Effective HR practices

We will see how human resource practices can improve performance. For example, a recent review of personality testing effectiveness concluded that screening applicants through personality testing can produce employees who perform better. In other words, people with the right traits for the job did the job better, and finding that makes sense to anyone who is ever had a bad experience with a surly customer service clerk, or a similar. Similarly well trained employees perform better than untrained ones, and safe workplaces produce fewer lost time accidents and accident costs than do unsafe ones. The most productive and highest performing world class companies, like Toyota, have long had world class training and plant safety programs.

High performance work system: A high performance work system is an integrated set of human resource management policies and practices that together produce superior employee performance.

High performance work Systems: In fact, a growing body of evidence shows that the best performing companies in a wide r6ange of industries perform so well in part because of their high performance work systems. A high performance work system is an integrated set of human resource management polices and practices that together produce superior employee performance.

While there’s no hard and fast rule about what comprises high performance work systems, most organizational psychologists would agree they include these practices:

1) Employment security
2) Selective hiring
3) Extensive training
4) Self managed teams and decentralized decision making
5) Reduced status distinctions between managers and workers
6) Information sharing
7) Contingent (pay-for–performance) rewards
8) Transformational leadership (for instance, in terms of inspirational motivation).
9) Measurement of management practices
10) Emphasis on high quality work.


A set of quantitative performance measures HR managers use to assess their operations

In terms of measurable outcomes, high performance work systems produce, for instance, more qualified applicants per position, more employees hired based on validated selection tests, more hours of training for new employees, and a higher percentage of employees receiving regular performance appraisals. Systems like these produce many benefits for employers, some surprising. One study found, for instance, that high performance work systems produced fewer occupational injuries.

Another study focused on 17 manufacturing plants, some of which use high performance work system practices. For example, they paid more (median wages of $ 16 per hour compared with $ 13 per hour for all plants); trained more (83% offered more than 20 hours of training per year, compared with 32% for all plants); used more sophisticated recruitment and hiring practices (tests and validated interviews, for instance); and used more self managing work teams. These plants also had the best overall performance, in terms of higher profits, lower operating costs, and lower turnover.

Measuring the Human Resources Management Team’s Performance:

In today’s performance based environment, employers naturally expect their human resource management teams to provide measurable evidence of their efficiency and effectiveness, and for that of their proposed programs. For example, how much will that new testing programs save us in reduced employee turnover? How much more productive will our employees be if we institute that new training programs? And how productive is our human resources team, in terms of HR staff per employee, compared to our competitors?

The fundamental requirement for such measurability is that the human resources manager needs the numbers. Specifically, he or she needs quantitative performance measures (metrics). For example, median HR expenses as a proportion of companies’ total operating costs average about 0.8%. There tends to be between 0.9 and 1.0 human resource staff persons per 100 employees (the ratio tends to be lower in retailing and distribution firms and higher in public, state organizations. Both manufacturing and non-manufacturing firms spend about $ 1000 per employee for HR.