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Organizational Sustainability
Sustainability refers to the ability of a company to survive and
succeed in a dynamic, competitive environment.
Organizational success is based on how well the
organization meets the needs of its stakeholders

Shareholders, employees, customers, partners, community
members, etc.
Organizations strive for sustainability by creating HighPerformance Work Systems (HPWS) that provide
competitive advantage
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High-Performance Work Systems
HPWS refers to the relationship between specific HR practices
and critical outcomes measures
Characteristics of HPWS
1. Bench strength of highly qualified applicants for each
position
2. The use of validated selection and promotion procedures
3. Extensive training and development opportunities
4. The use of formal, multi-source performance appraisal
Linkage of merit increases to formal appraisal processes.
5. High percentage of workforce included in incentive systems.
6. High percentage of workforce working in self-managed,
project-based work teams (may be virtual teams).
7. High percentage of jobs filled from within
8. Partnering with other outside organizations
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Competitive Advantage
Competitive advantage is an organization’s ability to
formulate strategies that place it in a more favorable
position relative to the other companies in the industry
 Differentiation or competitive advantage
Principles describing competitive advantage:
 Customer Value
 Organizational Reputation
 Uniqueness
 HR Approach
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Competitive Advantage: Customer Value
Customer value refers to customers’ feelings that they
receive more value from their transaction with an
organization than from its competitors
Value chain analysis is a tool that maximizes customer value
 It assesses the amount of added value produced by
each position, program, activity and unit;
 It allows the organization to refocus on its core
competencies and requirements.
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Competitive Advantage: Reputation
Many customers seek out products and services at least to
some extent as a function of the reputation of the
organization selling the product or service
Organizations simply possess valued and respected
capabilities. In other words, the organization has
developed a market credibility.
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Competitive Advantage: Uniqueness
Uniqueness refers to offering a product or service that your
competitor(s) cannot easily imitate or copy
Three mechanisms for offering uniqueness
1. financial or economic capability—a business
receives special access to financial funding or is
able to produce a good or service cheaper than
someone else
2. strategic or product capability—the business offers
a product or service that differentiates it from
others
3. technological or operational capability—a
business can have a distinct way of building or
delivering its product or service
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Competitive Advantage: HR Approach
The development of related best practices over time provide
a sustainable competitive advantage.
Two basic approaches to HR best practices exist; these are
not mutually exclusive.
Universalistic approach: Seeks to identify methods of
managing people that are effective for all organizations
Contingency approach: Seeks to match different ways of
managing people with the best method for producing goods
and services
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Universalistic Approach
HR practices that are internally consistent and reinforce each
other can create a consistent work environment. These
are called HR bundles.

Training programs + Compensation plans that support the same
goal
Two HR bundles are:
 Control strategies try to streamline processes by exerting
high level of managerial control
 Commitment strategies emphasize organizational
commitment through worker empowerment
Commitment strategies are best because they lead to higher
productivity and higher quality output
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Thought question: What kind of messages would HR put out
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Contingency Approach
This approach looks at two dialectics:
 Internal labor focus vs. External labor focus


Internal = growing employees in their sphere of influence; focus on
long-term careers
External = hiring those who already have the skills; limited focus on
company attachment
 Cost
focus vs. Differentiation focus
Cost = seeks to produce goods and service inexpensively
 Differentiation
= seeks to produce goods andDifferentiation
services that are
Cost
unique
Bargain Laborer
Free Agent
External Focus on efficiency
Focus on distinctiveness
Buying talent
Buying labor

Internal
Loyal Soldier
Focus on efficiency
Creating talent
Committed Expert
Focus on distinctiveness
Creating talent
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