Académique Documents
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Mike Millmore Philip Lewis Mark Saunders Adrian Thornhill Trevor Morrow
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ISBN: 978-0-273-68168-7
Pearson Education Limited Edinburgh Gate Harlow Essex CM20 2JE England and Associated Companies around the world Visit us on the World Wide Web at: www.pearsoned.co.uk ---------------------------------First published 2007 Pearson Education Limited 2007 The rights of Mike Millmore, Philip Lewis, Mark Saunders, Adrian Thornhill and Trevor Morrow to be identified as the authors of this Work have been asserted by them in accordance with the Copyright, Designs and Patents Act 1988. ISBN: 978-0-273-68168-7 All rights reserved. Permission is hereby given for the material in this publication to be reproduced for OHP transparencies and student handouts, without express permission of the Publishers, for educational purposes only. In all other cases, no part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise without either the prior written permission of the Publishers or a licence permitting restricted copying in the United Kingdom issued by the Copyright Licensing Agency Ltd, Saffron House, 610 Kirby Street, London EC1N 8TS. This book may not be lent, resold, hired out or otherwise disposed of by way of trade in any form of binding or cover other than that in which it is published, without the prior consent of the Publishers.
Contents
Introduction An overview of the Instructors Manual Strategic Human Resource Management: Contemporary Issues: an overview Rationale and aims of the book Structure of the book Readership Pedagogic features Chapter 1 Strategy and human resource management Learning outcomes Chapter summary Teaching and learning suggestions: Comment Student preparation In the classroom Follow-up work Answers to self check and reflect questions References Chapter 2 Strategic human resource management: a vital piece in the jigsaw of organisational success? Learning outcomes Chapter summary Teaching and learning suggestions: Comment Student preparation In the classroom Follow-up work Answers to self check and reflect questions Chapter 3 SHRM in a changing and shrinking world: internationalisation of business and the role of SHRM. Learning outcomes Chapter summary Teaching and learning suggestions: Comment Student preparation In the classroom
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9 9 10 10 11 12 12 14 14 14 14 15 15 15 15 16 16 18 19 19 19 19 20 20 20 21 21 21 23 23 23 23 24 24 24 24
Follow-up work Answers to self check and reflect questions Chapter 4 Evaluating SHRM: why bother and does it really happen in practice? Learning outcomes Chapter summary Teaching and learning suggestions: Comment Student preparation In the classroom Follow-up work Answers to self check and reflect questions Answers to part 1 case study Questions: Strategic human resource management at Halcrow Group Limited Chapter 5 The role of organisational structure in SHRM: the basis for effectiveness? Learning outcomes Chapter summary Teaching and learning suggestions: Comment Student preparation In the classroom Follow-up work Answers to self check and reflect questions Answers to case study questions: DaimlersChrysler AG Chapter 6 Relationships between culture and strategic human resource management: do values have consequences Learning outcomes Chapter summary Teaching and learning suggestions: Comment Student preparation In the classroom Follow-up work Answers to self check and reflect questions Answers to case study questions: Corporate culture and Group values at DICOM Group plc
25 25 27 27 27 27 28 28 28 29 30 30 33 38 38 38 38 39 39 40 40 41 41 42 49 49 49 49 50 50 51 51 52 53 56
Chapter 7 Strategic human resource planning: the weakest link? Learning outcomes Chapter summary Teaching and learning suggestions: Comment Student preparation In the classroom Follow-up work Answers to self check and reflect questions Answers to case study questions: Human resource planning in mergers and acquisitions References Chapter 8 Strategic recruitment and selection: much ado about nothing? Learning outcomes Chapter summary Teaching and learning suggestions: Comment Student preparation In the classroom Follow-up work Answers to self check and reflect questions Answers to case study questions: Recruitment and Selection at Southco Europe Ltd References Chapter 9 Performance management: so much more than annual appraisal Learning outcomes Chapter summary Teaching and learning suggestions: Comment Student preparation In the classroom Follow-up work Answers to self check and reflect questions Answers to case study questions: Performance management at Tyco References Chapter 10 Strategic human resource development: pot of gold or chasing rainbows? Learning outcomes
61 61 61 61 62 62 62 63 64 64 67 71 73 73 73 73 74 74 74 75 76 77 80 84 86 86 86 86 87 87 87 88 88 89 90 93 94 94 94
Chapter summary Teaching and learning suggestions: Comment Student preparation In the classroom Follow-up work Answers to self check and reflect questions Answers to case study questions: INA References Chapter 11 Strategic reward management: Cinderella is on her way to the ball Learning outcomes Chapter summary Teaching and learning suggestions: Comment Student preparation In the classroom Follow-up work Answers to self check and reflect questions Answers to case study questions: Developing a global reward strategy at Tibbett and Britten group Chapter 12 Managing the employment relationship: strategic rhetoric and operational reality Learning outcomes Chapter summary Teaching and learning suggestions: Comment Student preparation In the classroom Follow-up work Answers to self check and reflect questions Answers to case study questions: Strategic approaches to the employment relationship social partnership: the example of the Republic of Ireland Further Reading Chapter 13 Diversity management: concern for legislation or concern for strategy? Learning outcomes Chapter summary Teaching and learning suggestions: Comment
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94 95 95 95 96 97 97 101 105 106 106 106 106 107 107 107 108 108 109 110 113 113 113 113 114 114 114 115 116 116 117 129 130 130 130 130 131 131
Student preparation In the classroom Follow-up work Answers to self check and reflect questions Answers to case study questions: Making diversity an issue in leafy Elgarshire Chapter 14 Downsizing: proactive strategy or reactive workforce reduction? Learning outcomes Chapter summary Teaching and learning suggestions: Comment Student preparation In the classroom Follow-up work Answers to self check and reflect questions Answers to case study questions: The demise of MG Rover Cars?
131 132 133 133 138 140 140 140 140 141 141 141 142 143 143 145
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
Supporting resources
Visit www.pearsoned.co.uk/millmore to find valuable online resources Companion Website for students Answers to self-check and reflect questions For instructors Instructor's Manual containing: learning outcomes and summaries teaching and learning suggestions including comment, student preparation, in the classroom and follow-up work answers to self-check and reflect questions answers to case study questions references PowerPoint slides
Also: The Companion Website provides the following features: Search tool to help locate specific items of content E-mail results and profile tools to send results of quizzes to instructors Online help and support to assist with website usage and troubleshooting
For more information please contact your local Pearson Education sales representative or visit www.pearsoned.co.uk/millmore
INTRODUCTION
An overview of the Instructors Manual
This instructors manual has been designed to help the lecturer utilise the textbook Strategic Human Resource Management: Contemporary Issues as a teaching resource. This Introduction incorporates a brief overview of the text in order to set the context for its utilisation as a teaching resource. Its substantive content, however, comprises a chapter by chapter commentary with supporting ideas and materials for teaching strategic human resource management (SHRM) to undergraduate and postgraduate students of Management and HRM. Each chapter commentary includes the following features: Learning outcomes Chapter summary Teaching and learning suggestions: Comment Student preparation In the classroom Follow-up work
In addition, answers are provided to all case study questions and PowerPoint slides are included for all chapters. There is one integrated case covering the Part One chapters (Chapters 14). Answers to the questions for this case appear in this manual immediately after the final chapter of Part One, i.e. Chapter 4. Each Part Two chapter (Chapters 514) has its own specific case study positioned at the end of each chapter. Answers to these chapter case study questions appear in this manual immediately after answers to self check and reflect questions for each chapter. There is substantial standardisation in the Teaching and learning suggestions for each chapter with respect to the Student preparation and In the classroom sections. Although tailored to reflect the particular content of specific chapters these sections inevitably reflect our own teaching style preferences. The style that we most commonly favour involves the student undertaking preparatory reading and related activities with the teaching session using these activities to build on a base level of knowledge. A key element of the teaching session when adopting this approach, however, is to provide sufficient time for students to raise any queries they may have on the reading. Many of the pedagogic features of this book such as self check and reflect questions, follow-up study suggestions and case studies can be used as the basis for preparatory work and/or in-class activities. Other ideas for preparatory and in-class activities can be found in this manual. Our ideas are not meant to be prescriptive but simply represent suggestions that can be customised or substituted as required.
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
through its written style and supporting pedagogic features can be readily understood by its potential readership; conveys the central importance of vertical and horizontal strategic alignment in a way that enables the reader to appreciate the holistic nature of the concept and how it can be applied in practice to recognised specific areas of HR activity; and grounds the reader in the practicalities of organisational life in a way that enables them to distinguish between SHRM rhetoric and reality.
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
Readership
This book can be used with a range of students from those with little experience of the world of work to more experienced managers. The principal target audience for this book comprises undergraduates, postgraduates and students on professional programmes who are studying the management of human resources either as their subject specialism or as an integral component of more general business and management programmes. It works well if students have some work experience or already have some knowledge of organisational behaviour. This is nearly always the case with our likely readership. Part-time undergraduate, postgraduate and professional students are nearly always already in employment, or between jobs, and can therefore relate the content of this text to a range of work experiences. Full-time postgraduate and professional students tend to enter such programmes following a period of work experience or, like full-time undergraduate students, have undertaken a work placement and/or part-time jobs prior to or during their studies.
Pedagogic features
The over-riding purpose of Strategic Human Resource Management: Contemporary Issues is to help undergraduate and postgraduate students and students on professional courses get to grips with how the discipline of human resource management can be developed as a powerful adjunct to strategic management. The concern throughout is to help students understand how the management of human resources can be developed strategically, at both the conceptual and practical level, to support the formulation and achievement of an organisations strategic objectives. Each chapter deals with a dimension of strategic human resource management and discusses relevant theory and practical applications using as little jargon as possible. Tables and figures are used to aid this discussion and as a vehicle for enhancing clarity of communication. A comprehensive glossary provides brief definitions and/or explanations of key terms and an index is available to help students find their way around the book and its underpinning literature sources. Learning outcomes at the beginning of each chapter provide the reader with clear statements of chapter objectives and benchmarks against which the reader can assess their subject knowledge and comprehension. Mapping diagrams are incorporated into chapter introductions to provide a visual summary of the chapter content. These mark out the subject territory by identifying key areas of discussion and showing how these are structured in the chapter. Key concepts boxes are used to help explore conceptual development. These take a variety of forms including, for example, providing subject definitions, identifying key themes, presenting theoretical frameworks and summarising research findings. In practice boxes are used to illustrate how conceptual understanding can be or is being used to inform organisational practice. These too take a variety of forms and include, for example, case studies reported in the literature, cases drawn from the direct work experiences of the author team, examples sourced from the internet and other news media and, occasionally, hypothetical constructions of practical applications. Self check and reflect questions enable students to check whether they have understood dimensions of the chapter content. These can all be answered without recourse to other
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
(external) resources and are designed to encourage the student to interact with the chapter readings. They can also be used either as preparatory activities for subsequent class-based teaching sessions or tackled during the teaching session itself. Answers to all self check and reflect questions are provided as part of this instructors manual. A summary of key points at the end of each chapter can be used by students before and after reading the chapter to structure their thinking and to ensure that they have digested the main points respectively. Case studies drawn from a variety of sources are used at the End of Part One and Chapters 514 to facilitate student comprehension and transfer of learning. Case study questions require students to apply their knowledge and understanding of chapter content to a variety of organisational scenarios covering many different types of organisation. As with self check and reflect questions, the cases and accompanying questions can also be used either as preparatory activities for subsequent class-based, teaching sessions or tackled during the teaching session itself. Answers to all case study questions are provided as part of this instructors manual.
CHAPTER 1
Summary
Strategic management focuses on the scope and direction of an organisation, and often involves dealing with uncertainty and complexity. Strategic human resource management is concerned with the relationship between an organisations strategic management and the management of its human resources. The exact nature of this relationship in practice, however, is likely to be difficult to analyse and evaluate, not least because strategic management is a problematic area. Four approaches to strategy making were described and evaluated: the classical approach, evolutionary perspectives, processual approach and systemic perspectives. The implications of each of these approaches for human resource management were subsequently analysed. Strategic integration was used to explore possible links between approaches to strategy and human resource management. Integration has been recognised as a necessary condition for HRM to be considered strategic although it is not sufficient to treat it as the only link to define a strategic approach to HRM. Six possible strands of strategic integration were identified. Resource-based theory was analysed because of its recognition of an organisations internal resources as a potential source of competitive advantage. Forms of organisational capability were analysed and their relationship to human resource management were evaluated.
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
Student preparation
Prior to the class, we believe it is important that students read and make their own notes from the chapter. More specifically we ask students to note those topics that they found particularly complex, or interesting (or both) in order that may form the basis of an initial classroom discussion. The notion of strategy is particularly abstract for students with limited or no work experience. It is also challenging for those students who are in a junior position in their own organisation. In view of this we think it is an important part of student preparation that they think about the issue of strategy in relation to an organisation where they work or one known to them. Indeed, the latter may be easier since they may feel closer to the strategy of a well known multi-national of which they are a customer (e.g. Apple or Microsoft) than to the organisation in which they are an employee. In this regard it is important to emphasise to students that organisation may just as easily mean the department where they work as the corporation. Completion of the self-check questions for this chapter is particularly useful prior to the class as they may form the basis of group work. They form an immediate link with chapter content and enable the tutor to develop many teaching points from the resultant discussions. It may be very useful to ask students to illustrate the points they make in response to the self-check questions with ideas from the chapters practice and concept boxes.
In the classroom
The danger with running a class on this topic is that it runs the risk of being too abstract. We have found that focus on a case study is an important part of a strategy class for HRM students in particular, because it brings to life the topic and allows the tutor to make a series of valuable teaching points from the chapter. For example, Practice Box 1.5 The impact of environmental concern on motor vehicle manufacturers raises the important issue of the constraints upon the activities of organisations that forms part of the host of considerations that need to be taken into account in the strategy-making process. A case based on this, or a similar, issue may form a useful platform for analysis of strategy.
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
Follow-up work
The first two of the follow-up study suggestions at the end of the chapter: 1. Undertake a search of practitioner publications (related to HR and management), identify a number of short articles about case study organisations that often feature in these and select, say, two or three of them to identify references to or evidence of any of the strategic management themes discussed in this chapter and their relationships to the management of human resources. 2. Seek out the possibility of talking to a senior manager in an organisation to discuss its approach to strategy making and the relationship between strategy and HRM in this case. are specifically designed to ensure the practical relevance of HRM is not lost in the consideration of more abstract strategic issues.
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
1.2 What is the scope for the strategic integration of HRM in relation to each of the four approaches to strategy making discussed in this section? Using the behavioural perspective or matching model to explain the link between the classical approach to strategy and HRM suggests that strategic integration may be a feature of this approach, where HRM is not only informed by organisational strategy but is also capable of shaping it, at least to some extent. The processes involved in strategy formation in practice, however, means that a much more complex and messy picture emerges, which may mean that HRM is not strategically integrated and can only adopt a reactive posture. The reality is therefore likely to be highly variable and depends on a range of different factors. Evolutionary perspectives suggest an approach to strategy making that is highly deterministic, so that while HRM would need to be closely matched to an organisations strategy, its approach would be reactive rather than proactive. The processual approach to strategy making is the one that offers the clearest scope for HRM to be strategically linked to organisational strategy. Emergent strategy would, according to this theory, require a proactive HRM approach, which suggests that HRM would capable of shaping as well as responding to organisational strategy. However, the section on the resource-based view of the organisation later in the chapter includes some discussion that evaluates and challenges this assertion. The systemic approach to strategy making recognises that the scope for the strategic integration of HRM with organisational strategy is much less clear: this perspective points to the fact that in many situations HRM will not be conceptualised in a way that is intended to lead to strategic integration. 1.3 Think of an organisational situation with which you are familiar. This may be one in which you currently employed or one that you have worked for previously, or another organisation known to you. Use the model of the six strands of strategic integration to evaluate, as far as you are able, the extent of the integration of HRM and human resources within the organisation. Whilst this question is designed to check your understanding of the elements of this model, it requires you to apply this to an organisation known to you and so your answer will be based on your own evaluation. However, you may have been able to include consideration of the following aspects: The nature of the relationship between organisational strategy and HRM. This may have led to some interesting reflections about the nature of strategy in the organisation as well. The nature of horizontal integration between HRM policy areas and also between HRM and other functional areas in the organisation. Whether there is a Human Resource Director and at what level or levels within the organisation. The nature of line management integration with HR policies. The integration of employees with the goals of the organisation. Your judgement about the capacity for the organisation to respond to change as the future unfolds related to the capabilities of its human resource base.
1.4 How would you relate the resource-based view to the dichotomy between the planning school and the learning school that we discussed earlier? In simple terms, the planning school emphasises a deliberate approach to strategy making, which implies a high level of control over the processes involved in relation to both strategy formulation and implementation. The learning school by contrast places emphasis on strategy as an emergent process, embedded in the knowledge and skills of those who manage and work in the operating divisions, business units or departments of organisations. Resource-based
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
theorists also stress the importance of learning and knowledge as we saw in the discussion in the final part of this chapter. However, this is not to say that organisations will not seek to develop organisational resources and capabilities deliberately, including core capabilities. Authors such as Prahalad and Hamel (1990) discuss examples of large corporations who have intentionally developed core competencies to achieve competitive advantages over others in their respective industries. In contrast, Muellers evolutionary approach suggests that while organisations may express their strategic intent, their level of control over the subsequent development of organisational capabilities will not be as deliberate and controlled as these other examples seem to imply. These differences of view appear to suggest that there may be a range of views about intentionality and deliberateness amongst resource-based theorists as there is between those who subscribe to the planning school and those who subscribe to the learning school. If there are different positions here these may be seen as having different implications for the role of HRM.
References
Boxall, P.F. (1996) The strategic HRM debate and the resource-based view of the firm, Human Resource Management Journal, 6(3), 5975. Johnson, G. and Scholes, K. (2002). Exploring Corporate Strategy: Text and Cases (6th edn). Harlow: FT Prentice Hall.
CHAPTER 2
Strategic human resource management: a vital piece in the jigsaw of organisational success?
Learning outcomes
By the end of this chapter you should be able to: identify the major principles, which underpin the concept of strategic human resource management (SHRM); analyse the main theoretical approaches to SHRM; explain the history and origins of SHRM; evaluate the studies which aim to establish the link between SHRM and organisational performance.
Summary
The main principles of SHRM include: a stress on the integration of personnel policies both one with another and with business planning more generally; the locus of responsibility for personnel management no longer resides with specialist managers but is now assumed by senior line management. the focus shifts from managementtrade union relations to managementemployee relations, from collectivism to individualism. there is stress on commitment and the exercise of initiative, with managers now donning the role of enabler, empowerer and facilitator.
The principal theoretical approaches to SHRM are termed: universalist, matching models (closed) and matching models (open). The universalist approach assumes that there are best HR practices that promise success irrespective of organisational circumstances. The matching models (closed) approach specifies HR policies and practices that are relevant to specific organisational situations, whereas the matching models (open) approach defines the employee behaviours necessitated by the organisations overall strategy. These behaviours are to be delivered through the HR strategy. All of the theoretical approaches to SHRM have their problems. Those concerned with the universalist approach are: defining the best practices to apply; the low regard for organisational context; and the absence of employee input assumed. The problems with the matching models (closed) approach are: the ambiguity that attends the defining of strategy; the essentially managerialist stance assumed; and problems concerned with implementation.
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Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
Problems attending the matching models (open) are the models rather idealised nature and, like the other models, their prescriptive tone. The growth of interest in SHRM was due to a number of factors including: the crisis of under-performance in American industry; the rise of individualism; a decline in collectivism; the rise of knowledge workers with differing work expectations; and a search for more status by personnel specialists. In an attempt to establish the link between SHRM and organisational performance there have been numerous studies conducted since the mid-1990s in the USA and UK. In general these have been very positive about the relationship between SHRM and organisational performance although most have not offered an explanation as to why certain HR practices are may lead to enhanced organisational performance.
Student preparation
As with other chapters, prior to the class, we believe it is important that students read and make their own notes from the chapter. It will be of importance for students to think and make notes upon some of the major themes from the chapter in relation to organisation practice in which they may have been involved.. Some of themes may be: high employee commitment to the goals and practices of the organisation; the securing and training of high quality staff and internal practices to achieve high quality products; and flexibility in terms of organisational structure, employee functions and job content to enable the organisation to respond quickly to change. In similar vein to Chapter 1 it is an important part of student preparation that they think about the issue of SHRM in relation to an organisation where they work or one known to them. It would be extremely useful as class preparation for students to talk to an HR manager about one of the two key themes, e.g. to what extent is the HR strategy in y(our) organisation integrated.
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
Prior to the class, the completion of the self-check questions for this chapter is particularly useful as they may form the basis of group work in the class. The questions create an immediate link with chapter content and enable the tutor to develop many teaching points from the resultant discussions. It may be very useful to ask students to illustrate the points they make in response to the self-check questions with ideas from the chapters practice and concept boxes.
In the classroom
After an initial class discussion based on the student preparation we have found that the topic of SHRM is best illustrated by case study work. For example, one of the central concepts of the chapter lends itself very well to this. This is the so-called open approach to SHRM, which argues the existence of a clear and mutually supportive relationship between organisational strategy and HR strategy. As the chapter explains, using the open approach, the test of the degree to which the HR strategy is truly strategic is a test of its appropriateness to the organisational strategy. The variables in the model: the operating environment (both external and internal) in which the organisation finds itself; the organisational strategy, which requires specific desired employee behaviours to be adopted if it is to be achieved; and the three 'key levers' (structural, cultural and personnel strategies) through which the HR strategy is pursued, may all be identified or suggested, in relation to a case study. This may be the case related to the chapter or another of the tutors choice. We have found the model works really well and illuminates many of the ideas of integration in an interesting way.
Follow-up work
To some extent the follow-up work will be dictated by the content of the classroom work. If the case study, for example, was based on the open approach it may be useful to ask students to work with the ideas in their own organisation or read more about organisations who have pursued HRM and estimate the extent to which the approach adopted by the organisation has been open. Indeed, one of the suggestions for follow-up work in the chapter: search the specialist practitioner HR literature for case studies that illustrate the way in which clear and cogent organisational philosophies inform HR strategy
may be a useful precursor to such an exercise. What this task does is to enable the student to integrate ideas from Chapters 1 and 2.
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
2.2. In what ways do you think the presence of employee voice may be helpful to the implementation of universalist HR initiatives? The central argument behind the concept of employee involvement in the design and implementation of HR initiatives is that better outcomes will result if employees are involved. This is for two reasons. First, at the rational level it seems sensible that if employees understand the reasons for and components of a particular initiative, then they are more likely to be effective participants in the process of implementation. Performance appraisal is a good example of this. It is not unusual for managers to introduce performance appraisal schemes and incorporate training for managers but not employees. The result is often that employees do not understand the part they play in the process, or, more importantly, really understand the reasons why the organisation is introducing appraisal. The second reason is emotional and concerns the notion of ownership. We are all more likely to engage more enthusiastically in the initiative if we have been part of its conception and design rather that it being imposed upon us. 2.3. How influential would you say that the factors noted in Figure 2.4 were in creating the drive to introduce SHRM in major organisations? The simple answer to this question, of course, is that it is very difficult to say. On the face of it does seem reasonable to assume that all of these factors were influential. Perhaps some (e.g. the crisis in American industry) were more important than others. But we can safely say that these factors were associated with the rise in interest in SHRM. It would too much to say that they caused the growth of SHRM. When considering such questions as this it raises the extreme difficulty of linking changes in a causeeffect manner. Considering the complexity of this problem is a useful introduction to the section, which concluded Chapter 2, that is, on the HRorganisational performance link. 2.4. What practical contribution do you think the studies linking HR and organisational performance listed in this section have made to the practice of SHRM? Much depends upon the extent to which HR managers take notice of what the studies have concluded. Some may argue that there is little point in academics producing studies such as this if nobody actually in a position to change management policies reads them. We do not take the bleak view that the gap between academia and practice is so wide that the studies will not be of practical benefit. Certainly in the United Kingdom the Chartered Institute of Personnel and Development have done much to commission and publicise the results of the research at conferences and in pamphlets and in-house journals. In many respects the studies tend to confirm a lot of what we might expect. It seems intuitively correct to say that carefully designed and skilfully implemented HR practices will have an effect upon the bottom-line. But the studies we have outlined go much further than confirming this. They identify the key practices and the combination where these practices may be introduced. They also point to the difference that factors such as the importance of front-line managers may make. Above all, they note some useful measures that may be used to assess HR effectiveness. If some plausible link can be shown, this will contribute greatly to the influence that HR managers can have at the highest levels in organisations.
CHAPTER 3
SHRM in a changing and shrinking world: internationalisation of business and the role of SHRM.
Learning outcomes
By the end of this chapter you should be able to: identify some of the key background issues relevant to the internationalisation of business; analyse the significance in the growth of multi-national companies; define strategic international human resource management; identify the key components of strategic international human resource management; explain the significance of the capability perspective on strategic international human resource management; evaluate the importance of the cultural perspective on strategic international human resource management.
Summary
MNCs pursue international business for a variety of reasons in a variety of ways. The importance of MNCs is not new but their growth in recent years has been rapid and significant. SIHRM may be better understood by the examination of a model in which classic MNC components and factors relevant to the MNCs external and internal operating environments influence the SIHRM issues, functions and policies and practices, which in turn affect the concerns and goals of the MNC. The development of key competences by MNCs is important at three levels: organisational, line management and HR professionals. National cultural differences are an important aspect of SIHRM and have been measured by a number of authors allowing these differences to be categorised. Strategies for managing cultural differences include: ignoring them, minimising them and utilising them.
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
The effects of national cultural differences on HR practices can be quite profound with the consequence that the transformability of many of these practices is suspect.
Student preparation
Prior to the class, we believe it is essential that students read and make notes from the chapter. We use a variety of vehicles to bridge student preparation and class-based activities to enhance their understanding of the chapter content and its overall relationship to managing human resources strategically. As standard, we would ask students to make a note of any queries arising from their reading and to come prepared to raise them during the teaching session. Sometimes this may be formalised by asking students to write down (as questions) the three issues addressed by the chapter where they would like further clarification and guidance. Students may also be asked to do one or more of the following: address pre-set questions and write their answers briefly in note format; complete the self check and reflect questions and come to the session prepared to share and discuss their responses; and familiarise themselves with the chapter case study (or an alternative case supplied in advance) and come to the session prepared to tackle the case questions.
Our outline answers to self check and reflect questions follow in the next substantive section of this chapter guide.
In the classroom
Clearly the approach adopted to student preparation can be followed through into the classroom. A starting point that we find useful is to discuss the issues arising from the students preparatory reading. This avoids providing lecture input that simply repeats what students have already grasped, reinforces the value of reading as an essential prerequisite for class-based discussion and provides a platform from which further class-based activities can be launched.
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
However, when adopting this approach, we find it useful, once student queries have been exhausted, to provide a snappy summary of key issues. Where preparing answers to self check and reflect questions, has been set as part of preparation for the teaching session, at least two alternatives present themselves. First, students can be asked to contribute individual responses that are then subjected to plenary discussion. This is our preferred approach because it makes students more accountable for their personal learning and reserves any group work for case study analysis. Second, students can be formed into groups to share their individual answers and draw conclusions from their discussions. However, if preparing answers to self check and reflect questions was not part of preparatory work but consideration of the questions is to feature as part of the taught session, we would favour the group approach as a more stimulating approach. In all cases student responses can be considered against our suggested answers, which themselves can be usefully critiqued. Greater topicality can be achieved by capturing the big business news stories of the week and discussing any SHRM issues that are likely to arise.
Follow-up work
The pedagogic features adopted throughout this book are intended to offer up a number of alternatives for follow-up work whilst at the same time leaving the lecturer free to add or substitute their own ideas. If they have not already been used as part of class activities any prior preparation of answers to the self check and reflect questions will serve as a useful reinforcement to chapter content. There are also a number of follow-up study suggestions after the chapter summary that can be undertaken by students either individually or in groups and an extensive list of references provides many opportunities for further reading.
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
3.2. As a senior HR manager in a major MNC what arguments would you anticipate using to defend your company against the anti- globalisation lobbys position that globalisation was a disadvantageous to your companys employees? Inevitably your opponents would cite the examples of MNCs, which exploit child labour and vulnerable adult employees by paying poor wages and compelling them to work long hours. But even where MNCs locate production facilities in developing countries you could argue that terms and conditions of employment are often much better than in local companies. You could argue that, for example, in south-east Asia the migration of rural workers to the cities (similar to the British industrial revolution of the 18th and 19th centuries) is evidence that the opportunities provided in a developing economy are more attractive than remaining among the rural poor. In addition, you could argue that the opportunity to develop international careers is an extremely attractive one for many managerial, professional and technical employees. 3.3. In what other ways may the expatriate managers at DecoStore have established tacit knowledge? HCN employees will learn tacit knowledge through the ways in which expatriate managers interpret policies and procedures. All managers in all organisations follow some procedures very closely and pay scant attention to others. This teaches employees a good deal about what the organisation sees as important and what it does not. Of course, this has the potential to lead to confusion among employees. But the ways in which this confusion is accommodated in the minds of employees is part of the learning process, which helps them to sort out what is important and what is not. Tacit knowledge will also be imparted to employees through the patterns of power and influence, which exist among expatriate managers. Which of them is the most powerful? From where does that power emanate? Who wins the battles for scarce resources? Who gets his (usually) or her own way? The answers to these, and other similar, questions will assist the employees to understand power patterns and gain important tacit knowledge about how the organisation works at an informal level. 3.4. Which of the line manager competences do you think are particularly important for HR professionals? Of course, all of them are important. Increasingly, international business knowledge and the ability to take the role of innovator by seeing old problems in new ways and trying new methods of solving them are important as HR professionals operate strategically rather than pursue a narrower specialist focus. Indeed, the former perspective has been the focus of this chapter. However, the final section of this chapter, on the cultural perspective to SHRM, emphasises the importance of both cultural adaptability and perspective taking (i.e. taking into account the views of others). Perhaps the key role of the HR professional is to ensure that senior and line management develop and practise these competences. 3.5. Of what value is this general grouping of national cultures to managers in their SIHRM activities? You may argue that all they do is confirm the general sort of assumptions that managers have about different cultures. If so, this is in itself is of some value. But more importantly what such research does is to provide managers with valuable insights, which they can use in SHRM decision making. These decisions may be concerned with issues of structure (e.g. the extent to which the organisation may decentralise its foreign operations with local HR managers and staff) or HR practices (e.g. whether to impose a standardised reward structure across different countries). Such cultural information may not determine decisions but they have the virtue of concentrating managers minds upon the consequences of some of their decisions.
CHAPTER 4
Summary
Evaluation has the potential to make an important contribution in relation to the implementation of specific HR initiatives but also to wider SHRM. Evaluation takes place continuously on an informal and personal basis and will affect peoples choices and behaviours at work. There are a number of valid reasons relating to organisational culture, unchallenged assumptions and previous experience that explain why planned formal evaluation of strategic HR has rarely taken place. A planned systematic process of evaluation should be included at the beginning of the implementation process for all HR interventions. Within evaluation of SHRM a distinction can be made between typical evaluations and action research. While both use the same strategies and data collection techniques, action research has explicit foci on involvement of participants and subsequent action. Both can make use of both secondary and primary data.
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Prior to evaluating SHRM it is important that a clear understanding of the precise purpose and objectives of the evaluation is reached. This needs to reflect the context and purpose of the evaluation and be agreed between those undertaking the evaluation and the sponsor. Evaluation of SHRM involves multiple stakeholders and cannot be divorced from issues of power, politics and value judgement. Feedback typically involves cascading a summary of findings from the top-down the organisation. Alternatively the findings can be shared first with those who generated the data. This can help promote ownership of subsequent actions. Issues that cannot be dealt with may be fed up from the bottom to high levels of the organisation.
Student preparation
Prior to the class, we believe it is essential that students read and make notes from the chapter. We have found that producing mind maps of the chapter content is a useful approach to note taking and encourages students to reflect on the internal integration of the subject content of the chapter. We use a variety of vehicles to bridge student preparation and class-based activities to enhance their understanding of the chapter content and its overall relationship to managing human resources strategically. As standard, we would ask students to make a note of any queries arising from their reading and to come to the teaching session prepared to raise them. Sometimes this may be formalised by asking students to write down (as questions) the three issues addressed by the chapter where they would like further clarification and guidance.
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Students may also be asked to do one or more of the following: address pre-set questions and write their answers briefly in note format; complete the self check and reflect questions and come to the session prepared to share and discuss their responses; and familiarise themselves with the chapter case study (or an alternative case supplied in advance) and come to the session prepared to tackle the case questions.
Our outline answers to self check and reflect questions follow in the next substantive section of this chapter guide. Pre-set questions that we have found useful for structuring student reading, preparatory activities and classroom discussion for the topic of evaluating strategic HRM include: 1. How would you justify the need for evaluation of a new HR initiative to the head of Human Resources? 2. Why do organisations fail to evaluate HR initiatives? 3. What are the purposes of evaluation? 4. Outline the range of evaluation strategies that could be chosen to evaluate an HR initiative?
In the classroom
Clearly the approach adopted to student preparation can be followed through into the classroom. A starting point that we find useful is to surface and discuss the issues arising from students preparatory reading. This avoids providing lecture input that simply repeats what students have already grasped, reinforces the value of reading as an essential prerequisite for class-based discussion and provides a platform from which further class-based activities can be launched. However, when adopting this approach, we find it useful, once student queries have been exhausted, to provide a summary of key issues. Where preparing answers to self check and reflect questions has been set as part of preparation for the taught session, at least two alternatives present themselves. First, students can be asked to contribute individual responses that are then subjected to plenary discussion. This is our preferred approach because it makes students more accountable for their personal learning and reserves any group work for case study analysis. Second, students can be formed into groups to share their individual answers and draw conclusions from their discussions. However, if preparing answers to self check and reflect questions was not part of preparatory work but consideration of the questions is to feature as part of the teaching session, we would favour the group approach as a more stimulating approach. In all cases student responses can be considered against our suggested answers, which themselves can be usefully critiqued. Where case study work has featured as part of preparatory activities, similar approaches to those suggested for self check and reflect questions can be adopted. Our approach here would be to start with a more general exploration of the integrative case at the end of Part One: Strategic Human Resource Management at Halcrow and use this to focus upon evaluation issues, in particular those highlighted by Questions 6 and 7. However, in doing this it is important to recognise the length of this case and ensure that students have read it prior to the class.
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
Follow-up work
The pedagogic features adopted throughout this book are intended to offer up a number of alternatives for follow-up work while at the same time leaving the lecturer free to add or substitute their own ideas. If they have not already been used as part of class activities, any prior preparation of answers to the self check and reflect questions and/or the questions suggested for student preparation and/or the integrative case Strategic Human Resource Management at Halcrow will serve as a useful reinforcement to chapter content. Our outline answers to the self check and reflect questions follow in the next substantive section of this chapter guide. Answers to the integrated Part One case study questions are included after this chapter. There are also a number of follow-up study suggestions after the chapter summary that can be undertaken by students either individually or in groups and an extensive list of references provides many opportunities for directed further reading.
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to provide an opportunity for analysis and reflection before making adjustments to HR interventions; to improve management decision making; to gain acceptance and commitment to SHRM initiatives; to help create new insights and shared understanding; to overcome what may be subjective evaluations by enabling assumptions held to be tested and shared.
4.3 Before you read on based on your own experience make a list of reasons why you might be reluctant to undertake an evaluation of an HR process. As you read this section compare the reasons you have listed with those we identify. To what extent are they the same or similar to those you have identified? The list of reasons that you are likely to have compiled as your own reasons for being reluctant to undertake an evaluation are: difficulties of undertaking evaluation HR is widely considered to be virtually unmeasurable, there is no consensus regarding universally relevant HR indicators, organisations do not possess the necessary skills to produce a competent or credible evaluation;
perceived lack of a need to evaluate people know the results will be positive, gut feelings are often perceived to be sufficient, managers often prefer to rely on their informal information channels, managers tend to focus on implementation rather than evaluation;
difficulties associated with dealing with negative outcomes previous evaluations have been divisive and negative, a blame culture exists within the organisation, a risk of being unpopular with peers.
4.4 Outline the relative advantages of action research and more typical approaches to evaluation from the perspective of the HR manager sponsoring an evaluation. Your answer to this question is unlikely to be in the same format as ours. For both typical evaluation and action research, we would hope your answer makes reference to the need to gather data in a rational and systematic manner to find out the extent to which the HR intervention(s) has achieved its objectives. In addition we would have expected you to include at least some of the following advantages for typical evaluation and action research, although we recognise our list is not exhaustive:
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A typical evaluation may be advantageous to an HR manager sponsoring an evaluation when: an evaluation was not considered to be a necessary part of the SHRM intervention; the HR manager is uncertain whether s/he will wish to act upon the findings of the evaluation; the HR manager requires the evaluation to be undertaken by people who are obviously separate from the organisation so that the findings are more likely to be seen as objective rather than biased by the sponsors beliefs; there is a desire to maintain close control of the evaluation process; there is a desire to maintain close control of the findings and the extent to which these are fed back to their employees.
In contrast action research may be advantageous to an HR manager sponsoring an evaluation when: the evaluation process is seen as an integral part of facilitating strategic change with regard to HRM; there is a wish that employees work alongside those undertaking the evaluation throughout the process; there is a desire to engender employees ownership of the findings and any subsequent changes; there is a desire to develop evaluation expertise within the organisation; the HR manager intends that the knowledge gained from the evaluation is transferred to other aspects of SHRM within the organisation; there is a desire to adopt a process consultation approach.
4.5 Outline the advantages that are likely to accrue to an organisation using a range of techniques, rather than just one, to obtain data to evaluate SHRM. One technique on its own is unlikely to provide sufficient data to fully evaluate SHRM. While secondary data can be used to benchmark the evaluation against an industry or perhaps national context there is often still a need to collect a range of data. By selecting appropriate techniques, the data collected can be matched to the objectives of the evaluation more closely. Different techniques are better at collecting different types of data. For example, to gather information from a large number of people and answer what? questions questionnaires are an efficient method. However, to explore the same situation in more depth and gather information to answer why? or how? questions, techniques such as unstructured interviews are likely to be more appropriate as the interviewee can talk freely about events. Using different data sources also enables the finding to be triangulated. If all the findings suggest the same outcome then you can be more certain that the data have captured the reality of the situation rather than your findings being spurious.
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wanted business partners whose behaviours were aligned to their own needs. In addition the group was also seen as rather grey. The challenge for Halcrow is to retain the reputation for technical excellence and reliability while becoming increasingly commercially aware, flexible and, above all, more responsive to customer needs. It is a challenge, which the SHRM strategy, through the change programme, is designed to meet. Overall, the key change issue that is driving SHRM is the need for Halcrow to be more responsive in the light of a more competitive industry. Therefore, the principal aim of the new HR initiatives is to generate more competitive employee behaviours which, in turn, is envisaged will generate better all round employee and business performance. 3. What obstacles do you think that Halcrow management will face as it works to change the Groups culture from one dominated by technical excellence to one that also embraces commercial awareness? Obstacles related to changing the culture highlighted in the case include: The knowledge and understanding (and qualifications) of the workforce need to be developed to ensure that employees have the requisite commercial skills. At present approximately 80% of Halcrows employees are classified by the group as professional and technical (P and T) staff who have a minimum of an undergraduate degree in engineering or a related subject and are also members of a relevant professional institution. The focus of employees is on a job well done. As noted in the case, the group is full of people who are professional engineers and who take pride in a job well done. In essence, technical excellence takes precedence over commercial success. Although Halcrow needs to retain its reputation for technical excellence and reliability, the organisations employees must become increasingly commercially aware about the groups profit performance, flexible and, above all, they need to be more responsive to customer needs in the light of a more competitive industry. This is all occurring in an environment in which Halcrows customers are taking technical excellence for granted when making decisions about which consultancy group to employ. In view of Halcrows reputation for technical excellence this is also an obstacle.
4. What measures might Halcrow take to increase its retention of young professional graduates? Based on the available data, labour turnover amongst young professional graduates is clearly perceived as a critical problem within Halcrow with the potential to frustrate the achievement of its strategic business plans. The sustainability of their commitment to continued dynamic growth and quest for superior business performance as a route to competitive advantage are being jeopardised by the high levels of labour turnover being experienced amongst Halcrows cadre of graduate engineers and, more generally, across P and T staff. This problem of labour turnover assumes greater significance within the prevailing organisational context, characterised by: a shortage of high quality consultants throughout the construction and engineering sectors; fierce competition for such labour; progressive decline in the number of students studying relevant degree courses; and increasing client expectations that projects require a stable staffing base to support their delivery. Despite the frequent reference to the problem there is little hard data available in the case on the extent of labour turnover or its causes. Further, apart from benchmarking within their business sectors, there is no evidence of any broader external comparisons that might shed more light on the problem. Therefore, a useful starting point for increasing the retention of young professional graduates is the use of thorough evaluation to address these gaps. However, and in fairness, steps have already been taken in this direction. Employee survey results have
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highlighted feedback, recognition and employee involvement and engagement as being particularly problematic areas requiring attention. There is also reference to problems concerning the managerial environment, the leadership and management skills base, organisational culture, the attractiveness of the financial sector as an alternative career pathway, increasing concerns over staff development and the lack of succession planning together with a clear acknowledgement within the company that these issues require attention. The cursory analysis above at least provides pointers towards future action that can be taken to improve the retention rate of young professional graduates at Halcrow. However, this has to be set in the context of an increasingly articulated specification of the HR base required by Halcrow to achieve its organisational objectives. This embraces required values, codes of behaviour and core competencies that underpin the HR strategy designed to improve the organisations human capital base. A key consideration is how these HR requirements are being translated into HR practice and the impact that they may have on future retention. How, for example, is recruitment and selection being conducted to maximise the probability of bringing appropriate staff into the organisation and avoiding such HR requirements becoming mere platitudes, and to what extent does successfully matching employer HR demands and the employee attributes of recruits impact positively on their retention? Further exploration of how recruitment and selection could contribute to improving the retention of young professional graduates could be directly linked to Chapter 8. Apart from its role in contributing to the acquisition and maintenance of required employee behaviours, human resource development (HRD) represents another important potential area for improving retention. A failure to undertake effective induction and to audit training undertaken may in themselves exacerbate labour turnover and cause employees to question the organisations commitment to their development and succession planning. There is also, worryingly, a lack of detail with respect to HRD particularly with respect to knowledge management and creating a learning environment given the organisations emphasis on the need to develop an open culture within which learning transfer is facilitated. Attention to those features alone may help young professional graduates engage with and commit to the organisation. In addition greater emphasis may need to be placed on a grow your own philosophy. From the case details it is not clear what proportion of young professional graduates are recruited directly into the organisation and what proportion are grown through company training schemes. However, where labour shortages persist it may well be in the organisations interest to recruit school leavers into sponsored training programmes to meet their future professional and technical requirements. This may even be done in conjunction with other companies in the sector to increase the attractiveness of construction and engineering and to secure an increase in the future supply of such staff. This would seem to be particularly appropriate if directed at increasing the participation rate in the sector of previously underrepresented groups such as females. Lastly, another possibility emerges from the outputs of internal evaluation activities. Currently senior managers are working with Kaisen Consulting Ltd to create processes through which employees can become involved in developing actions to improve the managerial environment, which if successful is likely in itself to have a positive impact on retention. As part of this, why not actively involve the at risk employee group young professional graduates in evaluating the causes of labour turnover and developing action plans to improve retention? This would be entirely consistent with organisational aims to address issues around feedback, recognition, employee involvement, career development and succession planning. Such an approach could incorporate areas such as recruitment and selection and HRD but would almost undoubtedly surface other areas for consideration and action planning. Picking up on this last point, it is accepted that we have been highly selective in the areas we have brought to bear on the problem of increasing retention of Halcrows young professional graduates. It is recognised that the reader could range more widely over the content of the book to focus on how such areas as structure, culture, HR planning, performance management,
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reward management and diversity management can all be brought into the equation for developing measures for reducing turnover and increasing retention. 5. (a) What hurdles do you think that Halcrow will have to overcome in its attempt to ensure international employees adopt the Groups codes of behaviour? (b) Now visit the Halcrow Group website (http:/www.halcrow.com) and read Halcrows Statement of Business Principles, paying particular attention to the Code of Business Practice. Expand your answer in the light of what this tells you about the Groups views regarding business integrity, and what is expected of Halcrow staff. The case reports that the fact that there has been no HR function in any of the offices until recently suggests that HR has experienced a very low profile in Halcrows international operations. In fact, the function in all but the most basic administrative sense has been nonexistent. However, the HR director was keen for this to change. A catalyst for this drive is the groups recently published codes of behaviour. These stress the need for honesty, transparency and integrity in all Halcrows business operations. However, the lack of an international HR tradition in Halcrow means that the HR director clearly has a large task on hand establishing the relevance of the function and the mission that HR is attempting to deliver through the change strategy. That is not to say that the employees will openly doubt the relevance of the HR effort, but committing to it fully is a different matter. Delivering a strategy through adjusted employee behaviours is a way of thinking with which most will be totally unfamiliar. Of course, there are the inevitable cultural and communication problems, which may attempt to change employee behaviours. Look again at the list of employee behaviours that Halcrow are trying to encourage throughout the group: Treat everyone with respect, trust and dignity; Help each other share experiences and lessons learned; Be polite; Never undermine anyone directly or indirectly; Work together to resolve disagreements; Be professional and ethical at all times; Listen to others points of view; Be honest and open.
The wording of the list presents immediate potential misunderstandings. Does the concept of ethics have the same meaning in all cultures, is the notion of professionalism and what it means accepted consistently internationally. The Halcrow website (http://www.halcrow.com/html/documents/pdf/corporate_info/bus_princ.pdf) contains a very clear account of business principles with helpful statements of what is required from the staff and what the staff may expect from the company. 6. To what extent does the data collected by the employee survey allow the HR director to evaluate the extent to which HR initiatives are supporting the Groups strategic direction?
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The core content of the questionnaire has remained substantially the same since 2000 enabling benchmark comparisons over time. The 30 questions are used to ascertain employees views on 10 key areas that relate clearly to the groups strategic direction. These include clarity about their job, client focus, their competence, resources to do their job, empowerment, involvement, cooperation from others, feedback to them and recognition. Additional supplementary questions are also included, for example on employee commitment, to allow specific issues to be evaluated. By including location information, such as regional office, business group and skill group, comparisons can be made between different parts of the group highlighting areas that are performing both above and below the Group average. High response rates for the survey (over 67% of employees worldwide returning their questionnaire in 2002 and 72% in 2004) mean that the data collected are more likely to be representative of the Group. 7. (a) How does Halcrow currently make use of primary and secondary data to evaluate the extent to which initiatives to engage employees within the Group are working? Through the 2000 employee survey (primary data), Halcrow was able to identify those areas of strategic HRM highlighted by employees as being most in need of attention. These were: feedback, recognition and involvement of employees. Benchmarking the surveys in 2002 and 2004 against the 2000 employee survey, has allowed Halcrow to establish the extent to which these issues are being addressed through HR initiatives. Results from the surveys suggest that there have been improvements in all three areas. However, data from the survey (and other sources) suggest that there is still more to be done to improve these and other aspects of HRM such as employee engagement. Data from Halcrows employee survey has been used to calculate an HR Enablement Index for the group. This is an average score of responses to all the questions in each of the ten key areas and provides an overall indication of the extent to which employees are engaged with their work within the Group. Average scores for each of the 10 key areas are then be used to highlight those aspects where satisfaction is relatively low and where action may need to be taken. Comparison of the 2004 HR Enablement Index score with that for 2002 revealed that there had been no significant change in employees engagement. Secondary data on retention rates for the same period revealed that this was within a context of declining labour turnover. This led the HR Director to ask why engagement had only remained constant in a labour market characterised by a shortage of suitably qualified people. The answer to this question is currently being sought from a range of primary and data including employee exit interviews, staff workshops around the world to discuss issues associated with employee engagement and further analysis of the employee survey data. (b) What other measures do you think they might adopt? There are a whole host of other measures that might be adopted to evaluate the extent to which initiatives to engage employees within the group are working. These will relate to data already held by the organisation in HR records such as the technical versus organisational focus of training and development courses attended (secondary data) as well as collecting additional data. For example, subject to agreement and issues of confidentiality, annual reviews between line managers and employees might be developed to explore and feedback issues related to organisational engagement. In addition Halcrow appears only to have considered employee engagement from the perspective of the employees. Given their need to develop commercial awareness it is important that they also seek to understand their customers views regarding this. This might be done with focus groups with customers or a series of in-depth interviews.
CHAPTER 5
Summary
Strategic linkages exist between corporate strategy, organisational structure and human resource strategies, demonstrating the strategic nature of structure. Dimensions of organisational structure have been identified that can be used to analyse the nature and evaluate the effectiveness of an organisations structure. These dimensions indicate the complex range of variables to be understood by managers in deciding how they should structure an organisations activities to meet its strategic objectives. They also indicate that the design of organisations structure involves managerial or strategic choice. Three perspectives were considered that offer explanations about the relationship between the design of organisational structure and strategic effectiveness. These relate to the classical universal, contingency and consistency approaches to the design of organisational structure. A fourth perspective relates to the role of organisational politics and the exercise of power that has already been considered and discussed in depth in Chapter 1. Principal forms of organisational structure were reviewed and their effects on those who work within them analysed and evaluated. These forms include: simple; functional; divisionalised; matrix; project-based; network, cellular and virtual structures. Theoretical linkages between these organisational forms and contingency variables have been recognised. The development of these forms indicates some degree of movement from centralised and bureaucratic structures to decentralised and more fluid ones.
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Organisations need to promote human resource strategies that are congruent with the nature of the organisational structure that they chose (or recognise the impact of their structure on their espoused human resource policies and the practice and outcomes of the human resource strategies that they promote). Choice of organisational structure has been recognised as leading to a problematic relationship between the respective desires for managerial control, organisational efficiency and responsiveness to external conditions and intended markets. Attempts to maximise centralised managerial control in situations requiring greater organisational responsiveness are likely to affect the pursuit of effectiveness and working relationships adversely. Decentralised forms of organisational structure may adversely affect the scope for and nature of organisation-wide human resource strategies. In practice, this is likely to be a function of both the nature of the structural form that is chosen and the strategy of the organisation.
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Student preparation
Prior to the class, we believe it is essential that students read and make notes from the chapter. We have found that producing mind maps of the chapter content is a useful approach to note taking and encourages students to reflect on the internal integration of the subject content of the chapter. We use a variety of vehicles to bridge student preparation and class-based activities to enhance their understanding of the chapter content and its overall relationship to managing HR strategically. As standard, we would ask students to make a note of any queries arising from their reading and to come to the teaching session prepared to raise them. Sometimes this may be formalised by asking students to write down (as questions) the three issues addressed by the chapter where they would like further clarification and guidance. Students may also be asked to do one or more of the following: address pre-set questions and write up their answers briefly in note format; complete the self-check and reflect questions and come to the session prepared to share and discuss their responses; and familiarise themselves with the chapter case study (or an alternative case supplied in advance) and come to the session prepared to tackle the case questions.
Our outline answers to both self-check and reflect questions and case study questions follow in the next two substantive sections of this chapter guide. Pre-set questions that we have found useful for structuring student reading, preparatory activities and classroom discussion for the topic of the role of organisational structure in HRM include: 1. How would you define organisational structures and set it into the SHRM context? 2. What are the principal strategic relationships between organisational structures and corporate strategy and how could they be evidenced in practice? 3. How would you argue the case for and against the formal adoption of structures by organisations?
In the classroom
Clearly the approach adopted to student preparation can be followed through into the classroom. A starting point that we find useful is to surface and discuss the issues arising from students preparatory reading. This avoids providing lecture input that simply repeats what students have already grasped, reinforces the value of reading as an essential prerequisite for class-based discussion and provides a platform from which further class-based activities can be launched. However, when adopting this approach, we find it useful, once student queries have been exhausted, to provide a snappy summary of key issues. Where preparing answers to self-check and reflect questions has been set as part of preparation for the teaching session, at least two alternatives present themselves. First, students can be asked to contribute individual responses that are then subjected to plenary discussion. This is our preferred approach because it makes students more accountable for their personal learning and reserves any group work for case study analysis. Second, students can be formed into groups to share their individual answers and draw conclusions from their discussions. However, preparing answers to self-check and reflect questions was not part of preparatory work but consideration
40 Pearson Education Limited 2007
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of the questions is to feature as part of the teaching session, we would favour the group approach as a more stimulating approach. In all cases student responses can be considered against our suggested answers, which themselves can be usefully critiqued.
Follow-up work
The pedagogic features adopted throughout this book are intended to offer a number of alternatives for follow-up work while at the same time leaving the lecturer free to add or substitute their own ideas. If they have not already been used as part of class activities, any prior preparation of answers to the self- check and reflect questions and/or the questions suggested for student preparation and/or the chapter case DaimlerChrysler AG will serve as a useful reinforcement to chapter content. Our outline answers to both self-check and reflect questions and case study questions follow in the next two substantive sections of this chapter guide. There are also a number of follow-up study suggestions after the chapter summary that can be undertaken by students either individually or in groups and an extensive list of references provides many opportunities for directed further reading.
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
The classical universal approach is associated with the identification of so-called best practice principles that may be used in a variety of organisational settings. It is therefore associated with the notion of 'one best way'. The contingency approach requires a more situational analysis and believes that effective organisations will result from a structural design that takes account of the demands created by the environment and the characteristics of the organisation. The consistency approach allows for structural variation based on a broader range of aspects. It highlights the need to analyse the internal fit between the various elements of an organisation's structure to produce a higher level of effectiveness and performance. 5.4 Using the ideas discussed above, how would you summarise organisational fluidity? Fluidity is used, following Clegg and Hardy (1996), as the opposite to, or movement away from, bureaucracy. Bureaucracy is associated with systems of rules and rule-following, division of labour, hierarchy, authority and centralisation. Fluidity by contrast is associated with decentralisation, collaboration, the need for participative and entrepreneurial behaviours, alternatives to hierarchy and structures that facilitate these. The later forms described in the section entitled Principal forms of organisational structure and their effects on those who work within them progressively describe attempts to construct structures that are intended to produce these outcomes. Of course, the actual incidence of organisations using more radical types of structure is still very much in the minority. 5.5 The discussion in this section has considered the impact of decentralised organisational structures on the development of human resource strategies. How do you think a more centralised and bureaucratic form of organisational structure will affect the development of human resource strategies? Large organisations based on these principles were associated traditionally with the existence of an internal labour market. For certain groups of employees, this offered a pathway for progression linked to the provision of training and development, incrementally progressive rewards and security of employment. These characteristics are associated with a psychological contract that exchanges security and gradual progression in the organisation for loyalty and commitment. The bureaucratic approach also points to the creation of centralised rules that are likely to include those related to HR. Organisations based on centralised and bureaucratic principles are therefore likely to develop corporate HR strategies that are applied across the organisation. However, the effects of such corporate HR strategies may be questioned in practice. Those outside particular groups may be excluded from the intentions of these HR strategies, especially in the context of recent developments to differentiate more strongly between core and peripheral groups of workers. Secondly, a centralised and bureaucratic organisational structure is likely to have an adverse impact on the intended outcomes of certain HR strategies in an organisation. Concepts Box 5.2 and related discussion are examples of this type of effect. The impact of structures based around centralised controls and bureaucratic procedures may thus act to impair HR strategies aimed at promoting or improving employees' performance, involvement and commitment. This is likely to indicate a failure by those responsible to appreciate the lack of congruence between the impact of this type of structure and the aims of such HR strategies, if this is indeed their real aim.
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As the HR-Director of DC (Stuttgart, Germany) you are required to develop a suitable HR strategy' and to propose solutions to the problems raised by the actual situation of DC and the intentions of the CEO described above.
State your understanding of the situation at DC and determine the needs of DC (problems within DC and reasons for the new organisational structure); also describe some strategic elements of the organisational structure.
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Globalization
Hyper Competition
Whereas German companies like Deutsche Bank AG, Lufthansa AG or Allianz AG are seen by specialists and scholars as truly global companies with excellent strategic HRM policies Daimlers Chrysler lacks such a reputation. There were incredible problems integrating Chrysler in the DC group. It took years to fix many post-merger problems. There are many other examples of a poor international HR policy of DC. This may also be a reflection of a generally rather poor (strategic) HR management of DCs head office.
You are therefore also asked you to answer the following questions: In light of the intentions in the announcement of DC (text above), which HR areas or HR challenges are concerned? Please name some of these challenges. Then establish a plan of action by formulating and justifying possible solutions to the challenges you have identified.
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Product Organization
CEO
VP HRM
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Matrix Organization
Functional Managers
Production
Marketing
HRM
Manager Product A
Manager Product B
What type of organisational structure should be created and implemented to support the new HR strategy?
Finances
Fin. Mercedes
Fin. Chrysler
Human Resources
IT and Organisation
R&D
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
What are possible advantages (and disadvantages) of creating a new organisational structure?
Marketing Marketing
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
In developing and implementing the new structures, the company will have to recruit new international managers. How could the company really select and develop a group of experienced international managers? What instruments would you use?
CHAPTER 6
Relationships between culture and strategic human resource management: do values have consequences?
Learning outcomes
By the end of this chapter you should be able to: explain the meanings of national and organisational cultures and the debates relating to their existence; discuss the importance of organisational and national cultures in managing SHRM interventions; explore the three main perspectives through which culture has been explored within organisations: integration, differentiation and fragmentation; assess the complexity of issues associated with aligning culture to an organisations strategic direction; analyse the linkages between organisational and other cultural spheres and SHRM interventions.
Summary
An understanding of culture and the interactions between different spheres of culture such as national and organisational, can assist in the selection and application of effective HRM interventions and the hierarchies in which they are placed. At the same time, SHRM interventions can influence the culture within an organisation. Culture consists of shared attitudes, beliefs, values and behaviours that belong to and have been learned by a group and, because they are considered to be valid, have been internalised and are taken for granted. These are taught to new members of the group as the correct way to perceive, think and feel. Culture is one of a range of factors that can influence an organisation's competitiveness. There is long-standing debate as to whether the impact of national cultural differences is declining or increasing. This is known as the convergence/ divergence debate. Researchers have developed dimensions upon which national cultures can be placed. These emphasise the importance of power and the way it is exercised, alongside other factors, such
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
as tolerance of uncertainty, orientation to time, the relative focus on individuals and the way in which conflicts are resolved. Nations scores against dimensions of national cultures can be thought of as stereotypes representing the mean around which scores for individual members of that country are dispersed. There is likely to be less variation within countries than between countries. Within organisations culture is most visible in practices or artefacts and, to a lesser extent, espoused values. SHRM interventions are largely concerned with structural means of influencing and supporting these visible manifestations. To re-align an organisations culture, the basic underlying assumptions upon which these practices or artefacts are based need to be changed. As these are deeply and strongly held within each employees subconscious they are difficult to change, especially over the short term. Re-aligning an organisations culture is a complex process utilising a range of strategies. These are often divided into top-down (programmatic) and bottom-up (critical path) approaches.
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
questions and the boxed examples. These allow the students to explore how the material they are studying applies to the world of work.
Student preparation
Prior to the class, we believe it is essential that students read and make notes from the chapter. We have found that producing mind maps of the chapter content is a useful approach to note taking and encourages students to reflect on the internal integration of the subject content of the chapter. We use a variety of vehicles to bridge student preparation and class-based activities to enhance their understanding of the chapter content and its overall relationship to managing HR strategically. As standard, we would ask students to make a note of any queries arising from their reading and to come to the teaching session prepared to raise them. Sometimes this may be formalised by asking students to write down (as questions) the three issues addressed by the chapter where they would like further clarification and guidance. Students may also be asked to do one or more of the following: address pre-set questions and write their answers briefly in note format; complete the self-check and reflect questions and come to the session prepared to share and discuss their responses; and familiarise themselves with the chapter case study (or an alternative case supplied in advance) and come to the session prepared to tackle the case questions.
Our outline answers to both self-check and reflect questions and case study questions follow in the next two substantive sections of this chapter guide. Pre-set questions that we have found useful for structuring student reading, preparatory activities and classroom discussion for the topic of culture and SHRM include: 1. Based upon your reading do you consider culture is something an organisation is or one of a series of organisational attributes? 2. What are the main similarities and differences between different typologies of national cultures? 3. Why do you think it is often stated that it is difficult to change an organisations culture? 4. Is it better to adopt a top-down or a bottom-up approach to organisational change?
In the classroom
Clearly the approach adopted to student preparation can be followed through into the classroom. A starting point that we find useful is to surface and discuss the issues arising from students preparatory reading. This avoids providing lecture input that simply repeats what students have already grasped, reinforces the value of reading as an essential prerequisite for class-based discussion and provides a platform from which further class-based activities can be launched. However, when adopting this approach, we find it useful, once student queries have been exhausted, to provide a brief summary of key issues.
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
Where preparing answers to self-check and reflect questions has been set as part of preparation for the teaching session, at least two alternatives present themselves. First, students can be asked to contribute individual responses that are then subjected to plenary discussion. This is our preferred approach because it makes students more accountable for their personal learning and reserves any group work for case study analysis. Second, students can be formed into groups to share their individual answers and draw conclusions from their discussions. However, preparing answers to self-check and reflect questions was not part of preparatory work but consideration of the questions is to feature as part of the teaching session, we would favour the group approach as a more stimulating approach. In all cases student responses can be considered against our suggested answers, which themselves can be usefully critiqued. Where case study work has featured as part of preparatory activities, similar approaches to those suggested for self-check and reflect questions can be adopted. If coming to the case afresh, there is unlikely to be time for groups to consider all four questions. Here we would suggest that groups major on one of the case questions only moving on to others if they have time. Our answers to the three questions arguably present a degree of comprehensiveness and detail unlikely to be echoed within the parameters of a standard teaching session. However, they can be introduced into discussion of the case study and their validity critiqued. In addition, there is scope for further detailed development of our answers and examples are provided as to how this might be put into operation.
Follow-up work
The pedagogic features adopted throughout this book are intended to offer a number of alternatives for follow-up work while at the same time leaving the lecturer free to add or substitute their own ideas. If they have not already been used as part of class activities, any prior preparation answers to the self-check and reflect questions and/or the questions suggested for student preparation and/or the chapter case Corporate culture and group values at DICOM Group plc will serve as a useful reinforcement to chapter content. Our outline answers to both self-check and reflect questions and case study questions follow in the next two substantive sections of this chapter guide. There are also a number of follow-up study suggestions after the chapter summary that can be undertaken by students either individually or in groups and an extensive list of references provides many opportunities for directed further reading. A further task for part-time students could involve them exploring their own organisations culture with a view to analysing the extent to which the symbols/artefacts, espoused values and basic underlying assumptions mutually reinforce each other.
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
6.2 Examine Tables 6.1 and 6.2 and select two countries with contrasting profiles. Use Hofstedes dimensions to suggest how SHRM interventions to motivate and appraise employees might differ between these countries. Now repeat this process using Trompenaars and Hampden-Turners dimensions. To what extent do your suggestions differ? Inevitably your precise answer will depend upon the two contrasting countries you have chosen. In our answer we have chosen the United Kingdom and Japan. As you will see, although the dimensions differ, the suggestions based upon these dimensions are similar. Hofstede: The United Kingdom scores lower on the power distance dimension than Japan. According to Hofstede, this suggests that UK employees will be less likely than Japanese employees to accept uneven distributions of power within the workplace and will expect more consultative decision-making. UK employees will also be less likely to be happy with large pay and reward differentials than Japanese employees. Hofstedes research suggests that UK employees are likely to be more individualistic than Japanese employees. This suggests that the UK employees are more likely to prefer bonuses such as individual performance related pay while those in Japan may prefer team-based performance related pay or company wide bonuses. Both UK and Japanese employees are likely to place emphasis on performance at work, both having scored towards the masculine on Hofstedes masculinity/femininity dimension. This means there are less likely to be differences in their views in this area. However, Hofstedes work highlights that UK and Japanese employees differ markedly on uncertainty avoidance. UK employees are likely to have a lower level of uncertainty avoidance,
53 Pearson Education Limited 2007
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implying that they are less likely to be motivated by long-term job security. This means that the reward package developed is likely to differ from that, which would be developed for Japanese employees. Finally, Hofstedes work highlights that Japanese employees are likely to have a longer-term view than their UK employees. This may be reflected in the focus on longer-term targets rather than quick results more normally expected in UK organisations. Trompenaars and Hampden-Turner According to Trompenaars and Hampden-Turner, UK employees are likely to be more universalist than those in Japan. This suggests that schemes to motivate UK employees are more likely to need to be clearly delineated with well defined criteria than those in Japanese organisations. Differences in attitudes to time also support this suggestion, UK employees being more likely to consider motivation as a linear sequence where specific performances result in specific rewards. As discussed in this chapter, Trompenaars and Hampden-Turners individualism versus communitarianism dimension is almost identical to Hofstedes individualist/collectivist dimension. Not surprisingly therefore it would seem likely that UK employees are more likely to prefer bonuses such as individual performance related pay while those in Japan may prefer team-based performance related pay or company wide bonuses. The specific versus diffuse and the attitudes to the environment dimensions also support this assertion. The former suggests that Japanese employees are more likely to consider issues such as performance holistically, emphasising the interdependency of their own performance with that of others. The latter suggests that, in contrast to UK employees, Japanese employees are more likely to consider the wider external context within which their performance has occurred. Relative scores on the neutral versus emotional dimension suggest that communicating personal feelings when motivating employees is more likely to be acceptable in the United Kingdom than in Japan. Trompenaars and Hampden-Turners dimension achievement versus ascription suggest that UK employees are more likely to expect rewards such as promotion for their own achievements. In contrast, Japanese employees focus on ascription suggests that seniority and promotion linked to age or time served in the organisation are more likely to be acceptable. 6.3 Why do you think it is difficult for managers to describe their organisations culture in detail? Although outward manifestations of culture are easy to discern (relatively visible), deeper underlying meanings upon which these are based are more difficult to decipher. In particular, the underlying values upon which an organisations culture are based are held deep within individual employees subconscious. Consequently, although they are articulated in individuals practices and, perhaps, the organisations espoused values, they occur almost automatically and are taken for granted. This means they are likely to be thought about only rarely. 6.4 Visit HPs corporate website at http://www.hp.com. Use the menus to go to the pages headed Company information: About us History and Facts. What clues do these give you about the culture of HP? Which culture do you consider was dominant in the merger between HP and Compaq? As you browse through these pages you will find lots of clues to HPs corporate culture. Some of those that are readily apparent are the stories relating to the founding and early years of HP.
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
Others relate to the management style adopted and the SHR interventions made by the company. They include: The story that when Bill Hewlett and Dave Packard founded HP in 1939, they built the company's first product, an electronic instrument used to test sound equipment, in a Palo Alto garage. The HP management style of management by walking about was created by the founders and emphasises personal involvement, good listening skills and the recognition that everyone in an organisation wants to do a good job. The use of an open door policy to create an atmosphere of trust and mutual understanding. This policy encourages employees to discuss problems with a manager without reprisals or adverse consequences. The provision of medical insurance for employees, using first names to address them, and the holding regular parties to show that the company cares for its employees. The use of reward schemes to reflect the companys belief that all employees should share directly in the companys success. The use of charitable giving and other activities to show the companys belief that it has a responsibility to be a good corporate citizen. The design and location of buildings reflect the company philosophy that people require attractive and pleasant surroundings to attain maximum job satisfaction and to perform to the best of their abilities. The institution of flexible working hours, or flex-time. The purpose, as explained by Bill Hewlett was to allow employees to gain for family leisure, conduct personal business, avoid traffic jams or to satisfy other individual needs.
Although the website talks about the historical development of Compaq the company with whom HP merged in 2002, there is relatively less information provided than for HPs development as outlined above. This combined with the company retaining the HP name may be taken to suggest that the HP culture was dominant in the merger (see also Practice Box 6.6). 6.5 How might an organisation use SHRM interventions to support a culture re-alignment process? SHR interventions are likely to be used to support and facilitate cultural re-alignment rather than initiate it. It is important that such interventions are aligned to the desired culture, and therefore the overall strategy of the organisation, and that they project values appropriate to both the strategy and the culture. Symbols of cultural re-alignment such as the management structure, office space and car parking allocations can be used to reinforce the new culture. Training interventions can also be used to help educate employees about the reasons for the re-alignment and the new desired behaviours. HR systems can be designed and implemented to support the desired culture. For example, performance measurement and reward schemes can be used to monitor and reinforce desirable behaviours in employees such as openness, learning and risk taking. Similarly recruitment, retention and redundancy can be used to help ensure that employees skills and preferred approaches to working match an organisations requirements.
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
Whether top-down or bottom-up strategies are adopted, it is important that the HR interventions used provide consistent clues to the desired culture. 6.6 Why might organisations choose a top-down approach to cultural re-alignment? Top-down approaches may be appropriate in particular circumstances or at particular times during a culture change process. Re-examining Table 6.4 highlights those of Bates (1995) design parameters of culture re-alignment for which a top-down approach is more effective. In particular, the table emphasises the ability of top-down approaches to communicate simple messages quickly. Thus, where expressiveness is essential to culture re-alignment or to a particular stage of the culture re-alignment process then a top-down approach may be most appropriate. This is especially where all that is required are changes at the practice/artefact level or rapid change is required. Top-down approaches may also be effective where it is essential that the new cultures message is spread throughout all levels of an organisation such as the merger between HP and Compaq. The ability of the message to penetrate in such cases depends on the communication process being highly structured. However, it must be remembered that in the short-term, such an approach is likely to generate some resistance to the new cultures values and basic underlying assumptions. In contrast, bottom-up approaches are more likely to generate a shared understanding and ownership of the new culture, although initially only amongst a sub group of employees rather than the whole organisation.
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
Performance appraisal is carried out annually, with three monthly reviews in some areas. The onus is very much on the staff to review their own performance. They fill in their own appraisal schedule with their line manager, and are asked things such as, How do you rate your punctuality on a scale of one to ten? If the member of staff has very different ideas of the rating to his/her manager, then a discussion is held and a compromise reached. Wherever possible, staff are given as much responsibility as they can handle as quickly as possible in both their own development and their working lives. Wherever possible, internal staff are promoted into managerial positions as they arise. Where this is not possible, they are involved in the writing of the job specification and the recruitment process, including the interview and selection process. Stories: these are told by members of the organisation to each other, outsiders, new recruits and mavericks. Their aim is to create awareness of organisational history, personalities and important events. Stories form a very important part of the way DICOM portrays itself. They are used to illustrate the company's values to visitors, new hires and people who come for job interviews. In the main, all the stories emphasise the humanity and caring nature of the Swiss based board of directors and how this permeates the entire company. The case highlights the story regarding the companys tenth anniversary celebrations. All the 800 company staff from around the world and their partners were invited to Switzerland for all expenses paid weekend of celebrations at the Lucerne opera house, which was hired exclusively for the company for the whole weekend. Legend has it that the company chairman paid for this out of his own pocket. Announcements regarding company performance and other news are communicated regularly to the whole company through email from the CEO. He always begins the email, Dear Friends, and always makes a point of finishing off by thanking everyone for their hard work and commitment. DICOM's board of directors asked all subsidiaries to complete an annual report on promotions, hires of disabled staff and donations to charity. This is done with the aim of promoting ethical awareness amongst DICOM's management. Subsidiaries are also expected to produce a bimonthly newsletter for local staff, keeping them informed of company news and performance, as well as giving them to opportunity to include their own personal and departmental news. Symbols: these include things such as offices, cars, logos, titles and terminology, which themselves can become representative of the nature of the organisation. Virtually all employees work in an open plan offices and symbols of rank and seniority are discouraged. Language is very important within DICOM with unique organisational meanings being given to some everyday words. This would make some conversations within the organisation fairly unintelligible to outsiders, although completely sensible to those within. This helps reinforce the feeling of camaraderie, and membership. For example: DICOM word 'Standards!' We don't wear stripes Meaning Well done! Congratulations! For example, we have set the standard to our competitors. Everyone has the right to have their say and be involved in decision-making.
Control systems: these are measurement and reward policies that emphasise what is important to the organisation, and focus attention on it accordingly.
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
Measurement is a continual process, even if official performance reviews are not. Workgroups normally meet on a monthly basis to discuss problems and progress. All are encouraged to make suggestions to improve workgroup performance against certain measurable criteria. Where performance of an individual is exceptional, managers have discretion to reward them in a way most valuable to the individual. This might be the granting of extra holiday, a meal for them and their partner or a public display of gratitude at an award ceremony. Every year at the Christmas celebration, a number of awards and prizes are given out to individuals and workgroups who have been voted as exceptional by their colleagues. Power structures: these are associated with the key constructs of the paradigm. Senior management is most likely to be associated with the core assumptions and beliefs as to what is important to the organisation. Students are likely to find this sphere more difficult to discern from the case. However, the role of senior management in the groups tenth anniversary celebrations emphasises how management are associated with core assumptions and beliefs that are important to the organisation. Organisational structure: this is the more formal way in which the organisation functions, and is likely to demonstrate power structures, relationships and again what is important to the organisation. DICOM has a very flat organisational structure. Within the United Kingdom, there is the Managing Director, Senior Managers, Junior/Workgroup Managers and staff. As noted within the case, although employees do have rank the display of stripes is not encouraged. When visitors are shown around the company, managers introduce their staff saying These are my colleagues. If anyone said These people work for me or these are my staff people would become quite annoyed and expect a later apology. 2. Assess the extent to which DICOM Groups culture is aligned to its vision and mission. Having constructed their cultural webs, students are likely to find this and subsequent questions far easier to answer. The vision and mission are both set out clearly at the beginning of the case. We have found that in answering the question, students benefit most from seeing how each sphere in their cultural web enables each of six bullet points that make up the mission are addressed using a simple table. These then enable DICOM to work towards its vision. For example: Mission statement Cultural web sphere Limited evidence Symbols Language is very important within DICOM with unique organisational meanings being given to some everyday words. For example, standards Language is very important within DICOM with unique organisational meanings being given to some everyday words. For example, standards Evidence
We care for our customers better than anyone else in our industry. We are a premier business partner of the world's leading system integrators, software developers, IT resellers and OEMs We only compete with superior products and services in fast growing information technology sectors in which we can achieve and maintain a dominant market share
Symbols
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We hire the highest calibre employees available and continually invest in their development.
Rituals
Training is a very important part of DICOMs culture. All levels of staff are encouraged to take advantage of both in-company and external training programmes including the DICOM Academy. Performance appraisal is carried out annually, with three monthly reviews in some areas. The onus is very much on the staff to review their own performance.
Control systems
Workgroups normally meet on a monthly basis to discuss problems and progress. All are encouraged to make suggestions to improve workgroup performance against certain measurable criteria. DICOM is promoted to its staff as the DICOM Family. The unofficial (although heavily endorsed by senior management) aim is To make money and have fun doing it. The humanity and caring nature of the Swiss based board of directors and how this permeates the entire company. DICOM has a very flat organisational structure. Within the United Kingdom, there are the Managing Director, Senior Managers, Junior/Workgroup Managers, and staff. As noted within the case, although employees do have rank the display of stripes is not encouraged.
To us respect, integrity and loyalty constitute very important values, reflected in a co-operative relationship with the society and the environment in which we operate.
Routine
Stories
Power structure
3. To what extent do you consider that DICOM Groups culture exhibits characteristics identified by Hofstede (Table 6.1) and by Trompenaars and Hampden-Turner (Table 6.2) for Switzerland? Give reasons for your answer. Hofstede Power distance relates to the extent to which less powerful employees accept that power is distributed unequally. Within DICOM inequalities between people appear to be minimised and consultative decision appears more likely to be used. Individualism/collectivism refers to the extent to which individuals are orientated to themselves and their immediate family, rather than wider strong cohesive in-groups that offer protection in exchange for unquestioning loyalty. In DICOM contracts of employment appear to be based on mutual advantage, DICOM providing training and good physical conditions. This suggests the organisation is more collectivist. Masculinity/femininity refers to the extent to which assertiveness and decisiveness are prioritised over more caring values such as nurturing and concern for quality of life. Within DICOM importance is placed upon competition and high performance emphasising the masculine aspects of this dimension. At the same time, the resolving of differences by discussion emphasises the feminine aspects of this dimension.
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
Uncertainty avoidance relates to the extent to which people feel threatened by ambiguous or unknown situations. It is less clear from the case where DICOM is placed upon this dimension. Confucian dynamism captures the long- or short-term orientation. Although DICOM places emphasis on the importance of social obligations, the emphasis on results and high performance suggests a more short-term orientation. Trompenaars and Hampden-Turner Relationships with people Universalism versus particularism. Relationships with people are important within DICOM. However, personal relationships are not anticipated to impact upon business decisions. Rather they are expected to be made logically, impartially and professionally suggesting a more universalist focus. Individualism versus communitarianism emphasises that societies can be individualistic or collectivist. Within DICOM employees appear to regard themselves as part of a group and consequently more communitarian than individualistic. Neutral versus emotional highlights the extent to which it is acceptable to express emotions publicly and communicate the full extent of personal feelings. Within DICOM, by establishing rapport between individuals, it appears possible to discuss performance issues and communicate personal feelings. Specific versus diffuse is concerned with the relative importance ascribed by different cultures to focusing on the specific, for example analysing issues by reducing them to specific facts, tasks, numbers or bullet points. This is contrasted with a focus upon analysing issues by integrating and configuring them into relationships, understandings and contexts. From the information within the case, it is uncertain where DICOM would be placed on this dimension. Achievement versus ascription This focuses upon the way in which status is accorded. DICOM places relatively high values on achievement rather than status. Attitudes to time This focuses particularly on whether time is viewed as linear and sequential (past, present and future) or circular and synchronic (seasons and rhythms). These differences are likely to impact on how planning and organising takes place, little information on which is provided in the case.
CHAPTER 7
Summary
HRP is the name given to formal processes designed to ensure that an organisations human resources capability can support the achievement of its strategic objectives. It involves forecasting the future demand for and supply of labour and drawing up HR plans to reconcile mismatches between the two. When viewed as the vital link between organisation and HR strategies HRP can be regarded as a bridging mechanism fulfilling three vital roles: aligning HR plans to organisational strategies to further their achievement; uncovering HR issues that can threaten the viability of organisational strategies and thereby lead to their reformulation; and acting in a reciprocal relationship with organisational strategies such that HR issues become a central input into the strategy formation process. Numerous difficulties surrounding the practise of HRP may thwart its potential to serve as the link between organisational strategy and SHRM practice. These difficulties may be sufficient to lead organisations to abandon any thoughts of practising HRP, may conspire to reduce the effectiveness of HRP practice or may limit its application to short-term, operational matters. Patchy and limited data on HRP practice points to its low level of take-up by organisations leading to an alternative perspective of HRP as the missing or weakest link between
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
organisational and HR strategies. This leads to a paradox where the more the complexities of organisational life warrant the establishment of HRP as the vital link the more these complexities are likely to cause HRP to be cast aside to become the missing/weakest link. Avenues for confronting operational difficulties and forging HRP as the pivotal bridging mechanism between organisational strategy and SHRM practice focused on: raising the profile of HR issues generally and the status and credibility of HR practitioners particularly; using contingency and scenario planning to introduce flexibility into the HRP process; building towards a flexible workforce that can manage the vagaries arising from unplanned developments and an uncertain future; and developing an HRP process centred on continual review, evaluation and adaptation and adopting a multi-stakeholder approach to make this a realistic possibility.
Student preparation
Prior to the class, we believe it is essential that students read and make notes from the chapter. We have found that producing mind maps of the chapter content is a useful approach to note taking and encourages students to reflect on the internal integration of the subject content of the chapter.
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
We use a variety of vehicles to bridge student preparation and class-based activities to enhance their understanding of the chapter content and its overall relationship to managing human resources (HR) strategically. As standard, we would ask students to make a note of any queries arising from their reading and to come to the teaching session prepared to raise them. Sometimes this may be formalised by asking students to write down (as questions) the three issues addressed by the chapter where they would like further clarification and guidance. Students may also be asked to do one or more of the following: address pre-set questions and write their answers briefly in note format; complete the self check and reflect questions and come to the session prepared to share and discuss their responses; and familiarise themselves with the chapter case study (or an alternative case supplied in advance) and come to the session prepared to tackle the case questions.
Our outline answers to both self check and reflect questions and case study questions follow in the next two substantive sections of this chapter guide. Pre-set questions that we have found useful for structuring student reading, preparatory activities and classroom discussion for the topic of strategic HRP include: 1. How would you define HRP and set it into the SHRM context? 2. What are the principal strategic relationships between HRP and corporate strategy and how could they be evidenced in practice? 3. What do you understand by the HRP paradox and how does this impact on the utility of the concept? 4. How would you argue the case for and against the formal adoption of strategic HRP by organisations?
In the classroom
Clearly the approach adopted to student preparation can be followed through into the classroom. A starting point that we find useful is to surface and discuss the issues arising from students preparatory reading. This avoids providing lecture input that simply repeats what students have already grasped, reinforces the value of reading as an essential prerequisite for class-based discussion and provides a platform from which further class-based activities can be launched. However, when adopting this approach, we find it useful, once student queries have been exhausted, to provide a snappy summary of key issues. Where preparing answers to self check and reflect questions has been set as part of preparation for the teaching session, at least two alternatives present themselves. First, students can be asked to contribute individual responses that are then subjected to plenary discussion. This is our preferred approach because it makes students more accountable for their personal learning and reserves any group work for case study analysis. Second, students can be formed into groups to share their individual answers and draw conclusions from their discussions. However, if preparing answers to self check and reflect questions was not part of preparatory work but consideration of the questions is to feature as part of the teaching session, we would favour the group approach as a more stimulating approach. In all cases student responses can be considered against our suggested answers, which themselves can be usefully critiqued.
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
Where case study work has featured as part of preparatory activities, similar approaches to those suggested for self check and reflect questions can be adopted. Our approach here would be to start with a more general exploration of the HRP implications of mergers and acquisitions and use this to develop an evaluative framework against which practice in the three case companies can be analysed. If coming to the case afresh, there is unlikely to be time for groups to consider all four questions. Here we would suggest that groups be allocated one of the case companies (Deutsche Bank/Bankers Trust or British Petroleum/Amoco or Volvo/Ford) and asked to work through Questions 3 and 4 for their allocated company. Group outputs can then be used as the basis for a plenary consideration of Questions 1 and 2. Greater topicality can be achieved by capturing the big business news stories of the week, discussing the HRP issues that are likely to arise and exploring how HRP might be used effectively to address these issues.
Follow-up work
The pedagogic features adopted throughout this book are intended to offer up a number of alternatives for follow-up work while at the same time leaving the lecturer free to add or substitute their own ideas. If they have not already been used as part of class activities, self check and reflect questions and/or the chapter case study, Human resource planning in mergers and acquisitions, can be set as follow-up work and should serve as a useful reinforcement of chapter content. Our outline answers to both self check and reflect questions and case study questions follow in the next two substantive sections of this chapter guide. There are also a number of follow-up study suggestions after the chapter summary that can be undertaken by students either individually or in groups and an extensive list of references provides many opportunities for directed further reading. A further task could require students to research reported case examples of mergers and acquisitions and analyse the extent to which HRP is evident during the planning, implementation and consolidation stages and the likely consequences of their findings.
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
treatment of survivors, is likely to directly affect the success of the redundancy programme itself and the future prospects of the emerging organisation. Similarly, if cultural alignment is imperative for the future survival of the organisation, employees unable to make the necessary adjustment may find themselves managed out of the organisation. 7.2 To what extent can the view that HRP is all about ensuring that the right person is in the right place at the right time be interpreted as a soft, as well as hard, approach to HRP? In a similar vein to Question 1, this simple view of HRP has been strongly associated with the hard variant but arguably contains within it the potential for a soft interpretation. This view is often bracketed with manpower planning with the assumption that the right person carries with it quantitative overtones. Here it is interpreted as referring to the number of employees with manpower planning being about ensuring that the supply of staff matches the demand for staff arising from the different tasks to be performed. However, this is a restrictive interpretation because right person could equally be said to refer to the soft, qualitative dimension of HRP. Here right could be expressed in terms of skills and competences, cultural orientation, motivation, commitment, values etc. However, a number of these attributes represent intangibles. Some are personal, some contextual and some organisational such that any attempt to incorporate them within HRP will require an approach that reflects the longer-term orientation consistent with strategically focused HRP. Therefore, although this view of HRP appears simple in appearance, it can be argued that a broader interpretation reflects more comprehensive definitions of HRP. The key lies in how right is interpreted and similar analysis can be applied to right place and right time. 7.3 How would you map out the benefits of HRP identified in the above analysis against the regulation, control and shape phases of Ulrichs (1987) model of transitions in SHRP (see Table 7.4). You might find it helpful to structure your answer in tabular format. To get you started, one example under each of the three phases identified by Ulrich has been provided below. Phase I Regulation Provides detailed information that enables tighter control over staffing numbers and costs. Generates a detailed audit of an organisations human capital. Phase II Control Enables HR strategies to be linked to and integrated with organisational strategies. Phase III Shape Surfaces and recognises the potentially unique contribution an organisations human capital can make to long-term strategic direction. Ensures that the HR dimension receives due attention in the strategy making process.
Provides a formalised process that encourages organisations to take account of HR issues early on in strategy making thereby reducing the risk of implementation failures due to a lack of HR capability. Provides a formalised process for generating plans to tackle the HR issues arising from strategic planning.
Enables the appropriateness of the organisations current skills, knowledge and attitudes mix to be analysed.
Provides a process for raising people issues early in the strategy setting debate and ensures that business-based plans are put in place for the people outcomes of this debate.
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Provides a mechanism for forecasting labour demand against internal and external supply in terms of numbers, knowledge, skills and attitudes. Matches labour demand and supply and through gap analysis surfaces mismatches between the two that need to be addressed.
Generates a variety of HR solutions for tackling the complexity of problems arising from strategy making.
Enables HR strategies, policies, procedures and practice to be developed as a coherent bundle of activities. The integration of HR policies and practices horizontally and vertically contributes positively to organisation performance. Facilitates the pursuit of high performance organisations commonly associated with SHRM by focusing on a high commitment, productivity and trust agenda. Crucial to helping organisations to adapt the workforce to meet changing demands arriving from a dynamic socio-economic climate.
HRP has an important role to play in reconciling the needs of individual employees and the needs of the organisation.
7.4 For each of the above cases answer the following question and justify your answer with reference to case evidence: Which of the six strands of strategic integration are evident in the case company?
The SIBUC case HRP at SIBUC reflects a systems perspective where it is conducted as a rational process flowing down through the three levels of organisational strategy. HRP starts from the organisation mission and strategic objectives, which inform the objectives for each of the nine functional areas. This led to the formulation of a set of HR objectives, strategies, plans and control mechanisms to help achieve the organisations over-arching mission and strategy. This mirrors the first and third strands of strategic integration (and perhaps by implication, the second). Emerging from the strategic objectives is a set of what could be called core competences such as service vocation, innovative, autonomous and effective interaction. These together with the cross-integration of the objectives for the nine functional areas provides for horizontal integration, the fifth strand. The use of the SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis to analyse and draw on the strengths of the existing staff, however, provides an opportunity for these to shape strategy formulation and suggests the possibility for two-way strategic integration, the fourth strand. The Farquhar case The Farquhar case appears to be much more opportunistic. Planning appears less formalised and the big decision to locate a production unit in the Czech Republic arises from the economic
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potential emerging from Eastern Europe. In this sense Farquhar appears to be responding to change in a dynamic business environment, which reflects the sixth strand of strategic integration. Developments in the Czech plant are also working upwards to influence production practice at Huntley, reminiscent of the fourth strand. Although Farquhars corporate strategy is not made explicit the location decision clearly reflects first and second-order strategic decisions and therefore relates to the first and second strands.
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are being used to generate the HRP initiatives being implemented. However, with Deutsche Bank/Bankers Trust there appears to be a close fit between the analysis of results from the cultural assessment exercise and subsequent management action and HR initiatives deployed. This is unlikely to have happened by accident and suggests that deliberate planning lies behind such integration. Communication, a vital ingredient to successful mergers and acquisitions, appears being handled differently across the three cases. For Deutsche Bank/Bankers Trust the communication focus appears to be directed at employees during the courting phase through the cultural assessment exercise and enhanced communication to close the information gap revealed by its findings. For BP/Amoco the focus appears to be on the marriage phase with different approaches adopted for managers and employees. For the former there were regular meetings designed to breakdown barriers between BP and Amoco managers whereas for the latter attitude surveys are being used to surface issues that managers would need to address if they are to win over the hearts and minds of employees. For Volvo/Ford there is no explicit reference to communication processes. However, the fact that a cultural analysis of the two companies has been derived from employee perceptions implies that some form of employee survey has been conducted during the courting phase. With Deutsche Bank/Bankers Trust and BP/Amoco there is evidence of specific downstream HRP initiatives designed to facilitate achievement of strategic objectives whereas with Volvo/Ford such HRP appears, at best, to have been deferred until after operational synergies have been achieved. Although the integration team in Volvo/Ford was seen as an important vehicle for overcoming cultural differences there is no suggestion as to how this was to be achieved. Lastly, despite the process being essentially top-down there is evidence pointing to the use of employee voice to provide a bottom-up perspective. This would certainly appear to be behind the cultural analysis at Volvo/Ford and can be seen to be driving management thinking at Deutsche Bank/Bankers Trust. However, involvement beyond this is not evident although at BP/Amoco it might be part of the input into establishing desired work behaviours, systems and processes. 2. If you had been responsible for the HRP dimension of each of the three merger situations, which do you think was handled most effectively and why? Interestingly, in each of the three cases there is no real indication as to the role, if any, being played by any HR function in planning and implementing the merger. However, on the basis of available information, we found it easier to identify Volvo/Ford as the merger situation we believed to have been handled least effectively from an HRP perspective. Here, apart from the initial cultural analysis and organisational restructuring, HR concerns appear to play second fiddle to other functional concerns arguably raising the risk of merger failure because of poor HRP as highlighted by Appelbaum and Gandell (2003). The choice between the other two case scenarios is much more difficult as there is merit in both their approaches to HRP. In the HRP chapter summary it was argued that When viewed as the vital link between organisation and HR strategies HRP can be regarded as a bridging mechanism fulfilling three vital roles: aligning HR plans to organisational strategies to further their achievement; uncovering HR issues that can threaten the viability of organisational strategies and thereby lead to their reformulation; and acting in a reciprocal relationship with organisational strategies such that HR issues become a central input into the strategy formation process. We would argue that both the Deutsche Bank/Bankers Trust and BP/Amoco cases evidence the first role of aligning HR plans to organisational strategies to further their achievement. However, we were initially attracted to the Deutsche Bank/Bankers Trust case where we felt there was more explicit concern to incorporate the second of these HRP roles concerned with uncovering HR issues that can threaten the viability of organisational
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strategies. From this perspective it could be argued that the Deutsche Bank/Bankers Trust case evidences a more comprehensive approach to HRP than BP/Amoco, particularly with respect to their handling of the pre-merger integration phase. However, contrary to this initial position, we would argue that BP/Amoco comes out stronger in the post-merger integration phase. Apart from a concern to challenge prevailing working values, the Deutsche Bank/Bankers Trust marriage appears to overly focus on the hard HRP issues surrounding business efficiency. While this is a critical consideration there is evidence that not only is this dimension being actioned within BP/Amoco but that they are also dealing with soft HRP issues to a greater extent. With BP/Amoco we particularly liked the fact that rather than imposing a cultural blueprint they appeared to be more concerned to identify and develop appropriate behaviours from an analysis of current patterns of employee behaviour. There is an apparent concern to develop a new corporate culture and the commitment to build from current patterns of work behaviour is also evident in the approach being adopted for integrating systems and processes, including HR. Here best practice is being used as the guiding criteria for such decisions irrespective of where it appears across the constituent companies. Throughout the cases there is very little reference to arguably a third phase of mergers and acquisitions, the post-merger consolidation phase. This incorporates a longer-term perspective and we particularly liked the intended use by BP/Amoco of regular monitoring of employee attitudes to shape future managerial action to secure their commitment to the new company. There appeared to be less concern for longer-term HRP issues within the Deutsche Bank/Bankers Trust case. In conclusion, based on the above analysis, we believe that the HRP dimension of the respective merger scenarios was handled most effectively within BP/Amoco. However, this could have been improved significantly if greater attention had been paid to HRP during the courting phase and the outcomes of this used to further guide HRP decisions during the marriage phase. 3. If you had been responsible for the HRP dimension of each of the three merger situations what would you have done differently and why? More general points relating to HRP in the three merger situations are covered in our answer to question four below. Here, we concentrate more on detailed operational HRP issues arising from the case scenarios. We have simply provided short, bullet point responses to provide examples of the sort of HRP practices we would have advocated. These can be used to facilitate a discussion around developing a broader and deeper analysis of the three case scenarios from an HRP perspective. Deutsche Bank/Bankers Trust 1. Given the challenge to existing Deutsche Bank working values, develop a new corporate culture for the merged company. 2. Translate this cultural blueprint into those over-arching employee values and behaviours (perhaps using a competency framework) thought to be necessary to achieve long-term merger and corporate business success. 3. Use these values and behaviours as the operational criteria when making HR decisions with respect to selection for redundancy, transfers, promotions, human resource development (HRD), reward allocation etc. 4. Develop communication channels/initiatives to cover the marriage phase of merger and the longer-term consolidation phase. 5. Consider the approach to employee involvement in key areas such as integration team membership and development of new working values as well as a broader consideration of the employee relations strategy to be adopted.
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6. Identify further key HRP issues and develop appropriate responses. Apart from communication and employee involvement identified above, these might include, for example, managing survivors, HR systems and processes such as job grading and remuneration, HRD strategies for acculturation and organisation structures to facilitate the emerging corporate culture (or vice versa). BP/Amoco 1. A clear HRP focus in the courting phase to establish what will be the likely HR issues that will need to be addressed as part of the merger process (core values, attitudes, competences; structures; change management approaches; employee relations strategies etc.). 2. Make more explicit the nature and scope of employee involvement with respect to the integration team, development of core behaviours, development of new corporate culture, analysis of best practice etc. 3. Significant investment in communication to keep employees informed and engaged in the merger process (and beyond). 4. Challenge the apparent quota-based approach to manager selection and replace with a performance and/or competency-driven approach. 5. Work through key organisational structures and assess the HRP consequences of any revised structures. 6. Plan how to manage the fallout from any: restructuring; functional rationalisation, particularly in terms of downsizing/redundancy; and performance management. Volvo/Ford Here we would have done just about everything differently. In terms of the information available we would certainly have wanted to work through the HRP implications of identified cultural differences between Volvo and Ford and the major structural reorganisation as well as making explicit the HR remit of the integration team if it is to fulfil its role as an important vehicle for overcoming cultural differences. More generally we would have given active consideration to all the other points raised above against the Deutsche Bank/Bankers Trust and BP/Amoco cases. 4. Critically evaluate the HRP process and practice evident in the three cases against the subject content of the chapter. Again we would suggest that our responses here leave scope for further development through facilitated discussion in-class. While a merger can be seen as an example of first-order strategy it does not in itself constitute the long-term corporate strategy of the organisation. What this corporate strategy might be in the three case scenarios is not made explicit in the information provided. This throws up two important limitations in HRP terms. First, the absence of a broader corporate strategy makes it impossible to evaluate the appropriateness of any HRP activity directed at furthering its achievement or to uncover HR issues that might threaten its viability. At best, it might be surmised that the mergers reported on are designed to achieve competitive advantage through cost minimisation but this is almost certainly not the whole picture. Second, in terms of temporal analysis, the focus in the cases is on short-term and, to a lesser extent, medium-term HRP activity. This ignores HRP related to the long-term cycle. As identified by Gratton et al (1999), the long-term cycle requires different clusters of people processes to secure strategic integration compared to those required for the short-term cycle. In the case scenarios there is no clear division or distinction in identified HR interventions between those relevant to short and long-term planning cycles.
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The above analysis throws up two further important limitations in all the case scenarios presented. First, there is no evidence that the third vital role of HRP identified in the chapter summary has played any part in organisational thinking. This third role concerned the reciprocal relationship with organisational strategies such that HR issues become a central input into the strategy formation process. As far as can be seen here, HRP concerns appear to be almost exclusively directed at the output rather than the input level. Second, and very much related to Gratton et als (1999) temporal perspective, it is difficult to discern any HP consideration around the general issues of managing change and enhancing organisational competence to deal with planned changes (e.g. the merger) let alone future shocks. What is apparent throughout the chapter case study is that within the consideration of three mergers involving international companies there is little or no detailed information on the HRP processes deployed by the case organisations. We are in the dark as to how HR interventions have been determined and as to how they fit into a broader HRP process. There does not appear to be any evident HR strategy underpinning HRP (in an HR strategy inputHRP output relationship) or deriving from it (in an HRP inputHRP strategy output relationship). Further, there is no mention of HRP ownership making it difficult to discern the role, if any, of any extant HR function or the extent to which HRP has been embedded in line managers role responsibilities. Without this it is not possible to determine which conceptual models of HRP might apply to practice in the case companies. As will be evident from answers to earlier questions, there is also little focus on any post-merger consolidation phase. This may be an important phase if the marriages are not to subsequently breakdown and lead to divorce. Although there is hard HRP thinking evident in the first two case scenarios we are left to speculate on the extent of any labour demand and supply forecasting. This means that the quantitative dimension of HRP receives no substantive coverage and that the overall scope of any HRP is in consequence restricted. While the evident concentration on cultural issues exemplifies soft HRP concerns it is arguably at the expense of a broader consideration of the soft and hard HRP issues surrounding mergers and acquisitions. In brief, against the chapter content, we flag up three further considerations:
1. That the above critique, together with answers to Questions 13, only serves to
demonstrate how difficult it is to practice strategic HRP. Despite the adage to fail to plan is to plan to fail our review of some of the HRP issues to be confronted in mergers alone exemplifies the complexities associated with the process and lends credence to those who question its operational efficacy. 2. Notwithstanding the complexities associated with HRP our review should also lead to a greater understanding of the possible consequences of ineffective or non-existent HRP (in this case with mergers). 3. The centrality of flexibility to HRP, if it is to gain credence as an operational HR tool, is not surfaced by any of the three case scenarios. There is no evidence of any contingency or scenario planning being used to inject flexibility into the HRP process or steps being taken to build flexibility into the workforce itself so that it can better deal with the vagaries of future uncertainties as well as planned change.
References
Appelbaum, S.H. and Gandell, J. (2003) A cross method analysis of the impact of culture and communications upon a health care merger, The Journal of Management Development, 22:5, 370409.
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Gratton, L. (1999) People processes as a source of competitive advantage, in Gratton, L., Hope Hailey, V., Stiles, P. and Truss, C. (eds) Strategic Human Resource Management, Corporate Rhetoric and Human Reality, Oxford: Oxford University Press, 170198. Gratton, L., Hope Hailey, V., Stiles, P. and Truss, C. (1999) Strategic Human Resource Management: Corporate Rhetoric and Human Reality, Oxford University Press. Salama, A., Holland, W. and Vinten, G. (2003) Challenges and opportunities in mergers and acquisitions: three international case studies Deutsche BankBankers Trust; British PetroleumAmoco; FordVolvo, Journal of European Industrial Training, 27(6), 313 321. Schuler, R.S. and Jackson, S.E. (1987) Linking competitive strategies with human resource management practices, The Academy of Management Executive, 1(3), 20719.
CHAPTER 8
Summary
The pursuit of competitive advantage, interest in SHRM and the role of recruitment and selection in securing one of an organisations most valuable assets provide a powerful rationale for the development of strategic recruitment and selection. It is possible to construct a model of strategic recruitment and selection around three primary features: strategic integration; a long-term perspective; and the use of HRP as a bridging mechanism between strategy and HR practice. The strategic variant elevates the organisational importance of recruitment and selection and leads to the generation of a more demanding person specification. These two outcomes generate four consequential interrelated, secondary features that are likely to shape strategic recruitment and selection practise: the adoption of a front-loaded investment model; rigorous evaluation of outcomes; the use of high validity, sophisticated selection methods; and multi-stakeholder involvement. Far from being a simple notion strategic fit has been revealed as a multi-dimensional concept where it is possible to identify at least six different strands. This means that strategic recruitment and selection has potentially to be aligned with multiple interpretations of strategy if it is to satisfy its strategic credentials.
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Despite uncertainties surrounding strategy implementation and the business environment as it unfolds over time, recruitment and selection practice can be shaped to support long-term changes in strategic direction. On balance and despite a powerful rationale to the contrary, organisational approaches to recruitment and selection practice appear to be dominated by traditional and not strategic approaches. The overall conclusion is that although the case for adopting strategic recruitment and selection may be seductively persuasive it is arguably another case in the HR arena where the rhetoric runs ahead of the reality.
Student preparation
Prior to the class, we believe it is essential that students read and make notes from the chapter. We have found that producing mind maps of the chapter content is a useful approach to note taking and encourages students to reflect on the internal integration of the subject content of the chapter.
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We use a variety of vehicles to bridge student preparation and class-based activities to enhance their understanding of the chapter content and its overall relationship to managing HR strategically. As standard, we would ask students to make a note of any queries arising from their reading and to come to the teaching session prepared to raise them. Sometimes this may be formalised by asking students to write down (as questions) the three issues addressed by the chapter where they would like further clarification and guidance. Students may also be asked to do one or more of the following: address pre-set questions and write their answers briefly in note format; complete the self check and reflect questions and come to the session prepared to share and discuss their responses; and familiarise themselves with the chapter case study (or an alternative case supplied in advance) and come to the session prepared to tackle the case questions.
Our outline answers to both self check and reflect questions and case study questions follow in the next two substantive sections of this chapter guide. Pre-set questions that we have found useful for structuring student reading, preparatory activities and classroom discussion for the topic of strategic recruitment and selection include: 1. Based on prior learning and/or experience, how would you map out the entire recruitment and selection process in a flow diagram? 2. What are the main strengths and weaknesses of the recruitment and selection process you have drawn up in response to Question 1? 3. What do you understand to be the key similarities and differences between the traditional approach to recruitment and selection focused on job fit and the strategic variant focused on organisational fit? 4. What problems are likely to be encountered by an organisation intent on developing and practising a strategic approach to recruitment and selection? 5. To what extent can a recruitment and selection exercise that you have encountered be classified as strategic?
In the classroom
Clearly the approach adopted to student preparation can be followed through into the classroom. A starting point that we find useful is to surface and discuss the issues arising from students preparatory reading. This avoids providing lecture input that simply repeats what students have already grasped, reinforces the value of reading as an essential prerequisite for class-based discussion and provides a platform from which further class-based activities can be launched. However, when adopting this approach, we find it useful, once student queries have been exhausted, to provide a snappy summary of key issues. Where preparing answers to self check and reflect questions has been set as part of preparation for the teaching session, at least two alternatives present themselves. First, students can be asked to contribute individual responses that are then subjected to plenary discussion. This is our preferred approach because it makes students more accountable for their personal learning and reserves any group work for case study analysis. Second, students can be formed into groups to share their individual answers and draw conclusions from their discussions. However, if preparing answers to self check and reflect questions was not part of preparatory work but
75 Pearson Education Limited 2007
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consideration of the questions is to feature as part of the teaching session, we would favour the group approach as a more stimulating approach. In all cases student responses can be considered against our suggested answers, which themselves can be usefully critiqued. Where case study work has featured as part of preparatory activities, similar approaches to those suggested for self check and reflect questions can be adopted. If coming to the case afresh, there is unlikely to be time for groups to consider all four questions. Here we would suggest that groups major on one of the case questions only moving on to others if they have time. Our answers to the four questions arguably present a degree of comprehensiveness and detail unlikely to be echoed within the parameters of a standard teaching session. However, they can be introduced into discussion of the case study and their validity critiqued. In addition there is scope for further detailed development of our answers and examples are provided as to how this might be put into operation. For students who have not previously studied recruitment and selection before it is useful to spend more time on exploring the fundamentals of the traditional process. Here the first question suggested for student preparation (Based on prior learning and/or experience, how would you map out the entire recruitment and selection process in a flow diagram?) can be used as the basis for group work. Groups can be asked to share their flow diagrams and draw up a composite flow chart before analysing it in terms of the second question suggested for student preparation (What are the main strengths and weaknesses of the recruitment and selection process you have drawn up in response to Question 1?). For students who are adding a strategic focus to prior studies of HRM it is more useful to focus on their answers to Questions 35 of those suggested for student preparation. We have particularly found it useful to focus on students practical experiences of recruitment and selection and to analyse these to evaluate their strategic credentials against the conceptual models provided in the chapter. Even if this did not form part of student preparation it is normally possible to get students to share and analyse their recruitment and selection experiences in this way.
Follow-up work
The pedagogic features adopted throughout this book are intended to offer a number of alternatives for follow-up work while at the same time leaving the lecturer free to add or substitute their own ideas. If they have not already been used as part of class activities, self check and reflect questions and/or the chapter case study, Recruitment and Selection at Southco Europe Ltd, will serve as a useful reinforcement of chapter content. Our outline answers to both self check and reflect questions and case study questions follow in the next two substantive sections of this chapter guide. There are also a number of follow-up study suggestions after the chapter summary that can be undertaken by students either individually or in groups and an extensive list of references provides many opportunities for directed further reading. A further task for full-time students would be to utilise material on recruitment and selection practice gathered as part of any search for a first destination job and analyse it for evidence of strategic practise.
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A further task for part-time students could involve them researching their own companys recruitment and selection activities in more depth with a view to analysing its strategic credentials against the conceptual referents provided in the chapter.
Further on in the chapter these themes take form through the development of a conceptual framework and model of strategic recruitment and selection. You might like to go back and see how the above themes have been reflected in these explanatory devices. 8.3 To what extent do staffing processes at the Dionysos reflect the strategic approach to recruitment and selection encapsulated by the conceptual framework and model depicted in Key Concepts 8.4 and Figures 8.3 and 8.4? Before directly addressing this question it is arguably important to reflect on the contextual circumstances impacting on recruitment and selection practice at the Dionysos. In summary, the hotel:
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is located in Turkey and not subject to the draft of legislation operating on recruitment and selection within the European Union; currently operates in a loose labour market where supply of labour exceeds demand; essentially provides a single product that supports a relatively straightforward approach to first, second and third order strategic decisions; and can be classified as a small to medium family business.
Within this identified context, current recruitment and selection practice could be argued to reflect the strategic variant through at least two strands of strategic integration. There is a strong link between the personal attributes, or core competencies, required in staff and the business goal with particular emphasis on service quality and family fit. There is also evidence of horizontal integration through an inter-related bundle of HR practices including staff development, welfare, performance management, reward management, management style and employee involvement. The strategy itself suggests a longer-term focus of creating a market niche and, although not formalised, a degree of HRP is evident in the HR practices developed and their integration with strategic imperatives. Although not cited in the case, both Rim and Ahmet actively use their MBA qualifications to inform their business planning. With respect to secondary features recruitment and selection at the Dionysos, although somewhat unconventional by UK standards, reflects a front-loaded investment approach and use of sophisticated selection with some evidence of multi-stakeholder involvement. The probationary period is tantamount to an extended, realistic and valid application of work sampling which costs a minimum of one months pay for each shortlisted candidate. There is also extensive and meaningful involvement of staff in making appointments to their work groups. In addition there appears to be significant attention given to evaluating organisational performance against key performance indicators. Although this evaluation is not explicitly linked to recruitment and selection, by implication it incorporates measurements of the quality of service provided by recruits. The hotel industry is very labour intensive and dependent on the quality and performance of its staff. Presumably therefore the success of the Dionysos in meeting its business goals has to be down in no small measure to the staff employed to deliver its vision. 8.4 To what extent does the process used to recruit Ryan Parry reflect a strategic approach to recruitment and selection? It is recommended that you conduct your analysis against the conceptual framework and model of strategic recruitment and selection presented earlier in the chapter (Key Concepts 8.4 and Figures 8.3 and 8.4). An analysis of the Buckingham Palace example against featured templates of strategic recruitment and selection is clearly constrained by a lack of detailed information. However, despite reference to careful selection, a feature of Borucki and Lafleys definition of strategic recruitment and selection, the signs are not good. While not privy to the corporate strategy of the Palace, if one exists, and although it does not fit neatly into the normal classifications of strategy, it is difficult to believe that the security of the monarch and other members of the Royal Family is not a central objective. Allied to this, particularly given the sensitivity to media relations, it might be expected that personal attributes such as commitment to the Royal Household, fidelity, honesty, integrity etc. would be fundamental attributes of personal specifications designed to recruit staff against this paramount concern for security. On the basis of the reported events and their detailed exposure in the tabloids it would seem that the antithesis of strategic recruitment and selection is operating here. There was either no strategic connection or the recruitment and selection process blatantly failed to deliver it. Selection methods used appear to be very basic and far removed from sophisticated selection with no evidence of a front-loaded investment model or multi-stakeholder involvement. Ryan Parry resigned from his post, presumably so he could reveal all, but it begs the question as to
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how long he could have worked at the Palace without being rumbled! What does this say about effective evaluation of recruitment and selection? 8.5 In Chapter 2 a number of studies exploring the contribution of SHRM to organisational performance reported on. A critique of the research methodology used by each study was presented under the banner of Study limitations. On a similar basis, what limitations can you identify in the study outlined above in Practice 8.11 that might explain the low incidence of strategic recruitment and selection reported? First, it might be argued that the study was directed at recruitment and selection practice generally and was not directly focused on strategic recruitment and selection. Second, the use of a non-directed, self-reporting procedure (flow chart production) inevitably reflects the personal perceptions of the respondent. While this was the intention it may nevertheless result in features being incorrectly omitted or inadvertently invented. However, other survey methods are not without these problems but here there were a number of checks and balances in operation. Class-based discussion allowed the opportunity for further elaboration or correction. Respondents were not led by the structure and content of data collection methods such as questionnaires or interview questions. By definition respondents were close to the action and not remote as might be the case with some respondents to questionnaires. The data was not likely to be doctored for a particular audience as its use was not disclosed until after its production. Also the fact that in some instances a number of respondents were employed by the same organisation (as many as eight in one case) and the availability of company-produced documentation made it possible to compare and contrast data and identify any glaring inconsistencies. Third, there was an element of leading in as much as their responses were not completely nondirected. As described earlier, emphasis was placed on the beginning and end points of their flow charts. Additionally, prior to producing their data students were exposed to other course inputs and preparatory activities. For management students this covered SHRM, HRP and recruitment and selection. For personnel students this covered strategic integration, HRP and recruitment and selection. As a result students were arguably sensitised to relevant subject material that was particularly associated with the beginning and end points of the recruitment and selection process and, more generally, strategic human resource practice. Taken together this could result in an over-statement of features of recruitment and selection associated with the strategic variant which could not be quantified. Fourth, the fact that responsibilities for recruitment and selection are generally divided in organisations between line managers and specialist personnel practitioners raises the possibility that respondents may only participate in part of the process. This may provide them with an incomplete or distorted picture of the process. However, these two groups were almost equally represented and taken together should provide a comprehensive picture of the state of play particularly where line manager and personnel practitioner respondents hail from the same organisation. Lastly, the process of data collection itself is open to abuse. Students do not always undertake preparatory work as diligently as their tutors might like and it is possible, for example, that students may simply omit elements of the flow chart in their rush to complete homework. However, it could be argued that there is a greater motivation for students to complete a task in which they have a vested interest (i.e. part of their personal study) than there is for questionnaire recipients to become respondents. It is also important to remember that there is an assumption here that student perceptions of practice will reflect what they see as the most significant aspects of recruitment and selection practice. It is possible to conjecture that if senior managers maintain that their organisations human resource practices are strategic but that operational staff do not identify with this then the strategic message has not been internalised. Put another way if those responsible for recruitment and selection activities do not perceive any
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strategic significance they are unlikely to be found practising the strategic variant whatever the organisational intent!
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for quantity, high concern for process, low risk-taking, and high commitment to organisational goals. A number of the above employee behaviours are arguably also relevant to other identified competency requirements. For example, a high degree of co-operation and interdependence, and equal attention to process and results can be related to effective team working and a high degree of risk-taking, and high tolerance of ambiguity to managing change. Adding to this, Cockerill (1989:5455) cites 11 competencies that are associated with high performance management in rapidly changing environments: information search; concept formation; conceptual flexibility; interpersonal search; managing interaction; developmental orientation; impact; self-confidence; presentation; proactive orientation; and achievement orientation. To operate successfully in an environment of dynamic change arguably requires a critical mass of employees who possess competencies associated with continuous learning and development, and transformational leadership skills. These include, for example: experiments; admits mistakes; openness; encourages ideas; makes joint decisions; charismatic; inspirational; goal directed; adopts rational approaches to problem solving; and with a strong concern for the needs of individuals with a capacity to contribute to their further development (Bass, 1990; Evenden, 1993). As before, a number of these overlap competency boundaries. With respect to teamwork, for example, it could be argued that admits mistakes, openness, encourages ideas, makes joint decisions and concern for the needs of individuals with a capacity to contribute to their further development are all relevant. Standing somewhat outside this list are the competency requirements around foreign languages required by global operations. This may simply be expressed in terms of fluency in a number of particular languages but would need to embrace the full range of linguistic competencies, verbal, written, comprehension etc. We could go on but what is already emerging is a very demanding list that leads us to three further points. First, is a reminder that core competencies represent those required in sufficient quantity in the workforce as a whole to support the achievement of corporate strategies and do not represent a person specification to be applied to every prospective employee. Second, the legitimacy of our ideas can be discussed further through class discussion. We would argue, for example, that: the list could be augmented, particularly in the area of diversity (where we have been deliberately silent but where Chapter 13 can be used as a source of ideas); some entries are open to challenge; and others require further exploration to establish their full meaning or legitimacy. Third, any debate around core competencies should be accompanied by the caveat that, however, the competencies are generated they need to be validated in the specific organisational context to which they apply if they are to serve a useful purpose. 2. What do you think would be an appropriate recruitment and selection procedure for Southco to follow? Map out your answer providing as much detail as possible on the recruitment and selection methods you would use. We start with a given that recruitment policy at Southco dictates that in the first instance vacancies must be advertised internally. However, irrespective of whether the focus is internal or external we would advocate that the process should start with the development of comprehensive role descriptions and person specifications that capture the demands arising form the strategic and competency analysis presented immediately above. Therefore we would expect these recruitment documents to adequately reflect role responsibilities and competencies associated with organisational requirements with respect to innovation, quality enhancement, performance management, managing change, diversity, foreign languages and teamwork.
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The job description and person specification will be used as the basis for the creation of a realistic job and organisational preview to be shared with candidates, as stakeholders, at every opportunity. This would start with the production of objective job advertisements providing sufficient detail to enable the prospective candidate to assess their continued interest in the vacancy. We recommend that this should be supported by open access to a help line to discuss the vacancy and, when recruiting externally, the organisation, to ensure a realistic preview of both is fully communicated. For major recruitment exercises involving multiple vacancies, key managerial appointments and areas of short supply we advocate that this be supplemented by open days/evenings designed to enable prospective candidates to subject the organisation to close scrutiny. With respect to external advertising it is difficult to be precise because specific copy and media placement will depend on the particular vacancy in question. However, this must be preceded by a detailed analysis of potential recruitment sources augmented by an evaluation of the companys previous recruitment exercises. For each vacancy we would require a competency-based application form that reflects precisely the core organisational and job competencies demanded by the role. Although some of the information will be common the competency-based component of the application form will need to be tailor-made if it is to be fit for purpose. To provide greater objectivity we would propose that applications received are evaluated independently by three stakeholders against the persons specifications. These stakeholders would then meet to determine the shortlist. Initially the shortlisting panel should identify all those applicants where there is agreement amongst all three stakeholders that they meet the shortlist criteria based on their independent assessments. Hopefully any panel discussion will then be about discussing finer distinctions between such applicants before finalising the shortlist. Cockerill (1989) argued that competencies can be assessed reliably through direct observation and simulated assessment centre conditions. Given the likely complexity of the persons specifications the use of multiple selection methods will almost certainly be necessary if reasonable levels of validity are to be achieved. Under these circumstances assessment centres, which feature direct observation as one of their elements, would be a sensible option. Based on the competency analysis we would anticipate the use of psychometric testing to assess dimensions such as attitudes, intelligence, motivation and personality supported by simulated group exercises to further assess teamwork competencies. In-depth interviews would be competency-based, structured and behaviourally oriented to assess directly those competences incorporated into application forms. Assessment centre exercises directed at work sampling would be designed so as to actively involve other important stakeholders and enable their participation in the selection process. This is seen to be particularly relevant to support the assessment of cultural fit, attitudes to others, interpersonal competencies and teamwork. If there is an interest in exploring the topic of strategic recruitment and selection in greater depth then a further, demanding exercise would be to take competencies identified under Question 1 and work through how each one could be assessed in detail within the multiple selection method context advocated. So, for example, taking risk-taking or high tolerance of ambiguity the task would be to work through how these could be assessed through interview, psychometric testing, work sampling etc. 3. To what extent could Southcos approach to recruitment and selection be classified as strategic? Justify your answer with evidence drawn from case material. Encouragingly there appears to be evidence of both external, vertical integration (Mabey et al, 1998) and institutional integration (Mabey and Iles, 1993) of HRM at Southco where the corporate alignment of the HR function is seen as a critical success factor and the most senior HR manager is regarded as an indispensable member of the senior management team. This is
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further evidenced through the corporate scorecard where the HR function is seen to represent one of the key measurables relating to performance delivery against corporate goals. How this feeds through to recruitment and selection practice, however, is less clear-cut. With respect to the primary features of strategic recruitment and selection (strategic integration, long-term perspective and formalised HRP), the concern for candidate fit both with organisation culture and its global context and the requirement for candidates to be able to adapt to the fastpaced business environment characterising Southco all reflect a strong strategic focus. Although not incorporated into the case study, this was exemplified by the process used to recruit a new managing director during the time the case study was being written. Here the strategic objectives of the organisation were used to identify the key role responsibilities and related objectives of the managing director over the short and longer-term and the personal competencies necessary to deliver these successfully. These key role responsibilities, objectives and competencies then became the basis for all subsequent recruitment and selection activity. What is not evident, however, is the extent to which this overtly strategicallydriven approach to recruitment and selection, demonstrating both the primary features of strategic integration and a longer-term perspective, is used to underpin the recruitment and selection of staff lower down the organisational hierarchy. This is not to say that this is not the approach followed and, on the basis of evidence available from the case, it can at least be argued that the over-arching concern for organisational fit directly reflects these primary features. With respect to the secondary features of strategic recruitment and selection (adoption of a front-loaded investment model, rigorous evaluation, the use of sophisticated selection methods and a multi-stakeholder approach) there is certainly some clear evidence to support some of these features. Here we would argue that the adoption of a front-loaded investment model, the use of sophisticated selection methods and a multi-stakeholder approach are evidenced by: the philosophy that recruiting the wrong person leads to substantial organisational costs; the use of a competency-based approach; the information material sent to candidates to establish realistic organisational and job previews; the length of selection events; the use of behaviourally-based interviews, competency assessments, psychometric testing, presentations and the assessment of team interaction; the involvement line managers and more senior levels of the management hierarchy, the HRD manager and the current role holder; and the joint decision-making process conducted against competency and cultural fit assessments.
On the basis of the evidence available, and acknowledging that this will not necessarily represent a complete picture, we conclude that at the very least Southco are operating a highly professional and sophisticated recruitment and selection process and that at the very best it has strong strategic underpinnings. However, as revealed by our answer to the last case question below, on the basis of available information the process does not meet all of our criteria for strategic recruitment and selection and therefore as currently evidenced is classified as largely but not fully strategic.
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4. What changes would you make to Southcos recruitment and selection processes in order to more fully meet the model, core dimensions and conceptual framework of strategic recruitment and selection captured respectively in Figures 8.3, 8.4 and Key Concepts 8.4? From the foregoing analysis it is argued that the following changes or additions are necessary in order for Southcos recruitment and selection processes to more fully meet the model, core dimensions and conceptual framework of strategic recruitment and selection captured respectively in Figures 8.3, 8.4 and Key Concepts 8.4 in Chapter 8: evidence of closer strategic alignment for a wider range of appointments throughout the organisational hierarchy; evidence that the qualities of the organisations existing HRs are being considered as an input into strategy formulation to establish two-way strategic integration; the explicit use of a HRP mechanism or equivalent to translate corporate objectives into valid core competencies; the clear articulation and use of a set of core values and/or competencies to inform recruitment and selection decisions broadly throughout the organisation; evidence of a long-term focus being adopted in addition to the more immediate job requirements in most appointments throughout the organisational hierarchy; rigorous evaluation of recruitment and selection processes and outcomes to assess: the validity of specified competencies and appointment decisions; stakeholder satisfaction; costeffectiveness; contribution to the achievement of corporate objectives and strategies, and the successful management of change; and to inform the further development of recruitment and selection practice; and more comprehensive evidence that key stakeholders are routinely being involved in recruitment and selection exercises.
References
Bass, B.M. (1990) From transactional to transformational leadership: learning to share the vision, Organizational Dynamics, Winter, 1931. Cockerill, A. (1989) The kind of competence for rapid change, Personnel Management, September, 5256. Evenden, R. (1993) The strategic management of recruitment and selection, in Harrison, R. (ed.) Human Resource Management: Issues and Strategies, Wokingham, AddisonWesley, 219 45. Harrison, R. (ed.) Human Resource Management: Issues and Strategies, Wokingham, Addison Wesley. Mabey, C. and Iles, P. (1993) The strategic integration of assessment and development practices: succession planning and new manager development, Human Resource Management Journal, 3(4), 1634.
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Mabey, C., Salaman, M. and Storey, J. (1998), Human resource management; a strategic introduction (2nd edn), Oxford, Blackwell. Schuler, R.S. and Jackson, S.E. (1987) Linking competitive strategies with human resource management practices, The Academy of Management Executive, 1(3), 20719.
CHAPTER 9
Summary
Performance management is an umbrella term to describe not a single activity but a range of activities which may be gathered together to enhance organisational performance. Although the performance indicators approach to performance management has proliferated in many organisations, it offers a restricted perspective on performance management. Performance management may be linked to the organisations strategy through horizontal and vertical integration. Performance management has the facility to change the culture and therefore the working practices of organisations as part of a concerted effort to generate change through its role as part of an organisations high performance HR strategy. An important way of integrating the HR practices is to use the skills, behaviours and attitudes necessary to deliver effective job performance as a way of assessing individual success. Among the reasons for the growth in importance of performance management, are the desire to achieve greater organisational effectiveness and the dissatisfaction with traditional performance appraisal.
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The performance management systems models includes inputs such as external and internal contexts and employee skills, processes including setting objectives and 360-degree appraisal; HR outputs such as performance plans and pay awards; and enhanced organisational performance. Included in the major conceptual flaws in performance management thinking are the potential preoccupation with management control, the assumed compliance of employees and the dangers of prescribing a particular model of performance management without paying due regard to the organisations context.
Student preparation
Prior to the class, we believe it is essential that students read and make notes from the chapter. We use a variety of vehicles to bridge student preparation and class-based activities in order to enhance their understanding of the chapter content and its overall relationship to managing human resources (HR) strategically. As standard, we would ask students to make a note of any queries arising from their reading and to come to the teaching session prepared to raise them. Sometimes, this may be formalised by asking students to write down (as questions) the three issues addressed by the chapter where they would like further clarification and guidance. Students may also be asked to do one or more of the following: address pre-set questions and write their answers briefly in note format; complete the Self-Check and Reflect Questions and come to the session prepared to share and discuss their responses; and familiarise themselves with the chapter case study (or an alternative case supplied in advance) and come to the session prepared to tackle the case questions.
Our outline answers to both Self-Check and Reflect Questions and case study questions follow in the next two sections of this chapter guide. Pre-set questions that we have found useful for
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structuring student reading, preparatory activities and classroom discussion for the topic of performance management include: 1. How would you define performance management and set it into the SHRM context? 2. What are the weaknesses of performance management in many organisations? 3. What are the principal strategic relationships between performance management and corporate strategy and how could they be evidenced in practice? 4. What do you think are the most important outputs of the performance management model in your organisation or one known to you?
In the classroom
A starting point for classroom activities that we find useful is to raise and discuss the issues arising from students preparatory reading. This avoids providing lecture input that simply repeats what students have already grasped, reinforces the value of reading as an essential prerequisite for class-based discussion and provides a platform from which further class-based activities can be launched. However, when adopting this approach, we find it useful, once student queries have been exhausted, to provide a summary of key issues. Where preparing answers to self- check and reflect questions has been set as part of preparation for the teaching session, at least two alternatives present themselves. First, students can be asked to contribute individual responses that are then subjected to plenary discussion. This is our preferred approach because it makes students more accountable for their personal learning and reserves any group work for case study analysis. Second, students can be formed into groups to share their individual answers and draw conclusions from their discussions. However, if preparing answers to self- check and reflect questions was not part of preparatory work but consideration of the questions is to feature as part of the teaching session, we would favour the group approach as a more stimulating method. In all cases student responses can be considered against our suggested answers, which themselves can be usefully critiqued. Where case study work has featured as part of preparatory activities, similar approaches to those suggested for self check and reflect questions can be adopted. Our approach here would be to start with a more general exploration of the performance management implications of the case.
Follow-up work
The pedagogic features adopted throughout this book are intended to offer a number of alternatives for follow-up work while at the same time leaving lecturers free to add or substitute their own ideas. If they have not already been used as part of class activities, any prior preparation of answers to the self-check and reflect questions and/or the questions suggested for student preparation and/or the chapter case Performance management at Tyco will serve as a useful reinforcement to chapter content. Our outline answers to both self-check and reflect questions and case study questions follow in the next two sections of this chapter guide. There are also a number of follow-up study suggestions after the chapter summary that can be undertaken by students either individually or in groups and an extensive list of references provides many opportunities for directed further reading.
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
are not kept then managers should not be surprised if levels of trust and commitment are not what they hoped for. 9.5. What problems may be involved in distinguishing between lack of capability and negligence? In practice the difference may be quite difficult to establish. Negligence suggests a strong element of wilfulness. In this case the employee is deliberately negligent due to a slipshod, careless attitude. But some cases of negligence may be the consequence of the employee not having sufficient awareness of what constitutes negligence, i.e. he or she is not capable of understanding what negligence means in the context of his or her job. For example, there is a difference between call centre operator A, who treats customers in a brusque manner because she is having a bad day to assistant B who always treats customers in this manner because she does not know the difference between brusqueness and a polite yet business-like manner. The way in which you would treat these two employees would be quite different. Repeated brusqueness on the part of the assistant A would be a misconduct case for the disciplinary procedure whereas assistant B may well be treated as incapable. There may be a case for moving assistant B to alternative work more suited to her skills and experience (e.g. not involving customer contact), always assuming that her employer can offer her such work. 9.6 What other potential problems may be relevant to the introduction or implementation of performance management? Like most other HR initiatives the list is endless! The main problems, as the chapter has sought to illustrate, are concerned with ineffective implementation rather than flawed design. Some of these problems are: resistance from managers who see performance management as just more HR bureaucracy; lack of training for managers and employees; lack of top management commitment; lack of resources and lack of evaluation of schemes in order to see what could be improved. However, there are other potential difficulties, which may be concerned with principle rather than practice. Given the strategic thrust of this book and this chapter it may be that there is a lack of strategic coherence concerned with performance management due to the lack of vertical and horizontal integration.
Clearly it is how effectively the managers conduct these activities that will determine that the performance management system is effective. The most important precursor to the pursuit of these activities is that the managers must be committed to the effective principles of the scheme. This is easier said than done. In many organisations performance management is seen as just another personnel department imposition: as long as its done and the forms are filled in that is all that is necessary. Unfortunately, the metrics based performance
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measurement approach to performance management tends to encourage such a bureaucratic outlook. This is clearly not the approach at Tyco as the second and third aims of the performance management scheme make clear: it empowers employees to take an active and influential part in the processes; and it is designed to assess not only the results that employees achieve but the way in which these results are achieved.
The implications for managers of these twin aims are important. It suggests that commitment to the effective principles of the scheme is not enough. What is also necessary is an enlightened attitude to the management of people, which believes that how people do what they do is as important as what results they achieve. This is profoundly different from the metrics based performance measurement approach to performance management where the emphasis is solely on results. Commitment to the performance management scheme and an enlightened attitude to the management of people must be allied with training in the skills of goal setting, development needs identification, feedback giving and assessment. All this will mean that Tyco managers should play their full part in ensuring that the performance management system is effective. 2. What action is needed to ensure that Tyco employees are equipped to gain the maximum benefit from the performance management system? The handbook which outlines the details of the scheme specifies that employees must: work hard to achieve their goals; take responsibility for their own professional development; solicit, listen to and act upon feedback; assess their performance objectively.
In the same way as managers must be committed to the principles of the performance management scheme at Tyco so must employees. The second responsibility that is thrust upon employees as part of the scheme, to take responsibility for their own professional development, demands a quite different psychological approach from that with which many employees are familiar. They are used to the idea of the employer accepting responsibility for employee development. After all, many of us have grown up with the idea of the organisation being a good company to work for, which will look after us. This is very different from the idea of employees accepting responsibility for their own career planning and development. It is consistent with characteristics of the new psychological contract which are set out in Table 9.1 below.
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Employers key responsibility Employees key responsibility Employers key input Employees key input
Fair pay for a fair days work Good performance in present job Stable income and career Time and effort
High pay for high job performance Making a difference to the organisation Opportunities for self-development Knowledge and skills
Adapted from Hiltrop (1995:290). The third responsibility that is thrust upon employees as part of the scheme, to solicit, listen to and act upon feedback, is consistent with the personal acceptance of responsibility for career development. It demands an openness that, again, will be quite difficult for many employees who are more used to defensiveness when faced with criticism, even of the more constructive type. Assessing their performance objectively obviously demands similar openness. 3. What should be the priority concerns of Tyco HR specialists in their attempt to ensure that the performance management system is fully integrated with other HR activities? The chapter goes into some detail about how performance management systems may be fully integrated with other HR activities. Vertical integration may be achieved by reinforcing to the Tyco mission, and, crucially, relating the organisations business objectives to those of the individual. This, and the notion of the necessity for employees to accept more responsibility for their own development, is consistent with what the chapter notes about performance management being seen as part of a so-called high performance HR strategy. The characteristics of such a strategy are: decentralised, devolved decision-making, made by those closest to the customer so as constantly to renew and improve the offer to customers; development of people capacities through learning at all levels, with particular emphasis on self-management, team capabilities and project-based activities to enable and support performance improvement and organisational potential; performance, operational and people management processes aligned to organisational objectives to build trust, enthusiasm and commitment to the direction taken by the organisation; fair treatment for those who leave the organisation as it changes, and engagement with the needs of the community outside the organisation this is an important component of trust and commitment-based relationships both within and outside the organisation.
All this suggests an emphasis upon attention to organisation structural design (see more detail in the chapter); and training and development to support performance management. 4. What problems may be encountered in applying a standardised performance management system throughout the 100 countries in which Tyco operate? The overall aim of Tycos performance management system is to contribute to the companys goals of achieving operational excellence and becoming one unified company. The aim is to unite Tyco teams throughout the world into a single operating company with a healthy culture characterised by alignment and growth opportunities. This suggests that the key task for Tyco management is to communicate the performance management strategy and policy throughout its operating companies and to train all those involved in its operation. But, given all that Chapter 3 says about cultural adaptation that is clearly easier said than done. Part of the section defining national culture in Chapter 3 states
92 Pearson Education Limited 2007
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that (national culture) affects all aspects of how people think, solve problems and make decisions both within and outside their employing organisations. The complexity of ideas contained in the previous answers to this case study suggests that Tyco employees in different operating countries will think very differently about some of the issues. Take, for example, the notion of individual responsibility for self-development. If this is a problem for many organisations in highly individualist cultures like the United States and the United Kingdom, it follows that it is likely to be even more so in cultures where dependence upon the employer has traditionally been prevalent. An example here is China, whose state-owned enterprises for much of the latter part of the 20th century operated a cradle to grave welfare system where the employer accepted responsibility for all aspects of the employees life, both inside and outside work. Chapter 3 specifies three ways of dealing with national cultural differences: ignoring the differences; minimising the differences and utilising the differences. The first approach sees cultural differences as irrelevant, or at least to push them to one side in the pursuit of standardisation and efficiency. This may be an important part of the MNCs overall business strategy since the strength of international brands such as Wal-Mart and Starbucks depends upon the customer receiving a similar experience in whichever part of the world the store is situated. Tyco may admire the marketing strategy of these organisations but this implies an HR strategy that is similarly uniform, which seems intuitively wrong. The second approach to dealing with national cultural differences is minimising cultural differences. This perspective sees cultural differences as a problem but does not ignore such differences. Operating companies in different countries are given some decision-making autonomy on the basis that local people know what is best for them and the part of the organisation, which is located in the host country should be as local in identity as possible. This approach does not rule out the possibility of the MNC developing a strong corporate culture: but there is sufficient flexibility to adapt that culture to local conditions (Perlmutter, 1969). Indeed, such flexibility may be dictated by the necessity for adapting to local custom and legislation. The third approach is utilising cultural differences. Here Tyco will be concerned to use cultural differences as a learning opportunity and a source of competitive advantage. This will enable the company to take advantage of different ideas and insights from wherever they may come. At first sight, this seems consistent with Tycos desire to become one unified company.to unite Tyco teams throughout the world into a single operating company with a healthy culture characterised by alignment and growth opportunities. But the cost of this is the element of standardisation of the performance management system. We are left wondering whether an effective standardised performance management system is possible. It may be that standardisation is consistent only with bureaucracy and effectiveness with differentiation. So Tycos aim, however laudable, may not be realisable.
References
Hiltrop, J,M. (1995) The changing psychological contract: the human resource challenge of the 1990s, European Management Journal, 13(3), 286294. Perlmutter, H. (1969) The tortuous evolution of the multi-national corporation, Columbia Journal of World Business, 1, 918.
CHAPTER 10
Summary
It is possible to construct a continuum of HRD strategic maturity upon which different approaches to HRD can be positioned. At the strategically immature end HRD is conducted in isolation of organisational strategies. Here any strategic linkage is accidental and HRD interventions represent isolated, tactical responses to operational problems encountered. At the strategically mature end HRD approaches and specific interventions reflect full strategic integration through their effective accommodation of two-way vertical and horizontal integration. In addition to strategic integration, SHRD is characterised by: senior management sponsorship; the commitment and active involvement of all levels of management; effective collaborative partnerships between HRD specialists and line managers; systematic environmental scanning to maximise the lead time for developing HRD responses to change; transformation in the role of HRD specialists from training providers to proactive change agents; a learning culture; and comprehensive evaluation of SHRD interventions. Although often positioned at the non-strategic end of the continuum of strategic maturity, it is possible for the more familiar systematic cycle of HRD to be modelled to incorporate the characteristics of SHRD. The learning organisation and knowledge management have emerged as two recent approaches to HRD that have a strong strategic connection. The learning organisation focuses on the process of learning to learn so as to enable learning within organisations to
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be faster than their competitors and the rate of change. Knowledge management adopts a narrower focus and seeks to capture, disseminate and utilise existing knowledge and generate new knowledge in order to sustain an organisations competitive position and promote innovatory behaviour. Both concepts place a premium on human capital as the route to sustainable competitive advantage where learning and knowledge can assume the status of an organisations core competence. Within a multi-stakeholder perspective, managers can be identified as the linchpin for the successful execution of SHRD. However, for a variety of reasons, their willingness and ability to assume this central role in SHRD is questionable.
Student preparation
Prior to the class, we believe it is essential that students read and make notes from the chapter. We have found that producing mind maps of the chapter content is a useful approach to note taking and encourages students to reflect on the internal integration of the subject content of the chapter. We use a variety of vehicles to bridge student preparation and class-based activities in order to enhance their understanding of the chapter content and its overall relationship to managing HR strategically. As standard, we would ask students to make a note of any queries arising from their reading and to come to the teaching session prepared to raise them. Sometimes this may be
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
formalised by asking students to write down (as questions) the three issues addressed by the chapter where they would like further clarification and guidance. Students may also be asked to do one or more of the following: address pre-set questions and write their answers briefly in note format; complete the self check and reflect questions and come to the session prepared to share and discuss their responses; and familiarise themselves with the chapter case study (or an alternative case supplied in advance) and come to the session prepared to tackle the case questions.
Our outline answers to both self check and reflect questions and case study questions follow in the next two substantive sections of this chapter guide. Pre-set questions that we have found useful for structuring student reading, preparatory activities and classroom discussion for the topic of strategic HRD include: 1. Drawing on the models and conceptual developments contained in the chapter, what for you constitutes SHRD? 2. To what extent is SHRD an unrealistic organisational aspiration and why? 3. Why are the concepts of the learning organisation and knowledge management so difficult to get to grips with? 4. How could organisational HR practice be developed and implemented to foster greater commitment among managers to their HRD role responsibilities? 5. To what extent could HRD practice in an organisation known to you be classified as strategic and what would be necessary to increase its strategic credentials?
In the classroom
Clearly the approach adopted to student preparation can be followed through into the classroom. A starting point that we find useful is to surface and discuss the issues arising from students preparatory reading. This avoids providing lecture input that simply repeats what students have already grasped, reinforces the value of reading as an essential prerequisite for class-based discussion and provides a platform from which further class-based activities can be launched. However, when adopting this approach, we find it useful, once student queries have been exhausted, to provide a snappy summary of key issues. While preparing answers to self check and reflect questions has been set as part of preparation for the teaching session, at least two alternatives present themselves. First, students can be asked to contribute individual responses that are then subjected to plenary discussion. This is our preferred approach because it makes students more accountable for their personal learning and reserves any group work for case study analysis. Second, students can be formed into groups to share their individual answers and draw conclusions from their discussions. However, if preparing answers to self check and reflect questions was not part of preparatory work but consideration of the questions is to feature as part of the teaching session, we would favour the group approach as a more stimulating approach. In all cases student responses can be considered against our suggested answers, which themselves can be usefully critiqued. Where case study work has featured as part of preparatory activities, similar approaches to those suggested for self check and reflect questions can be adopted. If coming to the case afresh, there
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
is unlikely to be time for groups to consider all four questions. Here we would suggest that groups major on one of the case questions only moving on to others if they have time. HRD is an area where almost every student has some experience irrespective of whether they are full or part time. The majority of full-time students will have accumulated work experience prior to and during their higher education studies and many will be following business-related courses, which incorporate a placement element. Therefore, we have found it both feasible and useful to surface these experiences during class discussion and to subject them to critical analysis in order to evaluate their strategic credentials.
Follow-up work
The pedagogic features adopted throughout this book are intended to offer up a number of alternatives for follow-up work while at the same time leaving the lecturer free to add or substitute their own ideas. If they have not already been used as part of class activities, the self check and reflect questions and/or the chapter case study, INA, will serve as a useful reinforcement of chapter content. Our outline answers to both self check and reflect questions and case study questions follow in the next two substantive sections of this chapter guide. There are also a number of follow-up study suggestions after the chapter summary that can be undertaken by students either individually or in groups and an extensive list of references provides many opportunities for directed further reading. One common denominator amongst students is that they are all actively engaged (or should be!) in the process of learning. An interesting exercise, therefore, is to ask them to reflect on the relevance of concepts underpinning the learning organisation and knowledge management to their student learning experiences and how they think these could be exploited in the world of work by both themselves and their work organisations.
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10.2 Before reading on, how would you critique Garavans depiction of SHRD as summarised in Key Concepts 10.2? Although Garavans early work provides a very useful starting point to an exploration of SHRD he appears to approach the subject very much from the perspective of the HRD specialist. Most of the key characteristics he identified relate specifically to the HRD function, which gives rise to a number of potential problems. First, it could be argued that this perspective may signal that the HRD function is seen as the most important stakeholder with prime responsibility for HRD. This would clearly represent a position that is inconsistent with SHRM with its emphasis on devolvement of HR to line managers. However, against this, his two characteristics of top management support and line manager commitment and involvement (Garavan, 1991: 18 and 20) reflect the SHRM roots of SHRD but could lead to a second difficulty. By placing together a heavy emphasis on the functional responsibilities of HRD specialists on the one hand and increased managerial responsibility and involvement on the other it may be setting up a recipe for conflict between these two respective stakeholders. Third, if taken to its extreme, the adoption of SHRM may result in the total abandonment of a specialist HR (and HRD) function making it impossible to activate the HRD functional interventions anticipated by Garavan. Lastly, although the absence of a specialist HRD function may be rare in large organisations the same cannot be said for small and medium-sized organisations. Another problem area arises around the central characteristic of 'integration (of HRD) with organisational missions and goals (Garavan, 1991: 1718). Within Garavans analysis business strategy is introduced in a generalised way that masks its true complexity and SHRD is essentially cast in a downstream relationship to it (although there is acknowledgement of the potential for HRD to influence strategy formulation through its attention to environmental scanning). In previous chapters it has been stressed that strategy is a multi-dimensional concept incorporating two-way vertical integration against a number of different orders (or levels) of strategy. Such issues are discussed at length elsewhere in this book and you are particularly referred back to Chapters 1, 7 and 8 for confirmation. A final possible area of critique arises from potential gaps in Garavans (1991) analysis. For example, his characteristic features of SHRD appear to have a very managerialistic bias. Stakeholder involvement covers HRD specialists, line managers and senior managers with no reference to employees. It may be recalled that in a number of definitions reviewed earlier there was an emphasis in the mutuality between individual and organisational growth such that SHRD was concerned not only with strategic integration but also with developing employees towards their full potential. Increasingly employees may be expected to take the lead role in their own personal development thereby shifting responsibility for SHRD. This is not to say that this shift in responsibility is an outcome of SHRD but it is legitimate to question whether the onus of responsibility might be different under HRD and SHRD respectively. Similarly, approaches to the more prosaic areas of training needs analysis and HRD delivery, including the emphasis of on-the-job training versus off-the-job training, might be differently oriented under SHRD compared to HRD. 10.3 How can SHRD help support second-order strategy changes designed to produce a flatter organisational structure through delayering? Recessionary pressures and cost reduction strategies frequently lead to organisations trying to do more for less. Often this means substantial downsizing and/or delayering with the two frequently being synonymous as layers of management are removed from the organisation. When they are applied in tandem the consequence for the remaining workforce is that levels of output may have to be maintained, or even increased, while at the same time the displaced managerial processes need to be absorbed into the job specifications for those that remain. In order to accommodate restructuring through delayering employees almost inevitably require a different skills base. Firstly, there may be a need for a set of technical skills necessary to
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support multi-skilling in order to enable employees to learn the jobs of colleagues and to cross hierarchic job boundaries, for example, skills associated with quality control, work scheduling, stock inventories and maintenance functions. Secondly, there are conceptual skills, which are frequently demanded by the vertical integration of work particularly where it embraces managerial responsibilities. Examples include quality assurance, problem solving, risk assessment, preventative maintenance and customer service. Thirdly, there are behavioural skills that are strongly associated with management processes and effective team organisation. Examples here could include giving and receiving feedback, negotiation, leadership, communication, group dynamics and personnel functions such as recruitment, HRD, performance appraisal and discipline. Whatever management's motivation for delayering the implications it has for SHRD should now be readily apparent. Almost every change to organisational structures will carry with it the need to develop additional and/or different skills in the workforce. This potentially represents a formidable HRD agenda particularly given the multi-dimensional nature of the skills base outlined above. Organisations will then need to develop specific HRD interventions to address these needs and are likely to do so against the conventional decision options confronting HRD practitioners, for example, on-the-job versus off-the-job HRD or internal versus external provision. Possibilities might include National Vocational Qualifications (NVQ)s, which are designed to provide practical skill development, competency-based HRD programmes and the use of open learning as a vehicle for acquiring theoretical knowledge. The SHRD portents for effective restructuring, however, are not particularly encouraging. Approaches to HRD frequently focus on knowledge and skill dimensions and neglect attitudes perhaps in the hope that appropriate attitude change will automatically flow from behavioural change! The business conditions that frequently spawn restructuring programmes may well lead to disinvestment in HRD rather than challenge the myopic managerial stance on HRD. Lastly, managers may not be of a sufficiently high calibre to handle the challenges to traditional command and control structures presented by restructuring through delayering. This clearly places a premium on management development, as a component of SHRD. 10.4 Why might it be argued that managers are the linchpin in the successful introduction and maintenance of SHRD? Underpinning SHRD is the notion of strategic integration where HRD acts to both influence and shape an organisations strategic direction and support its effective implementation. Managers are arguably the conduit through which this two-way strategic integration can be developed. This is consistent with the key role played by managers in performance management systems (Chapter 9) where they play a vital downstream and upstream role. In the downstream role they act to cascade strategic integration down through the organisation. In their upstream role they act as the channel for the upward communication that can highlight impediments to strategy implementation and/or provide an input into strategy making. Management support, commitment and involvement have been identified as key characteristics of SHRD. For example Garavans (1991) analysis, depicted in Key Concepts 10.2, refers to Top management support where the strategic integration of HRD requires the active support and participation of senior management in order to become a reality and Line manager commitment and involvement where the line manager takes centre stage in identifying and addressing the HRD needs of subordinates. McCracken and Wallace (2000) built on these two propositions to argue that SHRD requires top management leadership and line manager collaboration with HRD specialists to develop strategic partnerships if full strategic integration is to be achieved. They also argue that senior managers should take responsibility for scanning the organisation environment and identifying the HRD implications arising from their analysis (Key Concepts 10.3).
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The active involvement of managers in SHRD covers a number of key areas of responsibility. Managers: will frequently take the lead role in identifying HRD needs; are likely to have substantial input into organisational SHRD resourcing decisions; increasingly contribute directly as coaches and mentors as SHRD interventions move away from prescriptive off-the-job courses to focus on the learning opportunities offered by the immediate workplace; and are likely to be at the heart of the effective transfer of know-how acquired either through offthe-job HRD or workplace learning.
Senior managers arguably represent the dominant coalition of interests in organisations and through their decisions and behaviour, exert strong influence on the prevailing organisation culture. Their decisions on the structural design of the organisation, commitment to their personal development and performance in executing their HRD role responsibilities help determine the extent to which the organisation develops a learning environment. For example, the extent to which mangers are able to create the conditions that support mutual learning and which capture, disseminate and share learning as well as an appropriate culture that supports experimentation, risk-taking, independent thinking, discord, authority based on expert knowledge rather than status is likely to be instrumental to the creation of a learning culture. 10.5 What factors have contributed to the relatively low level of importance attaching to management development? Running through the chapter are a number of references to factors that may impact adversely on management development. For ease of reference these might be grouped under three headings. Based on your own experiences you may of course be able to add to those factors identified here. Firstly, there are the direct experiences of the managers themselves. They may have got where they are with little personal investment in management education and training, which may therefore be perceived as largely irrelevant. This attitude is likely to be reinforced if organisations demonstrably promote staff into management positions on the basis of their functional expertise rather then their potential management competence. Secondly, their interpretation of their role may emphasise functional rather than managerial responsibilities. This may reflect a comfort zone where they find it easier to carry on much as before rather than tackle a set of difficult responsibilities for which they feel inadequately prepared. Further if the way they develop their staff is not explicitly rewarded their functionally oriented behavioural patterns are likely to be reinforced. Thirdly, the way they are managed within the organisation will impact on their attitudes to personal development. They may have experienced little by way of quality one-on-one development time with their manager and are therefore exposed to poor role models. Further, the emphasis on short-term results may send out signals that longer-term investment in HRD is a low priority.
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Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
2. In a number of models of SHRD, employees, line managers and senior managers are identified as having important roles to play in its development (for example Mabey et al, 1998; McCracken and Wallace, 2000). To what extent do these stakeholders represent obstacles to the development of SHRD in INA and how are any such obstacles being addressed? The starting position for business turnaround was not particularly propitious. The workforce was characterised by long-serving employees who had received little task-based HRD. In addition the workforce was generally cynical about managements change intentions because of the failure of previous turnaround initiatives. This cynicism was arguably evidenced by the operation of the grapevine, which was not only rife but had become the most believed source of information in the company. From the collective (union) perspective: the works council was regarded as little more than a forum for discussing housekeeping issues; shop stewards viewed confrontation and not collaboration as the natural modus operandi; and employee relations had deteriorated to such a low level that despite INAs dire predicament strike action was being actively mooted in response to a number of unresolved issues. For line and senior managers the major frustration was that they could not adequately fulfil their role responsibilities, including those related to HRD. In response to the companys predicament, the demands of production had resulted in the HR roles of managers, supervisors and team leaders becoming diluted. In a chain reaction team leaders were spending too much time helping out with production meaning that the management hierarchy had become distorted with supervisors operating as team leaders and managers as supervisors. Also managements previous track record in HRD did not augur well for INAs change in strategic direction. Previous attempts to build skills through NVQ (National Vocational Qualifications) programmes had foundered because of lack of time and commitment amongst supervisors to undertake the necessary assessments of employee competencies. Based on the above, the identified stakeholders could have represented a very significant impediment to the proposed strategic re-alignment. However, action being taken appears not only to be addressing identified obstacles but doing so successfully. As a starting point we would argue that the steps being taken to build a learning culture described immediately above, carry with them significant potential to successfully address the obstacles presented by stakeholder attitudes, behaviours and competencies. For employees, two steps appear to be particularly important. First, was the one-to-one meetings directed at: communicating the companys position honestly; explaining the companys vision for business turnaround; and signaling managements commitment to that vision. Second, was the direct HRD investment by INA in its employees such that even if the latest attempt at business turnaround failed those employees would have at least been equipped with high-level, portable skills that would significantly enhance their employability. A key step from the collective perspective was the forging of a partnership agreement with the trade union Amicus. This resulted in the union signing-up to the change programme and appears to have been a major contributory factor in changing the employee relations climate and opening up a genuine twoway dialogue as exemplified by the re-alignment of the works councils remit and operation. For managers, supervisors and team leaders an important step has been the redefinition of their role responsibilities to enable them to commit to their HRD responsibilities. This has been supported by training needs analysis to identify skills gaps that might constrain effective role performance and appropriate training to meet identified needs such as communication. This has led, for example, to the introduction of an NVQ level 3 in business improvement techniques for supervisors and an NVQ level 3 in management for team leaders.
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3. Where would you position INA along the HRD strategic maturity continuum (Figure 10.8) and how would you justify your placement decision? Drawing on the work of Garavan (1991) and McCracken and Wallace (2000), the strategic credentials of INAs HRD activities have initially been analysed against their 9 characteristics of HRD as follows: 1. There is clear vertical strategic alignment between INAs decision to compete on the basis of quality and its commitment to develop workforce capability through switching investment in machinery to investment in human capital in order to build an employee skill base capable of realising the companys strategic vision. Although there is reference in the case to the works council now playing a key role in developing strategy there is too little detail here to suggest that this vertical strategic integration is anything but downstream at this stage and is therefore more consistent with Garavans views. 2. Consistent with Garavan, the active support of senior management for HRD is apparent through the many initiatives detailed above. This is reinforced by the assistance senior managers provide in customising training to meet INAs context and their participation in its delivery to those with leadership roles. However, no clear picture emerges that senior managers are adopting the strategic HRD leadership role championed by McCracken and Wallace. 3. The strategic and consequent HRD re-alignment, identified in 1 above, appears to have been formulated directly from environmental scanning. However, this is again more consistent with Garavans views as it appears to reflect the previously cited downstream strategic relationship rather than a senior management role to scan the environment for HRD implications as advocated by McCracken and Wallace. 4. HRD plans and policies appear to be being systematically integrated with organisational strategy within a clearly defined HRD strategy directed at developing a continuous improvement culture and building towards a learning organisation consistent with the SHRD views of McCracken and Wallace. 5. There is clear evidence of line manager commitment and involvement. This is consistent with their pivotal role in HRD anticipated by Garavan. However, there is no substantive evidence of line managers developing strategic relationships with HRD specialists as propounded by McCracken and Wallace. 6. The case provides no substantive evidence related to HRD being developed alongside and in a complementary way with other HRM activities. Therefore, although there may be some implicit evidence to the contrary, it is argued that horizontal integration is missing from the strategic equation. 7. The case provides no substantive evidence related to the roles of training specialists in INA. However, reports of INAs story by Roberts (2003) and Evans (2004) both appear to indicate that the Personnel Manager in delivering his HRD role responsibilities is fully engaged as an innovative change consultant consistent with McCracken and Wallaces construction of SHRD. 8. Again consistent with McCracken and Wallaces construction, there is an evident and significant role being played by HRD to influence and change organisational culture. 9. The case provides no substantive evidence related to the process of evaluating HRD in INA. However, the summary of achievements to date, detailed at the end of the case, point to the success of the changes being made at INA particularly in terms of their strategic contribution. Without further data it is impossible to assess the contribution of the various HRD interventions although against this it could be argued that this must have been substantial for the company to be named Welsh people development company of the year in 2003 and shortlisted for CIPDs annual People Management Award in both 2003 and 2004.
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In addition, it is argued that evidence of multi-stakeholder involvement in HRD places INA towards the right hand side of the continuum of HRD strategic maturity depicted in Figure 10.8 in the chapter. Apart from the involvement of senior managers, line managers and training specialists apparent in the foregoing analysis, this includes: collaboration with a local college in delivering the NVQ level 2 programme in performing manufacturing operations; employee representatives through their participation in the works council, its subcommittees and as learning representatives; support of the trades union Amicus in part funding INAs learning centre; and the pivotal role being played by line staff in transforming the companys skill base.
On balance we argue that the above analysis (points 1, 2, 3, 5 and 9) reflect more Garavans (1991) depiction of SHRD although elements of McCraken and Wallaces depiction are evident in points 4, 7 and 8. This, together with evident multi-stakeholder involvement, pushes our placement of INA on the continuum (Figure 10.8) further to the right. In conclusion, although recognising that there is limited evidence of two-way vertical strategic integration, we argue that INAs current position on the 6 point continuum of HRD strategic maturity is significantly to the right of point 4 (HRD) and just short of point 5 (SHRD). 4. Either what recommendations would you make to help INA move further towards strategically mature HRD? Or what further evidence would be needed to justify positioning INA at the SHRD end of the HRD strategic maturity continuum (see Figures 10.3 and 10.8)? Given our analysis in Question 3 above we argue that to fully satisfy positioning INA at the SHRD point on the continuum and to move it even further to the right towards the final point of SHRD plus requires: two-way strategic integration where HRD more explicitly informs strategy formulation and subsequently leads to the position where employee capabilities become identified as the organisations core competence; the development of strategic partnerships between line managers and those with specialist HRD role responsibilities; concerted attention being paid to horizontal integration to ensure the development of a complementary bundle of HRM activities; and success criteria of HRD interventions to be defined at the point of their development and subsequently evaluated using transparent processes with results being openly disseminated throughout the organisation.
With a nod to the second option of Question 4, it could of course be that INA is already doing the above and all that is required is evidence to this effect. More directly, we would argue that to fully justify our current positioning of INA on the continuum requires additional evidence in support of: HRD plans and policies being developed within a clearly articulated and coherent HRD strategy;
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the organisation change consultant role of HRD specialists; the strategic contribution being made by those with specialist responsibility for HRD; HRDs input into shaping and managing culture change; and evaluation of the direct strategic contribution of HRD.
Lastly, it is argued that it is too early to position INA against a concept that is fundamentally long-term in its orientation and that what will be needed is an accumulation of confirmatory evidence over time.
References
Evans, J. (2004) Bearing up brilliantly, People Management, 11 November, 3233. Garavan, T.N. (1991) Strategic human resource development, Journal of European Industrial Training, 15(1), 1730. McCracken, M. and Wallace, M. (2000) Towards a redefinition of strategic HRD, Journal of European Industrial Training, 24(5), 281290. Roberts, Z. (2003) Learning leads the way, People Management, 6 November, 3435.
CHAPTER 11
Summary
Reward management is concerned with financial and non-financial rewards to employees and embraces the philosophies, strategies, policies, plans and processes used by organisations to develop and maintain reward systems. Strategic reward management plays an important role in delivering the organisations overall business strategy by creating in employees certain behaviours, the need for which are implied by the business strategy. These employee behaviours may be produced by an HR strategy, which includes a reward strategy as well as other HR strategies such as the cultural strategy; the structural strategy and other HR strategies. A variety of factors in the external environment have led to the increased interest in strategic reward management. Principal among these are those factors, which have impacted upon the commercial environment in which organisations operate creating the necessity to be more competitive and responsive to change. The intra-organisational factors, which impact upon strategic reward management are the organisation cultural strategies, structural strategies and other HR strategies. In terms of reward the principal contributors to the organisations cultural strategies are pay for performance schemes. These may be at the level of the individual, the team and the business unit and the organisation. The reward contribution to the organisations structural strategies involves changing reward structures. In this chapter the move from traditional pay structures to job family and broadbanded structures were examined. Competence-related pay was analysed as the means by which reward may complement other HR strategies.
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
Student preparation
As with other chapters, we believe it is essential that students read and make notes from the chapter prior to the class. We use a variety of vehicles to bridge student preparation and class-based activities in order to enhance their understanding of the chapter content and its overall relationship to managing HR strategically. As standard, we would ask students to make a note of any queries arising from their reading and to come to the teaching session prepared to raise them. Sometimes this may be formalised by asking students to write down (as questions) the three issues addressed by the chapter where they would like further clarification and guidance. Students may also be asked to do one or more of the following: address pre-set questions and write their answers briefly in note format; complete the self check and reflect questions and come to the session prepared to share and discuss their responses; and familiarise themselves with the chapter case study (or an alternative case supplied in advance) and come to the session prepared to tackle the case questions.
Our outline answers to both self check and reflect questions and case study questions follow in the next two sections of this chapter guide. Pre-set questions that we have found useful for structuring student reading, preparatory activities and classroom discussion for the topic of strategic reward management include: 1. How would you define strategic reward management and set it into the context of SHRM?
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
2. What factors in the external environment have led to the interest in strategic reward management? 3. What are the principal strategic relationships between strategic reward management and corporate strategy and how could they be evidenced in practice?
In the classroom
A starting point for classroom activities that we find useful is to raise and discuss the issues arising from students preparatory reading. This avoids providing lecture input that simply repeats what students have already grasped, reinforces the value of reading as an essential prerequisite for class-based discussion and provides a platform from which further class-based activities can be launched. However, when adopting this approach, we find it useful, once student queries have been exhausted, to provide a summary of key issues. Where preparing answers to self check and reflect questions has been set as part of preparation for the teaching session, at least two alternatives present themselves. First, students can be asked to contribute individual responses that are then subjected to plenary discussion. This is our preferred approach because it makes students more accountable for their personal learning and reserves any group work for case study analysis. Second, students can be formed into groups to share their individual answers and draw conclusions from their discussions. However, if preparing answers to self check and reflect questions was not part of preparatory work but consideration of the questions is to feature as part of the teaching session, we would favour the group approach as a more stimulating method. In all cases student responses can be considered against our suggested answers, which themselves can be usefully critiqued. Where case study work has featured as part of preparatory activities, similar approaches to those suggested for self check and reflect questions can be adopted. Our approach here would be to start with a more general exploration of the strategic reward management implications of the case.
Follow-up work
The pedagogic features adopted throughout this book are intended to offer a number of alternatives for follow-up work while at the same time leaving lecturers free to add or substitute their own ideas. If they have not already been used as part of class activities, any prior preparation of answers to the self check and reflect questions and/or the questions suggested for student preparation and/or the chapter case Developing a global reward strategy at Tibbett and Britten Group will serve as a useful reinforcement to chapter content. Our outline answers to both self check and reflect questions and case study questions follow in the next two sections of this chapter guide. There are also a number of follow-up study suggestions after the chapter summary that can be undertaken by students either individually or in groups and an extensive list of references provides many opportunities for directed further reading.
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
development) renders employees less motivated by the prospect of achieving new competences.
Clearly it was felt that such fundamental concerns of reward strategy were being prejudiced by a lack of internal reward consistency. The potential harmful outcomes of a lack of internal reward consistency are always the perception by some employees that they are being unfairly treated in comparison with others. One of the basic truths of reward management is that all of us, as employees compare our salaries with someone else, both inside and outside our employing organisation. Preventing perceptions of unfairness is well-nigh impossible. But employers can take as many steps possible to lessen these by attempting to achieve internal consistency within the organisation and external consistency with similar jobs and similar employers in the relevant labour market. Tibbett and Britten sought to do this through bringing a measure of internal consistency to reward by establishing a group policy framework that would: help managers communicate a coherent policy on reward; guide country managers in the alignment of reward policies and projects within overall group principles; initiate a cost-effectiveness review of current reward expenditure in light of what is identified as valued by employees; and maintain the flexibility for local innovation and adaptability to customer's needs. It should be borne in mind that most of Tibbett and Britten Groups employees were transferred from major customers such as Debenhams, Homebase or IBM. These employees retained their existing terms and conditions of employment. This meant that there were a wide variety of pay and grading arrangements in operation. These varied by country and by contract. There were short- and long-term incentives and other benefits. There were also differing local relationships with trade unions. Local managers had traditionally agreed to vary certain arrangements locally and to pay upper quartile rates, for instance, or to use a particular form of competency-based pay. While the use of Tibbett and Britten Group incentives and benefits had become more consistent, many contracts were determined by the terms and conditions transferred from the customer. Most non-management employees were not on Tibbett and Britten Group terms and conditions. Managing the anomalies thrown up by this inconsistency was a key issue in the company's relationships both with employees and customers.
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2. Look again at the ten principles. Do you think there may be any potential contradictions inherent in these principles? Some potential contradictions are suggested. These may be: Principle Think global, act local by creating programmes that employ group principles and maintain optimum internal consistency and cohesion, while providing the flexibility to adapt to local market requirements and practices. Potential contradictions It may sound a bit pedantic but the very act of providing the flexibility to adapt to local market requirements and practices may in itself contain the potential to lead to internal inconsistencies. To deny the opportunity for managers the scope for flexibility to adapt to local market requirements would, of course, be unworkable, but the threat of internal inconsistencies must be recognised. As the chapter points out, one of the problems of problems of paying for individual job performance is that managers find differentiating between individual performance levels is very difficult. This may be for a variety of reasons. One of these, which the Tibbett and Britten Group reward principle opposite overlooks, is that the contribution of individuals may be broadly similar. This can lead to a situation of forced differentiation which contains the potential for internal inconsistency and perceived unfairness. Again, It may sound a bit pedantic, but the emphasis upon the unique characteristics of certain roles, as opposed to their similarity, leads to differentiation which potentially leads to internal inconsistency and perceived unfairness. The pursuit of internal consistency suggests to us an activity associated with cool rationality; recognition from the head rather than recognition from the heart. The latter suggests the potential for subjectivity rather than objectivity, and for inconsistencies such as favouritism. Again, the components of this principle: flexibility, choice, diversity, responding to customer requests; suggests decisions which do not reflect internal consistency.
Pay for performance, strongly differentiating rewards, which reflect the underlying contribution of individuals through performance assessment against stretching objectives.
Implement rewards selectively and tactically, where justified, in recognition of the unique characteristics of certain roles.
Support and encourage all managers to recognise from the heart the contribution of individuals and teams, as a critical component of the Total Rewards strategy.
Incorporate flexibility in the design of reward programmes, to provide the benefit of choice across our increasingly diverse workforce and to facilitate controlled tailoring to customer requests.
The answer to this question may strike you as rather over-critical. Does not all human activity contain the potential for contradiction? Are we all as humans entirely rational and consistent in our thoughts and actions? Of course, we are not. And Tibbett and Britten Group reward principle designers are no different from the rest of us. Preventing internal inconsistency is, arguably, impossible and may be undesirable. Being aware of its potential is neither.
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3. What potential benefits do you think may accompany the achievement of greater transparency in the new reward strategy? Look again at the answer to Question 1. The point was made that preventing perceptions of unfairness is well-nigh impossible. But employers can take as many steps possible to lessen these by attempting to achieve internal consistency within the organisation and external consistency with similar jobs and similar employers in the relevant labour market. It is tempting for employers to conceal their reward decisions as much as possible on the basis that concealment heightens management control while transparency lessens management control. After all, the less employees know about pay reward decisions the weaker position they are in to challenge those decisions. While managers at Tibbett and Britten Group may not want to go as far as revealing all the details about the rewards to individuals the basis upon such reward decisions were made will lessen the possibility of perceived unfairness.
CHAPTER 12
Summary
The management of the employment relationship is a central area of discussion, research and organisational practice within the field of SHRM. Key concepts include the shift from traditional industrial relations to employee relations. Key parties to the employment relationship can be the grouped into bodies representing employers and employees. Two key differing perspectives in relation to a strategic approach to the management of the employment relationship namely unitarism and pluralism are identified and discussed. Key theoretical contributions in relations to strategic HRM and employee relations have been identified and grouped. Four possible organisational approaches to the management of the employment relationship are presented. These four approaches are: new realism, traditional collectivism, individualised SHRM and the black hole. Potential policies and practices in relation to managing employee relations in a strategic manner are discussed. This discussion is presented under the central theme of employee involvement and participation. Within this context two key approaches are discussed in depth namely partnership and the psychological contract. The practical realities of developing and managing partnership are discussed, as are the elements involved in the development of the psychological contract at the workplace and organisational level.
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
Student preparation
Prior to the class, we believe it is essential that students read and make notes from the chapter. We have found that producing mind maps of the chapter content is a useful approach to note taking and encourages students to reflect on the internal integration of the subject content of the chapter. We use a variety of vehicles to bridge student preparation and class-based activities to enhance their understanding of the chapter content and its overall relationship to managing human resources strategically. As standard, we would ask students to make a note of any queries arising from their reading and come to the teaching session prepared to raise them. Sometimes this may be formalised by asking students to write down (as questions) the three issues addressed by the chapter where they would like further clarification and guidance. Students may also be asked to do one or more of the following: address pre-set questions and write their answers briefly in note format;
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
complete the self check and reflect questions and come to the session prepared to share and discuss their responses; and familiarise themselves with the chapter case study (or an alternative case supplied in advance) and come to the session prepared to tackle the case questions.
Our outline answers to both self check and reflect questions and case study questions follow in the next two substantive sections of this chapter guide. Pre-set questions that we have found useful for structuring student reading, preparatory activities and classroom discussion for the topic of managing the employment relationship include: 1. How would you define the employment relationship and set it into the SHRM context? 2. What are the principal strategic relationships between employee relations and corporate strategy and how could they be evidenced in practice? 3. What do you understand by the term strategic approaches to the management of the employment relationship? 4. How would you argue the case for and against the formal adoption of strategic employee relations by organisations?
In the classroom
Clearly the approach adopted to student preparation can be followed through into the classroom. A starting point that we find useful is to surface and discuss the issues arising from students preparatory reading. This avoids providing lecture input that simply repeats what students have already grasped, reinforces the value of reading as an essential prerequisite for class-based discussion and provides a platform from which further class-based activities can be launched. However, when adopting this approach, we find it useful, once student queries have been exhausted, to provide a snappy summary of key issues. Where preparing answers to self check and reflect questions has been set as part of preparation for the teaching session, at least two alternatives present themselves. First, students can be asked to contribute individual responses that are then subjected to plenary discussion. This is our preferred approach because it makes students more accountable for their personal learning and reserves any group work for case study analysis. Second, students can be formed into groups to share their individual answers and draw conclusions from their discussions. However, if preparing answers to self check and reflect questions was not part of preparatory work but consideration of the questions is to feature as part of the teaching session, we would favour the group approach as a more stimulating approach. In all cases student responses can be considered against our suggested answers, which themselves can be usefully critiqued. Where case study work has featured as part of preparatory activities, similar approaches to those suggested for self check and reflect questions can be adopted. Greater topicality can be achieved by capturing the big business news stories of the week, discussing the employee relations issues that are likely to arise and exploring how a strategic approach to the management of the employment relationship might be used effectively to address these issues.
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Follow-up work
The pedagogic features adopted throughout this book are intended to offer a number of alternatives for follow-up work while at the same time leaving the lecturers free to add or substitute their own ideas. If they have not already been used as part of class activities, any prior preparation of answers to the self check and reflect questions and/or the questions suggested for student preparation and/or the chapter case Strategic Approaches to the Employment Relationship Social Partnership: The example of the Republic of Ireland will serve as a useful reinforcement to chapter content. Our outline answers to both self check and reflect questions and case study questions follow in the next two substantive sections of this chapter guide. There are also a number of follow-up study suggestions after the chapter summary that can be undertaken by students either individually or in groups and an extensive list of references provides many opportunities for directed further reading.
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largely pluralistic in nature. In the United Kingdom and Ireland most public sector employees are managed in a pluralistic manner. 12.3 Choose an organisation with which you are familiar and, using Guests (1995) evaluation of the four possible approaches to the management of the employment relationship describe the current employment relationship. You should be able to identify, discuss and assess the four distinct types of management of the employment. In considering each approach to the management of the employment relationship approach you should be able to identify the key concepts and components of each approach and compare and contrast this with the policies and practices of the organisation they have chosen. You should attempt to evaluate the policies and practices of the organisation in relation to the four distinct approaches to the management of the employment relationship and decide which of the approaches is most prominent in the organisation. 12.4 Consider the arguments for and against the development and introduction of a partnership agreement in an organisation. You should be able to talk about the recent developments at national, industrial and organisational levels. In presenting arguments for and against the partnership model you should consider the elements required to develop a partnership agreement and the key stakeholders involved. The nature of the organisation you choose will have a major impact on how you answer this question. Factors to be included in your analysis are: the industry where companies operate, their key markets, products or services, the ownership of the organisation, the organisational culture, the size of the organisation, the structure of the organisation, previous relationships between the employer, employees and the union and the current methods for employee involvement and participation. The involvement of management is of vital importance and, depending on the organisation, can be viewed as an advantage or a disadvantage. 12.5 To what extent is the new psychological contract a myth dreamed up by HR commentators to add a new dimension to discussions about SHRM? As with significant elements of the general theory of SHRM, there may be an element of overstatement here in that the idea or the rhetoric as it has referred to it in this chapter may be running somewhat ahead of the organisational reality. The emergence of the new psychological contract can be considered as the consequence of two observable trends. The first is that all organisations have to be mindful of operating costs. In such a climate, the promise of a job and career for life is an expensive one. The second trend is the desire that many employees have to take control of their lives. This means that the concept of working for one organisation throughout a 40-year career is becoming less and less appealing.
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The answers to this case study are presented in the form of a handout that can be used in answering the questions presented in the case study or for studying the subject of employee relations approaches in more depth.
Approach may also depend on whether it has sectional interests, like unions or employers, to take care of. This is not to argue that governments have no scope for independent, autonomous action that they are always prisoners of ideology and/or interest groups, or of the capitalist system itself. It is simply to note that we are dealing here with a matter of popular controversy one at the core of the public policy-making process.
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
Corporatism
Bargained or neoCorporatism
Neo-laissez faire
Crouch uses 'liberal' in original 19th Century sense as demanding the freeing of individuals from all forms of community, economic, moral and political restraints. In particular: Freedom from interference by the state in the economy (in the 19th Century) meant allowing market forces to work without interference. Similarly, individualism meant liberty for the individual to grasp opportunities available to him; but it also meant being forced to remain an individual and not to combine with others (Emphasis added). Revived in Ronald Reagans America and Mrs Thatchers Britain in 1980s, as a product of neoliberalism, its three essential tenets are: 1. pursuit of individual self-interest is the engine of economic progress; 2. state must ensure that vested interests especially trade unions are not permitted to interfere, using essentially illegitimate collective power, with the totally free operation of markets; 3. no role for government in setting pay and conditions of employment, and no role for interest groups in formation of public policy. In late 1970s British unions were still strong so it was necessary, to attain neo-laissez faire IR, for them to be weakened, using a number of measures: by legal restrictions on union power in workplace help employers resist unionisation, and make it more difficult to engage in industrial action by de-regulation of the labour market: no minimum wage; no union labour only contracts; privatisation of state enterprises; tendering for public services; erosion of legal job security rights; accepting unemployment as method of wage regulation by ending social partnership: elimination of unions and employers from influence on formation of government social and economic policy.
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This was liberal in traditional ideological terms, but also liberal in a modern sense meaning tolerant, progressive and defensive of diversity. In Britain and Ireland FCB also retained in one important respect the key liberal canon of no state interventionism: governments were to be more or less bystanders as regards industrial relations. FCB faith was based on conviction that both order on the streets and just as importantly, economic and social justice were most likely to be assured by unregulated free collective bargaining; and free meant: virtually total independence of industrial relations system from government control; general distrust of law and its restrictive effects; complete self-reliance and independence of TUs, employers and employers associations.
These freedoms were regarded as so essential that the only real interventions by governments were: to offer further support for FCB; to provide a substitute for it and/or; to apply moral pressure.
Support: took form of state-funded conciliation and arbitration, designed to provide help when normal bargaining had not produced agreement. Substitute: was represented in what later came to be known as Wages Councils, which set minimum wages in certain trades. Exhortation: the most a government operating a rigorous liberal collectivist FCB policy might do as regards wage levels was to urge the parties to moderation Corporatism
Classical Neo-Corporatism
As we have already noted, neo-corporatism was generally influenced by a social democratic ideology, and was popular in Europe in 60s and 70s. It involved state and organisations of employers and workers working jointly to achieve social justice. And it usually included incomes (control) policies, and the effective redistribution of wealth. What actually provoked the European turn to neo-corporatism from 1960s onwards? Two things: high inflation, industrial militancy, low productivity;
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slow down in post-war boom including a so-called investment strike, under which the captains of capital invested in property, for example, rather than entrepreneurial ventures.
In response, governments sought to change the behaviour of both the employers and the trade unions by giving them a role in policy-making. Classical agreements usually involved increases in public spending often funded by borrowing. Sometimes this also involved labour market regulation concessions to unions, such as: legislation protecting employees from arbitrary or unfair dismissal; top-down, representative employee involvement in organisational decision-making.
(In Ireland the late 1970s legislation requiring appointment of worker directors to boards of semi-state companies is a good example of this).
Competitive Neo-Corporatism
But, as in Ireland, this tradition of neo-corporatism virtually withered on the vine in Europe in the 80s. Why? economic recession; globalisation of markets; ideological shift towards neo-liberal thinking.
But it revived in 1990s in a different form. It was now about competitiveness, enterprise and cutting public expenditure. The focus of agreements now turned towards: pay deals consistent with national competitiveness; sustainable levels of public expenditure; reform of tax and social welfare systems; measures to increase flexibility, skill and quantity of labour.
Union sides no longer claiming pacts as major, beneficial negotiating breakthroughs. Instead found themselves on defensive: best that could be achieved in difficult economic conditions. There was also effective abandonment by many governments of Keynesian demand management. This reflected not only an ideological move to the neo-liberal right, but also curtailed latitude that existed to use public spending to prime economic activity. In defence of absence of specific mechanisms to reduce inequality, poverty and want, the argument was that a rising tide lifts all boats in other words, everyone would benefit automatically from economic success. Instead of labour market regulation, new neo-corporatist pacts began to include de-regulation, in a variety of forms including some of the mechanisms used by the Thatcher government in 1980s:
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on employee involvement, emphasis changed too, towards employers rather than workers interests; direct, bottom-up, individualised, employee involvement, linked to promotion of company objectives, especially achieving competitive edge.
However, looking back at our policy choices, perhaps only serious choice now is between neolaissez faire and neo-corporatism? We shall now look at the case of social partnership in the Republic of Ireland Inherited policy: free collective bargaining.
For employers decentralised bargaining had been a mixed blessing. Number of strikes had fallen significantly, and trends in wage levels had begun to moderate. But all governments had relied on borrowing rather than cutting expenditure to meet social spending. And while pay increases outstripped inflation and thus threatened competitiveness, the social costs of employment taxation, pensions and social welfare were also an increasing burden. Though the employers were not exactly inspired by the idea, then, centralised bargaining (neo-
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corporatism or social partnership in other words) did seem to offer the possibility of linking economic and fiscal reform with pay determination, and preferably pay restraint Fianna Fil (FF) and a new partnership. FF viewed the difficulties of the 198387 Coalition with more political concern than political pleasure. Main reason was that they were going to inherit those difficulties as in due course they did, as a minority government formed in 1987. But the FF social partnership inheritance had also been reasserting itself, and some careful wooing of ICTU figures in advance ensured that the unions, at any rate, were already on-side. The result was a 3-year tripartite agreement the grandly-titled Programme for National Recovery (PNR). It set sharp limits on pay, with only a 3% per annum increase on first 120 per week of earnings, and 2% thereafter with underpinning minimum of 4. The most significant features were (competitive?) commitments to the control of public expenditure and a reduction in government borrowing. But PNR included other broadly expressed classical commitments: to promote increased employment through industrial development; to improve social welfare provision; and to reduce direct taxation on lower paid workers covered by the PAYE system.
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provisions followed much the same pattern as in the two previous pacts, but more attention was given to non-pay issues. As title suggests, one of the main non-pay issues addressed by the PCW was unemployment. Another was employee involvement (EI); for ICTU now wanted more than the lip service paid to this in the PNR and PESP. Significantly, an ICTU internal report on new management methods seemed to endorse bottom-up EI with a competitive edge component. What was wanted was for partnership at national level to be complemented by partnership in the enterprise, the plant and the office. But while there were more words about participation in the PCW, IBEC (Irish Business and Employers Confederation the successor to FUE) fought hard against anything too prescriptive. There was further disappointment for ICTU when post-agreement discussions produced little more. PCW ended on a sour note, with public service workers complaining loudly that they had done poorly in comparison with other groups.
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
New agreement contained Government commitments to spend 25m on a range of important social projects before 2000. Targeted specifically were the long-term unemployed, the educationally disadvantaged, those on low incomes and those living in the more deprived areas of the country. Where to after P2000? There were a number of other things to cheer supporters of social partnership Though anecdotal evidence suggested wage drift beyond agreed norms, a survey of 1,000 pay settlements confirmed that the level of adherence was remarkably high. And there were other achievements: agreement in broad terms to a procedure for union recognition; unemployment had dropped sharply.
Question 3 Why has social partnership remained in Ireland: arguments for and against.
Stick with partnership?: no! On the neo-liberal side it was argued: firstly, the unions had pushed their luck too far. Moreover, ICTU was no longer the authentic, majority voice of Irish workers; it now represented predominantly public sector employees;
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and it had failed to convince most investors especially the US high-tech companies to recognise trade unions; secondly, it was claimed that the aims that prompted the birth of social partnership in the late 80s had been almost fully realised. Needed now was a dose of free market, laissez faire industrial relations to sharpen up the act of the unions, management and employees; thirdly, the pay agreement at the core of the PPF was becoming a fiction. Increases in the booming parts of the private sector appeared to be exceeding the PPFs pay norms. And pay militancy was rising in the public sector. Could increases really be held to 2 3% in a highly successful economy with real labour shortages?; fourthly, there was widespread partnership fatigue arising from the 20+ working groups set up under the PPF on work, housing, gain sharing etc.
This demanded return to the leaner and less complicated agreements of the late 80s and 90s. Stick with partnership?: yes! As against all that, three main pressures for a continuation of social partnership: firstly, a simple argument was that the cumulative benefits of social partnership were so obvious that it would foolish to throw them all away. It would be even more regrettable to abandon the uniquely Irish neo-corporatist model one that incorporated both classical and competitive neo-corporatism, and represented, as it were, neo-liberalism with a social conscience; secondly, there was some apprehension that a return to unfettered FCB would be too much of a shock for the industrial relations system. Associated worry that many managers and union officials were ill-equipped to deal with face-to-face negotiating at firm and plant level; thirdly, and perhaps most telling, it was argued that retaining neo-corporatism was essential in face of an economic downturn. With so much US investment, Ireland is especially vulnerable to effects of the US recession of 2001, that was deepened by the 9/11 terrorist attacks. To make economic matters worse, soon after the 2002 General Election which returned the FF/PD coalition for a second term suspicions about looming problems in public finances were proved justified. Expenditure running well beyond expectations, but tax receipts appeared to be in serious decline too. This was not the right moment, so it was argued, to make any radical change of approach. Social partnership might be essential for economic stability.
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Competitiveness obviously became a stronger component with passage of time, but issues of justice and fairness have not been lost sight of. The present Irish model of social partnership thus represents what we might call a balanced version of neo-corporatism unique to RoI; would surely be a mistake to let this major indigenous institutional achievement fall by the wayside. But was neo-corporatism/social partnership a major factor in the development of the Celtic Tiger?
What created the Celtic Tiger and can social partnership work in the United Kingdom?
Cynics dismiss social partnership as causal factor; so let us try to evaluate what actually was responsible for recent Irish economic growth: European money (Euro-gold) OK, but this could only be used for infrastructural projects; educated labour force important, but shared with United Kingdom; English speaking once again shared, but Republic of Ireland is the only English-speaking country within the Eurozone; Industrial Development Authority is good at selling Ireland yes, but have to have a good product to be a good salesperson; low corporation tax a crucial advantage; low social costs yes, but social costs are even lower in the United Kingdom; low value of the euro this is the one no one talks about, but it must not be discounted!; good government? who knows!; Favourable conjunction of circumstances? in other words luck!
All these factors would play a part in the creation of a social partnership agreement in the United Kingdom. Table 12.1: Key policy elements sustaining progress factors the United Kingdom could consider in a social partnership agreement.
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Poverty and social inclusion Health and addressing health Inequalities Equality Access to quality public services Challenge of delivering a fair and inclusive society
Protecting employees rights ensuring greater equality Improving skills Promoting health and safety Achieving a better work - life balance Developing integrated policies for migrant workers Partnership in the workplace
Social partnership: two clear potential benefits for the United Kingdom: low inflation a key factor early on; psychological effect arguably the most important in the long-term, for both the United Kingdom and for potential investors.
It seems impossible, then, to conclude other than that social partnership was key if not the key, to recent economic success of the Republic of Ireland and could be a key to future economic success in the United Kingdom. But as well as those relating to employee relations and economic results, there is another wider lesson to be learned by the United Kingdom from social partnership because the Irish experience shows that neo-corporatism is a real and demonstrably effective policy alternative to full-blooded neo-liberalism.
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That a social partnership/neo-corporatist Ireland and a free market/neo-laissez faire United States were both among the best performing economies 1990s and early 2000s is an adequate testimony to this.
Further Reading
Essential piece is Cradden T, Social Partnership in Ireland: a rising tide lifts all boats?, in Collins N & Cradden T (eds), Political Issues in Ireland Today, 3rd edn, Manchester: MUP, 2004. For a denser piece see Roche WK & Cradden T, Neo-corporatism and social partnership, in Adshead M & Millar M, Public Administration in Ireland, London: Routledge, 2003. For opposing views, see Allen K, The Celtic Tiger: The Myth of Social Partnership in Ireland, Manchester: MUP, 2000; and Kirby P, The Celtic Tiger in Distress, London: Palgrave, 2002. Also worth a look are: Teague P, Pay Determination in the Republic of Ireland: Towards Social Corporatism?, British Journal of Industrial Relations, Vol 33 No 2, 1995. Visser J, Two Cheers for Corporatism, One for the Market: Industrial Relations, Wage Moderation and Job Growth in Holland, British Journal of Industrial Relations, Vol 36 No 2, 1998. Irish Congress of Trade Unions website at [http://www.iol.ie/ictu].
CHAPTER 13
Summary
Conceptualisations of diversity management within the literature can be broadly categorised into two groups: the equal opportunities approach, which has a legislative and compliance focus and is concerned with equality of status, opportunities and rights. This, it can be argued, is deeply rooted in traditional approaches to human resource management; the managing diversity approach, which focuses upon an explicit holistic strategy of valuing differences, such as age, gender, social background, ethnicity and disability. This, it can be argued, is like SHRM, driven by organisational needs.
The business case claimed for a managing diversity approach includes a better public image for the organisation, a satisfying working environment for employees, improved employee relations, increased job satisfaction and higher employee morale, increased productivity and, for the organisation, improved competitive edge. It is argued that organisations will only survive and prosper in an increasingly competitive and dynamic global environment if they respond to the heterogeneity of their markets. However, there is limited empirical evidence to support these claims in either the UK or USA. Despite a lack of evidence, it seems probable that the benefits of diversity management will only be realised within the context of the re-alignment of an organisations culture to one
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where diversity is valued. For this to happen, it will be necessary to persuade those in power that this will impact positively on organisational effectiveness. Empirical evidence suggests that, for many organisations, diversity management remains a theoretical concept rather than a strategic reality, combining equal opportunities and managing diversity approaches. The most frequent reason advanced for this is that organisations believe they are already undertaking sufficient investment through ensuring equality of opportunity. However, for organisations considering the implementation of a managing diversity approach, advice is available.
Student preparation
Prior to the class, we believe it is essential that students read and make notes from the chapter. We have found that producing mind maps of the chapter content is a useful approach to note
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taking and encourages students to reflect on the internal integration of the subject content of the chapter. We use a variety of vehicles to bridge student preparation and class-based activities to enhance their understanding of the chapter content and its overall relationship to managing human resources strategically. As standard, we would ask students to make a note of any queries arising from their reading and to come to the teaching session prepared to raise them. Sometimes this may be formalised by asking students to write down (as questions) the three issues addressed by the chapter where they would like further clarification and guidance. Students may also be asked to do one or more of the following: address pre-set questions and write up their answers briefly in note format; complete the self check and reflect questions and come to the session prepared to share and discuss their responses; and familiarise themselves with the chapter case study (or an alternative case supplied in advance) and come to the session prepared to tackle the case questions.
Our outline answers to both self check and reflect questions and case study questions follow in the next two substantive sections of this chapter guide. Pre-set questions that we have found useful for structuring student reading, preparatory activities and classroom discussion for the topic of diversity management include: 1. What are the main differences between equal opportunities and managing diversity approaches? 2. Outline the key legislation with regard to equal opportunities and managing diversity since 1975. 3. What arguments have been put forward to support the business case for managing diversity?
In the classroom
Clearly the approach adopted to student preparation can be followed through into the classroom. A starting point that we find useful is to surface and discuss the issues arising from students preparatory reading. This avoids providing lecture input that simply repeats what students have already grasped, reinforces the value of reading as an essential prerequisite for class-based discussion and provides a platform from which further class-based activities can be launched. However, when adopting this approach, we find it useful, once student queries have been exhausted, to provide a short summary of key issues. Where preparing answers to self check and reflect questions has been set as part of preparation for the teaching session, at least two alternatives present themselves. First, students can be asked to contribute individual responses that are then subjected to plenary discussion. This is our preferred approach because it makes students more accountable for their personal learning and reserves any group work for case study analysis. Second, students can be formed into groups to share their individual answers and draw conclusions from their discussions. However, if preparing answers to self check and reflect questions was not part of preparatory work but consideration of the questions is to feature as part of the teaching session, we would favour the
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group approach as a more stimulating approach. In all cases student responses can be considered against our suggested answers, which themselves can be usefully critiqued. Where case study work has featured as part of preparatory activities, similar approaches to those suggested for self check and reflect questions can be adopted. If coming to the case afresh, there is unlikely to be time for groups to consider all four questions. Here we would suggest that groups major on one of the case questions only moving on to others if they have time. Equal opportunities and diversity is an area where every student has some experience irrespective of whether they are full or part time. Most full-time students will have accumulated work experience prior to and during their higher education studies and many will be following business-related courses, which incorporate a placement element. Therefore, we have found it both feasible and useful to surface these experiences during class discussion and to subject them to critical analysis to evaluate their strategic credentials.
Follow-up work
The pedagogic features adopted throughout this book are intended to offer up a number of alternatives for follow-up work while at the same time leaving the lecturer free to add or substitute their own ideas. If they have not already been used as part of class activities, any prior preparation of answers to the self check and reflect questions and/or the questions suggested for student preparation and/or the chapter case Making diversity an issue in leafy Elgarshire will serve as a useful reinforcement to chapter content. Our outline answers to both self check and reflect questions and case study questions follow in the next two substantive sections of this chapter guide. There are also a number of follow-up study suggestions after the chapter summary that can be undertaken by students either individually or in groups and an extensive list of references provides many opportunities for directed further reading.
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
However, in the 60 plus age group, the population is set to rise from 83m in 2005 to 123m in 2030, and increase of more than 40%. Over the next 25 years, the number of full-time workers in the EU is set to fall by 8%, but the number of long part-time work (2031 hours per week) is predicted to remain constant. Short part-time work (less than 19 hours), however, is set to rise by 5% across the EU. Thus, general trends would indicate that over the next 25 years, the working population across the EU will be older, less reliant on full-time workers and a greater shift to more flexible forms of working, particularly short part-time work. In terms of gender composition, employment growth will occur in the part- time sector, more typically associated with a female workforce.
As for other more general trends indicated by the above data, the following are frequently mentioned in the literature: a decline in the youngest labour market group, of 1624-year olds. in the UK, 80% of labour market growth by 2010 will be amongst women by 2010 only 20% of the workforce will be white, able-bodied, male and under 45. the above trends indicate that employers have little option but to broaden their view on the types of people to target in the labour force. Those relying on the so-called traditional model of an employee as being white, able-bodied, male, under 45 and working full-time, are likely to find themselves facing severe skills shortages in the not too distant future. What do you consider to be the strengths and limitations of the equal opportunities and the managing diversity approaches to diversity management?
13.2
Equal Opportunities Although your list may differ in the way it is worded from the one below we would expect you to have listed most of the following strengths: the equal opportunities movement, gaining legislative force in the 1970s, has focused attention on the organisational practice of equal opportunities, and through such attention has made practices like direct sex and race discrimination a rarity. the movement has gained much from legislative backing, with Acts in relation to sex, race and disability being on the statute books for three decades. The area is a developing one, with new provision being made as circumstances require; for example, regulations to limit age discrimination and to protect against discrimination based on sexual orientation.
as well as the following limitations: treats everyone the same, and focuses on disadvantaged groups; can mean people lose their individuality and that simply by being a member of a particular group discrimination is assumed to be an issue. there has been little observable impact (except in the case of direct race and sex discrimination) on employment patterns, despite three decades of legislation. For example, men still account for the most senior management positions in the United Kingdom,
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womens pay still lags behind that of men and those from ethnic minorities and the disabled have made few inroads into senior organisational positions. it is argued that a compliance-based model may mean that organisations while complying with the letter of the law, do not actually comply with the spirit of the law; the equality approach does not address this issue.
Diversity Management Although your list may differ in the way it is worded from the one below we would expect you to have listed most of the following strengths: It is a strategic approach to managing people, which does not try to suppress difference but actually seeks to identify it and value it. Its focus on improving organisational performance through promoting practices designed to enhance individual productivity is seen as a key component of effective people management. It is a move away from a compliance-based model, to a much more positive and businessfocused approach to ensuring workplace equality.
as well as the following limitations: Few examples exist of the approach actually delivering what it promises. The business focus of ensuring maximum profit may be at odds with key principles of social justice and fairness The extent of organisational change required to fully embrace the approach is considerable; in the current fast-paced business environment, organisations may be unable to resource initiatives with little to show in the way of short-term payback.
13.3 Outline the strengths and limitations for diversity management of the equal opportunities approach. The strengths for diversity management of the equal opportunities approach which you are likely to have outlined should include: the equal opportunities approach, based primarily on legislative provision, has meant that the issue of equality in employment has been on the organisational agenda for the past 30 years or so, and since the law applies to all but the smallest enterprises; few organisations will be unaware of the issue or of their obligations under the legislation the equality approach has undoubtedly fallen out of favour in recent times, particularly with the addition of EU directives, making some organisations feel that this is an overly burdensome and highly regulated area. This makes the time ripe for an approach to equality; which shifts the focus from legal compliance to leveraging and valuing difference for organisational benefit; i.e. from an external imperative to an internal one. The agenda becomes a far more positive one, emphasising the value to be gained from valuing and embracing difference, rather than a punitive avoidance of legal penalty.
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The limitations for diversity management of equal opportunities should include: the approach may be negatively viewed by organisations used to the restrictive equal opportunities approach. The shift in mindset required from avoiding discrimination to actively valuing difference may be difficult to grasp, and more importantly to articulate organisationally in terms of practical measures that need to be taken to advance the agenda. for some organisations the shift from an approach based on social justice, equity and fairness, to one where differences between individuals are valued simply because of their positive impact upon organisational performance, may seem morally questionable. the equality approach has led to a plethora of legal regulation, and with the adoption of EU directives organisations have a considerable number of regulations to comply with. Organisations may in these circumstances feel they are doing enough, and that this is not an area to which further resources can be invested.
13.4 Outline the strengths and limitations for diversity management of the managing diversity approach. The strengths you have outlined are likely to include: a shift in the agenda from externally focused drivers for action to internally, business-linked drivers. a more positive, strategic and ultimately holistic approach to the management of equality and difference. closer contact and understanding with customer and employee markets. the possibility of wider-scale culture change within the auspices of a diversity management programme.
Your limitations are likely to include: little empirical evidence, either in the United Kingdom, United States of America or Europe to support key contentions made. a plethora of consultants in the area renaming a basic equality of opportunity approach as diversity management; organisations then believing there to be little difference. the focus on the business case promotes a view that issues of social justice, equity and fairness are no longer important. there is confusion as to the focus of interest; group, individual or both?
13.5 To what extent is it appropriate to support a positive climate for diversity management for purely business-focused reasons rather than as part of its cultural values? Those supporting the view that it is appropriate to support a positive climate for diversity management for purely business-focused reasons, may raise some of the following points to support their position:
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without articulating the financial return an organisation could gain from diversity management, in times of high competition, few organisations would commit resources to such programmes. in tight labour markets, emphasis on the link between effective diversity management and access to new and emerging labour markets will be a powerful argument. in times when customer satisfaction is at a premium, a link between a diverse workforce and an improved ability to meet customer requirements through improved understanding is of great value. links to improving productivity, reducing turnover and absenteeism will all be highly persuasive to organisations seeking elusive competitive advantage.
Consequently the overall position of those with this view would be that diversity management is important, and clearly the right thing to do. However, senior managers in the organisation who are responsible for the effective utilisation of scarce resources are not going to commit considerable amounts of that resource to projects where the only benefit to be gained is that the company is considered to have done the right thing. Organisations are increasingly looking for strong financial justification before willing to commit resources to initiatives; and without a solid business case to support it; the diversity management agenda will be lost. Those who are uncomfortable with the linking of diversity management to purely businessfocused outcomes, rather than as part of cultural values would be likely to raise the following points: How can you actually do a cost/benefit analysis on what is right and what is wrong? Diversity management, valuing people for who they are, the contributions they can make and the difference in the perspectives, skills and experiences that they bring is simply the right thing to do. There is no need to go further and start trying to calculate exactly how right this is in terms of bottom-line profitability. Taking this position to its logical end, would firms actually start calculating how much they would save by not managing diversity effectively, and if it were more than the benefit they would gain; would this be advocated? A diversity management programme, not underpinned by deeply held corporate values, becomes little more than a collection of initiatives that have little underlying rationale; people both inside and outside the organisation would soon see through this fairly cynical approach to the issue If all that supports the adoption of a diversity management approach is some perceived business benefit, what happens when the results do not come quickly enough? Does the organisation stop valuing difference?
At the heart of this approach is the difficulty of taking moral issues, and framing them as strategic objectives capable of measurable financial return. The point here would be that diversity management should occur because it is simply right to treat people with dignity and respect. If this brings the business some financial benefit, then that is an added bonus, but the financial benefit should not be the reason why diversity is valued within the organisation.
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
3. Do you agree with Worcestershire County Councils phased approach to diversity management; what do you see as the key strengths and limitations of this approach? Obviously, there is no one right answer to this question. However, Worcestershires phased approach has been based upon the premise that people learn best when they are motivated and interested. Consequently all employees needed to know that the County Council was treating diversity and equality as special and important issues and had been provided with thought provoking information prior to commencing diversity awareness training (phase 2). This was the basis for the ongoing poster campaign. Subsequent to this diversity training commenced and is again still ongoing. Updates on this training and the associated successes can be found in the Councils newsletter Equality News. Copies of this can be downloaded from http://worcestershire.whub.org.uk/home/wcc-chief-exec-equality-news The Councils approach is both time consuming and expensive as the authority has over 17,500 employees. By not making diversity training compulsory, employees can opt out of being trained. Inevitably because of the time to train so many employees and the ongoing nature of training in a dynamic environment there will be a need to refresh and update people. Despite these concerns, the case suggests that diversity is becoming embedded within the County Council. The County Council has employed a Diversity Officer whose job is entirely concerned with diversity issues. Evidence that the phased approach is working include ongoing improvements to the ways in which services are delivered and the fact that both race and disability are issues of legitimate discussion amongst employees. 4. If you were Worcestershire County Councils Diversity Officer, what specifically would you see as being the key focus of your role? What information/evidence do you think you would need to collect/disseminate to ensure the County Council makes progress towards its goal of better serving residents and of valuing diversity amongst its workforce to make a difference to peoples lives, and not just to comply with legislation? This work is currently being undertaken by the County Council and is set out in their Corporate Equalities Scheme document. The latest version of this, which will provide the most up to date answer to this question, can be downloaded as a .pdf file from http://worcestershire.whub.org.uk/ home/wccindex/wcc-chief-exec-equality-and-diversity.htm
CHAPTER 14
Summary
Downsizing is an organisational strategy to reduce the size of an organisation's workforce. Its use is likely to generate a range of reactions from those who remain in an organisation, which may lead to adverse consequences. Three organisational strategies have been identified to achieve downsizing. These are: the workforce reduction strategy; organisation redesign strategy; and the systemic change strategy. An important distinction has also been drawn between the use of proactive and reactive approaches to downsizing. The use of a reactive, workforce reduction strategy has been found to impair, rather than improve, organisational performance. Even where this approach is not used there may still be a negative effect arising from the creation of negative survivors reactions and the loss of organisational competence. Where organisations use methods to implement downsizing that emphasise managerial control at the expense of perceived influence by employees, this will generate further negative survivors' reactions leading to adverse consequences for the organisation.
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
The incidence and strength of survivors' reactions are affected by the existence of moderating variables. These highlight the scope for downsizing organisations to intervene to seek to minimise their incidence or manage their effects. A range of organisational theories, related to equity, organisational justice, job insecurity, job redesign and organisational stress, can be used to suggest appropriate human resource interventions to manage the process of downsizing more effectively, depending on the characteristics of the organisational context.
Student preparation
Prior to the class, we believe it is essential that students read and make notes from the chapter. We have found that producing mind maps of the chapter content is a useful approach to note taking and encourages students to reflect on the internal integration of the subject content of the chapter. We use a variety of vehicles to bridge student preparation and class-based activities to enhance their understanding of the chapter content and its overall relationship to managing human resources strategically. As standard, we would ask students to make a note of any queries arising from their reading and to come to the teaching session prepared to raise them. Sometimes this may be formalised by asking students to write down (as questions) the three issues addressed by the chapter where they would like further clarification and guidance. Students may also be asked to do one or more of the following: address pre-set questions and write their answers briefly in note format;
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
complete the self check and reflect questions and come to the session prepared to share and discuss their responses; and familiarise themselves with the chapter case study (or an alternative case supplied in advance) and come to the session prepared to tackle the case questions.
Our outline answers to both self check and reflect questions and case study questions follow in the next two substantive sections of this chapter guide. Pre-set questions that we have found useful for structuring student reading, preparatory activities and classroom discussion for the topic of downsizing include: 1. What do you understand to be the main differences between downsizing and redundancy? 2. Outline the range of strategies that an organisation may choose when downsizing and the implications for both organisations and their employees. 3. What interventions may be used to help manage downsizing and how do these relate to equity theory, organisational justice, job insecurity, communication and the psychological contract?
In the classroom
Clearly the approach adopted to student preparation can be followed through into the classroom. A starting point that we find useful is to surface and discuss the issues arising from students preparatory reading. This avoids providing lecture input that simply repeats what students have already grasped, reinforces the value of reading as an essential prerequisite for class-based discussion and provides a platform from which further class-based activities can be launched. However, when adopting this approach, we find it useful, once student queries have been exhausted, to provide a short summary of key issues. Where preparing answers to self check and reflect questions has been set as part of preparation for the teaching session, at least two alternatives present themselves. First, students can be asked to contribute individual responses that are then subjected to plenary discussion. This is our preferred approach because it makes students more accountable for their personal learning and reserves any group work for case study analysis. Second, students can be formed into groups to share their individual answers and draw conclusions from their discussions. However, if preparing answers to self check and reflect questions was not part of preparatory work but consideration of the questions is to feature as part of the teaching session, we would favour the group approach as a more stimulating approach. In all cases student responses can be considered against our suggested answers which themselves can be usefully critiqued. Where case study work has featured as part of preparatory activities, similar approaches to those suggested for self check and reflect questions can be adopted. If coming to the case afresh, there is unlikely to be time for groups to consider all questions. Here we would suggest that groups major on one of the case questions only moving on to others if they have time. As already noted, downsizing is a strategy that most students will have heard about via the media. If at the time you are teaching this topic there is an organisational downsizing taking place, it may well be helpful to use this as an alternative case study. As part of this, students may wish to compare how the same events are reported by different media. Alternatively, you could obtain more recent newspaper reports to extend the case on MG Rover Cars at the end of the chapter.
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
Follow-up work
The pedagogic features adopted throughout this book are intended to offer up a number of alternatives for follow-up work while at the same time leaving the lecturer free to add or substitute their own ideas. If they have not already been used as part of class activities, any prior preparation of answers to the self check and reflect questions and/or the questions suggested for student preparation and/or the chapter case The demise of MG Rover Cars? will serve as a useful reinforcement to chapter content. Our outline answers to both self check and reflect questions and case study questions follow in the next two substantive sections of this chapter guide. There are also a number of follow-up study suggestions after the chapter summary that can be undertaken by students either individually or in groups and an extensive list of references provides many opportunities for directed further reading.
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
board reductions, perhaps related to a general cost reduction strategy. Such an alternative approach has been associated with cost reduction strategies, short-termism and a low level of managerial control. This approach is likely to lead to the types of post-downsizing organisational problems discussed in the main body of the chapter. The use of selection criteria offers a further means to exercise managerial control in relation to the downsizing process. Selection criteria may be used in relation to an ostensibly voluntary approach. While targeting (see above) may be used to identify work areas or groups for downsizing, the use of selection criteria, in relation to targeted areas, provides a check in relation to particular individuals whom the organisation wishes to retain. Selection criteria may also be used as the only filter where volunteers are sought from across the organisation. The alternative to any form of selection in relation to a voluntary approach to redundancy is made clear by Lewis (1993: 28): the volunteer population may become an irresistible force and the pattern of volunteers may largely determine the distribution of actual redundancies. The outcome of this lack of managerial control could be a mismatch between actual and required human resource profiles of the downsized organisation. 14.4 How would you react to the redundancy of colleagues in the organisation for which you work, or in an organisation for which you have worked? (Perhaps you have actually experienced this event. If you have, how did you react and why?) Your response to this question will clearly be personal to a certain extent. However, if you are persuaded by the theory being advanced in this chapter you will have made connections to the approach of the organisation in terms of its downsizing strategy. You will have also reflected on the methods used to implement downsizing, or more precisely given the question, the method of redundancy. Where the organisation simply used a workforce reduction strategy, without much thought about those who survived, or who would survive, this event, you may be expected to experience fairly negative reactions. Where the organisation did not consider those made redundant you may be expected to experience fairly strong or strong sympathetic reactions to those so affected. This may not be the case where you feel that those selected for redundancy were appropriately selected. This may be even more the case where they are fairly treated. However, there may be a number of reasons related to your psychological characteristics; the prevailing employment circumstances and the need for your redundant colleagues to find work; as well as the closeness of your working relationships, beliefs and values etc. why you would have, or did have, sympathetic reactions towards your colleagues. You can see what a potentially complex picture can emerge from this type of event. We hope that you do not have to experience this! Where you have to manage this situation we hope that the ideas in this chapter provide at least some help! 14.5 Outline how perceptions of distributive, procedural, informational and interpersonal treatment may impact positively on downsizing survivors reactions. Distributive treatment refers in this case to the outcomes of downsizing. It is therefore, related to employees perceptions regarding the outcomes downsizing decisions made. Where employees perceive that these outcomes are fair, such as in relation to individuals performance or in that they affect both employees and their managers equally they will perceive the downsizing more positively. The possibility of fair outcomes also impacts upon perceptions of the procedures through which these decisions were reached. Where negative reactions are created by outcomes that are seen as unfair, these may be reduced if the procedures by which they were reached are considered fair. This is related to the amount of employee involvement in the process such as through consultation and communication as well as providing employees with options such as voluntary redundancies.
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
Interpersonal treatment, in particular by line managers has been shown to have considerable influence on employees perceptions. Where employees are treated sensitively by line managers they are likely to feel more positive about the downsizing. Sensitive treatment of those who are leaving has also been shown to impact positively on those who survive the downsizing (stayers). Finally, the provision of clear information about both downsizing decisions and the reasons for these decisions has also been shown to impact positively on reactions to the downsizing.
The reasons for this support were, according to the newspaper extracts: statutory redundancy requirements; the large number of workers upon whom the closure impacted; the impact upon the local economy.
Millmore et al., Strategic Human Resource Management: Contemporary Issues, Instructors Manual
3. Why did the UK Government become involved in the downsizing at Rover? One will never know for sure. It might be argued that as last UK owned major automotive manufacturer, MG Rover was of strategic importance. Others might feel it was due to the redundancies occurring when the Labour Government was campaigning for re-election and the marginal constituency of Redditch was close by! 4. What were the intended and unintended outcomes of the downsizing strategy adopted? Intended outcomes About 1,250 out of more than 5,000 workers who lost jobs when MG Rover collapsed in April had found new employment within 6 weeks of the downsizing. MG Rover workers signed up for training courses.
Unintended outcomes The impact upon the local economy was less than expected due to the tight labour market and the diversification strategy for purchasing components adopted by MG Rovers previous owner, BMW. The Labour government, which was seeking re-election when MG Rover collapsed, pledged 175m and the EU put up 40m. That totalled almost 36,000 per worker. Workers who obtained employment were earning less in their new jobs than they did at the Longbridge plant