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This slide discusses the shift towards a contract for performance, the influence of trade unions, Japanese management techniques, the American excellence school, and different perspectives on performance management.
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Part 3 Performance
Slide 10.1 Performance • There has been a shift away from the contract of employment towards the contract for performance • Getting the most out of the workforce is a predominant management preoccupation • Managing and developing people has perhaps the most powerful effect on overall performance (Caulkin, 2001)
Slide 10.2 Influence of Trade Unions (1 of 2) Traditional HRM approach – centred on assessment of past performance & reward Trade unions sought to improve terms and conditions of their members in exchange for better productivity Performance became stereotyped as no intrinsic interest to the person doing the work
Slide 10.3 Influence of Trade Unions (2 of 2) Change in influence of trade unions Collective bargaining no longer dominates the management agenda as it once did Now scope for integration in a way that was once unrealistic Can now say performance is a reward
Slide 10.4 The Japanese Influence Japanese personnel policies described as: • Performance • Motivation • Flexibility • Mobility
Slide 10.5 ‘J’ Organisations Characterised by: • Commitment • Effort • Company loyalty (Delbridge & Turnbull, 1992)
Slide 10.6 Adopting Japanese Techniques in the UK Many Japanese management techniques adopted, example JIT Only appear to succeed when initiatives & techniques are developed and modified for their location
Slide 10.7 Peters & Waterman – an American Perspective American excellence school characteristics • A bias for action • Being close to the customer • Autonomy & entrepreneurship • Productivity through people • Hands on and value driven • Stick to the knitting • Simple form, lean staff • Simultaneous loose and tight properties
Slide 10.8 Shift in Perspective in the Peters & Waterman approach From strategy and structural factors (hard) to Style, systems, staff, and skills (soft)
Slide 10.9 Peters & Austin’s Factors for Excellence • Concern for customers • Innovation • Attention to people • Leadership
Slide 10.10 Problems With the American Research Methodology • No comparison made with companies not considered excellent • So were principles applied to greater extent in excellent companies? • Excellent companies in research have since experienced severe problems • Extent of application to UK organisations
Slide 10.11 Impact of American Research • Influence on strategic thinking about performance profound • Emphasis away from objective terms (profitability, effectiveness, value added, etc) • Move towards generating feelings of enthusiasm and achievement • UK seeking to determine high commitment work practices
Slide 10.12 HRM Strategy Literature • Universalist – certain HR policies & practices will result in high performance • Contingency – different HR policies & practices needed to produce high performance depending on business strategy and environment • Resource based – organisational members are unique so practices and policies are unique to each company
Slide 10.13 Different Definitions of Performance Bottom line financial performance – profitability Through productivity measures Measurement of outcomes, e.g. wastage, quality of labour turnover
Slide 10.14 The Bundles Approach • The performance effects of HR policies and practices are multiplicative • Highlights emphasis on internal fit
Slide 10.15 Seven Critical People Management Policies • Emphasising employment security • Recruiting the right people • Extensive use of self managed teams & decentralisation • High wages linked to organisational performance • High spending on training • Reducing status differentials • Sharing information (Pfeffer, 1998)
Slide 10.16 Sheffield Enterprise Programme – Identified Factors • Culture • Supervisory support • Concern for employee welfare • Employee responsibility • Training (Patterson et al, 1997)
Slide 10.17 Which People Management Policies Create High Performance in Different Circumstances? Guest, 2001 High performance work practices may be effective in manufacturing rather than services
Slide 10.18 Focus on the Resource Based View • Each organisation is unique and complex • Need to look beyond HR policies and practices • Need to consider long term performance capability • Move to longitudinal studies can be useful • Organisational context and institutional arrangements need more attention
Slide 10.19 Characteristics of Big Ideas in High Performing Organisations • Embedded • Connected • Enduring • Collective • Measured & managed
Slide 10.20 Commitment • Attitudinal commitment • Behavioural commitment
Slide 10.21 Value of Commitment Thought to result in: • Better quality • Lower turnover • Greater capacity for innovation • More flexible employees (Walton, 1985)
Slide 10.22 Measuring Outcomes of Commitment • Industrial relations climate • Absence levels • Turnover levels • Individual performance (Mabey & Robertson, 1990)
Slide 10.23 Simple Model of HRM & Performance Figure 10.1 A simple model of HRM and performance (Source: D. Guest (2000) ‘Human resource management, employee well-being and organizational performance’. Paper presented to the CIPD Professional Standards Conference, 11 July. Reproduced with the permission of the author.)
Slide 10.24 Can High Commitment Reduce Performance? • Might decrease flexibility and inhibit creative problem solving (Cooper & Hartley, 1991) • If commitment reduces staff turnover then fewer ideas may enter the organisation • May depend on reason for commitment – e.g., people committed to the organisation via pay levels may not produce required level of performance
Slide 10.25 Managing Commitment Commitment is affected by: • Personal characteristics • Experiences in job role • Work experiences • Structural factors • Personnel policies (Guest, 1992)
Slide 10.26 Impact of HR Policies • Employee ability/skills • Motivation • Incentive
Slide 10.27 Factors Affecting Employee Motivation • Job influence • Career opportunities • Job challenge • Involvement in management decisions • Training and line manager respect
Slide 10.28 Factors Affecting Job Satisfaction • Job influence • Career opportunities • Job challenge • Teamworking
Slide 10.29 Factors Affecting Commitment • Training • Career opportunities • Management leadership • Performance appraisal • Work life balance • Communication about organisational performance
Slide 10.30 Major Performance Initiatives – Organisational Focus
Slide 10.31 Major Performance Initiatives – Individual Focus • Performance management • Performance related pay • Self development/continuous development • Empowerment
Slide 10.32 Major Performance Initiatives – Team Focus • High performance teams • Cross functional teams • Self regulating teams
Slide 10.33 Things That Go Wrong • The process/people balance • Getting the measures right • Management losing interest • The team/individual balance • Missing out the development part • Implementing and managing change
Slide 10.34 Mix of Measures • Financial measures • Customer measures • Internal business measures • Innovation and learning
Slide 10.35 Suggestions for Running a Successful Performance Initiative • Develop a clear vision for the business as a framework for individual and team goals • Consult, develop and agree individual goals and targets:– what to do to achieve – how to satisfy customers– precise, difficult, and challenging • Gain commitment from the top • Train all participants
Slide 10.36 Summary (1 of 2) • Performance is rewarded • Performance is also a reward • UK performance views have been influenced by Japanese and US strategy perspectives • Has the research between people management practices and organisational performance been proven?
Slide 10.37 Summary (2 of 2) • Commitment as the moderating variable between HR practices and organisational performance is insufficient • There are many factors that can affect the people/process balance • Factors likely to produce success include vision, target setting, full management commitment, training & honouring commitments
