MGT 323 1

The High Performance Organization

Contingency approach to OB???What do successful organizations have in

common? Careful with “best practices” and

“benchmarking.”

MGT 323 2

External Environment and OB: Performance Context

Economic and social conditions: Changing customer expectations– Total Quality Management (TQM).

• Meeting customer needs.• Doing tasks right the first time.

– Continuous improvement.• Is this necessary?• If so, can it be done better?

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Customers and Employees .. Most important

– Upside-down pyramid view of organizations.• Customers and clients at the top of organization.• Workers directly affect customers and clients.• Team leaders and middle managers directly

support the workers.• Top managers clarify the mission and objectives,

set strategies, and make adequate resources available.

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What is a high performance organization?

High performance organizations (HPOs).

– HPOs intentionally designed to:

• Bring out the best in people.

• Produce organizational capability that delivers

sustainable organizational results.

– HPOs place people first. Knowledge based

economy

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What is a high performance organization?

Emphasis on intellectual capital.

– Intellectual capital is the foundation for HPOs.

– To utilize intellectual capital, HPOs often

organize work-flow around key business

processes and use work teams within these

processes.

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What is a high performance organization?

Key components utilized in HPOs.– Employee involvement.

– Self-directing work teams.

– Integrated production technologies.

– Organizational learning.

– Total quality management.

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What is a high performance organization?

Employee involvement.– The amount of decision making delegated to

workers at all levels.– Employment involvement can be visualized on

a continuum.• No involvement or parallel involvement.• Moderate involvement or participative

management.• High involvement or employee empowerment.

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What is a high performance organization?

Self-directing work teams.– Empowered to make decisions about planning,

doing, and evaluating their work.– Sometimes called self-managing or self-

leading work teams.– Important in HPOs due to:

• Need to tap employees’ expertise and knowledge.• Need for employees to manage themselves.

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What is a high performance organization?

Integrated production technologies.– Focus on providing flexibility in

manufacturing and services and involves job design and information technology.

– Key components:• Just-in-time systems.

• Use of computers.

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What is a high performance organization?

Organizational learning.

– A way for organizations to adapt to their

settings and to gather information to anticipate

future changes.

– HPOs are designed for organizational

learning.

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What is a high performance organization?

Total quality management (TQM).– A total commitment to:

• High-quality results.• Continuous improvement.• Meeting customer needs.

– TQM is a a tightly integrated part of HPOs.• Encourages all workers to do their own quality

planning and checking.

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What are the management challenges of high performance organizations?

Challenges of environmental linkages.– HPOs are open systems influenced by a

rapidly moving external environment.– Open systems components.

• Inputs: worksite problems and opportunities, and vision, mission, and strategy.

• Transformation processes: five HPO components.

• Outputs: individual, group, and organizational effectiveness, and contributions.

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How do high performance organizations operate?

Southwest Airlines as an HPO.– HPO component: employee involvement.

• Flat and lean hierarchy.• Heavy team emphasis throughout organization.• Paper work minimized.• Rapid decision making emphasized.• People were empowered to do “whatever it takes”

to get the job done.

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How do high performance organizations operate?

Southwest Airlines as an HPO.

– HPO component: self-directing work teams.

• Longer term service teams.

• Ad hoc teams for given projects or duties.

• Culture promotes cooperative activities.

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How do high performance organizations operate?

Southwest Airlines as an HPO.

– HPO component: integrated production

technologies.

• Integrated use of information technology in

distribution, order entry, crew pairings, dispatching

of flights, revenue management, schedule

planning, and parts replacement.

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How do high performance organizations operate?

Southwest Airlines as an HPO.– HPO component: organizational learning.

• Deeply rooted in Southwest’s culture.

• Letters and newsletters about company business.

• Managers encourage workers to spend time at jobs other than their own.

• Southwest’s “University for People.”

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How do high performance organizations operate?

Southwest Airlines as an HPO.– HPO component: total quality management.

• “Southwest Spirit” focusing on a strong work ethic, a strong desire for quality work, going beyond the call of duty, helping others, and doing the “right” thing.

• TQM qualities are reinforced by empowerment, learning, and communications devices.

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How do high performance organizations operate?

Southwest Airlines as an HPO.– Other HPO considerations: vision/direction

setting package.• “The mission of Southwest Airlines is dedication

to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit.”

• Strategic elements in direction setting.• Core values.

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How do high performance organizations operate?

Southwest Airlines as an HPO.

– Other HPO considerations: the people.

• Attitude reflecting “Southwest Spirit” is a key

hiring requirement.

• Attitude more important than other hiring

qualifications.

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How do high performance organizations operate?

Southwest Airlines as an HPO.– Other HPO considerations: compensation.

• Flight attendants paid by the trip.• Incentives for employee performance.• Pilots’ salaries are comparable to other airlines but

they fly 40% more hours.• Profit sharing and pension plans.• Usual airline fringe benefits.

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How do high performance organizations operate?

Southwest Airlines as an HPO.

– Other HPO considerations: dealing with the

environment.

• Southwest flourishes in a deregulated environment.

• Southwest’s HPO attributes serve it well in dealing

with a highly competitive environment.

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How do high performance organizations operate?

Southwest Airlines as an HPO.– Other HPO considerations: outcomes.

• Highly satisfied employees.• Strong commitment to the company.• Low turnover.• Strong performance on various productivity

measures.• Active in contributing to the communities in which

it operates.