Management Research Paper

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Executive Summary

The business organization under analysis in this report is Bank Sohar. The subject being investigated is High Performance Working (HPW). This report contains seven sections; namely, introduction, business orientation, literature review, methodology, results / discussion, conclusions, and recommendations. Literature on HPW is reviewed with the problems being encountered by Bank Sohar in mind. In terms of methodology, the report is based on a questionnaire survey in which ten Bank Sohar employees provided answers to fourteen questions relating to barriers to HPW.

The report makes two recommendations. First, Bank Sohar should match employees’ work knowledge with job responsibilities. The objective is to ensure that the bank achieves the goal of encouraging employees achieve a sense of power, control, and ownership over their work. It is expected that this will discourage them from the tendency to get away with too little work. Secondly, the bank should dismantle all communication barriers between the staffs and management by establishing an internal contact centre or a communications station. This action plan will enable employees understand the bank’s rationale for establishing a HPW environment.

Contents

Executive Summary. 2

Introduction. 4

Business Orientation. 5

Literature review.. 7

Results / Discussion. 13

Conclusions. 17

Recommendations. 18

References. 20

Appendices. 21

  1. Details of action plan in table format 21
  2. The answers in the Questionnaire. 22

 

Introduction

The aim of this report is to investigate the issue of high performance working environment at Bank Sohar. The objective is to demonstrate awareness of factors that affect current efforts to lead and manage people as well as how effective policies can add value to the strategic goals of a business. This is an important goal considering that today, many organizations tend to operate in environments where staff performance is lower than expected and employees routinely get away with doing very little work. In such situations, the HR department is often blamed for failing to put the necessary strategies, policies, performance targets, and action plans in place with a view to raise performance.

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In HRM literature, a lot of emphasis is on the need for HR officers to promote high performance working (HPW). Of the numerous scholars who have made immense contribution to discourse on HPW, Jeffrey Pfeffer stands out. According to Pfeffer, people are at the heart of success in any business endeavour. He adds that the management requirement can be reduced to seven HR policies; namely careful recruitment, employment security, teamwork and decentralization, high pay, narrow status differentials, extensive training, and regular communication.

This report is structured as follows. The next section provides an overview of business orientation of Bank Sohar, a banking institution based in Oman. The notion of HPW is located and its position identified as far as the bank’s organizational strategy is concerned. This is followed by a review of literature on third party sources that describe, analyze, and critique the concept of HPW. Next, the methodology part addresses how the research was conducted, research methods chosen, and results analyzed. This is followed by the results/discussion section, and finally conclusions and recommendations. In the end, an action plan that best fits into Bank Sohar’s organizational strategy is presented.

Business Orientation

Bank Sohar is a banking institution with its headquarters in Muscat, Oman. The bank has 24 branches and 610 employees. Of these, 251 work in head office departments while the rest work in corporate banking. It is one of the banks whose operations are a demonstration of the changing banking environment in Oman. The bank presents itself as a banking partner with an in-depth understanding of business needs in today’s highly dynamic business landscape.

In terms of SWOT analysis, the main strength of the bank is that it has a strong market presence. Adequacy of capital is also a major strength for Bank Sohar. The main weakness is that the bank’s foreign markets have not expanded significantly. This limited concentration in terms of the foreign market makes the bank more of a national than a transnational banking institution. The bank has two main opportunities at its disposal, one of them being its foray into the contemporary capital market business. The second opportunity consists in the company’s fast-growing, elaborate distribution channels.

High performing working (HPW) issues are of utmost relevance in the day-to-day as well as long-term operations of Bank Sohar. In HPW, Bank Sohar is expected to make use of a new approach to managing instead of the traditional strategy that emphasizes on hierarchical systems relating to scientific management. To achieve HPW, the employer-employee relationships at the bank should be radically altered. The objective should be to create a sustained competitive advantage for the bank. The pursuit of HPW should bring into perspective aspects of both human resource management and economics.

At Bank Sohar, HRM issues pose a serious challenge to day-to-day operations. The bank appreciates the fact that its employees are its greatest asset. However, at the same time, it acknowledges the need to ensure that the highest possible output is obtained from each of these employees at any given time. Currently, this goal has not yet been achieved. In a perfect scheme of things, the bank would be operating as a one-stop financial centre with products that cut across segments in terms of the sets of propositions made. In such an environment, the values that all employees would adhere to at all times include integrity, passion, speed, respect for people, teamwork, and customer focus.

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The HRM department at Bank Sohar endeavours to create a platform through which employees who are passionate about success can thrive. However, the bank also expects these professionals to engage in HPW in order for the goal of mutualism to be achieved as far as work-related benefits are concerned. Nevertheless, it is unfortunate that many of the company’s employees get away with doing very little work despite numerous opportunities having been made available to them. This shortcoming greatly disorients the bank’s overall HR strategy in terms of efforts to promote transparency, loyalty, trust, and fairness.

At Bank Sohar, many efforts are being made to embrace a distinctive managerial approach that may be said to resemble that of HPW. For example, the bank has put in place a number of strategies aimed at transforming it into a pleasant working environment. Similarly, it makes numerous efforts to introduce exciting career options. Other efforts are characterized by provisions for attractive benefit schemes, abundant growth potential, highly competitive remuneration packages, and regular professional training.

Literature review

High performance working is also referred to in some contexts as high commitment or high involvement working. In HPW, organizations are expected to establish distinctive managerial approaches to facilitate high performance by employees. In HPW literature, emphasis is on different management practices and features that constitute HPW. Nevertheless, Jeffrey Pfeffer’s contribution is arguably the most cited piece of information regarding high performance working. It is contained in his book “The Human Equation”. In this book Pfeffer (1998) identifies seven characteristics of HPW that have already been mentioned earlier on in this report. According to Pfeffer (1998), the underlying idea in HPW is to establish an organizational that is founded on employee empowerment, involvement, and commitment. Organizations that embrace this approach are expected to refrain from introducing strategies that perpetuate employee control.

In practice, the specific blends of managerial practices that are often introduced in the pursuit of HPW vary from one company to the other. Ideally, every business is expected to take charge of its own destiny by involving all employees in an aggressive organizational strategy that calls for involvement-oriented operations. In organizations characterized by high involvement, employees are expected to feel involved and responsible or its overall success. They gain more knowledge, contribute more to the organization’s success, and gain a greater sense of responsibility for this success. Such employees are empowered by being provided with the requisite sources of information and knowledge. A number of companies are known to adopt this approach. Examples include Procter and Gamble, Southwest Airlines, and Virgin Atlantic.

In HPW, the bureaucratic approach to organizational management and administration is avoided. Managers avoid any reliance on control-oriented approach. The control-oriented approach is based on the assumption that all workplace activities must always be standardized, simplified, and highly specialized. It also put too much emphasis on pay incentives and supervision at the expense of other more “advanced” methods of motivating employees. The strategies adopted in the control-oriented approach may be said to be less advanced because of the glaring separation of work from the act of actually doing the work. In reality, these two elements are inseparable and should go hand in hand for employees to gain a sense of ownership, empowerment, and achievement.

By merging the content of work and the actual processes of doing the work, employees end up self-controlling and self-managing their workplace activities. They are given instructions on what needs to be done but are not followed around with time-consuming, never-ending narratives on how the work should be done. This gives them the freedom to be creative and innovative in problem-solving. More importantly, they shed off the “agent” mentality; instead, they embrace the idea that they are the owners of the success that they have ultimately helped to create in their organizations.

Evans & Davis (2005) observe that a number of empirical studies have examined whether companies that adopt the managerial practices of HPW are able to achieve higher performance levels than those that are managed using traditional approaches. Unfortunately, not many of these studies have adopted a comparative approach in efforts to establish the relationship between HPW and enhancement in financial or operating performance.

Huselid (1995) is one of the few scholars who have examined the relationship between HPW and higher operating performance. Huselid’s (1995) study was based on a survey of 968 companies operating in different industries. By adopting work practices that emphasize on high performance, companies were found to diminish employee turnover significantly. They were also seen to increase productivity in terms of sales per worker as well as corporate financial performance.

Pfeffer (1998) provides a review of a study in which MIT researchers made a comparison between automobile factories with flexible methods of production and those using the traditional methods of mass production. Flexible production methods turned out to put a lot of emphasis on employee involvement and the use of teams, leading to higher productivity than in the case of mass production. Another study found out that steel firms that used progressive management strategies were able to decongest their production lines while at the same time lowering operating costs significantly (Pfeffer, 1998).

Literature on HPW also contains numerous insights for enabling organizations understand the need to appreciate the relationships between “bundles” of HR practices, most of which tend to be internally consistent and interrelated. Companies that choose HR bundles that adopt division of labour in its narrowest sense are likely to be associated with policies that bring about low commitment. In contrast, companies that use HR bundles that encourage the establishment of flexible systems of production and multi-skilling orientation are likely to attract higher levels of commitment.

Some of the HR practices that have been found in literature to contribute to higher productivity include alternative pay systems, training, and employee involvement. According to Pfeffer (1998), these practices often lead to even greater productivity when they are implemented as part of an HPW system. The trick is for organizations to adopt employment involvement practices that make them believe that they stand to benefit immensely from them. To do this, companies must use information-sharing, reward, training, and reward-sharing practices. On this basis, Pfeffer (1998) argues that HPW systems can lead to the implementation of management practices that promote high performance.

However, literature on mainstream organizational or personnel economics does not enhance our understanding of the superiority of HPW. This is simply because analyses undertaken from this perspective are primarily designed to provide a rationale for principal-agent relationships that exist in the context of control-oriented organizations. In organizational economics, the fundamental problem-solving model entails efforts to induce agents to provide “efforts of different kinds”. In this regard, very few details are often provided as far as the need to empower and motivate employees is concerned.

In mainstream personnel economics, many efforts have been made to explain how companies can devise incentives to get the agent or employee to exert some effort that he perceives as onerous. It is assumed that the principal/employer really wants the employee to exert this effort in order to reap the fruits. He must therefore give pecuniary rewards to these employees as a way of diverting their efforts from what they would otherwise be doing were it not for the job. In this model, it has become possible for different methods of compensation to be assessed in terms of advantages and disadvantages.

Mainstream personnel economics fails to provide sufficient motivation for HPW because it ignores social, psychological, and spiritual aspects of employee behaviour within the organization. Mainstream organizational economics is primarily relevant in organizations that operate as hybrids. Such companies tend to combine involvement-oriented organization with control-oriented organization.

In contrast, traditional HRM does not take into consideration the relationship between the principal and the agent. The main concern for the traditional HRM managers is to hire the right person for the job. The factors to be considered in this case include training, motivation, experience, attitude, and orientation. In essence, this means that HRM has traditionally failed to focus on efforts to transform the existing approach to management through HPW within a view to enhance the company’s competitive advantage. Perhaps HRM managers fear that their contributions are seldom appreciated when time to analyze the factors influencing success in the company finally comes.

One of the theories that can contribute to our understanding of the importance of HPW is x-efficiency theory (Altman, 1997). One of the insights that facilitate this contribution is the observation that employees have discretion as far as their efforts are concerned, such that they can choose to do much less than what they are capable of doing. According to Altman (1997), the theory supports the need to invest a lot in time and energy with a view to establish a cooperative system of employee relations. This creates an ideal environment for higher worker efforts to be promoted, thereby bringing about higher internal efficiency. However, Altman (1997) does not explain on the form that these cooperative systems should take and the rationale for such strategic choices; he only refers briefly to aspects of trust and cooperation.

Literature on organizational behaviour provides even greater insights into the meaning of HPW, its benefits for the organization, and ways of promoting it. Organizational behaviourists argue that innovative HR practices can bring about improvements in the economic performance of a company. However, for this to happen, three conditions must be met. First, the employees must be in possession of knowledge and skill sets that their managers do not possess. Secondly, the employees must be motivated to continue applying their knowledge and skills primarily through discretionary efforts. Lastly, the employees must accept to contribute this discretionary effort with the aim of helping the firm achieve its overall production strategy.

According to Altman (1997), organizational experts have discovered that employees operating in today’s transformative organizations in fact work smarter, harder, more cooperatively, and more creatively than their counterparts in traditional organizations. Several reasons are provided for this phenomenon. One of them is that commitment, higher involvement, and greater control over their work motivates employees to work harder. The employees are also motivated to work hard because they are provided with contingent compensation in which their efforts are rewarded. They also encounter “peer-pressure” that is often triggered in the context of self-managing teams.

Since HPW emphasizes on the need to develop the skills and competence of workers, their efforts are better directed. They are also encouraged to be smarter in their work because of opportunities to learn accessed through job rotation and training opportunities. In these contexts, HR managers emphasize on trusting relationships, teamwork, and innovation. This creates an urgent need for employees to be more creative and cooperative.

In HPW, the operational level is of critical importance to the HR manager. The manager must be aware of the company’s expectations regarding his ability creating savings on administrative overhead. To achieve this goal, the HR manager must lobby for the elimination of numerous layers of management in the department. Obviously, he must also look for ways of reducing costs associated with operating with an alienated workforce that has nurtured an adversarial relationship with the company’s management. In this regard, the HR manager easily appreciates the importance of efforts to introduce quality circles, job rotation, and cross-functional teams. All these activities are an essential component in efforts to increase the level of cooperation among employees as well as between employees and management.

Methodology

The research was undertaken through a questionnaire containing fourteen questions. The questionnaire was distributed to ten members of staff of Bank Sohar. The respondents were given a period of two weeks to have filled out and submitted the questionnaire. These members of staff included two heads of departments, three staff head office departments, two staffs from corporate banking, and three from retail banking. The questions in the questionnaire were designed in such a way that the responses provided would enable the researcher establish how people at Bank Sohar view the effectiveness of HPW policies and practice.

A qualitative methodology was chosen in the research. This method was selected because it provided the most appropriate mechanism of looking for themes on the basis of the responses made by the staffs. Each of the questions that the respondents answered was related in one way or the other to HPW. Through a qualitative approach, the research sought to synthesize the results and interpret them based on HPW literature and the strategic goals of Bank Sohar. To facilitate the analysis and interpretation process, the most salient issues were singled out and accorded prominence during the process of data analysis and interpretation.

Results / Discussion

In this section, key findings of the questionnaire survey are presented. One of the most significant finding of this study was that more than 50 percent of the employees who filled out the questionnaire disagreed with the statement that “My job responsibilities do match my level of work knowledge, interests and skills”. This creates the impression that a high level of discontent exists at Bank Sohar with regard to the way the bank seeks to match employees’ work knowledge with job responsibilities. In a work environment where the knowledge, interests, and skills of employees are not put into consideration, the goal of HPW may not be achieved.

 

Moreover, an overwhelming majority of the bank’s employees strongly disagree with the statement that they are allowed to choose and shift to the work area which suits their ability in the business. Whereas one may not expect a business organization to give employees the freedom to shift work areas as they wish, it is reasonable to expect the organization to have done a better job of managing employees’ perceptions and expectations regarding work-area mobility. Bank Sohar seems to have failed in this goal. The negative answers given in response to this statement may be viewed by many as a protest vote against the bank’s HR manager. This means that a phenomenon that hinders the realization of HPW already seems exists at the bank.

At Bank Sohar, the problem of communication barriers between the staffs and management persists. This is evident because more than fifty percent of the respondents (six out of ten) disagreed with the statement that “No communication barriers are set between the staffs and the management”. The bank’s HR manager must therefore work harder towards ensuring that all communication barriers are dismantled. Employees who are constrained by communication barriers are less likely to be creative and innovative, meaning that they may be unable to contribute maximally to HPW. Furthermore, nine out of ten respondents disagreed with the way promotions are given at the bank. It seems employees think that the bank could do a better job of ensuring that every employee is promoted on the basis of merit only. In a workplace where employees have a negative perception towards promotions, HPW goals may not be achieved since employees would most likely be reluctant to put their best efforts into the job.

Employees seemed to hold conflicting opinions regarding issues of remuneration, work environment, and the level of training being provided. This may mean two things. First, the problem may have arisen because of a lack of proper communication between senior management and employees. In the context of the HPW model, the HR manager is expected to bridge this gap by clarifying issues relating to communication between employees and senior management. The second explanation is that the bank may have failed in its obligation of promoting HPW through clear, precise, and strategic action plans aimed at achieving specific high-performance targets. In this regard, the bank may still be stuck in the traditional conception of management in which tasks are separated from the people who actually perform them.

In the traditional approach, management standardizes tasks with a view to make them as simple as possible for employees. No room is left for them to be creative and innovative. Their social and psychological needs are not put into consideration either. In traditional scientific management approaches, it is assumed that the objective of motivating employees through incentives is to persuade them to do tasks that they would otherwise not do. It is assumed that if it were not for the material benefits, the employees would not be performing the tasks either because they do not know what success through high-performance means to them or because the tasks are uninteresting. This negative perception of work discourages employees from developing a sense of control and ownership of their workplace activities.

However, a number of positive indicators exist that the bank’s HR managers can build on with a view to establish a stable HPW environment. One of them is the high level of confidence among employees regarding the level of fairness with which tasks are assigned among staff. Six out of ten respondents agreed that the bank’s management upholds the spirit of fairness when assigning tasks to employees. Positive views were also expressed with regard to career support, with seven out of ten respondents agreeing that Bank Sohar is committed to supporting the careers of its employees. The employees were also supportive of the bank on the issue of fair treatment; they agreed that the bank treats them with trust, respect, and integrity.

Conclusion

In conclusion, Bank Sohar has not yet achieved the goal of establishing high performance working (HPW) environment to enable it achieve its strategic goals. Bank Sohar’s management appreciates the need to put in place HRM framework that ensures that every employee put his best efforts into his or her work. However, the bank seems to be torn between the traditional management philosophy and the contemporary high performing work environment in which employees are important stakeholders in efforts to achieve the desired performance goals.

Bank Sohar has not fully adhered to the Jeffrey Pfeffer’s views regarding HR policies, particularly recruitment, decentralization, employment security, narrow status differentials, regular communication, and teamwork. The new HR director will need to create a new platform in which the communication process will be overhauled. Without proper communication, employees may continue to entrench a culture in which they get away with doing too little work. It would also be very helpful for clarifications to be made on most issues on which employees hold conflicting views. These issues include remuneration, work environment, promotion, and availability of training opportunities.

Bank Sohar has the option of either adopting forward-looking administrative structures wholesomely or adopting a hybrid of traditional model and the new model. The choice that the management of the bank makes depends on strategic goals and capabilities. The main lesson to be learnt from undertaking this research is that HR directors need to embrace HPW strategies aimed at ensuring that employees do not get away with doing too little work. Nevertheless, on the basis of the evidence provided in this report, it has emerged that no employee can do his best on a job if he or she does not have a sense of power, ownership, and control over the outcomes. Therefore, in the context of HPW, the HR function must concentrate on ways of instilling in employees a sense of power, ownership, and control over their work. This will motivate them to do their best for their own benefit and for the benefit of the organization.

Recommendations

This report makes the following recommendations:

  1. Bank Sohar should match employees’ work knowledge with job responsibilities. This will enable the bank achieve the goal of encouraging employees to achieve a sense of power, control, and ownership over their work, thereby enabling them do their best. In the long run, the organization will benefit from higher performance. To implement this action plan, Bank Sohar will need to hire a new director with experience in implementing a similar strategy in a banking institution. This is a medium-term action plan whose implementation should be completed within two years. The responsibility for this action plan will be vested in the HR director. The main cost to be incurred is time. Reorganizing the work stations of employees is a very time-consuming process. Towards this end, review processes should be undertaken every three months. Failure to undertake this action will lead to the continuation of a situation in which most employees feel that it is not in their best interest for the bank to achieve its performance targets.
  2. Bank Sohar should dismantle all communication barriers between the staffs and management. This will enable the bank communicate its intentions to introduce HPW values. Moreover, employees will be able to understand the rationale for the bank’s decision to move them from one work station to the other. To implement this action plan, a central communications station or internal contact centre will need to be established. This action should have been achieved within three months since it is a short-term action plan. The responsibility for this action plan should be vested in the bank’s director of internal communications. In terms of cost, the bank will have to bear the costs of setting up a standard, modern, contact center together with hiring a workforce of about five communications specialists and two technical staff members. Once the contact centre becomes operational after three months, it should be monitored on a weekly basis. Failure to undertake this action will lead to the stalling of the bank’s operations because employees will lack the communicative platform needed to promote the synergies that characterize a HPW environment.

References

Altman, M 1997, Human Agency and Material Welfare,

Evans, W & Davis, W 2005, ‘High-Performance Work Systems and Organizational Performance: The Mediating Role of Internal Social Structure’, Journal of Management, vol. 31, no. 5, pp. 758-775.

Huselid, M 1995, ‘The Impact of Human Resource Management Practices on Turnover, Productivity, and Corporate Financial Performance’, Academy of Management Journal, vol. 48, no. 3, pp. 635-672.

Pfeffer, J 1998, The human equation, HBS Press, Boston.

 

Appendices

1.     Details of action plan in table format

 

Priority Action

(what?)

Business Justification

(why?)

 

Benefits Specific Intervention

(how?)

Time Frame Who Cost Method of monitoring Consequence of not doing
1 The bank should match employees’ work knowledge with job responsibilities.

 

It will enable the bank ensure that no employee is tempted to do too little work. It will lead to a higher performance Bank Sohar will need to hire a new director with experience in implementing a similar strategy in a banking institution. This is a medium-term action plan whose implementation should be completed within two years. The responsibility for this action plan will be vested in the HR director. The main cost to be incurred is time. Reorganizing the work stations of employees is a very time-consuming process.

 

review processes should be undertaken every three months Failure to undertake this action will lead to the continuation of a situation in which most employees feel that it is not in their best interest for the bank to achieve its performance targets.
2 Bank Sohar should dismantle all communication barriers between the staffs and management.

 

This will enable the bank communicate its intentions to introduce HPW values.

 

Employees will be able to understand the rationale for the bank’s decision to move them from one work station to the other.

 

A central communication station or internal contact centre will need to be established. This action should have been achieved within three months since it is a short-term action plan. The responsibility for this action plan should be vested in the bank’s director of internal communications In terms of cost, the bank will have to bear the costs of setting up a standard, modern, contact center together with hiring a workforce of about five communications specialists and two technical staff members. Once the contact centre becomes operational after three months, it should be monitored on a weekly basis Failure to undertake this action will lead to the stalling of the bank’s operations because employees will lack the communicative platform needed to promote the synergies that characterize a HPW environment.

 

 

2.     The answers in the Questionnaire

 

 

This Questionnaire has been distributed to 10 staffs:

 

  • 2 head of departments
  • 3 staff head office departments.
  • 2 staffs from corporate banking
  • 3 staffs from retail banking

 

The answers were the following (I will mention the staff counts per answer)

 

Statements Strongly Agree Agree Disagree Strongly Disagree
I am confident that the work tasks are assigned fairly among the staff 3 3 4
I do have a positive perception of my work environment and I am proud to say to the others that I work for Bank Sohar 6 2 2
Bank Sohar pays me fairly according to my work level and grade 5 5
My job responsibilities do match my level of work knowledge, interests and skills.

 

3 4 3
I am getting enough training on my work area including exposure to the department within the organization 6 2 2
I am allowed to choose and shift to the work area which suits my ability in the business 4 1 5
My superiors measure and value my caliber and provides enough support to grow in my career

 

1 7 2
Bank Sohar treats every staff fairly with trust, respect and dignity. 10
No communication barriers are set between the staffs and the management

 

4 6
My work environment supports team work 3 7
Promotions decisions are neutral and fare 1 9
My job requirements relevant information is accessible through different channels. 3 7
I am encourage to leave my comfort zone and take new challenges 4 6
I am getting enough support from my superiors when needed 1 9

 

Here is the MS Word version of the document:

 

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