216758238-Lecture-HPWS1

HPWS’s notes by Noureen Mushtaq

Lecture number 1:

Interaction is the only instrument to learn. And this interaction does not essentially

revolves around human –interaction rather this broad concept includes „interaction‟ with

anything that assist human being to change and adapt, either its people, environment, literature

(books etc) or technology. Thus one of the major sources of human learning is ‘Socialization’.

This notion should also be understood by the fact that when human knowledge is

obtained by various kinds of socialization or interaction, this knowledge is also depending upon

the scope of human beings. In other words our knowledge is limited with the scope of our

exposure of our surroundings, environment literature and technology etc. for instance a person

obtaining knowledge from the source of literature, would be having knowledge limited as per

those books and literature that he had gone through.

With the passage of time, our interaction keeps on increasing, so do our exposure and

knowledge, all the way in our life, helping us to keep on learning. The way a child get

familiarized with his family, then society and later on to the world, his exposure increased his

interaction and so do the learning and knowledge increases as well, as illustrated in following

diagram:

Therefore, we can conclude that there is no limit to learning but to our knowledge which

is limited and has to be improved side by side in all our life. That is why it has been said that

“Move around to learn”. This was also the reason that previously sailors were considered wise

people, as they were a source of improvement of people‟s skills etc. as the purpose of interaction

is to expand our exposure with other things and that gives us knowledge through learning.

Till here, we can conclude one thing and that is knowledge and leanring is very essential

for human survival as well as success but in this regard there raises another important question

that How to establish:

Reality

Criteria

Standard

Truth etc

Because for establishing or defining these, one has to have stable situation etc, which is

not the case, as situation is not absolute rather emergent. to clear the point of discussing

situation here, we must consider one of the saying that :

“Man is a product of his environment”

As through exposure and interactions, a man is exposed to different kinds of :

Behaviors

Structures

Personalities

Factors etc


And thus we become able to develop a complex idea through interpreting these various kinds and

natures of factors of simple things as said by David Hume:

“Man develops or transform a simple idea into complex one, for which mind has no further

explanation”

This background discussion was made in order to build up an understanding for our first concept

which is:

Ladder of inference:

Ladder of inference is used to make people belief that they love in a “subjective World”.

By subjective world, we mean that it is such a world which is defined by ourselves, by us reading

our:

Situations

Conditions

Surroundings etc

By making an employee belief that nothing is solid (with reference to situation), a vacuum is

created for those employees to adjust and deal with the misbehaviors or such behaviors which

are not of their desire or through using ladder of inference it is attempted that employee can deal

with the unfavorable behaviors and happenings. Because it is a fact of life that everything can

not go in one‟s favor or as per the desire of one‟s self, thus by these realization, one can be made

to tolerate and accommodate such disturbing situations or cases as each one of Create our own

Reality, based on our own beliefs.

From some Set of values generalized values become more important and

transform into Beliefs then such Tested Beliefs becomes Assumptions which are not

allowed to be Challenged. And this is how our realities, our criterions and our standards differ

from others. And mostly we follow the following patter while decision making :

Context specific Assumption Conclusion

And all of this is done, because we create our own reality. Ladder of refence promotes the

employee that everyone has the right to define his or her own reality along with this the power of

environment cannot be overlooked where environment‟s pressure controls our behavior. That is

why a learned man is the one who:

Learns Unlearn & Relearn

That is why for changing others‟ behaviors, one has to change the environment as we don‟t jave

any other way of altering the behaviors.

Principles of Ladder of inference:

In short, following are the principles of ladder of inference:

1. As per OUR Set of values/values

2. OUR Beliefs

3. On OUR Assumptions

4. Draw OUR own conclusions

5. Collect OUR data

6. Observe the data

7. We give Meaning

While all of these components or principles, everything is based on „I’.

Piaget’s Model of Learning:


“Whatever we see or acquire, we test it on the basis of our existing adopted or manifested

mental structure or standards or assumptions and only that thing which can fit in there, in the

mind and aligned with it, stays while others are disregarded”.

We evaluate new things on the basis of our own old, existing experiences and by default

there exits, inbuilt resistance to change, in our mind. Thus we do following steps:

1. We Evaluate the Change and Resist to change and then

2. We start Accommodation with change (means, that with the passage of

time we start accommodating ourselves gradually and next comes) :

3. Adopting 4. Organizing as your mental structure is mature enough to align this

newness/change with previous mental structure.

When a person gets mature enough even being a learned man, this process still goes in,

but its duration is reduced and ladder of inference is used as a tool to teach employee, to

respect others‟ values as well.

We have to go through the basic assumptions in order to define or recognize our mental

structures. Thus two perspectives or aspects have to be addressed in this regard:

Metaphysics-Ontological discussion:

1. What is Reality/Knowledge?

Epistemological – Metaphysics discussion:

2. How do we know it?(process of knowing that this is reality

Reality’s Different Assumptions on school of thoughts:

1- Absolution Modernism (Reality is independent of its experience)

2- Subjectivism Symbolic Interpretivism (Reality is dependent of its experience)

3- Projection through language Post Modernism (through Language reality is displayed. Thus

the purpose must be fulfilled for which it has been use/displayed ; „what is in it for me?”)

With the tiny change in the mental model or mind set, a complete new entity is being

created.

Economical Rationality is the mostly biggest reality and it over ruled every other

relationship when economic benefits are at stake then there is no moral or ethical model

works.

It is an unconscious or unintentional process for the individual but intential for the one

who is grooming him.

Thus, organization, structure etc varies for person to person.

Have faith in your version of reality.

HRM:

“It is an approach or process for people management, which seeks competitive advantage

through strategic deployment of highly committed/capable workforce, by using cultural,

structural and personal techniques” (story, 1995).

HRM is deployment, whereas HR is something else, thus it contains two types or variants

in its literature.

Soft variants:


HRM can be explained by Humanist model (which contains its focus on the human

factor, means that people have to be empowered, trusted, skilled and quality focused etc which

will become a source of competitive advantage for the organization.

Hard variants:

HR is just an asset, which is as any other asset of the organization. As per the approach of

cost-leadership, people must be managed, which focuses Utilitarian Model. In short this

approach promotes that efficiency has to be improved.

Both of these aspects of HRM talks for achieving one objective and that is competitive

advantage, as competitive advantage is directly proportionate with Organizational performance:

1- Soft Variants Humanist Model Human Focused Competitive Advantage

2- Hard Variants Utilitarianism Model Management Focus Competitive

Advantage.

According to Delary and Doty (1996) it leads to three perspectives for organizations:

1- Universalism Perspective:

It is meant for everyone and it talks about a) Business Strategy b) HR strategy 3)

Business performance and it talks about Best Practices with same results.

“HR practices and Business strategy are independent yet they contain a positive

relation or impact on the business performance”.

Although both of these (HR practices and business strategy) are very much important for

an organization, yet it is not essential that both of these have to be aligned.

2- Contingency :

As per this perspective, it would be same as well but their pattern would vary.

According to this perspective, HR practices and Business strategy has to be Aligned or

Integrated and HR practices have to be developed according to the business strategy, otherwise

it would not positively improve business performance.

Business strategy Hr practices Improved Business performance

3- Configuration:

This perspective promotes the contingency perspective where its focus is on

Environment as well. That is why as per the environment, HR practices and business strategy

should be aligned only then the business performance will be improved.

There are further two views regarding Competitive Advantage:

1- Industry Organization Model also known as I/O Model

2- Resource Based View also known as RBV

Industry Organization model:

The forces of External environment are homogeneous and moveable, in that particular

industry (which means that every player in the industry has the access to those factor or

influenced by those forces, as well as cane exploit those resources). Thus a proper use of

business strategy would create potential competitive advantage for them as well.

Resource Based View:

It states that it is actually the Internal enviroement of the organization that creates

competitive advantage for the organization. Therefore the internal forces of the organization are


heterogeneous and immovable in the industry and they have more potential to be a source of

competitive advantage as they are:

Rare

Adding value

Non-substitutable

Inimitateable

(Only HR holds these attributes for a longer time period resulting in organization‟s sustainable

competitive advantage)

Resource Based view the impact or relations among a team is mediated by:

1- Social Complexity

2- Causal Ambiguity

And because of these factors, human beings fulfill the requirements that enable HR to play its

important role in achieving Competitive Advantage.

For instance there is a team, being a source of competitive advantage and no one knows

that what is the actual reason of their performance, as the possibilities could be:

Their relationship

Environment etc

From this point it is leading to SHRM or strategic Human Resource Management:

SHRM:

When it comes to HPWS, then there are basically four components of HPWS and HR

practices are one of them.

SHRM is based on two pillars:

1- Integration it deals with Fit/Perfect Fit (fit in both sides of HR bundle; horizontally and

vertically).

2- Devolvement it deals by answering perfect fit but To what Extend

In Integration, we will discuss two sides of HR bundles:

1- Horizontal Fit:

By horizontal fit we mean that all of the HR practices must be aligned with each other.

2- Vertical Fit:

By vertical fit we mean that all of these HR practices must be aligned with the Business

Strategy.

HR practices are aligned and having a perfect fit, horizontally as well as vertically, which is also

taken as integration.

Now we will discuss Devolvement, that deals or explains that to which extend organization has

transformed/empowered or authority has been given to the line manager, instead of HR

specialists or experts for executing HR strategy, as Line managers are the actual hands through


which organizational strategy would be implemented. And even the nature and correct

assessment of the workflow etc can be done by a line manager more accurately than others.

Devolvement is such an important concept in SHRM, that without devolvement HRM will

never reach the level of SHRM.


Lecture 3- Dated: 04-03-2014

Following are the most important Terminologies used in HPWS:

Work: “Efforts apply to accomplish something”

Work System: “work occurred through some purposeful or proper system”

Work system Framework: “a model for initial understanding of operationalization and

accomplishment of work system”

Goal: “desired results through efficient use of work system”

Organization: “Multiple work systems that are coordinated to achieve some good, that

cannot be achieved through individual work system”

Business Process: “work steps through which work is accomplished with a proper

worksystem”.

Work system: “it is a combination, integration and collaboration of machine and

humans, to produce product and services”

Creating Work system:

There are three incidents of work system:

1- What employee does?

2- What employee need?

3- How job interacts or interfaces to each other?

Job Characteristic Model:

It involves the following:

Skill variety

Task identity

Task significance

Autonomy

Feedback

1- What Employee does?

What an employee does would be determined by the following:

Job Characteristic Model:

It involves following:

Skill variety

Task identity

1-What Employee does?

Work System 2-What Employee Need?

3- How Job Interact or

interface each other?-

What Employee does?

Job Specialization

Job Rotation Job enrichment Job enlargement


Task significance

Autonomy

Feed back

Above mentioned characteristics will lead to:

2- What employee need?

Needs are depending upon various possible factors, which are required to be considered, such as:

Need varies according to age and gender

Employees need voice or representation

They need work-life balance

Safety, security etc

It has to be understood that without fulfilling the needs of people or employees, organization

cannot force them to work.

3- How Job Interact:

How job interact is depending upon how business require that job to be interacted or interfaced.

Strategic Design of work or Redesigning of work:

There can be various examples of this concepts, such as:

Outsourcing

Off-shoring

Franchising etc

Work system to HPWS:

Work system was first discussed by Bortorm and Hiessen (1977).

Then it was discussed with the concept of Socio-technical system

David Naddler (1992) discussed High Performance work system

High Performance Work System:

HPWs is an extension of SHRM and deliberation of work systems. Following is the

definition of HPWS:

“It is a combination of:

Human resource practices

Work systems

Structures

Business practices and processes

That develops employees with:

Flexibility

Skill Variety

Task Identity

Task Significance

Meaningfulness of Job

Autonomy

Accountable or Empowered person

Feedback

Reflecting Actual Performance

Employees’ Job Satisfaction

Goal Achievement


Commitment

Skills

Knowledge”

This reflects how these practices, systems and processes help employee to maximize.

Principle of HPWS:

Following are four principles:

i. Shared information

ii. Knowledge development

iii. Performance reward link

iv. Egalitarianism (justice/equality)

1- Shared information:

It means that there has to be such systems which has clear pattern of communication,

because only then it will lead to specific decision.

i)Shared information ii) Communication iii)Empowerment iv) Employee Commitment &

Motivation v)Builds decision power for right choice of alternatives vi)enhances

performance.

2-Knowledge development:

Environment goes from linear to non-linear conditions, which means that sometimes

sharing information can be dangerous as ell, so there should be proper training and development

skills, only then shared information can create commitment, empowerment and performance etc.

3-Performance reward link:

It happens that performance based rewards, create conflicts of interests among employees

and organization also, which are obvious and natural. On the following basis, reward is given

from organizational perspective:

Skill based rewards

Performance based rewards

Seniority based rewards

4-Egalitarianism (justice/equality):

This advocates that:

1- Employees must be treated equally

2- Egalitarians say that if there is a separate dress code for seniors and workers, then it

indicates the less equality in the organization

3- Employees can even call their seniors and managers with name


Lecture 4- Dated: 11-03-2014

*It describes structure and it has to eb on the basis of principles

Anatomy* of HPWS:

1- Work Flow Design and Team Work:

2- Complementary HR Practices

3- Management Processes and Leadership

4- Supportive Information Technology

1-Work Flow Design and Team Work:

HPWS is all about how the work has been designed.

HR Management is based upon:

1- Total quality management

2- Restructuring

3- Re-engineering

All of these attempts are made in order to make sure continuous visiting and revisiting

organizational structure and work flows to improve. In this perspective TQM as modification

is required to keep adjusting with changing environment. Restructuring and reengineering

to redesign the work flow on the basis of the principles of HPWS. Redesign the workflow of

main people, who actually execute work.

Structure

And take advantage of employee‟s

KASOS. If there is no KASOS,

than there would be no HPWS. As

if KASOS is not present then there

is no benefit of empowering or

team making that is why

employee‟s knowledge etc should

be enhances.

Restructuring

TQM

Reengineering


2- Complementary HR Practices:

One cannot handle HR well unless HR practices are properly followed. All of these

practices or processes are integrated to build competitive advantage and to deliver ultimate

customer value. And through HR practices, the team is made and empowerment is assigned to

such teams, in such situation empowerment can be beneficial, for the organization.(there are

three HR complementary, from which one has been discussed here)

a- Staffing Activities include:

i. Job analysis

ii. Job positioning

iii. Screening

iv. Recruiting

v. Selection

We will select only those candidates, who have steeper Learning Candidates/ fast

learner with reference to our discussion. We will select that weather they can manage

learning process according to the requirement of organization and can acquire and

manage information.

b- Training and development:

Training and development used to breach the gap

between what employees have and what they are

desired and on the basis of HR Inventory so that can

tell what is existing hr in the organization and what

will be required for training and development, as

everyone cannot be trained in organization, having

these number of employees.

T and D is about grooming to make decision and

solving problems at their own level. Therefore

copying with T and D has to create or improve

following factors:

a- Developing skill/abilities

b- Problem Solving

c- Decision Making

d- Interpersonal Skills etc.

c- Compensation:

There are two dimensions of compensation:

1- Pay to Performance

2- Pay to Skill (which means highly skilled labor

has to be incorporated)

In HPWS, you use segmentation in compensation as the requirements are higher from

employees. Through a multi dimensional approach of compensation, to compel and motivate the

employees to perform this much and be involved. Employees would be compensated as per their

involvement and contribution to the performance.


3-Management Processes and leadership:

For instance the various concepts of leadership have been introduced to cultivate self disciplined

teams etc, such as:

Servant leadership

Enabler

Stewardship

Facilitator

Motivator etc

And this concept is linked with:

Fast leaner and will go above/back ?

4-Supportive Information Technology:

It means that informational technology has to help the organizational function.

Fitting it all together:

1- Internal fit (yourself as an organization including the HR practices, Management

Processes and technology; also includes horizontally integration)

2- External fit (for whom you are working, strategic objectives, customers, suppliers,

competitors, distributors and environment etc)

As per the (theory name?) minimum satisfaction level of all stakeholders should be met. As it is

commonly said that keep them happy and it will create happy ways for you as well and all of

these four elements are linked with:

Integration

Devolvement

Assessing the alignment:

To what extend all of the processes have been aligned or integrated. For this purpose we use HR

Score card to asses this. HR score card is a tool to evaluate HR practices.

Organization core

competences and

functions

Core Management

and Core process

Are made on the basis of core competencies

As a result this system will formed as:

HR Expertise:

-Admin Expert (policies)

-Strategic Execution Expert

- Employee Advocacy (voice of

employee etc)

HR Deliverables:

-workforce Mindset

-Technical skills

-Workforce behaviors

High Performance Practices:

-Communication based

-Staffing

-Compensation

-Development

-Measurement etc

Strategic Focus:

-operations

-Product leadership

-Customer intimacy

-Alignment Based

-Integration Based

-Differentiation Based

It will guide you through the path and will enhance HR performance

There is nothing invested in T& D that cannot be measured


On these basis you can develop HR system

Another important component comes here in this discussion that is of the unlocked Black

box.

As an HR manager one must translate the potential monetary benefits that can be

achieved by investing in HR and when you can define it and communicate it to the

executives that are the important contribution in an organization‟s decision making where

you sell this important point to the strategic top level management.

By all of these steps, we try to modify all of the relevant HR factors that can result in

improved performance etc.

There are various theorists, who also talk about “integrating HR score card with

Business Score card”

Implementation:

Build business case for?? (Missing points)

Communication plan; which should be in two way pattern:

1- top down (it reselects the top level management‟s trust on

employees)

2- bottom up patterns(it should the willingness of employees for

top management)

Unions: it involves powerful stakeholders, who can cause resistance to change or in other

words they are main or key resourceful persons who can cause resistance.

Instead of Win-Loss situation, it should be tried to make Win-Win position or at least to

create its illusion for other parties.

It can also be done through formal documentation (of negotiation etc with stakeholders),

which will demonstrate a clear picture to everyone, so they can help and enhance, as well

as assist change. That is why one should keep in mind that the negotiation will remain as

long as the document stays, so you cannot change it without concerning other person and

involving them in also.

Never overlook the document, as everything else is designed according to that document.

And also never go for one-sided change or modifications on the documents as it is never

acceptable.

Translation: it means draw map line and Pick a proper model to implement.

Outcomes: there are outcomes at two levels:

1-at Employee or Individual level (for instance weather his work

life quality or work life balance is improved or not etc)

HRP/SYS REUSLTS

How & When (Black box)


2-At Organizational Level; it includes further two things:

i- Competitiveness

ii- Competitive Advantage (means that

through HPWS one has improved the

organization as rare, in-imitable,

non-substitutable and value adding)

In literature there are other similar concepts existing such as; HPWS leads to High

Commitment

High Performance

Management

High Involvement

Therefore it can be concluded that Sustainable competitive advantage is not possible today

without HPWS. As through the followings:

1- Core Business Functions

2- HR practices

And both of these maximize employee‟s performance as well as his wellbeing and which

definitely influence organizational performance including competitive advantage, as HPWS

focuses upon Employee.

There are various other factors, also taken as driving forces for HPWS, including:

All HR practices/processes etc Employee commitment HPWS


Lecture 5, Dated: 25-03-2014

Why mathematical model could not be established in SHRM? As SHRM has also:

Methodological issues:

The first issue is can we measure various variables

And more importantly another issue, one step backwards; can we truly

Conceptualize those variable?

Conceptual consensuses are needed before establishing the measure for measuring that variable,

such as for:

Market share

Market growth

Organizational performance etc

As job satisfaction etc have same dimension in all organizations but their

Meanings vary, which makes its conceptualization difficult.

Third is why it should be down? Means that either for Performance or

Outcome?

Performance can be one of the outcomes

Levels of outcome can also vary such as:

1- Organizational level outcome

2- Employee level outcome (related to HR) etc

This is how things are being over lapped on each other.

That is why a discussion on THE DEBATES IN HPWS, would enable us for

identifying Gaps, future directions and key areas of differences.

(Slides started)

Now we will talk about Bundles of integrated HR practices, which are internally

consistent, instead of isolated HR practices.

This is the point when we move to Strategic HRM.

Why are we talking about SHRM here, because it is important to discuss HR

bundles while discussing HPWS, there are 3 kinds of HR bundles such as:

1- Empowerment enhancing bundle

2- Skill enhancing bundle

3- Motivation enhancing bundle

These are such HR bundles that can result in empowerment, skill and motivation

enhancement. And one important thing to remember that whenever throughout this discussion if

the term „HR practices‟ is used, it is referring to HR bundles not single HR practice.

Thus one can conclude that through HR bundles the performance of the

organization can be enhanced

Weak Underpinning:

Here we are talking about HR practices as Bundle, that may include various appropriate set of

HR practices; skills, empowerment and motivation. While these bundles result into outcome not

HR Practices Performance

Outcomes

Black BOX


in performance, as the term performance is very limited but the term outcome can cover up

performance in itself that is why we use the result of hr bundles as outcome.

Ulrich (2000) states that:

“These HR practices, which are integrated closely with each other, create such HR

Competence, which results into performance”

Although this framework is very strong yet it cannot be proved mathematically,

because as said by Boselie et al, there has to be Solid Explanation or concepts

that can be mathematically proved.

Now here before explaining n discussing this issue, there are some prerequisites we should go

through such as:

1- Universalism

2-RBV (Resource based view)

3-AMO (Ability motivation opportunity)

According to Contingency theory, there have to be a best fit, such as:

HR Policy (according to business objectives) + Business Policy = Business

Performance

While Universalism talks about best practices (based on Institutional theory, referring to

similar environment sharing organizations).

Contingency theory talks about Best fit according to the environment while

Universalism talks about best Practices for similar environment sharing organizations.

Now at this level, the discussion would be about these three theories or approaches and how

their defenders have justified or explained their strong link or impact on organizational

performance.

Delery gave empirical evidences that because of universalism, performance can be

improved

While RBV, focuses on organizational level or within the organization more because

organization always excels on the internal basis

HPWS focuses, on empowering employee that is why it has a link with AMO also.

Therefore, organization has to explore the opportunities and if organization does not give

chance to employee for taking initiatives then how can his creativity and abilities be

enhanced?

Whenever you use any of the HR practices in your research, make sure that you need to provide

relevant supporting literature for each practice.

The concept of contingent pay is that, it is given on the basis of Performance, paying

extra than the permanent pay of the employee.

Utilitarianism instrument theory says that a good thing for one would or should be

good for everyone else as well.

All of these consensus issues are there because of the lack of correct theoretical

frameworks (for example one of such gap can be filled by defining specific condition,

needed for estimating the correct impact of these HR practices on organization)

Issues:

Therefore it can be concluded that there are basically two essential problems with HPWS:

1- Methodological Issues

2- Conceptual Issues


There are three questions, for initiating the solution of above mentioned issues:

1- Weather this particular HR practice has been implemented in the organization or not?

2- To what extend the employees of the organization are exposed to them?

3- To what extent, each employee has its intensity at different levels?

RESRACH TIP whenever you go for using a tool to measure your variable, try to see

all of these three proximities in it and see why researcher has used this particular tool in

his research (from where you are referring for using such measures) and also go through

the methodology for knowing what samples would you need for using these tools.

Human Resource Practices:

There are basically three levels at which these practices are there in an

organization:

1- Intended HR practices

2- Actual HR practices

3- Perceived HR practices (by the employees)

The intended HR practices and Actual HR practice would be done by the

organization but the impact of these HR practices would be determined by employees, as

per their perception about the HR practices.

The intention or purpose of today‟s discussion we can say that we have to create a

stream, which will have the consensus of the entire researcher, where it would not the

purpose to Conform to everyone to one paradigm but to define the stream that can be

followed for all paradigms.

Casualty:

It means A is causing B or we can say it in the form of a equation that Y= B1 + B2 + B3.

Causality is always complex. Here this is the third debate or issue that starts here regarding HR

practices or HPWS.

Employee is the unit even at that black box, which is then transformed, transmitted and

understood.

As per the Unitarist assumption, conflict between organization and employee exists.

The most important things in this regard are employee‟s reaction about HR practices.

“Performance is the function of Perceive HR practices by the employee, not a result of

intended or actual HR practices”

Performance= f (employee perception of HRP)

While one thing to be understood or reminded while this discussion is that our basic

assumption here in this discussion is that all of the organizations are based upon

Rationality or in other words it is basically rationality that is governing all of the

organizational steps.

There are various examples of PWS, where there are contradictory effects on employee.

That is why it has been discussed even in literature about the importance of perception of

employee that would determine the result of HRP.

Review:

There are three key issue that we have discussed in class up till now:

1- Weak underpinning (because of black box)


2- Methodological issues

3- Outcome:

Organizational level outcomes and Employee level outcomes

1As per the first issue of weak underpinnings all three of the theories we have discussed

earlier are not able to unlock the black box alone.

2for Methodological issues there further steps or components which are important such as:

a- conceptualization

b- Measurements:

I-Presence

II-Coverage

III-Intensities

c- Reliability:

I- Valid source of information

II- Signal Respondent

III- Causality:

i- Simple

ii- Complex (Vertical + Horizontal)

d- HR Policy:

I- Intended Practices

II- Actual Practices

III- Perceived Practices

3 as far as the issue are regarding the Outcome following are further two elements in it:

a- Organizational Level Outcomes:

I- Financial Outcomes (such as ROI, Sales, Toubin‟s Q)

II- HR Related Outcomes (Attitude + Behavior)

III- Organizational Outcomes (Productivity + efficiency+ effectiveness)

b- Individual or Employee Level Outcome:

I- Employee Gains

II- Employee Reactions


Data was collected by following

Delphi Technique

HPWS (Including all

practices &

systems)

RBV (Employee‟s Perception

about HPWs/HRP)

-Rare

-In imitable

-time bond

-value addition

-non substitutable

HR

outcomes

(Linked with

individual‟s outcome

also)

Attitude: -Satisfaction

-OC etc

Behavior:

-OCB

-Absentees

- TOI etc

Organizational

Outcomes

A-Financial

Outcomes:

(Book based indicators)

-ROI

-ROF

-ROA

(Market based indicators)

-Profit to book value

-Tobin‟s Q

Organizational

Performance -Effectiveness

-Efficiency

-Productivity

-Market Activity


Lecture 6; Dated 01-04-2014

Article’s extracts:

The joint contribution of Economics and HRM:

Economics is the mother of all sciences and it is also a fact that it rules all around the

rationality of human beings as well.

It is also a driving force for all of us, especially for business.

Organizational behavior is also discussed by economics.

Economics discusses productivity at macro as well as micro levels.

Thus, it can be said that economics is always behind business. Because all of the results

are ultimately been attempt for gaining economic benefits for the organization in the form

of profits.

That is why while talking about HPWS; it would be of great importance to discuss the

economical perspective regarding HPWS.

The criticism that has been presented in their article regarding economics is that it does

not present any appreciating attempts regarding HPWS.

HPWS revolves around the relationship between Employee and Employer, just like the

way this relationship has been discussed in economics as well.

But employee, employer relationship has been discussed differently in economics and

HPWS.

And second common point between economics and HPWs is that both of them strive for

achieving efficiency and effectiveness of the organization.

Article’s Theme:

1- HPWS takes organization towards Superior Economic Performance.

2- Contribution of HRM and economics towards HPWS (although there is hardly any

economics literature talking about HPWS).

*X-Efficiency theory states that employee always contributes less than his capacity towards

the organizational performance.

The plan of this paper being reviewed is to:

Discuss the HPWS from main stream of both literatures.

Also discuss the aspect of Behavioral Economics; financial behavior is one of its

examples.

Therefore, initially this paper discusses organizational behavior and behavioral

economics and then both of them will be integrated.

HPWS is also known as High Involvement organization or High Commitment results

into high Performance of organization.

These seven HR practices as per mentioned in article contributes towards HPWS, along

with the four principles:

1. Employment security

2. Selective hiring of new personals

3. Self-managed teams

4. Pay to performance

5. Extensive training

6. Reduce status

7. Information Sharing


By having these HR practices, the organization will turn into a highly involved organization and

in such high involvement organization employee will:

“Feel responsible for and involved in its success”

Author has given real market examples to support his argument.

Fundamental differences between HPWS and Economics:

The relationship between employee and employer is special in nature which leads to

sustainable competitive advantage. There are two kinds of approached or one can say that similar

set of practices etc can be perceived as either control oriented or involvement oriented approach

of the organization.

Control Oriented Approach; believing that “workers at the lowest level are only hands

to perform the tasks and they are not required to think in decision making of work

design” and following tools are used to control:

Simplified

Standardized

Specialized

Supervision and Pay Incentives (based on the performance of tasks)

Involvement Oriented Approach; according to Lawler (1992) “Employees should be

able to perform without a controlling supervision” and employee does not exist for

work only but also for:

Improving work methods

Procedures

Solving problems

Coordination

And for this purpose employees are needed to be Empowered and motivated. Through this

mechanism organization can effectively and positively control employees‟ performing behaviors.

And this is also the main different point from economic approach.

HPWS linked with Economical Performance:

Huselid (1995) have provided evidences regarding the link between economical

performance and HPWS, by stating that:

“The magnitude of the return on investment in high performance work practices or systems is

substantial”

Evidences:

Huselid had provided various evidences by linking the investment in human resource

practices resulting or translating intro monetary or economic outcomes, such as:

One standard deviation in HRP will result into 7.05% decrease in

turnover intentions.

27,044 increase in sales

3814 increase in market value

HPWS advocates towards Work FOR each other, not AGAINST each other.

Therefore, on the basis of practical evidences that:

HPWS Improved Organizational PerformanceSuperior Economic Performance.


An important thing to note here that the set of these HR practices will vary accordingly and this

will create the fit, this is the reason it is always HR bundles involved in creating such fit.

Main Scream Organizational Economics:

Although John Tomer (author of the article) had shown practical evidences in his article

that both (Economics and HPWS) of these are linked and impacting organization as well, yet the

main stream of economics does not support the superiority of HPWS, because:

Economics talks about Control Oriented Organization

While

HPWStalks about Involvement Oriented Organization

And that is why as per Economics; variables which cannot be measured cannot be managed

also.

it could be possible to create a combination of involvement + control oriented approach that

may help and support HPWS.

Mainstream of HRM:

Before discussing this perspective, it is important to note that here we are talking about

simple HRM not SHRM, thus here by HRM we mean traditional HRM approaches, which also

inclines towards Control Oriented Approach. And it also revolves around Agency theory

regarding Employee, Employer Relationship. Therefore, even at this mainstream of HRM, we

find no such link as well.

Developing an understanding of HPWS

We would try to build this link between HPWS, through Behavioral Economics.

Organizational Behaviors:

For effective use and results of HR practices and systems, OB talks about those three

required conditions for those HR practices, which already contain the potential to contribute in

organizational performance.

1- When employee have the knowledge, skill to manage task

2- Employees are motivated to apply their skills and knowledge in discretionary efforts.

3- MISSING

HPWSis something that contains these conditions by default. Because the objective

of these conditions is to help employees through their skills, motivation and knowledge in their

decision making and job design.

And one reasons for the presence of such conditions in HPWS is that because of the

“Peer pressure” employee have to develop and learn such knowledge and skills required for

effectiveness.

In HPWS as per the part of employees or as per their perspective, they contain a very

clear conceptualization regarding how much smart efforts are required for the output, they

require.

Integrating Organizational Behavior with Behavioral Economics:

HPWS‟s employee put more efforts than in control oriented organizations.

Workers in traditional control oriented originations will experiences:

1- Stress


2- Frustration

3- Psychological failures

4- Short time perspective

5- Internal conflict etc

Contrary to this condition resulted in control oriented organization, when an

organization enhances and enables an individual with Self Actualization (Self Actualization is the state

when person is not recognized by his works, rather his work is recognized by him). Then he will put more efforts for

organizational success.

Worker Motivation Model:

John Tomer (1987) has presented his model having four dimensions:

1. the match between an individual and the characteristics of both job and the

organization

2. the existing structure and supervision of the job.

3. the existence of clear, meaningful goals for jobs and the organization.

4. the nature and enforcement of the implicit contract between employer and employee.

There is the existence of considerable control on how work is done, to acquire skills.

Two kinds of Motivation:

1- Agent Motivation (that is an economic perspective)

2- Deep Ownership Motivation (Intangible Ownership)

These are distinctive nature of employee and employer relationship. Why is it difficult for

economists to understand the deep ownership motivation? The reason being is because the agent

motivation is structured as compare to deep ownership motivation. Through agent motivation,

satisfaction of lower needs are rewarded which is the most familiar form of reward for

economists. While in deep ownership motivation, employee feels high psychological power.

Organizational Relationship as Capital:

Deep motivation is neither extrinsic or intern sic, rather it is based on employee and

employer‟s relationship. And this is how this individual factor of production (as per economic

aspect) becomes much more beneficial than any other factor of production.

Organizational Capital:

Connective capital means Relationship

It supports learningConnective Capital Improved performance.

Results in operating performanceOrganizational Capital Concept linked with organizational

capabilities

The performance Difference:

Structure of interaction and information transfer is the difference that derivers or defines

how and where to invest in (in which kind of capital).

Making successful organizational investment in HPWS for Competitive advantage as:

Intangible

Unique

Firm

Non substitutable


Rare etc

216758238-Lecture-HPWS1

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