The question of whether the way people are managed and treated at work contributes to the overall performance of the enterprise, has been much debated. The focus of this debate has tended to be on formal processes and procedures within organisations. These high performance working practices (HPWPs) have been the subject of a wide range of studies designed to test their impact.
The literature has shown that such practices tend to be part and parcel of an approach that emphasises high quality goods and services, and engaged and empowered workforces. Practices studied include those related to training and skills, participation, empowerment, and communication and compensation. The practices themselves are believed by some to be additive ie ‘the more the better’ but by others to work more effectively in combination. Some see these combinations as grouped into coherent ‘bundles’ of practices eg practices that act together to enhance employee skill or involvement, and others have suggested that practices need to ‘fit’ with the business strategy of the firm eg skill enhancement practices are best considered in an environment with high skill demands.
There is now considerable evidence across a wide range of studies that adoption of these practices is associated with good business performance. Interpretation of the size of the effect is difficult as different studies link different combinations of practices and different measures of performance, but they suggest that as much as 20-40 per cent of productivity differences between firms may be accounted for by differences in HR practices. Despite these strong associations with performance, estimates of uptake suggest that less than a quarter of organisations adopt such practices to any significant extent.
Discussions of impact suggest that HPWPs act to improve the self- confidence and flexibility of the workforce and contribute to improved motivation, morale and commitment which in turn are related to enhanced individual performance.