Implementing High-Performance Work Systems helps HR create the conditions for employees and workplaces to perform at their best, new research shows.
Maximising a workforce’s performance potential is about more than hiring the best and brightest. It requires HR to strategically design and implement systems that empower, develop and engage their people.
Labour costs are the single biggest expense for most businesses, with salaries comprising an average of 70 per cent of total expenditure. A recent AHRI research paper, based on responses from 600 Australian employers and senior HR practitioners, revealed an opportunity for Australian organisations to invest not only in talent, but in creating the conditions for that talent to perform at its best.
The research focused on High-Performance Work Systems (HPWS), defined as strategic groupings of HR practices that motivate, empower and upskill employees.
The report focuses on a number of High Performance Work (HPW) practices which have been shown to have a tangible impact on organisational performance, including flexible work arrangements, information sharing and employee involvement.
“One of the factors that makes the HPWS approach distinctive is that it promotes greater employee autonomy and involvement in decision-making,” says AHRI’s CEO Sarah McCann-Bartlett.
“It’s designed to give managers and employees more authority and the skills to manage their own work practices and behaviours, aligned with the organisation’s objectives and values. The result is that employees are more empowered, motivated and upskilled, which in turn leads to better organisational performance.”
Capitalising on the benefits of High-Performance Work Systems
AHRI’s research reveals that HPW organisations – defined as those which have implemented at least five of the eight selected HPW practices – outperform their peers financially, regardless of their size.
In fact, 76 per cent of HPW organisations in the private sector reported better-than-average financial results.
“These data points indicate that by not adopting HPWS, many Australian businesses are limiting their potential to improve their financial performance,” says McCann-Bartlett.
There is no set formula for a successful HPWS. An organisation’s selection depends on its strategic objectives and the internal and external environments.
“The key challenge for HR practitioners is to choose the most suitable bundle of practices for their organisation and ensure these practices are implemented in an appropriate way,” says McCann-Bartlett.
Other benefits gained from implementing HPWS include improved service quality (experienced by 50 per cent of respondents), enhanced customer feedback (44 per cent) and increased productivity (43 per cent). These outcomes can be seen in the graph below.
Crucially, HPWS also help HR practitioners develop organisational agility in turbulent times, says Gerwyn Davies, Research and Advocacy Specialist at AHRI.
“As business environments grow more complex, HPWS offer a framework for resilience and adaptability.
“Leaders are increasingly recognising that traditional methods of managing people may limit potential. Organisations with robust learning and development programs, for example, are better positioned to foster innovation – an essential skill for navigating technological disruptions.”
Performance blockers
Despite its advantages, the report also found that HPWS have been implemented by less than half of Australian workplaces.
Time constraints were the most frequently reported barrier to implementation (cited by 36 per cent), followed by insufficient managerial training (24 per cent) and challenges in integrating new practices with existing systems (23 per cent).
Overcoming these constraints requires HR practitioners to carefully determine the optimum combination of HPW practices for their organisation and develop a strong business case for their implementation.
“As HPWS often require a change in the basis of control… it’s important that leaders and senior managers support and enable this shift,” says Davies.
“HPWS require managers to engage with employees in a new way, focusing on building their commitment.”
Seeing HPWS in action
One organisation that has seen great success through implementing HPWS is global insurer QBE. Its strategic focus on HPW practices such as learning, recognition and work design has helped the company advance its goal to become a consistent and innovative risk partner in the market.
A key component of this strategy is QBE’s expansive leadership development program, says Shiona Watson, AUSPAC Chief People Officer at QBE.
“Leaders have a disproportionate influence on culture. So if we were going to pull one particular lever to make an impact, it was focusing on leadership capability,” says Watson.
Crucial to this initiative’s success was its broad reach; all 700 leaders in QBE’s AUSPAC division have participated in the program, which focuses on developing skills such as adaptive leadership, purpose-driven leadership and digital proficiency.
“Leadership programs fail when you just focus on the top cohort of leaders [rather than] your entire leadership population.
“Our frontline leaders manage the vast majority of our workforce, so not focusing on that cohort would have meant the broader leadership program wouldn’t have had the cut-through and the success we were aspiring for.”
Consistent with the approach to HPWS recommended in AHRI’s report, QBE’s learning and development initiatives place a strong emphasis on employee autonomy.
“As business environments grow more complex, HPWS offer a framework for resilience and adaptability.” – Gerwyn Davies, Research and Advocacy Specialist, AHRI
“We’ve taken a three-phased approach to the leader capability program. The first phase was about giving leaders the right skills. The second was helping leaders embed and practise those skills.
“Next year, we’re shifting to holding leaders accountable for applying them. We’re going to give them support in the flow of work, but it’s up to them now to actually use those skills on a day-to-day basis.”
What ties QBE’s HPW practices together is an overarching focus on employee wellbeing, because, as Watson puts it, “driving high performance at the cost of employee wellbeing is not a sustainable solution”.
Where QBE’s wellbeing initiatives had previously been focused on employee support systems, Watson’s team has recently directed more attention to addressing the underlying causes of poor wellbeing at work.
“We have been very deliberate about constructing roles that allow people to operate at their best, feel effective and feel like they’re adding value,” she says.
Want to learn more about improving organisational performance through High-Performance Work Systems? Access the full AHRI report.
Critical success factors for implementing HPWS
Watson stresses the importance of designing HPWS within the unique context of your business.
“There’s no one lever that drives high performance in an organisation, and the solution that’s right for your organisation will vary… So it’s really important to understand what the available levers are,” she says.
If you’re ready to or planning to implement a HPWS in your organisation, there are a few tips AHRI’s research suggests following to maximise performance outcomes. These include:
1. Ensure alignment with strategic goals
Ensure that the bundle of HPW practices is consistent and aligned to the organisation’s strategy. Once introduced, the HPW practices require continuous refinement and regular evaluation as the internal and external environments and strategic goals change.
2. Utilise line managers
HPWS require managers to relate to their workers in a different way, gaining their commitment rather than relying on command and control. This can be achieved by coaching, providing regular communication about the organisation’s values and goals and encouraging employees to be more involved in decision-making.
3. Communication and understanding
Communicate the nature and benefits of HPWS frequently and comprehensively to ensure they are widely understood throughout the organisation.
4. Learning and development
Ensure the organisation’s learning and development strategy is delivering the additional skills required for the successful implementation of HPWS and utilises HPW practices such as team-working, multiskilling and information sharing.
5. Be mindful of work intensification
While HPWS can bring benefits for employees in terms of increased job satisfaction, it can also increase employee workload and stress through expanded responsibilities. Line management capability and other HPW practices, such as employee involvement in decision-making and information sharing, can reduce this risk.
Above all, HPWS are never a set-and-forget, Watson says. It should be dynamic and flexible enough to adapt in response to changing trends and challenges.
“[For example], we’ve focused on adaptive leadership because we know things are going to come up that we don’t yet know about.
“You need a deep understanding of what your organisation needs from a systemic point of view, and then be prepared to learn and update as you’re nudging your solutions along, to get the outcomes you want.”
A longer version of this story first appeared in the December/January 2025 issue of the HRM magazine.
Learn how to create the best environment for optimal performance with AHRI’s Performance Mastery: Elevate your Team’s Success short course. It will set you up in supporting team members to reach their potential and contribute to organisational success.