Today’s organizations are faced with increased competition due to globalization, deregulation, and technological advances. To make it even harder to compete, organizations have been hit hard by the global economic crisis. If an organization is to survive, it needs to adapt and continually seek to reduce costs, increase quality, create new products, and increase performance.
In a 1998 study of nearly 1000 organizations, Luthans and Sommer found that firms with high performance practices achieved:
- $27,044 more in sales,
- $18,641 more in market value,
- $3,814 more in profits on a per employee basis, and a
- 7% decrease in turnover.
How did they do it? And what defines a high performance organization?
First a definition: a high performance organization is an organization which has adopted a set of working practices deemed to enhance individual and organizational performance. The key is finding which set of working practices achieve results and how you can implement them into your organization.
Based on the above research and subsequent findings, the 10 HRM practices below were identified in high performance organizations.
- Engaging in Selective Hiring. Most managers would say they already do this, but the true test is whether or not the firm’s human resources have the skills and innovation to move the organization beyond the competition. What’s needed is strategic human resources planning that address the organization’s future human resource needs, a plan for proactive recruitment of the finest talent that includes a comprehensive selection process, and a cultural immersion process to fully integrate the new hire into the organization.
- Fostering Employment Security. Ok, so the idea of employment security these days seems laughable, but organizations that create a feeling of security enjoy better performance because the individual isn’t worried they will have a job next week, which also reduces turnover. To achieve this, firms need to communicate regularly such things as feedback on performance. This lets people know what is expected of them, what the outcome is, and how well they performed a task or project. While positive feedback on performance doesn’t create absolute certainty, it does increase job security.
- Building and Empowering Teams. High performance organizations stand out with their encouragement and wide use of teams. In addition, they show willingness to empower these teams with making innovative decisions.
- Providing Extensive Development & Training. High performance organizations develop and continually add to their arsenal of training materials and resources. Perhaps more importantly, they measure results and make adjustments accordingly. Without a measurement process in place, it is impossible to tell what works from what doesn’t.
- Disclosing Essential Information. High performance organizations share important data with their people. Hugely important is sharing the strategic planning goals and initiatives. By including everyone in the strategic plan, the firm achieves more ‘buy-in’ which in turn helps drive results. By assigning specific objectives to individuals, and keeping the progress highly visible, individual gain a greater sense of ownership and accountability.
- Creating Supportive Cultures. High performance organizations are culturally sensitive to the social norms and practices which may facilitate or inhibit their results. By routinely examining the work culture and intervening when appropriate, organizations are able to strengthen performance.
- Reducing Status Differences. Reducing social and political status differences increases team involvement and performance. When co-workers identify with others on a more level playing field, they are less apt to hold back in team meetings and see each other more as a team mate with the same goals.
- Linking Compensation Directly to Performance. When compensation is tied directly to performance, you tend to get better performance! High performance organizations tie compensation to desired performance in the form of incentives (bonus). Also, issues of inequity are addressed quicker than in other firms.
- Promoting Health and Safety. High performance organizations often develop work cultures that consider employee health and safety a top priority. This can take the form of compensation for gym memberships, free or low cost services for employees to receive physical and mental advice from a health professionals by telephone or online, and a comprehensive cultural atmosphere that values health and safety.
- Integrating HRM Strategy. High performance organizations value HRM and consider it a strategic partner in contributing to desired results.
Organizations that implement these strategies will have far better results than their counterparts. Performance technology designed to align the organization with your strategic plan, and translate enacting strategy into day-to-day tasks and activities, not only keeps everyone involved, it also saves time by managing with tools that don’t require seeking status updates or having additional meetings to get crucial information.
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