High performance working can be defined in a number of ways. The project described in this paper uses a definition that includes a high level of customer service and the generation of value to the customer in ways that mark out or differentiate one organization's product or service from that of its competitors. The project reached new - and confirmed conventional - conclusions about the component parts of high performance working defined in these terms. The project identifies the following factors as those that, acting together, can provide the core of an approach to a high performance strategy based on differentiation:
Towards high performance working
Competitive pressures - and increasingly global pressures - are forcing private and public service organizations alike to ensure that they are efficient. Many organizations go further and seek a reputation for excellence among their competitors. But beyond this, as economies become more sophisticated and consumers become more discerning, organizations are looking to generate high added value by setting out a unique offering. In doing this, large organizations may continue to serve mass markets, but increasing numbers of large, and many small, organizations are finding their own market niche. They are tailoring their offering to the needs of particular individuals and groups of customers and in this way are distancing themselves from their competitors - providing an exclusive offering.
This customer-led vision of high performance working is derived from a report of a review of research on workplace learning (Stern and Sommerlad, 1999). The report stated that the implications of these developments in strategy include much greater devolution of decision-making within flatter organizational structures. The move away from centralized planning and standardization requires consequential changes in the way people in organizations learn. It moves the focus of learning from training and teaching to individual and team learning, and learning needs are defined by the learners themselves.
This paper sets out the results of a joint follow-up research study by the International Labour Organization (ILO) and the International Federation of Training and Development Organizations (IFTDO). The results are set out in the form of a framework within which to think about the main elements of high performance working. The case studies on which the paper is based are being prepared for publication on the web sites of the ILO and the IFTDO in March 2000.
The research project took the form of a pilot study rather than a rigorous in-depth investigation. It was designed to get an idea of the extent to which organizations are moving towards the high performance working goal and how they were doing it. The Stern and Sommerlad report provided an analysis and an indication of the direction of change. The ILO/IFTDO research looked at practice and, particularly, the practices being used by organizations that are trying to develop high performance working.
The ILO/IFTDO research
This overview draws on nine case studies from six countries: Cyprus, Hong Kong, South Africa, Singapore, the United Kingdom and the United States. The case study organizations range in size from 130 employees upward. The case studies were selected according to criteria derived from factors identified in the Stern and Sommerlad research and definitions of high performance working used by the OECD and academic researchers. However, in one respect a different approach was taken. The ILO/IFTDO criteria were deliberately framed so as to include organizations that are successful and have a focus on innovation, customers and quality and differentiation. (1) The criteria included:
The following commentary on the case studies looks first at the organizations' objectives and the way they focus on developing the offering to their customers. It then looks at what they have done to realize these objectives, how they started, some of their organizational characteristics, the way in which they developed a capacity for organizational learning and the wider people management framework in which this took place.
The term "high performance working" does not apply to a discrete set of employment practices. However, as can be seen from the above criteria and the note at the end of this paper (Appendix B), it does have certain characteristics that have provided the basis for academic research. The case studies show considerable similarities amongst the approaches to performance improvement.
International research shows that there is considerable room for the wider application of the sorts of practices that have come to be associated with a drive toward high performance. In the United States a 1996 study of Fortune 1000 companies found only a substantial minority using teamworking, quality circles, employee involvement and self-managed teams.
In a recent study (Stevens, 1999) in the United Kingdom, the Institute of Personnel and Development (IPD) looked at the development of four types of skill associated with high performance working: individual, broadening, quality-related and group-based. The survey showed that only 1 per cent of organizations have sought to develop all four "high performance" skills. Less than one-third are seeking to develop two or more of the four skills. It therefore appears that the opportunity to make a difference by using the skills and potential of employees more fully is still wide open.
Organizational objectives and a focus on customers
It would be good to be able to say that all the organizations studied have been exemplary performers over many years. In fact, by this measure only one organization would have been included in the project. One organization has been in existence for 99 years, three are over 70 years old, and two have been formed in the last five years. One is a public sector body, for which the question of age is immaterial. It is therefore not possible to claim that they have all exhibited sustained high performance, but the case studies demonstrate innovatory behaviour and a range of forms of differentiation of their service offering to customers.
All the case study organizations have their own claims to fame. For instance:
The case study organizations have got ahead and sought to stay ahead as a result of people-based strategies. They all demonstrate efficiency in their operation. They all seek to develop excellence in the service they give to customers. It is also apparent that some of the case study organizations demonstrate exclusivity or differentiation of the offer to their customers. The following examples help to illustrate the way the organizations have adopted specific strategies that relate to the achievement of efficiency, excellence and exclusivity.
Efficiency is particularly demonstrated by the Mandarin Oriental Hotel Group, with its use of multi-skilling to provide a high level of flexibility in manning in an industry in which the development of single skills and the use of temporary employees is the norm. It benchmarked itself against Sheraton Hotels in Australia and adopted a similar strategy.
A team of eight employees at Motorola's automotive and industrial electronics group in Northbrook, Illinois in the United States managed to cut the number of steps involved in handling a requisition from 17 to six and the average elapsed time (ET) from 30 hours to three. The team called itself ET/VT = 1 because it wanted to make sure that every minute of elapsed time is "value time" when something worthwhile is being done. But before starting the project, they had enrolled in a "high commitment, high performance" team training course with Motorola University.
The other seven organizations implicitly emphasize efficiency through performance management and continuous improvement. However, what marks out these two case studies is the extent to which the organizations show an even greater emphasis on the positive drive for excellence (and, if possible, exclusivity in the market place) and the sophisticated management processes they used for this purpose.
Excellence is demonstrated by South African Breweries. This organization bases its strategy on three elements: people, growth and reputation. It aims "to be a world-class manufacturer and marketer of fine quality beers, whilst behaving in a progressive and socially responsible manner" and "to be in the top five brewers in the world by the year 2004". The management and development of its people are an integral part of the management of its brand.
Thorn Lighting, from Spennymore in the United KIngdom, concentrates on cost-effective lighting solutions in an industry in which electronics, new materials and energy efficiency create a climate of continuing change. It is the leading lighting supplier in the United Kingdom and is part of a group that is the largest supplier of light fittings in Australasia and second largest in Europe. It too manufactures in volume, but is constantly seeking market leadership through innovation. Products introduced in the last three years generate about 40 per cent of group sales.
In the highly competitive world of motor component manufacture, W.H. Smith & Sons has concentrated on doing what it has always done- manufacturing to meet the needs of customers for volume production of plastic injection mouldings and sub-assemblies including leather-covered products. The company is regarded as a leader in the field of plastics technology and has had to improve its performance to maintain its lead in a highly competitive and "lean" industry in which it is the supplier to leading motor manufacturers.
The Mandarin Oriental Hotel Group's strategy has many of the same fundamental features, which have to do with excellence and the "empowerment of staff to go beyond the call of immediate duty with a little bit of extra help". This is not entirely a "one-off" strategy, tailor-making the service to the needs of the individual customer, although it has elements of this approach, as all hotels do. Doing it better is the customer's view of the Mandarin offer. Its aim is to create a learning environment through a "university within a hotel", with outside certification up to Master's degree level in one hotel in the Group in the year 2000 and then to implement the strategy throughout the Group.
Exclusivity is best demonstrated by Singapore's Comfort Driving Centre, which has put the application of learning theory, by instructors and computer-based learning and simulation, at the heart of its processes. It has a client driving-test pass rate of 53 per cent - over twice the success rate of its competitors. The Laiki Bank has also innovated and led the field in Cyprus in the use of teleservice and Internet banking, both developed in-house on the basis of employee initiatives.
Both organizations have found, or will find, that others copy them. Their exclusive advantage will be only temporary. However, presently that exclusivity draws customers and provides a base from which to innovate further and keep ahead of the pack.
The concept of exclusivity or differentiation is important. Differentiation marks out one organization's offer to customers from that of other organizations. At its most distinctive, this may be a unique selling point. At a given point in time, this may be protected by a monopoly position or by copyright or other intellectual property rights. However, for most organizations differentiation is a matter of degree, of keeping ahead of the competition or, in the public service, satisfying both customers and other beneficiaries and the government of the day.
What did these organizations do?
It is impossible to provide an agenda to be followed by other organizations. However, some common themes have emerged, together with examples of practice that should be of interest to personnel and development practitioners and their other management colleagues. It is clear that in all the case study organizations the initial drive towards high performance working has come from the top of the organization. In two case studies, the influence of personnel and development practitioners is apparent - the Mandarin Oriental Hotel Group and the United States Social Security Administration (SSA). No doubt, other organizations would be able to explain the interplay between the personnel and development and line management in terms of ideas. What is clear is that, whether working with insiders or outside suppliers, there has been a high level of integration and collaboration, and their teamworking has been seamless.
Getting started: A recurring theme in the case studies is the influence and leadership of a CEO or chairman (in the case of the Mandarin Oriental Hotel Group, the group director of human resources) with a vision of what the people in the organization could achieve with the right skills used in an appropriate organizational structure and the generation of motivation. The jobs carried out and the technical skills used vary enormously, but time and again the same key skills and attitudes required are mentioned: teamworking, problem solving, responsibility, initiative and attention to quality.
The importance of "vision" cannot be overstated. Organizations such as Motorola, based in the United States in a fast-moving industry and started by entrepreneurs, might be expected to see more easily the potential of high performance work practices. It is interesting that, given the industry sectors the case study organizations are in, most of them might have been expected to be much more resistant to change.
For the Laiki Bank, the vision has been provided by the group chairman. The Bank's vision statement, shown below, sets out fairly comprehensive objectives for a high performance organization. If there is one omission from the vision, it has to do with learning, although - as can be seen from the full case study - this may be taken as implicit. Important aspects of this include "a recruitment policy that has produced a high calibre workforce of young aggressive, forward-looking employees whose unconventional ideas have led to the Bank becoming dominant in Cyprus". The Bank gives its professional staff appropriate accountability and "encourages prudent risk taking".
"Our vision is to differentiate ourselves as the most dynamic, effective and reliable financial organization.
We thereby ensure long-term and stable profitability for the benefit of our shareholders and our staff." |
South African Breweries and the Food and Allied Workers' Union representing employees built a strong relationship, undertook a joint "world class manufacturing" study tour to Germany, the United Kingdom, the United States and Geneva, Switzerland to visit the ILO, looking for benchmarks of performance and ideas about the way in which these might be achieved.
From what is undoubtedly an even less likely background, employing airport security police officers for whose commanders "training was often seen as a dirty word", the general manager of Singapore-based SATS Security Services has led the creation of a customer-oriented organization with global ambitions. He says that his belief that managers should "develop your people, treat them well, motivate them, empower them and they will take care of your problems for you" is the basis for the system he has developed, rather than an "abstract concept" of high performance working. The organization is also interesting because it has had problems attracting well-qualified recruits, but this has not held back their efforts to double their customer satisfaction rating with clients during the 1990s.
The company also benchmarks its performance against similar overseas organizations, including the New Zealand ASS, and makes use of United States IACP benchmarking to challenge performance assumptions. Often, benchmarking activities provide the target for the performance of the whole or part of an organization and this, together with the strategy for performance improvement, needs to be communicated and "owned" by employees. Managing this and the cultural changes that go with it is the essence of the change process.
Perhaps the ultimate "top-down" initiative studied relates to the United States Social Security Administration. Although legislation exists that would enable the United States Government to direct how federal agencies should work, the Administration has made agencies more free to decide their own mode of operation, and oversight of their operations has been reduced. United States Office of Personnel Management (OPM) and General Accounting Office manuals have been withdrawn. The President's Management Council has been advised that the best way to improve human resource development in the federal Government is to "have high expectations of HRD and to communicate and reinforce these expectations". The central expectation of HRD is that its contributions result in high-performing federal agencies.
The Government Performance Results Act requires the SSA to define what business it is in, what customers it serves, what its value-added niches are, how it recognizes its own success, whether it has the workforce capacity and the technology and systems to achieve its goals. The SSA may involve the OPM to overcome bottlenecks in information moving from one part of the SSA to another, prepare employees to operate new equipment, maintain current information on client needs, and support human performance.
Getting organized: Another common theme throughout the organizations has to do with the empowerment of employees to use their own judgement within the framework of a job and often working in a team. Multi-skilling and job rotation increase efficiency and maintain competence and flexibility. Flat organizational structures underpin efficiency and simplify management and communications.
Singapore's Comfort Driving Centre has sought to maintain a relatively flat hierarchy below the senior executive in an organization that now employs over 130 people. Teamworking is becoming the main means of organizing work - a change that has required considerable preparatory work and will not be completed until later in the year 2000. But much of the innovative work of the organization is carried out in project teams established to tackle management problems. Membership of project teams is open to all staff on the basis of individual initiative and enthusiasm. One project team developed a computer-based package to design a track layout for motorcycle instruction and to redesign the student registration system.
W.H. Smith & Sons adopted cell manufacture, with cells dedicated to the needs of particular customers. South African Breweries has extensively used and refined its manufacturing team structures since the early 1990s. The first phase focused on substantial performance improvement, eliminating stocks, developing problem-solving skills and practices, identifying best operating practices and structuring teams at four levels from shift through to region, focusing on situational, systemic and strategic problem solving. A revision of team structures started in 1997 has achieved a step change in skill levels, so that teams have become self-sufficient and do not need assistance from quality control technicians and other specialists.
Motorola bases its use of self-managed teams on the perceived need for customers to have "seamless" responses to their requests. The Monterrey plant has 2,000 employees, all of whom are involved in team projects. An employee can be the leader on one team and a member of others. The aim is to "have every employee serving on five teams". Motorola teams compete annually in a Total Customer Service competition. In a recent competition held in Orlando, one winning team called "Roots" came from Tianjin, southeast of Beijing. The team had boosted the local content of paging devices and thereby simplified the resolution of quality problems and reduced lead times. This was done by providing cross-sector support for the existing suppliers, relocating high-tech suppliers to China, and finding and developing new local suppliers.
Getting smart: The development of the capability of employees to do that which is required in organizations with high aspirations lies at the heart of the management challenge. The capacity to learn is at the centre of the case study organizations' strategies. For some, the level of technical skill required is high. Multi-skilling - moving sideways to acquire parallel but sometimes unrelated skill sets - is complicated. Added to this, however, is the need to develop self-management and problem-solving skills, so as to contribute to quality improvement, and interpersonal skills for effective teamworking.
South African Breweries defined a set of management and self-management practices for employees. The latter state that employees will discover larger goals/priorities affecting the job, improve continuously, enjoy and express a positive view of their job, initiate regular performance discussions, conduct and communicate self-reviews, and develop themselves.
Thorn Lighting used a project team approach to compare Thorn performance with best practices in world-leading companies. It saw a need to shift the culture from "relative introversion" to "customer-focused and outward-looking". It has moved to cell-based manufacturing concentrating on "one product in one cell", with each cell employing between 20 and 200 employees. Each operator is typically competent at three jobs and moves around the jobs to develop and maintain flexibility. The cell teams carry out their own maintenance, although they can call on specialists for higher-level skills.
Initially there had been apprehension about the introduction of teamworking, and considerable effort was put into managing this transition. Fourteen line managers were trained to be facilitators for a "Kielder" outdoor teambuilding two-and-a-half-day exercise for almost everyone in manufacturing. This programme was followed up with a UK Team Building Business Awareness programme, again facilitated by managers. The leadership role of line managers and team leaders, underpinned by team skills training, has been a key component of the change programme.
The implications of development programmes of this magnitude are considerable, and management development features strongly as an essential preparation for skill development more widely. In many ways, this can be seen as the change that laid the groundwork for the changes that followed. SATS Security Services sees every team leader as a trainer. The team leaders provide structured on-the-job training with theoretical knowledge being tested using computer-based training. There is a sophisticated system of tracking and career planning to follow the development of individual members of staff, ensuring that they move jobs after two years.
It has already been mentioned that IPD research in the United Kingdom has shown that few organizations say they are developing more than one out of four "bundles" of high performance work skills: individual, broadening, quality-related and group-based. The case study organizations sought to develop more than one and sometimes all the skill sets for appropriate groups of workers. Some saw the objective as the encouragement of learning as distinct from training. The United States Social Security Administration saw the need to move from traditional training, involving one-way communication from a teacher to a student, to the development of the need for learning "from within the learner". In this context, the role of the "trainer" becomes that of "facilitator".
Whether this goes as far as the research observation reported by Stern and Sommerlad, that high performance working moved the definition of learning need from the trainer to the learner, could be debated. What is clear is that learning is becoming focused on equipping people for the development of the next round of products, services, processes and, therefore, jobs. This is particularly a feature of Motorola's provision through its University, but it is also the basis on which W.H. Smith & Sons, employing 500 people, provides two learning centres for job-related learning at work and for study on subjects of personal interest by employees and their families outside normal working hours.
Motorola's University, as described in the Motorola case study, deserves close inspection. The University is staffed by managers, engineers and consultants. At one level, the University is used for job-related study. At another level, it acts as an agent of change. It acts as a resource centre, supporting performance development in the workplace at 99 sites in 23 countries. It supports action learning and learning "beyond the organization". One of the University's roles now is to raise questions "where the answers do not exist". The Motorola University is also creating a research agenda and has held its first research colloquium in Malaysia delivered by Motorola employees for Motorola employees and invited guests.
Getting results: All the organizations have in place performance management procedures in order to monitor progress, assess the development of skills and identify areas for further development. South African Breweries reviews individual goals monthly on an informal basis between managers and direct reports. The performance reviews cover the self-management practices referred to above and aim to result in what are known as the "4 As":
Formal reviews take place twice yearly for individuals and teams. Since 1993, surveys have provided feedback from employees. The surveys now assess organizational performance on a range of issues including ethics, work attitudes, company image and management processes.
If investment in people lies at the heart of the development of high performance working and job changes and new organizational structures create the framework within which employees can deliver, the case studies show that high-quality relationships are needed to make them work. The Mandarin Oriental Hotel Group sees results in terms of a "profit chain": employee satisfaction leading to customer satisfaction and thence to increased profit. A monthly survey of a sample of employees identifies any problem areas that need to be tackled.
In some of the organizations, employees are members of trade unions through which they are involved in the design and development of organizational change and more effective bargaining arrangements and communications. The quality of communications is clearly important at all the case study organizations.
SATS Security Services' general manager first established confidence in the early 1990s by holding what were known as "skip-level" interviews, one-to-one with staff. He then acted on complaints without identifying the source of the complaint. SATS Security Services also links pay to training, giving increases after upgradings, promotions and, for instance, for performance in crisis situations. A points-based award system provides additional small cash awards costing 5 per cent of the wage bill, and this proves a powerful incentive. The top five performers every year receive a trip to an overseas conference. SATS Security Services also provides extensive health care for employees through its Wellness Programme.
Other organizations have made changes to their pay system to ensure that it reinforces and provides a message that is consistent with other management and cultural values. Thorn Lighting does not have a bonus scheme based on individual or team performance. It takes the view that this could detract from what is ultimately an organizational effort. Instead, it recognizes team performance by awarding badges and certificates, recognition in the company magazine, and asking operators and supervisors to represent the company at competition award ceremonies.
Many of the companies have won awards for performance and people and quality systems. The Thorn Lighting and W.H. Smith & Sons sites are recognized nationally as demonstration plants by the United Kingdom's Department of Trade and Industry.
Giving out: For some case study organizations, involvement and commitment do not stop at the "factory gate". South African Breweries has been involved in Equity (affirmative action) so as to tackle the racial and gender imbalance in the workforce. The firm also started to outsource the driving of distribution vans to its own employees in 1995, helping them to buy and operate the vehicles. Job modifications and losses have been discussed with the trade union and, with the advice of the International Labour Organization, an initiative called Project Noah has seen the setting up of 161 small, micro and medium-sized businesses in industries ranging from farming to manufacturing and services. Thorn Lighting is heavily involved in providing unemployed people with pre-employment training. Trainees are given preference when vacancies arise.
Sustaining progress is not a sinecure, but it can be done: All of the case studies reveal some of the historic and some of the current problems the organizations have encountered. Many have had to face traditional and conservative attitudes among staff. Management inertia has been a common issue. Not all that has to be done could be done immediately and there have been false starts. There is often a period before the benefits become apparent, during which there is considerable uncertainty whether changes that have been introduced will work or not. There may be a period of experimentation. Also, sustaining a competitive advantage is not easy. Many organizations go through stages of review and renewal of energy, particularly as markets change.
Even Motorola, with a huge investment in people stretching back over 70 years, explains how it had to fight back to a leading position in telephone technology and to cope with the Asian financial crisis. But these are organizations that have "broken through" once and know what it takes to do it again. They see innovation, teamworking and flexibility as core capabilities and learning and good people management as the way to develop them. They all appear to have done more than most organizations to master the multi-faceted approaches necessary to develop high performance working. And, with devolved decision-making, the in-built capacity for continuous improvement should be higher than in a centrally controlled process.
Concluding thoughts
Increasing evidence is becoming available about the connections between people management and development and "the bottom line". Researchers have identified three ways in which this occurs: through the use of best HR practice; getting the right "fit" between business strategy and HR practices; and using specific "bundles" of practices, varied according to organizational context. The case studies used in the ILO/IFTDO research show significant evidence of the use of all these approaches. They bear witness to the search by organizations for an alignment between practices and outcomes and active searching for examples of good practice.
More importantly, however, the case studies demonstrate alignment between people management and development and market strategy, with an emphasis on excellent customer service and, in some cases, clear market differentiation. The case studies are not academically rigorous scientific studies. As with any case studies, readers will be intrigued by thoughts about the painful changes that had to be made and what is not said, as much as what is. But in the end, what is impressive are the similarities across countries and between industries, from high technology manufacture to personal service in hotels and in the public service. There is a strong emphasis on learning in the context of project-based learning and individual and team decision-making: learning and organizational development.
There is much evidence in the case studies of a strong movement towards high performance working. Initiative, responsibility, teamworking, leadership, devolved decision-making, and people learning and growing with the job are all characteristics of the organizations studied. The contribution made by employees at all levels, particularly in relation to projects that push their organization forward, thus improving processes and service to customers, should inspire other organizations to consider whether they are "missing a trick".
What is also apparent is a sense of realism. These are "hard-headed" organizations seeing a commercial advantage (in the case of the United States Social Security Administration, a public service advantage) in using the potential of their people as fully as possible. They have aligned the form of high performance to the needs of their customers in such a way that it gives them a competitive edge.
The full exploitation of market differentiation is not seen in these case studies. The studies do not look at one-off, tailor-made products and services, although in their own markets some of the organizations are moving in this direction. These are not organizations that simply empower employees to do what they think in the expectation that success will follow. (There are organizations that claim to do this.) However, they are edging in this direction. None of them exercises minute-by-minute control over all its employees. They are organizations that are structured to generate freedom to learn and contribute rather than to control.
All the case study organizations place much of their developmental work, on which their future depends, in the hands of teams of people who often volunteer their involvement rather than being asked and who have often thought up the project proposal in the first place. Employees demonstrate a hunger for the improvement of their organization and the learning that goes with it. In this sense, there is leadership throughout the organizations. Many employees also show that they are not afraid to have their work examined by their supervisor and their peers.
Finally, there is the question of people management and development expertise. All the organizations have very carefully tailored employment relations, learning opportunities on and off the job, and organizational development. They learn from other organizations. They share their expertise with other organizations. They use external benchmarks and recognition systems to check out their performance. One organization does not have a specialist human resource development or personnel department; yet its extensive use of learning and development makes clear the expertise used by the company. The seamless application of people management and development and line management leadership, expertise and vision provides the strategy and the power house for high performance working. Finding out how to manage and develop people so as to generate freedom to learn and contribute will be a major challenge in the early part of the twenty-first century.
Appendix A
The Institute of Personnel and Development (IPD), as a member of the International Federation of Training and Development Organizations (IFTDO), has been undertaking a joint exercise with the International Labour Organization (ILO), looking at high performance working in nine organizations around the world. The results of the work are presented for the first time at the IFTDO/Institute of Personnel and Development World Conference in London in April 2000.
The origins of the initiative lie in the publication of the International Labour Organization's World Employment Report 1998-99, which focused on the contribution of training and development to economic and employment growth. That report concentrated on public policy aspects of training and development and gave relatively little attention to developments in professional practice.
The IFTDO response to the ILO report emphasized the need for the ILO to develop its thinking and advice to training practitioners and organizations in the fast-moving field of workplace learning. Subsequently, with the knowledge of the ILO, the IPD, acting on behalf of the IFTDO, sought to start to fill the gap with a review of the international (English-speaking) research on workplace learning, culture and performance.
A report on this research, Workplace learning, culture and performance, written by Elliott Stern and Elizabeth Sommerlad of the Tavistock Institute, was published by the IPD on behalf of the IFTDO in 1999. It drew together the conclusions of many researchers. When the authors presented the research at a workshop meeting held on the occasion of the 1999 IFTDO/International Society for Performance Improvement Conference in Long Beach, California, the IFTDO and the ILO were particularly drawn to one strand of thinking:
In more sophisticated economies, serving increasingly discriminating consumers, organizations are required to differentiate their products and services and seek to meet the needs of more defined markets and individual customers. The resultant move away from centralized planning and standardization moves the focus of learning from training and teaching to individual and team learning and the definition of learning needs by the learners themselves.
The research reported in this paper has been coordinated by John Stevens of the IPD, Torkel Alfthan of the ILO and David Ashton of the Centre for Labour Market Studies at the University of Leicester, UK, and has been carried out by David Ashton, Tony Twigger, Barrie Oxtoby and Michael Marquardt, independent consultants. Denise Smith wrote the case study on the South African Breweries, Ltd. The ILO and the IFTDO are most grateful to these researchers and to the many members of the staff of the ILO, members of the IFTDO and the staff of USAID and the American Society for Training and Development (ASTD) who helped identify the case study organizations. The ILO and the IFTDO are also most appreciative of the time given by and the cooperation of the case study organizations. Although they have not sought publicity, without their help there would have been no opportunity to explore this most important topic.
Appendix B
There are a number of different, and not mutually exclusive, approaches to performance improvement by organizations. However, the term "high performance working" has come to be associated with the achievement of high levels of performance, profitability and customer satisfaction by enhancing skills and engaging the enthusiasm of employees. This approach relates to both outputs (what is achieved) and inputs (how it is achieved). In this context, the term cannot be used to describe a highly automated process producing either commodity goods or unchanging goods that sell solely because of careful brand management.
An Organization for Economic Cooperation and Development (OECD) definition of high performance working refers to flatter, non-hierarchical structures, moving away from reliance on management control, teamworking, autonomous working, based on high levels of trust, communication and involvement. Workers are seen as being more highly skilled and having the intellectual resources to engage in lifelong learning and master new skills and behaviours. This definition ignores the output side of the equation but clearly cannot apply to volume production or standardized service provision.
An exploration of the academic literature by the University of Leicester has resulted in a description of high performance work systems that concentrates on organizational, cultural and "soft HRM" in the context of, and aiming at, a "fit" between them in order to produce high performance. It has to do with an open culture and opportunity for employees to work flexibly towards organizational objectives in the workplace.
A definition of "advanced group working" by Jones takes a task-based approach and sees people making adjustments, planning and coordinating their own resources, maintaining contact with the planning department, allocating their own jobs within a given time, correcting their own mistakes, and choosing and training team members. Other researchers, Bucholz, Roth and Hess, suggest that the attributes of high performance working teams are participative leadership, shared responsibility, aligned purpose, high communication, future-focused, task focused, creativity, and rapid response.
Some confusion, but no inherent contradiction, arises from other uses of the terms "high performance working" and "high performance work practices" in the context of research on the connections between people management and business performance. For instance, Mark Huselid of Rutgers University refers to "high performance work practices" when he might refer to HR stance or strategy. Much of this important work is in its infancy, but there is an expectation that it will be possible to reconcile the statistical approach of Huselid with the case study approach taken by other researchers.
Research commissioned by the IPD from the Sheffield Institute of Work Psychology has shown people management and development to be more important than strategy, R&D and technology as a predictor of productivity and profitability changes. This research also showed that, statistically, the strongest predictors have to do with work organization and skill development. However, in all this research, it is proving difficult to predict which particular work practices and policies relate to specific kinds of performance improvement.
The connections between specific practices and outcomes are now being looked at in case study research being conducted for the IPD by John Purcell and a team at the University of Bath. They are looking at both the main people management and development practices within a series of organizations and their effect over time, the fit with organizational objectives and the qualitative and cultural dimensions of change.
It can be seen that the missing element in a definition of "high performance working" based only on inputs has to do with the question "Why?". The answer might be thought to be obvious, but without an answer the generality of the title can be taken to imply a "one-size-fits-all" approach applicable in all organizations. For some years, there has been a growing consensus around the proposition, explored particularly in the writings of Michael Porter, that in the future organizations will need to meet the needs of a more diverse and discerning customer base and much greater individualization within markets. This answer to the question "Why?" has been explored in the ILO/IFTDO research.
The extent of high performance working
The complexity of definitions of high performance working makes it difficult to assess the extent of the use of such practices. Indeed, as the case studies make clear, culture, leadership and other intangibles are very important ingredients in their success, and this adds a further layer of complexity. However, some measure can be obtained by using a simplified group of indicators. This has been the approach taken in a consistent stream of academic research, and this has also been the approach adopted by the IPD and the University of Leicester in a large-scale Training and Development Survey first held in the United Kingdom in 1999.
The survey looked at four bundles of skills associated with high performance working: individual, broadening, quality-related and group-based. The survey showed that only 1 per cent of organizations had sought to develop all four high performance skills bundles. Most organizations had concentrated on the skills bundle associated with individual performance - those most closely associated with achieving high performance through work intensification, working harder but not smarter. Managers whose organizations concentrated primarily on developing this particular skills bundle were less likely to link the reasons for this to business objectives and finance. Only 28 per cent were seeking to develop two or more of the four skills bundles. This indicates that, as yet, high performance working does not represent a major strategy direction for people management and development in the United Kingdom.
A similar result may be inferred from the evidence of the United Kingdom's 1998 Workplace Employee Relations Survey. Aspects of practices associated with employee involvement have been found to be relatively common. Training, teamworking, supervisors trained in employment relations matters and problem-solving groups were found to be associated with each other. However, while 65 per cent of managers reported employees working together in teams, only 5 per cent appeared to be involved in autonomous teamworking.
During the year 2000-01 comparable results will become available for other countries as the IPD Training and Development Survey is replicated as a result of work by Marcus Powell of the Centre for Labour Market Studies at Leicester University in conjunction with the IFTDO.
A study by Lawler et al (1998) of 200 Fortune 1,000 companies in the United States found one-fourth using improvement teams, including quality circles, nearly one-fifth practising employee involvement, including self-managed teams, and just over one-tenth involving employees in the management of the business. There had been little change in these figures since the previous survey in 1993. Total quality management (TQM) approaches have actually shown a drop from over three-fourths to two-thirds of those surveyed. Involvement and TQM are very much associated with high performance working approaches.
Interestingly, business process re-engineering (BPR) actually increased by an estimated 70 per cent to 80 per cent between 1993 and 1998. Business process re-engineering is very much a "top-down" approach to performance improvement. The move from TQM to BPR might be worrying if it represented an abandonment of "people-based" strategies, but this may or may not be the case. There is bound to be an element of "hunting" to find what fits for particular organizations. Lawler et al conclude that "involvement, TQM and re-engineering tend to reinforce each other's effectiveness".
Cully, M.; O'Reilly, A.; Woodland, S.; Dix, G.: Britain at Work: As Depicted by the 1998 Workplace Employee Relations Survey, London, Routledge, 1999.
ILO: World Employment Report 1998-99, Geneva, International Labour Organization.
Lawler, E.E.; Mohrman, S.A.; Ledford, G.E.: Strategies for High Performance Organizations: The CEO Report, San Francisco. Jossey-Bass Publishers, 1998.
Patterson, M.G.; West, M.A.; Lawthom, R.; Nickell, S.: The Impact of People Management Practices on Business Performance, London, Institute of Personnel and Development, 1997.
Stern, E.; Sommerlad, E.: Workplace Learning, Culture and Performance, London, Institute of Personnel and Development, 1999.
Stevens, J.; Ashton, D.: "Underperformance appraisal"in People Management, Vol. 5, No. 14, London, Institute of Personnel and Development, 1999.
1. 1 The question of definition is explored more fully in Appendix B.