Academic journal article Management : Journal of Contemporary Management Issues

High Performance Management: An Illustrative Example of Sales Departments' Productivity Measurement1

Academic journal article Management : Journal of Contemporary Management Issues

High Performance Management: An Illustrative Example of Sales Departments' Productivity Measurement1

Article excerpt

This paper describes a conceptual approach to measure and compare productivity of resource utilization at the firm level, adapting a set of techniques known as Data Envelopment Analysis (DEA). Within this approach, the paper addresses the issues of multiple inputs and multiple outputs of the sales departments of a firm. In particular, we focus on the resource management of sales departments. The proposed measurement methodology will allow assessment of the impact of different management policies on firm performance. It is hoped that this novel approach to productivity measurement will help sales managers identify efficient practices and superior management policies, and will promote the adoption of these policies.

(ProQuest: ... denotes formulae omitted.)

1. INTRODUCTION

In the late 1990s, the American Society for Training and Development (ASTD) used the term high performance work systems to refer to "those organizations which organized workflow around key business processes and often create teams to carry out those processes" (Gephart and Van Buren, 1998). Also in the United States, the Center for Creative Leadership uses the term high performance work organizations (Kirkman et al., 1999), while the United Kingdom Chartered Institute of Personnel and Development refers to high performance working, emphasizing the outcome of practices in generating a differentiated product or service (Stevens, 2000). This is a topic that deserves consideration because High Performance Work Systems (HPWS) are important as they provide more efficient ways of organizing human labour, as well as they deliver higher levels of productivity and profitability.

According to Ashton and Sung (2002): "First and foremost, stringent scientific research has now established a strong link between the use of human resource practices and enhanced performance across a range of indicators, but especially in productivity and, crucially, profitability. Put plainly, investment in these practices and the skills associated with them pays off on the bottom line" (p.17).

Therefore, high performance management (here after HPM) raises issues regarding performance improvements. Furthermore, Wood (1999) points out the talk of high performance management or high performance work systems implies that the link between the working practices and performance has been proved.

Several authors (Farias, 1998; Goddard, 2004) support this view which is, according to Whitfield and Poole (1997): "strongly supportive of the hypothesis that firms adopting the high-performance approach have better outcomes than those which do not" (p. 755).

Furthermore, according to Guest (2002), there is a need of refocusing on the worker. Adding to this view, Appelbaum et al. (2000) state that: "Studying workers' attitudes and experiences with workplace practices can help researchers get inside the black box between inputs and outputs in the production process. It can improve our understanding of the ways in which HPWS (high performance work systems) are related to performance" (p. 110).

Therefore, managers must take a multi-project perspective, seeking to optimize the use of resources at the firm level. This is not simply a matter of optimizing activities on individual sales departments; the discretion of managers to reallocate resources among departments creates non-linear effects and, hence, sales decisions must be considered at the firm level. We claim that a measure of productivity at the departments' level has a host of benefits, as it:

* supports managers' decisions about resource utilization across departments for the most return,

* supports decisions about investment in resources,

* supports benchmarking, allowing sales departments to better understand their competitive position and improve their performance and

* supports comparative research of various management policies.

We propose in this paper that a set of non-parametric, frontier evaluation methods, known as Data Envelopment Analysis (DEA), is sufficiently powerful to accommodate the measurement challenge posed by HPM. …

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