High Performance Workplace

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The business case for creating high performance workplaces is increasingly strong, with studies in sectors as diverse as steel mills, automotive plants, banking, retail and healthcare.

They show that good management of people leads to improvements in performance measures such as productivity, profit, new products to market and customer satisfaction.

Some key examples include:

In a study of 968 US firms in 1995, the researcher Mark Huselid found that organizations using progressive people management techniques made $27,000 more sales and $4,000 more profit per employee. For a company employing 10,000 staff this equates to roughly $27 million more profit - well worth having!
Malcolm Patterson and colleagues at Sheffield University, in their 1997 study of 67 manufacturing firms in the UK showed that 19% of productivity and 18% of profitability was explained by the use of high performance people management
A study of 366 UK firms published in 2003 by David Guest at King's College showed that high performance management was strongly linked to lower staff turnover and higher profits per employee
Michael West and colleagues at Aston Business School, examining hospitals in the NHS in 2003, showed that high performance people management was linked to lower patient mortality rates and higher quality of care, having controlled for other factors such as number of doctors per bed

The key point about the evidence above it is that rather than just rhetoric, there is now strong research evidence that getting the people element right really does make a bottom-line difference. There are really six elements that go into designing truly high performance organizations. These elements are often described as the Star Model because if you visualize a pentagonal shape with a five-pointed star, each point depicts the key features of an organization: strategy, structure, rewards, processes, and people. The glue that holds this all together is in the center of the star: the organizational culture. All points on the star are interconnected. This is an important point to understand because this shows that organizational success or effectiveness requires a good alignment or fit among all elements.

Core to achieving high performance is the firm’s strategy. The strategy needs to define the capabilities and competencies that are needed to enhance performance and responsiveness. The right strategy, however, without the right structure to support that strategy can often lead to less than optimal performance or even failure. The challenge for management is to develop an approach to organizing that considers all of the elements and how they fit together to create an organization with the right strategy, competencies, and capabilities to succeed.

Structure is how people are grouped together, who reports to whom, how tasks are assigned, and the nature of the jobs. Because these decisions are basic building blocks, they must be closely articulated with strategy. They largely determine how the organization will behave, what people are needed, and what reward systems will work.