Critical Review of High Performance Work Systems, Organisational Culture and Firm Effectiveness
This paper provides a cross sectional study of Human Resource practices to ascertain their contribution towards a company’s success and its competitive advantage edge. The paper further attempts to establish the relationship between high performance work systems and the organisational culture of a company and its performance. The objectives of this study will be achieved through a critical review of Verburg and Hartog’s paper, highlighting its empirical and theoretical review, research methods, the main findings and the practical implications of these practices for a company.
The study implements the use of an inductive approach method to collect data by means of a questionnaire. The study was carried out in the Netherlands and questionnaires were sent to a sample of 678 organisations amongst the 5000 registered on the database for the Netherlands Associations for Personnel Management. The study of the relationship between high performance work practices and the organisational culture and a firm’s performance is justified by Verburg and Hartog’s.
They contend this study is highly important because previous empirical research has been limited. Hence the need for this study to understand the nature of the relationship between these factors in the sample organisations. The research findings show an existing relationship between high performance work practices and the goal orientations at varying levels in the different organisations. A relationship between high performance work practices and culture orientation was also tested to explain whether any variations exist. The objective of this critique therefore is to appraise the methods used in this paper and analyse whether high performance work practices are a measure of organisational culture.
Literature and Concepts
The relationship between high performance work and a company’s performance has been a popular topic over time amongst researchers. The potential to determine if Human Resource management influences the success of a company in the market has been very questionable and has stimulated considerable debate. This is mainly because there are a wide range of high performances practices such as incentive pay and profit sharing, amongst others.
Verburg and Hartog are critical of the existing literature on high performance work. They identify problems with the literature review so far by noting that the organisational context in which it operates determines on the importance and success of high performance work practices. They further identify that there is a limit on the nature of labour practices that can be used in the Netherlands, according to the Dutch Law.
To support this idea they cite reference to Boselie and Dietz (2003.) They contend that only certain practices such as employee development and training, information sharing and compensation schemes are often linked to high performance work. Delaney and Husselid (1996) also share the same opinion and further suggest that these high skills and practices have a positive influence on organisational performance. In addition to these views, Batt (2002) offers a greater insight as to the significance of highly skilled work in a company. She further suggests that the high work systems are designed to provide employees with the opportunity to share knowledge amongst them, and to provide an incentive scheme that will motivate.
These views have proved contradictory because some researchers like Purcell (1999) and Guest (2001) purport that there is no definite number of practices to be included in a high performance work system. A Arthur, 1994; Bae and Lawler(2000); Ichniowski et al, (1997); Koch and McGrath, (1996) focus instead on a system approach to derive the effects of combining practices. The notion of the content of practices of what high performance systems should constitute is still very confusing as Delery (1998) discovered, by noting that HRM practices may substitute each other or can work against each other.
There is still confusion as to whether a single policy can be referred to as a system (Boselie and Dietz, 2003). For instance, training and development can be seen as one practice on its own or as a component which constitutes variables such as internal promotion, skills training, career planning and management development.
There is a lack of evidence to contend the claim that most researchers fail to distinguish the fact that different practices are applicable to different personnel. Verburg and Hartog recognise three different groups of personnel, namely; service employees, line managers and specialist staff; in order to assess how different practices apply to these different groups.
This paper mainly uses the qualitative research method to establish the relationship between High Performance Work systems, organisational culture and a firm’s effectiveness. The questionnaire approach was used in particular, whereby questionnaires were designed to target two main groups of employees in 678 organisations throughout the Netherlands. The questionnaires were completed by 175 respondents producing a response rate of 25.8 percent which is favourable enough and can be compared to previous research work by Huselid whose response rate was 28 percent.
These two main groups include Human Resource managers and the chief executives. The Human Resource Manager was assigned to respond o the questionnaire which relates to the Human Resource practices in the firm and the Chief executive or any other member of the top management team should the latter be absent was required to fill out the questionnaire relating to organisational culture of the organisation.
This research method employed in this paper is relevant for this study because the questionnaires can easily be sent out to cover a large geographical area, it is a flexible means because respondents can answer the questionnaire anywhere they choose and it is favourable where the information is sensitive should the respondent be shy to disclose it in a different research form such as a face to face interview. (Fink, 2006)
However, the downside with this methodology is that in the event where the respondent is unsure about information, there is no form of clarification available to respondents when completing the forms. In addition to this, the sample size chosen may not be responsive as expected because they lack motivation to complete the forms or they may be simply too busy to complete them. It is not known if the questionnaires were emailed or posted as assumed in this case. Based on the lead time of two weeks given before respondents submitted their forms it is assumed that they were either posted or emailed as analysed above. (Fink, 2006)
Despite the relevant sample size and the representatives appointed to complete the questionnaires, their first issue with the research strategy was questionnaire design. Despite Verburg and Hartog’s effort to test all issues relating to high involvement practices, the design of their questionnaires was very complex, confusing to fill out and could be very time consuming which could possibly deter respondents to complete. For instance, the questionnaire tailored to human resource managers had a range of many different questions relating to an extensive list of many items of high performance work; such as questions on training and development and incentive information. Moreover, each section had a different response format which could render the questionnaire even more confusing and burdensome to respond to.
Secondly, the existence of closed questions in the questionnaire which require ‘yes/no’ answers could be criticised. To a lesser extent, they could be appreciated to provide responses geared at the understanding of the study. However, they are far more limited in that the answers do not provide any further information about practices which have yet been covered in the literature of high performance work.
Finally, the reliance on only two respondents for an organisation with a large number of employees does not necessarily provide solid and sustainable answers required, because the respondents could possibly provide misleading information about the company to suit their own purposes.
Discussion of Results
Given the complex and broad nature of the variables tested with information from respondents in the sample organisations, a majority of relationships were identified. However, due to the cross sectional nature of the study the effects of these relationships on the organisations could not be tested.
Verburg and Hartog’s methodological approach is very similar to studies performed by Delaney and Huselid (1996). Their initial findings were likewise consistent with this previous study which established a relationship between Human Resource Management and market performance instead of a relationship with organisational performance. The findings also reflected a positive relationship exists between employees’ skills and direction with turnover, and a negative relationship with the level of absenteeism. Overall, employee skills and direction also had a positive impact with all four cultural measures tested except the rules orientation.
Future research on studies based on high performance work are advised to assess firms in a longitudinal manner instead of the cross sectional manner which this study employed. This is in order to distinguish clearly between firms who have an advantage to spend more on human resource management due to their higher financial outcomes.
The above study had more information about each of the company’s organisations prior to the research because they were available and the organisations were from different sectors where the average could easily be determined (Guest, 2001).
The above paper has explored the different factors that determine the relationship between high performance work and a firm’s success in a sub-set of Dutch organisations. The importance of training, employee skills and design was highlighted to mainly provide a high performance work alongside incentive pays and promotions. However, given the complexity of the various items of high performance practices involved in the research, the reported results must be properly understood and used with caution when utilised.
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