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Tuesday, October 15, 2019

Do High-Performance Work Systems Generate Negative Effects?

By Han Jian, Jianmin (James) Sun and Honglei Wang

High-performance work systems (HPWSs) typically describe systems of HRM practices, work structures and processes that are designed to produce high levels of employee knowledge, skill, attitude, motivation and flexibility. The positive outcomes of HPWSs have been supported by numerous studies. However, evidence indicates that HPWSs can also exert negative effects. As a result, it is worth examining why HPWSs have negative effects and when these negative effects occur.

Positive effects of HPWSs on organisational performance

Although the bundling of HPWS implementation varies within different organisations, substantial commonalities exist: result-oriented appraisal, selective staffing, extensive skills training, broadened career paths, extensive performance incentives and internal promotion. Studies have demonstrated that these practices improve the value, uniqueness and inimitability of employees’ knowledge and ability, which in turn prompts employee positive behaviour and improved organisational performance. Of note, however, many of these studies also assume that the majority of an organisation’s interests are aligned with those of its employees.

HPWSs’ negative effects: Employee perspectives

Certain arguments regarding negative effects of HPWSs stem from two primary concerns: goal disagreement and employee diversity. First, organisational and employee goals are overlapping but divergent and sometimes even mutually exclusive, and the individual interests of employees are often disregarded in HPWSs. The focus of an HPWS is strengthening organisational capabilities and achieving organisational performance goals; thus, an HPWS inevitably imposes strict employee regulations (such as performance standards) and increases demands made upon workers. To meet those goals and expectations, employees must cope with work overload or work intensification as well as continuously improve their skills. Therefore, HPWSs may have negative effects on the ability of employees to accomplish their life goals while working to achieve organisational goals.

Second is the fact that most HPWS studies assume that employees are a homogeneous group of individuals with similar goals and interests. In fact, employees boast unique values and a diverse range of life pursuits. Such diversity means that employees also perceive and interpret the aims and results of HPWSs differently.

Job demands–resources models and HPWSs

According to the job demands–resources (JDR) model, workplaces can be categorised according to two general factors: job demands and job resources. Job demands are defined as the physical, social, or organisational aspects of a job that require sustained physical or mental effort from the employee. Job resources are defined as the physical, social, or organisational aspects of a job that serve the functional purpose of enabling employees to achieve work goals.

Although an HPWS provides employees with a wide array of job resources, it also increases demands on employees. For example, such practices are usually initiated and designed to maximise organisational and individual performance, demanding that employees devote extra time and effort to skill development, which eventually leads to additional tasks. HPWSs also feature a series of performance-based incentives that closely tie employee compensation to performance, further increasing the pressure on employees to meet performance goals.

In short, the JDR model suggests that when an HPWS prolongs the imbalance between an individual’s work demands and resource inputs, a series of negative effects may occur, and indicates that maintaining a balance between job resources and job demands is critical.

Employee motivation and the negative effects of HPWSs

Employee motivation is a key factor that mediates the relationship between HPWSs and performance. In studying motivation, scholars and practitioners typically classify motivation as intrinsic or extrinsic. Intrinsic motivation refers to self-determined or autonomously driven behaviour characterised by inherent interest, enjoyment, and satisfaction; extrinsic motivation, conversely, is characterised by a drive to complete activities that yield specific outcomes in the form of external rewards.

In comparison with extrinsic motivation, intrinsic motivation typically enables employees to take more pleasure in their work experiences and results in a strong positive correlation between work and employee happiness. Extrinsic motivation, on the other hand, has been found to be negatively related or unrelated to positive outcomes.

Some HR practices can be bundled as motivation enhancements, which implies that the work motivation of employees can be increased through management practices such as performance appraisal and compensation systems. When employees substitute external rewards for self-competent and autonomous evaluations, however, they experience less enjoyment from the job itself. In addition, the anticipation of rewards causes individuals to focus on short-term objectives and risk avoidance rather than on innovation. Hence, when an HPWS is primarily driven by organisational performance, external rewards, and results-oriented evaluation practices, negative effects on employee initiatives are likely.

Employee attribution of HR practices and the negative effects of HPWSs

Social attribution theory suggests that individuals perceive and interpret the same social phenomenon differently. These individual differences have been used to explain differences in employee–employer interpretations of organisational activities such as a psychological contract breach and abusive supervision. Evidence has been revealed that employee’s attributions, rather than practices themselves, determine attitude and work results.

Employees are likely to have different or even opposing interpretations of the reasons behind a company’s implementation of HPWS practices. When employees attribute these practices to an organisation’s investment in human capital and career development, they interpret this investment as a sign of respect and recognition from their organisation.

However, negative attributions made by employees regarding an organisation’s management system can also cause negative effects in an HPWS. When employees experience high work pressure and extended working hours, they view various HPWS practices as means for promoting organisational interests by exploiting the human capital of employees. This is particularly true in organisations that have a continually rising benchmark of organisational and individual performance goals. As a result, the congruence between employee and organisational goals may diminish with curtailed work input.

Multiple factors—such as the management context, arrangement of HPWS practices, and characteristics of target employees—affect the opinions of employees regarding an HPWS and their attitudes and behaviours at work. Thus, to understand the dynamic effects of HPWSs, researchers must be wary of certain boundary conditions, especially from the perspectives of employees.

Too much of a good thing”

Excessive implementation of an HPWS may also result in negative outcomes. For instance, practices such as employee training, job rotation and enrichment and employee involvement are meant to increase resources available to employees. However, beyond an inflection point in this application of resource-enhancing practices, employees become overwhelmed in terms of both time and energy, and efforts made to increase the number of job-related resources available to employees result in increased job demands, triggering negative perceptions and emotions that are detrimental to employee and organisational development.

Conclusions

Given the increasing emphasis on HRM, an increasing number of companies are investing extensively in HR practices to establish competitive advantages without recognising the potential negative effects of these practices. The effectiveness of HPWSs depends largely on balancing job resources with job demands, intrinsic with extrinsic motivation, and the intentions of management with the attributions of employees, as well as avoiding “too much of a good thing.”

In conclusion, HPWSs provide undeniable benefits for both organisations and individual employees but can also cause problematic negative outcomes. As business organisations are held more accountable for corporate social responsibility and sustainable growth at both the organisational level and the individual employee level, the objectives of HRM in companies should not focus exclusively on financial performance. The potential effects of management practices on employees’ physical, social, and psychological well-being should be assigned substantial weight in the management equation. Understanding the negative effects of HPWSs can help organisations to design and implement policies and practices that fully leverage the benefits for both employers and employees and that eventually promote a sustainable workplace.

Han Jian is the Programme Director of the Chief Human Resource Officer (CHO) Programme and an Associate Professor of Management at CEIBS. For more on her teaching and research interests, please visit her CEIBS faculty profile here. Sun Jianmin is a Professor at the School of Labour and Human Resources at Renmin University of China. Wang Honglei is an Assistant Professor at the College of Economics and Management at Northeast Agricultural University.