Impact of High Performance Work Practices

Work success largely depends on the capabilities and aptitude of the employees who encounter challenges of the present day business. In the recent times, academic literature has proposed that the sole source of any sort of sustainable advantage that is competitive in nature for organisations is the human resources that they possess. The resource-based firm theory puts forth, that organisations should pay more attention to the resources that are essential for them and help them to put their strategies into play. A strong example of one such key resource is the human capital of the firm. High Performance Work Practices (HPWPs) are practices related to the human resources management in a company. They are focused on motivating the employees and their performance in the organisation where they work. This alone is a very big reason why companies like to adopt High Performance Work Practices. However, small organisations don’t normally opt for High Performance Work Practices, as to why this happens is still unclear. Some have argued that this happens because small companies tend to perform a number of jobs in a less complex manner as compared to the larger organisations. Some of the management practices that are covered under high performance work practices are formal employee training, higher pay, pay according to performance in group activities and self-directed teams. (Appelbaum, 2000). Combs has argued that the implementation of High Performance Work Practices results in a boost in the performance of the organisation with respect to financial and employee outcomes.

Appelbaum introduced an idea that stated that there exist three bundles that are required to build up the High Performance Work Practices of a company. These are; employee ability enhancing practices (A), employee motivation enhancing practices (M) and finally, the type of initiatives that give the employees the opportunity to do better than they already are (O). This came to be known as the AMO model. It has been observed over the years that the AMO model is theoretically possible and also the fact that it does offer a basic understanding of the value of High Performance Work Practices (HPWPs). (Luna-Arocas and Camps, 2007). The AMO model also presents an explanation of how human resource practices can actually affect the firm’s performance by targeting to enhance the abilities and motivation of the employees, while providing them with a platform that would give them the opportunity to participate. Research has shown that using practices that improve the abilities, like formal selection procedures and training programs can also affect the financial performance of an employee and make them more productive. Moreover, by motivating the employee the companies can enjoy improved efficiency and financial performance of the employee’s part. Also, conducting workshops such as participatory programs and general feedback activities are examples of opportunity enhancing activities. In 1994, when Osterman decided to evaluate the level of usage of high performance work practices in the companies, he was able to conclude that thirty-five percent of the companies in the tertiary sector which had more than fifty employees, majorly made use of work flexibility. In a similar study, Dyer and Reeves stated in 1995 that somewhere between ten to twenty-five percent of the companies which were involved in their study used guidelines provided by the high performance work practices literature to improve their human resource policies.

Boxall and Purcell later explained how the AMO model stated that the employees will be able to accomplish tasks better when they have the ability, motivation and the opportunities to do so. Some scholars argue that HPWPs are a collection of numerous practices with no obvious link. Human Resource practices often support each other and result in a successful business model.

This study is going to include extensive research into the High Performance Work Practices as well as its effects on the employees and the organisation. I will explain in detail about the AMO model, the effect of HPWPs of the organisation and

Review of Literature

The Abilities-Motivation-Opportunities (AMO) Model

The implication of High Performance Work Practices (HPWP) differ from one practice to another and have lead to the emergence of four exercises that re-occur in most of the organisation which have adopted HPWP in improving human resource practices. These are believed to be; formal training and development processes, reward schemes, recruitment and selection process and finally performance management. (Boselie, 2005; Boxall and Macky, 2009).

‘A’ stands for a person’s ability to perform in an organisation. The abilities of that the employees possess predict their performance on the job. (Schmidt and Hunter, 1998). Theoretically, the factor that determines the ability is based in the literature of the psychological and economical human capital. Practices that are undertaken by the firm which add to the abilities of the employees are advanced employee selection methods and job and skill training or the independence of procurement of skills while they are on the job. (Appelbaum, 2000).

The ‘M’ component is related with the motivation in the employees that encourage them to work harder in the organisation. According to the social exchange theory, an employee’s efforts are directly proportional to their evaluation of the sufficiency of the incentives they are or will be getting in the future. These incentives may include facilities like bonus pay and opportunities of promotion offered by the company. High Performance Work Practices that provoke motivation are; high pay, opportunities for employees to take their careers ahead and insights into the company’s plans for future. (Appelbaum, 2000; Kroon, Van De Voorde & Timmers, 2012).

The components that are mentioned above normally deal with the employees on a personal level. One of the additional quality of this model is that it also account, the environment in which the employees work. The employees must get the opportunity to use the abilities and the motivation in their day to day jobs. This is exactly what is the third and final component, ‘O’. This represents a worker’s opportunity to do well in the workplace. This is empowered by the job design theory and the employee empowerment literature. Employees should be presented with the authority to make work related decisions and work in groups and share feedbacks about each other and the company’s goals and future plans. They must also be permitted to effect business results and feel wanted at the company. Practices that promote the opportunities to perform are; involving employees in policy-making, team work and delegation of authority.

We can conclude, by merging the works of Boxall and Macky (2009) and Toh (2008) that the elements that are involved in the AMO model have different goals that can increase worth of the employee in the company. The AMO model can instigate; high employee performance or commitment or high workforce empowerment. These qualities can all be brought together to make a spectacular performance boosting system but is will not necessarily be in accordance with the needs or all the companies and it also wont be suitable in the case of small firms.