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Understanding high-performance work systems (and how to build one)

High Performance Work Systems
Table of contents
What is a high-performance work system?
How to use a high-performance work system to boost employee engagement and drive sales results
Final thoughts

Employee demands are changing.

Where once, a reasonable salary and compensation, health insurance and a decent pension were enough to satisfy most, today’s employees are looking for a more holistic compensation package.

Flexible work options, extensive training and development plans and generous paid time off (PTO) are all high on the list of perks that job seekers want. Perhaps most critically, they’re looking for more autonomy over their work responsibilities.

Initiatives that distribute decision-making power and enhance job autonomy are known as high-performance work systems (HPWSs).

Research demonstrates that even for small firms, there is a positive relationship between HPWS and business performance.

If that’s the case, how can today’s organizations adopt high-performance work systems?

In this article, we’ll unpack the high-performance work system definition and discuss the purpose behind this powerful concept. You’ll learn how to develop your own HPWS using seven practical tactics to improve employee engagement and develop an advantage in your industry.

Table of contents

What is a high-performance work system?

What are high-performance work systems and what do they help you achieve?

A high-performance work system is a set of strategic human resource management (HRM) initiatives that help companies decentralize decision-making to improve firm performance and profitability.

Businesses that leverage high-performance work systems are committed to developing a series of HR practices that aim to:

  • Distribute authority and decision-making power

  • Improve workplace morale and camaraderie

  • Increase employee compensation, job security and well-being

  • Make knowledge and information easily accessible

  • Enhance employee training programs

  • Emphasize employee involvement based on commitment to organizational goals (rather than involvement based on control)

High-performance work systems directly contrast more traditional organization performance management practices, which focus on:

  • Centralized power and authority

  • Minimizing employee benefits

  • Sourcing help through zero-hour contracts

  • Reducing employee costs

HPWS falls under the human resources banner, but its function in HPWS firms is actually far less administrative than in traditional HRM systems. Instead, HR is committed to the development and empowerment of employees.

HPWS is a process of continuous improvement. To build a successful HPWS, you’ll need to hire selectively and make sure that leaders recognize their employees’ intrinsic value. A key part of becoming a successful high-performance organization (HPO) is undergoing a mindset shift wherein employees are viewed as a competitive advantage in the marketplace (rather than an expense).

HPWS focuses on the company’s intellectual capital (the value of its employees’ skills, training, knowledge and proprietary information) as its primary advantage.

For this shift to take place:

  1. Employees need to have knowledge and skills that are complementary to those of their managers (achieved through a combination of selective hiring and skills training)

  2. Employees must be motivated to apply these skills sets in pursuit of organizational goals

  3. The company’s strategy for achieving its objectives must rely on the skills and knowledge of its employees

As authority and decision-making power are distributed, employers must trust that employees can work effectively and feel empowered to make appropriate choices.

In return, employers expect that employees are highly competent, confident, engaged and accountable for their work.

What is the purpose behind high-performance work systems?

The primary goal of HPWS is to create a sustainable competitive advantage in your industry.

This advantage comes from the intellectual capital in your team rather than, say, an exciting new feature. This new feature is likely to find its way into your competitor’s products in the future, but collective talent is harder to replicate.

Compared to traditional cost-cutting exercises, HPWS has been shown to be a more effective long-term solution. When this HR system was implemented in several public hospitals, efficiency and patient service quality increased.

Additionally, McKinsey studied 30 high-performing companies and found that those with strong work cultures (one of the core outcomes of high-performance work systems) showed 3x higher returns.

Other studies on HPWS demonstrate improvements in productivity, employee retention, engagement and workplace safety.

How to use a high-performance work system to boost employee engagement and drive sales results

The exact nature of the HPWS differs from company to company, though there are some common themes throughout.

This includes the previously discussed distribution of decision-making authority, as well as an emphasis on skills training, results-based sales commission and a highly-selective hiring program that values employee attitudes and character fit over educational history.

Here, we’ll examine seven practical strategies for developing a high-performance work system in your own organization.

1. Build a high-trust environment by decentralizing decision-making power

In the HPWS organization, leaders communicate company goals and provide support for employees to find the best path toward reaching them.

They tell their teams what they need to achieve, but they leave the “how” largely up to their workers, playing only a mediating role.

Each person in the company has the authority to make decisions about how they structure their work, provided they do so with the company’s objectives in mind and act in the best interests of customer satisfaction.

For example, customer success reps in an HPWS organization may be given the authority to spend up to $3000 per account each year to maintain and grow the relationship without requiring management consent.

This distributed decision-making power is key to forming trust-based employee-employer relationships in the HPO.

Employees in this environment feel more comfortable speaking up and sharing ideas, allowing the team as a whole to make better decisions. This authority boosts workplace morale and, in turn, the productivity and performance of the entire organization (in part because teams aren’t having to run ideas up the management flagpole and wait for approval before acting).

For this approach to be effective, teams need:

  1. Plenty of training (more on that shortly)

  2. Ongoing support from management

  3. A robust system for accountability

The best high-performance work system examples foster a culture of collaborative accountability, where individuals within a team hold each other accountable for their responsibilities.

For example, you could create a buddy system where an SDR (sales development representative) and an AE (account executive) hold each other accountable for their daily call goals.

2. Lift capabilities through training by commitment

HR managers committed to developing a high-performance work system must be able to trust that their employees will make wise decisions that move the company toward its overarching goals.

To fulfill this expectation, employees require extensive, specific training, known in the HPWS world as “training by commitment”.

Training by commitment focuses on giving employees the skills and knowledge to solve problems, take responsibility for their work outcomes and take the initiative to make or suggest important changes within the organization.

This is in contrast to traditional, control-oriented training, where employees are taught the specific actions required to complete their work, like running a templated sales demonstration.

The goal here is to build trust. When you’re confident in your employees’ abilities to solve problems on the fly and make smart, calculated decisions about how to structure their work, you’re more easily able to provide the space they need to succeed without feeling the need to micromanage.

Training by commitment improves job ownership and dedication to organizational goals, and studies demonstrate that HPWS-style learning has a positive effect on overall organizational performance.

This approach to training can be incredibly powerful in the context of coaching sales reps.

While cold calling scripts can be useful as a foundation, long-term development initiatives should focus on soft skills such as:

  • Objection handling

  • Open-ended qualifying questions

  • Listening for specific cues that demonstrate interest or disinterest

A great way to put this into practice is to run role-play scenarios where reps act out selling something other than what they actually sell. This practice helps solidify the specific competencies you’re trying to teach without relying on word tracks they’ve used a thousand times.

3. Drive performance with results-based compensation

Results-based compensation is already common in the sales arena, and no doubt your reps are already receiving some form of commission or performance appraisal-based bonus.

In the HPWS, results-based earnings are extended to the entire organization, rather than just leadership and sales reps, as is common in the traditional work environment. They typically reflect overall company earnings rather than individual employee performance.

Profit-sharing, for example, is a common approach, where each employee receives a percentage of the company’s profits each year or quarter.

This approach to remuneration drives employee motivation, commitment, job satisfaction and engagement. Team members feel a greater sense of purpose in their role, as they better understand (and pay more attention to) how the work they perform each day impacts organizational financial performance.

It also increases teamwork and social accountability. In the HPWS, your colleague’s work ethic and performance impact your earnings, so everyone is incentivized to provide support where possible and to hold each other accountable to their expectations.

While sales team commission incentives can still exist in the HPWS context, consider how you might be able to restructure earnings packages to include compensation based on overall corporate financial performance.

For example, you could retain the tiered sales incentives program you’re already using but freeze the earnings percentage at a certain tier and supplement that package with a profit-sharing scheme.

4. Give employees more security by eliminating part-time and contract positions

The traditional business school approach to improving profitability has been to reduce costs wherever possible. This has often involved downsizing headcounts and replacing full-time workers with part-timers, contractors and freelancers – positions that cost the company less overall.

More often than not, reducing headcounts hasn’t proved to lift the bottom line when the most costly issues are systemic problems. High-performance work practices take the opposite approach and see much more benefit.

By investing in employment security (for example, by eliminating zero-hour contracts or providing workers with guaranteed employment), high-performance organizations benefit from enhanced performance and a high commitment from employees.

When employees are provided this sense of fulfillment and security, they stay at your company for longer and are less likely to browse the job market “just in case”.

This is crucial for the HPO that invests heavily in building human capital. When you’re spending a significant amount of time and money training and developing your people, you want them to stay.

The most powerful way to promote job security is to adopt a program that guarantees employment after a certain period (five years, for example).

This may be too extreme or difficult to commit to, especially for less-mature businesses. In this case, a great start would be to form a policy that ensures you only hire full-time employees and don’t use contractors or freelancers.

Additionally, consider the impact of clear progression pathways for each role. For example, new SDRs should understand the potential career paths that lie ahead of them (depending on the structure of your company, that might be a promotion to AE, but it could also lead to an SDR leadership role).

When employees understand how they’ll be able to progress within your company (and are provided with a roadmap and development plan to action their goal), they’re often more committed and engaged at work.

5. Emphasize culture fit over qualifications and credentials

HPWS emphasizes hiring candidates who exhibit characteristics that are harmonious with the company’s goals, rather than looking for requirements like experience or education.

The logic here is fairly simple:

When you’re placing so much trust in your employees to work autonomously and make wise, independent decisions, skills and characteristics such as problem-solving, showing initiative and people skills are much more crucial than technical skills, which can be taught on the job.

Careful attention to these attributes has been shown to improve long-term fit and boost employee retention.

To be effective in hiring for character fit, it’s critical that you first analyze and understand the behaviors and characteristics that your current high-performers demonstrate.

For example, you might identify that a predictor of success in outbound sales roles is a high degree of extroversion. This can easily be tested during the recruitment process through a variety of personality profile assessments.

You can also move beyond these self-assessments and analyze how a candidate’s extroversion (or lack thereof) plays out in a social setting.

For instance, applicants whose hobbies involve singing, acting or public speaking (all activities which lend themselves toward extroverted personality types) may be deemed more likely to succeed in a sales position.

Look for candidates who play team sports or other group-centric hobbies as a sign of their ability to work toward a team goal rather than acting in self-interest.

6. Show employees they’re valued by removing status barriers and integrating teams

High-performance organizations recognize that great ideas and initiatives can come from all levels, not just management.

Crucial to employees feeling comfortable making such recommendations is the removal of traditional hierarchies and the symbols that denote status. For example, HPOs typically opt for an open-plan workspace over individual offices, where all employees work in the same space regardless of role or seniority.

Other examples of initiatives in pursuit of the same goal include:

  • Elimination of private secretaries

  • Equality of benefits and bonuses

  • Conscious effort to reduce the use of status signals like language and dress

These initiatives make individuals feel like valued contributors to the company and help remove the feeling of being “above” or “below” another employee.

This can be tricky to achieve in the sales context, where it’s common for AEs to be seen as more senior to SDRs.

One way to solve this would be to ensure all sales reps, regardless of role, work in the same physical space, use the same equipment and are incentivized on the same group-based structure (refer to point three for more details on results-based compensation).

7. Allow employees to work independently by making key information accessible

High-performance organizations must eliminate black box, “need to know basis” information sharing practices and allow employees easy access to the information they need to perform.

Empowering employees to access information through a document management system, for example, improves their ability to work autonomously and demonstrates that you trust in their discretion.

Online workplace wikis can be a great way to ensure information is accessible remotely and can foster a culture of high involvement by allowing employees to add to and edit documentation as required.

Consider recording training sessions as you hold them, and store these online also, so your team can review and retrain whenever they feel it’s appropriate.

Final thoughts

The high-performance work system is a powerful approach for enhancing employee engagement and morale while also driving the bottom line.

To be effective, it requires an organization-wide commitment to change, clear communication of goals and expectations and a high degree of employee-employer trust flowing in both directions.

Before you begin overhauling company policies and procedures in pursuit of building an HPWS, speak with your team. Their insights will be invaluable in building this new approach and seeking their advice first is a fantastic first step toward creating this new culture.

Driving business growth