonan 1994) that employees often interpret HRM practices in unintended and eccentric ways in that an HRM practice can have different consequences depending on the employees predisposition. Thus, it is important to collect employees views of HRM practices rather than relying on HRM policy directives.

CRITICS OF HPWS

There is a growing body of evidence that demonstrates the link between the use of high performance work practices and organizational performance (Appelbaum et al., 2000; Arthur, 1994; Huselid, 1995; Richardson and Thompson, 1999; Wood, 1999). However, despite the proven benefits of high performance work organization (HPWO), many of these studies have also noted that such practices are poorly diffused (Becker and Huselid, 1998; Ichniowski et al., 1996; Pil and MacDuffie, 1996) and as a consequence there has been increasing interest in understanding the factors associated with the use of these work practices. A number of explanations have been suggested:

organizational inability to introduce ‘bundles’ of high performance work practices (Ichniowski et al., 1996)

the need to align production and distribution systems with high performance practices (MacDuffie, 1995)

low levels of trust and employee need for job security (Cutcher- Gershenfeld et al., 1998), worker resistance (Batt and Appelbaum, 1995)

Organizational governance and the lack of a mutual gains model to support workplace reforms (Kochan et al., 1986).

A key theme noticeable in all high performance management literature is the synergy between a given set of practices. Although writers place differing emphases on certain practices, these HR practices need to be treated as systems and practitioners need to select measures that fit and support each other and which are characterised as being non-traditional and assumed to be moving away from ‘centralized command and control structures’ (Becker and Huselid, 1998: 21). Ambiguity appears when discussing bundles of practices – what should be included? Little agreement exists among the proponents of this approach about what practices should be included within the scope of the term HPWS.

There is no consistent relationship between the terms and the bundles of practices used (Wood, 1999). Legge (2001) points out that of 15 high-commitment practices identified in the UK WERS 98 study, only seven appear in US studies. Legge (2001) argues that studies of HPWS show further confusion in their approach, in that individual practices such as contingent pay are measured in different ways by different researchers. She cites the example of Huselid (1995) and Arthur (1992), where Huselid measures it using the proportion of the workforce covered by profit sharing, gain sharing and merit pay, and Arthur uses the percentage of employment costs accounted for by bonus or incentive payments.

Other criticisms have been identified at HPWS literature including the debate about the linkage between HR policy, HPWS and organisational performance. There remain significant problems or weaknesses in a number of areas, particularly theory and method issues. Some authors have referred to this as the ‘black box’ problem. Issues surrounding organisational performance are also neglected in research. Most studies and articles adopt one or more measures with little or no justification as to their choice. An immediate concern is that studies may be measuring quite different things under the positive sounding label of ‘performance’.

There are also other problems relating to the difficulty of establishing causality, the use of single respondents in questionnaires, the lack of employee opinions, the definition of performance and the time period, or lag, between HR activities and performance outcomes (Purcell et al, 2003). The HPWS research, a great deal of it has been quantitative and that in order to achieve the large numbers required for statistical analysis many of the surveys rely on one respondent within the organisation to respond to questions about practices that operate throughout the organisation. Thus, Purcell (1999) questions whether one senior manager is in a position to know what practices are used throughout the organisation, especially in firms with diversified structures. Regarding the use of single respondents, Gerhart et al (2000) provided evidence calling into question the reliability of measures of HR practices stemming from single respondents stating that reliability may be close to zero.

RECOMMENDATIONS

1- First of all top management commitment is very important and without its support it is impossible to put HPWS practices in place. According to (Dyer and Holder, 1988) management is probably the most powerful force that can work against the adoption of HPWS initiatives

2- It is important to note that there is no “one size fits all” approach and the best approach is to adopt combination of practices that suits to an organization according to organization culture and current circumstances.

3- Employee involvement is critical for the successful implementation of HPWS. Employment Involvement provides employees a great understanding of decisions because they are more likely to be involved in making those decisions. They will take responsibility and put more efforts to achieve them due to their own involvement in decision making process. Employee involvement is itself an active ingredient of HPWS.

4- Training and development is very important in order to successful implementation and running of these practices. We need to train key personnel who are going to participate in this process particularly Human resource management department staff. Without proper training there may be a chance of conflict between management and employees.

5- Extensive recruitment and selection procedures required in order to select new employees because they are going to be part of system and their understanding and support is very important in carrying out these practices.

6- There can be additional costs from the required increase in coordination and the acquisition of new skills. The design of team-based reward and recognition systems can also be difficult and have implementation costs. It is important to note that It would be one off cost and once HPWS implemented successfully then there would not be any further cost.