ABSTRACT
This chapter outlines a model of the critical organizational characteristics involved with human resource management (HRM). J. Hayton suggests that HRM practices fall into two categories: traditional HR practices and discretionary HRM. The chapter describes the HRM practices and high-performance work system (HPWS) that are necessary for an organization to foster innovation. G. Bohlander and S. Snell suggest that HPWS is a result of “a specific combination of HR practices, work structures, and processes that maximizes employee knowledge, skill, commitment and flexibility.” The first component of creating an HPWS is the concept of performance management, especially as it relates to the empowerment of employees. The second component of creating an HPWS is knowledge management. Knowledge management includes attracting, retaining, and developing individuals with the knowledge, skills, and abilities to meet the goals of the organization. The third component in creating an HPWS is employee compensation and incentives.
