Impact of High-Performance Work System Practices on

Human Resource Outcomes and Organizational Performance in

a Philippine Government Bank

Roland M. Simbre
National University, Philippines
rmsimbre@national-u.edu.ph

Abstract: Regardless of whether organizations are in the private or in the public

sector, there is a general notion that human resources are critical to keeping
organizations effective as well as maintaining a high level of organizational
performance. Over the past two decades, a series of empirical works have explored
the linkages of High-Performance Work System (HPWS) on employee outcomes
and firm performance. HPWS is a set of human resource practices designed to equip
employees with skills, information, motivation, and latitude yielding a workforce
thought to encourage workforce skill and motivation. The primary purpose of this
study is to explore the impact of HPWS on human resource and organizational
performance in the Land Bank of the Philippines. Moreover, this study attempts to
establish any significant difference in the HPWS, and significant relationships on
human resource outcomes and organizational outcome performances. The
quantitative method through survey questionnaires and interviews were used from
the seventy-five (75) selected rank and file employees of Land Bank in the
Philippines. To answer the problems specifically, the following statistical tools were
used: Frequency and Percentage, Weighted Mean, T-test for Independent Samples
and Pearson Product Moment Correlation (r). Findings showed that significant
differences were observed in the HPWS, human resource outcomes and
organizational performance as assessed by the rank and file employees and there are
significant relationships between high-performance work system practices and
human resource outcomes and organizational performance.

Keywords: high work-performance system practices; human resource outcomes;

organizational performance

I. INTRODUCTION
1.1 Background of the Study
It is increasingly apparent that one of the keys to a successful
organizational performance is the people within the organization and the
management system that harness their talents and capabilities. Human
resources (HR) are a primary source of competitive advantage which is
difficult to imitate. They can create continuous improvement and perform a
high level if they are motivated to do so.
A growing body of empirical evidence contains the argument that
the use of a set of HR practices, including comprehensive employee
recruitment and selection procedures, compensation and performance
management systems, information sharing, and extensive employee
involvement and training can improve the acquisition, development, and
retention of a talented and motivated workforce. These HR practices are

13
referred to as High-Performance Work Systems (HPWS) (Datta, Guthrie, &
Wright, 2013). HPWS have been defined as a group of separate but
interconnected HR practices designed to enhance employees’ skills and
effort (Takeuchi, Lepak & Wang, 2013). New models of high-performance
work systems break new ground in the quest to understand the nature of
high-performing organizations focusing on key elements of workplace
innovation-employee involvement and participation and equality and
diversity systems.
Over the past two decades, a series of empirical works have explored
the linkages of HPWS and their impact on employee outcomes and firm
performance. However, according to Boxall and Macky (2007), the
dominant focus of previous researches on HPWS was in the private and
manufacturing, and consequently, much of the extent literature is set within
this context.
This study was conducted to extend current Human Resource
Management (HRM) research on HPWS with emphasis on the linkage
between HPWS and performance at both the individual and organizational
levels in the public sector in the local setting at the Land Bank of the
Philippines (LBP). This is a specialized Government bank with a universal
banking license. It was established on August 8, 1963, and is fully-owned
by the Philippine Government as an official depository of Government
funds. It is also an implementing agency of the Comprehensive Agrarian
Reform Program (CARP) involved in the land evaluation, compensation to
owners of private agricultural lands, and collection of amortizations from
CARP farmer-beneficiaries. Hence, the bank provides credit assistance to
small farmers and fisher folks.
This study aims to determine the impact of High-Performance Work
System practices on human resource and organizational performance of the
Land Bank of the Philippines. Specifically, it attempts to answer the
following questions:
a. As assessed by the rank and file respondents, to what extent does
Land Bank of the Philippines observe high-performance work
system practices in their respective organizations regarding the
following?
a.1 employment security
a.2 selectivity in recruiting
a.3 high wages
a.4 incentive pay based on performance appraisal
a.5 information sharing
a.6 participation and empowerment
a.7 self- managed teams
a.8 training and skill development
a.9 reduced status distinctions and barriers
a.10 job design
a.11 promotion
a.12 measurement of HR practices

14
 b. Are there significant differences in the assessments of the rank
and file respondents of Land Bank of the Philippines as to the
extent to which High-Performance Work System Practices are
observed in their respective organizations?
c. What are the levels of human resource outcomes in Land Bank of
the Philippines regarding the following?
c.1 attitudinal outcomes
c.1.1 motivation
c.1.2 commitment
c.1.3 job satisfaction
c.2 behavioral outcomes
c.2.1 turnover
c.2.2 absenteeism
d. Are there significant differences in the level of human resource
outcomes in Land Bank of the Philippines?
e. How do the respondents from the rank and file group assess the
organizational performance in Land Bank of the Philippines?
f. Are there significant differences in the assessments of the
respondents from the rank and file group on the organizational
performance of Land bank of the Philippines?
g. Are there significant relationships between high-performance
work system practices and human resource outcomes and
organizational performance?

1.2 Hypotheses
Ho.1 There are no significant differences in which High-
Performance Work System Practices are observed in Land Bank of
the Philippines.
Ho.2 There are no significant differences on the level of human
resource outcomes of respondents in Land Bank of the Philippines.
Ho.3 There are no significant differences on the perceived
organizational performance in Land Bank of the Philippines.
Ho.4 There are no significant relationships between HPWS and
human resource outcomes and organizational performance.

1.3 Related Literature

High-Performance Work System (HPWS) is a name given to a set
of management practices that attempt to create an environment within an
organization where the employee has greater involvement and
responsibility. There is no universally agreed meaning for the term HPWS
due to large differences regarding the theoretical, empirical, and practical
approaches adopted (Boxall & Macky, 2012). Despite this, HPWS can be
broadly described as a range of innovative human resource management
practices, work structures, and processes, which, when used in certain
combinations or bundles are mutually reinforcing and produce synergistic
benefits (Huselid, 2011).

15
 Combs, Liu, Hall, and Ketchen (2013) and Subramony (2009)
described HPWS as a coherent set of HRM practices including selective
hiring, promotion from within, extensive training, performance appraisal,
employee participation, information sharing, teamwork, and broad job
design and have repeatedly been shown to relate positively with firm
performance.
Wei and Lau (2010) viewed HPWS as a systematic and integrated
approach of managing human resources toward the alignment of HR
functions and the achievement of firm strategy. On the other hand, Lepak,
Liao, Chung, and Harden (2006) defined HPWS as a set of contextual HR
practices that perceived as best practices in the industry, leading towards the
goal of performance enhancement by ensuring work abilities, motivation,
and empowerment. The above definition implies that studying the
perceptions of HR practitioners in a specific industry context can help select
the appropriate HPWS composition for that particular industry context.
Studies with regards to HPWS predominantly focus on bundles of HR
practices rather than individual practices in examining the impact of HR
systems on employee performance (Jiang, Lepak, Han, Hong, Kim &
Winkler, 2012). Studies linking HPWS to organizational performance
indicates a stronger relationship instead of individual practices (Combs et
al., 2013).
In the HPWS, workers are to a larger degree, self-controlled and
self-managed. The workers who possess superior abilities tend to apply their
competence to work-related activities. The work-related activities result in
achieving superior immediate indicators of firm performance and
sustainable competitive advantage (Way, 2002).
In Human Resource Management (HRM) literature, the relationship
between performance and HRM practices is established through HR
outcomes such as attitudes and behaviors of employees. HPWS also affect
organizational performance through HRM outcomes (Fey, Bjorkman, &
Pavlovskaya, 2011). It has been assumed in the literature that HRM
outcomes mediate between HPWS and organizational performance.

1.4 Theoretical Framework

This study is primarily premised on theories linking High-
Performance Work Systems (HPWS) to organizational and individual
performance. The most commonly used theoretical framework for linking
HR practices to performance is organizational behavior or motivation
theories, which generally suggest that work motivation leads to performance
(Parks, 2013). The behavioral perspective contends that successful
implementation of strategies relies considerably on employee behavior
(Jackson, Schuler, & Rivero, 2006) and that the use of HR practices in an
organization can reward and control employee behavior. Therefore,
organizations should operationalize HR practices that encourage employee
behaviors that align with organizational strategy. This alignment of strategy

16
 and HR practices leads to superior organizational performance (Delery &
Doty, 2017).
Human resource practices that enhance workforce abilities,
employee motivation and involvement, are bundled as HPWS, according to
Lepak et al. (2006). The authors view HPWS as complementary features
leading to performance or goal achievement. High-performance work
system literature contends that strategy driven HR practices can lead to high
levels of the individual (Boxall, Ang, & Bartram, 2011) and organizational
performance (Boxall & Macky, 2012).
Lepak, Liao, Chung, and Harden (2006) identified extensive
recruitment and selection activities, training, and development programs,
motivation-based HR programs to improve involvement (like performance-
based payment, financial incentives, and empowerment) and team work as
the essential HPWS. While the specific lists of HR practices may vary, most
of the existing literature and research evidence supports a positive link
between HPWS and performance outcomes (Liao et al., 2009; Nishii, Lepak,
& Schneider, 2011).
Based on the framework proposed by Pfeffer (2018), Liao et al.,
(2009) stated that the HPWS includes practices of extensive service training,
information sharing, self-management service teams and participation,
compensation contingent on service quality, job design for quality work,
service-quality-based performance appraisal, internal service, service
discretion, selective hiring, employment security, and reduced status
differentiation. Considering the context of the current study, which is the
banking sector, the implication here is that these practices are best suited to
promoting service quality. This is corroborated by Batt (2017) when he
stated that the effects of HPWS on employee behavior directly affect the
quality of services, as service industry employees maintain close contact
with customers.
Nishii, Lepak, and Schneider (2011) introduced the concept of HR
attribution (the positive or negative employee perception of managerial
intentions behind different HR practices) as a mediating variable that forms
employee participation.

Intended Actual Perceived Attitudinal Behavioral

Practices Practices Practices Outcomes Outcomes

Employee
Performance
Outcomes

Fig. 1. HR Causal Chain

17
 An HR causal chain proposed by Wright and Nishii (2006) shows
the links between HPWS and organizational outcomes through the
mediation of attitudinal and HR outcomes, as outlined in Figure 1.
This causal chain shows that strategy driven intended HR practices
should be reflected in actual HR practices, though on many occasions they
may vary widely (Boxall, Ang, & Bartram, 2011). Even if the variations
between intended and actual practices are within tolerable limits, the way
they are perceived by employees may be completely different. Perception
is translated to attitudinal and behavioral outcomes at employee level which
logically leads to performance outcomes both at an employee and
organizational level (Boxall & Purcell, 2013).
In sum, Figure 1 illustrates that employee perceptions of, and
reactions to, HR practices are at the heart of the links in the chain between
HR practices and performance (Kinnie, Hutchinson, Purcell, Rayton, &
Swart, 2006). Bowen and Ostroff (2015) offered an understanding of the
strength of HRM systems in explaining how individual employee attributes
accumulate to affect organizational effectiveness. Moreover, some authors
have also contended that employee perceptions can be influenced by
numerous internal or external factors which may or may not be controllable
(Boxall & Macky, 2012).

2. METHODOLOGY
This study is descriptive research. A purposive sampling method of
research was utilized in determining the impact of High-Performance Work
System on the selected seventy- five (75) rank and file employees from the
different departments of Land Bank of Philippines (LBP) main office as
respondents of the study.
Survey questionnaires and unstructured interviews were used as the
primary instruments in the study. To answer the problem and analyze the
gathered data, the following statistical tools were utilized: Frequency and
Percentage were used to describe the profile of the respondents. In
determining the average response of the respondents on the various factors
considered in the study, Weighted Mean was used. For the verbal
interpretation of the computed weighted means the following scale and its
corresponding verbal interpretations were used: 4.51 – 5.00 Strongly Agree
(SA), 3.51 – 4.50 Agree (A), 2.51 – 3.50 Partly Agree (PA), 1.51- 250
Disagree (D), and 1.00 – 150 Strongly Disagree (SD). T-test for independent
samples was used to test the null hypotheses of the study claiming no
significant differences in the assessments of the rank and file respondents of
Land Bank of the Philippines regarding the following: High-Performance
Work System Practices, human resource outcomes, and organizational
performance. Lastly, Pearson product-moment correlation (r) was used to
test the null hypothesis of having no significant relationship between High-

18
Performance Work System Practices and the following variables: human
resource outcomes and organizational performance. The computed Pearson
Coefficient of Correlation, r, was interpreted based on the following scale:
± 0.90 to ± 1.00 Very High Correlation (VHC), ± 0.70 to ±0.89 High
Correlation (HC), ± 0.40 to ±0.69 Moderate Correlation (MC), ± 0.20 to
±0.39 Low Correlation (LC), and Less than ±0.20 Negligible Correlation
(NC).

3. RESULTS AND DISCUSSION

Table 1. Assessments of Respondents on the Extent to which High-
Performance Work System Practices are Observed in the Land Bank of the
Philippines.

High Work-Performance System Weighted Mean Verbal

Practices Interpretation
Employment Security 3.88 Agree
Selectivity in Recruiting 3.85 Agree
High Wages 3.96 Agree
Incentive Pay based on Performance
Appraisal 4.00 Agree
Information Sharing 3.89 Agree
Participation and Empowerment 3.82 Agree
Self-managed Teams 3.90 Agree
Training and Skill Development 4.09 Agree
Reduced Status Distinctions and 2.90 Partly Agree
Barriers
Job Design 3.47 Partly Agree
Promotion from within 3.33 Partly Agree
Measurement of HR Practices 4.17 Agree
Overall Mean 3.77 Agree

As shown in Table 1, the respondents agreed with an overall mean

of 3.77 that in Land Bank of the Philippines (LBP), High-Performance Work
System (HPWS) practices were observed. It can be deduced that the bank
has in place human resource practices designed to equip employees with
skills, information, motivation, and latitude to encourage excellent
performance. However, it seems that it does not have adopted enough
policies to reduce status distinctions and barriers.

19
Table 2. T-Test Results on the Assessments of Respondents on Extent to
Which High-Performance Work System Practices are Observed in the Land
Bank of the Philippines
High Work-Performance System Weighted Verbal Interpretation
Practices Mean
Employment Security 3.88 Not Significant
Selectivity in Recruiting 3.85 Significant
High Wages 3.96 Not Significant
Incentive Pay based on Significant
Performance Appraisal 4.00
Information Sharing 3.89 Significant
Participation and Empowerment 3.82 Significant
Self-managed Teams 3.90 Significant
Training and Skill Development 4.09 Significant
Reduced Status Distinctions and Barriers Significant
2.90
Job Design 3.47 Significant
Promotion from within 3.33 Significant
Measurement of HR Practices 4.17 Significant
d.f. = 148 critical value at α.05 = 1.976

Concerning the above findings in Table 2, the null hypothesis of

having no significant differences in the assessments of the respondents of
Land Bank of the Philippines as to the extent to which HPWS are observed
in their respective organizations was rejected. It can be deduced that the
bank implements HPWS to significantly varying degrees. Nevertheless,
there is congruence in the HPWS about employment security and high
wages.

Table 3. Levels of Human Resource Outcomes of Respondents in Land

Bank of the Philippines
Human Resource Outcomes Weighted Mean Verbal
Interpretation
Attitudinal Outcomes Motivation 4.29 Agree
Commitment 4.20 Agree
Job Satisfaction 4.01 Agree

Overall Mean 4.17 Agree

Behavioral Outcomes Turnover

2.38 Disagree
Absenteeism 2.49 Disagree
Overall Mean 2.44 Disagree

20
 As gleaned in Table 3, the respondents of Land Bank of the
Philippines exhibit high motivation, commitment, and job satisfaction levels
on Attitudinal Outcomes as denoted by their overall mean of 4.17, which
reflect their overall “Agree” ratings. Regarding behavioral outcomes, the
respondents disagree garnering an overall mean rating of 2.44, and it exhibits
a low level on turnover intentions and absenteeism rate.

Table 4. T-Test Results on the Levels of Human Resource Outcomes of

Respondents in Land Bank of the Philippines
Human Resource Weighted Standard Computed Verbal
Outcomes Mean Deviation t-value Interpretation

Motivation 4.29 0.602 1.084 Not

Significant
Commitment 4.20 0.324 3.410 Significant
Job Satisfaction 4.01 0.474 2.819 Significant

Turnover 2.38 0.434 4.432 Significant

Absenteeism 2.49 0.532 0.116 Not
Significant
d.f. = 148 critical value at α.05 = 1.976

The tabular results revealed significant differences in the

commitment, job satisfaction, and turnover intentions of the respondents of
LBP and rejected the null hypothesis of having no significant differences. It
can be inferred from the findings that the respondents seem to be highly
committed and satisfied with their jobs in the bank.
On the other hand, regarding the motivation and absenteeism of the
respondents, the results show that the null hypothesis having no significant
differences is accepted of and can be deduced that the respondents manifest
comparable high motivation levels and low absenteeism rate.

Table 5. Perceived Organizational Performance in the Land Bank of the

Philippines
Indicators Weighted Verbal Interpretation
Mean
1. Quality of products or services 4.21 Very Satisfactory
2. Development of new products or services 4.08 Very Satisfactory
3. Ability to attract employees 4.19 Very satisfactory
4. Ability to retain employees 4.04 Very Satisfactory
5. Satisfaction of customers or clients 4.21 Very Satisfactory
6. Relations between management and 4.00 Very Satisfactory
employees
Overall Mean 4.12 Very Satisfactory

21
 As shown in Table 5, the respondents of Land Bank of the
Philippines registered an overall mean of 4.12 which reflect their overall
“very satisfactory” ratings on the performance of their respective
organizations. The respondents gave their highest appraisal on customer
service and quality of products and services offered by the bank.

Table 6. T-test Results on the Perceived Organizational Performance in

Land Bank of the Philippines.
Weighted Standard Computed Verbal
Mean Deviation t-value Interpretation
Perceived
Organizational 4.12 0.594 1.545 Not significant
Performance
d.f. = 148 critical value at α.05 = 1.976

This tabular data revealed no significant difference in the perceived

organizational performance of Land Bank of the Philippines and the null
hypothesis of having no significant difference was accepted. It can be
deduced that the bank achieved very satisfactory organizational performance
as perceived by the respondents.
As presented in Table 7, low significant correlations were observed
between human resource outcomes and the following HPWS: Employment
Security, Selectivity in Recruiting, High Wages, Incentive Pay Based on
Performance Appraisal, Participation and Empowerment, and Promotion
that rejected the null hypothesis of no significant relationship in the
organizations of Land Bank of the Philippines. On the other hand, the null
hypothesis was accepted regarding: Information Sharing, Self-Managed
Teams, Training and Skill Development, Reduced Status Distinctions and
Barriers, and Measurement of HR Practices.

22
Table 7. Pearson-R Results in Correlating High-Performance Work System
Practices and Human Resource Outcomes in the Land Bank of the
Philippines.
High Work- Computed Verbal Computed Verbal
Performance r-value Interpretation t-value Interpretation
System
Employment 0.290 Low 3.684 Significant
Security Correlation
Selectivity in 0.311 Low 3.986 Significant
Recruiting Correlation
High Wages 0.333 Low 4.293 Significant
Correlation
Incentive Pay 0.215 Low 2.684 Significant
based on Correlation
Performance
Appraisal
Information 0.043 Negligible 0.525 Not Significant
Sharing Correlation
Participation 0.272 Low 3.438 Significant
and Correlation
Empowerment
Self-managed 0.011 Negligible 0.129 Not Significant
Teams Correlation
Training and 0.155 Negligible 1.913 Not Significant
Skill Correlation
Development
Reduced 0.028 Negligible 0.339 Not Significant
Status and Correlation
Distinctions
and Barriers
Job Design 0.086 Negligible 1.051 Not Significant
Correlation
Promotion 0.228 Low 2.854 Significant
from within Correlation
Measurement 0.109 Negligible 1.334 Not Significant
of HR Correlation
Practices
d.f. = 148 critical value at α.05 = 1.976

Tabular results in Table 8 revealed a high significant correlation

between Perceived Organizational Performance, and Participation and
Empowerment. The data further showed moderate significant correlations
on Information Sharing, Training and Skill Development, and Promotion
from within and low significant correlations on Employment Security,
Selectivity in Recruiting, High Wages, Incentive Pay Based on Performance
Appraisal, Self-Managed Teams, and Measurement of HR Practices. On the
other hand, no significant correlation was observed between Perceived
Organizational Performance and Reduced Status Distinction and Barriers.

23
Table 8. Pearson-r Results in Correlating High-Performance Work System
Practices and Perceived Organizational Performance in the Land Bank of
the Philippines.
High- Computed Verbal Computed t- Verbal
Performance r-value Interpretation value Interpretation
Work System
Employment 0.184 Low 2.273 Significant
Security Correlation
Selectivity in 0.272 Low 3.438 Significant
Recruiting Correlation
High Wages 0.278 Low 3.521 Significant
Correlation
Incentive Pay 0.215 Low 2.682 Significant
based on Correlation
Performance
Appraisal
Information 0.537 Moderate 7.748 Significant
Sharing Correlation
Participation 0.733 High 13.108 Significant
and Correlation
Empowerment
Self-managed 0.230 Low 2.874 Significant
Teams Correlation
Training and 0.452 Moderate 6.169 Significant
Skill Correlation
Development
Reduced
Status and 0.148 Negligible 1.816 Not
Distinctions Correlation Significant
and Barriers
Job Design 0.621 Moderate 9.642 Significant
Correlation
Promotion 0.542 Moderate 7.846 Significant
from within Correlation
Measurement 0.283 Low 3.584 Significant
of HR Correlation
Practices
d.f. = 148 critical value at α.05 = 1.976

Based on the above findings, the null hypothesis of having no

significant relationships between Perceived Organizational Performance and
High-Performance Work System Practices was rejected except regarding
reduced status distinctions and barriers. This finding signifies a significant
relationship between Perceived Organizational Performance and HPWS.

24
4. CONCLUSION
The Land Bank of the Philippines has in place human resource
practices designed to equip employees with skills, information, motivation,
and latitude to encourage excellent performance. However, it seems that it
did not adopt enough policies to reduce status distinctions and barriers.
There are significant differences in the assessments of the rank and file
respondents as to the extent to which High-Performance Work System
Practices (HPWS) are observed in their respective organizations. The bank
implements HPWS to significantly varying degrees, and their rank and file
respondents demonstrate positive attitudinal and behavioral outcomes. They
are highly motivated, committed, and satisfied in their jobs. Conversely, they
exhibit a low level of turnover intentions and absenteeism rate.
There are significant differences in the commitment and job
satisfaction levels and turnover intentions of LBP’s rank and file respondents
and seem to be more highly committed and satisfied with their jobs. The
perceived organizational performance of LBP highly satisfied the
respondents, while customer service and the quality of products and services
offered by the bank are rated highest. The HPWS is significantly correlated
with human resource outcomes and perceived organizational performance.
Among the different components of HPWS, participation, and
empowerment, and high wages have the greatest impact on human resource
outcomes. Indeed, HPWS have the utmost effect on turnover intention from
among the human resource outcomes.
It is recommended that LBP should continuously improve its HPWS
practices to encourage excellent performance among employees. They
should give priority in adopting policies and strategies to reduce status
distinctions and barriers. The bank management should demonstrate value
and respect for every employee and make sure that responsibility, rewards,
and recognition are evenly distributed. Moreover, the bank should take note
of the components of HPWS which are rated lowest by the respondents.
Managers and supervisors should act as coaches, facilitators, and integrators
of team efforts. They should share responsibility for decision making with
employees. They may continue to empower employees and give them
greater latitude to decide how to achieve their goals to let them feel they
have a fuller role to play in their organizations. This will make them more
committed, motivated, and satisfied in their jobs. The management should
strive more to provide a positive working environment by providing the
needs of employees, involve and increase employee engagement, and
develop the skills of employees as well. Also, the management should be
more dynamic in implementing HPWS. Periodical evaluation of their HPWS
regarding new organizational priorities is necessary for the bank. There
should be a process audit to determine whether the system has been
implemented as it was designed whether the principles of HPWS are being

25
reinforced. Managers should support open exchange and communications
with their subordinates; an on-going dialogue at all level helps reaffirm
commitment that answers questions that come up and identify the areas for
improvement throughout the implementation of HPWS.

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