Armstrong M.Armstrong's Handbook of Human Resource Man.15ed 2020

i
P R A I S E F O R A R M S T RO N G’ S
H A N D B O O K O F H U MA N R E S O U RC E
MA N A G E M E N T P R AC T I C E
There is a reason why Michael Armstrong’s HR books represent a gold standard: they are both thorough and
academically rigorous but benefit from real world experience and an informed perspective on practice.
Robert Jeffrey, Editor, People Management magazine
Armstrong’s authoritative handbook continues to be a paragon of HR texts. The new edition of this indubitably
vital HR resource for students, tutors and practitioners alike, follows a tried and trusted, coherent format.
Lezlee-Jayne Stones, Associate Professor and School Director of Teaching and Learning, University of Lincoln
This comprehensive book is a major resource and gives the reader both an in-depth and detailed view of all
major assignments that the HR manager will encounter in the work setting. It is also a valuable asset for the
student of HR Management.
Thordur S Oskarsson PhD, Adjunct Professor, School of Business, University of Iceland
Armstrong and Taylor’s text provides comprehensive and user-friendly coverage of key concepts and models of
HRM, HRM processes and applications together with related delivery strategies. This edition extends and
updates earlier versions, and is testimony to its enduring relevance and appeal.
John Simmons, Lecturer, University of Liverpool Management School
A detailed, yet accessible text suitable for all levels. This latest edition further establishes its position as the ‘go
to’ text for HR students, academics and practitioners alike. I highly recommend it.
Dr Edward O’Connor, Assistant Professor, School of Business, Maynooth University
Michael Armstrong could well be offering the definitive text in the field... an excellent book.
The Times Higher Education Supplement (about a previous edition)
The gold standard when it comes to HRM texts.

Connie Nolan, Senior Lecturer, Canterbury Christ Church University (about a previous edition)
Topical, comprehensive, well-informed and student-friendly.

Dr Izabela Robinson, Senior Lecturer, Human Resource Management, Northampton Business School
(about a previous edition)
If any book is a contender for one of the standard references of the HR profession, this is it... it
covers just about everything that might be considered broadly relevant to practicing HR.
Personnel Today (about a previous edition)
Armstrong’s approach to HRM is sufficiently academic but tempered with good practice and common sense.
Dr Janet Astley, Senior Lecturer, York St John Business School (about a previous edition)
This book [is] a must-read for everyone who has a strong interest in the management of human resources.
Niki Kyriakidou, Leeds Business School, on behalf of the International Journal of Training and Development
(about a previous edition)
ii
A L S O AVA I L A B L E BY
M I C H A E L A R M S T RO N G
Armstrong on Reinventing Performance Management
Armstrong’s Essential Human Resource Management Practice
Armstrong’s Handbook of Management and Leadership for HR
Armstrong’s Handbook of Performance Management
Armstrong’s Handbook of Reward Management Practice

(with Duncan Brown)
Armstrong’s Handbook of Strategic Human Resource Management
Armstrong’s Job Evaluation Handbook
Evidence-Based Reward Management (with Duncan Brown and Peter Reilly)
How to Be an Even Better Manager
How to Manage People
Human Capital Management (with Angela Baron)
The Reward Management Toolkit (with Ann Cummins)

iii
iv
Publisher’s note
Every possible effort has been made to ensure that the information contained in this book is
accurate at the time of going to press, and the publishers and authors cannot accept
responsibility for any errors or omissions, however caused. No responsibility for loss or damage
occasioned to any person acting, or refraining from action, as a result of the material in this
publication can be accepted by the editor, the publisher or the author.
First edition published in 1977 as A Handbook of Personnel Management Practice by Kogan Page
Seventh edition published in 1999 as A Handbook of Human Resource Management Practice
Eleventh edition published in 2009 as Armstrong’s Handbook of Human Resource Management Practice
Fifteenth edition 2020
Apart from any fair dealing for the purposes of research or private study, or criticism or review, as
permitted under the Copyright, Designs and Patents Act 1988, this publication may only be reproduced,
stored or t ransmitted, in any form or by any means, with the prior permission in writing of the publishers,
or in the case of reprographic reproduction in accordance with the terms and licences issued by the
CLA. Enquiries concerning reproduction outside these terms should be sent to the publishers at the
undermentioned addresses:
2nd Floor, 45 Gee Street 122 W 27th St, 10th Floor 4737/23 Ansari Road
London New York, NY 10001 Daryaganj
EC1V 3RS USA New Delhi 110002
United Kingdom India
www.koganpage.com
© Michael Armstrong, 1977, 1984, 1988, 1991, 1995, 1996, 1999, 2001, 2003, 2006, 2009, 2012, 2014,
2017, 2020
The right of Michael Armstrong to be identified as the author of this work has been asserted by him in
accordance with the Copyright, Designs and Patents Act 1988.
ISBNs
Hardback 978 1 78966 103 3

Paperback 978 0 7494 9827 6
Ebook 978 0 7494 9828 3
British Library Cataloguing-in-Publication Data
A CIP record for this book is available from the British Library.
Library of Congress Cataloging-in-Publication Data

Names: Armstrong, Michael, 1928- author. | Taylor, Stephen, 1965- author.
Title: Armstrong’s handbook of human resource management practice / Michael
Armstrong with Stephen Taylor.
Other titles: Handbook of human resource management practice
Description: 15th edition. | London, United Kingdom ; New York, NY :
KoganPage, 2020. | “First edition published in 1977 as A Handbook of
Personnel Management Practice by Kogan Page”–Title page verso. |
Includes bibliographical references and index.
Identifiers: LCCN 2019042925 | ISBN 9780749498276 (paperback) | ISBN
9781789661033 (hardback) | ISBN 9780749498283 (ebook)
Subjects: LCSH: Personnel management–Handbooks, manuals, etc.
Classification: LCC HF5549.17 .A76 2020 | DDC 658.3–dc23
LC record available at https://lccn.loc.gov/2019042925
Typeset by Integra Software Services, Pondicherry

Print production managed by Jellyfish
Printed and bound by CPI Group (UK) Ltd, Croydon CR0 4YY
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To Clarissa
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THIS PAGE IS INTENTIONALLY LEFT BLANK

vii
CO N T E N T S I N B R I E F
List of figures xxix
List of tables xxxi
Preface xxxiii
PA R T I Fundamentals of human resource management 1
01 Human resource management 3

02 Strategic HRM 25
03 HR strategy 37
04 Human capital management 49
05 The context of HRM 56
06 HRM and performance 63
07 International HRM 76
PA R T I I Delivering HRM 91
08 The role of the HR function 93

09 The role of HR professionals 105
10 The HRM role of line managers 121
PA R T I I I Human resource management processes 127
11 Evidence-based HRM 129
12 HR analytics 136
13 e-HRM 145
14 Artificial intelligence and HRM 152
15 Knowledge management 158
16 Competency-based HRM 164
17 The ethical dimension of HRM 171
18 Corporate social responsibility 181
viii Contents in brief
PA R T I V Organization 187
19 Organizational behaviour 189
20 Organization design 208
21 Work design 215
22 Job design 223
23 Organization development 232
PA R T V Factors affecting the behaviour of people at work 245
24 Motivation 247
25 Commitment 263
26 Employee engagement 271
PA R T V I People resourcing 287
27 Workforce planning 289
28 Recruitment and selection 299
29 Talent management 327
PA R T V I I Employment practices 343
30 Managing employment 345
31 Managing diversity and inclusion 365
32 Managing flexibility 370
PA R T V I I I Learning and development 377
33 The basis of learning and development 379

34 The process of learning and development 392
35 Learning and development practices 404
36 Leadership and management development 419
Contents in brief ix
PA R T I X Performance management 429
37 The concept of performance management 431

38 Performance management systems 443
39 Reinventing performance management 456
PA R T X Reward management 471
40 The basis of reward management 473

41 The practice of reward management 489
42 Managing reward for special groups 505
43 The gender pay gap 517
PA R T X I Employment relations 525
44 The basis of employment relations 527

45 The employment relationship 535
46 The psychological contract 541
47 The practice of industrial relations 546
48 Employee voice 553
49 Employee communications 560
PA R T X I I Employee wellbeing 565
50 The principles and practice of employee wellbeing 567

51 Health and safety 576
PA R T X I I I HRM policies and practices and employment law 587
52 HR policies 589
53 HR procedures 596
54 HR information systems 602
55 Employment law 606
x Contents in brief
PA R T X I V People management skills 617
56 Strategic people management skills 619

57 Business skills 621
58 Problem-solving and decision-making skills 629
59 Analytical and critical skills 634
60 Research skills 638
61 Statistical skills 649
62 Selection interviewing skills 654
63 Job, role, competency and skills analysis 662
64 Learning and development skills 677
65 Negotiating skills 682
66 Change management 688
67 Influencing skills 700
68 Leadership skills 704
69 Handling people problems 712
70 Handling challenging conversations 719
71 Managing conflict 720
72 Political skills 724
73 Dealing with business issues from an HR perspective 727
74 Project management 732
CIPD New Profession Map 2018 735

Author index 739
Subject index 745
xi
CO N T E N T S
List of figures xxix
List of tables xxxi
Preface xxxiii
PA R T I Fundamentals of human resource management 1
01 Human resource management 3

Introduction 3
HRM: meaning and issues 3
The development of the HRM concept 5
HRM philosophy 6
The goals of HRM 7
HRM standards 8
The theoretical base of HRM 8
Models of HRM 9
Perspectives on HRM 12
The HR system 13
The impact of HRM 15
HRM – today 16
HRM – the future 16
The concept of people management 17
References 21
02 Strategic HRM 25
Introduction 25
The nature of strategic human resource management 25
Strategic fit 27
The resource-based view of SHRM 30
Critical evaluation of the concept of SHRM 32
References 34
03 HR strategy 37
Introduction 37
The nature of HR strategy 37
Approaches to the formulation of HR strategy 38
Developing HR strategy 41
Implementing HR strategy 45
References 47
xii Contents
04 Human capital management 49

Introduction 49
Human capital management defined 49
The concept of human capital 50
The constituents of human capital 51
Measuring human capital 51
Approaches to people management raised by human capital theory 53
References 55
05 The context of HRM 56

Introduction 56
Environmental factors 56
What’s happening to work? 57
The labour market 59
References 62
06 HRM and performance 63

Introduction 63
Measuring organizational performance 63
The impact of HRM 64
How HRM makes an impact 66
The contribution of HR 70
The development of high-performance working 70
High-performance work systems 70
References 73
07 International HRM 76
Introduction 76
The international scene 76
International HRM strategies 77
Contextual factors 77
Convergence and divergence 78
The practice of international HRM 79
Global approaches to talent management 80
Managing expatriates 84
International HRM policies 84
References 88
PA R T I I Delivering HRM 91
08 The role of the HR function 93

Introduction 93
The overall contribution of HR 93
The contribution of the HR function to the achievement of competitive
advantage 94
Contents xiii
The role and organization of the HR function 94

Outsourcing HR work 97
Power of the HR function 98
The reputation of the HR function 98
Evaluating the HR function 99
The role of HR in small- and medium-sized organizations (SMEs) 101
References 103
09 The role of HR professionals 105

Introduction 105
The overall role of the HR professional 105
The Ulrich model 105
The strategic role of the HR professional 106
The HR business partner role 108
The partnership role of HR professionals 111
The innovation role 111
The change agent role 112
The service delivery role 112
HR professionals: role requirements 112
Carrying out the role of the HR professional 114
References 118
10 The HRM role of line managers 121

Introduction 121
The people management role of line managers 121
How well does devolution of HR responsibilities to line managers work? 121
Factors affecting the quality of the implementation of HRM by line managers 123
Dealing with the issues 124
References 126
PA R T I I I Human resource management processes 127
11 Evidence-based HRM 129
Introduction 129
Evidence-based HRM defined 129
Evidence-based management 129
The approach to evidence-based HRM 131
References 135
12 HR analytics 136
Introduction 136
HR analytics defined 136
The purpose of HR analytics 137
The process of HR analytics 138
xiv Contents
HR analytics levels 138
Keeping people informed 142
References 143
13 e-HRM 145
Introduction 145
e-HRM defined 145
Purpose of e-HRM 146
Features of e-HRM 147
e-HRM achievements 149
References 151
14 Artificial intelligence and HRM 152

Introduction 152
The components of AI 152
Applications for AI in HRM 153
AI risks 155
The extent to which AI is used by HR 155
Tips for practitioners on introducing AI 156
Ethical considerations 156
References 157
15 Knowledge management 158
Introduction 158
The concept of knowledge 158
Knowledge management defined 159
Knowledge management strategies 160
Knowledge management issues 160
The contribution of HR to knowledge management 161
References 163
16 Competency-based HRM 164
Introduction 164
Competency defined 164
Using competencies 166
Applications of competency-based HRM 167
Developing a competency framework 167
Keys to success in using competencies 169
Reference 170
17 The ethical dimension of HRM 171

Introduction 171
The meaning and concerns of ethics 171
Contents xv
The nature of ethical decisions and judgements 172

Ethical frameworks 172
Fairness 173
Equity theory 173
Justice 173
HRM ethical guidelines 174
Ethical dilemmas 177
The ethical role of HR 178
References 180
18 Corporate social responsibility 181

Introduction 181
Corporate social responsibility defined 181
Strategic CSR defined 182
CSR activities 182
The rationale for CSR 183
The opposing view 183
Benefits of CSR 184
The basis for developing a CSR strategy 184
References 185
PA R T I V Organization 187
19 Organizational behaviour 189
Introduction 189
Organizational behaviour defined 189
The sources and applications of organizational behaviour theory 190
How organizations function 190
Organizational culture 193
Organizational climate 197
Organizational processes 197
Characteristics of people 199
Implications for HR specialists 203
References 205
20 Organization design 208
Introduction 208
Organization design theory 208
Organization design guidelines 209
Organizational choice 210
The approach to organization design 211
Successful organization design 212
References 214
xvi Contents
21 Work design 215
Introduction 215
What is happening to work? 215
Work design – a short history 215
The approach to work system design 216
Smart working 217
Agile working 219
Automation 220
The role of HR in work design 221
References 222
22 Job design 223
Introduction 223
Job quality 223
The principles and practice of job design 225
Job enrichment 227
The job characteristics model 227
The job demands-resources model 228
Job design practice 228
Responsibility for job design 228
Job crafting 229
References 230
23 Organization development 232
Introduction 232
Organization development defined 232
The nature of organization development 232
The story of organization development 233
Organization development strategy 237
The consulting cycle 238
Organizational diagnosis 238
Organization development programmes 240
Conclusions on organization development 242
References 244
PA R T V Factors affecting the behaviour of people at work 245
24 Motivation 247
Introduction 247
The meaning of motivation 247
Instrumentality theory 248
Content theory 249
Process theory 251
Summary of motivation theories 255
Contents xvii
Motivation and job satisfaction 257

Motivation and money 258
Conclusions on motivation theory 258
Motivation strategies 259
References 260
25 Commitment 263
Introduction 263
The meaning of organizational commitment 263
Mutuality and commitment 263
The mutual gains perspective 264
Commitment and engagement 265
Factors affecting commitment 266
Developing a commitment strategy 266
Critical evaluation of the concept of commitment 267
References 269
26 Employee engagement 271
Introduction 271
The meaning of employee engagement 271
The theory of engagement 272
The components of employee engagement 272
Drivers of employee engagement 274
Outcomes of engagement 275
Engagement strategy 275
Enhancing job engagement 275
Enhancing organizational engagement 277
Burnout 279
Measuring engagement 279
Critical evaluation of the concept of employee engagement 280
References 283
PA R T V I People resourcing 287
27 Workforce planning 289
Introduction 289
Workforce planning defined 289
Incidence of workforce planning 290
The link between workforce and business planning 290
Reasons for workforce planning 290
Workforce planning issues 291
Systematic workforce planning 291
Approach to workforce planning 295
References 297
xviii Contents
28 Recruitment and selection 299

Introduction 299
Defining requirements 299
Attracting candidates 300
Sourcing candidates 304
Managing the recruitment process 308
Selection methods 313
Selection interviews 313
Selection testing 317
Assessment centres 320
Choice of selection methods 320
Making the decision 321
Provisional offers and obtaining references 322
Checking applications 322
Offering employment 323
Following up 323
Dealing with recruitment problems 323
References 326
29 Talent management 327
Introduction 327
Talent management defined 327
Talent management policy 327
Talent management strategy 329
The process of talent management 330
The talent pool 331
Talent planning 331
Resourcing 331
Identifying talent 332
Talent development 333
References 340
PA R T V I I Employment practices 343
30 Managing employment 345
Introduction 345
The employee experience 345
Introduction to the organization 347
Managing employee retention 349
Release from the organization 355
Absence management 357
References 364
Contents xix
31 Managing diversity and inclusion 365

Introduction 365
The meaning and significance of managing diversity and inclusion 365
Bias as a factor affecting diversity and inclusion 366
The rationale for managing diversity and inclusion 366
How to manage diversity and inclusion 366
References 369
32 Managing flexibility 370
Introduction 370
Forms of flexibility 370
Flexible working 372
The role of HR 374
References 375
PA R T V I I I Learning and development 377
33 The basis of learning and development 379

Introduction 379
Learning and development defined 379
Strategic L&D 379
Creating a learning culture 380
Organizational learning strategies 381
The notion of a learning organization 381
Individual learning strategies 383
How people learn 383
References 390
34 The process of learning and development 392

Introduction 392
Identify learning needs 392
Overall approaches to learning and development 395
Plan learning and development activities 397
Implement 398
Evaluate 399
References 403
35 Learning and development practices 404

Introduction 404
Workplace learning 404
Social and collaborative working 407
Digital learning 409
Use of artificial intelligence 412
xx Contents
Training 413
Personal development planning 415
Apprenticeships 416
References 418
36 Leadership and management development 419

Introduction 419
Leadership and management development defined 419
The nature of leadership and management 419
Leadership and management development compared 421
Leadership development 421
Management development 423
Criteria for leadership and management development 427
References 428
PA R T I X Performance management 429
37 The concept of performance management 431

Introduction 431
Performance management defined 431
The conceptual framework 431
Underpinning theories 435
Aims of performance management 436
Principles of performance management 438
Examples of approaches to performance management 439
The impact of performance management 439
Requirements for success 440
References 442
38 Performance management systems 443

Introduction 443
How a performance management system works 443
Performance and development planning 443
Managing performance throughout the year 447
Performance reviews 447
Performance assessment 448
Recording the performance agreement and review 450
Introducing a performance management system 451
Requirements for success 452
360-degree feedback 453
References 455
39 Reinventing performance management 456

Introduction 456
Performance management criticisms 456
Contents xxi
Performance management system issues 458

The role of line managers 460
Dealing with the issues – reinventing performance management 463
A radical way ahead? 467
References 468
PA R T X Reward management 471
40 The basis of reward management 473

Introduction 473
Reward management defined 473
Values and beliefs 474
Reward policy 475
Reward strategy 479
The reward system 482
References 487
41 The practice of reward management 489

Introduction 489
Market pricing 489
Job evaluation 490
Base pay management 491
Contingent pay 496
Recognition schemes 499
Employee benefits 499
Administering reward management 500
References 504
42 Managing reward for special groups 505

Introduction 505
Executive remuneration 505
Reward management for sales and customer service staff 508
Rewarding expatriates 510
Paying manual workers 511
References 516
43 The gender pay gap 517

Introduction 517
Reasons for the gender pay gap 517
Actions to reduce gender pay gaps 518
Narrowing the gap at organizational level 520
References 524
xxii Contents
PA R T X I Employment relations 525
44 The basis of employment relations 527

Introduction 527
The meaning of employment relations 527
Employment relations policies 528
Employment relations strategies 529
Employment relations climate 529
Managing with unions 531
Managing without unions 532
References 533
45 The employment relationship 535

Introduction 535
The nature of the employment relationship 535
The basis of the employment relationship 535
Labour process theory and the employment relationship 536
Employment relationship contracts 537
Managing the employment relationship 537
Developing a climate of trust 538
References 539
46 The psychological contract 541

Introduction 541
The psychological contract defined 541
The significance of the psychological contract 542
The psychological contract and the employment relationship 542
How psychological contracts develop 542
The problem with psychological contracts 543
Developing and maintaining a positive psychological contract 543
References 544
47 The practice of industrial relations 546

Introduction 546
Trade union membership 546
Union recognition 547
Collective bargaining 547
Collective agreements 549
Informal employment relations processes 551
References 552
48 Employee voice 553
Introduction 553
The need for employee voice 553
Contents xxiii
Degrees of employee voice 554

Direct voice 555
Indirect voice 556
Employees’ experience of voice 557
References 559
49 Employee communications 560
Introduction 560
The importance of employee communications 560
What should be communicated 561
Approach to communication 561
Communication methods 561
Employee communication strategy 562
References 564
PA R T X I I Employee wellbeing 565
50 The principles and practice of employee wellbeing 567

Introduction 567
The principles of wellbeing 567
The case for caring about wellbeing 568
Factors affecting wellbeing 569
Employee wellbeing strategy 571
References 574
51 Health and safety 576

Introduction 576
Managing health and safety at work 576
Health and safety policies 576
Conducting risk assessments 577
Health and safety audits 579
Health and safety inspections 580
Accident prevention 580
Occupational health programmes 580
Managing stress 581
Measuring health and safety performance 582
Communicating the need for better health and safety practices 583
Health and safety training 583
Organizing health and safety 584
References 586
xxiv Contents
PA R T X I I I HRM policies and practices and employment law 587
52 HR policies 589
Introduction 589
Why have HR policies? 589
Overall HR policy 589
Specific HR policies 590
Developing HR policies 594
Implementing HR policies 595
53 HR procedures 596
Introduction 596
Capability procedure 596
Disciplinary procedure 597
Grievance procedure 598
Redundancy procedure 599
54 HR information systems 602
Introduction 602
Reasons for introducing an HRIS 602
The functions of an HRIS 602
Features of an HRIS 603
References 605
55 Employment law 606
Introduction 606
The purpose of employment law 606
How is employment law enforced? 611
HRM and employment law 612
The General Data Protection Regulation (GDPR) 615
References 616
PA R T X I V People management skills 617
56 Strategic people management skills 619

Introduction 619
The strategic role of the HR professional 619
The strategic business partner model 619
The strategic skills required 619
Reference 620
Contents xxv
57 Business skills 621
Introduction 621
Business skills 621
Financial skills 622
Business models 625
References 628
58 Problem-solving and decision-making skills 629

Introduction 629
Problem solving 629
Decision making 631
References 633
59 Analytical and critical skills 634

Introduction 634
Analytical skills 634
Logical reasoning 634
Critical thinking 635
Critical evaluation 635
Developing and justifying arguments 636
A final word 637
Reference 637
60 Research skills 638
Introduction 638
The nature of research 638
Planning and conducting research programmes 639
Research methodology 640
Methods of collecting data 641
Processes involved in research 644
References 648
61 Statistical skills 649
Introduction 649
Frequency 649
Measures of central tendency 649
Measures of dispersion 649
Correlation 650
Regression 650
Causality 651
Tests of significance 651
Testing hypotheses 652
References 653
xxvi Contents
62 Selection interviewing skills 654

Introduction 654
Preparing for the interview 654
Selection interviewing skills 654
Structured interviews 656
Coming to a conclusion 658
Dos and don’ts of selection interviewing 659
Reference 661
63 Job, role, competency and skills analysis 662

Introduction 662
Definition 662
Job analysis 663
Job descriptions 665
Role analysis and role profiles 666
Skills analysis 667
Competency modelling 671
References 676
64 Learning and development skills 677

Introduction 677
Coaching 677
Mentoring 678
Facilitating 678
Job instruction 679
References 681
65 Negotiating skills 682
Introduction 682
The process of negotiation 682
Stages of negotiation 682
Initial steps 682
Negotiating and bargaining skills 686
Reference 687
66 Change management 688
Introduction 688
The psychology of change management 688
Levers for change 688
The change process 688
Change models 689
Resistance to change 691
Implementing change 692
The role of change agents 693
Contents xxvii
The role of HR in leading and facilitating change 693

Change management programmes 695
Nudge theory 695
Evidencing the value of change 696
Guidelines for change management 696
References 698
67 Influencing skills 700
Introduction 700
Persuading people 700
Case presentation 701
Making a business case 701
Facilitating 702
Coordinating discussions 703
68 Leadership skills 704
Introduction 704
The meaning of leadership 704
Leadership theories 704
What leaders do 705
Leadership styles 705
Types of leaders 706
The reality of leadership 708
The qualities of a good leader 708
Effective leadership 709
References 710
69 Handling people problems 712

Introduction 712
Disciplinary issues 712
Absenteeism 713
Handling poor timekeeping 714
Handling negative behaviour 714
Dealing with under-performance 717
70 Handling challenging conversations 719
71 Managing conflict 720
Introduction 720
Handling inter-group conflict 720
Handling interpersonal conflict 721
Resolving conflict between team members 722
Reference 723
xxviii Contents
72 Political skills 724
Introduction 724
Typical political approaches 724
Using political means to get things done 725
Political sensitivity 725
Dangers of politics 725
Dealing with organizational politics 725
Reference 726
73 Dealing with business issues from an HR perspective 727

Introduction 727
Identify business issues 727
Establish people factors 728
Critically analyse relevant HR policy and practice 729
Conduct or participate in research 729
Analyse quantitative and qualitative information 729
Draw conclusions 730
Prepare and make the business case 730
Reference 731
74 Project management 732
Introduction 732
Project planning 732
Setting up the project 733
Controlling the project 733
CIPD New Profession Map 2018 735

Author index 739
Subject index 745
xxix
LIST OF FIGURES
FIGURE 0.1 Handbook route map xxxiv

FIGURE 1.1 The Harvard HRM framework 10
FIGURE 1.2 The HRM System 15
FIGURE 3.1 Stakeholder analysis matrix 42
FIGURE 3.2 The Selfridges stakeholder value model 43
FIGURE 4.1 Human capital evaluation – Civil Aviation Authority 53
FIGURE 6.1 The black box phenomenon 67
FIGURE 6.2 Impact of HRM on organizational performance 68
FIGURE 6.3 The AMO model as a framework for performance enhancing HRM practices 69
FIGURE 7.1 International performance management system – Standard Chartered Bank 82
FIGURE 11.1 A model of the inter-relationships between the components of evidence-based
HRM 132
FIGURE 12.1 Example of a dashboard 143
FIGURE 19.1 The sources and applications of organization behaviour theory 191
FIGURE 22.1 Model of job quality 224
FIGURE 24.1 The process of motivation according to content theory 250
FIGURE 24.2 Motivation model 253
FIGURE 26.1 IES model of employee engagement 273
FIGURE 26.2 How reward policies influence performance through engagement 278
FIGURE 27.1 Workforce planning flow chart 292
FIGURE 28.1 Example of application form (compressed) 311
FIGURE 28.2 A normal curve 318
FIGURE 29.1 The process of talent management 330
FIGURE 29.2 A nine-point performance/potential assessment grid 332
FIGURE 29.3 Competency band career development pathway 334
FIGURE 29.4 Career paths in a career family structure 337
FIGURE 29.5 The CEMEX model of talent management 337
FIGURE 30.1 A survival curve 351
FIGURE 33.1 The components of learning and development 380
FIGURE 33.2 Single- and double-loop learning 382
FIGURE 33.3 The Kolb learning cycle 385
FIGURE 33.4 A standard learning curve 386
FIGURE 33.5 A stepped learning curve 387
FIGURE 34.1 Learning needs analysis – areas and methods 393
FIGURE 34.2 The learning gap 393
FIGURE 34.3 A learning specification 394
FIGURE 34.4 Formal and informal learning 396
xxx List of figures
FIGURE 35.1 Systematic training model 413

FIGURE 38.1 The performance management cycle 444
FIGURE 38.2 Model of the performance management system in Astra-Zeneca 444
FIGURE 38.3 Model of the performance management system in Centrica 445
FIGURE 38.4 Model of the performance management system in Halifax Bank 445
FIGURE 38.5 Model of the performance management system in Pfizer Inc 445
FIGURE 38.6 The sequence of performance management activities over a year 446
FIGURE 38.7 Visual performance assessment matrix 450
FIGURE 38.8 (a) Performance management form (part 1) 451
FIGURE 38.8 (b) Performance management form (part 2) 452
FIGURE 40.1 Reward drivers 474
FIGURE 40.2 The reward system 483
FIGURE 40.3 Total reward model 484
FIGURE 41.1 Typical grade and pay structures 493
FIGURE 45.1 Dimensions of the employment relationship 536
FIGURE 48.1 Stages of employee voice 554
FIGURE 61.1 Examples of charts 650
FIGURE 61.2 A scattergram with regression (trend) line 651
FIGURE 62.1 Example of an interview rating form 659
FIGURE 63.1 Example of a job description 667
FIGURE 63.2 Example of a role profile 668
FIGURE 63.3 Example of a generic role profile 669
FIGURE 65.1 Negotiating range with a settlement zone 685
FIGURE 65.2 Negotiating range without a settlement zone 685
FIGURE 68.1 John Adair’s model of leadership 705
xxxi
L I S T O F TA B L E S
TABLE 1.1 Comparison between HRM and people management 18

TABLE 3.1 Examples of high-performance working ingredients 40
TABLE 6.1 Research on the link between HRM and firm performance 65
TABLE 6.2 Components of an HPWS 71
TABLE 9.1 Key HR specialist competency areas 113
TABLE 12.1 Levels of data collection 139
TABLE 12.2 A summary of HR data and its possible uses 140
TABLE 16.1 Example of a basic competency framework 165
TABLE 16.2 Example of competency framework definition with positive and negative
indicators 166
TABLE 19.1 Schools of organization theory 191
TABLE 20.1 Mechanistic and organic design 211
TABLE 23.1 Organization development activities and interventions 241
TABLE 24.1 Summary of motivation theories 256
TABLE 24.2 Motivation strategies 259
TABLE 26.1 Employee engagement management competency framework 276
TABLE 28.1 Sources of candidates (CIPD survey 2017) 304
TABLE 28.2 Comparison of sources of candidates 309
TABLE 28.3 Use of selection methods 313
TABLE 28.4 Validity of different selection methods 321
TABLE 29.1 Career development pathway example – HR function 335
TABLE 30.1 A survival rate analysis 352
TABLE 30.2 Leavers’ length of service analysis 352
TABLE 33.1 The practical implications of learning concepts and theory 387
TABLE 37.1 What management and individuals can gain from performance management 438
TABLE 39.1 Analysis of possible new performance management arrangements 465
TABLE 40.1 Theories explaining pay levels 477
TABLE 41.1 Summary description of different formal grade and pay structures 493
TABLE 41.2 Summary of individual contingent pay schemes 497
TABLE 41.3 A direct link between ratings and pay increases 501
TABLE 41.4 A pay matrix 502
TABLE 42.1 Summary of payment and incentive arrangements for sales staff 508
TABLE 42.2 Comparison of shop floor payment-by-result schemes 513
TABLE 43.1 Actions that can be taken by organizations to reduce a gender pay gap 521
TABLE 50.1 Wellbeing factors and actions 569
TABLE 55.1 Median awards made in different types of employment tribunal case 2017–18 612
xxxii List of tables
TABLE 60.1 Analysis of basic data collection methods 645

TABLE 62.1 Dos and don’ts of selection interviewing 659
TABLE 63.1 Criteria for a fully rigorous competency definition 672
TABLE 65.1 Commercial and industrial relations negotiations compared 683
xxxiii
P R E FA C E TO T H E 15 T H E D I T I O N
T his 15th edition of the Handbook of Human

Resource Management Practice includes
new chapters on the context of HRM, the HRM
references in the appendix are to chapters. Page
references can be located in the subject index.
The companion website at www.koganpage.
role of line managers, evidence-based HRM, com/ArmstrongHRMPractice provides extensive
e-HRM, performance management, and the gen- additional resources for lecturers and students.
der pay gap. The handbook has been brought up These comprise:
to date by reference to the findings of a number
●● A lecturer’s manual containing notes on
of significant research projects and other investi-
how teaching could be organized by
gations of how HRM operates in practice.
reference to the chapters in the main text
The plan of the book is illustrated in the
and the supplementary material in the
‘route map’ shown in Figure 0.1. The logic of
manual. Suggestions are made on various
the sequence of 14 parts is as follows. Part I con-
kinds of semesters and guidance is
tains a conceptual framework for the rest of the
provided on the links between the
handbook by providing a general introduction
handbook text and CIPD core and
to the concept of human resource management
specialist knowledge requirements. The
(HRM) and the associated concepts of strategic
manual includes sections for each chapter
HRM and human capital management. The
containing a summary of the main
context in which HRM operates, the contribu-
learning points, an outline of the subject
tion HRM makes to performance and interna-
matter, discussion points and questions
tional HRM are also dealt with in this part. Part
with comments on the points to be
II describes how HRM strategies, policies and
considered. In many chapters there are
practices are delivered through the HR function
multiple choice questions, case studies
and line managers. Part III deals with the HRM
and role-playing exercises. Most of the
processes that affect the whole organization,
chapters contain supplementary abstracts
namely evidence-based HRM, HR analytics,
from relevant HRM.
e-HRM, the growing use of artificial intelligence
(AI), knowledge management, competency- ●● Additional material is provided for
based HRM, the ethical dimension of HRM and lecturers in the shape of PowerPoint
corporate social responsibility. Following the slides with notes covering all the
initial framework provided by parts I to III, chapters.
Parts IV and V act together as a bridge between ●● A student’s manual consisting of
the general considerations dealt with in the pre- material, which can be used to reinforce
vious three parts and the specific areas of HRM the contents of the main book.
covered in parts VI to XIII. The aim of parts IV Summaries of each chapter are provided
and V is to explain the basis of organizational and in addition most of the chapters
and individual behaviour to inform how the dif- include supplementary abstracts from
ferent aspects of HRM practice should be man- relevant HRM literature to assist in
aged and the approaches that can be used to revision, the extra material includes
develop the organization and design the work multiple choice questions and ‘flash’
and jobs that enable it to function. The last part cards containing questions and answers
of the book is devoted to describing the main about key aspects of the subject matter.
skills that HR professionals have to use. There are also a number of case studies.
The appendix provides cross-references to the ●● A glossary of HRM terms.
core and specialist knowledge requirements set
●● An HRM bibliography.
out in the CIPD New Profession Map 2018. The
xxxiv Preface
F I G U R E 0.1 Handbook route map
2 Delivering HRM 4 Organization

1 Fundamentals of human resource
8 The role of the HR function management 19 Organizational behaviour
9 The role of HR professionals 20 Organization design
10 The HRM role of line 1 Human resource management 21 Work design
managers 22 Job design
2 Strategic HRM 23 Organization development
3 HR strategy
3 HRM processes
4 Human capital management
11 Evidence-based HRM
12 HR analytics 5 The context of HRM
13 e-HRM 6 HRM and performance 5 Factors affecting the
14 Artificial intelligence and HRM behaviour of people at work
15 Knowledge management 7 International HRM
16 Competency-based HRM 24 Motivation
17 The ethical dimension of HRM 25 Commitment
18 Corporate social responsibility 26 Employee engagement
6 People resourcing 7 Employment 8 Learning and 9 Performance 10 Reward

practices development management management
27 Workforce planning (L&D)
28 Recruitment and 30 Managing 37 The concept of 40 The basis of reward
selection employment and the 33 The basis of L&D performance management
29 Talent management employee experience 34 The process of management 41 The practice of
31 Managing diversity L&D 38 Performance reward
and inclusion 35 L&D practices management management
32 Managing 36 Leadership and systems 42 Managing reward
flexibility management 39 Reinventing for special groups
development performance 43 The gender pay gap
management
11 Employment 12 Employee 13 HRM policies

relations wellbeing and practices and
employment law
44 The basis of 50 The principles
employment relations and practice of 52 HR policies
45 The employment employee 53 HR procedures
relationship wellbeing 54 HR information
46 The psychological 51 Health and safety systems
contract 55 Employment law
47 The practice of
industrial relations
48 Employee voice
49 Employee
communications
14 People management skills
56 Strategic people management skills 65 Negotiating skills

57 Business skills 66 Change management
58 Problem-solving and decision-making skills 67 Influencing skills
59 Analytical and critical skills 68 Leadership skills
60 Research skills 69 Handling people problems
61 Statistical skills 70 Handling challenging conversations
62 Selection interviewing skills 71 Managing conflict
63 Job, role, competency and skills analysis 72 Political skills
64 Learning and development skills 73 Dealing with business issues from an HR
perspective
74 Project management
1
PART I
Fundamentals of human
resource management
PA R T I CO N T E N T S
01 Human resource management

02 Strategic HRM
03 HR strategy
04 Human capital management
05 The context of HRM
06 HRM and performance
07 International HRM
the case for a different approach to HRM through

Introduction people management. The second chapter deals with
the nature of strategic HRM. This is followed by a
HRM is about the management of people in order chapter on HR strategy that describes how the
to achieve desired results. strategic HRM concept functions in practice. The
following chapters deal with the associated concept
The first chapter in this part of the handbook covers of human capital management, the importance of
the conceptual basis of human resource manage- the context in which HRM takes place, the ways in
ment, including the various HRM models and the which HRM affects performance and the practice
characteristics of an HR system. It also examines of international HRM.
2

3
01
Human resource
management
Introduction
Pau se for th ou gh t
Human resource management (HRM) is about how
people are employed, managed and developed in or-
What do you think of the term human
ganizations. HRM is delivered by means of the HR resources?
system, which operates within the framework pro-
vided by the HR architecture.
The term ‘human resources’ is controversial.
Osterby and Coster (1992: 31) argued that it ‘reduces The chapter starts with a general discussion of the
people to the same category of value as materials, meaning of HRM and the issues involved in its
money and technology – all resources, and resources practice, and continues with analyses of the mean-
are only valuable to the extent they can be exploited ing and development of HRM and reviews of HRM
or leveraged into economic value.’ There has there- philosophy, goals and standards. The various mod-
fore been a move to replace ‘human resources’ with els of HRM and its underpinning theories are then
‘people management’ and a proposal on what the lat- considered. The concept of HRM has sometimes
ter could mean is made at the end of this chapter. But been controversial and different perspectives about
HRM is still the most commonly used term. what it stands for and what it means are then exam-
ined. Next, the chapter contains a description of
how an HR system within the framework of the HR
Wo rd s of wi sdom architecture delivers HRM. It concludes with a dis-
cussion of the present state of HRM and its future
Many texts and dictionaries mistakenly in the form of a philosophy of people management.
define ‘human resources’ as the people
employed in an organization, a notion that HRM: meaning and issues
obscures the meaning of human resources
It is possible to produce a definition of HRM as set
and that critics see as impugning the dignity
out below. But it is necessary to look more deeply
and denying the independence of human into the meaning of HRM. This involves consider-
agents. Human resources are more ing the issues concerned with the tension that can
exist between the fundamental requirement on the
accurately understood as the resources that one hand to help the organization to achieve its
are intrinsic to human beings, which they aims as a business or a public or voluntary sector
can apply to the various tasks of life. body, and the need on the other hand to respect and
promote the interests of the people working in the
Boxall (2013: 4)
organization.
4 Part 1 | Fundamentals of Human Resource Management
HRM defined
HRM was defined by Boxall and Purcell (2003: 1) Word s of w isd om
as ‘all those activities associated with the manage- All organizations have problems, and they
ment of employment relationships in the firm’.
Boxall (2007: 13) noted that: ‘Human resources in- nearly always concern people. How to
clude the knowledge, skills, networks and energies manage them; whom to hire, fire or
of people and, underpinning them, their physical
promote; and how to motivate, develop and
and emotional health, intellectual capabilities, per-
sonalities and motivations.’ retain them.
Chamorro-Premuzic (2017: xiii)
Wo rd s o f w isdom
However, HRM is not simply there to solve prob-
Human resource management (HRM), the lems. It can be regarded as a philosophy about the
management of work and people towards ways in which people are managed at work that is
underpinned by a number of theories relating to the
desired ends, is a fundamental activity in any
behaviour of people and organizations. HRM aims
organization in which human beings are to improve organizational effectiveness through
employed. It is not something whose people but it should also be concerned with the
ethical dimension – how people should be treated in
existence needs to be radically justified: HRM accordance with a set of moral values. An impor-
is an inevitable consequence of starting and tant point was made by Schneider.
growing an organization. While there are
myriad variations in the ideologies, styles
and managerial resources engaged, HRM Word s of w isd om
happens in some form or other. It is one Positive job attitudes for workers in an
thing to question the relative performance of organization can be expected when the
particular models of HRM... It is quite natural inclinations of the persons there are
another thing to question the necessity of allowed to be reflected in their behaviours
the HRM process itself, as if organizations by the kinds of processes and structures
cannot survive or grow without making a that have evolved there.
reasonable attempt at organizing work and Schneider (1987: 450)
managing people.
Boxall et al (2007: 1)
However, as Keegan and Francis (2010: 873) noted,

HR work is now ‘largely framed as a business issue’.
The emphasis is on business alignment and strategic
HRM issues fit. These are important requirements but focusing
on them can lead HR professionals to place insuffi-
The following fundamental issue facing HRM was cient emphasis on employee wellbeing when devel-
raised by Chamorro-Premuzic. oping HR policy and practice.
A simplistic view of the business imperative –
the often-expressed belief that the most important
Chapter 1 | Human Resource Management 5
thing HR professionals should know about is ‘how

the business makes money’ – permits little room for Source review
considering the rights and needs of employees as
well as the other stakeholders. HRM should indeed HRM is regarded by some managers as just a set of
aim to support the achievement of business goals
initials or new wine in old bottles. It could indeed be
but it should also aim to build relationships with
no more and no less than another name for
the people employed in the organization based on
personnel management, but as usually perceived, at
fair dealing, trust, openness and personal fulfil-
least it has the virtue of emphasizing the virtue of
ment. A basis for doing this is provided by the con-
cept of the employee experience as discussed in treating people as a key resource, the management
Chapter 30. of which is the direct concern of top management as
part of the strategic planning processes of the
enterprise. Although there is nothing new in the idea,
insufficient attention has been paid to it in many
organizations. The new bottle or label can help to
Wo rd s of wi sdom overcome this deficiency.
A regime which provides human beings Armstrong (1987: 35)
with no deep reason to care about one
another cannot long preserve its legitimacy. As Hendry and Pettigrew (1990: 18) observed:
Sennett (1998: 1) HRM was ‘heavily normative from the start: it pro-
vided a diagnosis and proposed solutions’. They also
stated that: ‘What HRM did at this point was to
wrap around some of the observable changes, while
providing a focus for challenging deficiencies – in
attitudes, scope, coherence and direction – of exist-
Pa us e for t houg ht ing personnel management’ (ibid: 20).
Torrington and Hall (1991) suggested that per-
Is there an inevitable tension between the sonnel management was workforce centred and
need for HRM to further the business success therefore directed itself to employees, while HRM is
resource centred and concerns itself with the overall
of the organization and the need to be human resource need of the organization.
concerned with the wellbeing of the people The ‘founding fathers’ of HRM were the US aca-
working in the organization? If there is, how demics Michael Beer and his colleagues in the
‘Harvard framework’, and Charles Fombrun and
can it be resolved? his colleagues in the ‘Michigan framework’ or
‘matching model’ as described later in this chapter.
In the UK they were followed by a number of
commentators who developed, explained and fre-
quently criticized the concept. Legge (2005: 101)
The development of the commented that: ‘The term [HRM] was taken up by
both UK managers (for example, Armstrong, 1987;
HRM concept Fowler, 1987) and UK academics.’
As first conceived, HRM had a conceptual
HRM emerged in the 1980s as a philosophy of how framework consisting of a philosophy underpinned
people should be managed and an alternative to tra- by a number of theories drawn from the behav-
ditional forms of personnel management. At the ioural sciences and from the fields of strategic man-
time there were questions about whether or not agement, human capital management and indus-
there was a significant difference between them. An trial relations. As defined by Storey (2001: 7), this
answer to this was provided at that time by the philosophy consisted of the assumptions ‘that it is
writer as follows: the human resource which gives competitive edge,
that the aim should be to enhance employee com- HRM system’ (Kepes and Delery, 2007: 390). This
mitment, that HRM decisions are of strategic im- notion of ‘guiding principles’ echoes Becker and
portance and that therefore HRM policies should Gerhart (1996: 786), who pointed out that it is at
be integrated into the business strategy.’ With its this level within the HR system that effects are ‘gen-
emphasis on strategy, commitment, the rights of eralizable or universal’. The impact of HR philoso-
stakeholders and the need to regard employees as phy was confirmed by Godard and Delaney (2000),
assets not costs, HRM was a groundbreaking de- who found that the value placed on human capital
parture from traditional personnel management. by those in decision-making positions within or-
Referring to strategic HRM (SHRM), Lengnick- ganizations affects the types of HR systems that are
Hall et al (2009: 69) observed that: ‘This shift sig- chosen and how they are used. Boxall and Macky
nalled a dramatic change in the role and influences (2009: 7) take the importance of the role of HR
of human resource professionals and adjusted the philosophy in HR system design a stage further by
lens used to capture the expectations of human re- suggesting that ‘we get closer to describing HR sys-
source activities within organizations. SHRM ar- tems in meaningful terms when we identify the
gues that more than mechanical, administrative principal themes that underpin them: in other
contributions are expected from HR professionals.’ words, when we describe the major philosophies
that management is trying to pursue.’ Lepak et al
(2006: 241), following their research in 402 estab-
lishments in the United States, revealed the impor-
Wo rd s o f w isdom tance of HR philosophy in determining how
high-investment human resource systems were fash-
HR derives its social legitimacy from its
ioned for both core and support employees.
ability to serve as an effective steward of a The following explanation of the common
social contract in employment relationships themes in HRM philosophies was made by Karen
Legge – a major contributor to thinking about
capable of balancing and integrating the HRM in its earlier days – on the basis of an analysis
interests and needs of employers, of a number of HRM models.
employees and the society in which these
relationships are embedded.
Kochan (2007: 600)
Word s of w isd om
That human resource policies should be
integrated with strategic business planning
The development of the HRM concept involved the
evolution of notions about HRM philosophy and and used to reinforce an appropriate (or
the goals of HRM. It had a strong base in behav- change an inappropriate) organizational
ioural science theory and was expressed in a variety
of models. culture, that human resources are valuable
and a source of competitive advantage, that
HRM philosophy they may be tapped most effectively by

mutually consistent policies that promote
Schuler (1992: 21) suggested that an HR philoso- commitment and which, as a consequence,
phy is ‘a statement of how the organization regards
its human resources, what role the resources play in foster a willingness in employees to act
the overall success of the business and how they are flexibly in the interests of the ‘adaptive
to be treated and managed.’ HRM philosophies organization’s’ pursuit of excellence.
have also been described as ‘the guiding principles
Legge (1989: 25)
that identify and characterize the value and treat-
ment of employees covered within a particular
Another major British commentator – John Storey – the way in which management treats its
produced this description of the beliefs of HRM: stakeholders and by applying an ethical
approach to people management.
Note that the goals include both high performance
and employee wellbeing.
Source review
The beliefs of HRM include the assumptions

that it is the human resource which gives Pau se for th ou gh t
competitive edge, that the aim should be to Why is it important for organizations to
enhance employee commitment, that HR achieve social legitimacy? How can it be
decisions are of strategic importance and that done?
therefore HR policies should be integrated
into the business strategy.
Storey (2001: 7)
Word s of wisd om
The potential to pursue the dual goals of
The goals of HRM high organizational performance and high
employee wellbeing reflects the promise of
Taking into account these beliefs, the goals of HRM
can be defined as being to: HRM.
Guest et al (2013: 197)
●● support the organization in achieving its
objectives by developing and implementing
human resource (HR) strategies which are
integrated with the business strategy
(strategic HRM);
●● contribute to the development of a high- Word s of wisd om
performance culture;
Meeting employee needs can also improve
●● ensure that the organization has the talented,
skilled, and engaged people it needs; productivity, innovation and business
●● maintain a positive employment relationship success.
between management and employees, Brown et al (2019: 52)
bearing in mind that employees must feel
trusted, valued and appreciated if they are to
work effectively and efficiently over time;
●● provide for a satisfactory employee
experience;
●● further the wellbeing of employees as major
stakeholders; Is it feasible to achieve the goals of both
●● achieve social legitimacy (defined by Dowling high employee wellbeing and high
and Pfeffer (1975: 122) as ‘the congruence performance? And if so, how can it be done?
between the values associated with the
organization and the values of its
environment’) by ensuring the rightfulness of
But Peter Boxall (2007: 62) referred to the ‘strategic

tensions’ between social legitimacy and managerial
autonomy. Word s of w isd om
To make HR practices more than isolated
HRM standards acts, managers and HR professionals must

master the theory behind HR work; they
The following are the HRM standards produced by need to be able to explain conceptually how
the CIPD on the basis of those issued by the British
Standards Institution. They provide guidance on and why HR practices lead to their
good people management practice. outcomes… Regardless of the preferred
theory, managers and HR professionals
should abstract from it a higher level of
Source review
reasoning for their day-to-day work and
●● People working on behalf of the organization thus better explain why their work
have intrinsic value, in addition to their accomplishes its goals.
protections under the law or in regulation,
Ulrich (1997: 238)
which needs to be respected.
●● Stakeholders and their interests are integral to
the best interests of the organization.
The main theories underpinning HRM are summa-
●● Every organization is part of wider society and rized below.
has a responsibility to respect its social contract
as a corporate citizen and operate in a manner
that is sustainable. AMO theory
●● A commitment to valuing people who work on The ‘AMO’ formula as set out by Boxall and Purcell
behalf of the organization and to meeting the (2003) states that performance is a function of
requirements of the standard is made and Ability + Motivation + Opportunity to Perform.
supported at the highest level. The formula provides the basis for developing HR
CIPD (2018) systems that attend to employees’ interests, namely
their skill requirements, motivations and the quality
of their job.
Contingency theory
The theoretical base of HRM
Contingency theory explains that HRM practices are
The original notion of HRM had a strong theoreti- dependent on the organization’s environment and cir-
cal base. Guest (1987: 505) commented that: cumstances. This means that, as Paauwe (2004: 36)
‘Human resource management appears to lean heav- observed: ‘The relationship between the relevant in-
ily on theories of commitment and motivation and dependent variables (eg HRM policies and practices)
other ideas derived from the field of organizational and the dependent variable (performance) will vary
behaviour.’ according to the influences such as company size, age
Dave Ulrich cites the need for HR practice to be and technology, capital intensity, degree of union
guided by HR theory. He reminded HRM profes- ization, industry/sector ownership and location.’
sionals that theory helps explain the manner in Contingency theory is associated with the notion
which outcomes emerge. of fit – the need to achieve congruence between an
organization’s HR strategies, policies and practices
and its business strategies within the context of its
external and internal environment. This is a key ers in organizations, including shareholders, manag-
concept in strategic HRM. ers, employees, customers, government and the public
at large. He quoted (page 31) the Stanford Research
Institute’s 1963 definition of stakeholders as ‘those
Human capital theory groups without whose support the organization
Human capital theory is concerned with how people would cease to exist’. Organizations must take ac-
in an organization contribute their knowledge, skills count of these various interests when formulating and
and abilities to enhancing organizational capability implementing HR strategy and policies (stakeholder
and with the significance of that contribution. It states analysis is dealt with in Chapter 3).
that the unique nature of human capital resources
within the firm has the potential to generate sustain-
able competitive advantage (Nyberg et al, 2014).
Which do you think is the most significant
Motivation theory
of the theories summarized above and why?
Motivation theory, especially expectancy theory
and goal theory as described in Chapter 24, ex-
plains the factors that affect goal-directed behav-
iour. It therefore influences the approaches used in
HRM to enhance engagement, reward people and
manage performance. Models of HRM
In addition to having a strong theoretical base,
The resource-based view HRM has manifested itself over the years in a num-
ber of models that have defined what it is and how
Resource-based theory (Barney, 1991) is often exit operates. Of these, the first descriptions of HRM –
pressed as ‘the resource-based view’ (RBV). It states the Michigan and Harvard frameworks – have been
that competitive advantage is achieved if a firm’s the most influential.
resources are valuable, rare and costly to imitate.
HRM can play a major part in ensuring that the
firm’s human resources meet these criteria. The The Michigan framework or ‘match-
RBV is associated with human capital theory.
ing’ model
Fombrun and his colleagues at the University of
Social exchange theory Michigan proposed in 1984 the ‘matching model’,
Social exchange theory suggests that social beings which indicated that HR systems and the organiza-
feel obliged to return favours. Feelings of loyalty and tion structure should be managed in a way that is
commitment and discretionary effort are in some congruent with organizational strategy. This point
form a social reciprocation by employees to a good was made in the following classic statement:
employer. Employees will reciprocate their contribu-
tion to the organization if they perceive that the or-
ganization has treated them well. It is linked with
the concept of ‘mutual gains’ (Kochan and Osterman, Word s of wisd om
1994) which states that organizations can and
should pursue employment policies that produce The critical management task is to align the
benefits for both employees and themselves. formal structure and human resource
systems so that they drive the strategic
Stakeholder theory objectives of the organization.
Stakeholder theory as developed by Freeman (1984) Fombrun et al (1984: 37)
states that a number of different groups are stakehold-
Thus they took the first steps towards the concept inclusion of employee and societal wellbeing as long-
of strategic HRM. term consequences.
The Harvard framework

Beer et al (1984) produced what has become Word s of w isd om
known as the ‘Harvard framework’. They started
with the proposition that: ‘Human resource man- Today… many pressures are demanding a
agement (HRM) involves all management deci- broader, more comprehensive and more
sions and actions that affect the nature of the
relationship between the organization and employ- strategic perspective with regard to the
ees – its human resources’ (ibid: 1). They believed organization’s human resources. It is
that HRM had two characteristic features: (1) line
necessary to adopt a longer-term
managers accept more responsibility for ensuring
the alignment of competitive strategy and HR pol- perspective in managing people and
icies, and (2) HR has the mission of setting policies consideration of people as a potential asset
that govern how HR activities are developed and
implemented in ways that make them more mutu- rather than merely a variable cost.
ally reinforcing. Beer et al (1984: 4)
The Harvard framework is modelled in Figure 1.1.
Note the reference to stakeholder interests and the
F I G U R E 1.1 The Harvard HRM framework
Stakeholder
interests:
Shareholders
Management
Employees
Government
HRM policy HR outcomes: Long-term
Unions
choices: Commitment consequences:
Employee Congruence Individual
influence Cost wellbeing
Human resource effectiveness Organizational
flow effectiveness
Situational Reward systems Societal
factors: Work systems wellbeing
Workforce
characteristics
Business
strategy and
conditions
Management
philosophy
Labour market
Unions
Task technology
Laws and social
values
Source Beer et al (1984)

Contextual model European model

The contextual model of HRM refers to the impor- Brewster (1993) described a European model of
tance of environmental factors affecting the practice HRM as follows:
of HRM that have been underestimated in other
●● Environment – established legal framework.
models. These include the influence of the social, in-
stitutional and political forces and the circumstances ●● Objectives – organizational objectives and
and features of the organization. The contextual social concern – people as a key resource.
model advocates integrating the human resource ●● Focus – cost/benefits and environment
management system in the environment in which it is analysis.
developed. As Martin-Alcázar et al (2005: 638) men- ●● Relationship with employees – union and
tioned: ‘Context both conditions and is conditioned non-union.
by the HRM strategy.’ A broader set of stakeholders
●● Relationship with line managers – specialist/
is involved in the formulation and implementation of
line liaison.
human resource strategies. This is referred to by
Schuler and Jackson (2000: 229) as a ‘multiple stake- ●● Role of HR specialist – specialist managers:
holder framework’. These stakeholders may be ex- ambiguity, tolerance, flexibility.
ternal as well as internal and both influence and are The main distinction between this model and what
influenced by strategic decisions. Brewster referred to as ‘the prescribed model’ was
that the latter involves deregulation (no legal frame-
work), no trade unions and a focus on organiza-
The 5-P model tional objectives but not on social concern.
As formulated by Schuler (1992) the 5-P model of
HRM describes the way HRM operates under the
five headings of: The hard and soft models
1 HR philosophy – a statement of how the Storey (1989: 8) distinguished between the ‘hard’
organization regards its human resources, the and ‘soft’ versions of HRM. He wrote that: ‘The
role they play in the overall success of the hard one emphasizes the quantitative, calculative
business, and how they should be treated and and business-strategic aspects of managing human
managed. resources in as “rational” a way as for any other
economic factor. By contrast, the soft version traces
2 HR policies – these provide guidelines for
its roots to the human relations school; it empha-
action on people-related business issues and
sizes communication, motivation and leadership.’
for the development of HR programmes and
However, it was suggested by Keenoy (1997:
practices based on strategic needs.
838) that ‘hard and soft HRM are complementary
3 HR programmes – these are shaped by HR rather than mutually exclusive practices’. Research
policies and consist of coordinated HR in eight UK organizations by Truss et al (1997) indi-
efforts intended to initiate and manage cated that the distinction between hard and soft
organizational change efforts prompted by HRM was not as precise as some commentators
strategic business needs. have implied.
4 HR practices – these are the activities carried
out in implementing HR policies and
programmes. They include resourcing,
learning and development, performance and
reward management, employee relations, and Do you agree that HRM is about being both
administration.
hard and soft as necessary? But if this is the
5 HR processes – these are the formal
procedures and methods used to put HR case how can a consistent approach to HRM
strategic plans and policies into effect. be adopted?
The following is a selection of other reservations

Perspectives on HRM about HRM.
On the face of it, the original concept of HRM had ●● HRM is simplistic – as Fowler (1987: 3)
much to offer, at least to management. But for some wrote:
time HRM has been a controversial topic in aca- The HRM message to top management tends
demic circles. Peccei (2004) identified two main to be beguilingly simple. Don’t bother too much
perspectives. The first, ‘optimistic’ one is the idea about the content or techniques of personnel
that HRM can make a positive impact on the well- management, it says. Just manage the context.
being of employees. Get out from behind your desk, bypass the
When management adopts progressive HR poli- hierarchy, and go and talk to people. That way
cies that provide a more interesting, supportive and you will unlock an enormous potential for
rewarding work environment, in accordance with improved performance.
social exchange theory, workers will respond with
enhanced levels of engagement with the organiza- ●● Guest (1991: 149) referred to the ‘optimistic
tion and their work and thus achieve higher levels but ambiguous label of human resource
of performance. Both the organization and its em- management’.
ployees will therefore benefit – the concept of ‘mu- ●● Keenoy (1990: 3) referred to HRM as a ‘wolf
tual gains’. in sheep’s clothing.
In contrast, the second, ‘pessimistic’ perspective ●● HRM is manipulative; Willmott (1993: 534)
is that HRM is potentially harmful to employees asserted that: ‘any (corporate) practice/value
and leads to the intensification of work and their is as good as any other so long as it secures
systematic exploitation. Macky and Boxall (2008) the compliance of employees.’ Perhaps the
conducted research which showed that work inten- initials HRM stand for human resource
sification reduces job satisfaction, increases stress manipulation.
and undermines work-life balance. The pessimistic
perspective concludes that it is employers rather ●● Legge (1998: 42) claimed that HRM is
than employees who benefit from HRM – profits ‘macho-management dressed up as
before people. A very early reservation was made by benevolent paternalism’.
Alan Fowler. ●● ‘The HRM rhetoric presents it as an all or
nothing process which is ideal for any
organization, despite the evidence that
different business environments require
different approaches’ (Armstrong, 2000: 577).
Wo rd s o f w isdom
●● The unitarist approach to industrial relations
At the heart of the concept is the complete implicit in HRM (the belief that management
identification of employees with the aims and employees share the same concerns and
it is therefore in both their interests to work
and values of the business – employee together) is questionable (Ramsay et al,
involvement but on the company’s terms. 2000: 521).
Power in the HRM system remains very ●● HRM is managerialist: ‘The analysis of
employment management has become
firmly in the hands of the employer. Is it
increasingly myopic and progressively more
really possible to claim full mutuality when irrelevant to the daily experience of being
at the end of the day the employer can employed. While the reasons for this
development are immensely complex… it is
decide unilaterally to close the company or primarily a consequence of the adoption of
sell it to someone else? the managerialist conception of the discourse
Fowler (1987: 3) of HRM’ (Delbridge and Keenoy, 2010:
813).
employees share the same concerns). And Hyman

made the following memorable observation:
Pa u s e for t houg ht
To what extent do you think these
reservations are valid? Word s of w isd om
Capitalism is a system in which employers
David Guest referred to such comments as the ‘radical require workers to be both dependable and
critique of HRM’ and summarized them as follows: disposable.
Hyman (1987)
Wo rd s of wi sdom
This view of HRM, in which workers are However, in spite of reservations, it is a fact that
some form of human resource management or, as it
viewed primarily as resources or objects, is is increasingly being called, people management, is
attractive to some managers, if only to an inevitable feature of any organization. HRM has
remind them of past neglect of a potentially largely become something that organizations do
when they manage people rather than an aspiration
untapped resource. But it is also an easy or a philosophy. The way in which this is carried
and familiar target for criticism. It reflects a out through the HR system is described below.
longstanding capitalist tradition in which
the worker is viewed as a commodity. The The HR system
resultant exploitation may be paternalist
A system is a set of practices or activities that fit
and benevolent; but, equally, it may operate together and interact to achieve a purpose. This is
against the interests of workers. Essentially, how HRM is delivered. In a properly functioning
workers are simply resources to be HR system its different parts are interrelated and
jointly supportive and, together, they are there to
squeezed and disposed of as business enable HR goals to be achieved. The HR system op-
requirements dictate. More importantly, the erates within the framework provided by the HR
architecture. It also involves managing the employee
interests of workers and their wellbeing are experience of working in an organization.
of no significance in themselves.
Guest (1999: 6)
HR architecture
The HR architecture is a comprehensive representa-
But in spite of this, Guest concluded from his re- tion of all that is involved in HR, not simply the
search that: ‘It appears that workers like their expe- structure of the HR function. As explained by Becker
rience of HRM. The more HR practices they are et al (2001: 12): ‘We use the term HR architecture to
currently experiencing in their employment, the broadly describe the continuum from the HR pro-
more satisfied they seem to be and the better their fessionals within the HR function, to the system of
psychological contract’ (ibid: 23). HR-related policies and practices, through the com-
More recently, Dundon et al (2017: 19) referred petencies, motivation and associated behaviours of
to the ‘inherent bias in managerial writings to treat the firm’s employees.’ It was noted by Hird et al
workers as objects to be subservient to some (2010: 25) that: ‘This architecture is seen as a unique
employer-led strategic mission’. They also com-
combination of the HR function’s structure and de-
mented on ‘the unitarist flavour of mainstream livery model, the HR practices and system, and the
HRM’ (the unitarist belief is that management and strategic employee behaviours that these create.’
Purcell (1999: 38) suggested that the focus should discrete practices with no explicit or discernible link
be on ‘appropriate HR architecture and the pro- between them. The more strategically minded sys-
cesses that contribute to organizational perfor- tem approach views HR as an integrated and coher-
mance’. Becker and Huselid (2006: 899) stated that: ent bundle of mutually reinforcing practices.’
‘It is the fit between the HR architecture and the
strategic capabilities and business processes that im-
plement strategy that is the basis of HR’s contribu- The components of the HR system
tion to competitive advantage.’
As illustrated in Figure 1.2, an HR system brings
Activities such as organization development, se-
together HR philosophies that describe the over-
lection interviewing and testing, talent management,
arching values and guiding principles adopted in
learning and development, performance manage-
managing people. The HR activities carried out in
ment and total reward play an important part in the
the system can be divided into two broad categories:
delivery of HR. But there is the danger that new and
(1) transformational (strategic) activities such as or-
seemingly different techniques become ‘flavours of
ganization development and strategic human
the month’ only to be quickly forgotten when they
resource management that are concerned with de-
fail to deliver. veloping organizational effectiveness and the align-
ment and implementation of HR and business
strategies; and (2) transactional activities that cover
the main areas of HR service delivery – resourcing,
Wo rd s o f w isdom learning and development, reward and employment
relations.
The history of the management of human Taking account of the internal and external envi-
resources is littered with examples of widely ronments in which the organization operates, the
system incorporates:
acclaimed techniques enthusiastically
●● HR strategies, which define the direction in
introduced by managers who are keen to which HR intends to take each of its main
find solutions to their ‘people’ problems, areas of activity.
only to be discarded and discredited by the ●● HR policies, which set out what HR is there
to do and provide guidelines defining how
same disillusioned and increasingly cynical
specific aspects of HR should be applied and
managers some time later. implemented.
McLean (1981: 4) ●● HR practices, which consist of the HR
activities involved in managing and
developing people and in managing the
employment relationship.
The effective delivery of HR depends on using tech-

niques that are tried, tested and appropriate, not A strong HR system
ones that have been promoted vigorously as ‘best
practice’ without supporting evidence. Bowen and Ostroff (2004) advocated a ‘strong’ HR
system to ensure the more effective implementation
of HRM practices. They developed a model of
Features of the HR system HRM in which HR practices can be viewed as com-
munications from the employer to the employee.
Becker and Huselid (1998: 95) observed that: ‘The They suggested that ‘when the HRM system is
HR system is first and foremost a vehicle to imple- perceived as high in distinctiveness, consistency, and
ment the firm’s strategy.’ Later (2006), they argued consensus, it will create a strong situation’ (ibid:
that it is the HR system that is the key HR asset. 208). They argued that a strong HRM system can
Boselie et al (2005: 73) noted that in its traditional significantly affect firm performance by creating
form HR can be viewed as ‘a collection of multiple powerful, focused organizational cultures that help
F I G U R E 1.2 The HRM system
HR philosophies
Internal environment External environment

Strategic HRM and HR policies and
practices
Corporate social
Human capital management
responsibility
People Learning and Reward Employment Employee

Organization
resourcing development management relations wellbeing
Wellbeing
Organization Workforce Performance Employment
policy and
design planning management relationship
practice
Job evaluation
Organization Recruitment Organizational Industrial Health and
and pay
development and selection learning relations safety
surveys
Talent Individual Base pay Employee

Job design e-HRM
management learning management voice
Leadership and Employee Employment

Knowledge Employment Contingent
management commun- law
management practices pay
development ications compliance
Employee
benefits
to structure and direct employee behaviour and ef-

fort towards desired organizational goals. They also The impact of HRM
emphasized the important role of implementation
in translating the intended HRM system into action. HRM or people management practices impact on:
This point was later reinforced by Nishii and Wright ●● Performance – of individuals and the whole
(2008), who observed that there are gaps between organization through resourcing (enabling
intended and implemented HR systems and be- the recruitment and retention of capable
tween implemented and perceived HR systems. people), enhancing the employee experience,
learning and development activities (skills
development), performance management,
reward management and concern for
Pa us e for t houg ht employee wellbeing.
What do you think a ‘strong’ HRM system ●● Behaviour – influencing motivation,
would look like? commitment and engagement.
●● Culture – through organizational original philosophy if it ever was. It is just what HR

development interventions. people and line managers do.
●● Systems – by influencing work design.
Structures – by influencing organization
●●
design.
HRM – the future
HRM has a past and a present. What about its fu-
HRM – today ture? The accusation that HRM risks losing its di-
rection and raison d’être was made by Marchington
(2008). He thought that HRM was becoming uni-
As a description of people management activities
dimensional and one-best-way-driven, elitist, overly
in organizations, the term HRM is now in common
focused on the needs (and short-term financial per-
use. Emphasis is placed on the need for HR to be
formance priorities and metrics) of investors and
strategic and businesslike and to add value, ie to
leaders, and mis-focused, by ignoring how HRM is
generate extra value (benefit to the business) by the
(or is not) put into effect by line managers. He ar-
expenditure of effort, time and money on HRM
gued in favour of a future in which the HR function
activities. The problem with this approach is that
returns to its distinctive roots in people manage-
the needs and rights of employees as key stake-
ment and refocuses in three ways:
holders in the business can be neglected, even
ignored. Emphasis on being businesslike has led ●● increasingly playing the role of strategic
commentators like Dundon et al (2017: 100) to problem solver and broker, attempting to
declare with some reason that many employers balance the demands of different constituents
‘simply view workers as a disposable means to a and stakeholders, rather than ‘providing the
profitable end’. answers that leaders want to hear’;
There have been plenty of new interests and de- ●● paying greater attention to employee
velopments including human capital management, wellbeing as the route to high performance;
engagement, the concept of ‘the employee experi- and
ence’, talent management, competency-based
●● recognizing that what really matters is how
HRM, e-HRM, people analytics, high-performance
line managers put HRM into effect.
work systems, performance management and total
reward. But these have not been introduced under He returned to the fray in 2015.
the banner of the HRM concept as originally de-
fined.
The practice of HRM can be diverse. Dyer and
Holder (1988) pointed out that HRM goals vary Word s of w isd om
according to competitive choices, technologies,
HRM has always been located at the
characteristics of employees (eg could be different
for managers) and the state of the labour market. interface of potentially conflicting forces
Boxall (2007: 48) observed that: ‘Human resource within organizations. However, in its quest
management covers a vast array of activities and
shows a huge range of variations across occupa- for legitimacy, HRM has tended primarily to
tions, organizational levels, business units, firms, look up the hierarchy and focus on narrow
industries and societies.’
performance goals, so neglecting other
But it has become increasingly evident that the
term HRM has been adopted as a synonym for longstanding values and stakeholders.
what used to be called personnel management with- Unless HRM reasserts its independence, it is
out paying much attention to the philosophy of its
founding fathers. As noted by Storey (2007: 6): ‘In likely to wither both in academic and
its generic broad and popular sense it [HRM] sim- practitioner circles.
ply refers to any system of people management.’ Marchington (2015: 176)
HRM practice today is no longer governed by the
David Guest made a related point. HRM policies are and indeed should be
influenced by the interests of various stakeholders:
shareholders, management, employees, community
and government. Unless these policies are
Wo rd s of wi sdom influenced by all stakeholders, the enterprise will
fail to meet the needs of these stakeholders in the
The mutual gains model suggests that HRM long run and it will fail as an institution.
should benefit both individuals and In 2015, Michael Beer, Paul Boselie and Chris
organizations. However, the dominant Brewster reviewed the state of this neglected perspec-
models within HRM theory and research tive after 30 years. They stated that ‘we need to take a
wider, more contextual, more multi-layered approach
continue to focus largely on ways to improve founded on the long-term needs of all relevant stake-
performance, with employee concerns very holders’ (p 427). They also argued that: ‘Fundamental
to a multi-stakeholder approach must be the creation,
much a secondary consideration.
maintenance, and development of a culture of trust
Guest (2017: 22) among the different stakeholders. Considering HRM
as a social system, in contrast to the dominant indi-
vidual perspective, puts the relationships between
stakeholders at the centre of our studies’ (p 432).
In a business, its owners and its senior manage-
The concept of people ment as principal agents of those owners are two of
the key stakeholders. They will aim to achieve fi-
management nancial success as a necessary requirement for the
survival of the business. So where does HRM stand?
The views expressed above are those of two of the Boxall (2007: 63) suggested that ‘The mission of
most distinguished HRM academics, researchers and HRM is to support the viability of the firm’. And he
commentators in the UK. They should be respected correctly observed later that ‘HR strategy is part
and indicate that consideration should be given to and parcel of a larger business model, and it fails if
what needs to be done to reshape the HRM philoso- it does not serve the economic imperatives that are
phy to take account of the problems to which they essential to that model’ (Boxall, 2013: 59). However,
refer. A different approach could be defined under the a fundamental feature of people management is
heading of ‘people management’. This is a term that that policies and practices should be looked at and
is increasingly being used as an alternative to ‘human developed in accordance with the interests of the
resource management’ but it should mean more than people affected by them, not just the economic
just a change to a more acceptable name, as may needs of the business. It is necessary to achieve a
often be the case. A philosophy of people manage- balance between these interests. Thompson and
ment needs to be developed as described below. Harley (2007:149) remarked that:
In an environment where employee skills and
The philosophy of people commitment are central to organizational
success it is precisely by giving employees more
management that organizations will gain more… Successful
The philosophy of people management is based on strategies therefore rely on aligning employer and
employee interests.
two interrelated principles. The first is that a multi-
stakeholder approach should be adopted. Employees The second principle is that employees should be re-
have a stake in their organization that is just as im- garded as people rather than as exploitable resources.
portant as the stake held by owners and senior John Rawls (1973: 183) wrote that ‘We must treat
management. The attention given to the interests of persons solely as ends and not in any way as means’.
employees has to equal the attention given to the Schneider (1987: 450) argued that ‘Organizations
interests of the business. In their seminal book on are the people in them; that people make the place’.
HRM, Beer et al (1984: 15) observed that: Managing the employee experience is a ‘bottom up’
rather than a ‘top down’ process. To enhance the ex- the public at large (the community). Equally, how-
perience, the starting point is to gain understanding ever, it recognizes the interests of the people the or-
of how employees perceive what it is like to work in ganization employs and acts accordingly. People are
the organization and from that analysis obtain the not simply treated as resources – commodities or
evidence on what needs to be done to deal with any disposable factors of production who exist to be ex-
issues. And this cannot be done by an annual engage- ploited at the behest of the owners and management.
ment survey. Frequent ‘pulse’ surveys are necessary. Essentially, people management aims to achieve a
A people management system that adopts these balance between the needs of employees and those
principles will cover the same areas as an HRM sys- of the other stakeholders. It pursues employment
tem. People professionals will be responsible for the policies that are socially legitimate and produce ben-
same things as HR professionals, but the ways in efits for both employees and employers. It avoids the
which they do them will differ. temptation to look upwards and focus on the strate-
gic (business) aims of the organization at the expense
of the wellbeing of the people in the organization.
People management defined
The fundamental aim of people management is to
ensure that the organization has the knowledgeable,
Comparison between HRM
skilled, engaged and productive people it needs. It and people management
adopts a multi-stakeholder approach to managing
A comparison of the characteristics of HRM with
the employment relationship. This recognizes the
those of people management is given in Table 1.1.
need to satisfy the interests of the owners (the share-
holders) of a business or the requirements of those
responsible for the operation of a public or volun-
tary sector organization. It also recognizes the inter-
People management in practice
ests of the management of the organization and the The following case study illustrates people manage-
organization’s responsibilities to its suppliers and ment in practice at Richer Sounds.
TA B L E 1.1 Comparison between HRM and people management
People management
(Organizations are the people in
HRM them… people make the place: Gerald
(Resource-based view version) Schneider)
Concept/ Calvinism (focus on the values of order and Quakerism (emphasis on non-authoritarian
philosophy regularity) fellowship)
Darwin (survival of the fittest) Rawls (treat people as ends, not means)
Ownership Shareholder/senior management driven Multi-stakeholder with employees as key

and priority Employees regarded as factors of production Focus on employee wellbeing
Approach Fads and flavours of the month Evidence-based
Employment Unitary perspective Pluralist perspective

relationship Legal employment contracts Psychological contracts
Compliance Voluntarism
De-recognition Partnership/mutual gains
Focus on managing diversity Focus on both inclusion and diversity
Formal joint consultation processes Importance attached to all forms of employee
voice
(continued )
TA B L E 1. 1 (Continued)
People management
(Organizations are the people in
HRM them… people make the place: Gerald
(Resource-based view version) Schneider)
Work Work intensification Emphasis on job quality

Mechanistic Flexible working
Analytics Descriptive Predictive

Annual engagement survey Pulse surveys
Digital Human resource information systems Web-based applications: social media, cloud
technologies, chatbots, smart phones
Learning and Systematic training Workplace/experiential/self-managed/social

development Learning organization learning
E-learning Organizational learning
Blended learning
Talent Buy in the best talent and win the talent war Grow everyone’s talents
management Exclusive approach Inclusive approach
Elitist meritocracy Grow your own (talent on demand)
Performance Financial Balanced scorecard

emphasis Individual Collective
Rewards and Financial emphasis Total reward and recognition

incentives Highly differentiated More widely shared
Individual performance pay and bonuses Profit sharing
Performance Results and pay focus Strengths-based and development focus

management Formal annual event Continuous dialogue and feedback
Source Adapted from an unpublished paper by Duncan Brown
C A S E S T U DY Julian Richer claims that ethically run businesses like

his – those that that treat their staff well – are inevitably
Richer Sounds more successful than their peers. He has now decided
to hand over control of his business to its 500 or so
Julian Richer founded Richer Sounds, the chain of hi-fi and workers.
TV shops, in 1978 when he was 19. In 2018 the firm made Julian Richer has written that ‘My experience has
profits of around £10 million on a turnover of £189 million. shown me that treating your staff better will make your
The shops run by Richer Sounds have been declared by business perform better’ (Richer, 2017: 16). Some of the
The Guinness Book of Records as the busiest in the world key features of how this is done at Richer Sounds are:
for 20-plus years running. Shrinkage (theft) at the chain is
0.1 per cent of sales, a fraction of the 1–2 per cent typical ●● staff are called colleagues;
on the high street. Labour turnover is 11 per cent a year, ●● competitive pay (at the top level of market rates – no
compared to 100 per cent in some retailers. Richer Sounds one gets less than the National Living Wage);
donates 15 per cent of its profits to charity.
●● a formal recognition scheme which includes every ●● active support for new staff – apart from induction
month providing the colleagues in the most successful training, everyone is given a ‘shadow’, a colleague
branch with the use of the company Bentley; who helps them to settle down;
●● profit sharing; ●● a hardship scheme which provides grants or interest-
free loans to staff who are struggling financially;
●● career counselling rather than performance appraisal;
●● a private healthcare scheme;
●● a policy of continuous development – regular seminars
for managers and training sessions for staff until ●● ten holiday homes for staff including ones in Venice
midday every morning, Monday to Friday, covering and Paris;
technology, customer service and product knowledge;
●● free holidays for staff with more than five years’
●● an active suggestion scheme; service.
●● an ‘introduce a friend’ scheme – colleagues who
introduce someone to the company who has been
employed for six months get a bonus of £100;
Key learning points
HRM defined overall success of the business and how they are to be
treated and managed.’
Human resource management (HRM) is concerned ‘The beliefs of HRM include the assumptions that it
with all aspects of how people are employed and is the human resource which gives competitive edge,
managed in organizations. that the aim should be to enhance employee
commitment, that HR decisions are of strategic
The development of the HRM concept importance and that therefore HR policies should be
integrated into the business strategy’ Storey (2001: 7).
HRM emerged in the 1980s as a philosophy of how
people should be managed. Its ‘founding fathers’ were
the US academics Michael Beer and his colleagues in Goals of HRM
the ‘Harvard framework’, and Charles Fombrun and his The goals of HRM are to:
colleagues in the ‘Michigan framework’ or ‘matching
model’. ●● support the organization in achieving its objectives
As first conceived, HRM had a conceptual by developing and implementing human resource
framework consisting of a philosophy underpinned by (HR) strategies which are integrated with the
a number of theories drawn from the behavioural business strategy (strategic HRM);
sciences and from the fields of strategic management, ●● contribute to the development of a high-
human capital management and industrial relations. performance culture;
●● ensure that the organization has the talented,
HRM philosophy skilled, and engaged people it needs;
Schuler (1992: 21) suggested that an HR philosophy is
●● create a positive employment relationship between
‘a statement of how the organization regards its
management and employees and a climate of
human resources, what role the resources play in the
mutual trust;
●● further the wellbeing of employees as major Models of HRM

stakeholders;
A number of HRM models exist, the most influential
●● encourage the application of an ethical approach being the Harvard and Michigan frameworks.
to people management.
The HRM system

Underpinning theories HRM is delivered through the HR system within the
‘Human resource management appears to lean heavily framework of the HR architecture of an organization.
on theories of commitment and motivation and other HR architecture includes the HR systems and
ideas derived from the field of organizational processes and employee behaviours as well as the
behaviour’ (Guest, 1987: 505). The main theories are: structure of the HR function.
The HR system consists of the interrelated and
●● AMO; jointly supportive HR activities and practices which
●● contingency; together enable HR goals to be achieved.
●● human capital;
People management
●● motivation;
There is a case for developing a concept of people
●● social exchange; and management which emphasizes the need to adopt
a multi-stakeholder approach.
●● stakeholder.
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25
02
Strategic HRM
Introduction The nature of strategic
Strategic human resource management (strategic human resource management
HRM or SHRM) is a concept that aims to explain
what is involved in ensuring that key issues of Strategic human resource management (SHRM)
human resource management (HRM) are dealt with was defined by Wright and McMahan (1992: 298)
strategically. Acting strategically means taking a as: ‘The pattern of planned human resource deploy-
broad and longer-term view of what needs to be ments and activities intended to enable an organisa-
done and ensuring that strategic fit is achieved, ie tion to achieve its goals.’ It was later defined by
that HR or people strategies are integrated with Kaufman (2015: 404) as: ‘The choice, alignment,
business strategies and therefore support them. and integration of an organization’s HRM system
What’s the difference, if any, between SHRM so that its human capital resources most effectively
and HR strategy? The answer to this question is contribute to strategic business objectives.’ SHRM
that SHRM is an overall concept, the aim of which has been described by Boxall (1996) as the interface
is to illuminate the process of developing and im- between HRM and strategic management. Schuler
plementing HR strategy with particular emphasis and Jackson (2007: 5) stated that SHRM is funda-
on the integration of the HR strategy with the mentally about ‘systematically linking people with
business strategy and the integration of each of the firm.’
the different aspects of the HR strategy with one
another. SHRM provides the conceptual back-
ground against which HR strategy can be devised
and implemented. SHRM only becomes real when Word s of wisd om
it produces actions and reactions that can be re-
garded as strategic, either in the form of overall or SHRM is the choice, alignment, and
specific HR strategies or strategic behaviour on integration of an organization’s HRM system
the part of HR professionals working alongside
line managers. so that its human capital resources most
This chapter starts with an analysis of the nature of effectively contribute to strategic business
SHRM and how it is linked to the processes of strate-
objectives.
gic management and human resource management.
The next two parts deal with the achievement of stra- Cascio (2015: 423)
tegic fit (an important feature of SHRM) and the sig-
nificance of the resource-based view that provides a
fundamental rationale for SHRM. These are followed
by an examination of how strategic HRM works, SHRM is also about how members of the HR func-
namely the universalistic, contingency and configuration adopt a strategic approach on a day-to-day
tional perspectives defined by Delery and Doty (1996) basis. This means that they operate as part of the
and the three approaches associated with those per- management team and ensure that HR activities
spectives – best practice, best fit and bundling. support the achievement of corporate strategies.
reforming its strategy over time.’ The purpose of

strategic management was expressed by Kanter
Wo rd s o f w isdom (1984: 288) as being to ‘elicit the present actions for
Strategic human resource management is the future and become action vehicles – integrating
and institutionalizing mechanisms for change.’
largely about integration and adaptation. Its
Truss et al (2014: 49) also emphasized the action-
concern is to ensure that: (1) human oriented nature of strategic management. They de-
resources (HR) management is fully fined it as ‘the process that enables organizations to
turn strategic intent into action’.
integrated with the strategy and strategic The focus is on identifying the organization’s
needs of the firm (vertical fit); (2) HR mission and strategies, but attention is also given to
the resource base required to make it succeed.
policies cohere both across policy areas and
Managers who think strategically will have a broad
across hierarchies (horizontal fit); and (3) and long-term view of where they are going. But
HR practices are adjusted, accepted and they will also be aware that they are responsible,
first, for planning how to allocate resources to op-
used by line managers and employees as portunities that contribute to the implementation of
part of their everyday work. strategy, and second, for managing these opportuni-
Schuler (1992: 18) ties in ways that will add value to the results
achieved by the firm.
To summarize, strategic management deals
with both ends and means. As an end it describes
a vision of what something will look like in the
future. As a means, it shows how it is expected
Strategic HRM and HRM that this vision will be realized. To understand
One of the characteristics of HRM is that it is stra- how strategic management functions it is first nec-
tegic, so what’s the difference between HRM and essary to appreciate the meaning of strategy, as
strategic HRM? An answer to this question was discussed below.
provided by Truss and Gratton (1994: 666) who
wrote that: ‘We should perhaps regard SHRM as an
overarching concept that links the management and The meaning of strategy
development of people within the organization to
The classic definition of strategy was made by
the business as a whole and its environment, while
Chandler (1962: 13) who wrote that it was: ‘The
HRM could be viewed as an organizing activity
determination of the long-term goals and objectives
that takes place under this umbrella.’
of an enterprise, and the adoption of courses of ac-
tion and the allocation of resources necessary for
carrying out those goals.’ A simpler businessman’s
Strategic HRM and strategic definition was made more recently by Julian Richer
management (2017: 144). He defined it as the process of ‘identi-
fying the direction we should be moving in’.
Strategic HRM takes the notion of HRM as a stra-
Strategy has three fundamental characteristics.
tegic, integrated and coherent process and associ-
First, it is forward looking. It is about deciding
ates it with the process of strategic management.
where you need to go and how you mean to get
This is an approach to management that takes a
there. In this sense a strategy is a declaration of in-
broad and long-term view of where the organiza-
tent: ‘This is what we want to do and this is how we
tion is going and manages it in ways that ensure
intend to do it’. Strategies define longer-term goals
that this strategic thrust is maintained. As stated by
but they also cover how those goals will be attained.
Boxall and Purcell (2003: 44): ‘Strategic manage-
It’s about deciding what needs to be done to get
ment is best defined as a process. It is a process of
from here to there. They guide purposeful action to
strategy making, of forming and, if the firm s urvives,
Chapter 2 | Strategic HRM 27
deliver the required result. A good strategy is one

that works, one that in Abell’s (1993: 1) phrase, en-
sures that organizations adapt to changing demands Word s of w isd om
and circumstances by ‘mastering the present and A realized strategy can emerge in response
pre-empting the future’. As Boxall (1996: 70) ex-
to an evolving situation and the strategic
plained: ‘Strategy should be understood as a frame-
work of critical ends and means.’ planner is often a pattern organizer, a
Second, strategy aims to achieve strategic fit – learner if you like, who manages a process
the need when developing functional strategies such
as HR to achieve congruence between them and the in which strategies and visions can emerge
organization’s business strategies within the context as well as be deliberately conceived.
of its external and internal environment. Mintzberg (1987: 68, 73)
Third, strategy recognizes that the organiza-
tional capability of a firm (its capacity to function
effectively) depends on its resource capability (the
quality and quantity of its resources and their po-
tential to deliver results), ie the resource-based
view. Strategic fit
The notion of strategic fit is fundamental to the
Critical evaluation of the concept concept of SHRM. It states that when developing
HR strategies it is necessary (1) to integrate them
of strategy with the organization’s corporate or business strate-
The development of corporate strategy is often as- gies in order to ensure that they contribute to the
sumed to be a logical, step-by-step affair, the out- achievement of the organization’s goals (vertical
come of which is a formal written statement that fit), and (2) to integrate them with one another in
provides a definitive guide to the organization’s in- order to provide mutual reinforcement (horizontal
tentions. Many people still believe and act as if this fit). Richardson and Thompson (1999) suggested
were the case, but it is a misrepresentation of reality. that a strategy’s success turns on combining vertical
In practice, the formulation of strategy may not be or external fit and horizontal or internal fit. They
as rational and linear a process as some writers de- concluded that an organization with bundles of as-
scribe it or as some managers attempt to make it. sociated HR practices should have a higher level of
There are limitations to the logical model of man- performance, provided it also achieves high levels of
agement that underpins the concept of strategic fit with its competitive strategy. Research in a suc-
human resource management. In the words of cessful international furniture firm in Holland by
Mabey et al (1998: 74): ‘The reality is... that strate- Paauwe et al (2013) established that an important
gies may not always be easy to discern, that the contributory factor to the company’s success was its
processes of decision-making may be implicit, incre- pursuit of fit in strategic HR planning, which in-
mental, negotiated and compromised.’ Boxall and cluded involving employees in the planning process.
Purcell (2016: 39) suggested that ‘it is better if we In the first two sections of this part, considera-
understand the strategies of firms as sets of strategic tion is given to how vertical and horizontal fit can
choices, some of which may stem from planning be achieved. An overall description of what is in-
exercises and set-piece debates in senior manage- volved in making these choices is provided by the
ment, and some of which may emerge in a stream of perspectives on strategic HRM set out by Delery
action.’ and Doty (1996) as summarized in the next section.
Strategy formulation is not necessarily a deter- These perspectives provide the basis for an analysis
ministic, rational and continuous affair, as was em- in the final sections of the relative merits of adopt-
phasized by Mintzberg (1987), who referred to ing a ‘best practice’ or ‘best fit’ approach in making
strategy formulation as an ‘emergent’ process. the choice.
Achieving vertical fit than the parts. The significance of horizontal fit as a
means of achieving high employee performance also
Vertical fit or integration involves linking HR strat- emerged in the writings of Wright and McMahan
egy to the business strategy. In accordance with con- (1992) and MacDuffie (1995). This is known as ‘bun-
tingency theory, HR strategies are related to the dling’ and is an important feature of SHRM. In a
context and circumstances of the organization. The sense, SHRM is concerned with the organization as a
following models exist as the basis for achieving it: total system or entity and addresses what needs to be
done across the organization as a whole. It is not inter-
●● Competitive strategies model – HR strategy
ested in isolated programmes and techniques or in the
should match the preferred strategy of the
ad hoc development of HR strategies and practices.
firm in seeking sustainable competitive
Dyer and Reeves (1995: 656–57) pointed out
advantage. Porter (1985) defined competitive
that: ‘The logic in favour of bundling is straightfor-
advantage as achieving and sustaining better
ward... Since employee performance is a function of
results than business rivals, thus placing the
both ability and motivation, it makes sense to have
firm in a competitive position. He listed the
practices aimed at enhancing both.’ Their study of
drivers of competitive advantage as
various models listing HR practices that create a
innovation, quality and cost leadership.
link between HRM and business performance found
●● Life cycle model – as the organization that the activities appearing in most of the models
changes through the four stages of start-up, were involvement, careful selection, extensive train-
growth, maturity and decline, HR strategy ing and contingent pay. Richardson and Thompson
must change to meet its needs (Baird and (1999) concluded that a firm with bundles of associ-
Meshoulam, 1988). ated HR practices should have a higher level of per-
●● Strategic configuration model – HR strategy formance, provided it also achieves high levels of fit
should match the characteristics of the with its competitive strategy. Research in US
organization as defined by Miles and Snow automotive assembly plants by MacDuffie (1995)
(1978), who identified three types of ‘ideal’ established that innovative HR practices affect
organizations: prospectors, defenders and performance not individually but as interrelated ele-
analysers. ments in an internally consistent HR bundle.
Wo rd s o f w isdom
Word s of w isd om
Organizations with ‘greater congruence
Implicit in the notion of a ‘bundle’ is the
between their HR strategies and their
idea that practices within bundles are
(business) strategies should enjoy superior
interrelated and internally consistent, and
performance’.
Delery and Doty (1996: 803)
that ‘more is better’ with respect to the
impact on performance, because of the
overlapping and mutually reinforcing effect
of multiple practices.
Achieving horizontal fit (bundling) MacDuffie (1995: 197)
The notion of vertical fit was expanded by Baird and
Meshoulam (1988) to embrace horizontal fit or inte-
gration. This involves the integration of a number of
people management practices. The aim is to develop Bundling can take place in a number of ways. High-
and implement several HR practices together so that performance systems are in effect based on the prin-
they are interrelated and therefore complement and ciple of bundling because they group a number of
reinforce each other. Thus the sum becomes greater HR practices together to produce synergy and thus
increase their impact. Grade structures can define Michie and Sheehan (2005) tested these perspec-
career ladders in terms of competency requirements tives on a sample of UK manufacturing and service-
(career family structures) and thus provide the basis sector firms. They found that the relationship
for learning and development programmes. Job between HR policies and practices and performance
evaluation can be used to clarify and define levels in is dependent upon business strategy (the contin-
an organization. Total reward approaches ‘bundle’ gency perspective) and that companies pursuing an
financial and non-financial rewards together. integrated approach to HR perform best.
Competency frameworks (a set of definitions of the The typology produced by Delery and Doty pro-
competencies that describe the types of behaviour vided the basis for what has become the most com-
required for the successful performance of a role) monly used categorization of approaches, which is
can be devised that have a variety of uses, for exam- to adopt the terms ‘best practice’ and ‘best fit’ for
ple to specify recruitment standards, to provide a the universalistic and contingency perspectives, and
framework for structured interviews, to help iden- ‘bundling’ as discussed earlier for the configura-
tify learning and development needs and to indicate tional approach. This follows the classification
the standards of behaviour or performance required. made by Guest (1997) of fit as an ideal set of prac-
tices, fit as contingency and fit as bundles. There has
been much debate about the relative merits of the
best practice and best fit approaches.
Pa us e for t houg ht
Do you know of any examples of bundling 1 The best practice approach
in action? If so, how well did they work? The best practice or ‘universalist’ approach is based
on the assumption that there is a set of best HRM
practices and that adopting them will lead to supe-
rior organizational performance. They are universal
in the sense that they are best in any situation. The
Perspectives on the achievement following well-known list of best practices was pro-
of strategic fit duced by Pfeffer (1998):
Delery and Doty (1996) identified three perspec- 1 employment security;
tives that illuminated the notion of strategic fit: 2 selective hiring;
1 The universalistic perspective – some HR 3 self-managed teams;
practices are better than others and all 4 high compensation contingent on performance;
organizations should adopt these best
5 training to provide a skilled and motivated
practices. There is a universal relationship
workforce;
between these practices and firm
performance. 6 reduction of status differentials;
2 The contingency perspective – to be effective 7 sharing information.
an organization’s HR policies must be The ‘best practice’ rubric was attacked by Cappelli
consistent with the situation in which they and Crocker-Hefter (1996: 7) who commented that
are practised – the features and the notion of a single set of best practices has been
circumstances of the organization. overstated: ‘There are examples in virtually every in-
3 The configurational perspective – this is a dustry of highly successful firms that have very dis-
holistic approach that emphasizes the tinctive management practices. We argue that these
importance of the pattern of HR practices distinctive human resource practices help to create
and the greater impact on organizational unique competencies that differentiate products and
performance if they are associated with one services and, in turn, drive competitiveness.’
another. It suggests that an organization In accordance with contingency theory, which em-
must develop HR as a system so that both phasizes the importance of interactions between
horizontal and vertical fit can be achieved. organizations and their environments so that what
rganizations do is dependent on the context in which

o best for its purposes.’ He commented that: ‘The
they operate, it is difficult to accept that there is any search for a contingency or matching model of
such thing as universal best practice. What works well HRM is also limited by the impossibility of model-
in one organization will not necessarily work well in ling all the contingent variables, the difficulty of
another because it may not fit its strategy, culture, showing their interconnection, and the way in
management style, technology or working practices. which changes in one variable have an impact on
However, a knowledge of what is a ssumed to be best others, let alone the need to model idiosyncratic and
practice can be used to inform decisions on what path dependent contingencies’ (ibid: 37).
practices are most likely to fit the needs of the organi-
zation, as long as it is understood why a particular
practice should be regarded as a best practice and Conclusions on the best practice vs
what needs to be done to ensure that it will work in
the context of the organization. Perhaps it is best to
best fit debate
think of ‘good practice’ rather than ‘best practice’. It is often claimed that best fit is better than best
practice but Stavrou and his colleagues argued
differently:
2 The best fit approach
The best fit approach emphasizes that HR strategies
should be related to the context and circumstances Source review
of the organization and its type. It is in line with
contingency theory. This model seems to be more There may be merit in both approaches [best fit and
realistic than the best practice model. As Dyer and best practice] where the debate is between
Holder (1988: 31) observed: ‘The inescapable con-
general principles/bundles (training and
clusion is that what is best depends.’
development, staffing, compensation and benefits,
communication and participation, and planning)
and the manner in which they are carried out...
It seems that the ‘best fit’ and ‘best practice’
Pa us e fo r t houg ht
approaches of the HR-performance relationship
What sort of factors should an organization are not necessarily mutually exclusive. On the
take into account when it is seeking best fit? contrary, they may be combined to provide a more
holistic picture.
Stavrou et al (2010: 952–73)
But there are limitations to the concept of best fit.

Paauwe (2004: 37) argued that: ‘It is necessary to
avoid falling into the trap of contingent determin-
ism [ie acting as if the context absolutely determines
the strategy]. There is, or should be, room for mak-
ing strategic choices.’ What is your view about the best fit vs best
There is a danger of mechanistically matching HR
practice debate?
polices and practices with strategy. It is not credible to
claim that there are single contextual factors that de-
termine HR strategy, and internal fit cannot therefore
be complete. Boxall (2007: 61) contended that: ‘It is
clearly impossible to make all HR policies reflective
of a chosen competitive or economic mission.’
The resource-based view
Purcell (1999: 35) refers to the notion of ‘idio- of SHRM
syncratic contingency’ which ‘shows that each firm
has to make choices not just on business and opera- To a very large extent, the philosophy of SHRM is
tional strategies but on what type of HR system is underpinned by the resource-based view. This states
that it is the range of resources in an organization, Resource-based SHRM can produce what Boxall
including its human resources, that produces its and Purcell (2016) referred to as ‘human resource
unique character and creates competitive advan- advantage’. The aim is to develop strategic capabil-
tage. The resource-based view is founded on the ity. This means strategic fit between resources and
ideas of Penrose (1959: 24–25), who wrote that the opportunities, obtaining added value from the ef-
firm is ‘an administrative organization and a collec- fective deployment of resources, and developing
tion of productive resources’ and saw resources as managers who can think and plan strategically in
‘a bundle of potential services’. It was expanded by the sense that they understand the key strategic is-
Wernerfelt (1984: 172), who explained that strat- sues and ensure that what they do enables the stra-
egy ‘is a balance between the exploitation of exist- tegic goals of the business to be achieved. In line
ing resources and the development of new ones’. with human capital theory, the resource-based view
Resources were defined by Hunt (1991: 322) as emphasizes that investment in people increases their
‘anything that has an enabling capacity’. The con- value to the firm. It proposes that sustainable com-
cept was developed by Barney (1991: 102), who petitive advantage is attained when the firm has a
stated that: ‘A firm is said to have a competitive ad- human resource pool that cannot be imitated or
vantage when it is implementing a value-creating substituted by its rivals.
strategy not simultaneously being implemented by Boxall (1996: 66) suggested that ‘the resource-
any current or potential competitors and when based view of the firm provides a conceptual basis, if
these other firms are unable to duplicate the benefits we needed one, for asserting that key human re-
of this strategy.’ This will happen if their resources sources are sources of competitive advantage.’ He
are valuable, rare, inimitable and non-substitutable. noted that human resource advantage is achieved by
He noted later (Barney 1995: 49) that an environ- a combination of ‘human capital advantage’, which
mental analysis of strengths, weaknesses, opportu- results from employing people with competitively
nities and threats (SWOT analysis) was only half valuable knowledge and skills, and ‘human process
the story: ‘A complete understanding of sources of a advantage’, which follows from the establishment of
firm’s competitive advantage requires the analysis ‘difficult to imitate, highly evolved processes within
of a firm’s internal strengths and weaknesses as the firm, such as cross-departmental cooperation
well.’ Delery and Roumpi (2017: 1) stated that: and executive development’. Accordingly, ‘human
‘HRM practices, when viewed as systems of ‘inter- resource advantage’, the superiority of one firm’s la-
related and internally consistent’ practices, can be bour management over another’s, can be thought of
unique, causally ambiguous, synergistic and diffi- as the product of its human capital and human pro-
cult to imitate.’ cess advantages. He also observed (ibid: 66) that the
strategic goal emerging from the resource-based
view was to ‘create firms which are more intelligent
and flexible than their competitors’ by hiring and
developing more talented staff and by extending
Wo rd s of wi sdom
their skills base. Resource-based strategy is therefore
Creating sustained competitive advantage concerned with the enhancement of the human or
depends on the unique resources and intellectual capital of the firm. As Ulrich (1998: 126)
commented: ‘Knowledge has become a direct com-
capabilities that a firm brings to competition petitive advantage for companies selling ideas and
in its environment. To discover these relationships. The challenge to organizations is to
ensure that they have the capability to find, assimi-
resources and capabilities, managers must
late, compensate and retain the talented individuals
look inside their firm for valuable, rare and they need.’
costly-to-imitate resources, and then exploit This is the basis of resource dependence theory
(Pfeffer and Davis-Blake, 1992), which suggests
these resources through their organization. that HR strategies such as those concerned with re-
Barney (1995: 60) ward are strongly influenced by the need to attract,
retain and energize high-quality people.
Critical evaluation of the resource- various conceptual elements) than a description of

the reality of strategy formulation and implementa-
based view tion in organizations. As Brown et al (2019: 43)
The resource-based view has had considerable in- commented following their research for the Institute
fluence on thinking about strategic human resource for Employment Studies (IES): ‘Maybe the propo-
management. It provides a justification for attach- nents of strategic HRM had some very pertinent
ing importance to resourcing activities, especially ideas but used jargon which got in the way of peo-
those concerned with talent management. It can ple management becoming genuinely more strate-
also be used to enhance the value of the HR contri- gic.’ They were struck by the absence in current HR
bution in achieving competitive advantage. But it language of the term ‘strategic human resource
has the following limitations: management’. It is interesting to note that the
CIPD’s New Profession Map (2018) setting out its
●● it may be difficult to find resources that professional standards does not mention it.
satisfy all the criteria; Strategic HRM is fundamentally conceptual. It only
●● external factors such as product market becomes real when people management professionals
pressures are ignored; and line managers jointly practise strategic manage-
ment and together develop and implement people
●● it provides only generalized guidance on
strategies which address the people and business is-
what resources are suitable;
sues facing their organization.
●● different resource configurations can provide
the same value for firms;
●● as Priem and Butler (2001) pointed out, the
theory is tautological because valuable Pau se for th ou gh t
resources and competitive advantage are
defined in the same terms. What is the practical value of the SHRM
concept to practitioners?
What use can be made by practitioners of As emphasized by Armstrong and Brown (2019),
another fundamental problem with SHRM is that it
resource-based view theory? has been over-concerned with the interests of one set
of stakeholders – meeting the needs of the share-
holders and business leaders – and has been much
less concerned with the interests of the other stake-
Critical evaluation of the holders, especially employees. This issue was raised
by Kaye (1999), who asked the question: ‘Does
concept of SHRM SHRM benefit employees as well as their organiza-
tions?’ He observed that virtually all SHRM re-
The rationale for SHRM is the perceived advantage search takes the managerial/organizational perspec-
of having an agreed and understood basis for devel- tive with an emphasis on the consequences for
oping and implementing approaches to people organizational performance. This, he wrote, sug-
management which takes into account the corpo- gests that SHRM may be improving the bottom line
rate plans and priorities of the organization and the of companies, but may also be hurting employees –
changing context in which it operates. As Dyer and especially when workers are viewed as commodities.
Holder (1988: 13) remarked, SHRM should pro- Cascio (2015: 424) argued that: ‘In SHRM re-
vide ‘unifying frameworks which are at once broad, search, organizational performance is sometimes
contingency based and integrative’. viewed only in terms of operational outcomes
This is compelling stuff. But a literature review (productivity, quality, service, innovation) and fi-

of SHRM by the writer and Duncan Brown in 2019 nancial outcomes (return on assets, return on eq-
left the impression that SHRM is more of a con- uity, sales growth, overall financial performance).
struct (in the sense of a subjective theory containing Yet as Beer et al (1984) emphasized in their seminal
work, performance has to be framed more broadly In 2015, Michael Beer, Paul Boselie and Chris
to include meeting corporate, ethical and social re- Brewster reviewed the state of this perspective after
sponsibilities, including job satisfaction, industrial 30 years. They stated that ‘we need to take a wider,
democracy, and distributive justice. They advocated more contextual, more multi-layered approach
a multi-stakeholder approach to HRM, comment- founded on the long-term needs of all relevant
ing as follows: stakeholders’ (p 427). They also argued that
‘Fundamental to a multi-stakeholder approach
must be the creation, maintenance, and develop-
ment of a culture of trust among the different stake-
Wo rd s of wi sdom holders. Considering HRM as a social system, in
contrast to the dominant individual perspective,
HRM policies are and indeed should be
puts the relationships between stakeholders at the
influenced by the interests of various centre of our studies’ (p 432).
stakeholders: shareholders, management, Echoing this and earlier points, the most impor-
tant conclusion reached by Armstrong and Brown
employees, community and government. (2019) in their SHRM literature review was that
Unless these policies are influenced by all there was a requirement for a more action- and
stakeholders, the enterprise will fail to meet evidence-focused, multi-stakeholder perspective to
strategic HRM.
the needs of these stakeholders in the long
run and it will fail as an institution.
Beer et al (1984: 15)
Key learning points

Strategic human resource management (strategic The fundamental characteristics of strategy
HRM or SHRM) is concerned with ensuring that key
issues of human resource management (HRM) are 1 It is forward looking. It is about deciding where you
dealt with strategically in order to support the need to go and how you mean to get there.
achievement of organizational goals 2 It recognizes that the organizational capability of a
firm (its capacity to function effectively) depends
The conceptual basis of strategic HRM on its resource capability (the quality and quantity
of its resources and their potential to deliver
Strategic HRM is the ‘interface between HRM and
results). This is called the resource-based view.
strategic management’. (Boxall, 1996). It takes the
notion of HRM as a strategic, integrated and coherent 3 It aims to achieve strategic fit – the need when
approach and develops that in line with the concept of developing functional strategies such as HR to
strategic management. achieve congruence between them and the
organization’s business strategies within the
Strategic management context of its external and internal environment.
Strategic management is an approach to management

that takes a broad and long-term view of where the
Critical evaluation of the concept of strategy
business is going and manages it in ways that ensure Strategy formulation is not necessarily a deterministic,
that this strategic thrust is maintained. rational and continuous affair, as was emphasized by
Mintzberg (1987), who referred to strategy formulation 2 The contingency perspective – to be effective an
as an ‘emergent ‘ process. organization’s HR policies must be consistent with
the situation in which they are practised – the
Critical evaluation of the concept of SHRM features and circumstances of the organization.
Strategic fit 3 The configurational perspective – this is a holistic

approach which suggests that an organization
The concept of strategic fit states that when must develop HR as a system so that both
developing HR strategies it is necessary (1) to horizontal and vertical fit can be achieved.
integrate them with the organization’s corporate or
business strategies in order to ensure that they
Best practice
contribute to the achievement of the organization’s
goals (vertical fit), and (2) to integrate them with one This is the notion that there is a set of best HRM
another in order to provide mutual reinforcement practices which are universal in the sense that they are
(horizontal fit). best in any situation and adopting them will lead to
superior organizational performance. The notion of best
Achieving vertical fit practice incorrectly assumes that there are universally
effective HR practices that can readily be transferred.
Vertical fit or integration involves relating HR
strategies in accordance with contingency theory to
the context and circumstances of the organization. Best fit
The notion that HR strategies should be congruent
Achieving horizontal fit (bundling) with the context and circumstances of the
Horizontal fit or integration involves the development organization. More realistic than best practice, but
and implementation of several HR practices there is a danger of mechanistically matching HR
together so that they are interrelated and therefore policies and practices with strategy.
complement and reinforce each other. It is
generally known as bundling and is an important Best fit vs best practice
feature of SHRM.
It is often claimed that best fit is better than best
practice but it can be argued that both approaches
Perspectives on the achievement of strategic fit
have their uses if this is done judicially.
Delery and Doty (1996) identified three perspectives
that illuminated the notion of strategic fit: The resource-based view of SHRM
1 The universalistic perspective – some HR practices The philosophy of SHRM is underpinned by the
are better than others and all organizations should resource-based view. This states that it is the range of
adopt these best practices. There is a universal resources in an organization, including its human
relationship between these practices and firm resources, that produces its unique character and
performance. creates competitive advantage
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37
03
HR strategy
High levels of economic or operational performance
Introduction are important but so are the obligations of organi-
zations to all their stakeholders. The standards
HR or people strategy specifies what the organiza- quoted in Chapter 1 state that: ‘Stakeholders and
tion intends to do about people management gener- their interests are integral to the best interests of the
ally or in particular areas to support the achievement organization’ and stakeholders include both em-
of corporate goals and meet its obligations to its ployees and owners. HR strategy is about people as
stakeholders, especially its employees. It sets out well as organizations. It should also encompass an-
how its people management policies and practices other of the standards, namely: ‘Every organization
should be integrated with the business strategy and is part of wider society and has a responsibility to
with each other. respect its social contract as a corporate citizen and
Dyer and Reeves (1995: 656) described HR operate in a manner that is sustainable.’
strategies as ‘internally consistent bundles of human Strategic HRM as described in the previous
resource practices’, and in the words of Boxall chapter provides a conceptual background for HR
(1996: 61) they provide ‘a framework of critical strategy. But it is only a background. The reality is
ends and means’. HR strategy was defined by Boxall that strategic choice is exercised within organiza-
and Purcell (2016: 26) as ‘the critical set of eco- tions on the basis of evidence on the issues to be
nomic and socio-political choices that managers resolved and beliefs on the direction to be taken and
make in building and managing a workforce’. Its not on abstract SHRM principles. In this chapter,
purpose as stated by Wright and McMahan (1999: consideration is given to the nature of HR or people
52) is to ‘enable an organization to achieve its strategy, approaches to the formulation of HR
goals’. These goals will include the achievement of strategy, the processes of developing and imple-
required levels of performance – business success in menting HR strategy including testing new people
a commercial organization, operational success in a management practices.
not-for-profit organization.
The nature of HR strategy

Wo rd s of wi sdom Purcell (2001: 72) observed that: ‘Strategy in HR,
like in other areas, is about continuity and change,
HR strategy is part and parcel of a larger about appropriateness in the circumstances, but an-
business model, and it fails if it does not ticipating when the circumstances change. It is
about taking strategic decisions.’ HR strategy
serve the economic imperatives that are
should be based on the values that an organization
essential to that model. believes govern its approach to people management.
Boxall (2013: 59) It will set out intentions but it is not just a long-term
plan. It can and should be immediately relevant. It is
necessary to bear in mind the dictum of Fombrun principles; (2) creating a system of complementary
et al (1984) that businesses and managers must per- people management practices; and (3) giving priority
form well in the present to succeed in the future. to specific aspects of people management. These ap-
Research by the Institute for Employment Studies proaches can be combined in various ways.
(Brown et al, 2019) established that people strategy
has to balance explicit business alignment with the
need in uncertain circumstances to keep flexible. Overarching purpose
The following were the features of the strategies in
An approach devoted to developing an overarching
the case study organizations they examined.
purpose and set of organizational values will be
concerned with indicating the overall direction for
managing people in which the organization intends
Source review to go. It provides a framework for the development
of more specific strategies.
Prioritization seems to be the clear goal and This approach is in line with the notion of ‘the
requirement of people management strategies big idea’ that emerged from the longitudinal re-
today. One HR director told us that extremely search conducted in 12 companies by Professor
lengthy and over-ambitious HR strategies have John Purcell and his colleagues from Bath University
bedevilled the function and given HR a bad
(Purcell et al 2003). This was perhaps the most no-
table feature of some of the organizations. The big
reputation in the past for over-promising and
idea is a clear sense of mission underpinned by val-
under-delivering. Focus and delivery seem to be the
ues and a culture expressing what the firm is and its
new watchwords for people management.
relationship with its customers and employees.
Brown et al (2019: 4–5)
The big ideas in five of the organizations studied
were summarized as:
HR strategy should be distinguished from HR p olicy. ●● AIT – make the workplace a good place to
HR strategy is purposeful and dynamic. It provides work;
a sense of direction and constantly adjusts to meet ●● Jaguar Cars – quality management in terms
changed circumstances. HR policy is more about the of outcomes, process and routines;
here and now. It defines ‘the way things are done ●● Nationwide Building Society – mutuality as a
around here’. It may evolve but this is not necessarily key value;
the result of a strategic choice. It is when a deliberate
●● Selfridges – turning values into value;
decision is made to change a policy that a strategy
for achieving this change may have to be formulated. ●● Tesco – focus on people and customer issues.
Because all organizations are different, all people
strategies are different. There is no such thing as a
standard strategy. Research into HR strategy con- Source review
ducted by Armstrong and Long (1994) and Armstrong
and Baron (2002) revealed many variations. Some Organizations with a Big Idea displayed five
articulated strategies are simply very general declara- common characteristics – the idea was embedded,
tions of intent or statements of the values that the connected, enduring, collective and ‘measured and
organization has adopted for managing people. managed’. The Big Idea therefore means more than
Others go into much more detail. just having a formal mission statement. It means
that the values are spread throughout the
organization so that they are embedded in policies
Approaches to the and practices. These values interconnect the
formulation of HR strategy relationships with customers (both internal and
external), culture and behaviour, and provide the
HR strategies come in all sorts of shapes and sizes but basis upon which employees should be managed.
three approaches can be distinguished: (1) developing Purcell et al (2003: ix)
an overarching purpose and set of organizational
Chapter 3 | HR Strategy 39
The research conducted by Brown et al (2019) iden- Complementary HRM practices

tified the following key issues (ie ‘big ideas’) in the
HR strategies of the organizations they investigated: A strategy for introducing an overall system or bun-
dle of complementary HRM practices will involve
●● Keep the workforce at the ‘front and centre’ the development and implementation of several of
of everyone’s thinking (Anchor Homes). them together so that they are interrelated and in-
●● Supporting LSE to deliver success through its ternally consistent and therefore complement and
most critical asset: its people (London School reinforce each other. There are three ways of doing
of Economics). this, as described below.
●● Ensuring that we have a tailored, excellent,
clearly signaled support and development High-performance management
offer which will attract and retain talent, and
High-performance management aims to make an
is amongst the best across the Civil Service
impact on the performance of the organization in
(Ministry of Housing, Communities and
such areas as productivity, quality, levels of cus-
Local Government).
tomer service, growth and profits. It can do this
●● Recognize that our people provide the through high-performance work systems (bundles
outstanding customer experience that is at of practices that enhance employee performance
the heart of our strategy (Revolution Bars). and facilitate their engagement, motivation and
Here are some more examples of ‘big idea’ skill enhancement). High-performance working
approaches: practices include rigorous recruitment and selection
procedures, extensive and relevant training and
●● A local authority: As expressed by the chief management development activities, incentive pay
executive of this borough council, its HR systems, and performance management processes.
strategy is about ‘having a very strong focus Table 3.1 gives examples of firms that have adopted
on the overall effectiveness of the high-performance working policies and practices.
organization, its direction and how it’s
performing; there is commitment to, and
belief in, and respect for individuals, and I
think that these are very important factors.’
●● A public utility: ‘The only HR strategy you Pau se for th ou gh t
really need is the tangible expression of Is it realistic to expect that an organization
values and the implementation of values...
should introduce a high-performance work
unless you get the human resource values
right you can forget all the rest’ (managing system just like that? Or is one more likely
director). to emerge after a fairly prolonged period of
●● A manufacturing company: ‘The HR strategy
incremental steps towards high-
is to stimulate changes on a broad front aimed
ultimately at achieving competitive advantage performance working?
through the efforts of our people. In an
industry of fast followers, those who learn
quickest will be the winners’ (HR director).
●● A retail stores group: ‘The biggest challenge
will be to maintain [our] competitive High-commitment management
advantage and to do that we need to One of the defining characteristics of HRM is its
maintain and continue to attract very emphasis on the importance of achieving ‘mutual
high-calibre people. The key differentiator on gains’ by pursuing employment policies that pro-
anything any company does is fundamentally duce benefits for both the organization and its em-
the people; money is easy to get hold of, ployees (the concept of mutuality formulated by
good people are not. All we do in terms of Walton, 1985). High-commitment management has
HR practice is directly linked to business been described by Wood (1996) as: ‘A form of man-
improvement’ (managing director). agement which is aimed at eliciting a commitment
TA B L E 3.1 Examples of high-performance working ingredients
Organization High-performance working ingredients
Halo Foods ●● Reliance on teamworking and effective leadership, with innovation and self- and team-
management skills.
Land Registry ●● Managers who could see that the problems were as much cultural as organizational.
●● Recruitment whose attitudes and aptitudes match the needs of high-performance work
practices.
Meritor Heavy Vehicle ●● Teamworking skills and experience used on improvement projects.
Braking Systems ●● Linking learning, involvement and performance management.
Orangebox ●● A strategy that relies on constant reinvention of operational capability.

●● Engagement and development of existing talent and initiative in productivity
improvement.
●● Increasing use of cross-departmental projects to tackle wider opportunities.
Perkinelmer ●● A vision and values worked through by managers and supervisors.

●● Engagement of everyone in the organization and establishment of a continuous
improvement culture.
●● Learning as a basis for change.
United Welsh ●● Linking of better employment relations with better performance.

Housing Association ●● Using staff experience to improve customer service.
●● Focusing management development on the cascading of a partnership culture.
so that behaviour is primarily self-regulated rather High-involvement management

than controlled by sanctions and pressures external
The term ‘high-involvement’ was used by Lawler
to the individual, and relations within the organiza-
(1986) to describe management systems based on
tion are based on high levels of trust.’
commitment and involvement, as opposed to the
old bureaucratic model based on control. As defined
by Benson et al (2006: 519): ‘High-involvement
work practices are a specific set of human resource
Wo rd s o f w isdom practices that focus on employee decision making,
power, access to information, training and incen-
The most sustainable HR systems serve
tives.’ Camps and Luna-Arocas (2009: 1057) ob-
investors well while also serving employees served that: ‘High-involvement work practices aim
and their communities well. This is mutual to provide employees with the opportunity, skills
and motivation to contribute to organizational suc-
high performance and it is here that many of cess in environments demanding greater levels of
us would like to build mutually satisfying HR commitment and involvement.’
systems based on a good analysis of when,
why, how and for whom they will work. Specific HR strategies
Boxall (2013: 57)
Specific people strategies set out what the organiza-
tion intends to do in areas such as:
●● HR analytics;
●● knowledge management;
●● employee wellbeing; The strategy provides direction to the company’s

●● corporate social responsibility; talent, operational effectiveness and performance
and reward agendas. The company’s underlying
●● engagement;
thinking is that the people strategy is not for the
●● organization development; human resource function to own but is the respon-
●● resourcing; sibility of the whole organization, hence the title
●● diversity and inclusion; ‘Organization and People Strategy.’
●● talent management;
A government agency
●● learning and development;
The key components of the HR strategy are:
●● reward and recognition;
●● employment relations; ●● Investing in people – improving the level of
intellectual capital.
●● employee wellbeing.
●● Performance management – integrating the
The following are some examples of specific HR values contained in the HR strategy into
strategies. performance management processes and
ensuring that reviews concentrate on how
The Children’s Society well people are performing those values.
●● Implement the rewards strategy of the society ●● Job design – a key component concerned
to support the corporate plan and secure the with how jobs are designed and how they
recruitment, retention and motivation of relate to the whole business.
staff to deliver its business objectives. ●● The reward system – in developing reward
●● Manage the development of the human strategies, taking into account that this is a
resources information system to secure very hard-driven business.
productivity improvements in administrative
processes. A local authority
●● Introduce improved performance The focus is on the organization of excellence. The
management processes for managers and strategy is broken down into eight sections: employee
staff of the society. relations, recruitment and retention, training, perfor-
●● Implement training and development that mance management, pay and benefits, health and
supports the business objectives of the safety, absence management and equal opportunities.
society and improves the quality of work
with children and young people.
Developing HR strategy
Diageo HR strategy may be created by means of a deliber-
There are three broad strands to the Organization ate process of analysis, discussion and choice. But it
and People Strategy: may come into existence through an emergent, evo-
lutionary and possibly unarticulated process influ-
●● Reward and recognition: use recognition and
enced by the business strategy as it develops and
reward programmes to stimulate outstanding
changes in the internal and external environment.
team and individual performance
Pettigrew and Whipp (1991: 30) emphasized that
contributions.
strategy ‘… far from being a straightforward, ra-
●● Talent management: drive the attraction, tional phenomenon, is in fact interpreted by manag-
retention and professional growth of a deep ers according to their own frame of reference, their
pool of diverse, talented employees. particular motivations and information.’ But there
●● Organizational effectiveness: ensure that the are still strong arguments for a formal and system-
business adapts its organization to maximize atic approach to identifying strategic priorities and
employee contribution and deliver directions in order to provide a framework for deci-
performance goals. sion making and action.
The formal development of HR strategy involves

the following steps:
1 Scan the internal and external environment
and analyse the implications. What do you think is likely to be the most
2 Analyse the effectiveness of existing people important factor affecting the formulation
strategies. of people strategy?
3 Conduct a diagnostic review drawing on the
outcomes of steps 1 and 2.
4 On the basis of this review, decide what
needs to be in the shape of overall or specific
Stakeholder analysis
strategies. Stakeholders are the people or bodies who have a le-
5 Conduct a stakeholder analysis as described gitimate interest in an organization. They can include
below to ensure that the interests of all the shareholders, (owners), management, employees,
stakeholders, eg employees as well as suppliers, customers and the community or public at
management, are taken into account. large. Account should be taken of their various inter-
ests when formulating and implementing people
6 Set out the objectives of the strategy and
strategy and policies. This is done through stake-
how the effectiveness of any policies and
holder analysis, the process of identifying the stake-
practices included in it will be tested against
holders and establishing what their concerns are.
those objectives. Performance criteria can be
Stakeholder analysis takes place while formulat-
determined which may be expressed as
ing the strategy and involves answering the follow-
targets or in terms of return on investment.
ing questions:
7 Plan the implementation of the strategy,
ensuring that any likely problems are 1 Who are the people who are likely to have
identified and means of overcoming them legitimate interests in or concerns about
established. It is essential to spell out how what we are proposing to do?
the strategy is to be implemented as well as 2 What are those interests and concerns?
what is to be implemented. 3 To what extent does our proposal meet or
conflict with them?
F I G U R E 3.1 Stakeholder analysis matrix
Proposal
Stakeholder Interests/ Potential Action

concerns impact
Senior management
Line management
Employees
Trade union(s)
Shareholders (owners)
Customers
Suppliers
The public
4 In the light of the answer to question 3, do ●● takes account of the interests and concerns
we need to modify the proposal? of all the stakeholders including line
5 How should we take account of these managers and employees generally as well as
interests and concerns in our plans for those of the business and its other
implementing the proposal? stakeholders;
●● is founded on detailed analysis and study
A stakeholder matrix, as illustrated in Figure 3.1,
and is evidence based – it is not just wishful
may be used for this purpose.
thinking;
An example of another approach to stakeholder
analysis is given in Figure 3.2. ●● is aligned to the business strategy and will
support the achievement of business goals;
●● is coherent and integrated, being composed
of components that fit with and support each
Pa u s e for t houg ht other;
Carry out a stakeholder analysis for your ●● can be turned into actionable programmes
organization or any one you know. that anticipate implementation requirements
and problems.
Approach to strategy development

Criteria for an effective HR strategy The process of formulating HR strategy involves
An effective HR strategy is one that works in the generating strategic options and then making ap-
sense that it achieves what it sets out to achieve. Its propriate strategic choices. It was noted by Cappelli
criteria are that it: (1999: 8) that: ‘The choice of practices that an
F I G U R E 3.2 The Selfridges stakeholder value model

Customers Employees
Great choice Recognition
Fun Reward
Good value Development
Service Membership
Excellence Selfridges plc Communication
Suppliers Community
Financial stability Social responsibility
Growth opportunities Employment opportunities
Partnership Improved quality of local life
Quality presentation
Shareholders
Return on investment
Accountability and credibility
Stability
Market leadership
Source Purcell et al (2003: 21)

e mployer pursues is heavily contingent on a number The development of people strategy is not some-
of factors at the organizational level, including their thing to be left to the HR function. It should be
own business and production strategies, support of treated as a major responsibility of the organiza-
HR policies, and cooperative labour relations.’ It tion’s leaders working in conjunction with HR. The
is necessary to adopt a contingent approach in process should be continuous, not a one-off plan,
generating strategic HRM options and then making and it should be integrated with what is happening
appropriate strategic choices. There is seldom if
in the business. At Anchor Homes, as reported by
ever one right way forward. Brown et al (2019: 45), the people strategy is fully
incorporated into the business strategy, driven by
the centrality of employees to the customer service
and financial/cost dynamics of that strategy.
Pa us e fo r t houg ht Fundamental people issues are owned by the top
team and regularly discussed in their meetings,
What difficulties might an HR director have
leading directly to HR functional supporting ac-
in formulating a people strategy and getting tion and the review of policies or processes where
it accepted and implemented? How might necessary.
they be overcome? If possible, think about

these questions in relation to an
organization you know. Word s of w isd om
HR Directors must always be connected to
the realities of the organization. While you
need to stay close to the executive and their
Choices should relate to but also anticipate the crit-
ical needs of the business and the people in it. They priorities, you have to understand the
should be evidence based – founded on detailed behaviours and habits throughout the
analysis and study, not just wishful thinking, and
organization if you are going to influence
should incorporate the experienced and collective
judgement of top management about the organiza- cultural norms to support this type of
tional requirements while also taking into account transformational change and ensure that
the needs of line managers and employees generally.
The emerging strategy should anticipate the prob- the overall objectives of the company are
lems of implementation, which may arise if line achieved.
managers are not committed to the strategy and/or Fiona Regan, People Development
lack the skills and time to play their part, and the
Director, Revolution Bars
strategies should be capable of being turned into ac-
tionable programmes. Strategy should always be Source Brown et al (2019: 58)
formulated with implementation in mind.
C A S E S T U DY
The Peabody Trust
This is how the Chief Executive of The Peabody Trust First of all you have your business strategy, which
explained the organization’s approach to the development includes at management team level a review of what
of HR strategy. we expect our HR to deliver. We define what the
strategy means in terms of its implications for us as
individuals and for our employees. We decide what thing is the corporate understanding and
changes we have to effect and how we are going to responsibility for HR strategy.
communicate with and motivate the staff group to A good HR strategy is one, which actually makes
achieve those changes. The management team people feel valued. It makes them knowledgeable about
needs to be clear on what our vision for our people the organization, and makes them feel clear about
is, what we see our people doing, what we think they where they sit as a group, a team, or an individual. It
have to learn and what practices they need to must show that what they do either together or
change to effect the strategy we want. When you individually fits into the strategy. Importantly, it should
have answered those questions, then you can start to indicate how people are going to be rewarded for their
decide what the strategy is. The key to this is that all contribution and how they might be developed and
our directors have to contribute. The most important grow in the organization.
the extent to which senior management is

Implementing HR strategy ●●
trusted;
The ultimate challenge of HR strategy is putting it to ●● the perceived fairness of the initiative.
work. As Gratton (2000: 30) commented: ‘There is To which could be added failure to take account of
no great strategy, only great execution.’ Strategies the strategic needs of the business (which may be
cannot be left as generalized aspirations or abstrac- difficult because they are changing too rapidly or no
tions. But getting strategies into action is not easy: one really understands them), inadequate assess-
intent does not always lead to action. Too often, ment of the environmental and cultural factors, in-
strategists act like Charles Dickens’ character Mr cluding internal politics, that affect the content of
Pecksmith, who was compared by Dickens (Martin the strategies, the development of ill-conceived, un-
Chuzzlewit, Penguin Classics, 2004: 23) to ‘a manageable and irrelevant initiatives, possibly be-
direction-post which is always telling the way to a cause they are current fads or because there has been
place and never goes there.’ It is necessary to avoid a poorly digested analysis of ‘best practice’ which
saying, in effect: ‘We need to get from here to there does not fit the organization’s requirements, and,
but we don’t know or care how.’ importantly, failure to involve stakeholders in the
Gratton (1999: 202) noted ‘… the disjunction shape of managers and employees with the formula-
between rhetoric and reality in the area of human tion of strategy. These problems are compounded
resource management, between HRM theory and when insufficient attention is paid to practical im-
HRM practice, between what the HR function says plementation problems, particularly where line
it is doing and how that practice is perceived by managers are concerned and there is a need for sup-
employees, and between what senior management porting systems. The role of line managers is vital.
believes to be the role of the HR function, and the Guest and Bos-Nehles (2013: 80–81) produced a
role it actually plays.’ The factors identified model for successful implementation. They identi-
by Gratton which contribute to creating this gap fied four stages, each one being a necessary require-
included: ment for those that follow:
●● complex or ambiguous initiatives that may 1 Decision to introduce HR practices (HR
not be understood by employees or will be managers and senior executives).
perceived differently by them, especially in
2 Quality of HR practices (HR managers).
large, diverse organizations;
3 Implementation of HR practices (line
●● it is more difficult to gain acceptance of
managers).
non-routine initiatives;
4 Quality of implementation (line managers).
●● the initiative is seen as a threat;
●● inconsistencies between corporate strategies Implementation is likely to be more effective if
and values; practical strategies are formulated that can be put
into effect without too much difficulty and if line Implementation programme
managers and other employees are involved in the
formulation of the strategy. The aims should be to The implementation programme should:
(1) keep it simple; (2) spell out how the strategy is
●● use change management techniques (see
to be implemented as well as what is to be imple-
Chapter 66), particularly those involving
mented; and (3) ensure that support is given to line
communication and involvement and,
managers in the shape of advice, guidance and
possibly, nudge theory;
training.
To a large extent, HR strategies are implemented ●● be conducted as a project in line with the
by line managers. As Purcell et al (2003: x) stressed, requirements of effective project
it is front-line managers who ‘bring policies to life’. management (see Chapter 74); the project
plan may involve pilot schemes and staged
implementation;
●● take particular care in briefing and involving
Source review line managers;
●● identify the training needs of line managers
Implementing and enacting policies is the task of and other employees and plan and
line managers. It is necessary first to involve line implement training programmes;
managers in the development of HR strategy – ●● provide for the evaluation of the success of
bearing in mind that things done with line the programme stage by stage and on
managers are much more likely to work than completion; this will involve testing new
things done to line managers. Second, ensure people practices as described below.
that the HR policies they are expected to put into
practice are manageable with the resources
available. Third, provide managers with the Testing new people management
training, supporting processes and on-the-spot
guidance they need.
practices
Purcell et al (2003) New people management practices need to be
tested to ensure that their objectives and perfor-
mance criteria are being attained. These should
have been defined when they were initiated in terms,
But HR professionals must play a major part in pre- for example, of return on investment. Reactions
senting and justifying the strategy, helping to man- should be obtained from those responsible for im-
age the change programme, and providing support plementing and managing the practice and those af-
and guidance to managers. They need the communi- fected by it on how well it is working and the extent
cations and political skills that emerged from the to which it is meeting their needs. The costs and
Brown et al (2019) research as being critical to the benefits of the practice should be assessed and an
effective implementation and delivery of people estimate of the added value it has produced. Any
management strategies. problems in implementing the policy or practice
should be identified and methods of solving them
worked out.
What do you think is likely to be the biggest
barrier to the implementation of a people
strategy?
Key learning points
People strategy defined an overarching purpose and set of organizational

principles, creating a system of complementary people
People or HR strategy specifies what the organization management practices, and giving priority to specific
intends to do about people management generally or aspects of people management. These approaches
in particular areas to support the achievement of can be combined in various ways.
corporate goals and meet its obligations to its
stakeholders, especially its employees. It sets out how
Formulating people strategy
its people management policies and practices should
be integrated with the business strategy and with each People strategy may be created by means of a
other. deliberate process of analysis, discussion and choice.
But it may come into existence through an emergent,
The nature of people strategy evolutionary and possibly unarticulated process
influenced by the business strategy as it develops and
A people strategy should be based on the values that changes in the internal and external environment.
an organization believes should govern its approach to
people management. It will set out intentions but it is
Implementing people strategy
not just a long-term plan. It can and should be
immediately relevant. The ultimate challenge of people strategy is putting it
to work. Implementation is likely to be more effective if
Approaches to people strategy practical strategies are formulated that can be put into
effect without too much difficulty and if line managers
People strategies come in all sorts of shapes and sizes and other employees are involved in the formulation of
but three approaches can be distinguished: developing the strategy.
References
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49
04
Human capital
management
This chapter starts with a definition of the concept
Introduction of human capital and continues with an analysis of
its constituents and a discussion of how it can be
Human capital management (HCM) is an approach measured. The chapter concludes with a description
to managing people that regards them as assets and of the approaches to people management raised by
emphasizes that competitive advantage is achieved human capital theory.
by strategic investments in those assets. As Hitt et al
(2001) established through their research in profes-
sional service firms, leveraging human capital had a
positive effect on firm performance.
Human capital management
HCM involves measuring the value of human defined
capital, ie representing the value of people and mak-
ing good use of the information gained from meas- Human capital management (HCM) is concerned
urements. The concept of HCM is underpinned by with the knowledge, skills, abilities and capacity to
the concept of human capital which is associated develop and innovate possessed by people in an or-
with that of the resource-based view. ganization and the added value they therefore pro-
vide. It treats them as assets to be invested in
through resourcing, talent management and learn-
ing and development policies and practices. The aim
Wo rd s of wi sdom
is to enhance the value of the organization’s human
The [human capital] journey starts with capital so that the business can perform successfully
clarity on the value that the organization in the short and longer term and achieve competi-
tive advantage. HCM also involves measuring the
and its activities provide. That value value of an organization’s human capital, assessing
proposition then forms the basis for the contribution of people and measuring the effec-
tiveness of the HR practices used to manage them.
determining what value is created and As pointed out by Delery and Roumpi (2017: 9),
where people add value to capital. Implicit human capital in the shape of intellectual and social
in this is the quality and ideology behind capital is different from other types of resources in
that it is owned by employees and can be transferred
the management of people. to other firms if they leave. Therefore it is critical for
Wong (2017: 2) firms to use HRM systems to enhance existing levels
of human capital, initially by attracting high-quality
people and providing them with development op-
portunities, and then preventing the loss of their
human capital investments to other firms by enhanc-
ing the commitment of employees to the firm and
applying retention policies. As Wright et al (1994: The significance of the term was emphasized by
320) noted: ‘Sustained competitive advantage is Schultz, whose definition is set out below.
achieved only by the interaction between the human
capital pool and the HR p ractices.’
Source review
Paus e fo r t houg ht Although it is obvious that people acquire useful

skills and knowledge, it is not obvious that these
The resource-based view states that it is the skills and knowledge are a form of capital, that this
range of resources in an organization, capital is in substantial part a product of deliberate
investment, that it has grown in Western countries
including its human resources, that
at a much faster rate than conventional (non-
produces its unique character and creates human) capital, and that its growth may well be the
competitive advantage. What does the most distinctive feature of the economic system.
Schultz (1961: 1)
notion of human capital management add
to this concept?
Schultz also noted that: ‘Attributes… which are val-

uable and can be augmented by appropriate invest-
ment will be treated as human capital… Consider
Skaggs and Youndt (2004) used a sample of 234 ser-
all human abilities to be either innate or acquired’
vice organizations and found strong empirical sup-
(ibid: 21).
port to indicate that if fit is achieved between human
Scarborough and Elias (2002: ix) commented
capital and the organization’s strategic p ositioning,
that: ‘The concept of human capital is most usefully
the result is positive organizational performance.
viewed as a bridging concept – that is, it defines the
link between HR practices and business perfor-
mance in terms of assets rather than business pro-
The concept of human cesses.’ They pointed out that human capital is to a
capital large extent ‘non-standardized, tacit, dynamic, con-
text dependent and embodied in people.’ These
Human capital is the knowledge, skills and abilities characteristics make it difficult to evaluate human
of the people employed in an organization. Human capital, bearing in mind that ‘the features of human
capital theory regards people as assets and stresses capital that are so crucial to firm performance are
that investment by organizations in people will gen- the flexibility and creativity of individuals, their
erate worthwhile returns. ability to develop skills over time and to respond in
Adam Smith originated the idea of human capi- a motivated way to different contexts’ (ibid: ix).
tal (like so many other economic concepts).
Source review
Wo rd s o f w isdom Each individual in the organization has

characteristics that comprise human capital. He/she
The acquired wealth of nations derives from
also engages in the processing of information,
the acquired abilities of people – their interpretation and reaction to that information in
education, experience, skills and health. making choices about how to feel and behave. The
aggregation of human capital, we propose,
Adam Smith, cited by Schultz (1981: 140)
constitutes the organization or unit’s ‘human capital’.
Wright and McMahan (2011: 101)
Chapter 4 | Human Capital Management 51
Human capital is an intangible asset in the form of Organizational capital

a stock of knowledge. It is indeed the knowledge,
skills and abilities of individuals that create value, Organizational or structural capital is the institution-
which is why the focus has to be on means of at- alized knowledge possessed by an organization that
tracting, retaining, developing and maintaining the is stored in databases, manuals, etc. Ployhart and
human capital they represent. Moliterno (2011) defined it as ‘a unit-level resource
Human capital theory is related to the resource- that is created from the emergence of individuals’
based view. It states that the unique nature of knowledge, skills, abilities and other attributes. They
human capital resources within the firm has the po- present an ‘emergence’ model explaining how a num-
tential to generate sustainable competitive advan- ber of individuals with specific human capital en-
tage (Nyberg et al, 2014; Ployhart, 2006). dowments can be combined in such a way that a
‘human capital resource’ emerges at the unit level.
The constituents of
Measuring human capital
human capital
Human capital management is concerned with
Human capital consists of intellectual, social and measuring the value of people – establishing their
organizational capital. The intellectual knowledge contribution to organizational performance in
possessed by people is enhanced by the interactions order to provide insight into the strengths and
between them (social capital) and generates the in- weaknesses of the organization’s approach to man-
stitutionalized knowledge possessed by an organi- aging its key resource. Such measurements can
zation (organizational capital). assess the extent to which the organization has suf-
ficient numbers of the sort of people it needs and
analyse the operation and effectiveness of HR ac-
Intellectual capital tivities. Thus they can inform the process of devel-
The concept of human capital is associated with the oping human resource management strategy and
overarching notion of intellectual capital, which is indicate what steps need to be taken to change pol-
defined as the stocks and flows of knowledge avail- icy or practice.
able to an organization. These can be regarded as But the CIPD (2018) warns that: ‘Understanding
the intangible resources associated with people that, the context of data is key and as such there is no
together with tangible resources (money and physi- single measure, or set of measures, which can
cal assets), comprise the market or total value of a adequately convey its human capital value. Organi
business. zations need to decide which measures are relevant
to them and will give them the information they
need to effectively communicate the value and con-
Social capital tribution of human capital both internally and ex-
ternally.’ The CIPD also noted that ‘the emphasis
Social capital consists of the knowledge derived for measurement is no longer on absolute measures
from networks of relationships within and outside of human capital, but instead context-specific in-
the organization. Social capital has been defined by formation to enable informed decision making.’
Putnam (1996: 66) as ‘the features of social life – There is, however, still a belief, at least in some
networks, norms and trust – that enable participants academic circles, that absolute measures of the total
to act together more effectively to pursue shared ob- value of human capital are useful, although it is rec-
jectives.’ It is important to take into account social ognized that establishing them presents considera-
capital considerations, that is, the ways in which ble, possibly insurmountable difficulties which
knowledge is developed and learning takes place (so- might explain why less interest is being taken in
cial learning) through interaction between people. them by practitioners. Approaches to developing
Bontis et al (1999) commented that it is flows as well absolute and specific (contextual) measures and
as stocks that matter. Intellectual capital develops representing the value of people in different ways
and changes over time and a significant part is played are discussed below.
in these processes by people acting together.
Absolute measures ●● workforce composition: demographics data

including age, gender and ethnicity;
As McMahan and Harris (2013: 114) observed: ●● recruitment and retention: number of
‘Human capital has been measured in a multitude resignations/vacancies/applications, length of
of ways and has been related to an array of indi- service;
vidual outcomes.’ They identified the following ap-
proaches to the establishment of absolute measures, ●● skills, qualifications and competencies: levels
ie measures that indicate the total value of human of expenditure on training, types of training
capital in an organization: provided, length of time to reach competence
levels, data on training needs;
●● A single rater, eg the head of HR, makes an ●● performance management: performance
overall assessment using a scale including management results, productivity and
items such as levels of education, training, profitability data, targets set and met, levels
skills and abilities, and performance – but of customer satisfaction, customer loyalty;
this is a subjective judgement from someone
who may not have the information required ●● employee relations and voice: findings from
to make it. employee attitude surveys;
●● Multiple raters – this reduces individual bias ●● pay and benefits: overall wage bill costs,
but is still largely subjective. distribution of individual performance-
related pay awards, level of total reward
●● Aggregation of individual measures to a package;
higher level of analysis (team or
organization) – the challenge is to find ●● regulatory compliance: includes data on the
individual levels of analysis that can be compliance of employees to established
aggregated. standards and guidelines for working
practices in particular disciplines;
●● organization development and design:
includes data on spans of control, skills mix
Source review and talent pipelines.
This data could contribute to the measurement of
The individual context recognizes that each the absolute value of human capital but essentially
individual in the organization has characteristics it performs the function of enabling evidence-based
that comprise human capital. He/she also engages decisions on the development of HR strategy and
in the processing of information, interpretation and on the management of different parts of the HR sys-
reaction to that information in making choices tem. The collection, analysis and interpretation of
about how to feel and behave. The aggregation of this data is the function of the operational wing of
the individual human capital, we propose, human capital management, people analytics (see
constitutes the organization or unit’s ‘human Chapter 12). An approach to human capital meas-
capital’. Thus, this unit-level construct comprises urement used by the Civil Aviation Authority is
the aggregation of individual-level constructs. shown in Figure 4.1.
Wright and McMahan (2011: 101)
Representing the value of people

in different ways
Specific measures Representing the value of people in an organization
The selection and use of specific measures or met- focuses attention on the importance of enhancing
rics will be dependent on the context of the organi- that value as a means of improving organizational
zation. They could be drawn from the following performance. Analysis of data on trends in values
groups of human capital data relating to different provides a basis for HR planning and for monitor-
aspects of HR suggested by the CIPD (2018): ing the effectiveness of HR policies and practices.
F I G U R E 4.1 Human capital evaluation – Civil Aviation Authority

What do we want to know? How can we measure that?
Success of our policies Success of our policies

and practices and practices
• Are staff engaged? • Engagement index
• Are we retaining key • Quality of leaver
employees? • Quality of hire
• Are we recruiting strong • Recent recruit turnover
candidates?
• Absence rates/costs
• Do our new recruits stay
with us? • Pay benchmarks
• Are we managing • Manager competency

attendance levels? framework and
performance
• Are our reward levels management process
competitive?
• Do our managers have
the necessary skills to
manage staff?
Value created by our Value created by our

people people
• Are we continually raising • Performance

the bar on performance? management
• Are we developing our • Training evaluation
staff effectively? • External customer survey
• Are our ‘customers’
satisfied with our
performance?
Value can be measured in financial terms in terms of

the cost of employing people (the ratio of employ-
Approaches to people
ment costs to the total costs incurred by the organi-
zation). In commercial enterprises, value can also be
management raised by
measured in terms of the contribution made by em- human capital theory
ployees to the profitability of the business (profit
per employee). An approach to people management based on
Value can be represented in non-financial terms human capital theory involves obtaining answers to
by reference to the skills base and levels of capabil- these questions:
ity in the organization. The data for these can be
provided by preparing and updating skills invento- ●● What are the key performance drivers that
ries and by analysing information on organizational create value?
performance and the outcome of individual perfor- ●● What skills do we have?
mance reviews. ●● What skills do we need now and in the
future to meet our strategic aims?
●● How are we going to attract, develop and
retain these skills?
●● How can we develop a culture and

environment in which organizational and
individual learning takes place that meets Pau se for th ou gh t
both our needs and the needs of our What does the concept of human capital
employees?
management add to that of human resource
●● How can we provide for both the explicit
and tacit knowledge created in our management?
organization to be captured, recorded and
used effectively?
Key learning points
Human capital management defined theory regards people as assets and stresses that
investment by organizations in people will generate
●● Human capital management (HCM) is an approach worthwhile returns.
to managing people that regards them as assets
and emphasizes that competitive advantage is Constituents of human capital
achieved by strategic investments in those assets.
●● Intellectual capital – the stocks and flows of
●● It is concerned with the knowledge, skills, abilities knowledge available to an organization.
and capacity to develop and innovate possessed by
people in an organization and the added value they ●● Social capital – the knowledge derived from
therefore provide. It treats them as assets to be networks of relationships within and outside the
invested in through resourcing, talent management organization.
and learning and development policies and practices. ●● Organizational or structural capital – the
●● HCM also involves measuring the value of an institutionalized knowledge possessed by an
organization’s human capital, assessing the organization that is stored in databases, manuals, etc.
contribution of people and measuring the
effectiveness of the HR practices used to
manage them.
Measuring human capital
Human capital management is concerned with
●● Human capital in the shape of intellectual and
measuring the value of people – establishing their
social capital is different from other types of
contribution to organizational performance in order to
resources in that it is owned by employees and can
provide insight into the strengths and weaknesses of the
be transferred to other firms if they leave.
organization’s approach to managing its key resource.
Therefore it is critical for firms to use HRM systems
The CIPD (2018) has noted that ‘the emphasis for
to enhance existing levels of human capital, initially
measurement is no longer on absolute measures of
by attracting high-quality people and providing
human capital, but instead context-specific
them with development opportunities, and then
information to enable informed decision making.’
preventing the loss of their human capital
investments to other firms by enhancing the
commitment of employees to the firm and applying Representing the value of people
retention policies. in different ways
Representing the value of people in an organization
Human capital defined focuses attention on the importance of enhancing that
Human capital is the knowledge, skills and abilities of value as a means of improving organizational
the people employed in an organization. Human capital performance.
●● What skills do we have?

Value can be represented in terms of profit, cost,
skills and capability. ●● What skills do we need?
●● How are we going to attract, develop and retain
Approaches to people management raised these skills?
by human capital theory ●● How can we ensure that organizational and
An approach to people management based on human individual learning takes place?
capital theory involves obtaining answers to these ●● How can we provide for the knowledge created in
questions:
our organization to be used effectively?
●● What are the key performance drivers that create
value?
References
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(1999) The knowledge toolbox: a review of the of the human capital resource: a multilevel model,
tools available to measure and manage intangible Academy of Management Review, 36 (1),
resources, European Management Journal, 17 (4), pp 127–50
pp 391–402 Putnam, R D (1996) The strange disappearance of
CIPD (2018) Human capital management fact sheet civic America, The American Prospect, Winter,
[online] https://www.cipd.co.uk/knowledge/ pp 34–48
strategy/analytics/human-capital-factsheet#7708 Scarborough, H and Elias, J (2002) Evaluating
(archived at https://perma.cc/E6EZ-LWE8) Human Capital, London, CIPD
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of Management, 32, pp 868−97
56
05
The context of HRM
Introduction Environmental factors
Typical approaches to HRM and typical organiza- Environmental factors inside and outside the organ-
tions don’t exist. Organizations function in many ization exert a major influence on how the organiza-
different ways depending on their contexts. And so tion functions. This includes the need for concern
does HRM. Contingency theory tells us that defini- over the impact of the organization on environmen-
tions of aims, policies and strategies, lists of activi- tal issues such as pollution. Environmental factors
ties and analyses of the role of the HR function are will have a direct effect on the organization’s human
only valid if they are related to the context or cir- resource management policies and practices.
cumstances of the organization. Descriptions in
textbooks like this can be no more than generaliza-
tions that suggest possible approaches: they cannot
be prescriptive in the sense of laying down what Word s of w isd om
should be done in all circumstances. It all depends.
HRM in organizations cannot be fully
understood in an atomic sense isolated from
economic, social, and institutional
Wo rd s o f w isdom interconnecting relationships.
Different organizational and environmental Dundon and Rafferty (2018: 380)
circumstances will necessitate transformation

of general prescription into concrete strategy
adapted to the situation in which it is to The internal environment
operate. The internal environment of an organization con-
Karen Legge (1978: 97) sists of its social system (the ways in which work
groups are organized and the interactions that take
place) and its technical system (the ways in which
the work is organized and carried out to deliver
products or services to customers or clients). The
The aim of this chapter is to examine the main con-
other contextual factors are the sector in which the
textual factors that affect people management and
organization operates (eg public, private, v oluntary,
the practice of HRM, namely: environmental fac-
manufacturing, service), and its size, complexity,
tors (the nature of the internal and external envi-
technology, culture and financial circumstances.
ronments); what is happening to work including the
Two other important factors are the type of people
impact of emerging technology; and what is hap-
it employs and the presence or absence of trade
pening to the labour market.
unions
Chapter 5 | The Context of HRM 57
There have been significant shifts in the demograph-

ics of the workforce in the shape of an increased
Pa us e for t houg ht proportion of women, greater ethnic diversity, more
What differences in HRM organizations educated employees and an ageing population.
More people are engaged in ‘knowledge work’
would you expect between a large and
(technology and professional services) and fewer in
well-established insurance company and a factory jobs following the decline of manufacturing
start-up organization specializing in the in the UK. Work intensification is increasing. The
pressure for flexibility has meant that traditional of-
development of AI applications? fice or factory-based working is declining and the
‘gig economy’ and zero-hours contracts are flour-
ishing. The state of the labour market is analysed in
the next main section of this chapter.
The external environment David Guest (2017: 23) has pointed out that:
‘The 2008 financial crisis, greater international
The external environment impacts on organizations
competition, technological changes that facilitate
through the forces of national and international
the expansion of the ‘gig’ economy and the growth
competition, the deregulation of markets and the
of temporary employment have increased the num-
impact of globalization (the process by which busi-
bers within what Standing (2011) describes as the
nesses or other organizations develop international
“precariat” and have made large areas of employ-
influence or start operating on an international
ment potentially insecure.’
scale). Organizations are also influenced by the state
The Taylor Review of Modern Working Practices
of the financial and labour markets, economic and
(2017) listed a number of factors that could lead to
societal trends, developments in new technology,
poorer outcomes for workers. The key factor was
and government interventions in the shape of legis-
an imbalance of power between individuals and
lation and regulations.
employers: ‘Where employers hold more power
than employees, this can lead to poorer working
What’s happening to work? conditions and lower wage levels’ (ibid: 26). A sub-
mission by the Citizen’s Advice Bureau, Newham,
to the Review listed the following top three employ-
The nature of work is altering in many organizations.
ment issues raised in enquiries to them:
Some are operating more flexibly and some, for exam-
ple high-technology firms, are being organized organi- 1 unauthorized deduction of wages (26 per
cally, ie they are relatively informal with the emphasis cent of enquiries);
on lateral processes and interaction (networking). The 2 unfair dismissal (19 per cent);
external environment is constantly changing and may
3 terms and conditions, many in relation to
be turbulent, even chaotic. The following changes
bogus self-employment (13 per cent).
were noted by Jill Rubery and her colleagues:
Attitudes to work vary. Some people just see work
as a means to an end while others see it as a source
Source review of fulfillment. Galbraith (2004: 75) argued for a dis-
tinction between ‘people for whom work is exhaust-
The radical shift in production principles signals ing, fastidious and disagreeable and… those who
the collapse of old employment standards – manifestly take pleasure from it and feel no stress
especially job-for-life norms, standard working from it, with a gratifying sense of their personal im-
hours and collective wage negotiation. New forms portance, perhaps, or the visible superiority they
of ‘open innovation’ in services, for example, feel in placing others under their orders.’ Those in
suggest organizations may need to access the latter category are of course the highest-paid
workers.
specialized creative, technical and professional
As described below, the most important changes
skills on a temporary, part-time or freelance basis
have been the impact of emerging technologies and
in an effort to build ‘outside-in knowledge’.
work intensification accompanied by major changes
Rubery et al (2016: 245)
in the labour market.
The impact of emerging technologies There is also evidence from research conducted by
the CIPD in conjunction with Loughborough
New technologies are affecting work in a number of University (2017a) that new technology can improve
ways, as explained by the CIPD. the quality of work by removing mundane tasks and
allowing for some degree of role expansion. Examples
identified by the research included:
●● An automated dispensing system in a UK
Source review hospital reduced the amount of time
pharmacists spent in the dispensary, which
Current emerging technology centres on artificial
was better used to care for patients on wards.
intelligence (AI), including both machine learning
and robotics. This latest era is changing the nature
●● An automated decision support system for
air traffic controllers, advising them on
of work in new ways, where the technology not
optimal solutions in a real-time setting,
only assists in basic physical tasks, but also [in]
increased their performance and accuracy
tasks that require higher cognitive functions. In
without increasing their workload.
addition, AI and automation can result in new
integrations and co-operation possibilities and ●● A comparison of a realistic rail-signalling
challenges, which also can create new types of
automation model and experienced human
rail signal operators found that as
jobs and services.
automation increased, the perceived
CIPD (2019: 4)
workload of human operators, both mentally
and physically, decreased and the consistency
of performance increased.
As a result of this impact, some commentators have The CIPD (2019: 33) observed that ‘AI and automa-
predicted large-scale job losses. However, the Taylor tion are potentially deskilling and disempowering,
Review (2017) noted that, as confirmed by research but they are more likely to free people to do more
such as that undertaken by Deloitte in 2015, techno- value-added, higher-skilled tasks and exercise more
logical advancements and the automation of individ- discretion in decision making.’ Their survey indi-
ual tasks result in job creation as well as substitution cated that while the greatest drivers for AI [artificial
of labour. This is the concept of the augmentation of intelligence] and automation are business focused –
human work, rather than its replacement. in particular to improve service quality, reduce costs
But there may be a time lag between job losses and keep up with competitors – they can also de-
and job creation. liver real benefit for workers.
Work intensification
Source review
Work intensification is the process of raising the ex-
pected workload of an employee by increasing the
This new study has shown that technology is
amount of tasks to be undertaken or shortening
having a profound effect on the UK’s workforce.
the time allowed to complete those tasks. A Cardiff
Lower-skilled, routine jobs are progressively being
University study in 2012 found that work intensifi-
replaced by higher-skilled, non-routine jobs that cation increased from 31.5 per cent of the working
require dexterity, creativity, digital know-how and population in 1992 to 45.3 per cent in 2012. The
other ‘softer’ people skills. This technology-driven study established that intensification commonly oc-
shift has already created nearly four times more curred in workplaces where new computerized
jobs than have been lost, and it has brought equipment or other information and communica-
considerable additional value to the UK’s economy. tion technology had recently been introduced.
It also accentuates the importance of generating Other factors included increased competitiveness
and retaining the right skills in the workforce. and the pressure on employers to cut costs and a
Deloitte (2015: 11) change in the balance of power between employers
and employees, although high work intensity was
not associated with reductions in the number of em- contracts affect the nature of the labour market and
ployees (downsizing). the approaches adopted by employers to satisfy
their employment requirements. There is also uncer-
tainty in the UK about the implications of Brexit.
The state of the labour market in the UK in 2017
Pa us e for t houg ht was described by the CIPD as follows:
Isn’t work intensification an inevitable
feature in current organizational life? If it is, Source review
what can be done to modify its effects?
At present, however, despite the economic
uncertainty surrounding Brexit, the labour market is
buoyant, at or nearing full employment in many UK
Research in New Zealand by Macky and Boxall localities. It might be expected that as labour
(2008) showed that work intensification reduces becomes more scarce, the market would correct
job satisfaction, increases stress and undermines for poor jobs as employers seek to improve the
work-life balance. attractiveness of their offer. This has not happened.
A persistent bad-jobs trap exists in the UK with too
many workers in low-skill, low-wage jobs being
The labour market unable to progress out of these jobs. In-work
poverty (having an income that is below the official
The labour market is the place where employers
poverty line) continues to be an issue.
seek workers and workers seek employment. Jill
CIPD (2017b: 9)
Rubery and her colleagues made the following ob-
servations about its characteristics:
The composition of the UK labour

Source review market
As reported by the Taylor Review (2017), full-time,
Cross-national comparative research suggests that permanent work as an employee continues to make
the UK’s deregulated labour market is the most up the majority of employment in the UK (63 per
likely among European countries to generate a cent). However, there has been a shift towards more
‘lean’ model of work organization, described by flexible forms of working, with changes in levels of
teamwork, job rotation, relatively low worker part-time working and self-employment. Currently,
autonomy, tight quantitative production rules and almost 26 per cent of employment is in part-time
relatively high use of fixed-term employment. It is work and self-employment now accounts for
less likely to generate employee commitment, for around 15 per cent of total employment.
which fair treatment and job security are critical
ingredients.
Rubery et al (2016: 246) Recruitment
The CIPD (2017c) reported that recruitment diffi-
culties, especially for professionals and specialists,
The nature of the labour market in terms of its com- remain substantial for organizations, with three-
position and the availability of people for employ- quarters experiencing them in the last year. A tenth
ment will affect how organizations develop and of organizations had difficulties recruiting for more
apply their recruitment policies. Recruitment prob- than 50 per cent of their vacancies. There has been
lems arise because of skills shortages or the reduc- a decline in applicants per vacancy across all skill
tion in the numbers of workers from overseas. The levels, with the biggest drop seen in low- and
rise of the gig economy and the use of zero-hours medium-skilled roles.
The gig economy construction. The UK Government has stated its

intention to introduce migration restrictions that
The gig economy is a labour market characterized will focus on attracting ‘the brightest and the best’
by the prevalence of short-term contracts or free- EU nationals to the UK. However, this could have
lance work as opposed to permanent jobs. It is said a negative impact if implemented without due un-
to get its name because each piece of work is akin to derstanding of the needs of unskilled or low-skilled
an individual ‘gig’ – a brief musical performance by industries. It is possible that Brexit will mean im-
a band or a group (‘gig’ is short for engagement). migration restrictions taking place at a time when
The CIPD (2017d) stated that the number of people the UK labour market is already tight. The follow-
in the UK working in the gig economy, such as Uber ing are the comments of the CIPD on the implica-
drivers and delivery people, was about 1.3 million. tions of Brexit:
Gig workers are treated as contractors with no
guarantee of pay and no employment rights. They
are constantly being subjected to last-minute sched-
uling. Their employers say they provide the flexibil- Source review
ity for people to work whenever they like but critics
argue that not only do workers lack protection and Brexit will affect sectors and occupations differently,
fair pay, but the roles aren’t as flexible as they seem, with varying impacts on resourcing requirements
as workers are pressured or incentivized to work and talent availability. Availability should be more
when their employers need them. To deal with this apparent once the new immigration rules are settled.
problem, the Taylor Review suggested that the gov- However, factors including changing trading
ernment should create a new category of worker, regulations and potentially increased costs,
known as a ‘dependent contractor’, that sits between (temporarily) lower exchange rates, a general
contractors and those in full employment, and economic upturn or downturn, wage inflation, and so
brings with it some benefits and wage protection. on, could have less apparent and certainly more
Research by the CIPD (2017e) found that a complex effects on resourcing requirements.
higher proportion of gig workers are aged 18–29, CIPD (2018a: 3)
with nearly four in ten falling into this category,
compared with just 21 per cent of other workers.
Gig economy workers are marginally more likely to
be male (56 per cent) than other workers. The Royal
Society of Arts (2017) reported that gig working
Zero-hours contracts
has the potential to expand into sectors such as re- The CIPD (2018b: 1) defines a zero-hours contract
tail and confirmed that this type of work is particu- as ‘an agreement between two parties that one may
larly attractive to young people. be asked to perform work for another but there is
no minimum set contracted hours. The contract will
state what pay the individual will get if they do
work, and what will happen when they turn down
Pa us e fo r t houg ht work offered.’ The Taylor Report (2017) stated that
the proportion of the labour force in zero-hours
What are the implications of the gig contracts is 2.8 per cent.
economy for the future of work? The exact nature of zero-hours contracts may dif-
fer from organization to organization. For example:
●● individuals on zero-hours contracts may be
engaged as employees or workers;
Possible implications of Brexit ●● in some zero-hours contracts the individual
Brexit may create recruitment problems and la- will be obliged to accept work if offered, but
bour shortages in some sectors, especially those in others they will not;
employing a high share of EU nationals such as ●● the pay arrangements and benefits provided
hospitality, healthcare, food production, retail and may differ.
They are most suited to situations where work fluc- Zero-hours contracts have received very bad
tuates unexpectedly so that the employer cannot press but on the basis of their research, the CIPD
always guarantee work and are most common in has taken a more favourable view, as set out below:
retail, hospitality and restaurants.
Source review
Zero-hours contracts have sometimes, it seems, been give and take, a recognition that flexibility works both
singled out as an especially unfair form of employment. ways. A small minority of employers using them don’t
In our view, this is unjustified. Our research shows that seem to recognize this, but there are many ‘permanent’
zero-hours contracts appear to work well for many of jobs where the actions of employers can make them
those on them. But they are not for everybody and anything but secure. There may be too much emphasis
that’s why zero-hours contract workers need to at times on the precise terms of the employment
understand their employment rights as well as how contract with not enough attention given to the spirit in
these contracts are likely to work in practice. Zero- which the employment relationship is conducted.
hours contracts work best when there’s an element of CIPD (2015: 2)
Key learning points
Contingency theory The external environment

Typical approaches to HRM and typical organizations The external environment impacts on organizations
don’t exist. Organizations function in many different through the forces of national and international
ways depending on their contexts. And so does HRM. competition, the deregulation of markets and the
Contingency theory tells us that definitions of aims, impact of globalization (the process by which
policies and strategies, lists of activities and businesses or other organizations develop international
analyses of the role of the HR function are only valid influence or start operating on an international scale).
if they are related to the circumstances of the Organizations are also influenced by the state of
organization the financial and labour markets, economic and
societal trends, developments in new technology, and
Environmental factors government interventions in the shape of legislation
and regulations.
Environmental factors inside and outside the
organization exert a major influence on how the
What’s happening to work?
organization functions and on its human resource
management policies and practices. There have been significant shifts in the demographics
of the workforce in the shape of an increased
proportion of women, greater ethnic diversity, more
The internal environment
educated employees and an ageing population. More
The internal environment of an organization consists of people are engaged in ‘knowledge work’ (technology
its social system (the ways in which work groups are and professional services) and fewer in factory jobs
organized and the interactions that take place) and its The pressure for flexibility has meant that
technical system (the ways in which the work is traditional office or factory-based working is declining
organized and carried out to deliver products or and the ‘gig economy’ and zero-hours contracts are
services to customers or clients). flourishing.
The impact of emerging technologies learning and processing capacity, some commentators
have predicted large-scale job losses. However,
As a result of the impact of emerging technologies, research has shown that technological advancements
including artificial intelligence (AI) and rapid result in job creation as well as substitution of labour.
developments in automation in the form of machine
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88H8-PUD4) [accessed 22 August 2018] working-practices-rg.pdf (archived at https://perma.
CIPD (2019) People and machines: from hype to cc/KY8X-8ZW6) [accessed 14 August 2018]
reality [online] https://www.cipd.co.uk/knowledge/
63
06
HRM and
performance
erformance improvement programme, namely,
p
Introduction the measurement of organizational performance in
financial and non-financial terms as a basis for
The internal factors that shape short- and long-term identifying issues and indicating possible courses
business performance are the quality of the people of action. Guidance on any actions that HR might
working for the organization at every level, the ca- take is provided by the evidence from research
pacity of the organization to innovate and compete, on what impact HRM can make on performa
and the efficiency with which it plans and conducts nce, and how it does this as covered in the next
operations, which includes cost effectiveness. The two sections of the chapter. The chapter concludes
external factors are competition in the UK and with an analysis of what steps can be taken by
globally, economic trends, Government financial HR to enhance performance in the shape of develop-
and business policies and legislation, international ing a high-performance culture and introducing a high-
influences and pressures, eg Brexit, and the state of performance work system.
the labour market.
But to do well, organizations depend largely on
the quality, dedication, enthusiasm, expertise and
skill of the people working in them. The message
Measuring organizational
of the resource-based view is that HRM delivers performance
added value and helps to gain ‘sustainable com-
petitive advantage’ through the strategic develop- Organizational performance can be measured in fi-
ment of the organization’s rare, hard-to-imitate nancial and non-financial terms:
and hard-to-substitute human resources. As Guest
(1997: 269) argued: ‘The distinctive feature of
HRM is its assumption that improved perfor- Financial measures
mance is achieved through the people in the or-
ganization.’ If, therefore, appropriate HR policies ●● Shareholder value – the financial value
and practices are introduced, it can also be a ssumed delivered by a company to its shareholders.
that HRM will impact on firm performance. ‘The ●● Profit (in a business) – the amount by which
way in which human resource m anagement (HRM) the value of sales exceeds costs.
contributes to business performance is at the heart ●● Financial performance (in a not-for-profit
of the field of strategic HRM’ (Boxall, 2013: 47). organization) – the surplus or deficit of
This chapter is concerned with how HR can income over expenditure; control of
contribute to the improvement of organizational expenditure.
performance. In the initial section, consideration is
●● Sales turnover – the value of the sales made
given to the foundation of any evidence-based
by the business.
●● Return on capital employed – the profits

earned by the company as a percentage of its
financial assets (profitability).
Word s of w isd om
●● Earnings per share – profits divided by the Most businesses make the mistake of
number of shares. measuring performance in terms of figures
●● Productivity – the added value created by the when they ought to be measuring it in
company divided by the number of
employees (added value is the difference terms of people. The primary measures of a
between the value of sales and the cost of business’s success should be customer and
labour and bought-in parts).
staff satisfaction, not profits. Profits are
●● Cost per unit of output – cost of production
divided by the number of units produced. simply an indication that you are getting
customer service right.
Julian Richer (2017: 6)
Non-financial measures
●● Quality and execution of corporate
strategy (extent to which goals have been
achieved).
●● Management expertise.
The impact of HRM
●● Innovation and research leadership. Much research has been carried out showing that
●● Effectiveness of human capital people practices can create value and that good
management – ability to attract, retain and HRM practice and firm performance are correlated.
develop talented people. As Woodrow and Guest (2014: 51) commented:
●● Quality of product or service. ‘One stream of previous research has placed em-
ployee responses at the heart of the analysis and has
●● Market share.
shown that HR policy and practice can affect em-
●● Ratio of number of employees to output, for ployee attitudes and behaviour, which in turn affects
example units produced. organizational performance.’ But they also observed
●● Exercise of corporate social responsibility that any impact is likely to be limited if good HR
especially in connection with environmental policy and practice are poorly implemented.
issues. Notable examples of UK research on the impact
●● Reputation as a business and as an of HRM are Birdi et al (2008), Guest et al (2000a),
employer. Patterson et al (1997), Purcell et al (2003),
Thompson (2002) and West et al (2002). Their find-
●● Levels of customer service.
ings are summarized in Table 6.1.
Elsewhere, Huselid (1995) examined the relation-
ship between high-performance work systems (HPWS)
and firm performance in a sample of 1,000 US firms
(the features of an HPWS are described in the last sec-
Pa us e fo r t houg ht tion of this chapter). He found that HPWSs reduce
If you had to select three key financial employee turnover and increase productivity, thus
having a positive effect on corporate financial perfor-
measures and three key non-financial mance. Guthrie (2001) replicated Huselid’s method-
measures, which would you choose and why? ology in a sample of New Zealand firms and found a
similar relationship between HPWSs and firm perfor-
mance. Khatri (2000) used a sample of 200 of the
largest companies representing all major industries in
Singapore to examine the links between strategy and
Chapter 6 | HRM and Performance 65
TA B L E 6.1 Research on the link between HRM and firm performance
Researcher(s) Methodology Outcomes
Birdi et al A longitudinal research study by the It was found that the impact of empowerment (job
(2008) Institute of Work Psychology, University enrichment) was to produce a gain of nearly 7 per
of Sheffield covering 308 companies over cent of value added per employee, while the gain
22 years designed to establish the for extensive training was nearly 6 per cent. But
impact of various HRM and operational teamwork did not make a significant impact, neither
practices on company productivity. did total quality management or just-in-time.
Guest et al An analysis of the 1998 WERS survey A strong association exists between HRM and both
(2000a) which sampled some 2,000 workplaces employee attitudes and workplace performance.
and obtained the views of about 28,000
employees.
Patterson The research examined the link between HR practices explained significant variations in
et al (1997) business performance and organization profitability and productivity (19 per cent and 18 per
culture and the use of a number of HR cent respectively). Two HR practices were particularly
practices. significant: (1) the acquisition and development of
employee skills, and (2) job design including
flexibility, responsibility and variety.
Purcell et al A University of Bath longitudinal study of The most successful companies had ‘the big idea.’
(2003) 12 companies to establish how people They had a clear vision and a set of integrated
management impacts on organizational values. They were concerned with sustaining
performance. performance and flexibility.
Thompson A study of the impact of high-performance The number of HR practices and the proportion of
(2002) work practices such as teamworking, the workforce covered appeared to be the key
appraisal, job rotation, broad-banded grade differentiating factor between more and less
structures and sharing of business successful firms.
information in UK aerospace
establishments.
West et al Research conducted in 61 UK hospitals An association between certain HR practices and

(2002) obtaining information on HR strategy, lower mortality rates was identified. As noted by
policy and procedures from chief West: ‘If you have HR practices that focus on effort
executives and HR directors and and skill; develop people’s skills; encourage
mortality rates. cooperation, collaboration, innovation and synergy in
teams for most, if not all employees, the whole
system functions and performs better.’
HR practices, and HR practices and firm perfor- Peccei et al (2013: 15) pleaded that any analysis of
mance. Results showed that overall strategy affects the link between HRM and performance should be
HR practices, HR practices have a direct effect on more employee-centred and look explicitly at the ef-
organizational performance, and business strategy fect that HR practices have on employee wellbeing.
moderates the relationship between HR practices and They noted that a considerable amount of research
organizational performance. had been carried out focusing specifically on the pos-
It was suggested by Peccei (2004) that wellbeing had itive relationships between HR practices, employee
a key role in enhancing organizational performance. wellbeing and organizational performance (Orlitzky
and Frenkel, 2005; Wright et al, 2005; Vanhala and Bowen and Ostroff (2004) argued that the link be-
Tuomi, 2006). tween HRM and performance is likely to be greater
where what they describe as a ‘strong’ HR system is
in place. Core characteristics of their ‘strong’ sys-
The impact of rewards tem are high levels of distinctiveness, consistency
and consensus. Where these are present there will
on performance be an organizational climate that supports HR im-
Conceptually, rewards can improve individual or team plementation. But they suggested that it is not
performance by encouraging people to work smarter enough just to have good practices; they have to be
or harder – money can provide positive motivation in properly implemented. As Guest (2011: 6) com-
the right circumstances, not only because people need mented: ‘What this does is switch the focus to line
and want money but also because it serves as a highly management.’ Nishii et al (2008) argued that it is
tangible means of recognition. But the ability of finan- not just the presence of practices that is important
cial rewards to do this has been questioned by com- but ‘perceptions about the intentions behind the
mentators such as Herzberg (1966), Kohn (1993) and practices.’
Pink (2009). Badly designed and managed pay sys-
tems can demotivate rather than motivate people.
However, non-financial rewards, especially the recog-
nition of achievement and contribution, can provide Word s of w isd om
intrinsic motivation (see Chapter 24) that can lead to To make an impact HR practices must be
improved performance.
present, they must be effective and they
must be effectively implemented.
How HRM makes an impact Guest and Conway (2011: 1700)
Storey et al (2009: 4) observed that: ‘The premise is

that, in some shape or form, HR policies have an
effect on HR practices and these in turn influence Uncertainties about the link
staff attitudes and behaviours which will, in turn
again, impact on service offerings and customer between HRM and performance
perceptions of value.’ The assumption is that good As noted earlier, much research has demonstrated
HRM practices will enhance performance and add an association between HRM and performance.
value, ie the benefits to the organization will exceed But Guest et al (2000b) observed that it left uncer-
the cost of developing and operating them. tainties about cause and effect.
Wo rd s o f w isdom
Word s of w isd om
An optimistic version [of the relationship
HR practices seem to matter; logic says it is
between HRM and performance proposes
so; survey findings confirm it. Direct
that HRM has a positive association with
relationships between performance and
performance because workers respond
attention to HR practices are often fuzzy,
positively to it. An alternative, more
however, and vary according to the
pessimistic view is that HR practices result
population sampled and the measures used.
in intensification of work and it is this that
Ulrich (1997: 304)
leads to performance gains.
Guest and Bos-Nehles (2013: 79)
Paauwe (2009) remarked that although progress both internal and external, affect organizations that
has been made on the link between HRM and per- this direct linkage strains credibility.’
formance, significant methodological issues exist to A basic reason for ambiguity is multiple causa-
the understanding of this relationship. He argued tion, which exists when there is more than one pos-
that while it may be possible to observe HRM in- sible cause for an effect. HRM may have caused an
puts in the form of HR practices and to measure improvement in performance but there may be many
firm performance outputs, it may be difficult to other economic or business factors that did so, and
ascertain, through research, what happened in be- it could be difficult to unravel them. Another factor
tween – what the HRM outcomes were that con- is the possibility of reversed causality (a situation
verted the input of HR practices into firm where A might have caused B but B might well have
performance outputs. This is the so-called black caused A). As Purcell et al (2003: 2) expressed it:
box. Guest (2011: 11) concluded that: ‘After hun- ‘Although it is nice to believe that more HR prac-
dreds of research studies we are still in no position tices leads to higher economic return, it is just as
to assert with any confidence that good HRM has possible that it is successful firms that can afford
an impact on organization performance.’ He also more extensive (and expensive) HRM practices.’
asserted that the research is riddled with errors both
with respect to data on HRM and on outcomes. Contextual factors
Causation will additionally be affected by the or-
ganization’s context, ie the internal and external
Pa u s e for t houg ht environmental factors that influence what happens
within the organization.
How do you think people practices can
create value for an organization? The black box phenomenon
The black box phenomenon, as illustrated in
Figure 6.1, is the situation in which, while it may
be possible to observe HRM inputs in the form of
There are two issues that affect the determination
HR practices and to measure firm performance
of a link between HRM and firm performance:
outputs, it may be difficult to ascertain through re-
‘causal ambiguity’ and ‘contingency factors.’
search what happened in between – what the
HRM outcomes were that converted the input of
Causal ambiguity HR practices into performance outputs. Alvesson
The term causal ambiguity refers to the numerous, (2009: 56) suggested that: ‘Research does not pro-
subtle and often hidden interconnections between ceed beyond attempts to find an empirical associa-
the factors influencing cause and effect. Boselie et al tion between HR practices and organizational
(2005: 75) referred to the causal distance between performance. The phenomena are in a black box,
an HRM input and an output such as financial per- only input and output are registered and what is
formance: ‘Put simply, so many variables and events, happening remains clouded in the dark.’
F I G U R E 6.1 The black box phenomenon
Observable ? Measurable
HRM inputs HRM outcomes Firm performance

Explanations of how HRM makes Opinions on how people practices add value and
how HRM impacts on organizational performance
an impact are likely to be based on three propositions: (1) that
Guest (1997: 268) stated that: ‘The assumption is HR practices can make a direct impact on employee
that “appropriate” HRM practices tap the motiva- characteristics such as engagement, commitment,
tion and commitment of employees.’ His view on motivation and skill; (2) if employees have these
how expectancy theory might help to explain the characteristics it is probable that organizational
HR/performance link is given below. performance in terms of added value, productivity,
quality and the delivery of high levels of customer
service will improve; and (3) if such aspects of or-
ganizational performance improve, the financial re-
Source review sults achieved by the organization will improve.
This can be described as the HR value chain.
The propositions highlight the existence of an
The expectancy theory of motivation provides one
intermediate factor between HRM and financial
possible basis for developing a more coherent
performance. This factor consists of the HRM out-
rationale about the link between HRM practices and
comes in the shape of employee characteristics af-
performance. Although expectancy theory is
fected by HR practices. Therefore, HRM does not
concerned primarily with motivation, it is also a make a direct impact. A model of the impact of
theory about the link between motivation and HRM taking into account the considerations of re-
performance. Specifically, it proposes that high verse causation and contingency effects mentioned
performance at the individual level depends on high earlier is shown in Figure 6.2.
motivation plus possession of the necessary skills As explained by Guzzo and Noonan (1994) and
and abilities and an appropriate role and Rousseau (1995), HR practices communicate im-
understanding of that role. It is a short step to portant goals and desired employee behaviours
specify the HRM practices that encourage high from the organization to the employee. They can be
skills and abilities, for example careful selection and seen as ‘signals’ and are interpreted as such by indi-
high investment in training; high motivation, for vidual employees (Den Hartog et al, 2004). The sig-
example employee involvement and possibly nals of the HR system are, however, often not inter-
performance-related pay; and an appropriate role preted similarly or reacted to in the same way by
structure and role perception, for example job each individual due to differences in experience,
design and extensive communication and feedback. values or preferences. Wright and Nishii (2007) sug-
Guest (1997: 268) gested that it is not the HR practices as intended by
policy makers, but rather how employees e xperience
F I G U R E 6.2 Impact of HRM on organizational performance

Reversed causality
HRM HRM Business Financial

practices outcomes outcomes performance
• Resourcing • Engagement • Productivity • Profit
• Performance • Commitment • Quality • Sales
Business management • Motivation • Customer • Market share
HRM strategy
strategy • Learning and • Skill satisfaction • Market value
development
• Reward
management
• Employee relations
Contingency variables: Internal context – size, sector, technology, employees, culture external context – competition, economic, social
Source Based on Paauwe (2004)

the HR practices that will affect employee out- that: ‘Despite the lack of consensus regarding the
comes. This belief is reinforced by the AMO model HRM practices that are or should be included under
as described below. the umbrella term high-performance work practices
(HPWPs), there is a common thread across the
different proposed sets of practices: they address
How the AMO model explains the aspects of the AMO model. In other words,
HRM practices that combine as HPWPs can be
the impact of HRM viewed as ability-enhancing or skill- enhancing,
The AMO model (Boxall and Purcell, 2003) states motivation-enhancing and opportunity-enhancing
that performance depends on the individual’s abil- or empowerment-enhancing’ (ibid: 6). As illustrated
ity, motivation and opportunity. It provides valua- in Figure 6.3, the AMO model can provide a frame-
ble guidance on the HRM practices that should be work for performance enhancing practices.
included in a high-performance work system
(HPWS). A meta-analysis by Jiang et al (2012) es-
tablished that the three dimensions of HR practices
linked to the AMO formula – skills, motivation and
opportunity enhancement – could lead to improved
financial performance. As emphasized later by Word s of wisd om
Delery and Roumpi (2017: 3): ‘The systems ap-
proach that emerged suggests that it is the appropri- Arguably, the most sustainable HR systems
ate combination of different HRM practices rather serve investors well while also serving
than individual practices that can ensure the en- employees and their communities well.
hancement of all three components of the AMO
Boxall (2013: 57)
model and ultimately lead to high employee or
workforce performance.’ They also commented
F I G U R E 6.3 The AMO model as a framework for performance enhancing HRM practices
Ability
• Sophisticated recruitment
and selection procedures
• Extensive learning and
development processes
• Talent management
programmes
Motivation
Individual and
• Performance management
HRM initiatives organizational
• Performance pay
performance
• Leadership development
Opportunity
• Job design
• Work design
• Career management
programmes
People feel that their job is worth doing, and

The contribution of HR ●●
there is a strong fit between the job and their
capabilities.
Research by Khilji and Wang (2006: 1174) estab-
lished that: ‘It is the ability of HRM to motivate ●● There is a focus on promoting positive
employees that proves to be a necessary condition attitudes that result in an engaged,
for improved organizational performance.’ HR committed and motivated workforce.
makes an important contribution to enhancing ●● Performance management processes are
organizational performance by developing and
aligned to business goals to ensure that
implementing HR strategies that focus on high per- people are engaged in achieving agreed
formance and by ensuring that the HR system deliv- objectives and standards.
ers the human capital the organization needs. This ●● Capacities of people are developed through
can be done by fostering a high-performance cul- learning at all levels to support performance
ture as described below. improvement and they are provided with
opportunities to make full use of their skills
and abilities.
●● A pool of talent ensures a continuous supply
Pa us e fo r t houg ht of high performers in key roles.
What do you think is the main contribution A high-performance culture can be developed
that the AMO model makes to the practice through a high-performance work system.
of people management?
The development of If you were an HR director and your chief
high-performance working executive asked what you and your function

could do to improve organizational
Organizations achieve sustained high performance performance, what would you reply?
through the systems of work they adopt, but these
systems are managed and operated by people.
Ultimately, therefore, high-performance working is
about improving performance through people. This
can be done by the development and implementa- High-performance work
tion of a high-performance culture.
High-performance cultures are ones in which systems
the achievement of high levels of performance is a
way of life. The characteristics of such cultures are: High-performance work systems (HPWS) are bun-
dles of HR practices that facilitate employee in-
●● Management defines what it requires in the volvement, skill enhancement and motivation. An
shape of performance improvements, sets HPWS was described by Becker and Huselid (1998:
goals for success and monitors performance 55) as: ‘An internally consistent and coherent HRM
to ensure that the goals are achieved. system that is focused on solving operational prob-
●● Alternative work practices are adopted such lems and implementing the firm’s competitive strat-
as job redesign, autonomous work teams, egy.’ The approach used in an HPWS is sometimes
improvement groups, team briefing and referred to as ‘high-performance working.’
flexible working. High-performance work systems incorporate
●● People know what is expected of them – bundles of complementary practices that, as an inte-
they understand their goals and grated whole, make a much more powerful impact
accountabilities. on performance than if they were dealt with as
separate entities. Appelbaum et al (2000) stated that ●● Training programmes to enhance employee
they facilitate employee involvement, skill enhance- skills – investment in increasing employee
ment and motivation. Research conducted by Sung skills, knowledge and ability.
and Ashton (2005), Combs et al (2006) and Ericksen ●● Information sharing and worker involvement
(2007) indicated that an HPWS can significantly mechanisms – to understand the available
improve performance. alternatives and make correct decisions.
●● Reward and promotion opportunities that
provide motivation – to encourage skilled
Features of an HPWS employees to engage in effective discretionary
There is no generally accepted definition of an decision making in a variety of environmental
HPWS and there is no standard list of the features contingencies.
or components of such a system. In spite of this
Many descriptions of high-performance systems in-
problem of definition, an attempt to describe the
clude lists of desirable features and therefore em-
basic components of an HPWS was made by Shih
body the notion of ‘best practice’. However, Gephart
et al (2005) as follows:
(1995) noted that research has not clearly identified
●● Job infrastructure – workplace arrangements any single set of high-performance practices. Becker
that equip workers with the proper abilities to et al (1997) pointed out that high-performance
do their jobs, provide them with the means to work systems were idiosyncratic and had to fit the
do their jobs, and give them the motivation organization’s individual circumstances. The lists
to do their jobs. These practices must be that have been compiled vary considerably, as is
combined to produce their proper effects. shown in the selection set out in Table 6.2.
TA B L E 6.2 Components of an HPWS
US Department of Appelbaum Sung and Ashton Thompson and Heron

Labor (1993) et al (2000) (2005) (2005)
●● Careful and extensive ●● Work is organized to ●● High-involvement ●● Information sharing.

systems for permit front-line workers work practices – ●● Sophisticated
recruitment, selection to participate in decisions eg self-directed recruitment.
and training. that alter organizational teams and sharing/ ●● Formal induction
●● Formal systems for routines. access to company programme.
sharing information ●● Workers require more information. ●● Five or more days of
with employees. skills to do their jobs ●● Human resource off-the-job training in the
●● Clear job design. successfully, and many of practices – eg last year.
●● High-level participation these skills are firm- sophisticated ●● Semi or totally
processes. specific. recruitment autonomous work
●● Monitoring of ●● Workers experience processes, teams; continuous
attitudes. greater autonomy over performance improvement teams;
●● Performance their job tasks and appraisals, work problem-solving groups.
appraisals. methods of work. redesign and ●● Interpersonal skill
●● Properly functioning ●● Incentive pay motivates mentoring. development.
grievance procedures. workers to extend extra ●● Reward and ●● Performance feedback.
●● Promotion and effort on developing skills. commitment ●● Involvement – works
compensation ●● Employment security practices – eg council, suggestion
schemes that provide provides front-line various financial scheme, opinion survey.
for the recognition and workers with a long-term rewards, family- ●● Team-based rewards,
reward of high- stake in the company and friendly policies, employee share
performing a reason to invest in its job rotation and ownership scheme,
employees. future. flexi hours. profit-sharing scheme.
However, Godard (2004) suggested that such lists technology and total quality management perform
were no more than bundles of long-accepted good better when they integrate these costly changes in pro-
HRM practices. This may be so and in any case these duction strategy with a more empowering style of
practices will vary according to circumstances. But an HRM and extensive employee training.
essential and defining ingredient in an HPWS is the But the CIPD (2017: 24) observed that ‘high-
notion of ‘bundling’ HR practices to make them mu- performance work systems remain more topical
tually supportive and therefore more effective. A lon- than typical in the UK.’ A survey by UKCES (2014)
gitudinal study by De Menezes et al (2010) found that found that only 12 per cent of organizations have
British firms investing in Japanese-style lean manufac- adopted all or most of the HR practices that com-
turing systems such as integrated computer-based prise a HPWS.
C A S E S T U DY
Performance strategy at Johnson and Johnson
The strategy was to develop an integrated performance takes time and effort and a dedication to developing
and development process into the organization. To do people. It was also understood that from a business
this it was appreciated that an enhanced process standpoint it was critical to build and develop the talent
required a cultural shift within the organization. It was pipeline of the organization to meet aggressive business
accepted that performance management should be a goals and to operate profitably in a dynamically changing
continuous process and was not a one-time event; it marketplace.
Key learning points
The impact of HRM 2 if employees have these characteristics it is

probable that organizational performance in terms
Much research has been carried out showing that of productivity, quality and the delivery of high
good HRM practice and firm performance are levels of customer service will improve; and
correlated; notable examples in the UK are Guest et al
(2000a), Patterson et al (1997), Purcell et al (2003), 3 if such aspects of organizational performance
Thompson (2002) and West et al (2002). improve, the financial results achieved by the
organization will improve.
How HRM makes an impact

How the AMO model explains the impact
An explanation of the impact of HRM is based on three
of HRM
propositions:
The AMO model states that performance depends on the
1 that HR practices can make a direct impact on
individual’s ability, motivation and opportunity. It provides
employee characteristics such as engagement,
valuable guidance on the HRM practices that should be
commitment, motivation and skill;
included in a high-performance work system (HPWS).
The contribution of HR High-performance work systems

HR can contribute to enhancing organizational HPWS are bundles of HR practices that facilitate
performance by providing insight on the performance employee involvement, skill enhancement and
issues affecting the organization and its employees motivation.
including the development of a high-performance work
system.
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76
07
International HRM
practices should be adopted by subsidiaries –
Introduction how far they should converge or diverge.
International human resource management (inter- ●● Choices have to be made on the extent to
national HRM) is the process by which multi which HR decisions on matters such as
national companies (MNCs) manage people across appointments, promotions, redeployments
international boundaries. It involves the worldwide and talent management should be centralized
management of people, not just the management of or decentralized.
expatriates. ●● The management of expatriates involves
It was stated by Brewster et al (2005: 949) that: different approaches to selection, training,
‘A critical challenge for organizations from both the career management remuneration and special
public and private sectors in the 21st century is concerns about the adjustment of expatriates
the need to operate across national boundaries.’ As to working in foreign countries and to the
Sparrow et al (2011: 50) commented: ‘The ultimate problems of repatriation.
aim of multinational companies (MNCs) is to build ●● HR professionals have to exercise a broader
a core competence of being able to transfer capabil- range of expertise covering knowledge about
ity across multiple countries, which involves moni- foreign countries, their cultures and their
toring the implementation of relevant policies and institutions.
practices, ensuring an adequate corporate culture,
●● Firms become more involved in the personal
establishing the necessary networks, and ensuring
lives of their expatriate employees.
all parts of the organization are sensitive to the
needs of international staff.’ International HRM is covered in this chapter under
The fundamental differences between interna- the following headings: the international scene, inter-
tional and domestic HRM are that in an international national strategy, contextual factors, convergence
organization: and divergence, the practice of international HRM,
and the employment of expatriates.
●● HRM is more complex because it involves
operating across national boundaries rather
than within only one boundary and therefore
takes place in different countries, each with
The international scene
its own culture and institutions.
Internationalization is the process of international
●● It is necessary to manage a wider mix of economic integration in worldwide markets. Isidor
people at headquarters and in foreign et al (2011: 2167) observed that: ‘Internationali
subsidiaries that employ local staff (home zation offers firms manifold advantages such as re-
country nationals) and expatriates from alizing economies of scale and scope, learning from
either the parent company (parent company international markets, exploiting interrelations be-
nationals) or other countries (third country tween business segments and geographic areas,
nationals). achieving risk diversification, and cost reduction.’
●● Choices have to be made on the extent to Globalization is the development of single inter-
which parent company HRM policies and national markets for goods or services accompanied
Chapter 7 | International HRM 77
by an accelerated growth in world trade. Any com- ●● International – exploiting parent company
pany that has economic interests or activities knowledge and capabilities through
extending across a number of international bound- worldwide diffusion and adaptation.
aries is a global company. Globalization raises a ●● Transnational – creating a new organizational
number of issues not present when the activities of model by simultaneously developing global
the firm are confined to one country. competitiveness, multinational flexibility and
worldwide learning capacity.
They suggested that the transnational organization
Source review ‘is a feasible and necessary response to the changes
in the international environment’ (ibid: 19) and
Globalization requires organizations to move claimed that adopting the transnational model al-
people, ideas, products and information around the lowed companies such as Unilever to deal effec-
world to meet local needs. They must add new and
tively with these demands. They mentioned that
Unilever had developed a strongly held philosophy
important ingredients to the mix when making
of management built around independent operating
strategy: volatile political situations, contentious
companies whose managers were given maximum
global trade issues, fluctuating exchange rates, and
responsibility and freedom. The clearly understood
unfamiliar cultures. They must be more literate in
role of the Unilever board is to approve plans and
the ways of international customers, commerce, budgets, control capital expenditures and appoint
and competition than ever before. In short, and develop executives. At an operating level, local
globalization requires that organizations increase managers have great latitude to develop and imple-
their ability to learn and collaborate and to manage ment strategies that reflected the opportunities and
diversity, complexity, and ambiguity. constraints of their particular environments. The
Ulrich (1998: 126) watchwords that became corporate dogma were
‘local initiative and decentralized control’.
In contrast, Procter & Gamble, although re-
garded by Bartlett and Ghoshal as a transnational
organization, linked back its international opera-
Brewster et al (2005) identified five distinct, but tions to the parent company in two important re-
linked, organizational drivers of this process: effi- spects: not only did foreign subsidiaries depend on
ciency orientation, global service provision, informa- the parent for advanced technology and marketing
tion exchange, core business processes and localization expertise, but they were also structured to operate
of decision-making. as replicas of the US company, immersed in the
same principles and guided by the same policies.
International HRM
strategies Contextual factors
International HRM has to function strategically in All HR activities are affected by the context in which
order to support the achievement of international they operate, but the variety of contexts in which
business strategies. International HRM strategies international HRM functions are particularly sig-
will be affected by the different types of business nificant. They strongly influence decisions on the
strategies that MNCs can adopt, as identified by dissemination of parent company policies and prac-
Bartlett and Ghoshal (2002: 18–19): tices (convergence or divergence) and on the em-
ployment of expatriates. As Sparrow et al (1994:
●● Multinational – building strong local presence 269) asserted: ‘For global firms to be successful in
through sensitivity and responsiveness to local managing their worldwide workforces, they need to
needs. have an understanding and sensitivity to several
●● Global – building cost advantages through local environments. They must utilize local informa-
controlled global-scale operations. tion and adapt it to a broader set of human resource
policies that reflect the firm itself.’ Cultural differ- The convergence and divergence of HRM poli-
ences in local environments are often treated as the cies are associated respectively with centralization
most significant factor to be taken into account in and decentralization – but there are differences.
managing globally, but differences in local institu- Centralization involves concentrating the authority
tions and practices such as collective bargaining and for decision making in the hands of managers in an
workers’ rights can also be important. organization’s headquarters and decentralization
means devolving decisions more widely though op-
erating units, branches and lower-level managers.
Convergence and divergence Convergence and divergence are about the dissemi-
nation or absence of dissemination of specific poli-
In international HRM it is necessary to judge the cies and practices, although they may be linked to
extent to which, on the one hand, an organization processes of centralization or decentralization.
should implement standardized policies and prac- Generally, research has indicated that while
tices across the world (convergence) or, on the other global HR policies in such areas as talent manage-
hand, that it should allow overseas subsidiaries to ment, performance management and reward may
adopt their own practices or at least modify the be developed, communicated and supported by cen-
policies and practices of the parent company to suit tres of excellence, often through global networking,
local requirements (divergence). As Briscoe et al a fair degree of freedom has frequently been al-
(2012: 48) commented: ‘International HRM strat- lowed to local management to adopt their own
egy has to deal with the issue of whether to practices in accordance with the local context – as
standardize HRM policies and practices from head- long as in principle these are consistent with global
quarters, or to localize them to meet local condi- policies. Paik and Ando (2011: 3006) suggested on
tions, or do both (eg combination of core policies the basis of their research that: ‘To effectively inte-
established by HQ with localized practices to ac- grate and coordinate activities of foreign affiliates,
commodate local culture and practices).’ MNCs need to maintain a higher level of control at
Festing and Eidems (2011: 163) reported that: ‘In headquarters. MNC headquarters want foreign af-
the course of increasing globalization, more and filiates to act as if they were the headquarters’
more MNEs are being forced to compete globally agents. In this situation, MNCs are inclined to staff
and simultaneously adapt their business strategies to foreign affiliates with managers who understand
changing local demands.’ They also suggested that and appreciate headquarters’ directives.’ However,
‘firms tend not to standardize a whole HRM system they also noted that this policy may evolve to rely
but rather focus on single practices’ (ibid: 165). more on host country staff as headquarters learns
As Brewster et al (2005: 951) pointed out: how better to integrate activities of foreign affiliates
‘Where global integration and coordination are im- to achieve global efficiency. Cumulatively, head-
portant, subsidiaries need to be globally integrated quarters will learn more about managing in the host
with other parts of the organization and/or strategi- country and local practices and will build relation-
cally coordinated by the parent. In contrast, where ships with local suppliers and recruit more local
local responsiveness is important, subsidiaries will employees.
have far greater autonomy and there is less need for It was argued by Reilly and Williams (2012: 30)
integration.’ that: ‘What HR might need to do is more carefully
But the choice is not between total convergence decide what is common and global, versus what is
and total divergence. Frenkel and Peetz (1998: 537) different and local, against some well-thought-
described a globalization-induced trend towards in- through criteria. This might mean, for instance, a
creasing convergence, which finds a counterbalance common HR information system, but local resourc-
in national culture, the role of the nation state, and ing, or one method of executive reward, yet multi-
national industrialization strategies. Brewster and ple ways of aligning local pay with the market.’
Suutari (2005) remarked that strategic alignment They concluded that: ‘It is the essential processes,
(convergence) and localization (divergence) can be populations and tools that are the ones to control
regarded as opposite extremes on a continuum. from the centre, not a crude imposition of one size
fits all across the piece’ (ibid: 31).
may also be concerned with encouraging the actions

required to promote multicultural working through-
Pa us e for t houg ht out the organization.
What arguments would you use in favour or
against convergence? Workforce planning
International resourcing is based on workforce plan-
ning, which assesses how many people are needed
throughout the MNC (demand forecasting), sets out
the sources of people available (supply forecasting)
The practice of international and, in the light of these forecasts, prepares action
HRM plans for recruitment, selection or assignment.
Workforce planning may be carried out by the
parent company HR function, although it is likely to
The practice of international HRM is concerned
focus mainly on managers and professional and
with the HR activities conducted by a multinational
technical staff throughout the global organization,
company (MNC) in managing people throughout
and is linked to talent planning and talent manage-
the organization. The basic HR practices carried
ment. Workforce planning for junior staff and oper-
out in subsidiaries for their own nationals – recruit-
atives is more likely to be carried out by subsidiaries,
ment and selection, training, the payment of junior
although the centre may require information on
staff and operatives, day-to-day employee relations
their plans.
and HR administration – are similar to those de-
In an international organization, estimates of fu-
scribed in later chapters of this book. However, they
ture people needs can be prepared by each subsidi-
will be affected by local employment legislation, in-
ary for their own workforce planning purposes. The
dustrial relations practices, customs and cultures
basis of such forecasts is the annual budget and
and may be influenced by policy guidelines from the
longer-term business plan, translated into activity
centre. One of the roles of an international HR
levels. These are in turn converted to specific re-
function will be to be aware of local practices and
quirements expressed in terms of numbers of people
the local contexts that influence them in order to be
in different occupations and levels and with differ-
in a position to provide advice and guidance, espe-
ent skills. Assessments can also be made by subsidi-
cially where they affect the employment of expatri-
aries on how anticipated needs will be met. This
ates. HQs will probably not get involved in detailed
may be from inside their organization or in their
employee relations but they may issue policy guide-
own labour market (national or international) but
lines on union recognition and negotiations and
it could also include information on how many po-
monitor local decisions to ensure that the guidelines
sitions will need to be filled by expatriates from the
are followed, or that there is good reason to ignore
parent company or from other countries (third
them because of local industrial relations practices.
country nationals). The role of headquarters may be
There are, however, a number of HRM areas in
to review the plans of subsidiaries to make sure that
which the parent company may play a major part, as
they are realistic and to consolidate information
discussed below. Workforce planning for more sen-
on the requirements for expatriates so as to plan for
ior staff may be centralized, as may be resourcing
their availability.
decisions that affect the deployment of parent com-
pany or third country nationals. Talent management
processes and the remuneration of senior staff and Resourcing
expatriates may also be centralized. While perfor-
mance management systems will be administered by Resourcing in an international organization means
subsidiaries, the centre may want to ensure that the making policy decisions on how the staffing re-
processes involved conform to what is regarded as quirements of headquarters and the foreign subsidi-
good practice within the organization and provide aries can be met, especially for managers, and pro-
the information required for talent management and fessional and technical staff. Sparrow et al (2011:
staffing decisions. An international HR function 42) emphasized that: ‘MNC’s increasingly demand
highly skilled, highly flexible, mobile employees operations in the foreign subsidiary. Use is
who can deliver the required results, sometimes in made of communication technologies such as
difficult circumstances.’ video conferencing, although the home-based
Research conducted by Paik and Ando (2011: employee may have to visit the host country
3006) led to their conclusion that: ‘To effectively in- frequently.
tegrate and coordinate activities of foreign affiliates,
These alternatives are becoming increasingly popu-
MNCs need to maintain a higher level of control at
lar, especially in companies finding it difficult to ob-
headquarters. MNC headquarters want foreign af-
tain satisfactory expatriates for more conventional
filiates to act as if they were the headquarters’ agents.
assignments. But they can be difficult to manage
In this situation, MNCs are inclined to staff foreign
and stressful for those involved.
affiliates with managers who understand and appre-
ciate headquarters’ directives.’ However, they also
noted that this policy may evolve to rely more on
host country staff as headquarters learns how better
International talent management
to integrate activities of foreign affiliates to achieve Global talent management is defined below:
global efficiency. Cumulatively, headquarters will
learn more about managing in the host country and
local practices and will build relationships with local
suppliers and recruit more local employees. Source review
Additionally, or alternatively, a decision may be
made to employ third country nationals (TCNs) in The systematic identification of key positions which
certain posts. TCNs might be easier to obtain than differentially contribute to the organization’s
home country nationals and could cost less. But, as sustainable competitive advantage on a global scale,
noted by Dowling et al (2008), they might not want the development of a talent pool of high-performing
to return to their own countries after assignment, incumbents to fill these roles which reflects the
the host government may resent the hiring of TCNs, global scope of the multinational enterprise, the
and national animosities (eg India/Pakistan) would development of a differentiated human resource
have to be considered. architecture to facilitate filling these positions with
But there are other ways of meeting staff require- the best available incumbent and to ensure their
ments in foreign subsidiaries. Dowling et al (2008) continued commitment to the organization.
identified the following approaches: Mellahi and Collings (2010: 143–44)
●● Short-term assignments that may be for
troubleshooting, project management or a
stopgap measure until a more permanent
Mellahi and Collings suggested that enabling high-
arrangement can be made.
performing home country nationals (HCNs) to be-
●● Extended assignments that may last up to come senior managers improves the performance of
one year and involve similar activities as an international business by: (1) being better able to
those for short-term assignments. respond effectively to the demands of local stake
●● Commuter assignments that include special holders; (2) legitimizing the firm in the host
arrangements where the person commutes on country; (3) providing incentives for retaining and

a weekly or bi-weekly basis to the place of motivating talents.
work in another country.
●● Rotational assignments in which employees
commute from the home country for a short Global approaches to talent
set period followed by a break in the home
country. management
●● Virtual assignments where the employee does As described by Ready and Conger (2007: 71),
not move to a host location but manages HSBC has created a system of talent pools that track
from home some aspect or aspects of the and manage the careers of high potentials within the
company. After those employees have been identi- Approaches to international

fied, they are assigned to regional or business unit
talent pools, which are managed by local human performance management
resources and business unit leaders. They are then While the arguments in favour of standardization
selected initially for new assignments within their are powerful, and a convergent approach is often
region or business and may later be given positions adopted, the degree of convergence or divergence in
that cross boundaries. Managers of the pools single international performance management systems
out people to recommend for the group talent pool, can vary in a number of ways:
which represents the most senior cadre of general
managers and is administered centrally. Ready and Total convergence (standardization) – using the
Conger reported (ibid: 73) that at Procter & Gamble, parent company’s scheme throughout the
hiring and promotions are the responsibility of local international organization.
managers, but high-potential prospects are identified Total divergence (localization) – foreign
globally. People and positions are tracked in a subsidiaries use their own systems.
technology-based talent management system that

Partial convergence – foreign subsidiaries use a
can accommodate all the company’s 135,000 em-
version of the parent company’s system,
ployees but is primarily used to track 13,000 middle-
modified to take account of local factors
and upper-management employees. Procter & Gamble
such as culture and work systems.
also conducts a global talent review – a process by
Alternatively, they ensure that their own
which every country, function and business is as-
systems conform to policy guidelines issued
sessed for its capacity to find, develop, deploy, en-
by headquarters, possibly including certain
gage and retain skilled people.
requirements such as the design of the forms
or methods of rating.
International performance Dual system – using the headquarters’ scheme
for expatriates (parent company nationals),
management and local, possibly partly converged schemes,
As described in Chapter 38, performance manage- for home country and third country nationals.
ment systems operating in subsidiaries covering The effectiveness of international performance manage
home and third country nationals are the area of ment is affected overall by the sheer complexity of
HRM where there is likely to be the most conver- international business and the distance separating
gence. This means that a system based on the one headquarters and subsidiaries. The difficulties in-
used in the parent company is applied completely or clude influencing and controlling line managers;
partly worldwide. As Briscoe et al (2012: 347) ob- cultural differences; the problem of achieving
served: ‘There are some valid reasons which suggest consistent rating results; and variable levels of ma-
that a standardized approach may be warranted for turity among subsidiaries, which affect relative
the sake of global integration, culture cohesiveness, performance.
fairness, mobility of global employees, and as a con-
trol mechanism.’
Standard Chartered Bank
The international performance management pro-
cess used by Standard Chartered Bank is illustrated
in Figure 7.1.
Serono SA
Performance management systems are
Serono SA, the Swiss biotechnology company with
difficult enough to work well in a parent offices around the world, needed a performance
company so what can be done to help them management, pay-for-performance and compensa-
tion system that was not only consistent but was
function effectively in an overseas subsidiary? also flexible enough to adjust to the laws governing
employment in each of its far-flung operations.
F I G U R E 7.1 International performance management system – Standard Chartered Bank
The process
• Global for all employees Objective setting (January)
• In transition to accelerate a high-
performing organization • Financial/business objectives
• Two core management objectives
• Values objective for all
Performance coaching
(throughout the year)
• Regular open dialogue
• Integrates performance,
learning and
development, reward
and individual
engagement
• Addresses performance
issues
• Under-performance not
tolerated
Final review (Nov/Dec)

• 1–5 financial/business
rating scale Interim review (July)
• A–D values rating scale • Formal step-back
• Effective differentiation • ‘Tracking’ rather than
• Additional feedback form ‘rating’
• Cascaded ‘level down’
rating reviews
Each Serono operating unit has its own objectives, of countries. It is not just the management of expa-
which are aligned to overarching corporate goals. triate remuneration.
Units in each country tailor their performance man- Traditionally, discussions of international re-
agement and reward systems for compliance with ward strategies and practices have tended to focus
local laws, customs and budgets. An information on an elite of expatriate workers, sourced from
technology system was developed to automate per- headquarter locations and rewarded in isolation
formance management and compensation for from local country staff. Today, a diverse and com-
Serono’s global operations. The analytical tools built plex pattern is emerging, requiring a more strategic
into this system enable HR at the centre to gain an approach than simply copying the practices of other
overview of how the organization as a whole is multinationals.
evaluating its employees. For example, data on assess- Stephen Perkins (2006) explained that achieving
ments presented as bell curves (graphs showing distri- an appropriate balance between global and local re-
butions in the form of a curve shaped like a bell), quirements in international staffing and rewards has
reveal the extent to which appraisal scores are out of therefore become a much more strategic and chal-
line with what is regarded as a normal distribution. lenging issue for HR and reward managers. Major
organizations such as BP and the World Bank have
overhauled their policies in recent years to achieve
Reward management their key strategic reward goals of mobility and af-
fordability in this more demanding global context.
International reward management involves the
White (2005: 23) argued that: ‘Global consist-
management of all aspects of rewards in organiza-
ency in management’s messages to employees, as
tions operating worldwide or at least in a number
well as in the reward programs that reinforce these multinational finance firm established that different
messages is critical in building a cohesive entity that pay rates were adopted to reflect differences in the
will create shareholder value.’ His research in a local labour market.
CASE STUDIES
US-owned MNC ‘One GM, one global team’ and ‘Global perspective: local
engagement’.
Over the years this large US-owned international company But different locations were using different level pay
operating in Europe changed the degree of centralization or structures and job evaluation schemes. A ‘leading change’
decentralization frequently. Until the 1980s, corporate HQ is- programme involved compensation chiefs around the
sued a number of global policies that national managers were world. Under the banner of the phrase, ‘Global compensa-
expected to implement. Some room was given for the policies tion takes the approach that what can be should be’ the
to be adapted to fit local circumstances but management in global team:
subsidiaries had to justify these changes to headquarters.
During the late 1980s, the firm moved away from this ●● analysed the various strategies, structures and
highly centralized approach, allowing more scope for sub- practices in place around the world;
sidiaries to develop policies that suited their own situation. ●● used corporate governance to decide what needed to
For example, job evaluation systems could be developed be global, regional or local;
independently of the US system. The decentralizing ten-
dency was reversed in the early 1990s, and there has fol- ●● identified ‘best practices’ in compensation to establish
lowed a period during which strong coordination of HR a common philosophy, tools and structure for the
policies between countries and central control has been salaried workforce;
re-established. ●● engaged key stakeholders in the process;
●● provided tools, support and education;
General Motors (GM)
●● created with the help of Mercer Consultants more than
GM moves people around the globe frequently because its
200 benchmarks in 30 job functions and then slotted
products are designed and built on global platforms. The
them into global salary grades.
international philosophy of GM is expressed in the mantras
Multicultural working Role of the international HR

A fundamental feature of international operations function
is that multinational and therefore multicultural
An international HR function is responsible for de-
teams have to work together in foreign subsidiaries.
veloping and operating a transnational HR system,
Haas and Nüesch (2012) conducted research which
which was defined by Festing and Eidems (2011:
showed that on the one hand multinational teams
162) as ‘the sum of HRM policies and practices that
may have access to a greater variety of task-relevant
a multinational enterprise uses to attract, develop
experience. On the other hand, national diversity
and maintain its human resources including globally
may complicate team collaboration and increase
standardized and locally adapted structures and pro-
team conflict. Evidence was found that multina-
cesses’. Briscoe et al (2012: 413) indicated that the
tional teams perform worse than teams with less
role of an international HR department should be to:
national diversity. It is therefore necessary for inter-
national organizations to develop ways of improv- ●● contribute as an integral partner in
ing multicultural working. formulating the global strategy for the firm;
●● develop processes and concepts for top ●● identify the key skills required in the global
management as they develop the global organization – both line and HR
strategy; management;
●● help top management to understand the ●● share the responsibility for HRM with line
people implications of globalization; managers.
C A S E S T U DY local nationals. A generally integrated approach to HR is

adopted, although the extent to which HR policies are tai-
lored to local circumstances varies. This is affected by the
IBM need to conform to different legal requirements in each
company, which particularly affects employee relations
IBM has over 300,000 employees in more than 160 countries.
policies. However, total reward and performance manage-
It has evolved in recent years from a predominately IT
ment policies and practices are common across the world.
manufacturing and sales company to become a business
The company claims that it acts on its values, for example
services company.
equal opportunities, even when they may prove controver-
The company is structured into three regions and de-
sial locally. Levels of international mobility are high, espe-
scribes itself as a globally integrated company. Strategy is
cially for staff working in HR, finance and IT.
global but the human front end of HR is local, staffed with
2 Assignment – performance management, pay

Managing expatriates and benefits, family support and preparation
for repatriation or reassignment.
An expatriate was defined by Lee and Donohue
(2012: 1198) as ‘any individual who relocates from 3 Post-assignment – retention by reintegrating
his/her home base to an international location for returning international assignees into
business or work purposes and sets up temporary organizational career systems.
residence in the host country.’
The management of expatriates is an important
factor determining the degree of success achieved in
an international business. Expatriates are expensive;
they can cost three or four times as much as the em- Pau se for th ou gh t
ployment of the same individual at home. They can What do you think are the most important
be difficult to manage because of the problems as-
sociated with adapting to and working in unfamiliar things to do when assigning someone to
environments, concerns about their development work in an overseas subsidiary?
and careers, difficulties encountered when they re-
enter their parent company after an overseas assign-
ment, and how they should be remunerated. The
process of managing expatriates has been summa-
rized by Sparrow et al (2004: 145) as a global as-
signment cycle, the three phases of which are:
International HRM policies
1 Pre-departure – planning the assignment, The difficulties involved in managing expatriates
selecting the individual, administering the mean that policies need to be developed in each of
relocation programme and conducting the areas described below and for their remunera-
preparatory training and development. tion, as covered in Chapter 42.
Resourcing policies ●● cope in the long term with a large variety of

foreign contexts;
The challenge is that of resourcing international op- ●● manage local operations and personnel
erations with people of the right calibre. As Perkins abroad effectively;
(2006) observed, it is necessary for businesses to re-
main competitive with their employment offering in ●● gain acceptance as a representative of one’s
the marketplace, to attract and retain high-quality company abroad;
staff with world-wide capabilities. ●● obtain and interpret information about
Policies are required on the employment of local foreign national contexts (institutions,
nationals and the use of expatriates for long periods legislations, practices, market specifics etc);
or shorter assignments. The advantages of employ- ●● inform and communicate effectively with a
ing local nationals are that they: foreign environment about the home
●● are familiar with local markets, the local company’s policies;
communities, the cultural setting and the ●● take into account the foreign environment
local economy; when negotiating contracts and partnerships;
●● speak the local language and are culturally ●● identify and accept adjustments to basic
assimilated; product specifications in order to meet the
●● can take a long-term view and contribute for needs of the foreign market;
a long period (as distinct from expatriates ●● develop elements of a common framework
who are likely to take a short-term for company strategies, policies and
perspective); operations;
●● do not take the patronizing (neo-colonial) ●● accept that the practices that will operate
attitude, which expatriates sometimes adopt. best in an overseas environment will not
necessarily be the same as the company’s
Expatriates may be required to provide the experi- ‘home’ practices.
ence and expertise that local nationals lack, at least
for the time being. But there is much to be said for At interviews for candidates from outside the or-
a long-term resourcing policy which states that the ganization, and when talking to internal staff about
aim is to fill all or the great majority of posts with the possibility of an overseas assignment, it is advis-
local people. Parent companies who staff their over- able to have a policy of providing a realistic preview
seas subsidiaries with local nationals always have of the job. The preview should provide information
the scope to ‘parachute in’ specialist staff to deal on the overseas operation, any special features of
with particular issues such as the start-up of a new the work, what will need to be done to adjust to
product or service. local conditions, career progression overseas, re-
entry policy on completion of the assignment, pay,
and special benefits such as home leave and chil-
Recruitment and selection policies dren’s education.
The preparation policy for overseas assignments
Policies for recruitment and selection should deal should include the provision of cultural familiariza-
with specifying requirements, providing realistic tion for the country(ies) in which the expatriate will
previews and preparation for overseas assignments. work (sometimes called ‘acculturization’), the pre-
Role specifications should take note of the be- ferred approach to leading and working in interna-
haviours required for those who work internation- tional teams, and the business and HR policies
ally. Leblanc (2001) suggested that they should be which will apply.
able to:
●● recognize the diversity of overseas countries;
●● accept differences between countries as a fact
Training policy
and adjust to these differences effectively; Tarique and Caligiri (1995) propose that the fol-
●● tolerate and adjust to local conditions; lowing steps should be taken to design a training
programme for expatriates:
1 Identify the type of global assignment, eg Where a number of expatriates are employed it is
technical, functional, tactical, developmental customary for someone at headquarters to have the
or strategic/executive. responsibility of looking after them.
2 Conduct a cross-cultural training needs
analysis covering organizational analysis and
requirements, assignment analysis of key Re-entry policies
tasks and individual analysis of skills.
Re-entry policies should be designed to minimize
3 Establish training goals and measures – the problems that can arise when expatriates return
cognitive (eg understanding the role of to their parent company after an overseas posting.
cultural values and norms) and affective They want to be assured that they will be given po-
(modifying perception about culture and sitions appropriate to their qualifications, and they
increasing confidence in dealing with will be concerned about their careers, suspecting
individual behaviours to form adaptive that their overseas experience will not be taken into
behaviours such as interpersonal skills). account. Policies should allow time for expatriates
4 Develop the programme – the content to adjust. The provision of mentors or counsellors is
should cover both general and specific desirable.
cultural orientation; a variety of methods
should be used.
5 Evaluate training given. Global mobility policies
Global mobility policies for expatriates need to be
Career management policy specified and communicated to those concerned.
The subjects that should be covered are:
Special attention has to be paid to managing the
careers of expatriates either as part of their experi- ●● pay;
ence overseas or on return permanently or for a ●● allowances;
period to their home country. ●● hardship and danger pay;
●● mobility incentives;
Assimilation and review policies ●● housing and payment for utilities;
Assimilation policies will provide for the adapta- ●● education of children;
tion of expatriates to overseas posts and for their ●● transportation;
progress in them to be monitored and reviewed. ●● home leave;
This may take the form of conventional perfor-
●● spouse and family support;
mance management processes but additional infor-
mation may be provided on potential and the abil- ●● relocation arrangements;
ity of individuals to cope with overseas conditions. ●● repatriation arrangements.
Key learning points
International HRM Internationalization and globalization

International HRM is concerned with human resource Internationalization is the process of international
management policies and practices in multinational economic integration in worldwide markets.
enterprises. It has to function strategically in order to Globalization is the development of single international
support the achievement of international business markets for goods or services accompanied by an
strategies. accelerated growth in world trade. Any company that
has economic interests or activities extending across a set out the sources of people available (supply
number of international boundaries is a global company. forecasting) and, in the light of these forecasts, prepare
action plans for recruitment, selection or assignment.
Contextual factors affecting
international HRM Resourcing
All HR activities are affected by the context in which Resourcing in an international organization means
they operate, but the variety of contexts in which making policy decisions on how the staffing
international HRM functions are particularly significant requirements of headquarters and the foreign
in the way in which they influence decisions on the subsidiaries can be met, especially for managers,
dissemination of parent company policies and professionals and technical staff.
practices (convergence or divergence) and on the
employment of expatriates. Cultural differences may Talent management
also be significant.
The conduct of international talent management
involves basically the same methods as those used in
Convergence and divergence a domestic setting, namely, a pipeline consisting of
International HRM involves the need to judge the processes for talent planning, talent pool definition,
extent to which, on the one hand, an organization identifying talent internally, recruiting talent,
should implement similar policies and practices across performance management, management development
the world (convergence) or, on the other, it should and career planning, assignment or promotion.
allow overseas subsidiaries to adopt their own
practices or at least modify the policies and practices International performance
of the parent company to suit local requirements management systems
(divergence).
The effectiveness of international performance
management is affected overall by the sheer complexity
Multicultural working
of international business and the distance separating
A fundamental feature of international operations is headquarters and subsidiaries. The particular issues
that multinational and therefore multicultural teams affecting international performance management are the
have to work together in foreign subsidiaries. increased difficulty in influencing and controlling line
managers, cultural differences, the problem of achieving
Role of the international HR function consistent rating results, and variable levels of maturity
among subsidiaries, which affect relative performance.
An international HR function is responsible for
developing and operating a transnational HR system. Reward management
International reward management involves the
The practice of international HRM
management of all aspects of rewards in organizations
The practice of international HRM is concerned with operating worldwide, or at least in a number of countries.
the HR activities conducted by a multinational The factors that are likely to impact on the design
company (MNC) in managing people throughout the of reward systems, as suggested by Bradley et al
organization. (1999), are the corporate culture of the multinational
enterprise, expatriate and local labour markets, local
Workforce planning cultural sensitivities and legal and institutional factors.
International reward strategy is concerned with the
International resourcing is based on workforce development of an integrated approach to building
planning processes, which assess how many people reward policies and practices across international
are needed throughout the MNC (demand forecasting), boundaries.
Expatriates assignment cycle, the three phases of which are:

pre-departure, assignment and post-assignment.
An expatriate was defined by Lee and Donohue (2012:
1198) as ‘any individual who relocates from his/her
Policies for expatriates
home base to an international location for business or
work purposes and sets up temporary residence in the Policies are required on:
host country.’
●● the employment of local nationals and the use of
expatriates for long periods or shorter
Managing expatriates assignments;
The management of expatriates on international ●● recruitment and selection;
assignments is a major factor determining success or
failure in a global business. ●● preparation, assimilation and support;
●● career management;
The process of managing expatriates
●● remuneration.
The process of managing expatriates has been
summarized by Sparrow et al (2004: 145) as a global
References
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90

91
PART II
Delivering HRM
PA R T I I CO N T E N T S
08 The role of the HR function

09 The role of HR professionals
10 The HRM role of line managers
HR model it adopts – the HR function in which HR

Introduction professionals provide advice and services working
in conjunction with line management. The role of
HR is delivered within the framework provided by the latter in implementing HRM is crucial.
the HR architecture of the organization, which con-
sists of the HR system and HR practices and the
92

93
08
The role of the HR
function
Contribute to the formulation and
Introduction ●●
implementation of corporate strategy – as
Lawler and Mohrman (2003: 16)
The HR function deals with the employment, man- commented: ‘HR can play an important role
agement, development and performance of people in the formulation of strategy by making
in organizations. The members of the function may explicit the human capital resources required
be involved in strategic or transformational activi- to support various strategies and strategic
ties although the function also has the transactional initiatives, by playing a leadership role in
role of providing the HR services the organization helping the organization develop the
requires. The ‘clients’ of the HR function are not necessary capabilities to enact the strategy,
just the management of the organization. They also and by playing a strong role in
include line managers and employees generally. implementation and change management.’
In this chapter, consideration is given to the con-
tribution of HR – overall and specifically with re- ●● Improve organizational effectiveness (the
gard to the achievement of competitive advantage, ability of an organization to achieve its goals
the role and organization of the HR function, the by making good use of the resources
three-legged stool model of the function, the use of available). As emphasized by the CIPD
outsourcing (selecting and managing suppliers and (2010: 7): ‘HR has a unique role to play in
partnership organizations), the power and reputa- helping an organization succeed today in a
tion of the HR function, evaluating the HR function, way that lays the foundations for future,
and the role of HR in SMEs. sustainable success.’ This includes
contributing to the achievement of
competitive advantage as considered below.
The overall contribution ●● Facilitate change – fulfil the role of change
agent, lead and advise senior and line
of HR managers how best to manage organizational
change. Ulrich (1998: 125) suggested that
The overall contribution that HR can make is to: HR should become ‘an agent of continuous
transformation’.
●● Provide insight – seek understanding of the
issues affecting the organization and its ●● Deliver HR services – provide effective and
employees, explore the implications of these efficient services in such fields as recruitment,
issues for business and people management, talent management, learning and development,
and convey these messages to management. reward management, employment relations
The aim is to help organizations ‘to find new and employee engagement.
ways of meeting current and future ●● Provide expertise – contribute to the
challenges’ (CIPD, 2010: 5). achievement of the organization’s strategy
94 Part 2 | Delivering HRM
by developing HR strategies and delivering it can excel, and presents a moving target to its
advice and services in accordance with good competitors by continually improving its position.
practice in each aspect of HRM. He stated that the three most important factors
●● Provide advice – improve the quality of contributing to its achievement were innovation,
employment relationships by advising quality and cost leadership. But he recognized that
managers on the implementation of HR these depend on the quality of the organization’s
policies and procedures, on employment people. In accordance with the resource-based view,
issues, and on handling people problems. unique talents among employees, including superior
performance and skills and the capacity to achieve
●● Enhance the employee experience – take
high productivity, to work flexibly, to innovate and
steps to ensure as far as possible that
to deliver high levels of customer service are ways in
everything that people encounter, observe
which people are a critical ingredient in developing
and feel during the course of their
an organization’s competitive position. The role of
employment is satisfying and rewarding.
the HR function is to ensure that the organization
●● Promote the wellbeing of employees – help gets and keeps people with these sorts of talents.
to improve the quality of the work
environment, covering how people are
treated at work and in such areas as health
and safety, working conditions, reduction of
stress, work-life balance, bullying and Pau se for th ou gh t
harassment. The HR function is part of the management
●● Promote social responsibility – formulate
of the organization and is expected to
socially responsible HR policies on such
issues as equal opportunity, the management promote the interests of the business.
of diversity and inclusion, flexible working, Doesn’t this make it difficult for it to give
harassment, and bullying and ensure they are
implemented. Act as the guardian of the sufficient attention to the interests of
organization’s values and ethical standards employees?
concerning people, pointing out when
behaviour conflicts with those values or
where proposed actions will be inconsistent
with them. Ulrich (1998) called this the
‘employee champion’ role. The role and organization
Ensure compliance – develop and implement
●●
policies and procedures which ensure that
of the HR function
the provisions of employment law and the
Although the basic role of HR is to deliver HRM ser-
General Data Protection Regulation (GDPR)
vices, it does much more than that. It plays a key part
are complied with in spirit as well as to
in the creation of an environment and the develop-
the letter.
ment of the employee experience that furthers em-
ployee engagement by enabling people to make the
The contribution of the HR best use of their capacities, to realize their potential to
the benefit of both the organization and themselves,
function to the achievement and to achieve satisfaction through their work. This
involves contributing to improved performance by
of competitive advantage focusing on the three dimensions of HR practices
linked to the AMO formula (see Chapter 6) – skills,
According to Michael Porter (1985), sustainable motivation and opportunity enhancement.
competitive advantage is achieved when a firm cre- Many commentators argue that the role of HR
ates value for its customers, selects markets in which is to be business-oriented – contributing to the
Chapter 8 | The Role of the HR Function 95
achievement of sustained competitive advantage as same organization. Tyson (1987) claimed that the
discussed above. Becker and Huselid (1998: 97) be- HR function is often ‘balkanized’ – not only is
lieve that HR should be ‘a resource that solves real there a variety of roles and activities but these tend
business problems’. But one of the issues explored to be relatively self-centred, with little passage be-
by Francis and Keegan (2006) in their research is tween them. Hope-Hailey et al (1997: 17) believed
the tendency for a focus on business performance that HR could be regarded as a ‘chameleon func-
outcomes to obscure the importance of employee in tion’ in the sense that the diversity of practice iden-
its own right. They quoted the view of Ulrich and tified by their research suggests that ‘contextual
Brockbank (2005: 201) that ‘caring, listening to, variables dictate different roles for the function and
and responding to employees remains a centrepiece different practices of people management.’
of HR work’. The HR function and its members A chief executive’s view on the HR agenda as
have to be aware of the ethical dimensions of their quoted by Hesketh and Hird (2010: 105) was that
work. They have to be business-oriented but they it operates on three levels: ‘There’s the foundation
have to be people-oriented too. level, which we used to call personnel, it’s just pay
and rations, recruitment, all that sort of stuff that
makes the world go round, transactional work.
HR activities Level two to me is tools, it could be engagement,
reward, development, those sorts of things. Level
HR activities can be divided into two broad catego-
three is the strategic engagement.’
ries: 1) transformational (strategic) activities that
A survey by Incomes Data Services (IDS, 2010)
are concerned with developing organizational effec-
found that the overall median number of HR staff in
tiveness and the alignment and implementation of
the responding organizations was 14: in companies
HR and corporate or business strategies; 2) transac-
with up to 499 employees, the median number was
tional activities, which cover the main areas of HR
3.5, and in companies with 500 or more employees
service delivery. The remit of the HR function will
it was 20. While, as would be expected, large or-
vary in different organizations. It may be concerned
ganizations employed more staff than small- and
with all or any the following areas of HRM: or-
medium-sized companies, they had on average fewer
ganization design and development, job design,
HR staff per employee. For smaller companies the
people analytics, workforce planning, recruitment
median ratio of employees to HR staff was 62:1; in
and selection, talent management, learning and de-
large employers it was 95:1. The overall ratio was
velopment, knowledge management, performance
80:1. The XpertHR survey in 2018 found that the
management, reward management, employment re-
median ratio of employees to HR staff was 60:1 but
lations, employee wellbeing, managing diversity
there was quite a large range – the lower and upper
and inclusion, health and safety, fulfillment of statu-
quartiles were respectively 37:1 and 91:1.
tory requirements, dealing with employment law
An organization could consist of an HR or peo-
issues, and HR administration. HR functions are
ple director responsible directly to the chief execu-
sometimes given other responsibilities such as man-
tive, with a number of functional heads, possibly
aging the car fleet or providing catering facilities.
one each for talent management and recruitment,
learning and development, reward management,
employment relations and HR administration. But
The HR operating model there is no such thing as a typical HR or people
The operating model for the organization of an HR management function, although the ‘three-legged
function varies immensely depending on the con- stool’ model as described below has attracted a lot
text of the organization – its size, the extent to of attention.
which operations are decentralized, the type of
work carried out, the kind of people employed and
the role assigned to the HR function. As Sisson The three-legged stool model
(1990) commented, HR management is not a single
The notion of delivering HRM through three major
homogeneous occupation – it involves a variety of
areas – centres of expertise, business partners and
roles and activities that differ from one organiza-
HR shared service centres – emerged from the HR
tion to another and from one level to another in the
delivery model produced by Ulrich (1997, 1998), al- article by Johnson in 1999, two years after Ulrich
though Ulrich has stated that the three-part structure published his delivery model. In this a rticle, Johnson
was not his idea but an interpretation of his writing. quoted David Hilborn, an associate of William
The first reference to the three-legged stool was in an Mercer, management consultants, as follows:
Source review
The traditional design [of an HR department] typically employees concentrate on design rather than
includes a vice president of HR, then a manager of transactions and will have line managers as their
compensation and benefits, a manager of HRIS and customers. HR business partners make up the third
payroll, a manager of employment and so on. However, leg. They are generalists who usually report to line
the emerging model is more like a three-legged stool. managers and indirectly to HR. These employees don’t
One leg of the stool includes an administrative service get involved in transactions, but instead act as
centre which processes payroll, benefits and the like consultants and planners, linking the business with
and focuses on efficiency in transaction functions. The appropriate HR programmes.
second leg is a centre of excellence (or expertise) in David Hilborn quoted by Johnson (1999: 44)
which managers and specialists work. These
This exposition provided the blueprint for all subse- Critical evaluation of the three-legged
quent versions of the model, which has evolved in
its three-part form as follows: stool model
This model has attracted a great deal of attention
Centres of expertise – these specialize in the but the 2007 CIPD survey found that only 18 per
provision of high-level advice and services on cent of respondents had implemented all three ‘legs’,
key HR activities. The CIPD survey on the although 47 per cent had implemented one or two
changing HR function (CIPD, 2007) found elements, with business partners being the most
that they existed in 28 per cent of common (29 per cent).
respondents’ organizations. The most Moreover, there are difficulties with the notion.
common expertise areas were learning and Gratton (2003: 18) pointed out that ‘this fragmenta-
development (79 per cent), recruitment tion of the HR function is causing all sorts of unin-
(67 per cent), reward (60 per cent) and tended problems. Senior managers look at the
employment relations (55 per cent). fragments and are not clear how the function as a
Strategic business partners – these work with whole adds value.’ And as Reilly (2007) commented,
line managers to help them reach their goals respondents to the CIPD survey mentioned other
through effective strategy formulation and problems in introducing the new model. These in-
execution. They are often ‘embedded’ in cluded difficulties in defining roles and accountabili-
business units or departments. ties, especially those of business partners, who risk
being ‘hung, drawn and quartered by all sides’, ac-
HR shared service centres – these handle all the cording to one HR director. At the same time, the seg-
routine ‘transactional’ services across the mented nature of the structure gives rise to ‘boundary
business, which include such activities as management’ difficulties, for example when it comes
recruitment, absence monitoring and advice to separating out transactional tasks from the work
on dealing with employee issues like of centres of expertise. The model can also hamper
discipline and absenteeism. communication between those engaged in different
HR activities. Other impediments were technological Dealing with the issues

failure, inadequate resources in HR, and skills gaps.
The following approach incorporating recommen-
Hird et al (2010: 31) drew attention to the fol-
dations by Holley (2009: 8–9) can be used to deal
lowing issues:
with three-legged stool issues:
●● An ‘off the shelf’ introduction of a new HR
●● ensure that top management are behind the
structure without careful thought as to how
changes;
the model fits the organization’s requirements.
●● involve line managers and the whole of HR
●● A lack of care in dealing with the boundary
in planning and implementation;
issues between elements of the HR structure,
which can easily be fragmented. ●● work out exactly who will do what in each
area – HR and the line – and avoid overlaps
●● A lack of attention to the new skill sets
and ambiguities, taking particular care in
needed by business partners to ensure they
defining the respective responsibilities of
can play at the strategic level.
business partners and members of shared
●● A lack of understanding on the part of services centres and centres of expertise;
managers as to the value of a new HR
●● ensure that the right balance is achieved
structure.
between HR strategic (transformational)
●● A lack of skill on the part of line managers activities and HR service delivery
to make the required shift to greater (transactional) activities;
responsibility for people issues implied by
●● ensure that the right people are in the right
the new model.
roles (don’t simply switch job titles);
●● What is referred to as the ‘polo’ problem: a
●● let everyone know about the changes – why
lack of provision of the execution of HR
they are taking place, how they will work
services as the business partner shifts to
and any differences in responsibilities;
strategic work, and the centre of expertise to
an advisory role. ●● define the skills required by both HR staff and
line managers and help in their development;
Research carried out by Orion reported by Boroughs
●● plan the implementation, phasing it as
(2015) found that many of the HR business partners
required to avoid any disruption;
who were interviewed pointed out that their roles
were still ‘too transactional’ in nature and that they ●● monitor implementation to ensure that it is
struggle to shed the administrative elements involved. going according to plan.
However, some benefits were reported by re-
spondents to the CIPD (2007) survey. Centres of
expertise can provide higher-quality advice. Business
partners can exercise better business focus, line
Outsourcing HR work
managers can become more engaged, and the pro- The advantages of getting HR work done by out-
file of HR is raised. Also, the introduction of shared side suppliers, including management consultants
services results in improved customer service and (outsourcing) and setting up partnerships with other
allows other parts of HR to spend more time on organizations, are that:
value-adding activities. It can also cut costs by re-
ducing the number of HR staff required. ●● members of the HR function can focus on
By segmenting activities, the three-legged stool the key tasks that add value;
model indicates to line managers where they should ●● know-how, experience and facilities that the
contact HR and for what. But it introduces multiple organization does not possess are obtained;
channels rather than a one-stop shop. Circumstantial
●● an ‘extra pair of hands’ is made available
evidence has suggested that attempts to create new
when required;
structures can be frustrated by line managers con-
tinuing to use their ‘old’ generalist HR contacts on ●● cost savings can be achieved as long as the
a personal basis. supplier or partner is selected and managed
carefully.
The services that can be provided by outside suppliers 1 Power of resources – HR functional expertise
include recruitment, executive search, training, occu- and in-house HRM (ie not significantly
pational health and safety, employee wellbeing includ- outsourced).
ing counselling, childcare, and payroll administration. 2 Power of processes – HR works closely with
HR functions that have been given responsibility for top management team, HR functions as
other miscellaneous activities such as catering, car fleet facilitator.
management, facilities management and security be-
3 Power of meaning – support from the chief
cause there is nowhere else to put them may gladly
executive, use of business language in
outsource them to specialist firms or go in for some
communicating with line managers, use of
form of partnership.
HR analytics.
Close consideration should be given to the case
for outsourcing. The questions that need to be an- But it can be argued, as do Arrowsmith and Parker
swered are: Is the service one that can easily be (2013: 2709), that ‘HR is fundamentally a depend-
separated from other HR activities? Do we really ent function – virtually everything it does has to be
want to lose direct control over this activity? Will endorsed by and implemented through the line.’
the benefits exceed the costs?
Before selecting a supplier, check with other
firms on which suppliers they use and how satisfied The reputation of the
they are with them. Then draw up a short list of
three or four providers, brief them and ask them to HR function
bid for the contract, spelling out how they would
meet the brief in terms of deliverables – the level of Wright et al (2001: 702), stated that: ‘The human
service they would guarantee – and how much it resource function has consistently faced a battle
would cost. Select the best tender but obtain refer- justifying its position in organizations,’ but also ob-
ences before making the choice. served that: ‘Growing acceptance of internal re-
Service providers need to be managed just as sources as sources of competitive advantage brought
carefully – if not more so – than internal services in legitimacy to HR’s assertion that people are strate-
order to ensure that the agreed service standards gically important to firm success.’
and costs are being achieved. Standards and budg- Research by Graham and Tarbell (2006) found
ets should be reviewed regularly and revised as nec- that employees, line management and top manage-
essary. Swift corrective action should be taken if ment define the credibility of the HR function dif-
things go wrong and the contract terminated if ferently. While employees emphasize trust, line
there is a serious shortcoming. managers emphasize expertise and effective rela-
Partnerships can be set up with other organiza- tionships, and senior managers emphasize achieve-
tions to provide joint services. The same care in ment of results. And Guthrie et al (2001) observed
creating and managing a partnership should be ex- that: ‘HR departments have long suffered from a
ercised as for suppliers. The terms and conditions of lack of stature within business organizations.’
the partnership have to be spelt out including the Clearly, there are many instances where the HR
procedure for terminating it. Managing operations function is regarded highly. For example, this was
jointly can be tricky and care needs to be taken in established through the research carried out by
reviewing how things are going and identifying any Hesketh and Hird (2010). But there have been lots
improvements required. of criticisms. Barney and Wright (1998: 32) sug-
gested that managers’ views of HR departments do
not stem from their lack of understanding of the
Power of the HR function importance of their workforce, but instead because
HR departments ‘fail to direct the HR activities
Research by Sheehan et al (2014) established that toward developing characteristics of the firm’s

the extent of the power possessed by the HR func- human resources that can be a source of sustainable
tion – the amount of influence it exerts – depends competitive advantage.’ An extreme criticism is
on three dimensions: quoted below:
Research conducted by the Institute for Employ

Source review ment Studies (Hirsh, 2008) discovered that the fac-
tors that correlated most strongly with line manag-
ers’ and employees’ satisfaction with HR were:
The human resources trade long ago proved itself,
at best, a necessary evil – and at worst, a dark ●● being well supported in times of change;
bureaucratic force that blindly enforces ●● HR giving good advice to employees;
nonsensical rules, resists creativity, and impedes
●● being well supported when dealing with
constructive change. HR is the corporate function
difficult people or situations;
with the greatest potential – the key driver, in
theory, of business performance – and also the ●● HR getting the basics right.
one that most consistently under-delivers. But the results showed that HR could do better in
Hammonds (2005: 42) each of these areas. The conclusions reached were
that HR must find out what its customers need
and what their experiences of HR services are.
HR has to be responsive – clear about what it is
In the universities they studied, Guest and Clinton
there for and what services it offers, and easy to
(2007) found no evidence that any feature of HR
contact.
structure or practice was associated with any of the
Typical measures to assess HR effectiveness in
numerous performance indicators. Guest and Bos-
order of popularity include:
Nehles (2013) commented that: ‘The evidence to date
suggests that we cannot look with any confidence to ●● absence management data;
the HR function to provide a lead in HR innovation ●● staff turnover data;
and in ensuring effective HR implementation.’
●● exit interview feedback;
On a more positive note, Hesketh and Hird
(2010: 113) suggested that HR builds a good repu- ●● discipline and grievance data;
tation not only by enabling the business to perform ●● results of employee surveys;
but also by ‘the orchestrating of performance- ●● anecdotal/informal feedback;
enhancing transformations of people and opera-
●● number of tribunal cases;
tions and their underpinning architectural forms.’
●● benchmarking;
●● spending against budget;
●● time-to-fill vacancies data;
Pa us e for t houg ht ●● cost per hire.
If HR is not well regarded in an The contribution of HR to improving organiza-
organization, what can be done about it? tional performance is less frequently used, perhaps
because of measurement difficulties. But it is cer-
tainly relevant; HR potentially can have a major
influence on performance. And even if a quantified
assessment is impossible, a qualitative one can and
Evaluating the HR function should be made.
The evaluation should cover not only the work
It is necessary to evaluate the contribution of the HR of the function as a whole but also the effectiveness
function to establish how effective it is at both the of the main HR policies and practices with which
strategic level and in terms of service delivery and the function is concerned. The following three key
support. The prime criteria for evaluating the work of questions should be answered when carrying out a
the function are its ability to operate strategically and review:
its capacity to deliver the levels of services required.
1 To what extent is what is taking place in

accordance with the principle of good
practice? Pau se for th ou gh t
2 How effectively is the policy or practice What do you think are the three most
being implemented? important measures of HR effectiveness
3 What are the reactions of line managers and and why?
employees generally to the policy or practice?
CASE STUDIES
HR organization at the National Australia Bank Group
HR at the National Australia Bank Group has a number of They tend to work in the areas of talent, performance,
centres of expertise, business partners, solutions consul leadership, diversity and culture and their job is to facilitate
tants, project managers, a shared services centre, and the implementation of corporate people initiatives with the
telephone advisory service for employees (the people relevant specialist HR partners. Unlike shared services staff,
advisory helpline). they only get involved in HR’s daily operational matters if
projects escalate and extra help is required.
Centres of expertise
Solutions consultants
Centres of expertise cover areas such as reward, employment
policy, talent management, culture management, diversity Solutions consultants deal with operational queries
and performance. The staff in the centres are specialists in referred to them from the people advisory helpline – mainly
their respective fields, while the other parts of HR can be issues of case management and other more complex
found in the HR service centre, with the exception of enquiries. They are a key point of contact for people
recruitment, which is conducted by line managers. leaders on matters of policy and procedure, although they
do participate in some transaction work as well.
Business partners
Project staff
Business partners attend business unit leadership team
meetings and set the company’s people strategies and Project staff work on projects that emerge from strategic
deliver the HR requirements emerging from various projects. discussions.
The HR shared services model at PricewaterhouseCoopers (PwC)
The HR shared services model at PwC consists of tran The centres of expertise sit within the central human
sactional and professional areas. Transactional functions capital services centre but there are definite lines between
include payroll, benefits administration and the joiners/leavers them. Every centre of expertise is a cost centre, but for the
process department. The transactional functions also provide annual budgeting process all are looked at together as part
services for their professional counterparts. In contrast, of the HR shared services function.
professional areas organized into centres of expertise include The result of introducing the centres of expertise has
functions such as recruitment, learning and development, been that specialist knowledge is now organized into dis-
reward, diversity, and legal and advisory. crete units enabling know-how and experience to be more
easily shared. The new structure means there is less dupli- costs has been achieved via a combination of reductions in
cation and the improved efficiencies allow more time to be headcount, economies of scale and related efficiencies.
dedicated to strategic issues. Additionally, a decrease in
Reorganizing HR in the Greater Manchester Fire Service
Following major changes in operations, it was decided by ●● to introduce a more transparent promotions process;
senior management that the role of the fire service’s HR
●● to work on the organizational climate and leadership –
function was to provide high-level, strategic advice from
a series of awaydays for leaders using organizational
advisers who could work closely with them, backed up by
climate tools such as 360-degree feedback and the
specialists. In other words, a business partner model. So the
Belbin Team Inventory;
brigade began to recruit business partners – placing a special
emphasis on those with expertise in employee relations – and ●● the recruitment process was also modernized by
specialists to cover areas such as occupational health, putting together a resourcing team, building a
equality and diversity, reward, pensions and recruitment. microsite and developing an applicant tracking system;
Finding candidates with sufficient gravitas to act as top-level
●● to reorganize training;
strategic advisers was difficult. There weren’t many true
business partners about. A lot of people calling themselves ●● a departmental competency framework was put in
business partners were really HR advisers. place to ensure HR staff would be able to move easily
When the team was in place the major developments within the organization rather than becoming bogged
were: down in specialist areas.
related requirements tend to be minimal, centred on

The role of HR in small- and pay and contracts, with the rate for the job set by the
medium-sized organizations owner.
Stage 2: Emerging enterprises. In a growing busi-
(SMEs) ness the owner will have to delegate more and peo-
ple issues become more important. Someone may be
SMEs are usually defined as companies with up to appointed to look after HR matters, possibly on a
250 employees. The approach to HR they adopt var- part-time basis for any of the following reasons:
ies even more widely than in larger organizations.
●● The business has reached a size where
There may be no HR function at all or in some larger
policies and procedures are needed to guide
or more sophisticated SMEs there may be a fully
work and create a sense of fairness.
formed HR department, albeit a small one. However,
people management activities tend generally to be ●● The owner feels that people issues are taking
more informal, at least in the early stages of develop- up too much of their time.
ment. Research conducted by Miller (2015) estab- ●● People management is seen as vital for
lished that there were four stages of SME growth. growth and to achieve the company’s vision.
Stage 1: Start-up. In this initial stage, people mat- ●● There is a specific people issue that needs to
ters tend to be dealt with by the owner, with no for- be addressed, for example tribunal cases,
mal HR role. Overall the business is characterized by skills shortages, high turnover.
informality, with an emergent strategy, fluid struc-
tures and flexible job roles. The owner takes respon- But the owner may decide simply to outsource HR
sibility for hiring, looking for someone who ‘fits’ work such as recruitment and seek advice from con-
with what the company is all about. The people- sultants on any serious people problem.
Stage 3: Consolidation. As the business develops The research by Miller found that attaching
and expands it may appoint a full-time HR specialist workforce numbers to the stages did not reveal any
who will introduce more sophisticated practices in particular pattern. SMEs tended to develop more
areas such as recruitment, talent management, or re- formal HR practices and a dedicated HR manager
ward or performance management to meet the needs of or function at different workforce sizes, depending
the business for talented high-performing employees. on the people requirements of the business, the
Stage 4: Established business. Fully established leader’s view on people management and the indus-
businesses will set up an HR department under a gen- try in which the business operates.
eralist manager with specialized assistants, for example Marlow et al (2010) established through their
one focusing on recruitment and talent management research in six growing SMEs that although there
and another dealing with learning and development. was some formalization of HR, many owners still
retained informal control over employment mat-
As a company moves through each change, differ- ters. They commented that SMEs did not necessar-
ent HR requirements emerge which may lead to the ily move from informality to formality and that it
appointment of full-time or part-time HR profes- could be argued that in a small firm there may be
sionals or the extended use of external agencies and advantages in maintaining an informal approach to
consultants. people management.
Key learning points
The HR function best use of their capacities, to realize their potential to

the benefit of both the organization and themselves,
The HR function deals with the employment, and to achieve satisfaction through their work.
management, development and performance of Increasingly, the role of HR is seen to be business-
people in organizations. The members of the function oriented – contributing to the achievement of
may be involved in strategic or transformational sustained competitive advantage.
activities although the function also has the HR activities can be divided into two broad categories:
transactional role of providing the HR services the
organization requires. 1 transformational (strategic) activities that are
concerned with developing organizational
The HR operating model effectiveness and the alignment and implementation
of HR and corporate or business strategies;
Operating models for the organization of the HR
function vary immensely depending on the context of 2 transactional activities, which cover the main
the organization – its size, the extent to which areas of HR service delivery.
operations are decentralized, the type of work carried
out, the kind of people employed and the role assigned The ‘three-legged stool’ model of the
to the HR function. HR function
This model identifies three areas of HR activity:
The role and organization of the centres of expertise, strategic business partners and
HR function shared service centres.
Although the basic role of HR is to deliver HRM
services, it does much more than that. It plays a key Outsourcing
part in the creation of an environment that enhances
Services that can be outsourced to suppliers include
employee engagement by enabling people to make the
recruitment, executive search, training, occupational
health and safety, employee wellbeing including The role of HRM in small- and
counselling, childcare, and payroll administration.
Care has to be taken in selecting and managing
medium-sized organizations (SMEs)
providers. The approach to HR adopted by SMEs varies even
more widely than in larger organizations. There may be
Evaluating the HR function no HR function at all or in some larger or more
sophisticated SMEs there may be a fully formed HR
It is necessary to evaluate the contribution of the department, albeit a small one. However, people
HR function to establish how effective it is at both the management activities generally tend to be more
strategic level and in terms of service delivery and support. informal, at least in the early stages of development.
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105
09
The role of HR
professionals
irector, HR manager, HR business partner, HR
d
Introduction officer) or specialist (eg head of learning and devel-
opment, head of talent management, head of
This chapter examines the role of HR professionals reward), the level at which they work (strategic,
under the following headings: executive or administrative), the needs of the or-
●● The overall role ganization, the view of senior management about
●● The Ulrich model their contribution, the context within which they
work and their own capabilities. They can act as
●● The strategic role strategists, business partners, innovators, internal
●● The HR business partner role consultants, facilitators, coaches or service provid-
●● The partnership role ers. Tyson and Fell (1986: 7) explained that they
were ‘specialists in managing the employment rela-
●● The innovation role
tionship’. The best-known summary of the roles of
●● The change agent role HR professionals is the Ulrich model as described
●● The service delivery role below.
●● Carrying out the role
The Ulrich model

The overall role of the HR
Dave Ulrich made the following important point in
professional his influential Harvard Business Review article:
HR or people management professionals provide

advice, guidance and services on all matters con-
cerning the employment of people. The role can be
transactional, dealing with basic HR matters such
as recruitment and selection, or transformational, Word s of w isd om
operating strategically in order to make significant HR should not be defined by what it does
changes in how the organization functions or how
its employees are treated. The CIPD (2013: 9)
but by what it delivers – results that enrich
stated that the HR profession is ‘an applied busi- the organization’s value to customers,
ness discipline with a people and organization spe- investors, and employees.
cialism.’
Ulrich (1998: 124)
The roles of HR professionals vary according to
the extent to which they are generalist (eg HR
More specifically he suggested that HR can deliver

in four ways: as a strategic partner, an administra-
The strategic role of the HR
tive expert, an employee champion and a change
agent. This first model was later modified by Ulrich
professional
and Brockbank (2005), who defined five roles as
follows:
1 Employee advocate – focuses on the needs of Word s of w isd om
employees through listening, understanding
and emphasizing. HR must be fully responsive to the strategy
2 Human capital developer – focuses on and business model of the business. HR is
preparing employees to be successful in the not a rule to itself. It is not ‘HR for HR’, but
future.
HR (as broadly defined across the
3 Functional expert – concerned with the HR
practices that are central to HR value on competing stakeholders whom HR has to
the basis of the body of knowledge they satisfy) for the business.
possess.
Sparrow et al (2010: 88)
4 Strategic partner – combines the multiple
dimensions of business expert, change agent,
strategic HR planner, knowledge manager
HR professionals have a strategic role when they are
and consultant to align HR systems to help
operating at a transformational level as HR direc-
accomplish the organization’s vision and
tors, heads of HR centres of expertise or main HR
mission, helping managers to get things done
functions, or strategic business partners. As such they
and disseminating learning across the
take part in conjunction with their line manager col-
organization.
leagues in the development and implementation of
5 Leader – leading the HR function, innovative HR strategies that are aligned with busi-
collaborating with other functions and ness strategies and thus help to achieve them. At a
providing leadership to them, setting and transactional level (as an HR officer, adviser or as-
enhancing the standards for strategic sistant providing HR services possibly in an HR
thinking and ensuring corporate shared service centre) their role is not primarily stra-
governance. tegic but they can make a contribution to the formu-
They commented on the importance of the lation and implementation of HR strategy.
employee advocate role, noting that HR profes-
sionals spend about one-fifth of their time on em-
ployee relations issues and that caring for, listen-
ing to and responding to employees remains a Pau se for th ou gh t
centerpiece of HR work. Their model draws
attention to the multifaceted nature of the role,
What steps can HR practitioners take to
although most attention has been paid to the no- understand the strategic priorities of their
tion of the strategic nature of HR work and the organization?
concept of the strategic business partner. These
are discussed below, as are the other aspects of the
role not referred to specifically in the latest ver-
sion of the Ulrich model, namely the innovation Clearly, the extent to which HR roles are strategic
role, the change agent role and the service delivery depends on the level of the role and its primary pur-
role. pose, and summaries of what this involves for direc-
tors, heads or senior members of functions or
Chapter 9 | The Role of HR Professionals 107
c entres of expertise are given below. This is followed ●● appreciate the operational and business
by an analysis of the role of business partners who, imperatives and performance drivers relative
conceptually at least, function strategically. to these goals;
Restructuring the organization is an area where, ●● in commercial businesses, understand the
as pointed out by Hardman and Mookherjee business model of the organization (how it
(2015), to be successful, HR needs to be involved in makes money) and play a part in business
strategic conversations right from the start, and model innovation;
right at the top. To earn a place in those conversa-
●● comprehend how sustainable competitive
tions, HR professionals need to have credibility
advantage can be obtained through the
within their organization. They can achieve this by
human capital of the organization and know
developing their ability to think and work strategi-
how HR practices can contribute to the
cally and, in particular, being able to ask the right
achievement of strategic goals;
questions. The case study research for the Institute
for Employment Studies by Duncan Brown and his ●● contribute to the development of the business
colleagues led to the following conclusion: strategy on an ‘outside-in’ basis (Wright et al,
2004), starting from an analysis of the
customer, competitor and business issues that
the organization faces – the HR strategy then
Wo rd s of wi sdom derives directly from these challenges to
If HR wants more strategic impact, it needs create solutions, add value and ensure that
the organization has the distinctive human
to engage business leaders in the capital required to make an impact;
identification, understanding and solution ●● contribute to the development for the
of key people issues. This is not about organization of a clear vision and a set of
integrated values;
having an HR presence on the Board,
●● ensure that senior management understands
but rather about senior players in HR being the HR implications of its business or
able to facilitate the right level of corporate strategy;
discussion, whether in top team meetings ●● see the big picture, of how the organization
functions and the broader context in which
or elsewhere. the organization operates;
Brown et al (2019: 55)
●● think in the long term about where HR
should go and how to get there;
●● understand the kinds of employee behaviour
The strategic role of HR directors required to execute the business strategy
successfully;
The strategic role of HR or people directors is to
●● take time to identify business issues and their
promote the achievement of the organization’s goals
implications for HR strategy (see Chapter 73);
and values by: 1) developing and implementing HR
strategies that are integrated with the business or ●● believe in and practise evidence-based
corporate strategy and are coherent and mutually management;
supportive; 2) ensuring that a strategic approach is ●● be capable of making a powerful business
adopted that enables HR activities to support the case for any proposals on the development of
organization and add value; and 3) taking into ac- HR strategies;
count the ethical dimension of HRM. To carry out ●● fully embrace ethical considerations when
this role, HR directors need to: developing and implementing HR strategy.
●● understand the strategic goals of the This is a formidable list of requirements. Being an
organization; HR director is not an easy option.
The strategic role of heads of HR business or corporate goals of the organization or

function. They share responsibility with their
functions colleagues for the success of the enterprise and get
The strategic role of heads of HR functions or cen- involved with them in implementing corporate
tres of expertise is fundamentally the same for their strategy and running the organization. They may be
function as that of HR directors for the whole or- ‘embedded’ in an operational division or depart-
ganization. They promote the achievement of the ment or be part of a centralized HR function.
organization’s corporate goals by developing and im- Ulrich and Beatty (2001: 294) stated that the stra-
plementing functional strategies that are aligned with tegic business partner ‘represented a “player” whose
the business strategy and integrated with the strate- aim is to add value through acting as a “coach, archi-
gies for other HR functions, and adopt a strategic tect, builder, facilitator, leader and conscience.”’
approach in the sense of ensuring that HR activities The CIPD (2015a: 1) defined HR business part-
support the business, add value and are ethical. To nering as ‘a model whereby HR professionals work
carry out this role, heads of HR functions should: closely with business leaders and/or line managers
to achieve shared organizational objectives, in par-
●● understand the strategic goals of the ticular designing and implementing HR systems
organization as they affect their function; and processes that support strategic business aims.
●● appreciate the operational and business This can involve the formal designation of HR busi-
imperatives and performance drivers relative ness partners – HR professionals who are embed-
to these goals; ded within specific areas of the business.’
But there are many different definitions of HR
●● help senior management to understand the
business partnering and the role of HR business
implications of its strategy for the HR function;
partners can vary widely from one organization to
●● know how HR practices in the function can another. In some cases it may involve an entirely new
contribute to the achievement of the strategic approach to HR. At the opposite extreme the title
goals; may simply be a re-badging of a traditional general-
●● ensure that their activities provide added ist HR role. Following her research, Pritchard (2010:
value for the organization; 176) noted that the strategic partner role ‘appears to
●● be aware of the broader context (the be something of a moving target, rather loosely de-
competitive environment and the business, fined and precariously positioned with respect to
economic, social and legal factors that affect changing relationships both internal and external to
it) in which the function operates; the HR function’, and that being a business partner
can be a ‘fragmented experience’.
●● think in terms of the bigger and longer-term
The term originated in the concept of the strate-
picture of where HR strategies for the
gic business partner as defined by Ulrich (1998). He
function should go and how to get there;
advocated that HR should become a partner with
●● believe in and practise evidence-based senior and line managers in strategy execution. Ever
management; since then the focus has been on the strategic nature
●● be capable of making a powerful business of the business partner’s role, although it is not al-
case for any proposals on the development of ways made clear what being strategic really means.
HR strategies for the function; But research conducted by Hirsh (2008) found that
●● fully embrace ethical considerations when the word ‘strategic’ itself was hardly used by the line
developing and implementing HR strategy manager participants. They talked much more about
for the function. HR helping them to solve the key people problems
they faced. And this is essentially what business part-
ners are there to do, bearing in mind that business
The HR business partner role strategy is devised and implemented by people.
However, as Keegan and Francis (2010: 236) ob-
HR business partners work alongside their line manag served: ‘The business partner term seems to have
ement colleagues in order to develop and i mplement become the title of choice for ambitious HR practi-
an HR agenda that contributes to achieving the tioners.’ Research by Burroughs (2015) established
that over 50 per cent of the organizations surveyed a London-based US investment bank, interviewed
had introduced some form of HR business partner. by Pritchard (2010: 182, 184):
Conceptually, HR business partners have to:
●● ‘I think the way you change their [the
●● understand the business as a whole and its business clients’] behaviours in the longer
competitive environment; term is by getting to be a trusted advisor, and
●● understand the goals of their part of the the way to become a trusted advisor is to
business and its plans to attain them; know your individual, to know your client
and to know how to hook the individual.’
●● see the broad picture of how HR contributes
to business success; ●● ‘If you don’t know the little things, they’ll [the
business leaders] never trust you with the
●● ensure that their activities support the
bigger things . . . you survive by doing the little
strategic activities of their colleagues;
things and doing them right; and then building
●● be proactive, anticipating requirements, up that trust and that relationship with them.’
identifying HR issues and problems and
producing innovative and evidence-based
solutions to them which are aligned with
business requirements; Pau se for th ou gh t
●● respond to the needs of managers and ensure What can a newly appointed HR business
that the transactional HR services required
by them are provided by colleagues in shared partner do to get off to a good start?
services departments or by outsourcing;
●● build relationships founded on trust and
demonstrated expertise with their line
management clients.
Critical evaluation of the business
Reilly (2015) noted that research conducted by the
partner concept
CIPD and the IES in 2007 established that the busi- Achieving success in the deployment of business
ness partner concept had helped HR to become a partners is hard. Research by Sparrow et al (2015: 6)
more strategic contributor, to increase its business led to the conclusion that the following difficulties
focus and to improve the credibility of the function. need to be overcome to make the concept work:
It also encouraged greater line engagement with
●● problems of capability (upskilling, building
people management and put people management
business acumen, cultural insight and
issues higher on the agenda. But the research

relational skills);
revealed the following problems:
●● problems of expectations (selling the
●● business partners get drawn into ‘wrong’ proposition, educating the line about how to
activities – usually lower-level tasks than use the expertise and building the line
they should, given their role (and pay grade); capability to actually do it);
●● a tension arises between responding to ●● aligning the resources behind the business
corporate and business unit needs (often partner (aligning them to the business,
manifested by business partners ‘going avoiding role overload and providing
native’ when, as perceived by the corporate necessary support);
centre, they pursue parochial objectives at
●● regulating the relationships they have so they
the expense of the whole organization);
can be aligned to potential differences between
●● difficulties are apparent in finding staff of the business units and corporate agendas;
right calibre;
●● avoiding role drift back into reactive,
●● the failure of those in the role to be strategic operational or residual transactional work;
rather than operational in their contribution.
●● managing the boundaries between the business
The following practical advice on carrying out the partners and their connections back to work in
role was given by two strategic business partners in centres of expertise and service centres.
Source review
Historically, a lot of HR work has been about the business. This requires a different level of
delivering processes to the business, administering thinking, as the complexity and degree of ambiguity
payroll, keeping out of tribunals, writing terms and inherent in the role, and in the environment, in which
conditions, and so on, so HR has attracted people with organizations are operating has increased
the requisite skills and mindset. The HR business exponentially. In some cases the issue has been that
partner role is very different. It’s about delivering no one has actually articulated to the newly rebadged
innovative ways of developing organizational and business partners how the role is different or the new
people capability, building on deep data-driven level it is operating at.
insights into the strategic and commercial direction of Holley (2015: 12)
It can be argued that too much has been made of the The danger is that if business partners do focus
business partner model. Perhaps it is preferable to too much on what they believe to be strategic issues
regard the role of HR professionals as being part of they are in danger of existing in some sort of strate-
the business rather than merely being partners. There gic stratosphere remote from everyday people man-
is a risk of overemphasizing the seemingly glamorous agement concerns. Perhaps it would be preferable
role of business or strategic partner at the expense of to emphasize the transformational rather than the
the service delivery aspect of the HR practitioner’s strategic aspect of a business manager’s role. They
role. Syrett (2006) noted that whatever strategic aspi- are there to make a difference to organizational per-
rations senior HR practitioners have, they will formance through applications of HRM such as or-
amount to nothing if the function they represent can- ganization development and talent management.
not deliver the essential transactional services their The problem of making too much of the strategic
internal line clients require. As an HR specialist com- business partner role has been influenced by the er-
mented to Caldwell (2004): ‘My credibility depends roneous belief that Ulrich was simply focusing on
on running an extremely efficient and cost-effective HR executives as business partners. This has had
administrative machine... If I don’t get that right, and the unfortunate effect of implying that it was their
consistently, then you can forget about any big ideas.’ only worthwhile function. But Ulrich cannot be
Another person interviewed during Caldwell’s re- blamed for this. In 1998 he gave equal emphasis to
search referred to HR people as ‘reactive pragma- the need for HR people to be administrative ex-
tists’, a realistic situation in many organizations. perts, employee champions and change agents.
C A S E S T U DY
Business partnering at the Automobile Association (AA)
The key competencies required by the AA for its business ●● understand and interpret financial data;
partners are concerned with commercial decision making,
●● understand the connectivity between functional areas
commerciality, influencing people and facilitating change.
of the business;
They have to:
●● understand the impact of actions on cash flow and
●● understand the key factors affecting overall costs and
profitability.
profits;
in other organizations. But ‘best fit’ is important –

The partnership role of HR the innovation should meet the particular needs of
professionals the business, which are likely to differ from those of
other ‘best practice’ organizations. It has to be
It is not just business partners who need to adopt a demonstrable that the innovation is appropriate,

partnership approach with line managers. This ap- beneficial, practical in the circumstances and can be
plies to all HR professionals. Partnership means implemented without too much difficulty in the
working with line managers to deal jointly with is- shape of opposition from those affected by it, lack of
sues, people problems and, importantly, implement- the expertise or skill required to apply it, or the un-
ing HR strategies and new HR policies and practices. justifiable use of resources – financial and the time of
Traditionally, some HR specialists have tended to those involved.
lay down the law to their line manager clients: ‘This The danger, according to Marchington (1995), is
is the policy, this is what you have to do about it, that HR people may go in for ‘impression manage-
this is how I am going to help you.’ In a partnership ment’ – aiming to make an impact on senior manag-
mode, they will still explain what the policy is and ers and colleagues through publicizing high-profile
what the responsibilities of the manager are in im- innovations. HR specialists who try to draw atten-
plementing it, and they will still provide guidance tion to themselves simply by promoting the latest
and advice. But in adopting a partnership approach flavour of the month, irrespective of its relevance or
the HR professional will be focused on understand- practicality, are falling into the trap that Drucker
ing the particular preoccupations and concerns of (1955: 243), anticipating Marchington by 40 years,
individual managers and working alongside them described as follows: ‘The constant worry of all per-
to produce a joint agreement on how to proceed sonnel administrators is their inability to prove that
based on that understanding. It will be a matter of they are making a contribution to the enterprise.
agreeing rather than prescribing. Their preoccupation is with the search for a “gim-
When acting as partners HR specialists need to mick” which will impress their management col-
demonstrate to line managers that they understand leagues.’
the situation in which the latter operate and the As Marchington points out, the risk is that peo-
pressures they face. HR people need to be appreci- ple believe ‘all can be improved by a wave of the
ated as colleagues who know about the business magic wand and the slaying of a few evil characters
and will listen to managers when they make sugges- along the way.’ This facile assumption means that
tions or express doubts about a new policy. They people can too readily devise elegant solutions that
will discuss possible approaches and even agree do not solve the problem because of the hazards
modifications to fit particular circumstances as long encountered during implementation – for example,
as these do not fundamentally affect the policy. the indifference or even open hostility of line man-
They will work alongside line managers when a agers. These have to be anticipated and catered for.
new policy is being introduced, not as a prescriptive The guidelines for HR innovations are:
trainer but as, in effect, a coach. ●● Be clear on what has to be achieved and why.
●● Gain the support of the organization’s
leaders.
The innovation role ●● Involve line managers and consult
A strategic and therefore proactive approach to HRM employees.
will mean that HR specialists will need to innovate – ●● Ensure that what you do fits the strategy,
to introduce new processes and procedures they be- culture and circumstances of the
lieve will increase organizational effectiveness. organization.
The case for innovation should be established by ●● Don’t follow fashion – do your own thing as
processes of analysis and diagnosis using an long as it is relevant and fits the
evidence-based management approach to identify
organization’s needs.
the business need and the issues to be addressed. ●● Keep it simple – over-complexity is a
‘Benchmarking’ can be used to identify ‘best practice’ common reason for failure.
●● Define the innovation in language and using andling day-to-day employment matters, helping
h
terms that line managers use. to solve people problems and dealing with employ-
●● Don’t rush – it will take longer than you think. ment law issues. The latter is one of the most de-
manding and time-consuming areas in which they
●● Don’t try to do too much at once – an
give advice and provide services. A 2002 survey by
incremental approach is generally best.
the CIPD found that two-thirds of HR specialists
●● Assess resource requirements and costs. were spending in excess of 20 per cent of their time
●● Pay close attention to project planning and coping with employment law issues, while a quarter
management. reported that over 40 per cent of their working days
●● Remember that the success of the innovation were being spent in this way.
rests as much on the effectiveness of the For many HR practitioners, service delivery is
process of implementation (line manager what they do. The importance of this aspect of their
buy-in and skills are crucial) as it does on the work should not be underestimated by focusing too
quality of the concept, if not more so. much on strategic or business partner roles. Line
managers tend to judge HR professionals on
●● Focus on change management approaches –
the quality and efficiency of the services they pro-
communicate, involve and train.
vide rather than on their strategic capabilities.
The change agent role HR professionals: role

The implementation of strategy means that HR spe- requirements
cialists have to act as change agents, facilitating
change by providing advice and support on its
introduction and management. Caldwell (2001)

categorized HR change agents in four dimensions:
Word s of w isd om
1 Transformational change – a major change
that has a dramatic effect on HR policy and The capabilities of HR professionals include:
practice across the whole organization. ‘a real understanding of the business and
2 Incremental change – gradual adjustments of
ability to work closely with senior leaders;
HR policy and practices which affect single
activities or multiple functions. the ability to identify and prioritize people
3 HR vision – a set of values and beliefs that issues; understand the timeframes on which
affirm the legitimacy of the HR function as a they need to be addressed; and help
strategic business partner.
managers to see practical solutions. This
4 HR expertise – the knowledge and skills that
define the unique contribution the HR sometimes means challenging the views of
professional can make to effective people senior people and reminding them of the
management.
importance of taking a customer and
employee perspective, not just seeing the
The service delivery role business from their own point of view.’
Brown et al (2019: 56)
The role of HR professionals operates at a transfor-
mational level when HR strategies, programmes
and policies are devised and implemented which
further the achievement of business or corporate The role requirements of HR professionals are ex-
goals and help to meet the needs of employees. But acting. They are described below in terms of levels
for many HR people the emphasis is on transac- of competency and expected behaviours.
tional activities such as recruitment, training,
HR competencies HR professional behaviours CIPD

Research conducted by Brockbank et al (1999) led The CIPD Profession Map (2018) stated that mem-
to a definition of the key HR competency ‘domains’ bers of the ‘people profession’ should be ‘principles
and their components, as set out in Table 9.1. led, evidence based, outcomes driven’. The map set
A competency framework for the strategic part- out the following core behaviours expected of peo-
ner role in an investment bank as reported by ple professionals:
Pritchard (2010) emphasized three key areas:
●● Ethical practice – building trust by role-
organizational effectiveness, personal impact and

modelling ethical behaviour, and applying
business insight. The competencies included trusted
principles and values consistently in decision
advisor, leading change, critical thinking, financial
making.
acumen and strategy formulation.
●● Professional courage and influence – showing
courage to speak up and skilfully influencing
others to gain buy-in.
Pa us e for t houg ht ●● Valuing people – creating a shared purpose
It has been said that HR practitioners should and enabling people development, voice and
wellbeing.
be ‘specialists in ambiguity’. What does this
●● Working inclusively – working and
mean, why might it be the case and if it is collaborating across boundaries, effectively
the case, what can be done about it? and inclusively, to achieve positive
outcomes.
TA B L E 9.1 Key HR specialist competency areas
Competency Definition
1 Personal credibility Live the firm’s values, maintain relationships founded on trust, act
with an ‘attitude’ (a point of view about how the business can win,
backing up opinion with evidence).
2 Ability to manage change Drive change: ability to diagnose problems, build relationships with
clients, articulate a vision, set a leadership agenda, solve problems
and implement goals.
3 Ability to manage culture Act as ‘keepers of the culture’, identify the culture required to meet
the firm’s business strategy, frame culture in a way that excites
employees, translate desired culture into specific behaviours,
encourage executives to behave consistently with the desired culture.
4 Delivery of human resource Expert in the speciality, able to deliver state-of-the-art innovative HR
practices practices in such areas as recruitment, employee development,
compensation and communication.
5 Understanding of the Strategy, organization, competitors, finance, marketing, sales,

business operations and IT.
●● Commercial drive – using a commercial

mindset, demonstrating drive, and enabling
change to create value.
●● Passion for learning – demonstrating What can HR people do if they believe that
curiosity and making the most of a management decision is unethical?
opportunities to learn, improve and innovate.
●● Insights-focused – asking questions and
evaluating evidence and ideas to create
insight and understand the whole.
Ambiguities in the role of HR
●● Situational decision making – making
effective and pragmatic decisions or choices professionals
based on the specific situation or context. The activities and roles of HR specialists and the
demands made upon them as described above
appear to be quite clear cut but Thurley (1981)

Carrying out the role pointed out that HR practitioners can be specialists
in ambiguity. This continues in the age of Ulrich. As
of the HR professional Hope-Hailey et al (2005: 51) commented: ‘Ulrich
highlighted that HR professionals must be both
How HR professionals carry out their roles depends strategic and operational, yet the potential role con-
on the context in which they work (the size and flict this could engender was not addressed.’
culture of the organization, the types of activities car- Caldwell reached the following conclusions on the
ried out and the requirements of senior management), basis of his research:
their skills and disposition and, importantly, the val-
ues they adopt. They will be affected by ambiguity
and questions on the status of the profession and
what is involved in being a professional. It can be a
difficult job to do well and the criteria for success are Word s of wisd om
demanding. An example of a grade structure illustrat- There is the issue of ‘powerlessness’ or the
ing the different levels in an HR department based on
a large charity is given in Chapter 29, Figure 29.5. marginality of HR practitioners in
management decision-making processes,
especially at a strategic level. The HR
The values of HR professionals
function has an inward-looking tendency to
The most important aspect of HR values is the ethical
stance HR people take in promoting people manage- identify professional expertise mainly with
ment policies and practices that are just, fair and take administrative concerns over who controls
account of the interests of employees as well as those
HR activities, rather than questions of HR
of the organization. The pressure on HR practitioners
in the private sector is to promote the interests of practices or who has responsibility for
the business and thus increase shareholder value. In implementing HR policy.
the public sector, the pressure is to further the aims of
Caldwell (2004: 212)
the organization. The problem is that, as observed by
Parkes and Davis (2013: 2413): ‘HR seems wedded to
its allegiance to profitability and distancing itself from
any connections with welfare.’ They also note that:
‘The economic drivers for organizations are impor- The difficulties that HR professionals face in dealing
tant but the danger of relying only on the business with ambiguity were well described by Guest and
case is that ethics and responsibility become optional.’ King.
of the organization but often with issues which have

not only been parochial but esoteric to boot.’
Wo rd s of wi sdom Watson (1996) referred to the ‘perpetual margin-
Much management activity is typically ality’ of the HR function and Caldwell (2004: 212)
raised the ‘issue of “powerlessness” or the marginal-
messy and ambiguous. This appears to
ity of HR practitioners in management decision-
apply more strongly to people management making processes.’
than to most other activities. By implication, Traditionally, the HR practitioner’s reaction to
this problem has been, in the words of Drucker
the challenge lies not in removing or (1955: 243) to ‘search for a “gimmick” that will im-
resolving the ambiguities in the role [of HR press their management colleagues.’ This was later
called adopting ‘the flavour of the month’. HR pro-
professionals] but in learning to live with
fessionals have now become more sophisticated.
them. To succeed in this requires skills in They have enthusiastically supported approaches
influencing, negotiating and learning when that appeal to management such as engagement
policies and talent management. And in the UK, the
to compromise. For those with a high CIPD spends a lot of time attempting to boost the
tolerance of ambiguity, the role of HR status of the HR profession by stressing the strate-
gic and business partner role of practitioners.
specialist, with its distinctive opportunity to
But research conducted by Guthrie et al (2011:
contribute to the management of people in 1681) confirmed that: ‘HR departments are still
organizations, offers unique challenges; for often viewed, collectively, as a function that is more
bureaucratic than strategic.’ They noted previous
those only comfortable if they can resolve research, which has shown that ‘it is this role – the
the ambiguities, the role may become a strategic role – in which line executives believe that
form of purgatory. HR is particularly deficient’ (ibid: 1682). The fol-
lowing perceptive comment was made on this trend
Guest and King (2004: 421)
by Keegan and Francis.
The status of HR Word s of wisd om

Over the years, the HR profession has suffered from
Bearing in mind the history of HR
an inferiority complex. This may arise because the
role of HR professionals is ill-defined (they are un- practitioners’ struggles for acceptance as key
sure of where they stand), their status is not fully organizational players it is hardly surprising
recognized, or top management and line managers
have equivocal views about their value to the organ- that a way of discursively modelling the
ization. Tyson and Fell (1986: 68) remarked that ‘the concept of HR as ‘hard’ and relating it to
ambiguous character of their work contributes to others’ concepts such as ‘business-driven
the problems of convincing others of its value.’
Long ago, Drucker (1955: 243) observed that: agendas’ and ‘strategic management’ has
‘The constant worry of all personnel administrators is become so popular. It offers perhaps a way
their inability to prove that they are making a contri-
out of the dualism when they seek to claim a
bution to the organization.’ Skinner (1981: 106) in
his notorious Harvard Business Review article, ‘Big share of strategic decision making while at
hat no cattle’, stated that ‘the corporate role of per- the same time struggling to attend to the
sonnel has always been problematic’; and Tyson and
Fell (1986: 136) argued that: ‘Classical personnel employee-centred and administrative
management has not been granted a position in aspects of the role.
decision-making circles because it has frequently not Keegan and Francis (2010: 878)
earned one. It has not been concerned with the t otality
They also commented that: ‘Exhortations for HR Following a worldwide study of professional HR
practitioners to pursue strategic roles and down- associations, including the CIPD, it was argued by
play their historically embedded administrative and Farndale and Brewster (2005: 35, 46) that there was
employee championing pose a serious threat to the ‘a paradox at the heart of HR professionalism: one
integrity of HR work and claims to professional ex- of the hallmarks of HRM is the attempt to align it
pertise’ (ibid: 894). And Farndale and Brewster with business strategy and to follow the interest of
(2005: 35) observed that: ‘HR has largely relied on the owners of the business; one of the hallmarks of a
attempting to develop a strategic role to enhance its profession is having its own standards that override
professional standing.’ those of the business. Most of the time, of course,
these will be complementary, but the professional as-
sociations have no mechanisms in place to deal with
What it means to be an HR the situations where they are not… There is no man-
datory requirement for specialists to be certified, and
professional national associations do not apply common stand-
Professionalism in HR, as in other fields, can be ards of entry and performance monitoring to mem-
defined generally as the conduct exhibited by peo- bers. Indeed, practitioners are not legally required to
ple who are providing advice and services that re- be members of these professional bodies.’
quire expertise and who meet defined or generally
accepted standards of behaviour. Work done by a
professional is usually distinguished by its refer- What HR professionals do
ence to a framework of fundamental concepts that
A survey by People Management (2018) found that,
reflect the skilful application of specialized educa-
on average, the HR professionals who responded
tion, training and experience. It is accompanied by
spent their workday as follows:
a sense of responsibility and an acceptance of rec-
ognized standards. HR professionals who are ●● working on strategy/long- 17 per cent
members of the Chartered Institute of Personnel term projects
and Development (the CIPD) are required to up- ●● dealing with grievances 14 per cent
hold the standards laid down by that body. More and queries
loosely, people can be described as acting ‘profes-
●● in meetings 22 per cent
sionally’ when they do their work well and act
with integrity. ●● having informal conversations 15 per cent
The CIPD advocates the following approach to in the business
professionalism: ●● on e-mails 32 per cent
Source review
Rather than focusing on the activities it delivers, the anecdotal ‘best practice’. We propose that a
(HR) profession should build its credibility and trust principles-based approach to HR practice can
by showing its capability and courage to challenge elevate the definition of ‘good’ from practice to the
accepted practice and offer business leaders a systems level, while giving freedom to individual
range of critical perspectives on how to create people management professionals to apply their
sustainable organizational value through people, professional judgement in designing bespoke ‘good’
underpinned by a body of fundamental and practices in real-life scenarios.
internationally relevant knowledge rather than CIPD (2015b: 12)
4 Be insight-led, clearly perceiving issues or

problems which need to be tackled in order
Pa u s e for t houg ht to improve organizational capability and
It is interesting that one-third of the time is effectiveness.
spent dealing with e-mails. What does that 5 Adopt an evidence-based approach to
innovation – support proposals on HR
tell us about life in organizations today? developments with hard data derived from
people analytics, research, benchmarking
and the analysis and evaluation of the
organizational context and HR practice.
6 Define and offer HR innovations and
Criteria for success as an HR practices in language that clients or
professional customers, eg line managers, can understand.
7 Understand the concerns of managers and
1 Understand fundamental concepts explaining employees generally by keeping in touch
organizational and individual behavior and (conversing with them regularly).
take action accordingly. 8 Respond eagerly and promptly to requests
2 Develop and apply HR expertise and skills for help or advice.
(generalist or specialist as appropriate). 9 Deliver the deal – generate trust by doing
3 Understand the business model of the what was promised.
organization and the context in which it 10 Act with integrity in accordance with firm
operates and appreciate the key factors that principles relating to veracity, reliability,
affect organizational performance. uprightness and honesty.
Key learning points
HR professionals administrative expert, an employee champion and a

change agent. This first model was later modified by
HR professionals provide advice, guidance and Ulrich and Brockbank (2005), who defined five roles as
services on all matters concerning the employment of follows:
people. The role can be mainly transactional, dealing
with basic HR matters such as recruitment and 1 employee advocate;
selection, or largely transformational, operating 2 human capital;
strategically in order to make significant changes in
how the organization functions or how its employees 3 functional expert;
are treated. 4 strategic partner;
5 leader.
The Ulrich model
The most celebrated delivery model was produced by The strategic role
Dave Ulrich. He wrote that ‘HR should not be defined
by what it does but by what it delivers – results that HR professionals have a strategic role when they are
enrich the organization’s value to customers, investors, operating at a transformational level as HR directors,
and employees.’ More specifically he suggested that heads of HR centres of expertise or main HR functions
HR can deliver in four ways: as a strategic partner, an or strategic business partners.
The HR business partner role The service delivery role

HR business partners work alongside their line For many HR people the emphasis is on
management colleagues in order to develop and transactional activities such as recruitment,
implement an HR agenda which contributes to training, handling day-to-day employment
achieving the business goals of the organization or matters, helping to solve people problems and
function. They share responsibility with their line dealing with employment law issues.
management colleagues for the success of the
enterprise and get involved with them in Carrying out the role of the HR
implementing business strategy and running the
business.
professional
How HR professionals carry out their roles
The partnership role of HR depends on the context in which they work (the
size and culture of the organization, the types of
professionals
activities it carries out and the requirements of
It is not just business partners who need to adopt senior management), their skills and disposition
a partnership approach with line managers. This and, importantly, the values they adopt. They
applies to all HR professionals. Partnership means will be affected by ambiguity and questions on
working with line managers to deal jointly with the status of the profession and what is
issues, people problems and, importantly, involved in being a professional. It can be a
implementing HR strategies and new HR policies difficult job to do well and the criteria for
and practices. success are demanding.
The innovation role What it means to be an HR

A strategic and therefore proactive approach to professional
HRM will mean that HR specialists will need to Professionalism in HR as in other fields can be
innovate – to introduce new processes and defined generally as the conduct exhibited by
procedures they believe will increase people who are providing advice and services
organizational effectiveness. that require expertise and who meet defined
or generally accepted standards of behaviour.
The change agent role
The implementation of strategy means that HR HR role of line managers
specialists have to act as change agents, HR can initiate new policies and practices but it
facilitating change by providing advice and is line managers that have the main
support on its introduction and management. responsibility for implementing them.
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121
10
The HRM role of line
managers
an effective contribution. The analysis conducted by
Introduction Purcell et al (2003) identified four main people man-
agement roles:
‘Line managers bring HR policies to life.’ This was
the succinct statement made by Purcell et al (2003: 1 Implementing HR policies – putting HR
58) following their extensive longitudinal research. policies into operation.
They commented that: ‘Time and again in our case 2 Enacting – how they apply the policies to
studies, whether interviewing senior executives or make them effective.
employees, the way line managers implement and
3 Day-to-day leadership – using interpersonal
enact policies, show leadership in dealing with em-
skills to get their team into action, handling
ployees and in exercising control came through as a
operational issues involving people, treating
major issue, and was often something of a concern’
employees fairly and with consideration,
(ibid: 59). They also observed that: ‘Employees are
communicating information, providing
likely to be influenced both by the HR practices
feedback on performance, coaching employees,
they experience and by their managers’ leadership
responding to suggestions and dealing with
behaviour. Such responses can be positive or nega-
problems involving individuals and teams.
tive. Poorly designed or inadequate policies can be
How and when these activities are done
‘rescued’ by good management behaviour in much
cannot be captured in a policy handbook.
the same way as ‘good’ HR practices can be negated
by poor management behaviour or weak leader- 4 Controlling the work of employees –
ship’ (ibid: 4). The role line managers play in imple- supervising employees, monitoring the
menting HR policies is crucial and in this chapter it quality of their work, trusting people to get
is examined under the following headings: on with their job and allowing them to
exercise influence over how the job is done.
●● The people management role of line managers
But line managers in practice may also have signifi-
●● How well does devolution of HR
cant HR responsibilities devolved to them such as
responsibilities to line managers work?
recruitment and training in addition to performance
●● Factors affecting the quality of the management and other duties.
implementation of HRM by line managers
●● Dealing with the issues
How well does devolution
The people management of HR responsibilities
role of line managers to line managers work?
Line managers are there to get results. But they can Questions have been raised about how well this
only do this by seeing that their team members make devolution to line managers of HR responsibilities,
however desirable, works and how well line ●● Guest and King (2004), in their study of senior
managers fulfil their people management duties, es- managers’ perceptions of the HR function,
pecially with regard to their contribution to the im- highlighted a number of examples of
plementation of HR policies. Examples are given exasperated managers who offered clear
below of the steady stream of studies on aspects of explanations of why they give low priority to
the line manager’s role in HRM, such as appraisal, initiatives emanating from the HR department,
involvement and incentive pay. These have noted including the bureaucratic requirements and
the distinction that frequently occurs between es- the transience of the initiatives as fads.
poused and enacted HR practices and have often ●● Khilji and Wang (2005), in their study in
explained that the gap has been caused by the line Pakistani banks, noted a gap between intention
managers’ lack of training, lack of interest, work and implementation with some managers
overload, and conflicting priorities. choosing not to implement HR practices.
●● McGovern et al (1997: 21) asked line ●● Vermeeren (2010) conducted research in a
managers in the seven companies they Dutch municipality and found that the HRM
studied to ‘rank in order what motivates activities perceived or experienced by
you to be involved in personnel activities’. employees will be those enacted by their
The first ranked answer in each case was supervisors. She concluded that: ‘There is no
‘personal motivation’, as opposed to significant influence of actual HRM on
targets, company values, career perceived HRM. This means that employees
advancement and other possible factors. within a division do not perceive the same
The researchers noted that ‘people HRM activities as managers pretend to
management, either in the form of carrying implement’ (ibid: 14). She noted the
out HR policies or in general, did not important influence of line managers’
emerge in the list of unwritten rules or leadership behaviour and observed that: ‘Line
measurement priorities within any of the managers have the task of executing
organizations’ (ibid: 230). organizational policies by translating them
●● Truss (2001) observed that managers may into situation-specific action directives during
well not transmit the articulated values of their interactions with employees’ (ibid: 5).
top management but reflect instead the ●● A research project carried out in 2014 by Dilys
‘informal’ culture of the firm. Robinson of the Institute for Employment
●● Purcell et al (2003: 58) reported that: Studies investigated how ‘engaging managers’ –
‘Problems of espoused policies not being people who inspire and motivate people to
enacted are quite common while questions of perform well – behave in their dealings with
what priority line managers can give to the people in their teams. The following
people management given numerous other comment made by one of these engaging
demands on their time remain a difficulty.’ managers on her approach to managing
They found through their research that line performance illustrates the approach a line
managers were frequently uncertain about manager might make to an HR policy:
their skills in dealing with people,
This organization has a very structured
particularly in terms of managing employee
performance management framework, as
behaviour or having ‘difficult conversations’. you would imagine from a big company.
The quality of the support available was I try and avoid using it unless I have to; I
important. Purcell and his colleagues would rather try and develop the personal
suggested that line managers should seek relationship with someone, to understand
‘proper’ advice from experienced HR their issue and try and improve their
colleagues, not simply a course on performance by working with them, rather
interpersonal skills. Managers are sometimes than going through procedural ways of
concerned about accepting responsibility for managing performance.
people management issues if they feel
exposed through inexperience or lack of ●● Woodrow and Guest (2014) showed how
knowledge or capability. sophisticated policies and practices to reduce
Chapter 10 | The HRM Role of Line Managers 123
bullying and harassment of staff in hospitals 1 Line managers do not have the desire to
were ignored by some line managers who perform HR responsibilities. They will
chose to give priority to other aspects of therefore prioritize operational issues over
their jobs rather than deal with this HR issues.
challenging issue. Individuals perceived that 2 They do not have sufficient capacity to spend
managers lacked the skills, motivation or time on both operational and HR issues.
time to implement policy effectively.
3 They lack sufficient HR-related competences.
●● A study by Brewster et al (2015) of line They may only have limited people
managers’ HRM responsibilities in a number management skills or may not have specialist
of European countries found large variations knowledge of, for example, legal
in the extent to which responsibility for HR requirements.
decisions was assigned to line managers.
4 HR professionals do not always provide line
More than half the organizations gave line
managers with the services they need (Bond and
managers primary responsibility for
Wise, 2003), partly because they are reluctant
workforce expansion or reduction and for
to abandon their hold over HR responsibilities
recruitment and selection.
and play a new role in supporting line
●● On the basis of his research in a major UK managers (Gennard and Kelly, 1997).
fashion retailer, Juan López-Cotarelo (2018:
5 HR departments tend to worry that line
255) suggested that: ‘Line managers make an
managers might manage people in an
important contribution to the implementation
inconsistent way so they try to prevent them
of HRM systems through exerting their
from interpreting and adjusting HR practices
cognitive and political abilities to bring about
to address what the managers perceive to be
decisions that are well suited to their local
local requirements (Harris, 2001; Bond and
situations.’ He noted that researchers have
Wise, 2003).
found that the main barrier to the devolution
of HR responsibilities to line managers is their As Hope-Hailey et al (1997) pointed out, line man-
failure to engage fully in their HRM duties agers need content-related advice on how to per-
due to a lack of desire or ability, conflicting form HR activities but they do not always get it.
priorities or time pressures – especially Research by Evans (2017) in three retail firms
because organizations do not always support established that HR policies were not carried out
them adequately in their HRM activities such effectively if they were perceived to be optional.
as formal training or incentives. Where line managers had in-store HR colleagues,
less ambiguity was reported. Evans commented that
this highlighted the importance of HR professionals
in championing and supporting the delivery of HR
Pa us e for t houg ht strategy. She also noted that HR was one of many
roles for the managers – they were also responsible
How would you sum up the issues relating for store management, general line management
to the HR responsibilities of line managers? and customer service. The complex nature of their
roles led to a high workload. As a result of this, HR
was deprioritized in some cases, especially when
HR outcomes weren’t measured.
Factors affecting the quality
of the implementation of Pau se for th ou gh t
HRM by line managers What would you say to a line manager who
Five main factors affecting the quality of the imple- was clearly neglecting his people
mentation of HRM by line managers were identi- management responsibilities?
fied by Guest and Bos-Nehles (2013: 91–92):
Provide them with time to carry out their

Dealing with the issues ●●
people management duties, which are
often superseded by other management
duties.
●● Select them carefully with much more
Wo rd s o f w isdom attention being paid to the behavioural
competencies required.
It is not just about getting good managers
●● Support them with strong organizational
but about establishing the context in which values concerning leadership and people
they can be good managers, and providing management.
them with the policy tools to do the job well. ●● Encourage the development of a good
Purcell et al (2003: 106) working relationship with their own
managers.
●● Ensure they receive sufficient skills training
to enable them to perform their people
The most intractable issue is the tendency of line management activities such as performance
managers to prioritize operational matters at the ex- management, not just because this will help
pense of their HR responsibilities. This is natural. them to get better results but because it is a
Line managers are under pressure to achieve results. good in itself.
To deal with this problem, attention should be given
to job design so that allowance is made for carrying
out HR duties as well as operational ones. It would
be no use encouraging managers to take more re-
Front-line managers need-well designed HR
sponsibility for people management if the pressures
they are subjected to make it impossible. Overcoming practices to use in their people management
this problem also requires leadership and education. activities in order to help motivate and
The leadership should be provided by more senior
management who can set an example with their reward employees and deal with
own implementation of HR practices. They can performance issues.
communicate to line managers the people manage- Purcell and Hutchinson (2007: 3)
ment values of the organization and the importance
of taking those values and specific HR matters seri-
ously, not only because this will help them to get
better results but because it is a good in itself. HR
The other actions that can be taken are, first, to
professionals can help with encouragement, support
involve line managers in the development of HR
and advice.
policy so that they have their say on matters that
concern them, second, to give them thorough train-
ing and guidance so that they develop the skills re-
quired, third, as pointed out by Bowen and Ostroff
Paus e fo r t houg ht (2004), to supply them with clear policies and pro-
Can you think of anything else that could be cedures concerning their HR responsibilities and
how to apply them, and finally, to get HR profes-
done to alleviate this problem?
sionals to provide them with adequate support and
encouragement (possibly by appointing HR strate-
gic business partners to work alongside line man-
Hutchinson and Purcell (2003) made the following agers in formulating and implementing HR strate-
recommendations on how to improve the quality of gies and practices). A recommendation by the CIPD
the contribution line managers make to people on the need for management development is set out
management: below.
Chapter 10 | The HRM Role of Line Managers 125
Source review
Academic and practitioner literature is clear on two wellbeing. This means that managers need to be
points: first, that employee engagement, health and equipped with the skills and behaviours both to engage
wellbeing are key for the productivity, performance and to protect the health and wellbeing of their teams.
and success of organizations; and second, that the To achieve this, organizations need to provide the most
way that employees are managed is a vital effective management development possible.
determinant of their engagement, health and CIPD (2017: 25)
Key learning points
The people management role of line Factors affecting the quality of the
managers implementation of HRM by line
‘Line managers bring HR policies to life’ Purcell et al managers
(2003: 58). Five main factors affecting the quality of the
Line managers are there to get results. But they implementation of HRM by line managers were
can only do this by seeing that their team members identified by Guest and Bos-Nehles (2013: 91–92):
make an effective contribution. The analysis
conducted by Purcell et al (2003) identified four main 1 Line managers do not have the desire to perform
people management roles: HR responsibilities. They will therefore prioritize
operational issues over HR issues.
1 implementing HR policies;
2 They do not have sufficient capacity to spend time
2 enacting; on both operational and HR issues.
3 day-to-day leadership; 3 They lack sufficient HR-related competences.
4 controlling the work of employees. 4 HR professionals do not always provide line
But line managers in practice may also have managers with the services they need.
significant HR responsibilities devolved to them. 5 HR departments tend to worry that line managers
might manage people in an inconsistent way.
How well does devolution of HR
responsibilities to line managers Dealing with the issues
work? Hutchinson and Purcell (2003) made the following
recommendations on how to improve the quality of the
Questions have been raised about how well this
contribution line managers make to people
devolution to line managers of HR responsibilities,
management:
however desirable, works and how well line managers
fulfil their people management duties, especially with ●● Provide them with time to carry out their people
regard to their contribution to the implementation of management duties, which are often superseded
HR policies. by other management duties.
●● Select them carefully with much more attention ●● Encourage the development of a good working
being paid to the behavioural competencies relationship with their own managers.
required. ●● Ensure they receive sufficient skills training to
●● Support them with strong organizational values enable them to perform their people management
concerning leadership and people management. activities such as performance management.
References
Bond, S and Wise, S (2003) Family leave policies and Hutchinson, S and Purcell, J (2003) Bringing Policies
devolution to the line, Personnel Review, 32 (1), to Life: The vital role of front line managers in
pp 58–72 people management, London, CIPD
Bowen, D E and Ostroff, C (2004) Understanding Khilji, S E and Wang, X (2006) ‘Intended’ and
HRM-firm performance linkages: the role of the ‘implemented’ HRM: the missing linchpin in
‘strength’ of the HRM system, Academy of strategic human resource management research,
Management Review, 29 (2), pp 202–21 International Journal of Human Resource
Brewster, C, Brookes, M and Gollan, P J (2015) The Management, 17 (7), 1171–89
institutional antecedents of the assignment of López-Cotarelo, J (2018) Line managers and HRM: A
HRM responsibilities to line managers, Human managerial discretion perspective, Human
Resource Management, 54 (4), pp 577–97 Resource Management Journal, 28 (2), pp 255–71
CIPD (2017) Developing managers to manage McGovern, F, Gratton, L, Hope-Hailey, V, Stiles, P
sustainable employee engagement, health and and Truss, C (1997) Human resource management
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developing-managers-to-manage-sustainable- Journal, 7 (4), pp 12–29
employee-engagement-health-and-well- Purcell, J and Hutchinson, S (2007) Front-line
being_2017_tcm18-18364.pdf (archived at https:// managers as agents in the HRM performance
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Evans, S (2017) HRM and front line managers: the Resource Management Journal, 17 (1), pp 3–20
influence of role stress, International Journal of Purcell, J, Kinnie, K, Hutchinson, S, Rayton, B and
Human Resource Management, 28 (22), pp 3128–48 Swart, J (2003) Understanding the People and
Gennard, J and Kelly, J (1997) The unimportance of Performance Link: Unlocking the black box,
labels: the diffusion of the personnel/HR function, London, CIPD
Industrial Relations Journal, 28 (1), pp 27–42 Robinson, D (2014) The engaging manager and sticky
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performance: the role of effective implementation, studies.co.uk/system/files/resources/files/493.pdf
in (eds) J Paauwe, D E Guest, P M Wright, HRM (archived at https://perma.cc/W8YT-99NT)
and Performance, Chichester, Wiley, pp 79–96 [accessed 17 November 2018]
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41 (3), pp 401–23 pp 1121–49
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line managers’ values, beliefs and perspectives, implementation and its effect on performance,
International Journal of Human Resource Paper presented at the EGPA conference,
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in the ’90s, Human Resource Management policies to prevent bullying and harassment, Human
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127
PART III
Human resource
management processes
PA R T I I I CO N T E N T S
11 Evidence-based HRM
12 HR analytics
13 e-HRM
14 Artificial intelligence and HRM
15 Knowledge management
16 Competency-based HRM
17 The ethical dimension of HRM
18 Corporate social responsibility
management approaches rather than the practices

Introduction such as employee resourcing and learning and de-
velopment that are concerned with particular HR
The HR processes covered in this part are those activities.
which deal with aspects of HRM that affect how it
operates generally such as the use of evidence-based
128

129
11
Evidence-based HRM
Introduction
Word s of w isd om
Increasingly, it is being emphasized that people
It looks as if the movement towards more
management professionals should adopt an
evidence-based management approach to their
evidence in the [HR] profession is now
work, especially when they are developing new HR picking up pace – and with the growing
strategies and policies and introducing new
practices. This chapter starts with definitions of
availability of data, and rising investment in
evidence-based HRM and the basic process
analytics capability in the function, it may
of evidence-based management. It then describes
now be the time to build evidence-based
the approach to evidence-based HRM with particu-
lar reference to people analytics, benchmarking and management into the foundation of the
research. profession, and finally put to bed any
criticism that HR is driven by gut alone.
Evidence-based HRM Houghton (2016)
defined
It has been said (Rousseau and Barends, 2011: 221) Evidence-based HRM is associated with the con-
that ‘blind faith has no place in professional prac- cept of evidence-based management as described
tice’. Human resource management needs to be below.
evidence-based.
Evidence-based HRM uses the information ob-
tained from HR analytics and the evaluation of Evidence-based
data about people and HR practices in the organi-
zation and the analysis of the information management
produced by benchmarking and research. The

purpose is to inform decisions on HR strategies, As defined by Barends et al (2014), evidence-based
innovations and practices and to ensure that such management considers data and insights that can in-
decisions are made by reference to the best avail- form evidence-based practice, a concept that stems
able evidence. As observed by Reay et al (2009: 13), from the view that good decisions arise from the com-
the watchwords are ‘evidence before action’. bination of critical thinking and the conscientious,
130 Part 3 | Human Resource Management Processes
explicit and judicious use of the best available evi- The approach to evidence-based
dence from multiple sources.
management
Source review
Wo rd s o f w isdom
Evidence-based management features a Evidence-based management is about making
decisions through the conscientious, explicit and
willingness to put aside belief and
judicious use of four sources of information:
conventional wisdom – the dangerous practitioner expertise and judgment, evidence from
half-truths that many embrace – and replace the local context, a critical evaluation of the best
research evidence, and the perspectives of those
these with an unrelenting commitment to
people who might be affected by the decision.
gather the necessary facts to make more Briner et al (2009: 19)
intelligent and informed decisions.
Pfeffer and Sutton (2006: 70)
As described below, the essential elements of evidence-

based management are (1) the use of evidence-based
questions, (2) the use of the four sources of informa-
Briner et al (2009: 22) explained that evidence-based tion to obtain answers to these questions, (3) the
management is: critical evaluation of the data obtained and (4) reach-
ing a decision on the action required on the basis of
●● something managers and practitioners do;
the evaluated data.
●● about the practice of management;
●● a family of related approaches to decision Evidence-based questions
making;
The purpose of evidence-based questions is to
●● a way of thinking about how to make establish what the situation is, what needs to be
decisions; done about it and what information is required to
●● about using different types of information; inform decisions. Questions such as the following
●● about using a wide range of different kinds might be asked:
of research evidence depending on the ●● What are we trying to do here, what’s
problem; important to this organization, how do we
●● about using research evidence as just one of measure that?
several sources of information; ●● How are current practices helping or
●● a means of getting existing management hindering what we are trying to do and what
research out to practitioners; evidence do we have of this?
●● likely to help both the process and outcome ●● How might changes improve the delivery of
of practitioner decision making; desired outcomes?
●● about questioning ideas such as ‘best practice’. ●● How can we best implement improvements
and how can we show ourselves that they are
working?
●● What information do we need to help us
make the right decision on what to do?
●● Where will that information come from and
how will we obtain it?
Chapter 11 | Evidence-based HRM 131
Sources of information
Source review How would you characterize the essence of
evidence-based management?
Evidence-based management is about making
decisions through the conscientious, explicit and
judicious use of four sources of information:
practitioner expertise and judgment, evidence from
the local context, a critical evaluation of the best
The approach to evidence-
research evidence, and the perspectives of those based HRM
people who might be affected by the decision.
Briner et al (2009: 19) Evidence-based HRM involves:
●● setting HR strategy goals and defining
success criteria;
●● conducting a review of current HR policies
Critical evaluation and practices against these criteria, using
Critical evaluation involves making informed judge- both situation-specific evidence in the
ments about the validity, relevance and usefulness organization and information from external
of any evidence made available by establishing the benchmarking and research to identify key
degree to which it is valid and supported by the issues to address;
facts. Some of the evidence may simply be a matter ●● using HR analytics to measure the impact of
of opinion and it is necessary to scrutinize the facts those policies and practices and evaluating
and arguments and compare them with other their effectiveness by reference to the
sources of evidence to establish if the opinions are measures and success criteria;
justified or biased. ●● reviewing developments and applications of
Critical thinking is necessary. This means reflect- HR through benchmarking and the study of
ing on and interpreting data, drawing warranted research findings;
conclusions and recognizing unjustified or ill-defined
●● considering the issues that have been
assumptions (see also Chapter 59).
identified and the messages from
benchmarking and research and developing
Reaching a decision and testing new or improved HR practices;
Decisions are reached by weighing up the evidence ●● implementing the HR changes and
and answering the following questions: establishing a policy of continuous
improvement involving measurement, review
●● What does the evidence reveal about possible
and evaluation.
courses of action in the form of a new or
revised policy or practice? A model of how these activities function is shown in
●● Does the evidence provide guidance on what Figure 11.1. This appears to describe a sequential
is likely to be the best or at least the progress in the form of a continuous cycle from goal
optimum course of action? setting, through review, measurement, evaluation,
and development activities to implementation and
●● What are the costs of implementing the
further review. This can happen in some circumstances
policy or practice and what are the benefits
but it should be emphasized that the activities are not
to stakeholders?
necessarily specified, or defined and managed in an
●● How will the policy or practice be orderly sequence. They are closely interlinked and
introduced? they may overlap. Goal setting affects all the other
●● What is likely to happen if the policy or activities. Similarly, those concerned with review,
practice is introduced? measurement and evaluation can take place at any
F I G U R E 11.1 A
model of the inter-relationships between the components of
evidence-based HRM
Review
Set HR goals and

Implement Measure
success criteria
Develop Evaluate
time (or all at once) and all of them d irectly influence practitioners and employers to gain insights into
the subsequent activities of development and imple- their workforce, HR policies and practices, with a
mentation. focus on the human capital element of the work-
The model illustrates the different ways in force, and can ultimately inform more evidence-
which evidence-based HRM can work. Using the based decision making.’ HR analytics are covered in
components of the model appropriately means detail in Chapter 12.
applying and linking them in ways which fit the
demands of the situation. It becomes a way of Benchmarking
thinking that HR practitioners can apply to any
situation or issue. Benchmarking is the process of obtaining evidence
Evidence-based HRM involves the use of HR of HR practices in other organizations to provide
analytics, benchmarking and the study of the practi- guidance on reward initiatives and improvements.
cal implications of HR research. It requires the ap- Benchmarking is carried out by studying published
plication of the analytical, logical reasoning and case studies or surveys produced by organizations
critical thinking skills described in Chapter 59. such as the CIPD, e-reward, IES, or Xpert HR; par-
ticipating as a member of a research club or organi-
zation with specialist expertise in human capital
HR analytics measurement such as PwC Saratoga or Valuentis; or
As defined by the CIPD (2018: 1): ‘HR analytics, also conducting or commissioning a special survey.
known as people analytics, is the use of people data Benchmarking sounds useful. It can generate new
in analytical processes to solve business p roblems. ideas which seem to have worked well elsewhere or it
HR analytics uses both people data, collected by HR can confirm that the business is taking the right line.
systems (such as payroll, absence management) and But it can be a waste of time. Pfeffer and Sutton
business information (for example, operations per- (2006) refer to the ‘mindless mimicry’ involved in
formance data). At its core, HR analytics enables HR what they call ‘casual benchmarking’ – defined as
ncritical emulation in which ‘the logic behind what

u performance-related pay. The academic perspective
works for top performers, why it works and what has often been to disprove its effectiveness, yet prac-
will work elsewhere is barely unravelled.’ They com- titioners have to review HR practice in their organi-
ment that people tend to imitate ‘the most visible, the zation through some means and so might rightly
most obvious and frequently, the least important want evidence as to what to do instead. As Churchill
practices’. Because companies are different, ‘what reputedly said of democracy, perhaps it’s the best of
one of them needs to do to be successful is different a bad set of alternatives. In the UK the criteria used
from what others need to do’. They suggest that the for assessing the quality of research in universities
following questions need to be answered before start- appear to be reinforcing this academic/practitioner
ing to benchmark or putting the results into effect: divide, placing great weight on pure research and
publication in the top academic journals rather than
●● Do sound logic and evidence indicate that
applied research, teaching and application.
the benchmarking target’s success is
A further problem is the often conflicting nature
attributable to the practice we seek to
of the information available from research. Academics
emulate?
spend a lot of time demolishing the conclusions
●● Are the conditions at our company similar reached by other academics or, more specifically, rub-
enough to make the learning useful? bishing the methodology used to reach these conclu-
●● Why does a given practice enhance sions. These are then replaced with conclusions
performance? reached by using their own methodology. Established
●● What are the downsides of introducing the dogmas that have percolated into the minds of man-
practice even if it is a good idea? agers who care about such things are thus excised,
leaving confusion.
The use of research-based evidence requires the
Evidence-based HRM and research application of critical evaluation techniques as de-
Evidence-based HRM is driven by a spirit of enquiry, scribed in Chapter 59 and it presents problems.
an open-minded but critical approach. Everything People may select the evidence that confirms their
that can be found out on the subject should be found own prejudices and reject that which conflicts with
out. And this means absorbing any relevant lessons them. They may have been brought up on a belief
from research. which becomes dogma and which contrary evidence
The main problem with evidence-based HR (if they ever try to find it) fails to shake. They may
based on research is that there is too much evidence. adopt the easy way out. They may not have the
A huge number of academic or quasi-academic jour- power or influence to give the research findings ef-
nals exist – hundreds can be accessed on the EBSCO fect.
journals database available through the CIPD. Much But in spite of these problems, a lot can be gained
of the research is esoteric or obscure, written in aca- by studying the surveys and research reports of such
demic jargon by academics for academics. Some organizations as the CIPD and the Institute for
articles are pertinent but managers simply don’t
Employment Studies (IES), and by consulting jour-
have the time, even if they had the inclination, to sift nals like Employee Relations, The Harvard Business
through all the information to identify what is rele- Review, The Human Resource Management Journal
vant to them. A few names may have percolated and The International Journal of Human Resource
through such as Maslow, Herzberg and Ulrich – but Management. People Management is good at pre-
the rest is silence. senting the latest trends and provides a lot of anec-
Pfeffer and Sutton (2006) point out that there is dotal data.
not enough good evidence and much of it doesn’t
quite apply. They mention that: ‘One hallmark of
solid research is conservatism – the carefulness of Pau se for th ou gh t
the researcher to point out the specific context in
which intervention A led to outcome B. Unfortunately How would you tackle an assignment to
that leaves managers wondering if the research improve the effectiveness of performance
could possibly be relevant to them.’ The perspective
is generally different between practitioners and aca- management in an organization?
demics, as evident in the contradictory findings on
Key learning points
Evidence-based HRM ●● conducting a review of current HR policies and

practices;
Evidence-based HRM uses the information obtained
from the analysis and evaluation of data about people ●● using HR analytics to measure the impact of those
and HR practices in the organization and the analysis policies and practices;
of the messages delivered by benchmarking and ●● considering the issues that have been identified
research. and the messages from benchmarking and
The purpose is to inform decisions on HR research and developing and testing new or
innovations and improvements to HR policy and improved HR practices;
practice and to ensure that such decisions are made
by reference to the best available evidence. ●● reviewing developments and applications of HR
through benchmarking and the study of research
findings;
Evidence-based management
●● implementing the HR changes.
Evidence-based management was defined by Briner
et al (2009) as follows:
Evidence-based HRM activities
Evidence-based management is about making
decisions through the conscientious, explicit and HR analytics
judicious use of four sources of information: As defined by the CIPD (2018: 1): ‘HR analytics, also
practitioner expertise and judgement, evidence known as people analytics, is the use of people data
from the local context, a critical evaluation of the in analytical processes to solve business
best research evidence and the perspectives of problems.’
those people who might be affected by the decision.
They recommended a five-step approach: Benchmarking

1 Practitioners or managers gain understanding of Benchmarking is the process of obtaining evidence of
the problem or issue. HR practices in other organizations to provide
guidance on reward initiatives and improvements.
2 Internal evidence is gathered about the issue or
Benchmarking is carried out by studying published
problem, possibly reformulating the problem and
case studies or surveys produced by organizations
making it more specific.
such as the CIPD, e-reward, IES, or Xpert HR.
3 External evidence is gathered from published
research and benchmarking. Analysis of research
4 The views of stakeholders are obtained. Evidence-based HR is driven by a spirit of enquiry; an
open-minded but critical approach. Everything that
5 All the sources of information are examined and
can be found out on the subject should be found out.
critically appraised.
And this means absorbing any relevant lessons from
research.
The approach to evidence-based HRM
This involves:
●● setting HR strategy goals and defining success
criteria;
References
Barends, E, Rousseau, D and Briner, R (2014) Houghton, E (2016) Where is evidence in the HR
Evidence-based Management: The basic principles, profession? CIPD Blog [online] https://www.cipd.
Amsterdam: Center for Evidence Based co.uk/Community/blogs/b/edward-houghton/posts/
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D3TB-QTWD) [accessed 13 August 2018] Pfeffer, J and Sutton, R I (2006) Evidence-based
Briner, R B, Denyer, D and Rousseau, D M (2009) management, Harvard Business Review, January,
Evidence-based management: concept clean-up pp 62–74
time? Academy of Management Perspectives, 23 Reay, T, Berta, W and Kohn, M K (2009) What’s the
(4), pp 19–32 evidence on evidence-based management?
CIPD (2018) HR analytics factsheet [online] https:// Academy of Management Perspectives, November,
www.cipd.co.uk/knowledge/strategy/analytics/ pp 5–18
factsheet (archived at https://perma.cc/96SJ-A4T4) Rousseau, D M and Barends, E G R (2011) Becoming
[accessed 14 July 2018] an evidence-based practitioner, Human Resource
Management Journal, 21 (3), pp 221–35
136
12
HR analytics
capital, organizational performance, and external
Introduction economic benchmarks to establish business impact
and enable data-driven decision making.’
The effectiveness of evidence-based HRM as discussed HR analytics applies measures or metrics (these
in the last chapter is largely dependent on information terms are generally used interchangeably although
about what is happening and what is likely to happen strictly speaking, metrics are decimalized measures)
to people and the process of people management in to provide the basis for measuring such things as
the organization. Providing this data and using it to employee turnover and levels of engagement, assess-
make predictions is the role of HR analytics as defined ing the impact of HRM practices, and guiding deci-
in the first two sections of this chapter. In the next sion making on present and future HRM activities.
section the process of HR analytics is examined in It is about ‘data mining’ – getting as much out of
terms of gathering data and using measures. The HR data as possible and then going on to find links,
chapter is completed with descriptions of the three correlations and, ideally, causation, between differ-
levels of HR analytics – d escriptive, multidimensional ent sets of the data, using statistical techniques.
and predictive. The analytical process may involve the handling of
‘big data’. The term was originated by McAfee and
Brynjolfsson (2012: 63), who in a Harvard Business
Review article, described it as data characterized by
Wo rd s o f w isdom sheer volume, velocity (speed with which it can be col-
HR analytics presents a tremendous lected) and variety (number of different sources, for
example, social media). They claimed that: ‘Data-driven
opportunity to help organizations decisions are better decisions – it’s as simple as that.
understand what they don’t yet know… By Using big data enables managers to decide on the basis
identifying trends and patterns, HR of evidence rather than intuition. For that reason it has
the potential to revolutionize management.’
professionals and management teams can HR analytics provides a basis for people manage-
make better strategic decisions about the ment decision making. The process of identifying
measures or metrics and collecting and analysing data
workforce challenges they may soon face.
relating to them focuses the attention of the organiza-
Huselid (2014) tion on what needs to be done to find, keep, develop
and make the best use of its human capital. Predictions
can be made to provide guidance on the development
of HR strategy and progress in achieving strategic HR
goals can be monitored. In accordance with the prin-
HR analytics defined ciple that ‘you cannot manage what you cannot meas-
ure’, the effectiveness and impact of HR practices can
As defined by Marler and Boudreau (2017: 15), HR be measured.
analytics is: ‘An HR practice enabled by information The CIPD produced the following statement of
technology that uses descriptive, visual, and statisti- their view of the analytical and measurement pro-
cal analyses of data related to HR processes, human cesses involved in HR analytics:
Chapter 12 | HR Analytics 137
Source review
HRM needs to develop as a decision science. To do answer the question. Once the question has been
this it is necessary to develop rigorous analytical answered, the management process to turn the
frameworks and models. Boudreau and Jesuthasan insight into action may involve the regular
(2011) propose the LAMP (logic, analytics, monitoring and management of specific metrics
measurement, process) model. The starting point that have been shown by the analysis to be
here is a strategic goal or problem. The first task is important for performance. The overriding point is
to develop a logic-based intuitive answer about that metrics follow from analysis rather than
what the best way of achieving this goal or solving following a standard template. Metrics and
this problem might be. This is followed by the analytics are tools for uncovering how people
‘analytics’ phase of turning the intuition into affect organizational performance rather than
research questions or hypotheses, and coming up providing summary measures of the contribution of
with a research design to answer the question or people to the bottom line.
test the hypotheses. Measures are then developed CIPD (2017a: 15)
in the context of the research design in order to
The need is to develop a framework within which

The purpose of HR analytics reliable information can be collected and analysed
such as added value per employee, productivity and
The purpose of HR analytics has been defined by measures of employee behaviour (eg attrition and ab-
the CIPD as follows: senteeism rates, engagement levels, performance fig-
ures and accident rates). The data provides guidance
to HR on future people strategy and information on
the effectiveness of existing people management prac-
Source review tices. Importantly, the data can also be used to inform
line managers on how well they are carrying out their
HR analytics enables HR and their major people management duties.
stakeholders to measure and report key workforce In more detail, the purposes to which HR analyt-
concepts, such as performance, wellbeing, ics can be put include:
productivity, innovation and alignment. This in turn
enables more effective evidence-based decisions ●● enhancing levels of engagement;
by strategic business functions. HR analytics ●● improving employee retention rates;
enables HR teams to demonstrate the impact that ●● reducing absenteeism;
HR policies and processes have on workforce and ●● evaluating the effectiveness of different
organizational performance, and can be used to sources of recruits;
demonstrate return on investment and social return
●● evaluating the effectiveness of learning and
on investment for HR activity. Business managers
development activities;
are increasingly interested in how to use HR
concepts more effectively, and so HR analytics is ●● investigating the effectiveness of performance
an important way in which HR teams can evaluate management or performance-related pay in
improving performance;
and improve people and business performance.
CIPD (2018) ●● measuring the impact of organizational
development interventions;
●● reducing accident rates;
●● providing guidance on future HR strategy.
In each area the analysis would investigate trends percentage of the number employed. Data comes
and, whenever possible, the inter-relationships be- first but establishing the need for a certain measure
tween different types of data and between the data may indicate what data is required to enable the
and performance. This evidence could be used to measurement to take place.
reach conclusions about any action required or to The gathering and analysis of data is facilitated
evaluate the effectiveness of action already taken. by the use of eHRM, including artificial intelligence
(AI), as covered in Chapters 13 and 14.
There are a number of levels on which organiza-
tions operate with regard to data collection and
Pa us e fo r t houg ht management. The model in Table 12.1 illustrates
this and offers some guidance for organizations
Why is HR analytics important? starting out on the process of generating human
capital data. The steps for the generation of good-
quality human capital data are:
1 Start with basic data and analysis restricted
The process of HR analytics to identifying trends and patterns and what
they mean.
HR analytics gathers evidence and understanding 2 Demonstrate its integrity by ensuring it is
that can be put to good use. It is something that the accurate, reliable and of value.
HR function should be involved in doing. However,
help in dealing with highly technical processes such 3 Progress to higher levels of data collection
as multivariate analysis for predictive analytics can and demonstrate the values of particular
be provided by analytic consultants who carry out processes and enable managers to see how
experimental design, people data modelling (creat- their actions can impact on performance.
ing a model for HR data to be stored in a database), 4 Identify the drivers of business performance.
simulation and optimization to address HR issues
and concerns. HR analytics involves the analysis
and application of data, measures, information and HR analytics levels
knowledge as defined below:
There are three levels of HR analytics:
●● data consists of the basic facts – which as
interpreted through measures contribute to 1 Descriptive analytics: the use of data to
information and knowledge; record a particular aspect of HR and provide
●● measures or metrics are means of recording, information on what has been happening to,
analysing and interpreting data; for example, labour turnover or absence rates.
●● information is data which has been processed 2 Multidimensional analytics: the combination
in a meaningful way; as Drucker (1988) of different sets of data to establish any
wrote, ‘information is data endowed with relationships (correlations) between them
meaning and purpose’; and, hopefully, indicate causation (eg that a
particular HR initiative has caused an
●● knowledge is information put to productive
improvement in performance).
use; it is often intangible and it can be
elusive – the task of tying it down, encoding 3 Predictive analytics: the analysis and use of
and distributing it through knowledge historical data to predict trends and therefore
management activities can be tricky. provide guidance on HR strategy
Data is raw material; measures or metrics assemble

and analyse that raw material so that conclusions
can be reached on its value and significance. Thus Pau se for th ou gh t
data may be available on the number of people leav- Can you give any examples of the use of any
ing in a period but this will be interpreted as a meas-
ure of employee turnover – the number leaving as a of these types of analytics?
TA B L E 12.1 Levels of data collection
Level
Basic Intermediate Higher
Action ●● Collect basic input data eg ●● Design data collection for ●● Identify key performance
absence, employee turnover. specific human capital needs. indicators relating to the
●● Identify useful data already For example, conduct an business strategy, and design
available such as data from employee attitude survey to and implement data collection
pay reviews, performance measure satisfaction, or follow processes to measure against
management, job evaluation, up on training activity to monitor them.
training, the recruitment implementation and use. ●● Feed both quantitative and
process. ●● Use this data to inform the qualitative information into an
●● Use this data to design and implementation of analysis model such as a
communicate essential people management policies balanced scorecard.
information to managers and processes. ●● Provide managers with
about absence, turnover or ●● Look for correlations between indicators on a range of
accident levels, compared by data – for example, whether measures designed to inform
department. high levels of job satisfaction them on performance and
●● Look for trends or patterns in occur when certain HR practices progress in their department.
the data and investigate their are in place, such as ●● Accompany this with specific
causes. performance management, actions to be taken informed by
career management or flexible the resulting human capital data.
working. ●● Interpret and communicate
●● Communicate the value of data in ways that will be
processes to line managers and meaningful to a range of
identify specific actions to audiences.
improve people management.
Outcome ●● Measures of efficiency and ●● Measures of process. ●● Identification of the drivers of

effectiveness. ●● Information to help design the business performance.
●● Basic information for HR model that's most likely to ●● Information that will enable
managers on headcount, contribute to performance. better-informed decision
make-up of the workforce, ●● Communication to managers not making both internally on the
and so on. just how to implement management of people and
●● Identification of any action processes but with externally on the progress with
that might be needed as a accompanying information on regard to strategy.
result of these measures – why they are important and
for example, to reduce what they can achieve.
accident rates, to improve
the diversity profile of the
workforce or to reduce
absence.
and sickness, employee turnover, health and

Descriptive analytics safety, pay.
Descriptive analytics cover the following types of ●● People development and performance
data: data – learning and development
●● Basic workforce data – demographic data programmes, performance management/
(numbers by job category, sex, ethnicity, age, potential assessments, skills and
disability), working arrangements, absence qualifications.
●● Employee engagement data – engagement Multidimensional analytics

surveys
●● Perceptual data – opinion surveys, focus Multi-dimensional analytics is a form of descriptive
groups, exit interviews. analytics in which different sets of data or ‘variables’
are compared to show the extent to which there is
●● Performance data – financial, operational any relationship between them. A ‘dependent varia-
and customer. ble’ is one that may be affected by changes in an
A summary of HR data and its possible uses is given ‘independent variable’. In effect, when planning the
in Table 12.2. analysis a hypothesis is made that one or more of the
TA B L E 12.2 A summary of HR data and its possible uses
Data Possible use: analysis leading to action
Workforce composition – gender, ethnicity, age, ●● Analyse the extent of diversity

full-time, part-time ●● Assess the implications of a preponderance of employees in
different age groups, eg extent of losses through retirement
●● Assess the extent to which the organization is relying on
part-time staff
Length of service distribution ●● Indicate level of success in retaining employees

●● Indicate preponderance of long- or short-serving employees
●● Enable analyses of performance of more experienced
employees to be assessed
Skills analysis/assessment – graduates, ●● Assess skill levels against requirements

professionally/technically qualified, skilled workers ●● Indicate where steps have to be taken to deal with shortfalls
Attrition – employee turnover rates for different ●● Indicate areas where steps have to be taken to increase
categories of management and employees retention rates
●● Provide a basis for assessing levels of commitment
Attrition – cost of ●● Support business case for taking steps to reduce attrition
Absenteeism/sickness rates ●● Identify problems and need for more effective attendance
management policies
Average number of vacancies as a percentage of ●● Identify potential shortfall problem areas

total workforce
Total payroll costs (pay and benefits) ●● Provide data for productivity analysis
Compa-ratio – actual rates of pay as a percentage of ●● Enable control to be exercised over management of pay
policy rates structure
Percentage of employees in different categories of ●● Demonstrate the extent to which the organization believes
contingent pay or payment-by-result schemes that pay should be related to contribution
Total pay review increases for different categories of ●● Compare actual with budgeted payroll increase costs
employees as a percentage of pay ●● Benchmark pay increases
(continued )
TA B L E 12.2 (Continued)
Data Possible use: analysis leading to action
Average bonuses or contingent pay awards as a % ●● Analyse cost of contingent pay

of base pay for different categories of managers and ●● Compare actual and budgeted increases
employees ●● Benchmark increases
Employee surveys of engagement levels ●● Record outcome of engagement enhancement programmes

and indicate direction of future plans
Outcome of equal pay reviews ●● Reveal pay gap between male and female employees
Personal development plans completed as a ●● Indicate level of learning and development activity
percentage of employees
Training hours per employee ●● Indicate actual amount of training activity (note that this does
not reveal the quality of training achieved or its impact)
Percentage of managers taking part in formal ●● Indicate level of learning and development activity
management development programmes
Internal promotion rate (% of promotions filled from ●● Indicate extent to which talent management programmes are
within) successful
Succession planning coverage (% of managerial jobs ●● Indicate extent to which talent management programmes are
for which successors have been identified) successful
Percentage of employees taking part in formal ●● Indicate level of performance management activity
performance reviews
Distribution of performance ratings by category of ●● Indicate inconsistencies, questionable distributions and trends
staff and department in assessments
Accident severity and frequency rates ●● Assess health and safety programmes
Cost savings/revenue increases resulting from ●● Measure the value created by employees
employee suggestion schemes
independent variables will impact in some way on that following attendance at a training course, cus-
the dependent variable. In an example given by tomer satisfaction levels go up. But this does not
Edwards and Edwards (2016), a dependent variable mean that the conclusion can be reached that course
might be the customer satisfaction score achieved by attendance causes higher levels of customer satisfac-
sales assistants and the independent variable might tion. There may be other factors such as price re-
be the hypothesis that this is improved by attending ductions or improved merchandising.
a customer service training course. Regression analy- However, even if causation cannot be established
sis as described in Chapter 61 is used to examine the with confidence, the existence of correlation can be
relationship between the variables and indicate how revealing. At least it can indicate that a positive rela-
changes in the level of the independent variable re- tionship exists between an HR initiative and desirable
late to changes in the level of the dependent variable. outcomes. This can be used to justify the investment
The analysis may show that the independent and point the way to further developments.
variable has a positive effect on the dependent vari- It may be decided when making the hypothesis
able. In the example given above, this would mean prior to the analysis that there are two or more inde-
pendent variables that might affect the dependent A predictive HR analytics exercise typically makes
variable. In this case multi-regression analysis can be use of multiple regression or multivariate analysis
used. If there are two or more dependent variables (see Chapter 61) to predict the value of a dependent
as well as two or more independent variables, multi- variable or variables based on the value of one or
variate analysis is used (see Chapter 61). more independent variables.
Use of predictive analytics

Predictive HR analytics
The following examples of the use of predictive analy
Predictive HR analytics involves the analysis and use tics were given by Edwards and Edwards (2016: 74):
of historical HR data to analyse patterns and predict
future trends. This enables evidence-based decisions ●● Diversity – prediction of ethnic diversity
to be made on HR strategy and the obtaining of in- across teams from base location function,
formation on the benefits of innovations that can be group size, team leader gender, and team
used to make out the business case for them. Predictive gender breakdown.
HR analytics have been defined as follows: ●● Engagement – predict team level engagement.
●● Employee turnover – predict team level
turnover.
Source review ●● Performance – use performance appraisal
data and pulse survey data (pulse surveys
Predictive analytics are the systematic evaluation of take place several times a year) to predict
predictive modelling using inferential statistics to individual performance in a manufacturing
existing people-related data in order to inform organization.
judgements about possible causal factors driving ●● Recruitment and selection – identify the
key HR-related performance indicators. These factors associated with recruitment, selection
predictive models can then be applied to make and induction that predict the retention of
tangible predictions about particular results or new joiners.
outcomes (eg employee or organizational behaviour) ●● Graduates – predict graduate performance
that we might expect to find given certain conditions. from demographic, assessment centre and
Edwards and Edwards (2016: 2) induction data.
But a survey by the CIPD (2017b) found that only 5
per cent of respondents were using predictive ana-
As explained by Marr (2018: 78): ‘Predictive ana-
lytics although it was more common in organiza-
lytics uses data, statistical modelling and machine
tions with larger HR departments (13 per cent of
learning to predict the likelihood of future out-
those with 100+ HR employees).
comes based on historical data. By understanding as
much as we possibly can about the past, it is possi-
ble to identify patterns and build models for what
will happen in the future.’
Keeping people informed
Clearly, HR analytics is pointless unless the people
who use it are kept informed. They must have easy
Wo rd s o f w isdom access to the data, which should be presented to
Arguably, the most practical for them in a way that can be easily assimilated.
Dashboards provide a useful way to do this. They
organizational management and with the are graphical displays using dials, ‘traffic light’ pres-
greatest potential is the emergence of entations and graphs to convey key performance
measures on an organization’s intranet system to a
predictive analytics. wide audience so that they can be acted upon easily
Fitz-Enz and Mattox (2014) and swiftly. An example of a basic dashboard with
just three dials is illustrated in Figure 12.1.
F I G U R E 12.1 Example of a dashboard
Engagement
Performance Customer satisfaction
Key learning points
HR analytics defined particular aspects of HR such as recording

employee turnover rates.
HR analytics uses statistical analyses of data to
provide the basis for assessing the impact of HRM ●● Multidimensional analytics: combines different sets
practices and the contribution made by people to of data to establish any relationships (correlations)
organizational performance to provide a basis for between them.
people management decision making. ●● Predictive analytics: analyses data to predict future
trends.
What is involved?
HR analytics involves the analysis and application of Keeping people informed
data, measures, information and knowledge HR analytics is pointless unless the people who use it
are kept informed. They must have easy access to the
HR analytics levels data, which should be presented to them in a way that
can be easily assimilated. Dashboards provide a useful
There are three levels of HR analytics:
way to do this.
●● Descriptive analytics: uses factual data to illustrate
References
Boudreau, J W and Jesuthasan, R (2011) CIPD (2017b) Outlook [online] https://www.cipd.
Transformative HR: How great companies use co.uk/Images/hr-outlook_2017_tcm18-17697.pdf
evidence-based change for sustainable advantage, (archived at https://perma.cc/3K46-AQPX)
San Francisco, CA, Jossey Bass [accessed 21 January 2019]
CIPD (2017a) Human capital metrics and analytics: CIPD (2018) HR analytics fact sheet [online] https://
assessing the evidence of the value and impact of www.cipd.co.uk/search?q=people+analytics+cipd
people data [online] https://www.cipd.co.uk/ (archived at https://perma.cc/LA4U-864V)
Images/human-capital-metrics-and-analytics- [accessed 21 January 2019]
assessing-the-evidence_tcm18-22291.pdf (archived Drucker, P (1988) The coming of the new
at https://perma.cc/3W8N-FNA6) [accessed 20 organization, Harvard Business Review, January–
January 2019] February, pp 45–53
Edwards, M R and Edwards, K (2016) Predictive HR https://perma.cc/3PZV-427E) [accessed 21 January

Analytics: Mastering the HR metric, London, 2019]
Kogan Page Marler, J H and Boudreau, J W (2017) An evidence-
Fitz-Enz, J and Mattox, J R (2014) Predictive based review of HR analytics, International
Analytics for Human Resources, Hoboken, NJ, Journal of Human Resource Management, 28 (1),
Wiley pp 3–26
Huselid, M A (2014) The Corporate Mirror [online] Marr, B (2018) Data-driven HR, London, Kogan Page
https://leadersatwork.northeastern.edu/data- McAfee, A and Brynjolfsson, E (2012) Big data: the
management/corporate-mirror-looking-big-data- management revolution, Harvard Business Review,
analytics-workforce-management/ (archived at October, pp 60–68
145
13
e-HRM
Introduction organizational boundaries (Marler and Fisher,
2013: 22).
The use of digital technologies in people management e-HRM is also known as digital HRM. The term digi-
is expanding rapidly. This chapter covers: tal refers broadly to anything to do with computers,
how they function and how they are used. Digital
●● The meaning of e-HRM
technology is concerned with computer-based prod-
●● The purpose of e-HRM ucts and solutions. In the jargon (there’s a lot of it
●● The features of e-HRM about in this field) it involves ‘digitization’ – the pro-
●● Applications of e-HRM cess of converting information from a physical format
into a digital one, and ‘digitalization’ – the process of
leveraging digitization to improve business processes.
e-HRM defined Digital HRM has been defined as follows:
e-HRM is the use of digital technologies in the

form of web-based applications involving com- Source review
puter hardware and software, cloud technologies,
chatbots, social media, smart phones and block- Digital HRM deals with the nature, role and
chain to help deliver HRM services for manage- contribution of technology in strategically
ment and employees. Artificial intelligence (AI) is managing talent in a digital world. It incorporates
also a component of e-HRM but because of its social, mobile, analytics, cloud (SMAC) and other
growing significance it is dealt with separately in emerging technologies for efficient and effective
Chapter 14.
delivery of HR services. It covers related
Here are two other definitions:
management trends in performing the
●● e-HRM is a way of implementing HR operational, relational and transformational
strategies, policies and practices in aspects of HR, such as the devolution of HR
organizations through a conscious and administration via self-service applications,
directed support of and/or with the full use shared services, and outsourcing as well as
of web-technology-based channels (Parry and strategic aspects involving evidence based on big
Tyson, 2011: 2). data, predictive analysis, artificial intelligence,
●● e-HRM consists of configurations of and managerial insights. It is also conscious of
computer hardware, software, and electronic and addresses unintended consequences of
networking resources that enable intended or technology, including implications for information
actual HRM activities (eg policies, practices security and privacy.
and services) through individual and group- Thite (2019: 3)
level interactions within and across
This is a very comprehensive definition, although in In addition to the general purposes listed above,
essence it suggests that the terms e-HRM and digi- the benefits of technology as deployed by e-HRM
tal HRM are pretty well synonymous. The former is are that it can generate the data and information
more commonly used and is therefore adopted in required for HR analytics (see Chapter 12). By ap-
this chapter. plying artificial intelligence algorithms it can play
an important role in recruitment and selection and
learning and development activities as described in
Chapters 28 and 34 respectively. Other applications
include:
Wo rd s o f w isdom
●● the operation of a talent management system
Every organization requires a digital agenda
that collects, stores and processes talent
to use information to win in the financial, management information and helps to attract,
customer, and employee marketplaces. This identify, retain and develop talented people;
digital business agenda enables the ●● the provision of two-way channels of
communication between employees and
organization to source information that management within the organization that,
helps the business win in their chosen amongst other things, enable employees to
get instant answers to any queries they have
financial and customer markets.
about their conditions of employment etc;
Ulrich (2019: xvi)
●● the development of cloud collaboration
services to improve teamwork using software
such as Webex for virtual meetings, group
messaging, file sharing and whiteboarding
where the ability of the cloud to enable users
Purpose of e-HRM to access data from anywhere at any time
means that team members can easily input
Basically, e-HRM is involved in the transactional and share information – the cloud can
activities of maintaining the organization’s em-
become a brainstorming forum, allowing
ployee database. But, as described in this chapter, it ideas to be exchanged and facilitating
can do much more than that. Five goals for e-HRM communications between team members;
were listed by Parry and Tyson (2011: 7): efficiency, ●● the communication of the availability of
service delivery, strategic orientation, manager em- benefits to employees and the opportunity
powerment and standardization. Broadly similar for them to select benefit plans online;
goals were produced by Marler and Fisher (2013: ●● self-service systems that enable managers to
20), who stated that: ‘Organizational goals for access information about their staff and
e-HRM investments include cost reduction through interact with the system to input
streamlining HRM operations, improved effective- information, subject to compliance with
ness through providing better delivery of HRM ser- GDPR requirements (see Chapter 55);
vices, and transformation of the HRM function to a
●● providing employees with access to a
strategic business partner.’ However, Dave Ulrich
centralized HR database that allows them to
(2019: xix) broadened the agenda when he sug-
review their personal data and self-nominate
gested that: ‘Currently in most firms, technology is
for additional training and development.
used to deliver administrative efficiency (phase 1),
upgrade and innovate HR practices (phase 2), and The rest of this chapter is devoted to an analysis of
deliver information (phase 3). Increasingly, technol- how these purposes can be achieved by describing
ogy should encourage belonging through social and the main features of the different aspects of e-HRM,
emotional connections among employees in an or- excluding artificial intelligence, and examining how
ganization and among employees and stakeholders e-HRM is being applied in key areas of people
outside an organization.’ management.
Chapter 13 | e-HRM 147
accessing and managing cloud services via a net-

Features of e-HRM work. The system stores and processes data in a
standardized form which can then be configured for
The digital features available for e-HRM activities use in the organization. Alternatively, consumers can
as described below are the basic human resource develop a customized cloud service for themselves, a
information system (HRIS) coupled with cloud process called PaaS ( Platform-as-a-Service). Most
technology, the analysis of big data, the use of organizations choose cloud solutions from software
chatbots, social media and smart phones and the vendors such as Oracle, SAP and Workday.
more esoteric fields of gamification and block- The advantages of cloud computing are high
chains. It involves the use of ‘platforms’ – bases computing power – the ability to store and process
upon which other computer applications can be masses of data – accessibility and, potentially, lower
built upon. costs. It can replace local arrangements for bought-
in software packages. A further benefit provided by
Human resource information using cloud is that it is highly adaptive and changes
can be made very quickly, although it may be costly
system (HRIS) to do so. As noted earlier, the cloud can facilitate
An HRIS is a computer-based system for adminis- group collaboration by enabling information and
tering HR processes and procedures. It enables the ideas to be shared easily.
management of information by providing for the
storage, processing and analysis of people data.
The features of an HRIS system as described in Chatbots
more detail in Chapter 54 are the use of tradi-
Chatbots or bots are text-based applications that
tional software packages, cloud computing,
carry out a ‘natural language’ conversation by ac-
enterprise resource planning systems (ERPs), the
cessing a database of predetermined phrases. They
intranet, internal social networks, and provisions
can be designed to convincingly simulate how a
for self-service (the arrangement that allows man-
human would behave as a conversational partner.
agers and employees access to information and
Some chatbots use sophisticated natural language
the facility to interact with the system to input
processing systems, but many simpler systems scan
information).
for keywords within the input, then pull a reply
with the most matching keywords or the most simi-
Cloud computing lar wording pattern from a database.
Chatbots are either accessed through virtual
Cloud computing is a web-based platform that pro-
assis
tants such as Google Assistant and Amazon
vides on-demand shared computing resources and Alexa, or via messaging apps such as Facebook
information. Unlimited data is stored and processed Messenger or WeChat. In HR they can be used to
in separate data centres. Services such as servers, provide answers to queries from employees about
storage and applications are delivered to an organi- conditions of employment or any other HR issue
zation’s computers and devices through the i nternet. that affects them. They can also personalize learn-
Cloud users can access data and software applica- ing, tailoring it to the needs of individual learners
tions anywhere in the world on demand using lap- by answering questions and providing feedback.
tops or smart phones. Multiple consumers can be
served simultaneously without being concerned
about the underlying software, data storage and
concurrent users.
Big data
Cloud computing can be provided by an SaaS Big data consists of extremely large data sets that
(Software-as-a-Service) system – an on-demand soft- may be analysed computationally to reveal patterns,
ware delivery model in which users are charged for trends and associations.
Social media is used extensively in recruitment

and for internal employee communications, includ-
Wo rd s o f w isdom ing giving a ‘voice’ to employees.
Data-driven decisions are better decisions –
it’s as simple as that. Using big data enables Smart phones
managers to decide on the basis of evidence
Smart phones are in effect hand-held personal
rather than intuition. For that reason it has computers. As distinct from the traditional mobile,
the potential to revolutionize management. they possess extensive computing capabilities, in-
cluding high-speed access to the internet using both
McAfee and Brynjolfsson (2012: 63)
Wi-Fi and mobile broadband; most smart phones
also support Bluetooth (a wireless technology
standard for exchanging data over short d istances).
Smart phones use a mobile operating system and
Social media are able to process a variety of software compo-
Social media was defined by Kaplan and Haenlein nents, known as ‘apps’. They operate as communi-
(2010) as ‘a group of internet-based applications cations devices by transmitting online chat, video
that build on the ideological and technological chat, telephone calls and e-mails through the inter-
foundations of Web 2.0 and that allow the creation net by Wi-Fi. They can use cloud storage.
and exchange of user-generated content.’ The term Smart phones were used by 68 per cent of the
Web 2.0 describes websites that use technology be- total population in 2018 (Newzoo’s Global Mobile
yond the static pages of earlier websites. Market Report) and this penetration is increasing
Social media uses digital technologies that allow steadily – the forecast usage in 2022 is 79 per cent
people to connect with each other to create and (Statista). A survey by Deloitte in 2017 found that
share information. It involves an online digital plat- just over half the respondents used their smart
form or website (a social networking site) that phone for at least one work-related activity.
enables people to interact via ‘instant messaging’ People can easily be reached through their smart
(real-time, direct text-based communication be- phones by employers. This can facilitate two-way
tween two or more people using personal computers communications and can be used to deliver learning
or other devices) or e-mail. Organizations can oper- material, sometimes through specially developed
ate an enterprise social network (ESN), also known apps (learning on the move). Smart phones can also
as an internal social network, which functions in the be used for recruitment purposes.
same way as social networks such as Facebook.
Suppliers of ESNs include Chatter, Jive and Yammer.
They can be used to communicate information to
Gamification
employees but an important and valuable feature is Gamification is typically the use of video game
that they are interactive – they enable dialogues to design and operation elements to achieve the moti-
take place between management and employees. vation of learners through competition, incentives
C A S E S T U DY
SAP: Roadwarrior deals, challenge each other and collect points to be the best
sales professional. While competing and playing, employees
SAP, the enterprise resource management firm, designed the learn about new products and methods to close deals.
game Roadwarrior to keep their sales team up to date. Source Scholz (2019)
In Roadwarrior, sales professionals are required to close
and rewards such as the use of ‘leader boards’ New digital and mobile tools
(tables listing game leaders), the award of points for
achieving higher levels, and the provision of ‘badges’ New digital and mobile tools such as those listed
(digital indications of the level of skills reached). below are being offered by suppliers to support a
Gamification can also be used as a recruitment aid. number of key HR activities and requirements:
●● Productivity and collaboration apps. These
move well beyond traditional e-mail to
Blockchain improve productivity and engagement.
A blockchain is a distributed database, shared across Products such as Facebook’s Workplace,
a network. Every piece of information is mathemat- Slack, Microsoft Skype for Teams, Google
ically encrypted and added as a new ‘block’ to the G-suite, and solutions from companies such
chain of historical records. Each computer node (a as Basecamp, Trello, Asana, and 15 Five can
device such as a personal computer, or smart phone, support collaborative teamwork and provide
or data point) holds a copy of the data, so there is no platforms for learning, goal alignment,
single point of failure. All communications or trans- performance management, and traditional
actions are visible to anyone with access to the HR processes.
system. Users can choose to remain anonymous or ●● Engagement and feedback apps. New pulse
provide proof of their identity to others. The digital survey tools are available, replacing
nature of the system means that blockchain transac- traditional annual engagement surveys.
tions can be tied to computational logic and pro-
●● Performance management apps. A new breed
grammed. Users can set up algorithms and rules that
of continuous performance management
automatically trigger transactions
products that include feedback tools has
Blockchains enable direct, secure transactions
emerged from vendors such as Reflektive,
between individual entities. Their advantages are
BetterWorks, Zugata, HighGround,
decentralization, cryptographic security, transpar-
WorkBoard, and SuccessFactors.
ency, and immutability (once a piece of information
enters a blockchain it remains there permanently). ●● Employee service platforms. These tools
Blockchains allow information to be verified and offer an integrated service for employees
value to be exchanged without having to rely on a consisting of chatbots and natural language
third-party authority. processing with case management, content
The most familiar use of blockchains is bitcoin management, and easy-to-use mobile and
currency, but as noted by Iansiti and Lakhami, ‘It web portals.
has the potential to become the system of record for
all transactions’. Its possibilities as an e-HRM pro-
cess, especially one involving dealing with employee e-HRM achievements
problems, employee communications or voice
are being explored. One example, quoted by Research conducted by Parry and Tyson (2011) in
Whitehouse (2018), is the blockchain-powered 10 case study organizations established that effi-
anti-harassment platform for the workplace offered ciency goals were achieved by most of them. Service
by Vault. It allows employees to anonymously log delivery improvements were generally achieved,
instances of harassment and bullying, which are supporting improved effectiveness of the HR
collated and fed (at the user’s choice) directly to the function. The findings showed that a potential goal
right person in HR with the aim of encouraging for e-HRM is to standardize operational procedures
more victims to come forward. The use of block- across an organization, but they noted that: ‘The re-
chain technology makes it tamper-proof and secure, alization of improved efficiency and effectiveness is
cementing the crucial trust needed for the system to dependent on the design and implementation of the
work as intended. By cross-referencing reports, system, and increased effectiveness and involvement
Vault can also ascertain whether other victims are in delivering the business strategy may depend on
experiencing harassment by the same perpetrator, appropriate redeployment and up-skilling of HR
thus encouraging more people to speak out. staff’ (ibid: 352).
C A S E S T U DY
Development of HR technology and are able to access up-to-date company information and
training facilities. The HR team can push out pulse surveys,
Turkish Bank DenizBank has developed a new suite of send recognition messages and provide information to
digital HR applications. Employees create personal profiles employees.
Key learning points
e-HRM defined Big data

e-HRM is the use of digital technologies in the form of Big data consists of extremely large data sets that may
web-based applications involving computer hardware be analysed computationally to reveal patterns, trends
and software, cloud technologies, analytics, artificial and associations.
intelligence (AI), social media, smart phones and
blockchain to help deliver HRM services. HR analytics
HR analytics are concerned with the application of
Purpose of e-HRM sophisticated statistical analyses to answer HR
Five goals for e-HRM were listed by Parry and Tyson questions using people-related data.
(2011: 7) – efficiency, service delivery, strategic
orientation, manager empowerment and Social media
standardization.
Social media was defined by Kaplan and Haenlein
(2010) as ‘a group of internet-based applications that
Human resource information system build on the ideological and technological foundations
(HRIS) of Web 2.0, and that allow the creation and exchange
An HRIS is a computer-based system for administering of user-generated content.’
HR processes and procedures.
Smart phones
Cloud computing Smart phones are in effect hand-held personal
Cloud computing is a web-based platform that computers. As distinct from the traditional mobile, they
provides on-demand shared computing resources and possess extensive computing capabilities, including
information. high-speed access to the internet using both Wi-Fi and
mobile broadband.
Artificial intelligence
Blockchain
Artificial intelligence (AI) is the use of computers to
engage in human-like thought processes, such as A blockchain is a distributed database, shared across
learning, reasoning, and self-correction. a network.
Applications of e-HRM Digital learning uses Web 2.0 technology and

includes e-learning, virtual learning environments,
The basic application of e-HRM is a human resource social network learning, knowledge sharing, the use of
information system (HRIS). e-HRM applications can smart phones to provide ‘learning on the move’
operate in almost every other aspect of HRM but the through apps, and the use of game-based learning.
major application areas are recruitment and learning Other e-HRM applications include:
and development.
In recruitment, organizations have been using
●● the use of AI data-mining algorithms;
corporate websites, social media and internet job ●● the operation of a talent management system;
boards as important recruitment sources. Recently,
●● the communication of the availability of benefits to
AI has come to the fore. Algorithms can sift CVs,
employees and the opportunity for them to select
profile existing high performers and apply their
benefit plans online;
traits to candidates, write job descriptions that
eliminate any form of biased language, and remove ●● self-service systems;
all trace of protected characteristics from ●● providing employees with access to a centralized
applications. HR database.
References
Deloitte UK (2017) Mobile Consumer Survey newzoos-2018-global-mobile-market-report-
[online] https://www2.deloitte.com/ch/en/pages/ insights-into-the-worlds-3-billion-smartphone-
technology-media-and-telecommunications/ users/ (archived at https://perma.cc/DD2W-22A5)
articles/mobile-consumer-survey.html (archived [accessed 13 July 2019]
at https://perma.cc/XW8N-NBUK)[accessed 21 Parry, E and Tyson, S (2011) Desired goals and actual
July 2018] outcomes of e-HRM, Human Resource
Iansiti, M and Lakhami, K R (2017) The truth about Management Journal, 21 (3), pp 335–54
blockchain, Harvard Business Review, January/ Scholz, T M (2019) Gamification and e-HRM, in (ed)
February, pp 118–27 M Thite, e-HRM: Digital approaches, directions
Kaplan, A M and Haenlein, M (2010) Users of the and applications, Abingdon, Routledge,
world, unite! The challenges and opportunities of pp 140–150
social media, Business Horizons, 53 (1), pp 59–68 Thite, M (2019) Electronic/digital HRM: a primer, in
Marler, J H and Fisher, S L (2013) An evidence-based (ed) M Thite, e-HRM: Digital approaches,
review of e-HRM and strategic human resource directions and applications, Abingdon, Routledge,
management, Human Resource Management pp 1–21
Review, 23 (1), pp 18–36 Ulrich, D (2019) Foreword and forward thinking on
McAfee, A and Brynjolfsson, E (2012) Big data: the digital HR, in (ed) M Thite, e-HRM: Digital
management revolution, Harvard Business Review, approaches, directions and applications, Abingdon,
October, pp 60–68 Routledge, pp xvi–xix
Newzoo (2008) Mobile Global Market Report Whitehouse, E (2018) We can change the way you
[online] https://newzoo.com/insights/articles/ work, People Management, July/August, pp 30–34
152
14
Artificial intelligence
and HRM
Introduction The components of AI
Artificial intelligence (AI) is the use of computers to As explained by Eubanks (2019) the term ‘artificial
engage in human-like thought processes, such as intelligence’ is actually an overarching category
learning, reasoning, and self-correction. Essentially, with four functions falling under that heading,
AI enables us to do things with what has been namely:
learned. AI systems function without being explic-
1 Machine learning, which provides computers
itly programmed. They are based on the data they
with the ability to learn without being
collect and the analysis of how the systems are used.
explicitly programmed. Machine learning
AI can analyse data (‘data mining’) and handle
uses algorithms (sets of rules to be followed
questions by looking up an answer in a data set.
in calculations or other problem-solving
HR is a highly administrative function and poten-
operations) to spot patterns and associations
tially, AI can significantly reduce the amount of this
in data sets and predict what will happen
type of work. More positively, it can generate data
next or initiate an action. As explained by
that informs decision making on people manage-
Marr (2018: 19) machine learning gives the
ment issues. In this chapter, a description is given of
AI system access to data and lets it ‘learn’ for
the main components of AI and its HR applications,
itself. The more data it is given, the more it
and consideration is given to the risks involved in
learns and the more accurate it becomes. In
using AI, the extent to which AI is used by HR, and
traditional machine learning, the learning
the approach that can be adopted to introducing it.
process is supervised and the programmer
tells the computer what types of things it
should be looking for based on past known
Source review outcomes. In advanced machine learning,
unsupervised algorithms learn from inference
Current emerging technology centres on artificial and not the programmer. At the end of the
intelligence (AI), including both machine learning day, any aspect of our intelligence and
and set automated algorithms, and robotics. This intuition can be boiled down to rules we
latest era is changing the nature of work in new have developed through experience and can
ways, where the technology not only assists in therefore be captured by an algorithm. But
basic physical tasks, but also tasks that require algorithms are only as good as the data
higher cognitive functions. In addition, AI and sources they rely on.
automation can result in new integrations and 2 Natural language processing, which is the
co-operation possibilities and challenges, which ability of computers to understand human
also can create new types of jobs and services. language and enables them to process and
CIPD (2019: 10) analyse large amounts of natural language
data. Natural language processing (NLP) can
Chapter 14 | Artificial Intelligence and HRM 153
be used for text mining (analysing text data According to Tata (2018), AI can provide a novel
for trends and other insights), sentiment cognitive perspective in order to:
analysis (analysing quantities of data, for
●● challenge as much as inform;
example e-mails, and determining the overall
mood or sentiment of those involved) and ●● offer a different perspective;
speech recognition. ●● act as a kind of devil’s advocate to manage
3 Deep learning (hierarchical learning), which stakeholders’ participation and process their
takes the form of a series of machine- views.
learning decisions where outputs from one The following is a summary of the specific uses of
decision inform the analysis of the next. artificial intelligence in human resource management:
Iterations continue until the output reaches
an acceptable level of accuracy; IBM’s ●● HR analytics – gathering and analysing data
Watson system is an example of deep and information on people and HRM
learning in action. processes to guide decision making.
4 Neural networks, which process information ●● Recruitment and selection – matching
in a similar way to the human brain. candidates located in a database to job/
Networks are composed of a large number person specifications; using natural language
of interconnected processing elements processing to predict which words in job
(neurons) working in parallel to solve a advertisements will make the most impact on
specific problem. Neural networks learn by candidates. At Unilever, as reported by Reilly
example. They cannot be programmed to (2018), the time to hire has been cut by 75
perform a specific task. Examples of the use per cent with the help of AI.
of neural networks are facial and ●● Talent management – identifying eligibility
handwriting recognition. for inclusion in a talent development
programme (a talent pipeline) by providing
information on performance histories.
Applications for AI in HRM
Source review
Our research shows that there is potential in principle more influence over their work. We know from an
for AI and automation to impoverish jobs, for established body of research into job demands and
example, deskilling them and making them less resources that autonomy or empowerment is an
interesting and fulfilling. However, according to important psychological ‘resource’ that helps people
employers, what is much more likely is that jobs are deal with pressure.
enriched by AI and automation and employees are HR practitioners can use these findings to position
freed from mundane tasks to focus on more value- their organizations’ use of AI and automation in a way
added or creative tasks. This is the case for pay, that strengthens employer brand: as well as being
worker control and also for physical and mental seen to be in the vanguard of work innovation, these
wellbeing, despite an increase in the pace of work for technologies can be seen to enrich people’s working
many. These findings may relate to another trend: the lives and ultimately help their careers.
tendency for AI and automation to give employees CIPD (2019: 27)
●● Learning and development – developing and feature at the individual level either as a
operating performance support systems that positive thirst for information or as a
provide on-the-job access to learning worrisome set of concerns.
material in the shape of information about ●● Workforce scheduling – scheduling workers
techniques, procedures and knowledge and onto shifts and indicating where it is best to
skill requirements with examples and advice allocate workers with specific skills.
on how they should be developed and
●● Payroll – AI algorithms can be used to check
applied. This includes coaching. For example,
initial payroll entries and calculations.
Sidekick, an AI-powered coaching platform,
uses a mix of data points to monitor ●● Employee queries and self-service problems –
employees to identify micro-behaviour setting up chatbots (bots) to answer queries
changes which require interventions such as from employees on such matters as holiday
one-on-one coaching sessions. and maternity leave entitlement or to provide
help with problems, eg with computer
●● Retention management – using data-mining
systems.
algorithms to identify potential leavers so that
action can be taken as required to retain them.
●● Employee sentiment analysis – analysing
large amounts of text, for example e-mails, Pau se for th ou gh t
to identify employee attitudes, moods or
sentiments. What do you think is likely to be the best
●● Probabilistic matches – machine learning can area to introduce AI in a typical large
identify data that is likely to be associated
organization?
with the same person but that appears in
slightly different databases. This could
CASE STUDIES
AI at the Adecco Group

In 2018 the Adecco Group, which specializes in automated recruiting processes for the vast majority of
temporary staffing, moved into AI through its acquisition the permanent positions with which the Adecco Group
of Vettery for its fully automated, zero-touch recruitment was involved.
AI platform. The acquisition gained the algorithm needed The group is also capitalizing on the market shift
to expand the group’s capabilities by the automation of towards a gig economy, driven in most part by millennials
core tasks and the ability to offer innovations to clients seeking freelance work. It has created YOSS (your own
to improve their talent recruitment and career boss), an end-to-end digital marketplace that uses AI to
management activities. The development programme match supply with demand. The platform can match
began with listing IT-related jobs because they were the freelancers with benefits and training as well as handle
easiest to codify and, in a few months, had introduced payment arrangements.
Recruitment holdings
Recruitment Holdings (a Japanese staff-servicing group) employees to the data of those who have previously
uses employee data, including personality assessments, resigned. Those at risk of resignation are interviewed by
working hours and performance evaluation to compare managers to identify any issues with their employment.
Marriot hotels
The Marriott hotel chain uses a chatbot for initial vacancies, and providing information on the company’s
interactions with job candidates by responding to culture and values.
standard questions, matching candidates’ interests with
AI risks
Word s of wisd om
An Institute for Employment Studies report (Reilly,
AI is really good at things that human
2018) noted the following risks involved in using AI:
beings are quite bad at, and human beings
●● The possibility that algorithms may be racist
or sexist because their construction reflects are really good at things that AI is quite bad
the reality of the employment situation rather at. Get them together and it’s a great
than the ideal (eg Amazon and Google).
combination.
●● AI can master competencies more rapidly
Megan Butler quoted by Jane Sims (2019: 19)
than humans and could over time diminish
human competence.
●● With machine learning, there can be a
problem in divining what the machine has
learned and how it reached its conclusions. The extent to which AI
The General Data Protection Regulations
●●
(GDPR) allow applicants to discover whether is used by HR
automated decision making has been used
and challenge an outcome if the process did
not involve human participation.
Source review
●● Will AI be able to explain why its decisions
are optimal?
As with many functions that involve administrative
●● Algorithms can seriously mislead people (like tasks, HR has activities that look ripe for the picking
satnavs sometimes) – this may happen when in the use of AI. A primary candidate is recruitment,
in recruitment selection the system gives
in particular sourcing and rating applicants, but
unimportant features too much weight or
there is also potential in learning and development
where the system uses ‘kill’ questions that
activities and fielding employee enquiries.
reject candidates on the basis of a single data
However, our research suggests that there is
item, eg a criminal record.
more potential than impact to date. Applications of
●● AI cannot replicate human intuition because AI and automation to HR processes have so far
we don’t understand how human
been relatively uncommon and less far-reaching in
consciousness functions.
their impact than for other departments, such as
●● AI may not capture the subtle connections operations and IT. One in seven organizations (14
between people that drive human behaviour. per cent) saw impacts on the HR function and even
●● It is possible to exaggerate the competence of fewer employers introducing physical or cognitive
machines and belittle human capability – automation reported that HR is the most affected
humans are especially resourceful in spotting department (7 per cent and 4 per cent respectively).
and solving problems and using their own CIPD (2019: 21)
initiative, which machines aren’t.
A CIPD survey of HR practitioners in 2018 found analysis suggests that 1984 is happening in 2019.
that the major reason for not using AI was the cost How much surveillance is necessary? How intrusive
involved. Other reasons included lack of technical should we get? AI has the dubious potential to learn
expertise, unavailability of technology and ethical personal information that employees never intended
concerns. Research by the CIPD (2019: 11) found to share with their employer.
that the lack of investment in AI was often ‘a dis- It is essential to meet the requirements of the
tinct lack of awareness of AI and its potential’. GDPR, which requires employers to obtain the con-
sent of employees or job candidates to process their
personal data (see Chapter 55).
It should also be remembered that algorithms
Pa us e fo r t houg ht have been found to replicate demographics – if the
top performers are young white men, AI will pick
What ethical concerns might you have if it up on behaviours and keywords that lean towards
was proposed to use AI for applications this group. Employers need to set clear guidelines
around the acceptable use of AI and communicate
such as sentiment analysis or sifting job these to managers and other employees. They need
applications? to work closely with vendors to ensure that any
technology deployed aligns with the expectations of
the business for fair process and compliance with
GDPR.
The advice of the ICO (the Independent Commi
ssioner’s Office) on applying AI to personal data is
Tips for practitioners on that organizations should:
introducing AI ●● Be upfront about it and explain their
purposes for using AI.
The following suggestions on introducing AI were ●● If the purposes for processing are unclear at
made by Peter Reilly (2018): the outset, give people an indication of what
●● clarify objectives; is going to be done with their data. As
processing purposes become clearer, update
●● be driven by business needs not technology; your privacy information and actively
●● liaise closely with IT; communicate this to people.
●● test systems before rolling out; ●● Inform people about any new uses of
●● maximize transparency; personal data before you actually start the
processing.
●● look for lots of small improvements rather
than going for a big bang change. ●● If AI is used to make solely automated
decisions about people with legal or similarly
significant effects, tell them what information
Ethical considerations is being used, why it is relevant and what the
likely impact is going to be.
The use of artificial intelligence involves handling ●● Consider using just-in-time notices and
personal data, which raises ethical considerations. dashboards, which can help to keep people
Data mining is all very well, but how deep should it informed and let them control further uses of
go? To some people, including the writer, sentiment their personal data.
Key learning points
Definition and use of artificial AI risks and problems

intelligence (AI) These include:
AI can significantly reduce the amount of purely ●● ‘sexist’ algorithms;
administrative work HR carries out. More positively, it
●● difficulty of knowing how conclusions have been
can generate data that can inform decision making on
reached;
people management issues
●● data protection issues;
The components of AI ●● AI cannot replicate human intuition or capture the
The term ‘artificial intelligence’ is actually an overarching subtle reactions.
category with four functions falling under that heading,
namely: machine learning, natural language processing, Tips for practitioners on introducing AI
deep learning and neural networks. The following suggestions on introducing AI were
made by Peter Reilly (2018):
Uses of artificial intelligence in human ●● clarify objectives;
resource management ●● be driven by business needs not technology;
●● liaise closely with IT;
●● recruitment and selection; ●● test systems before rolling out;
●● talent management; ●● maximize transparency;
●● learning and development; ●● look for lots of small improvements rather than
●● retention management; going for a big bang change.
●● employee sentiment analysis; Ethical considerations

●● probabilistic matches; The use of artificial intelligence involves handling
●● workforce scheduling; personal data, which raises ethical considerations.
●● payroll;
●● employee queries and self-service problems.
References
CIPD (2018) The cost of AI for HR [online] https:// Eubanks, B (2019) Artificial Intelligence for HR,
www.cipd.co.uk/news-views/changing-work-views/ London, Kogan Page
future-work/thought-pieces/cost-of-ai-hr (archived Marr, B (2018) Data-driven HR, London, Kogan Page
at https://perma.cc/A4RZ-MK7Y) [accessed 6 May Reilly, P (2018) IES Perspectives on HR: HR Network
2019] Paper 142, Brighton, Institute for Employment
CIPD (2019) People and machines: from hype to Studies
reality [online] https://www.cipd.co.uk/knowledge/ Sims, J (2019) HR will wreck AI, Work, Spring, pp
work/technology/people-machines-report (archived 16–19
at https://perma.cc/65QG-HJTQ) [accessed 6 May Tata (2018) Cognitive Diversity: AI and the future of
2019] work, London, Tata Consultancy Services
158
15
Knowledge
management
therefore dealt with in the first section of this
Introduction chapter. In subsequent sections knowledge manage-
ment is described in more detail, strategies for
Knowledge management is concerned with storing developing its practice are described, and considera-
and sharing the wisdom, understanding and exper- tion is given to the role of HR.
tise accumulated in an enterprise about its processes,
techniques and operations. It treats knowledge as a
key resource. It was defined by Tan (2000: 10) as:
‘The process of systematically and actively manag- Word s of w isd om
ing and leveraging the stores of knowledge in an
organization.’ As Ulrich (1998: 126) remarked: Knowledge is the most critical competitive
‘Knowledge has become a direct competitive advan- asset that a firm possesses.
tage for companies selling ideas and relationships.’
Grant (1996: 109)
There is nothing new about knowledge manage-
ment. Hansen et al (1999: 106) observed that: ‘For
hundreds of years, owners of family businesses have
passed on their commercial wisdom to children,
master craftsmen have painstakingly taught their The concept of knowledge
trades to apprentices, and workers have exchanged
ideas and know-how on the job.’ But they also com- Knowledge is defined as what people understand
mented that: ‘As the foundation of industrialized about things, concepts, ideas, theories, procedures
economies has shifted from natural resources to in- and practices. It can be described as know-how or,
tellectual assets, executives have been compelled to when it is specific, expertise. A distinction was made
examine the knowledge underlying their business by Ryle (1949) between ‘knowing how’ and ‘know-
and how that knowledge is used’ (ibid: 106). ing that’. ‘Knowing how’ is the ability of a person to
Knowledge management is more concerned with perform tasks, and ‘knowing that’ is holding pieces
people and how they acquire, exchange and spread of knowledge in one’s mind. According to Blackler
knowledge than it is about information technology. (1995: 1023): ‘Rather than regarding knowledge as
That is why it has become an important area for HR something that people have, it is suggested that
practitioners, who are in a strong position to exert in- knowing is better regarded as something that they
fluence in this aspect of people management. It is as- do.’ He also noted that: ‘Knowledge is multifaceted
sociated with intellectual capital theory (see Chapter 4) and complex, being both situated and abstract, im-
in that it refers to the notions of human, social and plicit and explicit, distributed and individual, physi-
organizational or structural capital. It is also linked to cal and mental, developing and static, verbal and
organizational learning (see Chapter 33). encoded’ (ibid: 1032–33).
Knowledge management should be based on an Nonaka (1991) suggested that knowledge is held
understanding of the concept of knowledge; this is either by individuals or collectively. In Blackler’s
Chapter 15 | Knowledge Management 159
(1995) terms, embodied or embraced knowledge is the purpose of knowledge management is to capture
individual and embedded, and cultural knowledge a company’s collective expertise and distribute it to
is collective. It can be argued (Scarborough and wherever it can achieve the biggest payoff. This is in
Carter, 2000) that knowledge emerges from the col- accordance with the resource-based view of the
lective experience of work and is shared between firm, which suggests that the source of competitive
members of a particular group or community. advantage lies within the firm (ie in its people and
their knowledge), not in how it positions itself in
the market. A successful company is a knowledge-
Explicit and tacit knowledge creating company.
Knowledge is possessed by organizations and
Nonaka (1991) and Nonaka and Takeuchi (1995)
people in organizations. Organizational operational,
stated that knowledge is either explicit or tacit.
technical and procedural knowledge can be stored in
Explicit knowledge can be codified – it is recorded
databanks and found in reports, libraries, policy
and available and is held in databases, in corporate
documents, manuals and presentations. It can also
intranets and intellectual property portfolios. Tacit
be moved around the organization through informa-
knowledge exists in people’s minds. It is difficult to
tion systems and by meetings, workshops, courses,
articulate in writing and is acquired through per-
‘masterclasses’, written publications and ‘communi-
sonal experience. As suggested by Hansen et al
ties of practice’, defined by Wenger and Snyder
(1999), it includes scientific or technological exper-
(2000: 139) as ‘groups of people informally bound
tise, operational know-how, insights about an in-
together by shared expertise and a passion for joint
dustry and business judgement. The main challenge
enterprise’. The intranet provides an additional and
in knowledge management is how to turn tacit
very effective medium.
knowledge into explicit knowledge.
People possess knowledge that has been acquired
through their own experiences at work. But it will
not necessarily be shared formally or even infor-
Knowledge management mally with their colleagues and crucial knowledge
defined could be lost if it remains locked up in the minds of
employees, or taken elsewhere by them if they leave
Knowledge management is about getting knowl- the organization. An important issue in knowledge
edge from those who have it to those who need it in management is how knowledge can be identified
order to improve organizational effectiveness. It and distributed.
was defined by Scarborough et al (1999: 1) as ‘any In the information age, knowledge rather than
process or practice of creating, acquiring, capturing, physical assets or financial resources is the key to
sharing and using knowledge, wherever it resides, to competitiveness. Knowledge management allows
enhance learning and performance in organiza- companies to make the best use of their employees’
tions.’ They suggested that it focuses on the devel- creativity and expertise (Mecklenburg et al, 1999).
opment of firm-specific knowledge and skills that
are the result of organizational learning processes.
Knowledge management deals with both stocks and
flows of knowledge. Stocks include expertise and Word s of wisd om
encoded knowledge in computer systems. Flows
represent the ways in which knowledge is trans- Managing knowledge inevitably means
ferred from people to people or from people to a managing both the company’s proprietary
knowledge database.
technologies and systems (which don’t walk
Knowledge management identifies relevant in-
formation and then disseminates it so that learning out of the door at the end of the day) and
can take place. It promotes the sharing of knowl- the people (who do).
edge by linking people with people and by linking
Boxall and Purcell (2000: 197)
them to information so that they learn from re-
corded experiences. As explained by Blake (1988),
expertise and they find and develop people who

Knowledge management are able to use a person-to-person knowledge-
strategies sharing approach. Experts can be identified who
can be approached by e-mail, telephone or per-
Two approaches to knowledge management strategy sonal contact.
have been identified by Hansen et al (1999): the cod- The research conducted by Hansen et al (1999)
ification strategy and the personalization s trategy. established that companies that use knowledge well
adopt either the codification or the personalization
strategy predominantly and use the other strategy
to support their first choice. They pointed out that
The codification strategy those who try to excel at both strategies risk failing
Knowledge is carefully codified and stored in data- at both.
bases where it can be accessed and used easily by
anyone in the organization. Knowledge is explicit
and is codified using a ‘people-to-document’ ap- Knowledge management
proach. The strategy is therefore document-driven.
Knowledge is extracted from the person who devel- issues
oped it, made independent of that person and r eused
for various purposes. It is stored in an electronic The strategies referred to above do not provide easy
repository for people to use, and allows people to answers. The issues that need to be addressed in de-
search for and retrieve codified knowledge without veloping knowledge management practices are dis-
having to contact the person who originally devel- cussed below.
oped it. This strategy relies largely on information
technology to manage databases and also on the use
of the intranet. The pace of change
One of the main issues in knowledge management
is how to keep up with the pace of change and iden-
The personalization strategy tify what knowledge needs to be captured and
Knowledge is closely tied to the person who has de- shared.
veloped it and is shared mainly through direct
person-to-person contacts. This ‘person-to-person’
approach means providing for tacit knowledge to Relating knowledge management
be passed on. The exchange is achieved by creating strategy to business strategy
networks and encouraging face-to-face communi-
cation between people by informal conferences, As Hansen et al (1999) showed, it is not knowledge
workshops, communities of practice, brainstorming per se but the way it is applied to strategic objec-
and one-to-one sessions. tives that is the critical ingredient in competitive-
Hansen et al (1999) proposed that the choice of ness. They suggested that ‘competitive strategy must
strategy should be contingent on the organization: drive knowledge management strategy’ and that
what it does and how it does it. Thus consultancies management have to answer the question: ‘How
such as Ernst & Young, using knowledge to deal does knowledge that resides in the company add
with recurring problems, may rely on codification value for customers?’ (ibid: 114).
so that recorded solutions to similar problems are
easily retrievable. Strategy consultancy firms such
as McKinsey or Bains, however, rely on a person-
Technology and people
alization strategy to help them to tackle the high- Technology may be central to companies adopting a
level strategic problems they are presented with codification strategy, but for those following a per-
that demand the provision of creative, analytically sonalization strategy, IT is best used in a supportive
rigorous advice. They need to channel individual role. Hansen et al (1999: 113) commented that:
In the codification model, managers need to of highly skilled people.’ Knowledge management is
implement a system that is much like a traditional about the management and motivation of knowledge
library – it must contain a large cache of documents workers who create knowledge and will be the key
and include search engines that allow people players in sharing it.
to find and use the documents they need. In the
personalization model, it’s more important to have
a system that allows people to find other people. The contribution of HR to
Scarborough et al (1999) suggested that technology
should be viewed as a means of communication
knowledge management
rather than as a means of storing knowledge.
Knowledge management is more about people than HR can make an important contribution to know
technology. Research by Davenport (1996) estab- ledge management simply because knowledge is
lished that managers get two-thirds of their infor- shared between people; it is not just a matter of
mation from face-to-face or telephone conversations. capturing explicit knowledge through the use of
There is a limit to how much tacit knowledge IT. The role of HR is to see that the organization
can be codified. In organizations relying more on has the intellectual capital it needs. The resource-
tacit than explicit knowledge, a person-to-person based view of the firm emphasizes, in the words of
approach works best, and IT can only support this Cappelli and Crocker-Hefter (1996: 7), that ‘dis-
process; it cannot replace it. tinctive human resource practices help to create
unique competences that differentiate products
and services and, in turn, drive competitiveness.’
The significance of process HR can contribute by providing advice on
culture management, organization design and de-
Blackler (1995) emphasized that a preoccupation velopment, and by establishing learning and com-
with technology may mean that too little attention munication programmes and systems. There are 10
is paid to the processes (social, technological and ways of doing this:
organizational) through which knowledge com-
bines and interacts in different ways. The key pro- 1 Help to develop an open culture in which the
cesses are the interactions between people. This is values and norms emphasize the importance
the social capital of an organization – ‘the network of sharing knowledge.
of relationships [that] constitute a valuable resource 2 Promote a climate of commitment and trust.
for the conduct of social affairs’ (Nahpiet and 3 Advise on the design and development of
Ghoshal, 1998: 243). Social networks can be par- organizations that facilitate knowledge
ticularly important in ensuring that knowledge is sharing through networks, teamwork and
shared. Trust is also required – people are not will- communities of practice.
ing to share knowledge with those they do not trust.
4 Advise on resourcing policies and provide
The culture of the company may inhibit knowl-
resourcing services that ensure that valued
edge sharing. The norm may be for people to keep
employees who can contribute to knowledge
knowledge to themselves as much as they can be-
creation and sharing are attracted and
cause ‘knowledge is power’. An open culture will
retained.
encourage people to share their ideas and knowledge.
5 Advise on methods of motivating people to
share knowledge and rewarding those who
Knowledge workers do so.
6 Help in the development of performance
Knowledge workers, as defined by Drucker (1993),
management processes that focus on the
are individuals who have high levels of education and
development and sharing of knowledge.
specialist skills combined with the ability to apply
these skills to identify and solve problems. As Argyris 7 Develop processes of social learning, ie
(1991: 100) commented, they are: ‘The nuts and bolts learning from other people by social
of management... increasingly consist of guiding and interaction, that will generate and assist in
integrating the autonomous but interconnected work disseminating knowledge.
8 Set up and organize workshops, conferences,

seminars, communities of practice and
symposia that enable knowledge to be shared Pau se for th ou gh t
on a person-to-person basis. How would you convince a CEO that
9 In conjunction with IT, develop systems for knowledge management is important and
capturing and, as far as possible, codifying
explicit and tacit knowledge. that the HR function could have an
10 Generally, promote the cause of knowledge important role in promoting it?
management with senior managers to
encourage them to exert leadership and
support knowledge management initiatives.
Key learning points
The purpose and significance of Knowledge management issues

knowledge management ●● The pace of change.
Knowledge management is about getting knowledge ●● Relating knowledge management strategy to
from those who have it to those who need it in order to business strategy.
improve organizational effectiveness.
●● IT is best used in a supportive role.
Knowledge management strategies ●● Attention must be paid to the processes (social,
technological and organizational) through which
The codification strategy – knowledge is carefully
knowledge combines and interacts in different ways.
codified and stored in databases where it can be
accessed and used easily by anyone in the ●● The significance of knowledge workers must be
organization. Knowledge is explicit and is codified appreciated.
using a ‘people-to-document’ approach.
The personalization strategy – knowledge is closely The contribution HR can make to
tied to the person who has developed it and is shared
mainly through direct person-to-person contacts. This
knowledge management
is a ‘person-to-person’ approach that involves ●● Help to develop an open culture that emphasizes
ensuring that tacit knowledge is passed on. the importance of sharing knowledge.
●● Promote a climate of commitment and trust.
Knowledge management systems
●● Advise on the design and development of
●● Creating an intranet. organizations that facilitate knowledge sharing.
●● Creating ‘data warehouses’. ●● Ensure that valued employees who can contribute
●● Using decision support systems. to knowledge creation and sharing are attracted
and retained.
●● Using ‘groupware’, ie information communication
technologies such as e-mail or discussion bases. ●● Advise on methods of motivating people to share.
●● Creating networks or communities of practice or ●● Help in the development of performance

interest of knowledge workers. management processes that focus on the
development and sharing of knowledge.
●● Develop processes of social learning that will ●● In conjunction with IT, develop systems for
generate and assist in disseminating knowledge. capturing and, as far as possible, codifying explicit
and tacit knowledge.
●● Set up and organize workshops, conferences and
communities of practice and symposia that enable ●● Generally, promote the cause of knowledge
knowledge to be shared on a person-to-person management with senior managers.
basis.
References
Argyris, C (1991) Teaching smart people how to learn, Nahpiet, J and Ghoshal, S (1998) Social capital,
Harvard Business Review, May–June, pp 54–62 intellectual capital and the organizational
Blackler, F (1995) Knowledge, knowledge work and advantage, Academy of Management Review, 23
experience, Organization Studies, 16 (6), pp 16–36 (2), pp 242–66
Blake, P (1988) The knowledge management Nonaka, I (1991) The knowledge-creating company,
explosion, Information Today, 15 (1), pp 12–13 Harvard Business Review, November–December,
Boxall, P and Purcell, J (2000) Strategic human pp 96–104
resource management: where have we come from Nonaka, I and Takeuchi, H (1995) The Knowledge-
and where are we going? International Journal of Creating Company, New York, Oxford University
Management Reviews, 2 (2), pp 183–203 Press
Cappelli, P and Crocker-Hefter, A (1996) Distinctive Ryle, G (1949) The Concept of Mind, Oxford,
human resources are firms’ core competencies, Oxford University Press
Organizational Dynamics, 24 (3), pp 7–22 Scarborough, H and Carter, C (2000) Investigating
Davenport, T H (1996) Why re-engineering failed: the Knowledge Management, London, CIPD
fad that forgot people, Fast Company, Premier Scarborough, H, Swan, J and Preston, J (1999)
Issue, pp 70–74 Knowledge Management: A literature review,
Drucker, P (1993) Post-capitalist Society, Oxford, London, IPD
Butterworth-Heinemann Tan, J (2000) Knowledge management – just more
Grant, R M (1996) Towards a knowledge-based buzzwords? British Journal of Administrative
theory of the firm, Strategic Management Journal, Management, March–April, pp 10–11
17 (special issue), pp 109–22 Ulrich, D (1998) A new mandate for human
Hansen, M T, Nohria, N and Tierney, T (1999) What’s resources, Harvard Business Review, January–
your strategy for managing knowledge? Harvard February, pp 124–34
Business Review, March–April, pp 106–16 Wenger, E and Snyder, W M (2000) Communities of
Mecklenberg, S, Deering, A and Sharp, D (1999) practice: the organizational frontier, Harvard
Knowledge management: a secret engine of Business Review, January–February,
corporate growth, Executive Agenda, 2, pp 5–15 pp 33–41
164
16
Competency-based
HRM
Introduction Behavioural competencies
Behavioural competencies define behavioural ex-
Competency-based HRM is about using the notion pectations, ie the types of behaviour required to de-
of competency and the results of competency analy- liver results under such headings as teamworking,
sis to inform and improve HR processes, especially communication, leadership and decision making
those concerned with recruitment and selection, and are sometimes known as ‘soft skills’. Criterion-
learning and development, and performance and re- referencing, ie comparing one measure or situation
ward management. It has an important part to play with a criterion in the form of another measure or
in a number of HR activities. This chapter covers: outcome, may be used to determine the relationship
●● The meaning of competency between them. They can be set out in a ‘competency
framework’, which contains definitions of the be-
●● Competency frameworks
havioural competencies used for all employees in an
●● Approaches to using competencies organization or for particular occupations such as
●● The applications of competency-based HRM managers. Guidelines on defining behavioural com-
●● Keys to success in using competencies petencies are provided in Chapter 63.
●● Competency and emotional intelligence
Technical competencies
Competency defined Technical competencies define what people have to
know and be able to do (knowledge and skills) in
The term ‘competency’ refers to an underlying char- order to carry out and meet performance expecta-
acteristic of a person that results in effective or su- tions and are sometimes known as ‘hard skills’. They
perior performance. The leading figure in defining are related to either generic roles (groups of similar
and popularizing the concept of competency was roles), or to individual roles (‘role-specific competen-
Boyatzis (1982). He conducted research that estab- cies’). They are not usually part of a b
ehavioural-based
lished that there was no single factor but a range of competency framework, although the two are linked
factors that differentiated successful from less suc- when considering and assessing role demands and
cessful performance. These factors included per- requirements.
sonal qualities, motives, experience and behavioural The terms ‘technical competencies’ and ‘compe-
characteristics. Since his contribution, three types of tences’ are closely related, although the latter has a
competencies have been identified: behavioural particular and more limited meaning when applied
competencies, technical competencies and NVQs/ to NVQs/SNVQs, as discussed below. Guidelines
SNVQs. on defining technical competencies are provided in
Chapter 61.
Chapter 16 | Competency-based HRM 165
NVQ/SNVQ competences Competency frameworks

The concept of competence was conceived in the Competency frameworks provide the basis for the
UK as a fundamental part of the process of develop- use of competencies in areas such as recruitment
ing standards for NVQs/SNVQs. These specify min- and selection, learning and development, and per-
imum standards for the achievement of set tasks formance management. The 10 most popular head-
and activities expressed in ways that can be ob- ings are:
served and assessed with a view to certification. An
1 team orientation;
element of competence in NVQ language is a de-
scription of something that people in a work area 2 communication;
should be able to do. They are assessed on being 3 people management;
competent or not yet competent. No attempt is 4 customer focus;
made to assess the level of competence.
5 results orientation;
6 problem solving;
7 planning and organizing;
Pa us e for t houg ht 8 technical skills;
9 leadership;
What is the difference, if any, between
10 business awareness.
behavioural competencies and emotional
A framework will include definitions of each
intelligence? competency heading as in the example given in

Table 16.1.
TA B L E 16.1 Example of a basic competency framework
Achievement/ The desire to get things done well and the ability to set and meet challenging goals, create own
results orientation measures of excellence and constantly seek ways of improving performance.
Business The capacity continually to identify and explore business opportunities, understand the business
awareness opportunities and priorities of the organization and constantly to seek methods of ensuring that
the organization becomes more businesslike.
Communication The ability to communicate clearly and persuasively, orally or in writing.
Customer focus The exercise of unceasing care in looking after the interests of external and internal customers to
ensure that their wants, needs and expectations are met or exceeded.
Developing others The desire and capacity to foster the development of members of his or her team, providing
feedback, support, encouragement and coaching.
Flexibility The ability to adapt to and work effectively in different situations and to carry out a variety of tasks.
Leadership The capacity to inspire individuals to give of their best to achieve a desired result and to maintain
effective relationships with individuals and the team as a whole.
(continued )
Planning The ability to decide on courses of action, ensuring that the resources required to implement
the actions will be available and scheduling the programme of work required to achieve a
defined end result.
Problem solving The capacity to analyse situations, diagnose problems, identify the key issues, establish and
evaluate alternative courses of action and produce a logical, practical and acceptable solution.
Teamwork The ability to work cooperatively and flexibly with other members of the team with a full
understanding of the role to be played as a team member.
TA B L E 16.2 Example of competency framework definition with positive and negative

indicators
Competency heading Manage continuous improvement.
Competency definition Constantly seeking ways of improving the quality of services, the relevance and appeal
of those services to the needs of customers and clients, and their effectiveness.
Competency requirement Set targets for improvement.

Develop and implement programmes for managing change.
Contribute to the development of quality assurance and control processes and ensure
that they are implemented.
Positive indicators Encourage the development of new ideas and methods, especially those concerned
with the provision of quality.
Conscious of the factors that enable change to take place smoothly.
Discuss ideas with colleagues and customers and formulate views on how to
improve services and processes.
Negative indicators Doesn’t try anything that hasn’t been done before.
Complacent, believes that there is no room for improvement.
Follows previous practices without considering whether there is any need to change.
Some frameworks illustrate these definitions with provide guidelines on the number of competencies to
descriptions of acceptable behaviour, which may be be selected (eg four to eight) and others combine
expressed as positive or negative indicators as their core framework with a menu so that users are
shown in Table 16.2. required to select the organization-wide core compe-
tencies but can add a number of optional ones.
Using competencies
Role-specific competencies
A number of approaches to using competencies are Role-specific competencies are also used by some
adopted, as described below. organizations for generic or individual roles. These
may be incorporated in a role profile in addition to
a statement of key result areas. This approach is
The ‘menu’ approach adopted in performance management processes, in
A ‘menu’ approach selects competencies that are rele recruitment person specifications and in the prepa-
vant to generic or individual roles. Some organizations ration of individual learning programmes.
Graded competencies in the future so that they can plan their own self-
directed learning programmes.
A further, although less common, application of
competencies is in graded career or job family struc-
tures (career or job families consist of jobs in a Performance management
function or occupation such as marketing, opera-
Competencies in performance management are
tions, finance, IT, HR, administration or support
used to ensure that performance reviews do not
services that are related through the activities car-
simply focus on outcomes but also consider the be-
ried out and the basic knowledge and skills re-
havioural aspects of how the work is carried out
quired, but in which the levels of responsibility,
that determine those outcomes. Performance re-
knowledge, skill or competence needed differ). In
views conducted on this basis are used to inform
such families, the successive levels in each family are
personal improvement and development plans and
defined in terms of competencies as well as the key
learning programmes.
activities carried out.
Applications of competency-
based HRM
How do you assess the level of performance
The main areas in which competencies are used are: with regard to a behavioural competency
●● recruitment and selection; such as leadership?
●● learning and development;
●● performance management;
●● reward management.
Reward management
Recruitment and selection Competency-related pay relates additional awards
Competencies are used in many organizations as to assessments of competency but it has never be-
a basis for person specifications set out under come popular. However, more frequent use is made
competency headings developed through role anal- of contribution-related pay, which provides for peo-
ysis. The competencies defined for a role are used ple to be rewarded according to both the results
as the framework for recruitment and selection, they achieve and their level of competence.
and competency-based interviews are structured
around the c ompetencies listed in the specification.
Developing a competency
Learning and development framework
Role profiles, which are either generic (covering a A competency framework should be as simple to
range of similar jobs) or individual (role-specific), understand and use as possible. The language
can include statements of the competencies re- should be clear and jargon-free. Without clear lan-
quired. These are used to assess the levels of compe- guage and examples it can be difficult to assess the
tency achieved by individuals and so identify their level of competency achieved. When defining com-
learning and development needs. Learning events petencies, especially if they are used for perfor-
can be based on competency analysis related to an mance management or competency-related pay, it is
organization’s competency framework. essential to ensure that they can be assessed. They
Competencies are also used in development cen- must not be vague or overlap with other competen-
tres, which help participants build up their under- cies and they must specify clearly the sort of behav-
standing of the competencies they require now and iour that is expected and the level of technical or
functional skills (competencies) required to meet that fits and reflects the organization’s own culture,
acceptable standards. It is helpful to address the values, core competencies and operations, but refer-
user directly (‘you will...’) and to give clear and brief ring to other lists will help to clarify the conclusions
examples of how the competency needs to be per- reached in the initial analysis and serve to check that
formed. all relevant areas of competency have been included.
Developing a behavioural competency frame- When identifying competencies, care must be taken
work that fits the culture and purpose of the or- to avoid bias because of sex or race.
ganization and provides a sound basis for a number
of key HR processes is not to be undertaken lightly. Step 4. Framework design –
It requires a lot of hard work, much of it concerned
with involving staff and communicating with them definition of competencies
to achieve understanding and buy-in. The steps re- Care needs to be exercised to ensure that definitions
quired are described below. are clear and unambiguous and that they will serve
their intended purpose. If, for example, one of the
Step 1. Programme launch purposes is to provide criteria for conducting per-
formance reviews, then it is necessary to be certain
Decide on the purpose of the framework and the that the way the competency is defined, together
HR processes for which it will be used. Make out a with supporting examples, will enable fair assess-
business case for its development, setting out the ments to be made. The following questions can be
benefits to the organization in such areas as im- used to test the extent to which a competency is
proved performance, better selection outcomes, valid and can be used:
more focused performance management, employee
development and reward processes. Prepare a pro- ●● Can you describe the competency in terms
ject plan that includes an assessment of the re- that others understand and agree with?
sources required and the costs. ●● Can you observe it being demonstrated or
failing to be demonstrated?
Step 2. Involvement and ●● Can you measure it?
communication ●● Can you influence it in some way, eg by
Involve line managers and employees in the design training, coaching or some other method of
of the framework (steps 3 and 4) by setting up a development?
task force. Communicate the objectives of the exer- It is also important at this stage to ensure that defi-
cise to staff. nitions are not biased.
Step 3. Framework design – Step 5. Define uses of the

competency list competency framework
First, get the task force to draw up a list of the core Define exactly how it is intended that the compe-
competencies and values of the business – what it tency framework should be used, covering such ap-
should be good at doing and the values it believes plications as recruitment and selection, learning
should influence behaviour. This provides a founda- and development, performance management and
tion for an analysis of the competencies required by reward.
people in the organization. The aim is to identify and
define the behaviours that contribute to the achieve-
ment of organizational success, and there should be
Step 6. Test the framework
a powerful link between these people competencies Test the framework by gauging the reactions of a
and the organization’s core competencies. balanced selection of line managers and other em-
The list can be drawn up by brainstorming. The ployees to ensure that they understand it and be-
list should be compared with examples of other com- lieve that it is relevant to their roles. Also pilot-test
petency frameworks, to avoid replicating other lists. the framework in live situations for each of its pro-
It is essential to produce a competency framework posed applications.
Step 7. Finalize the framework Keys to success in using

Amend the framework as necessary following the
tests and prepare notes for guidance on how it competencies
should be used.
●● The competencies should reflect the
Step 8. Communicate organization’s values and its needs, as
Let everyone know the outcome of the project – established by analysis, to determine the
what the framework is, how it will be used and how behaviours that will lead to high
people will benefit. Group briefings and any other performance.
suitable means should be used. ●● Frameworks should not be overcomplex.
●● There should not be too many headings in a
Step 9. Train framework – seven or eight will often suffice.
Give line managers and HR staff training in how to ●● The language used should be clear and
use the framework. jargon-free.
●● Competencies must be selected and defined
Step 10. Monitor and evaluate in ways that ensure that they can be assessed
by managers – the use of ‘behavioural
Monitor and evaluate the use of the framework and indicators’ is helpful.
amend it as required.
●● Frameworks should be regularly updated.
Key learning points
Competency-based HRM ●● Technical competencies define what people have

to know and be able to do (knowledge and skills) to
Competency-based HRM is about using the notion of carry out their roles effectively.
competency and the results of competency analysis to
inform and improve HR processes, especially those ●● NVQ/SNVQ competencies specify minimum
concerned with recruitment and selection, learning standards for the achievement of set tasks and
and development, and performance and reward activities expressed in ways that can be observed
management. and assessed with a view to certification.
Competency defined The contents of competency frameworks

(the 10 most popular headings)
The term ‘competency’ refers to an underlying
characteristic of a person that results in effective or 1 Team orientation.
superior performance. The different types of
2 Communication.
competencies are:
3 People management.
●● Behavioural competencies define behavioural
expectations, ie the type of behaviour required to 4 Customer focus.
deliver results under such headings as 5 Results orientation.
teamworking, communication, leadership and
6 Problem solving.
decision making.
7 Planning and organizing. ●● Communicate the objectives of the exercise to staff.
8 Technical skills. ●● Draw up a list of the core competencies of the

business.
9 Leadership.
●● Define the competencies for inclusion in a
10 Business awareness.
competency framework.
Uses of competencies ●● Test and finalize and communicate framework.
●● Recruitment and selection.

Keys to success in using competencies
●● Learning and development.
●● The competencies should reflect the organization’s
●● Performance management. values and its needs, as established by analysis, to
determine the behaviours that will lead to high
●● Reward.
performance.
How to develop a competency framework ●● Frameworks should not be overcomplex.
●● Decide on the purpose of the framework and the ●● There should not be too many headings in a
HR processes for which it will be used. framework – seven or eight will often suffice.
●● Make out a business case for its development, ●● The language used should be clear and jargon-
setting out the benefits. free.
●● Prepare a project plan that includes an assessment ●● Competencies must be selected and defined in ways
of the resources required and the costs. that ensure they can be assessed by managers –
the use of ‘behavioural indicators’ is helpful.
●● Involve line managers and employees in the design
of the framework. ●● Frameworks should be regularly updated.
Reference
Boyatzis, R (1982) The Competent Manager, New York, Wiley
171
17
The ethical dimension
of HRM
Introduction
Word s of w isd om
The theme of this chapter is the importance of
recognizing that there is an ethical dimension to It is only by recognizing the moral
human resource management. As Boxall et al (2007: presuppositions of business theory, refining
5) observed: ‘While HRM does need to support them, testing them by living differently, and
commercial outcomes (often called “the business
case”), it also exists to serve organizational needs revising them that we can invent and
for social legitimacy.’ This means exercising social reinvent better ways to live.
responsibility, ie being concerned for the interests Freeman (1994: 412)
(wellbeing) of employees and acting ethically with
regard to the needs of people in the organization
and the community.
To grasp this ethical dimension it is necessary to
understand the nature and principles of ethics, the The meaning and concerns
ethical role of HR and the ethical guidelines they
can use. It is also necessary to know about ap- of ethics
proaches to resolving ethical dilemmas. These issues
are covered in this chapter under the following Ethics is defined by the Compact Oxford Dictionary
headings: as being ‘related to morals, treating of moral ques-
tions’, and ethical is defined as ‘relating to morality’.
●● The meaning and concerns of ethics Morality is defined as ‘having moral qualities or en-
●● The nature of ethical decisions and dowments’ and moral is defined as ‘of or pertaining
judgements to the distinction between right and wrong’. Petrick
●● The ethical concepts of deontology, and Quinn (1997: 42) wrote that ethics ‘is the study
utilitarianism, stakeholder theory and of individual and collective moral awareness, judge-
discourse theory ment, character and conduct’. Hamlin et al (2001:
98) noted that ethics is concerned with rules or prin-
●● The significance of the concepts of equity,
ciples that help us to distinguish right and wrong.
justice and fair dealing
Ethics and morality are sometimes treated as being
●● HRM ethical guidelines synonymous, although Beauchamp and Bowie (1983:
●● How to resolve ethical dilemmas 1–2) suggested that they are different: ‘Whereas mo-
●● The ethical role of HR rality is a social institution with a history and code of
learnable rules, ethical theory refers to the philosophi-

cal study of the nature of ethical principles, decisions
grounds upon which competing claims can
and problems.’ Clearly, ethics is concerned with
matters of right and wrong and therefore involves be made. Decisions are judgements usually
moral judgements. Even if ethics and morality are not involving choices between alternatives, but
the same, the two are closely linked. As Clegg et al
(2007: 111) put it: ‘We understand ethics as the social rarely is the choice between right and
organizing of morality.’ Simplistically, ethics could be wrong... Moral disagreement and
described as being about behaviour while morality is judgements are concerned with attitudes
about beliefs.
Ethics is concerned with making decisions and and feelings, not facts.
judgements about what is the right course of action Winstanley and Woodall (2000a: 8–9)
to take. It can be described in terms of a framework
that sets out different approaches and can be ex-
tended to embrace particular concepts that affect
and guide ethical behaviour, namely equity, justice
and fair dealing. These approaches and concepts are
Ethical frameworks
discussed below.
The ethical concepts of deontology, utilitarianism,
stakeholder theory and discourse theory, as de-
scribed below, provide frameworks that can be used
The nature of ethical to evaluate HRM policies and practices.
decisions and judgements
As defined by Jones (1991: 367), an ethical decision Deontological theory
is one that is morally acceptable to the larger com- Deontological (from the Greek for ‘what is right’)
munity. He also noted that: ‘A moral issue is present theory maintains that some actions are right or
where a person’s actions, when freely performed, wrong irrespective of their consequences. It is as-
may harm or benefit others. In other words, the ac- sociated with Kant’s notion of the categorical im-
tion or decision must have consequences for others perative, which contains two main propositions:
and must involve choice, or volition, on the part of (a) that one should follow the principle that what is
the actor or decision maker’ (ibid: 367). Clegg et al right for one person is right for everyone, and thus
(2007: 112) emphasized that: ‘Ethical decisions you must do to others as you would be done by;
emerge out of dilemmas that cannot be managed in and (b) in the words of Rawls (1973: 183): ‘We
advance through rules.’ People have to make choices. must treat persons solely as ends and not in any
Foucault (1997: 284) asked: ‘What is ethics, if not way as means.’
the practice of freedom?’
Utilitarianism
Wo rd s o f w isdom Utilitarianism is the belief that the highest principle
of morality is to maximize happiness, the overall
Ethics is not about taking statements of balance of pleasure against pain. Actions are justi-
morality at face value; it is a critical and fied when they result in the greatest good to the
greatest number. As Sandel (2010: 33) explained,
challenging tool. There are no universally utilitarianism says that ‘the morality of an action
agreed ethical frameworks... Different depends solely on the consequences it brings about;
the right thing to do will be whatever brings about
situations require ethical insight and
the best state of affairs.’ In other words, actions
flexibility to enable us to encapsulate the should be judged in terms of their results. This can
be interpreted as supporting the dubious principle
Chapter 17 | The Ethical Dimension of HRM 173
that the end justifies the means – torture is all right and without bias. To be unfair to someone is to deal
as long as it prevents terrorism (NB even if this ar- with them less favorably than others or to treat
gument were accepted, the effectiveness of torture them arbitrarily without considering their needs.
as a means of preventing terrorism is highly ques- Fairness is associated with what is known as proce-
tionable). Utilitarianism has been criticized first be- dural justice as described later in this chapter, which
cause it fails to respect individual rights, and second is concerned with the perceptions employees have
because, as Michael Sandel explained, it implies about how they are treated and the fairness with
that all moral judgements can be translated into a which company policies are put into practice.
single currency of value, but there is no such thing
as a ‘util’.
Equity theory
Stakeholder theory Equity theory, as formulated by Adams (1965), is
In accordance with the ideas of Freeman (1984), concerned with the perceptions people have about
stakeholder theory states that the organization how they are being treated as compared with oth-
should be managed on behalf of its stakeholders: its ers. To be dealt with equitably is to be treated fairly
owners, employees, customers, suppliers and local in comparison with another group of people (a ref-
communities. As Legge (1998: 22) described it, erence group) or a relevant other person. Equity in-
management must act in the interests of the stake- volves feelings and perceptions and it is always a
holders as their agent, and also act in the interests of comparative process. It is not synonymous with
the organization to ensure the survival of the firm, equality, which means treating everyone the same
safeguarding the long-term stakes of each group. and which would be inequitable if they deserve to
be treated differently.
Discourse ethics
Justice
Foucault (1972) defined discourse as the taken-for-
granted ways that people are collectively able to Justice is the process of treating people in a way
make sense of experience. Discourse ethics, as ex- that is inherently fair, right and proper. The concept
plained by Winstanley and Woodall (2000a: 14), of ‘justice as fairness’ proposed by Rawls (1973:
suggests that ‘the role of ethicists is not to provide 348) states that ‘natural duties and obligations arise
solutions to ethical problems, but rather to provide only in virtue of ethical principles.’
a practical process and procedure which is both ra-
tional and consensus enhancing, through which is-
sues can be debated and discourse can take place.’
Word s of wisd om
First: every person is to have the equal right
to the most extensive basic liberty
If asked, what arguments would you present
comparable with a similar liberty for others.
for an ethical approach to HRM?
Second: social and economic inequalities
are to be arranged so that they are both (a)
reasonably expected to be to everyone’s
Fairness advantage, and (b) attached to positions
and offices open to all.
Fairness is treating people in ways that recognize
Rawls (1973: 60)
what is due to them. It involves being even-handed,
just and consistent and acting with consideration
There are four types of justice: procedural justice, society: ‘Each person possesses an inviolability
distributive justice, social justice and natural justice. founded on justice that even the welfare of society
as a whole cannot override. For this reason justice
denies that the loss of freedom for some is made
Procedural justice right by a greater good shared by others.’ In or-
ganizations, social justice means relating to
Procedural justice (Adams, 1965; Leventhal, 1980)
employees generally in ways that recognize their
involves treating people in ways that are fair, con-
natural rights to be treated justly, equitably and
sistent, transparent and properly consider their
with respect.
views and needs. In organizations, it is concerned
with the perceptions employees have about the fair-
ness with which company procedures are being op-
erated in such areas as performance appraisal, pro-
Natural justice
motion and discipline (fair process). According to the principles of natural justice, em-
ployees should know the standards they are expected
to achieve and the rules to which they are expected
to conform. In a discipline process they should be
Source review given a clear indication of where they are failing or
what rules have been broken and, except in cases of
The five factors that affect perceptions of gross misconduct, they should be given a chance to
procedural justice: improve before disciplinary action is taken.
1 The viewpoint of employees is given proper
consideration. HRM ethical guidelines
2 Personal bias towards employees is
suppressed. The guidelines set out below relate to how employees
3 The criteria for decisions are applied are treated in general and in the HRM activities of
consistently to all employees. organization development, recruitment and selection,
learning and development, performance manage-
4 Employees are provided with early feedback ment, reward management and employee relations.
about the outcome of decisions. They also relate to employment practices concerning
5 Employees are provided with adequate the work environment, employee wellbeing, equal
explanations of why decisions have been made. opportunities, managing inclusion and diversity,
handling disciplinary matters and grievances, job
Tyler and Bies (1990) security and redundancy.
General guidelines
Distributive justice
●● Recognize that the strategic goals and values
Distributive justice (Adams, 1965; Leventhal, 1980) of the organization should embrace the
means ensuring that people are rewarded equitably rights and needs of employees as well as
in comparison with others in the organization and those of the business.
in accordance with their contribution, and that they
receive what was promised to them (management ●● Recognize that employees are entitled to be
‘delivers the deal’). treated as full human beings with personal
needs, hopes and anxieties.
●● Do not treat employees simply as means to
Social justice an end or mere factors of production.
Social justice is based on the concepts of human ●● Relate to employees generally in ways that
rights and equality. Rawls (1973: 3–4) rejected the recognize their natural rights to be treated
principle of utilitarianism when he asserted that in justly, equitably and with respect.
Organization development (OD) ●● Ensure that candidates are not unfairly

disadvantaged by testing processes.
●● Agree in advance with clients and individuals ●● Give candidates feedback on test results
the goals, content and risks of an OD unless there are compelling reasons why
programme. feedback should not be given.
●● Make explicit any values or assumptions ●● Ensure that selection decisions are free of
used in the programme. discrimination or bias on the grounds of sex,
●● Obtain the maximum involvement of all sexual orientation, race, age or disability.
concerned in the programme so that they ●● Give unsuccessful candidates the reason for
understand the processes involved and how the decision if they request it.
they can benefit from them.
●● Work with clients to plan and implement
change to the benefit of all stakeholders. Learning and development
●● Enable individuals to continue with their ●● Respect individual rights for dignity, self-
development on completing the programme. esteem, privacy and autonomy.
●● Protect confidentiality. ●● Recognize that it is necessary and legitimate
to provide individuals with learning
opportunities that enable them to gain the
Recruitment and selection knowledge and skills required to perform
●● Treat candidates with consideration – well in their jobs and develop their potential.
applications should be acknowledged, But note that individuals should still be
candidates should be kept informed without allowed autonomy to choose the extent to
undue delay of decisions made about their which they pursue learning and development
application, and they should not be kept programmes beyond this basic requirement.
waiting for the interview. ●● Accept that while the organization has the
●● Avoid intrusive or hectoring questioning in right to conduct learning and development
interviews. activities that enhance performance,
individuals also have the right to be provided
●● Do not put candidates under undue stress in
with opportunities to develop their own
interviews.
knowledge, skills and employability.
●● Do not criticize any aspect of the candidate’s
●● Ensure that people taking part in learning
personality or experience.
events feel ‘psychologically safe’ in
●● Use relevant selection criteria based on a accordance with the view expressed by
proper analysis of job requirements. Schein (1993: 91) that: ‘To make people feel
●● Give candidates reasonable opportunity to safe in learning, they must have a motive, a
present their case and to ask questions. sense of direction, and the opportunity to try
●● Avoid jumping to conclusions about out new things without the fear of
candidates on inadequate evidence or as a punishment.’
result of prejudice. ●● Avoid manipulating people to accept
●● Give accurate and complete information to imposed organizational values.
candidates about the job, prospects, security
and terms and conditions of employment.
●● Only use properly validated tests
Performance management
administered by trained testers. Performance management ethical principles have
●● Do not use discriminating or biased tests. been defined by Winstanley and Stuart-Smith (1996)
as follows:
●● Monitor tests for impact and unintended
bias.
●● Respect for the individual – people should be ●● Provide genuine opportunities and channels
treated as ‘ends in themselves’ and not for employees to express their views and
merely as ‘means to other ends’. influence decisions on matters that affect
●● Mutual respect – the parties involved in them.
performance management should respect ●● Negotiate in good faith.
each other’s needs and preoccupations. ●● Recognize that the interests of management
●● Procedural fairness – the procedures and employees do not necessarily coincide
incorporated in performance management and develop and implement employment
should be operated fairly in accordance with relations policies accordingly.
the principles of procedural justice.
●● Transparency – people affected by decisions
emerging from performance management Employment practices
processes should have the opportunity to
scrutinize the basis upon which decisions ●● Create a healthy, safe and fulfilling work
were made. environment.
●● Promote the wellbeing of employees by
improving the quality of working life
Reward management provided for them, enhancing work-life
balance and developing family-friendly
●● Generally apply the principles of procedural
policies.
and distributive justice.
●● Take particular care to minimize the stress to
●● Ensure that reward policies and practices are
which employees may be subjected.
fair, equitable and transparent and that they
are applied consistently. ●● Provide equal opportunities for all with
regard to recruitment and selection, learning
●● Reward people according to their
and development, talent management, career
contribution.
progression and promotion.
●● Ensure that people know in general the basis
●● Manage inclusion and diversity by
upon which rewards are provided and in
creating an environment where different
particular how their own reward package is
kinds of people can thrive and succeed and
determined.
by recognizing and respecting their
●● Maintain reasonable and defensible pay differences.
differentials.
●● Handle disciplinary matters according to the
●● Ensure that equal pay is provided for work principles of natural justice.
of equal value.
●● Recognize that people may have legitimate
●● Base decisions about performance pay or grievances and respond to them promptly,
bonuses on fair and equitable criteria. fully and sympathetically.
●● Avoid bonus schemes that encourage ●● Preserve job security as far as possible and
undesirable behaviour. take alternative action to avoid compulsory
●● Do not pay less than the living wage. redundancies.
●● If compulsory redundancy is unavoidable,
do whatever is possible to alleviate the
Employment relations distress by, for example, helping people to
●● Deliver the deal. find work.
●● Be open to employees’ input and responsive ●● Do not allow whistle-blowers who expose
to justifiable questions and concerns about wrongdoing to be penalized.
employment policies and practices.
concept of bounded rationality). This was explained

by Rosemary Harrison as follows:
Do you think guidelines like these, but
modified to suit the circumstances and Word s of wisd om
needs of the organization, should be
Some of the factors that militate against a
produced in an organization? If so, how
purely ‘rational’ approach include confused,
would you persuade the organization’s
excessive, incomplete or unreliable data,
leaders that this is a good idea and if you
incompetent processing or communicating
succeeded, what approach would you adopt
of information, pressures of time, human
to developing them?
emotions, and differences in individuals’
cognitive processes, mental maps and
reasoning capacity.
Ethical dilemmas Harrison (2009: 331)
‘Ethics will be enacted in situations of ambiguity

where dilemmas and problems will be dealt with
without the comfort of consensus or certitude’ Faced with factors such as these, the process of eth-
(Clegg et al, 2007: 109). Bauman, quoted in Bauman ical dilemma resolution can be hard going. There is
and Tester (2001: 44), commented that: ‘Morality no ‘one right way’ to deal with an ethical issue, but
concerns choice first of all – it is the predicament an approach based on systematic questioning, anal-
human beings encounter when they must make a ysis and diagnosis to get at the facts and establish
selection amongst various possibilities.’ And Derrida the issues involved is more likely to produce a rea-
(1992) observed that ethical responsibility can ex- sonably satisfactory outcome than one relying
ceed rational calculation. purely on ‘gut feeling’. The following checklist –
used judiciously and selectively according to the
circumstances – can provide a basis for such ques-
Resolving ethical dilemmas tioning and analysis.
As Adam Smith (1759) wrote in The Theory of ●● What are the known facts about the situation
Modern Sentiments: ‘When ethically perplexed, the and is it possible that there are facts or
question we should always ask is: would a disinter- circumstances that have not come to light,
ested observer, in full possession of the relevant and if so what can be done to uncover them?
facts, approve or disapprove of our actions?’ This ●● In disciplinary or conduct cases, to what
guidance is just as compelling and relevant today. extent does the conduct contravene the
Woodall and Winstanley (2000: 285) suggested organization’s code of ethical conduct (if one
that ‘being ethical is not so much about finding one exists) or any other relevant organizational
universal principle to govern all action, but more policy guidelines and rules?
about knowing how to recognize and mediate be- ●● In disciplinary cases, are there any mitigating
tween often unacknowledged differences of view.’ By circumstances?
definition, an ethical dilemma is one that will be dif-
●● Have different versions or interpretations of
ficult to resolve. There may be all sorts of issues sur-
the facts and circumstances been offered and,
rounding the situation, some of which will be unclear
if so, what steps can be taken to obtain the
or contentious. The extent to which people react or
true and full picture?
behave rationally may be limited by their capacity to
understand the complexities of the situation they are ●● Do the facts as established and confirmed
in and affected by their emotional reactions to it (the justify the proposed action?
●● Is the proposed action in line with both the ethical practices widely among line managers, com-
letter and the spirit of the law? municate codes of ethical conduct, ensure people
●● Is the proposed action and any investigations learn about what constitutes ethical behaviours, man-
leading to it consistent with the principles of age compliance and monitor arrangements.’
natural, procedural or distributive justice? There are three approaches that HR can adopt.
The first is to ensure that HR policies and the ac-
●● Will the proposed action benefit the tions taken to implement them meet acceptable
organization and if so how? ethical standards. HR can press for the production
●● Is there any risk of the proposed action of a value statement that indicates how the organi-
doing harm to the organization’s reputation zation intends to treat its employees. Value state-
for fair dealing? ments may be set out under such headings as care
●● Will the proposed action be harmful to the and consideration for people, belief that people
individual affected or to employees generally should be treated justly and equitably, and belief
in any way and if so how? that the views of employees about matters that con-
cern them should be listened to.
This requires advocacy skills to persuade man-
agement to adopt and act on these policies and the
The ethical role of HR courage and determination to make out the ethical
case even when management favours a conflicting
Legge (1998: 20–21) commented that: ‘In very gen- business case. But value statements are meaningless
eral terms I would suggest that the experience of until the values are put into practice (‘values in
HRM is more likely (but not necessarily) to be use’); the ethical role of HR involves helping to en-
viewed positively if its underlying principles are eth- sure that this takes place.
ical.’ HR professionals have a special responsibility Second, HR practitioners can act as role models,
for guarding and promoting core values in the or- leading by example and living and breathing good
ganization on how people should be managed and ethical behaviour. As a respondent to the survey
treated. They need to take action to achieve fair conducted by Parkes and Davis (2013: 2426) com-
dealing. This means treating people according to the mented: ‘If HR does not act ethically, how can it
principles of procedural, distributive, social and nat- expect employees to do so?’
ural justice, and seeing that decisions or policies that The third approach, and the hardest, is to c hallenge
affect them are transparent in the sense that they are unethical behaviour on the part of management.
known, understood, clear and applied consistently. Such behaviour can take many forms, including man-
Kochan (2007: 600) suggested that: ‘HR derives agement tolerance for exploitation, harassment and
its social legitimacy from its ability to serve as an bullying; the lack of a whistle-blowing policy that
effective steward of a social contract in employment provides routes for reporting malpractice; the unjust
relationships capable of balancing and integrating treatment of whistleblowers; and performance man-
the interests and needs of employers, employees and agement criteria that emphasize organizational gain
the society in which these relationships are embed- over all else. The latter was the case at the Royal
ded.’ But he also noted that most HR professionals Bank of Scotland (RBS) before the financial crisis,
have ‘lost any semblance of credibility as stewards where the performance management concentrated on
of the social contract because most HR profession- target achievement, ignoring behaviour. The courage
als have lost their ability to seriously challenge or to challenge is less likely to be forthcoming in or-
offer an independent perspective on the policies and ganizations where the culture is one of command and
practices of the firm’ (ibid: 604). And Parkes and control – and obedience is expected to whatever is
Davis (2013: 2427) pointed out the risk that the dictated by management (features of the pre-crash
HR role can become ‘rather passive, favouring com- RBS culture). Power, politics and culture shape norms
municating standards rather than actively promot- of behaviour and, as Herb Kelleher (the CEO of
ing ethical behaviour’. Southwest Airlines) put it, culture is ‘what people do
To overcome this problem and thus fulfill an ethi- when no one is looking’ (reported by Lee, 1994). One
cal role, Winstanley and Woodall (2000b: 7) r emarked respondent to the Parkes and Davis survey (2013:
that: ‘HR professionals have to raise awareness of 2425) commented: ‘It can be difficult on a personal
ethical issues, promote ethical behaviour, disseminate level to be speaking out – HR do not have the power’.
Another said: ‘Speaking out can be career suicide’. It courage to do so is listed by the CIPD as one of the
is too easy in these circumstances for HR to be mere qualities required by an HR professional. But it is
bystanders. Neil Roden, former head of HR at RBS, difficult and there may be limits to what HR can do.
explained HR’s position in relation to the financial If HR professionals cannot do anything about the
debacle at the bank as follows: ‘I’m not absolving way their organization does things they either have
myself totally... (but) I can’t see what HR could have to carry on and do whatever they can in other less
done... I wasn’t running the bank... the CEO makes confrontational ways, or they must leave.
the decisions, not me. HR is a support function, no
more’ (HR Magazine, 2010).
An HR director who is a member of an executive Pau se for th ou gh t
board can question decisions from an ethical
viewpoint but if the comments are not heeded then Would you resign in these circumstances? If
the director will either have to accept the decision not, why not?
or resign. It is important to challenge – and the
Key learning points
Ethics and morality defined organization development, recruitment and

selection, learning and development, performance
Ethics is defined by the Compact Oxford Dictionary as management, reward management, employee
being ‘related to morals, treating of moral questions’, relations, and employment practices concerning the
and ethical is defined as ‘relating to morality’. Morality work environment, employee wellbeing, equal
is defined as ‘having moral qualities or endowments’ opportunities, managing diversity, handling
and moral is defined as ‘of or pertaining to the disciplinary matters and grievances, job security and
distinction between right and wrong’. Simplistically, redundancy.
ethics could be described as being about behaviour
while morality is about beliefs.
Handling ethical dilemmas
Ethics is concerned with making ethical decisions
and judgements. It can be described in terms of an There is no ‘one right way’ to deal with an ethical
ethical framework that sets out different approaches dilemma but an approach based on systematic
and can be extended to embrace particular concepts questioning, analysis and diagnosis to get at the
that affect and guide ethical behaviour, namely equity, facts and establish the issues involved is more likely
justice and fair dealing. An ethical decision is one that to produce a reasonably satisfactory outcome than
is morally acceptable to the larger community. one relying purely on ‘gut feeling’. An ethical
dilemma is one that will be difficult to resolve.
Ethical concepts There may be all sorts of issues surrounding the
situation, some of which will be unclear or contentious.
The ethical concepts of deontology, utilitarianism,
stakeholder theory and discourse theory provide
frameworks that can be used to evaluate HRM policies The role of HR
and practices. HR professionals have a special responsibility for
An important role for HR professionals is to do guarding and promoting core values in the
whatever they can to embed the consistent application organization on how people should be managed
of ethical values in the organization so that they can and treated generally. They are particularly
become values in use rather than simply professed concerned with values relating to just and fair
values in a code of practice or values statement. treatment. They can act as role models and
challenge unethical practices. But challenging
Ethical guidelines can be difficult.
Ethical guidelines relate to how employees are treated
in general, and to the major HRM activities of
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Psychology, New York, Academic Press University Press, pp 599–619
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181
18
Corporate social
responsibility
HR professionals need to marshal the arguments
Introduction in favour of CSR, as set out in this chapter, to over-
come any overt or covert resistance. They must be
The notion that businesses should act in a socially able to advise on CSR strategies and how they can
responsible way has been around for some time. be implemented. This is not an easy task and sug-
gestions on the approaches that can be adopted are
made in the concluding section of the chapter.
Wo rd s of wi sdom
The business man is only tolerable so long Corporate social
as his gains can be held to bear some responsibility defined
relation to what, roughly and in some sense,
his activities have contributed to society. Corporate social responsibility (CSR) is exercised
by organizations when they conduct their business
J M Keynes (1923)
in an ethical way, taking account of the social, envi-
ronmental and economic impact of how they oper-
ate, and going beyond compliance. Environmental
issues are particularly important. Wood (1991: 695)
The aim of this chapter is to explore what it means observed that: ‘The basic idea of corporate social
to act responsibly This involves the exercise of cor- responsibility is that business and society are
porate social responsibility (CSR). interwoven rather than distinct entities; therefore,
HR professionals, because of the ethical dimen- society has certain expectations for appropriate
sion of their function (as described in Chapter 17), business behaviour and outcomes.’ As Baron (2001:
have an important role to play in furthering CSR. 11) noted, CSR involves ‘providing to others bene-
CSR was justified by the CIPD as a relevant and fits beyond those generated by economic transac-
important HR activity as follows: tions with the firm or required by law.’
Source review
CSR needs to be embedded in an organization’s culture to make a change to actions and attitudes, and the support
of the top team is critical to success. HR already works at communicating and implementing ideas, policies,
cultural and behavioural change across organizations. Its role in influencing attitudes and links with line managers
and the top team means it is ideally placed to do the same with CSR.
CIPD (2009: 1)
McWilliams et al (2006: 1) stated that CSR refers

to the actions taken by businesses ‘that further some
Strategic CSR defined
social good beyond the interests of the firm and that
which is required by law’. CSR has also been described Strategic CSR is about deciding initially the degree
by Husted and Salazar (2006: 76) as being concerned to which the firm should be involved in social issues
with ‘the impact of business behaviour on society’ and and then creating a corporate social agenda – con-
by Porter and Kramer (2006: 83) as a process of inte- sidering what social issues to focus on and to what
grating business and society. The latter argued that to extent. As Porter and Kramer (2006: 85) noted: ‘It is
advance CSR: ‘We must root it in a broad understand- through strategic CSR that the company will make
ing of the interrelationship between a corporation and the greatest social impact and reap the greatest
society while at the same time anchoring it in the strat- business benefits.’ They also observed that strategy
egies and activities of specific companies.’ is always about choice – organizations that ‘make
CSR is concerned generally with how companies the right choices and build focused, proactive and
function and this includes how they manage their integrated social initiatives in concert with their
people. The CIPD (2003: 5) emphasized that ‘the core strategies will increasingly distance themselves
way a company treats its employees will contribute from the pack’ (ibid: 91).
directly to the picture of a company that is willing CSR strategy needs to be integrated with the busi-
to accept its wider responsibilities.’ ness strategy but it is also closely associated with HR
CSR policy may be expressed in a value state- strategy. This is because it is concerned with socially
ment that sets out the organization’s core values responsible behaviour which respects the interests of
under such headings as: stakeholders both outside and within the firm – with
society generally and with the internal community.
●● care and consideration for people; In the latter case this means creating a working envi-
●● care for the environment; ronment where personal and employment rights are
upheld and HR policies and practices provide for the
●● competence;
fair and ethical treatment of employees.
●● competitiveness;
●● customer service;
●● innovation; CSR activities
●● performance;
CSR activities as listed by McWilliams et al (2006)
●● quality; include incorporating social characteristics or fea-
●● teamwork. tures into products and manufacturing processes,
adopting progressive HRM practices, achieving
But espoused values are pointless unless they be-
higher levels of environmental performance through
come values in use and this needs concerted action
recycling and pollution abatement, and supporting
by management working with employees and sup-
community organizations.
ported by HR.
C A S E S T U DY
Lloyds Banking Group
The Lloyds Banking Group was recognized by Business in the future, supporting start-ups and tackling disadvantage
Community as the Responsible Business of the Year in 2018. through four independent charitable foundations. In 2016, the
The Group’s Helping Britain Prosper Plan sets out 22 specific company set up a £1 billion Green Loan initiative to incentivize
targets designed to tackle some of the social and economic commercial real estate to become more energy efficient. As
issues that matter most to Britain and its people, businesses a result, more than 5 million square feet of Britain’s real estate
and communities. It includes targets attached to addressing became more energy efficient in 2017.
Britain’s housing needs, helping people to save for their
Chapter 18 | Corporate Social Responsibility 183
Moran and Ghoshal (1996: 45) contended that

The rationale for CSR ‘what is good for society does not necessarily have
to be bad for the firm, and what is good for the firm
Stakeholder theory, as first propounded by Freeman does not necessarily have to come at a cost to soci-
(1984), suggests that managers must satisfy a variety. Value creation, rather than value appropriation,
ety of constituents (eg workers, customers, suppli- lies at the heart of effective firm strategies.’
ers, local community organizations) who can influ-
ence firm outcomes. According to this view, it is not
sufficient for managers to focus exclusively on the
needs of shareholders or the owners of the business.
The opposing view
Stakeholder theory implies that it can be beneficial
The opposing view is that businesses are there to
for the firm to engage in certain CSR activities that
make a profit, not to exercise social responsibility.
non-financial stakeholders perceive to be i mportant.
The marketing expert Theodore Levitt (1958: 41),
The rationale for CSR, as defined by Hillman and
in a notorious article in the Harvard Business
Keim (2001), is based on two propositions. First,
Review on the dangers of social responsibility, posed
there is a moral imperative for businesses to ‘do the
the questions: ‘Are top executives being taken in by
right thing’ without regard to how such decisions af-
pretty words and soft ideas? Are they letting the
fect firm performance (the social issues argument);
country in for a nightmare return to feudalism by
second, firms can achieve competitive advantage by
forgetting that they must be businessmen first, last
tying CSR activities to primary stakeholders (the
and almost always?’ He did write that CSR can be
stakeholders argument). Their research in 500 firms
used as ‘a way of maximizing the lifetime of capital-
implied that investing in stakeholder management
ism by taking the wind out of its critics’ sails’ (ibid:
may be complementary to shareholder value creation
43). But, writing as an unrestructured capitalist, he
and could indeed provide a basis for competitive ad-
suggested that: ‘The essence of free enterprise is to
vantage as important resources and capabilities are
go after profit in any way that is consistent with its
created that differentiate a firm from its competitors.
own survival as an economic system’ (ibid: 44).
However, participating in social issues beyond the
The Chicago monetarist Milton Friedman (1962:
direct stakeholders may adversely affect a firm’s abil-
133–34) questioned the ability of business manag-
ity to create shareholder wealth. Strong arguments
ers to pursue the social interest. He asked:
for CSR were made by Porter and Kramer (2006).
If businessmen do have a social responsibility
●● The moral appeal – the argument that other than making maximum profits for
companies have a duty to be good citizens. stockholders, how are they to know what it is?
The US business association Business for Can self-selected private individuals decide what
Social Responsibility (2007) asks its the social interest is? Can they decide how great a
members ‘to achieve commercial success in burden they are justified in placing on themselves
ways that honour ethical values and respect or their stockholders to serve that social interest?
people, communities and the natural
environment.’ In 1970 Friedman argued that the social responsi-
bility of business is to maximize profits within the
●● Sustainability – an emphasis on
bounds of the law. He maintained that the mere ex-
environmental and community stewardship.
istence of CSR was an agency problem within the
This involves meeting the needs of the
firm in that it was a misuse of the resources en-
present without compromising the ability of
trusted to managers by owners, which could be
future generations to meet their own needs.
better used on value-added internal projects or re-
●● Licence to operate – every company needs turned to the shareholders.
tacit or explicit permission from government, These outspoken views may no longer be sup-
communities and other stakeholders to do ported so openly but they still exist and are still
business. acted on. There is much evidence that CSR is not on
●● Reputation – CSR initiatives can be justified the agenda – for example, UK banks that made
because they improve a company’s image, money by selling worthless investments or insur-
strengthen its brand, enliven morale and even ance policies and then failed to respond adequately
raise the value of its stock. to complaints. And, less egregiously, a glance at the
‘Your Problems’ column in the Observer reveals ●● Building capacity – building the capacity of
plenty of instances of businesses indulging in anti- others to help manage the business
social behaviour. It is necessary, therefore, to have a effectively. For example, suppliers understand
convincing case for the benefits of CSR. the business’s approach to the environment
and employees can apply social and
environmental concerns in their day-to-day
roles.
Paus e fo r t houg ht
●● Questioning business as usual – individuals
How would you counter those arguments? continually questioning the business in
relation to a more sustainable future and
being open to improving the quality of life
and the environment.
●● Stakeholder relations – understanding who
Benefits of CSR the key stakeholders are and the risks and
opportunities they present. Working with
them through consultation and taking their
Benefits from CSR listed by the CIPD (2003: 4) in-
views into account.
clude ‘offering distinctive positioning in the market
place, protecting reputation, building credibility ●● Strategic view – ensuring that social and
and trust with customers and employees, redefining environmental views are included in the
corporate purpose or mission and securing the com- business strategy so that they are integral to
pany’s licence to operate.’ the way the business operates.
Research into the relationship between CSR and ●● Harnessing diversity – respecting that people
firm performance conducted by Russo and Fouts are different, which is reflected in fair and
(1997) found that there was a positive relationship transparent business practices.
between environmental performance and financial
To develop and implement a CSR strategy based on
performance. Hillman and Keim (2001) established
these principles it is necessary to:
that if the socially responsible activity were directly
related to primary stakeholders, then investments ●● understand the business and social
may benefit not only stakeholders but also result in environment in which the firm operates;
increased shareholder wealth. However, participa- ●● understand the business and HR strategies
tion in social issues beyond the direct stakeholders and how the CSR strategy should be aligned
may adversely affect a firm’s ability to create such to them;
wealth.
●● know who the stakeholders are (including
top management) and find out their views on
The basis for developing and expectations of CSR;
●● produce and deliver persuasive arguments
a CSR strategy in favour of CSR: if all else fails suggest
that there is room for enlightened self-
The basis for developing a CSR strategy is provided interest that involves doing well by doing
by the following competency framework from the good;
CSR Academy (2006), which is made up of six ●● identify the areas in which CSR activities
characteristics: might take place by reference to their
●● Understanding society – understanding how relevance in the business context of the
business operates in the broader context and organization and an evaluation of their
knowing the social and environmental significance to stakeholders;
impact that the business has on society.
Chapter 18 | Corporate Social Responsibility 185
●● prioritize as necessary on the basis of an ●● obtain approval for the CSR strategy from
assessment of the relevance and significance top management and key stakeholders;
of CSR to the organization and its ●● communicate information on the whys and
stakeholders and the practicalities of wherefores of the strategy, comprehensively
introducing the activity or practice; and regularly;
●● draw up the strategy and make the business ●● provide training to employees on the skills
case for it to top management and the they need in implementing the CSR strategy;
stakeholders;
●● measure and evaluate the effectiveness of CSR.
Key learning points
The meaning of CSR Developing a CSR strategy

CSR activities include incorporating social ●● Identify the areas in which CSR activities might
characteristics or features into products and take place by reference to their relevance in the
manufacturing processes, adopting progressive HRM business context of the organization and an
practices, achieving higher levels of environmental evaluation of their significance to stakeholders.
performance through recycling and pollution
●● Prioritize as necessary on the basis of an
abatement, and advancing the goals of community
assessment of the relevance and significance of
organizations.
CSR to the organization and its stakeholders and
the practicalities of introducing the activity or
The rationale for CSR practice.
There are two arguments for CSR (Hillman and ●● Draw up the strategy and make the case for it to
Keim, 2001): first, there is a moral imperative for top management and the stakeholders to obtain
businesses to ‘do the right thing’ without regard to their approval.
how such decisions affect firm performance (the
social issues argument); second, firms can ●● Communicate information on the strategy,
achieve competitive advantage by tying CSR comprehensively and regularly.
activities to primary stakeholders (the stakeholders ●● Provide training to employees on the skills they
argument). need to use in implementing the CSR strategy.
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seriously: maximizing profits and social Business Review, December, pp 78–92
performance, Journal of Management Studies, 43 Russo, M V and Fouts, P A (1997) A resource-based
(1), pp 75–91 perspective on corporate environmental
Keynes, J M (1923) A Tract on Monetary Reform, performance and profitability, Academy of
London, Macmillan Management Review, 40 (3), pp 534–59
Levitt, T (1958) The dangers of social responsibility, Wood, D J (1991) Corporate social performance
Harvard Business Review, September–October, revisited, Academy of Management Review, 16 (4),
pp 41–50 pp 691–718
McWilliams, A, Siegal, D S and Wright, P M (2006)
Corporate social responsibility: strategic
187
PART IV
Organization
PA R T I V CO N T E N T S
19 Organizational behaviour
20 Organization design
21 Work design
22 Job design
23 Organization development
Introduction People management policies and practices

therefore need to be based on an understanding of
how organizations function and an appreciation of
Human resource management is concerned with the
the factors associated with organization, work
behaviour of people who work in organizations. It
system and job design and the approaches that can
is involved in the design and development of organ-
be used to develop organizational effectiveness.
izations and in the design of work systems and jobs
that can maximize organizational performance lev-
els and provide a satisfying employee experience.
188

189
19
Organizational
behaviour
Introduction
manager needs to understand the patterns
Organizational behaviour is the term used to of behaviour that are observed, predict in
describe how organizations function with regard to
their people, structure, processes and culture. It is what direction behaviour will move
concerned with the characteristics of people and (particularly in the light of managerial
how they act in organizations, individually or in
action), and use this knowledge to control
groups. Organizational behaviour theory is based
on the main behavioural science theories, which behaviour over the course of time.
have been proved by research. Like all proven theo- Nadler and Tushman (1980: 30)
ries it provides insights into good practice. Thus it
provides guidance on the design of organizations,
work systems, jobs, and the process of organization This chapter covers:
development. It also provides the conceptual frame-
work for approaches to achieving the motivation, ●● What is meant by organizational behaviour
commitment and engagement of people. ●● The sources and applications of
An understanding of how organizations function organizational behaviour theory
and how people behave in them is important to HR ●● How organizations function
professionals, indeed to all managers.
●● Organizational culture
●● Organizational climate
●● Organizational processes
Wo rd s of wi sdom ●● Characteristics of people
Managers perform their jobs within complex ●● The factors that affect individual behaviour
social systems called organizations. In many ●● Implications for HR specialists
senses, the task of the manager is to
influence behaviour in a desired direction, Organizational behaviour
usually towards the accomplishment of a
specific task or performance goal. Given this
defined
definition of the managerial role, skills in the Organizational behaviour was defined by Huczynski
and Buchanan (2007: 843) as the term used to de-
diagnosis of patterns of organizational
scribe ‘the study of the structure, functioning, and
behaviour become vital. Specifically, the performance of organizations and the behaviour of
groups and individuals within them.’
190 Part 4 | Organization
making arrangements in the form of defined or

Source review understood responsibilities and relationships to

enable those people to work cooperatively together.
Organizations can be described as systems that, as
Characteristics of organizational behaviour:
affected by their environment, have a structure that
●● It is a way of thinking – about individuals, has both formal and informal elements.
groups and organizations. Organizations operate through a process of gov-
ernance which has three dimensions: the exercise of
●● It is multidisciplinary – it uses principles,
authority, decision making, and accountability at
models, theories and methods from other the top for performance and behaviour.
disciplines. Organization structures are frameworks for get-
●● There is a distinctly humanistic orientation – ting things done. Traditional formal structures were
people and their attitudes, perceptions, learning based on laid-down hierarchies (lines of command)
capacities, feelings and goals are of major represented in organization charts, and use was made
importance. of closely defined job descriptions. But to varying ex-
tents, organizations operate informally as well as for-
●● It is performance-oriented – it deals with the mally by means of a network of roles and relation-
factors affecting performance and how it can ships that cut across formal organizational boundaries
be improved. and lines of command. Organization structures can
evolve almost spontaneously as circumstances change
●● The use of scientific method is important in
and new activities have to be carried out.
studying variables and relationships.
●● It is applications-oriented in the sense of being
concerned with providing useful answers to
questions that arise when managing Word s of w isd om
organizations. An organization does not make decisions;
Ivancevich et al (2008: 11)
its role is to provide a framework, based on
established criteria, within which decisions
can be fashioned in an orderly fashion.
The sources and applications Alfred P Sloan Jr (1972)
of organizational behaviour
theory
Factors affecting how
Organizational behaviour theory is based on behav-
ioural science disciplines. These are defined as the
organizations function
fields of enquiry dedicated to the study of human The processes that take place in organizations –
behaviour through sophisticated and rigorous interaction and networking, leadership, group behav-
methods. The ways in which they contribute to dif- iour, the exercise of power and the use of politics –
ferent aspects of organizational behaviour theory may well have much more effect on how organizations
and how they in turn influence HRM practices are function than can be shown in a defined organization
illustrated in Figure 19.1. chart supported by elaborate job descriptions and an
organization manual. Moreover, the way in which an
organization functions will be largely contingent on
How organizations function its purpose, technology, methods of working and ex-
ternal environment. A number of theories have been
An organization is an entity that exists to achieve a developed, summarized in Table 19.1, to explain how
purpose through the collective efforts of the people organizations function, culminating in the contin-
who work in or for it. Organizing is the process of gency and process schools that now predominate.
Chapter 19 | Organizational Behaviour 191
F I G U R E 19.1 The sources and applications of organization behaviour theory

Discipline Contribution to theory Application
• individual • job/work design

differences • selection
• personality processes and
• attitudes tests
• perceptions • learning and
• self-concept development
Psychology • attributions programmes
• motivation • performance
• engagement management
and commitment • reward
• learning management
• leadership • attitude
measurement
• group processes • organization

• attitude change development
• behavioural • organization
change design
Social psychology
• communication • change
management
• communication
systems
• group dynamics • organization

• power development
• politics • organization
• conflict design
Sociology • organization • job design
culture • leadership
• leadership development
• employee
relations
TA B L E 19. 1 Schools of organization theory
School Leading exponents Summary of theory
The classical Taylor (1911), Fayol Organizations need control, measurement, order and
school (1916), Urwick (1947) formality to function well. They have to minimize the
opportunity for unfortunate and uncontrollable informal
relations, leaving room only for the formal ones.
The human Barnard (1938), Barnard emphasized the importance of the informal
relations school Roethlisberger and organization – the network of informal roles and
Dickson (1939) relationships that, for better or worse, strongly influences
the way the formal structure operates. In their analysis of
the Hawthorne studies, Roethlisberger and Dickson
stressed the importance of informal groups and decent,
humane leadership.
(continued )
School Leading exponents Summary of theory
The behavioural Argyris (1957), Herzberg A humanistic point of view is adopted that is concerned
science school et al (1957), McGregor with what people can contribute and how they can best be
(1960), Likert (1961), motivated.
Schein (1965)
The bureaucratic Weber (1908) translated Max Weber coined the term ‘bureaucracy’ as a label for a
model in 1947 type of formal organization in which impersonality and
rationality are developed to the highest degree.
Bureaucracy, as he conceived it, was the most efficient
form of organization because it was logical and because
personalized relationships and non-rational, emotional
considerations do not get in its way.
The socio-technical Emery (1959), Trist et al In any system of organization, technical or task aspects are
model (1963) interrelated with the human or social aspects. The
emphasis is on interrelationships between, on the one
hand, the technical processes of transformation carried out
within the organization and, on the other hand, the
organization of work groups and the management
structures of the enterprise.
The systems Miller and Rice (1967) Organizations should be treated as open systems that are
school Bertalanffy (1968) continually dependent upon and influenced by their
environments. The basic characteristic of the enterprise as
an open system is that it transforms inputs into outputs
within its environment. The principle of equifinality states
that in an open system a goal can be reached in many ways.
The contingency Burns and Stalker Members of the contingency school analysed a variety of
school (1961), Woodward organizations and concluded that their structures and
(1965), Lawrence and methods of operation are a function of the circumstances
Lorsch (1969) in which they exist. They do not subscribe to the view that
there is one best way of designing an organization or that
simplistic classifications of organizations as formal or
informal, bureaucratic or non-bureaucratic are helpful.
The process Pascale (1990), Ghoshal Rather than seeing organizations as a hierarchy of static
school and Bartlett (1995) jobs, members of the process school think of them as a
portfolio of dynamic processes that overlay and often
dominate the vertical, authority-based processes of the
hierarchical structure. The emphasis is on ‘horizontal tasks’,
collaboration and networking across units rather than on
‘vertical tasks’ within functional units. Hence the concept
of the ‘boundaryless organization’.
Types of organization structures

The main types of organization structures are: Word s of wisd om
Unitary – there is one structure covering all The needs of large-scale organizations have
activities. to be satisfied by common people achieving
Divisionalized – an organization that divides its uncommon performances.
main activities into different units based Drucker (1955: 124)
upon the product, the markets served, the
skills involved or geographical areas.
Lattice – an alternative term for an organic
organization, see below. Organizational culture
Line and staff – a traditional organization The culture of an organization has been described
based on the military model in which a by Deal and Kennedy (2000: 4) as ‘the way we do
hierarchy of ‘line managers’ carry out the things around here’. It is more complex than that, as
fundamental operations such as other definitions given below indicate. But this sim-
manufacturing, sales or customer service plistic definition at least demonstrates that it is an
while the ‘staff’ functions such as finance all-pervading notion that affects the way in which
and personnel provide them with services, people behave and has to be taken into account as a
advice and support. contingency factor in any programme for develop-
Mechanistic – a formal organization that is ing organizations and HR policies and practices.
hierarchical with rigid chains of command Organizational culture offers a shared system of
and control, distinct departments and tightly meanings which is the basis for communications
defined and specialized jobs (usually a and mutual understanding. If these functions are
characteristic of a line and staff not fulfilled in a satisfactory way, culture may sig-
organization). nificantly reduce the effectiveness of an organiza-
tion. This is why it is important for HR specialists
Organic – a relatively informal organization to understand the concept of organizational culture
with a non-hierarchical, flat structure where and how it affects organizations.
the emphasis is on horizontal processes, the
elimination of boundaries between functions,
teamwork and flexible roles (also known as a Organizational culture defined
lattice organization).
Organizational or corporate culture is the pattern
Matrix organization – an organization that of values, norms, beliefs, attitudes and assumptions
consists of a functional structure with a that may not have been articulated but which shape
number of different disciplines and a project the ways in which people in organizations behave
structure consisting of project teams drawn and things get done. ‘Values’ refer to what is be-
from the disciplines. lieved to be important about how people and or-
Network organization – a collection of ganizations behave. ‘Norms’ are the unwritten rules
interrelated organizations that extends of behaviour.
beyond the boundaries of any single This definition emphasizes that organizational
organization. culture is concerned with the subjective aspect of
what goes on in organizations. It refers to abstrac-
Virtual organization – an organization that tions such as values and norms that pervade the
mainly uses electronic means for its members whole or part of a business, which may not be
to interact with one another, thus minimizing defined, discussed or even noticed. Nevertheless,

face-to-face contacts. culture can have a significant influence on people’s
behaviour. The following are some other definitions following the change. Schein (1984) suggested that
of organizational culture: this is a learning process which takes place either
through the trauma model, in which members of
●● A strong culture is a system of informal rules
the organization learn to cope with a threat origi-
that spells out how people are to behave most
nating from change, for example by the erection of
of the time (Deal and Kennedy, 2000: 15).
defence mechanisms, or by means of the positive
●● The culture of an organization refers to the reinforcement model, where things that seem to
unique configuration of norms, values, beliefs work become embedded and entrenched. Learning
and ways of behaving that characterize the takes place as people adapt to and cope with exter-
manner in which groups and individuals nal pressures, including those involving change, and
combine to get things done (Eldridge and as they develop successful approaches and mecha-
Crombie, 1974: 89). nisms to handle new internal challenges, processes
●● Organizational culture offers a shared system and technologies in their organization. Where cul-
of meanings that is the basis for ture has developed over long periods of time and
communications and mutual understanding has become firmly embedded it may be difficult to
(Furnham and Gunter, 1993: 70–71). change quickly, if at all, unless a traumatic event
●● Culture is a pattern of basic assumptions – occurs.
invented, discovered or developed by a given
group as it learns to cope with the problems
of external adaptation and internal The diversity of culture
integration – that has worked well enough to The development process described above may
be considered valid and, therefore, to be result in a culture that characterizes the whole or-
taught to new members as the correct way to ganization. But there may be different cultures
perceive, think and feel in relation to these within organizations. For example, the culture of an
problems (Schein, 1990: 110). outward-looking marketing department may be
substantially different from that of an internally
focused manufacturing function. There may be

How organizational culture develops some common organizational values or norms, but
The values and norms that are the basis of culture in some respects these will vary between different
are formed in four ways. First, by the leaders in the work environments.
organization, especially those who have shaped it in
the past. Schein (1990) indicates that people iden-
tify with visionary leaders – how they behave and The components of culture
what they expect. They note what such leaders pay Organizational culture can be described in terms of
attention to and treat them as role models. Second, values, norms, artefacts and management or leader-
as Schein also points out, culture is formed around ship style.
critical incidents – important events from which
lessons are learnt about desirable or undesirable

behaviour. Third, culture develops from the need to
Values
maintain effective working relationships among Values are beliefs in what is best or good for the
organization members that establish values and
organization and what should or ought to happen.
expectations. Finally, culture is influenced by the The ‘value set’ of an organization may only be rec-
organization’s environment, which may tend to be ognized at top level, or it may be shared throughout
dynamic or unchanging. the business, in which case the business could be
described as value-driven.
The stronger the values the more they will influ-
Culture and change ence behaviour. This does not depend upon their
having been articulated. Implicit values that are
Culture evolves over time and responds to the deeply embedded in the culture of an organization
impact of change as a result of shared experiences and are reinforced by the behaviour of management
can be influential, while espoused values that are can be given in the organization is to be
mere rhetoric and are not reflected in managerial referred to as ‘very professional’.
behaviour may have little or no effect. When values ●● Power – recognized as a way of life; executed
are acted on, they are called ‘values in use’. Examples by political means, dependent on expertise
are listed below: and ability rather than position; concentrated
●● care and consideration for people; at the top; shared at different levels in
different parts of the organization.
●● competence;
●● Politics – rife throughout the organization
●● competitiveness;
and treated as normal behaviour; not
●● customer service; accepted as overt behaviour.
●● innovation; ●● Loyalty – expected, a cradle-to-grave approach
●● performance; to careers; discounted, the emphasis is on
●● quality; results and contribution in the short term.
●● teamwork. ●● Anger – openly expressed; hidden, but
expressed through other, possibly political,
Values may be expressed through norms and artefacts, means.
as described below. They may also be expressed
●● Approachability – managers are expected to
through the media of language (organizational jargon),
be approachable and visible; everything
rituals, stories and myths.
happens behind closed doors.
●● Formality – a cool, formal approach is the
Norms norm; forenames are/are not used at all
Norms are the unwritten rules of behaviour, the ‘rules levels; there are unwritten but clearly
of the game’ that provide informal guidelines on how understood rules about dress.
to behave. Norms tell people what they are supposed
to be doing, saying, believing, even wearing. They are
Artefacts
never expressed in writing – if they were, they would
be policies or procedures. They are passed on by word Artefacts are the visible and tangible aspects of an
of mouth or behaviour and can be enforced by the organization that people hear, see or feel and which
reactions of people if they are violated. They can exert contribute to their understanding of the organiza-
very powerful pressure on behaviour because of these tion’s culture. Artefacts can include such things as the
reactions – we control others by the way we react to working environment, the tone and language used in
them. Typical norms are: e-mails, letters or memoranda, the manner in which
people address each other at meetings or over the
●● How managers treat the members of their telephone, the welcome (or lack of welcome) given to
teams (management style) and how the latter visitors and the way in which receptionists deal with
relate to their managers. The prevailing work outside calls. Artefacts can be very revealing.
ethic, eg ‘work hard, play hard’, ‘come in
early, stay late’, ‘if you cannot finish your
work during business hours you are
Management style
obviously inefficient’, ‘look busy at all times’, The approach managers use to deal with people –
‘look relaxed at all times’. their management or leadership style – is a significant
part of the culture of an organization. Management
●● Status – how much importance is attached to
style can be described in terms of the following
it; the existence or lack of obvious status
extremes:
symbols.
●● Ambition – naked ambition is expected and charismatic ↔ non-charismatic
approved of, or a more subtle approach is autocratic ↔ democratic
the norm.
●● Performance – exacting performance controller ↔ enabler
standards are general; the highest praise that transactional ↔ transformational
Most managers adopt an approach somewhere

description, is more important than the person
between the extremes. Some will vary it according
to the situation or their feelings at the time; others who fills it. Power is associated with positions
will stick to the same style whatever happens. Every not people.
manager has his or her own style but this will be ●● The task culture in which the aim is to bring
influenced by the organizational culture, which may together the right people and let them get on
produce a prevailing management style that repre- with it. Influence is based more on expert power
sents a behavioural norm for managers that is gen- than on position or personal power. The culture
erally expected and adopted. is adaptable and teamwork is important.
●● The person culture in which the individual is the
Classifying organizational culture central point. The organization exists only to
serve and assist the individuals in it.
There have been many attempts to classify or catego-
rize organizational cultures as a basis for analysis Handy (1981)
and for taking action to support or change them.
Most of these classifications are expressed in four di-
mensions; three of the best-known ones are summa-
rized below. Note that following the lead of Harrison,
there is much common ground between them. Source review
Classification of cultures
Source review ●● Power culture in which leadership resides in a
few and rests on their ability and tends to be
Organization ideologies entrepreneurial.
●● Power-oriented – competitive, responsive to ●● Role culture in which power is balanced
personality rather than expertise. between the leader and the bureaucratic
●● People-oriented – consensual, management structure. The environment is likely to be stable
control rejected. and roles and rules are clearly defined.
●● Task-oriented – focus on competency, dynamic. ●● Achievement culture in which personal

motivation and commitment are stressed and
●● Role-oriented – focus on legality, legitimacy and action, excitement and impact are valued.
bureaucracy.
Harrison (1972) ●● Support culture in which people contribute out
of a sense of commitment and solidarity.
Schein (1984)
Source review
Appropriate cultures
Culture typology It is not possible to say that one culture is better than
●● The power culture is one with a central power another, only that a culture is to a greater or lesser
source that exercises control. There are few extent appropriate in the sense that it is relevant to
rules or procedures and the atmosphere is the needs and circumstances of the organization and
competitive, power-oriented and political. helps rather than hinders its performance. Embedded
cultures can exert considerable influence on organi-
●● The role culture in which work is controlled by zational behaviour so if there is an appropriate and
procedures and rules and the role, or job effective culture it would therefore be desirable to
take steps to support or reinforce it. If the culture is
inappropriate attempts should be made to determine (1985) distinguish between the actual situation (ie
what needs to be changed and to develop and imple- culture) and the perception of it (ie c limate).
ment plans for change. A culture will be more effec-
tive if it is consistent in its components and shared
amongst organizational members, and if it makes
the organization unique, thus differentiating it from Word s of w isd om
other organizations.
The way line managers enact HR practices
will be influenced by their leadership
behaviour and that of senior management
in establishing an appropriate
Think of your own organization or one you
organizational climate, and an important
know. Using your preferred system of
element in that climate will be the group or
categorization, to which one of the
bundle of people management practices as
classifications in it do you think it belongs?
perceived by employees.
Bowen and Ostroff (2004)
Organizational climate
Organizational processes
As defined by Harrison and Shirom (1999: 263),
organizational climate refers to the perceptions of an A number of social processes take place in organi-
organization’s members of organizational features zations that affect how they function. These are:
such as decision making, leadership and norms about interaction and networking, communication, group
work. Bowen and Ostroff (2004) observed that an behaviour, role behaviour, leadership, power, poli-
important element in organizational climate is the tics and conflict.
group or bundle of people management practices as
perceived by employees. Ivancevich et al (2008: 528)
described organizational climate as: ‘A set of proper- Interaction and networking
ties of the work environment, perceived directly or
indirectly by the employees, that is assumed to be a Interactions between people criss-cross the organiza-
major force in influencing employee behaviour.’ tion, creating networks for getting things done and
The term ‘organizational climate’ is sometimes exchanging information that is not catered for in the
confused with ‘organizational culture’ and there has formal structure. ‘Networking’ is an increasingly
been much debate on what distinguishes one from important process in flexible and delayered organiza-
the other. In Denison’s (1996) analysis of this issue, tions where more fluid interactions across the
he suggested that ‘culture’ refers to the deep struc- structure are required between individuals and teams.
ture of organizations, which is rooted in the values, Networking means that people canvass opinion and
beliefs and assumptions held by organizational enlist support to promote their projects or ideas. In
members. In contrast, ‘climate’ refers to those as- this way they may get more done than by going
pects of the environment that are consciously per- through formal channels. People also get things done
ceived by organizational members. Rousseau (1988) in organizations by creating alliances – getting agree-
stated that climate is a perception and is descriptive. ment on a course of action with other people and
Perceptions are sensations or realizations experi- joining forces to put the proposed action into effect.
enced by an individual. Descriptions are what a per-
son reports of these sensations.
The debate about the meanings of these terms can
Communications
become academic. It is easiest to regard organizational The communications processes used in organiza-
climate as how people perceive (see and feel about) the tions have a marked effect on how it functions,
culture existing in their organization. French et al especially if they take place through the network,
which can then turn into the ‘grapevine’. E-mails resistance to control and even rebellion
encourage the instant flow of information (and against the leader.
sometimes produce information overload) but may 3 Norming, when group cohesion is developed,
inhibit face-to-face interactions, which are often the norms emerge, views are exchanged openly,
best ways of doing things. mutual support and cooperation increase
and the group acquires a sense of its identity.
4 Performing, when interpersonal problems are
Group behaviour resolved, roles are flexible and functional,
Organizations consist of groups or teams of people there are constructive attempts to complete
working together. They may be set up formally as tasks and energy is available for effective
part of the structure or they may be informal gath- work.
erings. A group can be a permanent or a temporary
The term ‘group dynamics’ was coined originally by
feature in an organization. Interactions take place
Kurt Lewin (1947) to mean the improvement of group
within and between groups and the degree to which
processes in organization development programmes
these processes are formalized varies according to
through various forms of training, eg team building,
the organizational context.
interactive skills training, T-groups. The term is now
Formal groups or teams are created by organiza-
often used to describe the ways in which groups are
tions to achieve a defined purpose. People are brought
formed and group members interact.
together with the necessary skills to carry out the
tasks and a system exists for directing, coordinating
and controlling the group’s activities. Informal
groups are set up by people in organizations who
Role behaviour
have some affinity for one another. It could be said When faced with any situation such as carrying out a
that formal groups satisfy the needs of the organiza- job, people enact a role in order to manage that situ-
tion while informal groups satisfy the needs of their ation. The concept of a role indicates that in a sense,
members. people at work are always acting a part; they are not
Groups develop an ideology that affects the at- simply reciting the lines but instead are interpreting
titudes and actions of their members and the degree them in relation to the context in which they work.
of satisfaction they feel. If the group ideology is Role theory, as formulated by Katz and Kahn
strong and individual members identify closely (1966) states that the roles people play at work exist
with the group, it will become increasingly cohe- in relation to other people – their role set. The mem-
sive. Group norms or implicit rules will be evolved bers of the role set have expectations about the roles
that define what is acceptable behaviour and what their fellow members should play, and if they live up
is not. This is described as a ‘reference group’, to these expectations, they will have successfully per-
which consists of the group of people with whom formed the role. Performance in a role is a function
an individual identifies. The individual accepts the of the situation individuals are in (the organizational
group’s norms and, if in doubt about what to do or context and the direction or influence exercised from
say, reference is made to these norms or to other above or by other people). Stress and inadequate per-
group members before action is taken. Most people formance result when roles are ambiguous (unclear),
in organizations belong to a reference group and when they are incompatible with what individuals
this can significantly affect the ways in which they believe is expected of them and what other people, eg
behave. line managers, expect, and when conflict arises be-
Four stages of group development were identi- tween the different roles an individual might have to
fied by Tuckman (1965): carry out, eg at work and at home.
1 Forming, when there is anxiety, dependence
on the leader and testing to find out the
nature of the situation and the task, and
Leadership
what behaviour is acceptable. Organizations largely function by means of manag-
2 Storming, where there is conflict, emotional ers and supervisors who exercise leadership in order
resistance to the demands of the task, to get their teams into action and ensure that they
achieve the results expected of them. Goleman (2000) among competitive elements in their structure and
reported that a study by Hay McBer of 3,871 execu- membership. Conflict also arises when there is change,
tives, selected from a database of more than 20,000 because it may be seen as a threat to be challenged or
executives worldwide, established that leadership resisted, or when there is frustration. Conflict is not
had a direct impact on organizational climate, and always deplorable; it can be a result of progress and
that climate in turn accounted for nearly one-third of change and it can be used constructively.
the financial results of organizations. The conclusion
from research conducted by Higgs (2006) was that
leadership behaviour accounts for almost 50 per cent Characteristics of people
of the difference between change success and failure.
Research by Northouse (2006) into 167 US firms in The development of HR processes and the design of
13 industries established that over a 20-year period, organizations are often predicated on the belief that
leadership accounted for more variations in perfor- everyone is the same and that they will behave ra-
mance than any other variable. Leadership skills are tionally when faced with change or other demands.
described in Chapter 68. But the behaviour of people differs because of their
characteristics and individual differences and it is
not always rational.
Power The management of people would be much eas-
Organizations exist to get things done; in the pro- ier if everyone were the same, but they aren’t. As
cess of doing this, people or groups exercise power. classified by Mischel (1968), personal characteris-
Directly or indirectly, the use of power in influenc- tics can vary as follows.
ing behaviour is a pervading feature of organiza- ●● Competencies – abilities and skills.
tions, whether it is exerted by managers, specialists, ●● Constructs – the conceptual frameworks
informal groups or trade union officials. It is a way which govern how people perceive their
of achieving results, but it can be misused. environment.
●● Expectations – what people have learnt to
Politics expect about their own and others’ behaviour.
●● Values – what people believe is important.
Political behaviour is an inevitable feature of
organizational life. The aim of organizational politi- ●● Self-regulatory plans – the goals people set
cians is to get their own way by influencing people themselves and the plans they make to
to accept their point of view without going through achieve them.
the usual channels or relying on their authority. These characteristics are affected by environmental
Some individuals genuinely believe that the best or situational variables, which include the type of
way to get something done is by using political work individuals carry out; the culture, climate and
means, especially when they are frustrated by the management style in the organization; the social
normal decision processes. Others unashamedly group within which they work; and the ‘reference
pursue their own ends. Political behaviour can be groups’ individuals use for comparative purposes
harmful when it is underhand and devious, but it (eg comparing conditions of work or pay between
can sometimes help to enlist support and overcome one category of employee and another).
obstacles to getting results. All managers need The personal characteristics that affect people’s
political skills, as described in Chapter 72, but,
behaviour at work, as discussed below, are their
because of the nature of their role, such skills are ability, attributions, intelligence, personality, atti-
particularly important for HR specialists. tudes, emotions and emotional intelligence.
Conflict Ability
Conflict is also inevitable in organizations because they Ability is the quality possessed by people that makes
function by means of adjustments and compromises an action possible. Abilities have been analysed by
Burt (1954) and Vernon (1961). They classified them ●● what is measured by intelligence tests
into two major groups: V:ed – verbal, numerical, (Wright and Taylor, 1970: 31).
memory and reasoning abilities; and K:m – spatial
The last, apparently tautological definition is not
and mechanical abilities, as well as perceptual (mem-
facetious. As an operational definition, it can be re-
ory) and motor skills relating to physical operations
lated to the specific aspects of reasoning, inference,
such as eye/hand coordination and mental dexterity.
cognition (ie knowing, conceiving) and perception
They also suggested that overriding these abilities
(ie understanding, recognition), which intelligence
there is general mental ability (GMA), which accounts
and cognitive ability tests attempt to measure.
for most variations in performance. Following a
General intelligence (GI) consists of a number of
meta-analysis of 85 years of research findings,
mental abilities that enable a person to succeed at a
Schmidt and Hunter (1998) established that GMA
wide variety of intellectual tasks that use the facul-
was the most valid predictor of future performance
ties of knowing and reasoning. It can be measured
and learning for selecting people without previous
by an intelligence test and is sometimes expressed as
experience.
an intelligence quotient (IQ), which is the ratio of
Cognitive ability is the capacity of an individual
an individual’s mental age to the individual’s actual
to perform the various mental activities most closely
age as measured by an intelligence test.
associated with learning and problem solving.
The concept of emotional intelligence (as de-
scribed later) stresses that emotional maturity – in
the sense of the ability to identify, assess and man-
Attribution theory age the emotions of one’s self and others – is also
Attribution is the process by which individuals important.
explain the causes of behaviour and events. The

way people make attributions affects their behav-
iour. Kelley’s (1973) attribution theory details the Personality
process for making attributions not only to other
Personality has been defined by Huczynski and
people but to situational factors as well. According
Buchanan (2007: 138) as: ‘The psychological quali-
to his covariation model, an individual can make
ties that influence an individual’s characteristic be-
confident attributions about cause-effect relation-
haviour patterns in a stable and distinctive manner.’
ships in situations depending on:
Personality is organized into patterns that are, to
●● the degree of distinctiveness – the event- some degree, observable and measurable and in-
effect is highly observable; volves both common and unique characteristics –
●● consistency – the event-effect presents itself every person is different from every other person in
the same across time and modality (the some respects but similar to other people in other
attitude adopted to a situation); and respects. Personality is a product of both nature
(hereditary) and nurture (the pattern of life experi-
●● consensus – there is agreement among
ence). Personality can be described in terms of traits
individuals’ views of the event-effect
or types.
relationship.
Traits
Intelligence Traits are predispositions to behave in certain ways
Intelligence has been variously defined as: in a variety of different situations. The leading
model of personality traits is the following ‘big five’
●● the capacity to solve problems, apply classification (Costa and McRae, 1992; Digman,
principles, make inferences and perceive 1990):
relationships (Argyle, 1989: 53);
1 Openness – inventive/curious or consistent/
●● the capacity for abstract thinking and cautious.
reasoning with a range of different contents
and media (Toplis et al, 2004: 20); 2 Conscientiousness – efficient/organized or
easy-going/careless.
3 Extraversion – outgoing/energetic or solitary/ Attitudes

reserved.
4 Agreeableness – friendly/compassionate or An attitude can broadly be defined as a settled mode
cold/unkind. of thinking. Attitudes are evaluative. They are de-
veloped through experience but they are less stable
5 Neuroticism – sensitive/nervous or secure/ than traits and can change as new experiences are
confident. gained or influences absorbed. Within organizations
The assumption that people are consistent in the they are affected by cultural factors (values and
ways they express these traits is the basis for mak- norms); the behaviour of management (manage-
ing predictions about their future behaviour. We all ment style); policies such as those concerned with
attribute traits to people in an attempt to under- pay, recognition, promotion and the quality of
stand why they behave in the way they do. But peo- working life; and the influence of the ‘reference
ple do not necessarily express the same trait across group’ (the group with whom people identify).
different situations or even the same trait in the Sometimes there may be a discrepancy between at-
same situation. Different people may exhibit con- titudes and behaviour, ie someone may believe in
sistency in some traits and exhibit considerable one thing – such as being fair to people – but act
variability in others. differently. This is called ‘cognitive dissonance’.
Types Emotions
Type theories of personality identify a number of
types of personality that can be used to categorize Emotions are feelings that arouse people and there-
people and may form the basis of a personality test. fore influence their behaviour such as anger, fear,
The types may be linked to descriptions of various sadness, joy, anticipation and acceptance. The mild-
traits. One of the most widely used type theories is est forms of emotions are called ‘moods’, which are
that of Jung (1923). He identified four major low-intensity, long-lasting emotional states.
preferences:
●● relating to other people – extraversion or Emotional intelligence
introversion;
The notion of emotional intelligence was first de-
●● gathering information – sensing (dealing fined by Salovey and Mayer (1990), who proposed
with facts that can be objectively verified) or that it involves the capacity to perceive emotion, in-
intuitive (generating information through tegrate emotion in thought, understand emotion and
insight); manage emotions effectively. Goleman (1995) popu-
●● using information – thinking (emphasizing larized the concept. He defined emotional intelli-
logical analysis as the basis for decision gence as: ‘The capacity for recognizing our own feel-
making) or feeling (making decisions based ings and those of others, for motivating ourselves,
on internal values and beliefs); for managing emotions well in ourselves as well as
●● making decisions – perceiving (collecting all others.’ He suggested that its four components are:
the relevant information before making a 1 Self-management – the ability to control or
decision) or judging (resolving the issue redirect disruptive impulses and moods and
without waiting for a large quantity of data). regulate own behaviour coupled with a
This is the basis of personality tests such as the propensity to pursue goals with energy and
Myers-Briggs Types Indicator. persistence. The six competencies associated
Types should be distinguished from traits. As with this component are self-control,
Huczynski and Buchanan (2007: 142) put it: ‘Type trustworthiness and integrity, initiative,
approaches fit people into categories possessing adaptability – comfort with ambiguity,
common behaviour patterns. A personality trait, on openness to change and strong desire to
the other hand, is an enduring behaviour that o ccurs achieve.
in a variety of settings. While individuals belong to 2 Self-awareness – the ability to recognize and
types, traits belong to individuals.’ understand your moods, emotions and drives
as well as their effect on others. This is linked The notion that there is more to being effective
to three competencies: self-confidence, as a manager or working with people than having a
realistic self-assessment and emotional high IQ is persuasive. What matters is how that in-
self-awareness. telligence is used, especially when relating to people.
3 Social awareness – the ability to understand The term ‘emotional intelligence’ has become a con-
the emotional make-up of other people, and venient and recognizable label for this requirement:
skill in treating people according to their someone who is poor at dealing with people is de-
emotional reactions. This is linked to six scribed as lacking in emotional intelligence.
competencies: empathy, expertise in building But doubts have been expressed about the notion
and retaining talent, organizational of emotional intelligence. Edwin Locke, a distin-
awareness, cross-cultural sensitivity, valuing guished occupational psychologist and researcher,
diversity, and service to clients and customers. made the following observation:
4 Social skills – proficiency in managing
relationships and building networks to get the
desired result from others and reach personal Word s of w isd om
goals, and the ability to find common ground
The concept of emotional intelligence has
and build rapport. The five competencies
associated with this component are: leadership, now become so broad and the components
effectiveness in leading change, conflict so variegated that no one concept could
management, influence/communication, and
expertise in building and leading teams. possibly encompass or integrate all of them,
no matter what the concept was called; it is
According to Goleman, it is not enough to have a
high IQ; emotional intelligence is also required. no longer even an intelligible concept. What
Since Goleman’s contribution, three major models is the common or integrating element in a
of emotional intelligence, as summarized by Clarke
(2007), have dominated thinking in this area: concept that includes: introspection about
1 Personality models have become the most emotions, emotional expression, non-verbal
popular theory of emotional intelligence communication with others, empathy,
following Goleman. Here, emotional self-regulation, planning, creative thinking
intelligence is viewed as comprising a range
of emotional dispositions as well as and the direction of attention? There is none.
competencies, from individual traits to a Locke (2005: 426)
number of learnt capabilities. These are all
contained within the components of
emotional intelligence listed above. Mayer et al (2008) described it as mere ‘pop
2 Mixed models comprise aspects of psychology’. Dulewicz and Higgs (1999) have

personality as well as abilities to perceive produced a detailed analysis of how the elements
emotional intelligence and manage emotions. attributed to emotional intelligence overlap with
3 The ability model views emotional intelligence the typical behavioural competencies included in
more narrowly as a set of four cognitive competency frameworks such as sensitivity, flexibil-
abilities that involve the capacity to identify, ity and adaptability.
reason with, and utilize emotions effectively.
As Clarke comments, the first two models have
come under criticism in terms of the ambiguity as- Pau se for th ou gh t
sociated with the areas included and the measure-
What do you think the concept of emotional
ment approaches employed. The ability model has
received more positive commentary as possessing intelligence has to offer?
greater validity.
Implications for HR Organizational processes

specialists The social processes of interaction and networking,
communication, group behaviour, leadership, power,
politics and conflict need to be understood and
The main implications of organizational behaviour
considered when considering ways of improving

theory for HR specialists are summarized below.
organizational effectiveness (the ability of an organ-
ization to achieve its goals by making effective use of
How organizations function the resources available to it). Social and political
factors can affect how HR decisions are made and
When involved in organization design bear in how well they are implemented.
mind that, while the highly structured classical
model with clearly defined roles and lines of con-
trol and communication may appear to be the Individual characteristics
ideal solution, in practice organizations function
To manage people effectively, it is necessary to ap-
differently. It is necessary to take into account the
preciate the factors that affect how they behave at
process school and think of the organization as a
work and act accordingly. These characteristics are
portfolio of dynamic processes that overlay and
their ability, attributions, intelligence, personality,
often dominate the vertical, authority-based pro-
attitudes, emotions and emotional intelligence. It is
cesses of the hierarchical structure. Similarly, or-
also necessary when developing and implementing
ganizational development activities should be
HR policies and practices to bear in mind the ways
based on an analysis and understanding of these
in which people are motivated, the factors that af-
dynamic processes.
fect commitment and engagement, and decision-
making, nudge and self-determination theories.
Organizational culture When designing jobs, preparing learning and de-
velopment programmes, assessing and counselling
While it may not be possible to define an ideal staff, developing reward systems and dealing with
culture or to prescribe how it can be developed, it grievances and disciplinary problems, it should be
can at least be stated with confidence that embedded remembered that all people are different. What ful-
cultures exert considerable influence on organiza- fils or motivates one person may not fulfil or moti-
tional behaviour and therefore performance. If there vate another. Abilities, aptitudes and intelligence
is an appropriate and effective culture it is d esirable differ widely and it is necessary to take particular
to take steps to support or reinforce it. If the culture care in fitting the right people in the right jobs and
is inappropriate, attempts should be made to deter- giving them the right training. Personalities, atti-
mine what needs to be changed and to develop and tudes and emotions also differ. It is important to
implement plans for change (approaches to culture focus on how to manage diversity. This should take
management are described in Chapter 23). HR account of individual differences, which will in-
innovations need to take account of the culture in clude any issues arising from the employment of
which they will operate; they are likely to fail if they women, people from different ethnic groups, those
are countercultural. with disabilities and older people.
Organizational climate Judgements on personality

The perceptions of employees about the organiza- Personality should not be judged or measured sim-
tion and their experiences in it, which form the plistically in terms of stereotyped traits. People are
organization climate, need to be assessed and
complex, they change, and account has to be taken
understood so that action can be taken to deal with of this. The problem for HR specialists and manag-
negative factors. Diagnostics (diagnostic tools), as ers in general is that, while they have to accept and
described in Chapter 23, can be used for this understand these differences and take full account
purpose. of them, they have ultimately to proceed on the
basis of fitting them to the requirements of the

situation, which are essentially what the organiza-
tion needs to achieve. There is a limit to the extent Pau se for th ou gh t
to which an organization that relies on collective Can you think of any more implications for
effort to achieve its goals can adjust itself to the spe-
HR specialists provided by organizational
cific needs of individuals. But the organization has
to appreciate that individuals have rights as well behaviour theory?
as duties and understand that the pressures it places
on people can result in stress and can therefore be
counterproductive.
Key learning points

People perform their roles within complex systems Organization structures are frameworks for getting
called organizations. The study of organizational things done.
behaviour focuses on how this happens. Traditional formal structures were based on
laid-down hierarchies (lines of command) represented in
Organizational behaviour defined organization charts, and use was made of closely defined
job descriptions. But to varying extents, organizations
Organizational behaviour was defined by Huczynski operate informally as well as formally by means of a
and Buchanan (2007) as the term used to describe ‘the network of roles and relationships that cut across formal
study of the structure, functioning, and performance of organizational boundaries and lines of command.
organizations and the behaviour of groups and
individuals within them.’
Organizational culture
The sources and applications of The culture of an organization has been described by
Deal and Kennedy (2000: 4) as ‘the way we do things
organizational behaviour theory
around here’. Organizational or corporate culture is the
Organizational behaviour theory is based on the main pattern of values, norms, beliefs, attitudes and
behavioural science disciplines. These are defined as assumptions that may not have been articulated but
the fields of enquiry dedicated to the study of human which shape the ways in which people in organizations
behaviour through sophisticated and rigorous behave and the ways in which things get done.
methods.
How organizational culture develops
How organizations function
The values and norms that are the basis of culture are
An organization is an entity that exists to achieve a formed in four ways:
purpose through the collective efforts of the people
who work in or for it. ●● By the leaders in the organization, especially those
Organizing is the process of making arrangements who have shaped it in the past.
in the form of defined or understood responsibilities ●● Around critical incidents – important events from
and relationships to enable those people to work which lessons are learnt about desirable or
cooperatively together. undesirable behaviour.
Organizations can be described as systems that, as
affected by their environment, have a structure that ●● From the need to maintain effective working
has both formal and informal elements. relationships among organization members; this
establishes values and expectations.
●● Influenced by the organization’s environment; the Organizational climate

external environment may be relatively dynamic or
As defined by Harrison and Shirom (1999),
unchanging.
organizational climate refers to ‘members’ perceptions
of organizational features such as decision making,
The components of culture leadership and norms about work’.
Organizational culture can be described in terms of
values, norms, artefacts and management style. Organizational processes
A number of social processes take place in
Classifying organizational culture organizations that affect how they function. These are:
(Harrison, 1972) interaction and networking, communication, group
behaviour, role behaviour, leadership, power, politics
●● Power-oriented – competitive, responsive to
and conflict.
personality rather than expertise.
●● People-oriented – consensual, management Personal characteristics
control rejected.
The personal characteristics that affect people’s
●● Task-oriented – focus on competency, dynamic. behaviour at work are their ability, intelligence,
●● Role-oriented – focus on legality, legitimacy and personality, attitudes, emotions and emotional
bureaucracy. intelligence.
Appropriate cultures Emotional intelligence

It is not possible to say that one culture is better than Emotional intelligence is a combination of skills and
another, only that a culture is to a greater or lesser abilities such as self-awareness, self-control, empathy
extent appropriate in the sense that it is relevant to the and sensitivity to the feelings of others. Someone with
needs and circumstances of the organization and high levels of emotional intelligence should be able to
helps rather than hinders its performance. relate to people effectively.
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208
20
Organization design
Introduction its lack of structure) are contingent on its context.
This consists of its business model, the people who
The structure of an organization is a framework for work in the organization, the interests of the other
getting things done. Its design requires decisions on stakeholders and the systems and techniques it uses
how the work carried out in the organization should to achieve its purpose. However, it is useful to adopt
be divided between individuals and groups of peo- a logical and systematic approach to organizational
ple and how the relationships between them should design in the light of an awareness of the conditions
function. The aim is to ensure that people work ef- required for success as considered in the last two
fectively together to achieve the overall purpose of sections of the chapter.
the organization.
The basic question of ‘Who does what?’ is an-
swered by line managers but HR specialists are also
involved because they are there to help the business
Word s of w isd om
make the best use of its people. HR professionals
contribute to organization design or redesign activi- The multiplicity of variables impinging on
ties by using their understanding of the factors
any one organizational situation is so great
affecting organizational behaviour and their knowl-
edge of the business as a whole. that data on all of them sufficient to predict
The design or redesign of organizations happens the precise outcome of that multiple
all the time in response to changes in work arrange-
ment and systems and the launch of new activities. relationship would never in practice be
But organization design is also affected by macro forthcoming.
trends including those concerned with technology, Charles Handy (1985: 13)
the availability of people and the effect of political
changes such as Brexit.
There is a considerable body of organization de-
sign theory as summarized in the first section of this
chapter. This makes it quite clear that organization Organization design theory
design is not, as is often assumed, an approach
based on accepted principles that produces an inevi- Organization design theories propose that those
table ‘best’ result, although as listed in the second concerned with organization design should recog-
section, there are a number of guidelines that can be nize that:
taken into account even if they are not followed
slavishly. But as explained in the third section of the ●● Organizations are open systems consisting of
chapter there is always organizational choice. a number of interrelated parts and trans
Ultimately, the ways in which an organization ferring inputs into outputs (systems theory:
functions and therefore its structure (or sometimes Miller and Rice, 1967; Bertalanffy, 1968).
Chapter 20 | Organization Design 209
●● There are usually a number of ways to an order as its input and results in an ‘output’: the
achieve a goal so there are therefore usually delivery of the ordered goods. The organization de-
a number of ways in which to structure an sign should ensure that the flow of such processes
organization (the principle of equifinality: can proceed smoothly, efficiently and effectively.
Bertalanffy, 1968). The work that needs to be done and accountabil-
●● An organization’s structure will be dependent ities for results should be defined and agreed with
on the circumstances in which it exists such teams and individual jobholders.
as its purpose, technology, size and Matters requiring a decision should be dealt with
environment – this means that ideal as near to the point of action as possible by indi-
structures do not exist and it is most viduals or self-managing teams. Managers should
important to achieve ‘best fit’ (contingency not try to do too much themselves, nor should they
theory: Lawrence and Lorsch, 1969). supervise too closely.
●● Organizations consist of a portfolio of
dynamic processes that overlay the authority-
based processes of the hierarchical
Levels in the structure
structure – the emphasis is on ‘horizontal Too many levels of management and supervision
tasks’, collaboration and networking across inhibit communication and teamwork and create
units rather than on ‘vertical tasks’ within extra work (and unnecessary jobs). The aim should
functional units (process theory: Ghoshal be to reduce the number of levels to a minimum.
and Bartlett, 1995). However, the elimination of middle managers and
wider spans of control mean that more attention
has to be paid to improving teamwork, delegation
Organization design and methods of integrating activities.
guidelines
Span of control
Organization design is always an empirical and
evolutionary process for which absolute principles There are limits to the number of people anyone
cannot be laid down. But there are a number of can manage or supervise well, but these vary con-
broad guidelines that should be taken into account siderably between different jobs. Most people can
even if they are not followed slavishly. work with a far greater span of control than they
imagine, as long as they are prepared to delegate
more effectively, to avoid becoming involved in too
Allocation of work much detail, and to develop good teamwork among
the individuals reporting to them. In fact, wide
Related activities should be grouped logically t ogether spans of control are beneficial in that they can en-
into functions and departments. Unnecessary overlap hance delegation and better teamwork and free the
and duplication of work, either horizontally or verti- higher-level manager to spend more time on policy
cally within a hierarchy, should be avoided. making and planning.
A matrix organization may be developed in Limited spans of control encourage managers to
which multidisciplinary project teams are created interfere too much with the work going on beneath
specially to accomplish a specified task but the them and therefore constrain the scope that should
members of those teams are responsible on a con- be given to their subordinates to grow with their jobs.
tinuing basis to a functional leader who allocates
them to projects, assesses their performance, pro-
vides rewards and deals with training and career One person, one boss
development needs.
Close attention should be given to the processes Generally speaking, individuals should be account-
within the business. These are the interconnected se- able only to one boss for the results they achieve, to
quences of activities that convert inputs into o
utputs. avoid confusion on operational matters. But in a
Thus, ‘order fulfilment’ is a process that starts with project-based or matrix organization, individuals
might be responsible to their project leader for or organizational units will vary widely according
contributing to the outcome of the project while to what they are there to do and the activities they
also being responsible to their departmental have to carry out. That is why there are no absolute
manager or the head of their discipline for the con- principles. It all depends. Burns and Stalker (1961)
tinuing requirements of their role and for achieving established in their study of electronic companies in
agreed standards of overall performance. Scotland that in stable conditions a highly struc-
Individuals in functional roles such as finance or tured or ‘mechanistic’ organization will emerge that
HR may be directly responsible to a line manager has specialized functions, clearly defined jobs, strict
but may also have a ‘dotted line’ relationship of re- administrative routines and a hierarchical system of
sponsibility to the head of their function on policy exercising control. However, when the environment
matters. is volatile, a rigid system of ranks and routines will
inhibit the organization’s speed and sensitivity of
response. In these circumstances the structure is, or
Decentralization should be, ‘organic’ in the sense that it is a function
of the situation in which the enterprise finds itself
Authority to make decisions should be delegated as
rather than conforming to any predetermined and
close to the action as possible.
rigid view of how it should operate.
Child (1972) explained that in making such choices
the leadership group (the dominant coalition) had to
Optimize the structure be persuaded to influence the organization structure
Develop an ideal organization by all means, but through an essentially political process. He called this
also remember that it may have to be modified to fit process ‘strategic choice’. Choice analysis regards de-
in the particular skills and abilities of key i ndividuals. bate and negotiation in the social networks existing in
organizations as integral to decision making on or-
ganizational structures.
Relevance to purpose and context
The organization has to be developed to meet the
needs of its situation. In today’s conditions of
turbulence and change, this inevitably means a
tendency towards more decentralized and flexible
structures, with greater responsibility given to indi- Are design issues always under the control
viduals and an extension of the use of task forces of management? If not, what are the
and project teams to deal with opportunities or
threats. This implies an informal, non-bureaucratic, implications?
organic approach to organization design – the form
of the organization will follow its function, not the
other way around.
The organization may be largely based on multi- As noted by Parker et al (2001: 418): ‘Organiza
disciplinary project teams, as in a matrix organizations... differ from the rather static and inflexible
tion, or greater emphasis will be placed on ensuring enterprises of earlier times. Greater flexibility is re-
that flows of work involved in the key business pro- quired to enable the rapid delivery of low-cost,
cesses are properly catered for rather than the crea- high-quality and customized products, and to pro-
tion of a traditional formal and hierarchical structure. vide increasingly powerful and demanding custom-
ers with seamless service.’ They also noted that the
use of teamworking and other flexible forms of
Organizational choice working continues to grow, distinctions between
departments are disappearing as organizations be-
There is never one best way of organizing anything. come more integrated, and IT has changed and is
There is always a choice. It is necessary to bear in changing the way in which work is conducted.
mind that structural requirements in organizations These considerations may indicate that a hierarchical
TA B L E 20. 1 Mechanistic and organic design
Mechanistic design Organic design
Structure Formal Informal

Hierarchical (command and control) Flat, lean and flexible – horizontal processes
Distinct functional units Lattice structure
Work Tightly defined jobs Flexible roles

Minimal scope in jobs for decision making Enriched roles with more autonomy
Closely controlled work groups Self-managed teams
and rigid structure is inappropriate and a more flex- evaluation of the alternatives, but the law of the situ-
ible approach is required. As noted by Cummings ation, as described originally by Mary Parker Follett
and Worley (2005: 516), this means that the tradi- (1924), should prevail. This states that the work that
tional ‘mechanistic’ approach to organization de- people are required to do depends on the objective
sign may be replaced by an ‘organic’ approach as requirements of the situation. The final choice will
shown in Table 20.1. depend upon the context and circumstances of the
In accordance with systems theory and the prin- organization – as Lupton (1975) pointed out, it is
ciple of equifinality (the premise that multiple or- important to achieve best fit.
ganizational forms are equally effective), Huczynski Organizations may evolve organically without
and Buchanan made the following suggestion: any conscious attempt to design them. But if a de-
liberate design programme is planned this should be
based on the evidence that can be produced by an
organization review which may cover the whole or-
Wo rd s of wi sdom ganization or part of it (a strategic business unit, a
function or a department). A review of the whole
It is not necessary to specify in detail the organization should be conducted in the following
organization structure and the duties of stages:
each member. If an organization can 1 Activity analysis to establish what work is
done and what needs to be done. Two
develop its own method of operating and
questions need to be answered: (i) Are all the
change that as circumstances require, then activities required properly catered for?
it will be necessary only to detail the basic (ii) Are any unnecessary activities being
carried out?
and most significant aspects. This approach
2 Structural analysis to determine how activities
to organization design is called ‘minimum are grouped together; the number of levels in
critical specification’. the hierarchy; the extent to which authority is
Huczynski and Buchanan (2007: 89)
decentralized to divisions and strategic
business units (SBUs); where functions such
as finance, HR, IT and research and
development are placed in the structure (eg as
central functions or integrated into divisions
or SBUs); the relationships that exist between
The approach to different units and functions (with particular
organization design attention being given to the way in which
they communicate and cooperate with one
In exercising organizational choice, an organiza- another). Attention would be paid to such
tional review, as described below, will help in the issues as:
–– the logic of the way in which activities are remembering that whatever structure evolves it will
grouped (this may be in accordance with be contingent on the circumstances. An important
function, product, market or location) and point to bear in mind is that organizations consist
decentralized; of people working more or less cooperatively to-
–– the span of control of managers (the gether. Inevitably, and especially at managerial lev-
number of separate functions or people els, the organization may have to be adjusted to fit
they are directly responsible for); the particular strengths and attributes of the people
available. The result may not conform to the ideal,
–– any overlap between functions or gaps
but it is more likely to work than a structure that
leading to the neglect of certain activities
ignores the human element. It may be desirable to
or duplication;
have an ideal structure in mind, but it is also desir-
–– the existence of unnecessary departments, able to modify it to meet particular circumstances,
units, functions or layers of management; as long as there is awareness of any potential prob-
–– the clarity with which individual responsi lems that may arise.
bilities and accountabilities are defined.
3 Diagnosis to identify (on the basis of the
activities and structural analyses) the reasons
for any structural or system problems facing Word s of w isd om
the organization or function.
A great many problems in organizational
4 The choice in the light of the analyses and
diagnosis of how the business or part of it design stem from the assumption that
should be designed or revised. organizations are all alike; mere collections
5 A plan to implement any revisions to the of component parts to which elements of
structure, possibly in phases.
structure can be added and deleted at will, a
A review of part of an organization would take
sort of organizational bazaar.
place in broadly similar stages.
Mintzberg (1991: 332)
The worst sin that organization designers can com-
Can you think of any recent developments mit is that of imposing their own ideology on the
in technology, society and the economy that organization. Their job is to be eclectic in their
knowledge, sensitive in their analysis of the situa-
have had an impact on the ways in which tion, and deliberate in their approach to the evalua-
organizations function and are designed? tion of alternatives.
Successful organization
One of the pioneers of management theory
design and practice in the UK, Lyndall Urwick, was
Organizations are not static things. Changes are adamant that organization structures should
constantly taking place in the business itself, in the never be adjusted to fit round the particular
environment in which the business operates, and in
characteristics of people. Should this advice
the people who work in the business. There is no
such thing as an ideal organization. The most that be accepted or ignored?
can be done is to optimize the processes involved,
Research conducted by Whittington and Molloy ●● maintain effective project management

(2005) indicated that to achieve success in organiza disciplines;
tion design it is necessary to: ●● build skilled change management teams –
●● obtain top management support, especially with the right mix of experience and
personal commitment and political support; abilities – that can work together.
●● avoid piecemeal, uncoordinated change
initiatives by making a strategic business case
that anticipates implications across the entire
organization;
●● achieve substantive, rather than tokenistic, Word s of wisd om
employee involvement in the change process, Organizational decisions depend on
moving beyond communication to active
engagement; information, estimates and expectations
●● invest in communications with external that ordinarily differ appreciably from
stakeholders, including customers, suppliers reality.
and financial stakeholders;
Cyert and March (1963)
●● involve HR professionals closely, right from
the start – involving HR has been proved to
positively impact on a range of performance
outcomes;
Key learning points
Organization design theories Organization analysis

The main organization design theories are systems The starting point for an organization review is an
theory, the principle of equifinality, contingency theory analysis of the existing circumstances, structure and
and process theory. processes of the organization and an assessment of
the strategic issues that might affect it in the future.
Organization design guidelines
There are a number of organization design guidelines
Organization diagnosis
that should be taken into account, although they The aim of the diagnosis is to establish, on the basis of
should not be followed slavishly. the analysis, the reasons for any structural problems
facing the organization or function.
Aims of organization design
The overall aim of organization design is to optimize
Successful organization design
the arrangements for conducting the affairs of the Organizations are not static things. Changes are
business or function and thus achieve the ‘best fit’ constantly taking place in the business itself, in the
between the structure and what the business or environment in which the business operates, and in
function is there to do. the people who work in the business. There is no such
thing as an ‘ideal’ organization. The most that can be
Organizational choice done is to optimize the processes involved,
remembering that whatever structure evolves it will
There is never one best way of organizing anything. be contingent on the circumstances of the
There is always a choice. organization.
References
Bertalanffy, L Von (1968) General System Theory, Huczynski, A A and Buchanan, D A (2007)
New York, Braziller George Organizational Behaviour, 6th edn, Harlow, FT
Burns, T and Stalker, G (1961) The Management of Prentice Hall
Innovation, London, Tavistock Lawrence, P R and Lorsch, J W (1969) Developing
Child, J (1972) Organizational structure, environment Organizations, Reading, MA, Addison-Wesley
and performance: the role of strategic choice, Lupton, T (1975) Best fit in the design of
Sociology, 6 (1), pp 1–22 organizations, Personnel Review, 4 (1), pp 15–22
Cummings, T G and Worley, C G (2005) Miller, E and Rice, A (1967) Systems of Organization,
Organization Development and Change, Mason, Tavistock, London
OH, South Western Minztberg, H (1991) Organization design: fashion or
Cyert, R M and March, J G (1963) A Behavioural fit? in (ed) J J Gabarro, Managing People and
Theory of the Firm, Englewood Cliffs, NJ, Organizations, Boston, MA, Harvard Business
Prentice-Hall School Publications, pp 332–51
Follett, M P (1924) Creative Experience, New York, Parker, S K, Wall, T D and Cordery, J L (2001) Future
Longmans Green work design research and practice: towards an
Ghoshal, S and Bartlett, C A (1995) Changing the elaborated model of work design, Journal of
role of top management: beyond structure to Occupational and Organizational Psychology, 74
process, Harvard Business Review, January– (4), pp 413–40
February, pp 86–96 Whittington, R and Molloy, E (2005) HR’s Role in
Handy, C (1985) Understanding Organizations, Organizing: Shaping change, London, CIPD
3rd edn, Harmondsworth, Penguin Books
215
21
Work design
‘knowledge work’ – for example, professional ser-
Introduction vices and new product and service development.
More flexible working is taking place, with an
Work design is concerned with developing the increasing proportion of part-timers. A persistent

systems of work carried out in the organization – ‘bad-jobs’ trap exists in the UK with too many
the processes, practices and technology used to get workers in low-skill, low-wage jobs being unable to
things done by people. Work design is closely asso- progress out of these jobs. And the gig economy is
ciated with job design in that the latter is conducted thriving.
within the context of the system of work.
This chapter starts with two background sec-
tions – a review of what is happening in the world
of work and a short history of how the approach to
work design has developed. The next section deals Pau se for th ou gh t
with the approach to work design. The final two What do you think the impact of all these
sections describe the fundamental work design pro-
cess of smart working and the more recent associ- changes will be on the employee experience
ated concept of agile working. of work?
What is happening to work?

The nature of work is changing. Organizations are Work design – a short
functioning more flexibly. They tend to specialize
more and are organized organically, ie they are history
relatively informal with the emphasis on lateral
processes and networking – a ‘lattice structure’ – Work design began with the concept of the division
which is often flat, ie non-hierarchical without of labour originated by Adam Smith (1776). Much
many layers of management. There has been a shift later came ‘Taylorism’, the scientific management
away from large-scale industrial production, with movement pioneered by Taylor (1911), which was
a dramatic decline in manufacturing jobs and a based on the belief that the most efficient way to do
rise in service work. There has been a significant tasks was to move the responsibility for how to do
increase in the number of employers that an indi- the work from the individual employee to engineers
vidual employee expects to work for during his or or managers. The next step was ‘Fordism’, the mov-
her career. ing assembly line introduced by Henry Ford in
The demographics of the workforce have changed 1914. Thereafter, the practice of work simplifica-
in the direction of an increased proportion of tion became embedded in organizations and to a
women, greater ethnic diversity, more educated em- large extent still exists.
ployees and an ageing workforce. There has been a The first move away from this situation was pro-
growth in the number of employees engaged in vided by the concept of job enrichment popularized
by Herzberg (1968), who referred to it as ‘vertical Process-centred organizations

job loading’. This was reinforced by job design the-
ory (Hackman and Oldham, 1974) as discussed in Process-centred organizations avoid focusing too
Chapter 22. closely on the design of a rigid work system but in-
More recently, the concept of ‘smart working’ stead concentrate on the stream of products or ser-
has emerged. This was followed by the concept vices and the processes required to ensure that work
of ‘agile working’. Essentially, these mean devel- flows smoothly to the ultimate satisfaction of the
oping and managing a flexible and quickly customer or client. They have the following features:
responsive work environment in order to release
●● The focus is on horizontal processes that cut
employees’ energy and drive business perfor-

across organizational boundaries.
mance. More recently, there have been major
developments in automation and the use of arti- ●● The overriding objective will be to maintain
ficial intelligence. a smooth flow of work between functions
However, before describing these developments and to achieve synergy by pooling resources
it is first necessary to examine the overall ap- from different functions in task forces or
proaches to work system design. project teams.
●● The organization will not be based on the old
hierarchical ‘command and control’ structure,
The approach to work ie one that consists of a functional structure
with a number of different disciplines. Instead
system design it will be a ‘lattice’, or ‘matrix’ organization.
A lattice organization is one with a non-
Work system design is concerned with how the hierarchical, flat structure where the emphasis
various processes required to make a product or is on horizontal processes, the elimination of
provide a service should operate together. It deals boundaries between functions and teamwork;
with the set of related activities that combine to give a matrix organization is one that consists of a
a result that customers want. The structure of the functional structure with a number of
system describes the relations between different different disciplines and a project structure
operations. consisting of project teams drawn from the
Importantly, work system design must take disciplines.
account of what needs to be done to maximize ●● There may still be designated functions for,
the contribution and meet the needs of the peo- say, manufacturing, sales and distribution,
ple who will be working in the system. This is but the emphasis will be on how these areas
the focus of the concepts of smart and agile work together on multifunctional projects to
working. deal with demands such as product/market
A work system may be centred on activities such development.
as manufacturing, chemical processing, informa-
tion processing, supply, distribution, transport, the ●● Belief in and reliance on teamwork.
provision of public services or customer service. ●● Expansion of traditional jobs and increased
There is usually a choice between different pro- emphasis on flexible roles, with employees
cesses within the work system which will include making decisions and dealing with all types
automation. As the design of the work system af- of customer issues.
fects costs, quality and productivity it is important ●● Access to all types of information and
to provide the best match between the product or knowledge throughout the organization.
service and the process used to make or deliver it.
●● Quality and continuous improvement will be
Work system design is affected by the extent to
regarded as a common responsibility shared
which the organization is process-centred and it
between managers and staff from each
will involve the technique of process planning as
function.
described on the next page.
Chapter 21 | Work Design 217
Process planning ●● take account of environmental

considerations;
Work system design covers the planning of processes ●● operate generally in accordance with the
such as flexible manufacturing systems (computer principles of ‘smart working’.
numerical control machines controlled by a central
computer, allowing fast and easy changes between
products) and supply chain management (the con-
trol of products from the original suppliers of mate-
Smart working
rials through to the final customers). It may involve
As defined by the CIPD (2008: 4), smart working is:
facility layout – the physical arrangement of equip-
‘An approach to organizing work that aims to drive
ment, offices, rooms, work stations (including ‘hot
greater efficiency and effectiveness in achieving job
desks’ – individual desks shared between several
outcomes through a combination of flexibility, au-
people) and other resources. It will also consider the
tonomy and collaboration, in parallel with optimiz-
use of automation and artificial intelligence.
ing tools and working environments for employees.’
Process planning may determine how manufac-
The CIPD (2014a) reported that their survey re-
turing or the provision of a service should be di-
vealed that smart working was named as one of the
vided into a series of stages such as machines in a
top tactics to improve productivity by 56 per cent
production line, each of which uses resources and
of organizations in the UK, including 60 per cent of
adds value.
organizations in the public sector.
The characteristics of smart working as estab-
lished by the CIPD research were:
Requirements to be met in work
flexibility in work locations and hours;
system design ●●
●● self-management – a high degree of

When designing a work system it is necessary to see autonomy and a philosophy of
that it will: empowerment;
●● fit work requirements for efficiency and ●● the use of virtual teams (work groups that
flexibility; mainly uses electronic means for members to
●● ensure the smooth flow of processes or interact with one another);
activities, or of materials from supplier to ●● focus on outcome-based indicators of
customer; performance;
●● facilitate the effective use of resources and ●● high-performance working;
the control of waste; ●● use of more advanced communications
●● as far as possible enable employees to gain technology;
fulfillment from their work by providing ●● hot-desking and working from home;
scope for variety, challenge and autonomy;
●● ways of working that are underpinned by or
●● encourage cooperative effort through drive high-trust working relationships;
teamworking;
●● alignment of smart working with business
●● provide a good work environment in terms objectives.
of working conditions;
These significant characteristics of flexible working,
●● take account of the need to provide a
high-performance working and lean manufacturing
healthy and safe system of work (‘build
are described below.
health and safety into the system’) bearing in
mind the need to minimize stress and pay
attention to ergonomic considerations in the
design of equipment and work stations to
Flexible working
eliminate or at least significantly reduce the Flexible working is a pattern of working practice
risk of such conditions as repetitive strain or working hours that deviates from the standard
injury; or normal arrangement. The aim is to provide for
greater operational flexibility, improve the use of Self-managed teams are set up with full r esponsibility
employees’ skills and capacities, increase productiv- for planning, controlling and monitoring the work.
ity and reduce employment costs. Flexible working
has become increasingly important as a means of
enhancing operational effectiveness. It is examined Lean manufacturing
in detail in Chapter 32.
Lean manufacturing or lean production, often
known simply as ‘Lean’, is a process improvement
methodology developed by Toyota in Japan. Lean
High-performance working focuses on reducing waste and ensuring the flow of
High-performance working was defined by Combs production in order to deliver value to customers. It
et al (2006) as the sum of the processes, practices concentrates initially on the design of the process so
and policies put in place by employers to enable that waste can be minimized during manufacture. It
employees to perform to their full potential. They then examines operations in order to identify oppor-
referred to employee participation and flexible
tunities to improve the flow of production, remove
working arrangements as examples of such systems wasteful practices and engage in continuous im-
that have a direct impact on ways of working and provement or Kaizen (an important feature of Lean).
therefore flow through to job design. Various tools are available such as ‘FiveS’, which is a
Sung and Ashton (2005) defined high- workplace methodology that uses a list of five words
performance work practices as a set or ‘bundle’ of starting with the letter ‘S’ (sorting, straightening, sys-
35 complementary work practices covering three tematic cleaning, standardizing and sustaining).
broad areas: Reference to these enables a dialogue to take place
with employees on how work should be done and
1 High employee involvement work practices –
continuous improvement achieved.
eg self-directed teams, quality circles and
But as noted by the CIPD (2008: 11), the success
sharing/access to company information.
of Lean depends not so much on the tools but on its
2 Human resource practices – eg sophisticated approach to work. Lean is implemented by com-
recruitment processes, performance munities of people who carry out and supervise the
appraisals, mentoring and work redesign. work and may include stakeholders such as custom-
3 Reward and commitment practices – eg ers. Lean team members are encouraged to think
various financial rewards, family-friendly flexibly and be adaptable to change. They have a
policies, job rotation and flexible hours. sense of ownership of what they do and achieve.
High-performance work design requires manage-
ment to define what it needs in the form of effective
methods of production and the results expected Pau se for th ou gh t
from its introduction. It involves introducing a
high-performance work system (see Chapter 6) and What part can HR play in introducing and
multiskilling – job demarcation lines are eliminated managing smart working?
as far as possible and encouragement and training
are provided for employees to acquire new skills.
CASE STUDIES
Work organization at W L Gore
W L Gore, which is best known for its GORE-TEX® fabrics, charts, no ranks or job titles and no chains of command
has a non-hierarchical, flat organization structure (a nor predetermined channels of communication. What is
‘lattice’ structure). There are no traditional organization important when recruiting new people is that they have
the right fit with Gore’s culture. There are no rigid job structure gives associates the opportunity to use their
specifications. Instead, associates make a commitment own judgement, take ownership of work areas and
to contribute individually and collectively to work areas access the resources they need for projects to be
or projects according to their skills. Individuals are successful. Gore’s core values and ways of working are
encouraged to take an interest in a wide variety of job built on the principles of ‘smart working’. Its unique
areas or projects. Provided the core responsibilities culture, which fosters creativity, self-motivation,
within their role are carried out, associates can then participation and equality, has proved to be a key
stretch and build on their role to suit their interests, contributor to associate satisfaction and retention.
aspirations and the business needs. Gore’s ‘lattice’
Smarter working in the UK Civil Service
The smarter working programme in the UK Civil Service ●● let others know where and when you are working;
was initiated under the heading of ‘The Way We Work’
●● make sure the reporting structure is clear;
(TW3 for short). It was designed to help realize the Civil
Service Reform Plan’s aim of ‘Creating a decent working ●● share calendars and schedules;
environment for all staff, with modern workplaces
●● use electronic document management rigorously to
enabling flexible working, substantially improving IT tools
make sure work is easily accessible to everyone;
and streamlining security requirements to be less
burdensome to staff.’ It was emphasized that for ●● be flexible about flexible working so no one is
managers: ‘This means moving away from managing by disadvantaged by the choices of others;
presence to managing by outcome and using different
●● develop an etiquette for online communications and
ways of keeping in contact with the team, assessing
virtual meetings;
workloads and monitoring performance.’ For the team, it
was stated that: ‘This means greater sharing of schedules ●● signpost availability for phone contact or online
with colleagues and managers, filing information so that it discussion;
can be accessed by others and updating each other on
●● be fair and considerate about using space in the office;
work in progress.’
The top tips for smart working were given as: ●● support each other to succeed together.
Source UK Civil Service (2016)
Agile working
Source review
The concept of agile working has come to the fore
fairly recently. It is closely related to that of smart Agile working is the ability to stay open to new
working but with a greater emphasis on the need to directions and be continually proactive, helping to
respond quickly to the new demands made on or- assess the limits or indeed risks of existing
ganizations in today’s turbulent conditions. It was approaches and ensuring that leaders and
defined by the CIPD as follows: followers have an agile and change-ready mindset
to enable them and ultimately the organization to
keep moving, changing, adapting.
CIPD (2014b: 5)
The characteristics of the ‘agile’ business as noted otential for fast customization of products, as
p
by the CIPD include a high-performance culture, opposed to mass manufacturing and optimizations
flexibility of management practices and resources, in Lean. Agile does not exist in isolation and uses
and organizational structures that support collabo- many principles of Lean (such as continuous im-
ration, rapid decision making and execution. The provement), but applies those to the process and the
CIPD also noted that ‘agile manufacturing’ has de- way of working as a whole, rather than to the prod-
veloped as a production technology that enhances uct. Agile teams rely on self-organization, iterations,
‘lean’ manufacturing by a greater emphasis on customer centricity, knowledge sharing, collabora-
adaptability of change, for example, through its tion, and mutual trust.
C A S E S T U DY
The work agility programme at Deloitte
The aim of this programme at Deloitte, the business advisory people feel trusted to work in a way that suits both them
firm, is to increase the agility around how its people organize and the business.
their working lives. It includes a range of options around As stated by the Head of Client Service HR at Deloitte, the
when and where its people work, and includes ‘Time Out’ – programme ‘requires a shift in mindset from the traditional 9
the right to request a block of four weeks’ unsalaried leave to 5 with an hour for lunch, which is rarely a reality, to much
each year, without reason or justification. more nimble thinking that recognizes nothing is static… It’s
Deloitte recognized the need to create a culture where about finding a fair and flexible balance of what works for
output matters more than ‘presenteeism’, and where its the firm and the team as well as the individual.’
involving cognitive activity, especially by means of

artificial intelligence. These tasks can include infor-
mation acquisition, information analysis, decision
What do you think the concept of agile work and action selection and implementation.
According to McKinsey (2019), with today’s
adds to that of smart work?
technology, 45 per cent of activities people are paid
to do could be automated, and 60 per cent of jobs
could have 30 per cent or more of their activities
automated.
A survey by the CIPD (2019) in association with
Automation PA Consultants established that the most commonly
cited reasons for introducing automation were:
Automation has been with us for some time but
●● to improve the quality of goods and services
with the development of artificial intelligence tech-
(38 per cent);
niques it is becoming increasingly important. It is
defined as the performance of tasks or activities by ●● to deliver goods or services more cheaply
machines, including robots and computers, rather (33 per cent) or to reduce overall costs
than humans. This means not only that physical (32 per cent);
tasks can be carried out better and more cheaply ●● to keep up with competitors (32 per cent) or
than humans, but also that tasks can be performed the wider industry (32 per cent).
nderstanding of the ways in which people can best

u
The role of HR in work design be used in work systems to their own benefit as well
as that of the organization. But as the CIPD ob-
HR professionals should be able to make an impor- served, this doesn’t always happen.
tant contribution to work design based on their
Source review
Of the departments we listed in our survey, HR is the and therefore should be an instrumental part of
least likely to be involved in investment decisions on AI decision making on applications of AI and automation.
and automation (being involved in 55 per cent of cases). For this reason, HR should look to develop the skills and
HR is especially unlikely to be involved when the abilities to advise on where AI or automation could
technology is being used for cognitive tasks (50 per provide skills augmentation. Their role should ensure
cent), which is interesting given that these changes that the implementation of these technologies enables
may have greater implications for skill sets required in the design of new organizational structures that deliver
organizations. There is a strong argument to be made a more satisfying employee experience.
that HR should be involved in decisions that affect roles CIPD (2019: 13)
Key learning points
Work design through a combination of flexibility, autonomy and

collaboration, in parallel with optimizing tools and
Work design is the creation of systems of work and a working environments for employees.’
working environment that enhance organizational
effectiveness and productivity, ensure that the
Flexible working
organization becomes ‘a great place in which to work’
and are conducive to the health, safety and wellbeing Flexible working is a pattern of working practice or
of employees. working hours that deviates from the standard or
normal arrangement.
Work system design
High-performance working
Work system design is concerned with how the
processes required to make a product or provide a High-performance working was defined by Combs
service should operate. It deals with the set of related et al (2006) as the sum of the processes, practices and
activities that combine to give a result that customers policies put in place by employers to enable
want. The structure of the system describes the employees to perform to their full potential.
relations between different operations.
Lean manufacturing
Smart working A process improvement methodology developed by
The CIPD (2008: 4) defined smart working as: ‘An Toyota. ‘Lean’ focuses on minimizing waste and
approach to organizing work that aims to drive greater ensuring the flow of production in order to deliver
efficiency and effectiveness in achieving job outcomes value to customers.
Agile working Automation

The characteristics of the ‘agile’ business as Automation has been with us for some time but
noted by the CIPD include a high-performance with the development of artificial intelligence
culture, flexibility of management practices and techniques it is becoming increasingly important. It is
resources, and organizational structures that defined as the performance of tasks or activities by
support collaboration, rapid decision making and machines, including robots and computers, rather than
execution. humans.
References
CIPD (2008) Smart Working: How smart is UK PLC? Organizational Behaviour and Human
Findings from organizational practice, London, Performance, 16 (2), pp 250–79
CIPD Herzberg, F (1968) One more time: how do you
CIPD (2014a) Labour Market Outlook, London, motivate employees? Harvard Business Review,
CIPD, Summer January–February, pp 109–20
CIPD (2014b) Getting Smart About Agile Working McKinsey (2019) Insights on Organization [online]
[online] https://www.cipd.co.uk/Images/hr-getting- https://www.mckinsey.com/business-functions/
smart-agile-working_2014_tcm18-14105.pdf organization/our-insights (archived at https://
(archived at https://perma.cc/DH99-5WWW) perma.cc/2YD2-WMCP) [accessed 15 July 2019]
[accessed 5 February 2019] Smith, A (1776) The Wealth of Nations,
CIPD (2019) People and Machines: From hype to Harmondsworth, Penguin Books, 1986
reality [online] https://www.cipd.co.uk/knowledge/ Sung, J and Ashton, D (2005) High Performance
work/technology/people-machines-report (archived Work Practices: Linking strategy and skills to
at https://perma.cc/9HR8-2AK7) [accessed performance outcomes, London, DTI
6 May 2019] Taylor, F W (1911) Principles of Scientific
Combs, J, Liu, Y and Hall, A (2006) How much do Management, New York, Harper
high-performance work practices matter? A UK Civil Service (2016) Smarter Working [online]
meta-analysis of their effects on organizational https://assets.publishing.service.gov.uk/
performance, Personnel Psychology, 59 (3), government/uploads/system/uploads/attachment_
pp 501–28 data/file/394150/Smarter-Working-Top-Tips.pdf
Hackman, J R and Oldham, G R (1974) Motivation (archived at https://perma.cc/S24G-V384)
through the design of work: test of a theory, [accessed 5 January 2019]
223
22
Job design
As defined by Fairlie (2011: 509), meaningful work
Introduction involves ‘having a purpose or goals, autonomy, con-
trol, challenge, achievement, competence, mastery,
commitment, engagement, generativity, service to
Wo rd s of wi sdom others, self-realization, growth and fulfilment.’
If you want someone to do a good job, give

them a good job to do. The dimensions of job quality
Frederick Herzberg (quoted by Dowling, 1971)
Word s of w isd om
Herzberg’s aphorism is well known. But what is ‘a A good job, like a good life, consists of
good job’? The purpose of this chapter is to answer
this question by examining the process of job design multiple dimensions that an individual values.
as an important means of creating ‘good’ jobs. This The relative importance of these dimensions
is done by an initial look at the concept of job qual- is not necessarily the same for everyone or
ity, then by describing the process of designing jobs
and finally by considering the ways in which w orkers even for the same person at different times
in effect design their own jobs using ‘job c rafting’. Clark (2015: 4)
Job quality
The concept of job quality is about the characteris- Source review
tics of jobs that meet the needs of workers. It is con-
cerned with the factors that influence the creation
Whether a job is considered to be good or bad
of ‘good jobs’ and thus lead to job satisfaction, feel-
depends on a large number of characteristics of
ings of wellbeing, and enhanced levels of motiva-
one’s work and working conditions, including: how
tion, engagement and performance.
much money and fringe benefits one receives from
The term ‘job quality’ has come to the fore fairly
recently as a means of developing the earlier notions the job; the degree of job security; the extent to
of the quality of working life (QWL) and meaning- which jobs enable a person to use her skills and to
ful work. The QWL movement (Wilson, 1973) develop further skills; the amount of flexibility
advocated making work ‘meaningful’ through the allowed in working hours and schedules; and the
design of jobs that would incorporate sufficient flex- degree to which workers are able to participate in
ibility, breadth and challenge to ensure individuals decisions and to exercise autonomy and control
are motivated, excessive and prolonged stress is over their work activities.
minimized, and wherever possible job security is Findlay et al (2013: 444)
assured to sustain good-quality work for employees.
The European Foundation for the Improvement of 2 Intrinsic characteristics of work: including
Living and Working Conditions (Eurofound) model objective aspects (such as skills,
showing the dimensions and outcomes of job qual- autonomy, control, variety, work effort)
ity is shown in Figure 22.1. and subjective aspects (such as
The CIPD (2018: 18) stated that: ‘Good-quality meaningfulness, fulfilment, social support
jobs allow individuals to develop and deploy their and powerfulness).
skills and offer some degree of challenge commensu- 3 Terms of employment: including objective
rate to the demands of the job and the capabilities of aspects (such as contractual stability and
the individual. Similarly, good-quality jobs, in terms opportunities for training, development and
of both tasks and work organization, offer opportuni- progression) and subjective aspects (such as
ties for task discretion and control. Another crucial perception of job security).
element of job quality is the extent to which individu-
4 Health and safety: including physical and
als can have their voice heard and represented and
psycho-social risks.
can participate in relevant decision making.’ The
CIPD (2018) identified six key dimensions of job 5 Work-life balance: including working time
quality: arrangements such as duration, scheduling
and flexibility, as well as work intensity.
1 Pay and other rewards: including objective
6 Representation and voice: including
aspects such as wage level, type of payment
employee consultation, trade union
(for example, fixed salary, performance pay)
representation and employee involvement in
and non-wage fringe benefits (such as
decision making.
employer-provided pension and health cover)
and subjective aspects (such as satisfaction The CIPD has produced a Job Quality Index based
with pay). on these dimensions.
F I G U R E 22.1 Model of job quality
Working conditions:
• Emotional and physical
demands
• Working environment
• Social relationships at work
Worker outcomes:
Employment conditions: • Physical and
• Pay mental wellbeing
• Working time
• Good work/life
• Security
balance
Employment relations: • Job satisfaction
• Representation • Motivation
• Voice
• Communications • Engagement
Job design:
• Autonomy
• Opportunities for skill utilization
and development
• Meaningful work
Source Adapted from Eurofound (2013: 7)

Chapter 22 | Job Design 225
Enhancing job quality

procedures in completing those tasks, how
The various dimensions of job quality can be en-
hanced by actions in the areas of organization and closely the job incumbent will be
work design, employment practices, learning and supervised, and numerous other aspects of
development, reward management, employment re-
the work. Such choices are the essence of
lations and employee wellbeing as described in
other parts of this handbook. But an important ele- job design.
ment in job quality is job design, as considered in Wall and Clegg (1998: 265)
the next section of this chapter.
The principles and practice Specifying the content of a job starts from work re-
quirements because that is why the job exists. When
of job design the tasks to be done have been determined, prefer-
ably through systematic job analysis (see Chapter
Job design specifies the contents, methods and rela-
63), it is then necessary to consider how the jobs
tionships of jobs in order to meet work require-
can be set up to provide the maximum degree of
ments for productivity, efficiency and quality and
intrinsic motivation for those who have to carry
satisfy the personal needs of the job holder. Job de-
them out. This involves considering the factors that
sign can be something that managers do and em-
contribute to job quality and make jobs ‘meaning-
ployees experience. In practice, however, employees
ful’ as discussed earlier in this chapter. It also means
can and should have quite a lot of influence on what
fulfilling the s ocial responsibilities of the organiza-
they do and how they do it. This process has been
tion to the people who work in it by improving the
described as ‘job crafting’ and is examined in the
quality of their working life.
concluding section of the chapter.
The factors affecting the principles and practice
Job design can be conducted formally when reor-
of job design are:
ganization, the development of a new work system
or the introduction of a new activity takes place. It ●● the distinction between jobs and roles;
also happens informally whenever line managers ●● the characteristics of jobs;
make on-the-spot decisions on how work should be
●● task structure;
carried out. But the principles of job design as set
out below still apply in the latter circumstances. ●● method of working;
Even though job standardization is inevitable in ●● intrinsic motivation.
certain jobs, such as manufacturing lines or call cen-
tre operator roles, it is still necessary to take ac-
count of these principles. Jobs and roles
Although the terms jobs and roles are often used
interchangeably, a distinction can be made between
Wo rd s of wi sdom them. A job is an organizational unit consisting of a
group of defined tasks or activities to be carried out
Jobs are created by people for people. or duties to be performed. A role is the part played
Whether deliberately or by default, choices by individuals and the patterns of behaviour ex-
pected of them in fulfilling their work requirements.
are made about which tasks to group Jobs are mainly about tasks, roles are mainly about
together to form a job, the extent to which people. This distinction means that while jobs may
be designed to fit work and people requirements,
job holders should follow prescribed
roles are developed informally as people carry out
their work. It can also be said that roles are created
according to the strengths and limitations of the includes all these elements for each of the tasks
people who fill them. involved. The worker, or group of workers, having
been given objectives such as output, quality and
cost targets, decides on how the work is to be done,
The characteristics of jobs assembles the resources, performs the work, and
monitors progress and the achievement of targets.
There are three fundamental characteristics shared
Responsibility in a job is measured by the amount of
by all jobs:
authority that someone has to do all of these things.
1 Job range – the number and variety of The ideal arrangement from the point of view of
activities or operations a job holder motivation and engagement is to provide for fully
carries out. integrated jobs containing all three task elements. In
2 Job depth – the amount of discretion a job practice, management and team leaders are often en-
holder has to decide job activities and job tirely responsible for planning and control, leaving
outcomes. the worker responsible for execution. To a degree,
this is inevitable, but one of the aims of job design is
3 Job relationships – the interpersonal
often to extend the responsibility of workers into
relationships between job holders and their
the functions of planning and control. This can in-
managers and co-workers. Jobs should never
volve empowerment – giving individuals and teams
be considered in isolation. All job holders
more responsibility for decision making and ensur-
belong to formal or informal groups and the
ing that they have the training, support and guid-
interrelationships that exist in such groups
ance to exercise that responsibility properly.
should be considered when looking at the
content of an individual job.
Method of working
Task structure Job design needs to consider the method of working
in the sense of how the dimensions of the job will be
Job design requires the assembly of a number of
defined. There are two approaches. The first and
tasks into a job or a group of jobs. An individual
most common is fixed-time working in which the
may carry out one main task that consists of a num-
amount of time the employee is normally expected to
ber of interrelated elements or functions. Or task
work (ie excluding overtime) is defined. The second
functions may be allocated to a team working
approach is output-based working which requires
closely together in a manufacturing ‘cell’ or cus-
the employee to work towards an agreed output. A
tomer service unit, or strung along an assembly line.
survey by the CIPD (2014) found that only 5 per
In more complex jobs, individuals may carry out a
cent of respondents adopted the latter approach.
variety of connected tasks (multitasking), each with
a number of functions, or these tasks may be allo-
cated to a team of workers or be divided between
them. In the latter case, the tasks may require a vari-
Intrinsic motivation
ety of skills that have to be possessed by all members The case for using job design techniques is based on
of the team (multiskilling) in order to work flexibly. the premise that effective performance and genuine
Complexity in a job may be a reflection of the num- satisfaction in work follow mainly from the intrin-
ber and variety of tasks to be carried out, the differ- sic content of the job. This is related to the funda-
ent skills or competencies to be used, the range and mental concept that people are motivated when
scope of the decisions that have to be made, or the they are provided with the means to achieve their
difficulty of predicting the outcome of decisions. goals. Work enables people to earn money, which as
The internal structure of each task consists of an extrinsic reward satisfies basic needs and is in-
three elements: planning (deciding on the course of strumental in providing ways of satisfying higher-
action, its timing and the resources required), execut- level needs. But work also provides intrinsic rewards
ing (carrying out the plan) and controlling (monitor- related to achievement, responsibility and the op-
ing performance and progress and taking corrective portunity to use and develop skills that are more
action when required). A completely integrated job under the control of the worker.
●● it is a complete piece of work in the sense

that the worker can identify a series of tasks
Wo rd s of wi sdom or activities that end in a recognizable and
To varying degrees work has become definable product;
fractionated, deskilled, and tightly controlled; ●● it affords the employee as much variety,
decision-making responsibility and control as
planning the work is often separated from possible in carrying out the work;
implementing it. So jobs differ in how much ●● it provides direct feedback through the work
they enable workers to use and develop their itself on how well the employee is doing his
or her job.
skills and knowledge, which affects their
As described by Herzberg (1968), job enrichment is
involvement, self-esteem, and the challenge
not just increasing the number or variety of tasks
obtained from the work itself. (job enlargement), nor is it the provision of oppor-
Walton (1974: 12) tunities for job rotation (moving between different
jobs). These approaches may relieve boredom, but
they do not result in positive increases in motivation.
Word s of w isd om
What do you think ‘a good job’ looks like?
Job enrichment provides the opportunity for
the employee’s personal growth.
Herzberg (1968: 59)
Principles of job design

The basic principles of job design were set out by
Gallie (2007) who identified five core dimensions of
job quality: skill level; the degree of task discretion
or autonomy; the opportunities for skill develop- The job characteristics
ment; job security; and the extent to which jobs are
compatible with work-family balance. Autonomy is
model
important. The theory of self-determination devel-
The most influential model for job design has been
oped by Deci and Ryan (2000) argues that human
the job characteristics model developed by Hackman
beings have inherent needs to decide for themselves
and Oldham (1974). They identified five core job
what they are going to do (along with needs for
characteristics:
competence and relatedness to other people). Earlier
theories consisted of the concept of job enrichment 1 Skill variety: the degree to which a job
and the job characteristics model. More recently the requires an employee to perform activities
job demands-resources model has been proposed as that challenge his or her skills and abilities.
a means of classifying key job attributes as a basis 2 Task identity: the degree to which the job
for job design. requires completion of an identifiable piece
of work.
Job enrichment 3 Task significance: the degree to which the job

outcome has a substantial impact on others.
Job enrichment aims to maximize the interest and 4 Autonomy: the degree to which the job gives
challenge of work by providing the employee with a an employee discretion in scheduling work
job that has these characteristics: and determining how it is performed.
The concept of ‘supported autonomy’ refers 4 Enable employees to obtain direct feedback

to the provision of freedom for employees to on how well they are doing from the work
manage their work within certain boundaries itself.
(policies and expected behaviours) but with 5 Design jobs to minimize the risk of errors
support available as required. and to impose a degree of self-checking by
5 Feedback: the degree to which an employee employees to ensure highest possible
gets information about the effectiveness of quality standards
his or her efforts – with particular emphasis 6 Provide opportunities to enhance existing
on feedback directly related to the work skills and learn new ones.
itself rather than from a third party (for
7 Provide the resources required to do a good
example, a manager).
job, including supervisory support.
Hackman and Oldham explained that if the design 8 Ensure that job responsibilities are clearly
of a job satisfied the core job characteristics the em- defined and understood to avoid role
ployee would perceive that the work was worth- ambiguity.
while, would feel responsible for the work and
9 Review job demands to ensure that they are
would know if the work had been completed satis-
not excessive and therefore negatively affect
factorily. The outcome of this would be high-quality
work/life balance and lead to undue stress
work performance and high job satisfaction as a
and even burnout.
result of intrinsic motivation.
10 Review working conditions and ergonomic
factors to ensure that they provide for the
The job demands-resources physical wellbeing of employees.
model
Responsibility for job design
The job demands-resources model based on re-
search by Demerouti et al (2001) and Crawford Any line manager or specialist who is involved in
et al (2010) classifies job attributes and other re- deciding what work needs to be done and what work
lated work experiences into two broad categories. system should be adopted – and this means pretty
These are: (1) job demands that can be challenging well all managers – is responsible for designing jobs.
(eg complexity, responsibility, workload) or a hin- But wherever possible the process should be shared
drance (eg role ambiguity, conflict and overload), with the employees concerned who will, after all,
and (2) job resources (eg autonomy, supervisory have to carry out the work and may in any case be
support, feedback, access to information, develop- more knowledgeable about what needs to be done.
ment opportunities). Challenging demands and job Managers and indeed employees need to be aware of
resources are positively related to engagement levels the principles of good job design and how to put these
and hindrance demands are negatively related. into practice. The role of HR – an important one – is
to provide advice and guidance on this whenever the
need arises. The learning and development function
Job design practice can play a part by including job design in its manage-
ment and leadership development programmes.
The approaches to job design emerging from these
concepts are:
1 Combine tasks to create natural work units Pau se for th ou gh t
for which there is an identifiable end result. You are drawing up a leadership development
2 Provide as much variety as possible.
programme for potential managers. What
3 Enhance autonomy by giving employees as
much freedom as possible to make decisions, would you include about job design and how
determine their own methods of work and would you convey its importance?
exercise control over what they do.
but in practice they also do it for themselves. This

Job crafting process has been called ‘job crafting’ and it was de-
fined by the writers who produced the seminal work
As mentioned above, employees can and should be on the subject as follows:
involved in designing their jobs wherever possible
Source review
We use the term ‘job crafting’ to capture the actions individuals take to shape, mould and modify their jobs. Job
crafters are individuals who actively compose what their job is physically, by changing a job’s task boundaries,
what their job is cognitively, by changing the way they think about relationships among job tasks, and what their job
is relationally, by the interactions and relationships they have with others at work.
Wrzesniewski and Dutton (2001: 180)
Wrzesniewski and Dutton suggested that the can be beneficial both for the individual and the
motivation for job crafting arises from the needs of organization but it can be harmful for the business
people to shape the meaning of their work by (1) if it results in too much deviation from the tasks
asserting some control over it (ie increase their job that are an inherent and essential part of the job.
satisfaction by achieving more autonomy), (2) im- Managers need to recognize that it happens and this
proving their self-image and (3) extending and im- can be a good thing but they must not allow it to get
proving their relationships with others. Job crafting out of hand.
Key learning points
Job quality security; and the extent to which jobs are compatible
with work-family balance.
The concept of job quality refers to the characteristics
of jobs within their work environment that contribute to
Jobs and roles
feelings of employee satisfaction and lead to
enhanced levels of motivation and engagement. A job is an organizational unit consisting of a group of
defined tasks or activities to be carried out or duties to
Job design be performed. A role is the part played by individuals
and the patterns of behaviour expected of them in
Job design specifies the contents of jobs in order to fulfilling their work requirements. Jobs are about
satisfy work requirements and meet the personal tasks, roles are about people.
needs of the job holder, thus increasing levels of
employee engagement.
Job enrichment
Job design principles Job enrichment aims to maximize the interest and
challenge of work by providing the employee with a
The basic principles of job design were set out by job that has these characteristics:
Gallie (2007) who identified five core dimensions of job
quality: skill level; the degree of task discretion or ●● it is a complete piece of work in the sense that the
autonomy; the opportunities for skill development; job worker can identify a series of tasks or activities
that end in a recognizable and definable product;
●● it affords the employee as much variety, decision- complexity, responsibility, workload) and (2) job
making responsibility and control as possible in resources (eg autonomy, supervisory support,
carrying out the work; feedback, access to information, development
opportunities).
●● it provides direct feedback through the work itself
on how well the employee is doing his or her job.
Responsibility for job design
The job characteristics model Any line manager or specialist who is involved in
deciding what work needs to be done and what work
The job characteristics model was developed by
system should be adopted is responsible for designing
Hackman and Oldham (1974). They identified five core
jobs. The role of HR is to provide advice and guidance
job characteristics: skill variety, task identity, task
whenever the need and the opportunity arise.
significance, autonomy and feedback.
The job demands-resources model Job crafting

Employees can and should be involved in designing
The job demands-resources model classifies job
their jobs wherever possible but in practice they can
attributes and other related work experiences into two
also do it for themselves. This process has been called
broad categories. These are (1) job demands (eg
‘job crafting’.
References
CIPD (2014) HR: Getting smart about agile working Demerouti, E, Bakker, A B, Nachreiner, F and
[online] https://www.cipd.co.uk/Images/hr-getting- Schaufeli, W B (2001) The job demands-resources
smart-agile-working_2014_tcm18-14105.pdf model of burnout, Journal of Applied Psychology,
(archived at https://perma.cc/YQD3-NHY9) 86 (3), pp 499–512
[accessed 1 March 2019] Dowling, W E (1971) An interview with Frederick
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Quality [online] https://www.cipd.co.uk/ Eurofound (2013) Quality of Employment
knowledge/work/job-quality-value-creation/ Conditions and Employment Relations in Europe,
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NJ45-YEU4) [accessed 15 May 2019] pp 508–25
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Linking job demands and resources to employee challenge of job quality, Human Relations, 66 (4),
engagement and burnout: a theoretical extension pp 441–51
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Psychology, 95 (5), pp 834–48 regimes, and the quality of work, in (ed) D Gallie,
Deci, E and Ryan, R (2000) The ‘what’ and ‘why’ of Employment Regimes and the Quality of Work,
goal pursuits: human needs and the self- Oxford, Oxford University Press
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Organizational Behaviour and Human Walton, R E (1974) Improving the quality of working
Performance, 16 (2), pp 250–79 life, Harvard Business Review, May/June,
Herzberg, F (1968) One more time: how do you pp 12–16
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Nicholson, Blackwell’s Encyclopaedic Dictionary (2), pp 179–201
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pp 265–68 London, HMSO
232
23
Organization
development
Introduction The nature of organization
Organization, work and job design are basic development
processes involved in running an enterprise. Organi
zation development helps to ensure that they func- Organization development in its original version,
tion well. In this chapter, organization development when it was commonly referred to as ‘OD’, was
is defined and its somewhat chequered history is based on behavioural science concepts (see
described, from its origins as ‘OD’ to the more fo- Chapter 19). It was practised through what were
cused and business-like approaches adopted today. called ‘interventions’.
This leads to a discussion of organization develop- However, during the 1980s and 1990s, a number
ment strategy and an examination of organization of other approaches were introduced. Further changes
development in practice, involving the use of diag- occurred in the following decade during which a
nostics as the basis for preparing organization de- more strategic focus was adopted and more business-
velopment programmes. focused activities such as smart working and high-
performance working came to the fore. It is these
changes that led to the broader definition produced
Organization development by the CIPD.
Organization development used to be the prov-
defined ince of specialized consultants who tended to prac-
tise it as a mystery, with HR playing a supporting
Organization development is a systematic approach role if it played any role at all. But the close rela-
to improving organizational capability, which is tionship between HR and organization develop-
concerned with process – how things get done. As ment has been spelt out as follows.
expressed by Beer (1980: 10), OD operates as: ‘A
system-wide process of data collection, diagnosis,
action planning, intervention and evaluation.’
Organization development in its traditional form Source review
as OD was later defined by Rowlandson (1984: 90)
as ‘an intervention strategy that uses group pro- To remain competitive in today’s global
cesses to focus on the whole culture of an organiza- marketplace, organizations must change. One of
tion in order to bring about planned change.’ More the most effective tools to promote successful
recently, the CIPD (2018: 1) defined it as a ‘planned change is organization development (OD). As HR
and systematic approach to enabling sustained or- increasingly focuses on building organizational
ganization performance through the involvement of learning, skills and workforce productivity, the
its people.’
Chapter 23 | Organization Development 233
effective use of OD to help achieve company The first chapter – the original
business goals and strategies is becoming a broad
HR competency as well as a key strategic HR tool.
version
While there are variations regarding the definition Organization development emerged as the ‘OD’
of OD, the basic purpose of organization movement in the 1960s. It was based on the strong
development is to increase an organization’s humanistic values of its early founders, who wanted
effectiveness through planned interventions to improve the conditions of people’s lives in or-
related to the organization’s processes (often ganizations by applying behavioural science knowl-
company-wide), resulting in improvements in edge. Its origins can be traced to the writings of
productivity, return on investment and employee
behavioural scientists such as Lewin (1947, 1951)
on group dynamics (the improvement of group pro-
satisfaction.
cesses through various forms of training), and
HR Magazine (2007: 1)
change management. Other behavioural scientists
included Maslow (1954) who produced his needs
theory of motivation, Herzberg et al (1957) who
wrote about the motivation to work, and Argyris
The CIPD (2018) described the aims and character- (1957) who emphasized the need to plan for
istics of organization development as follows: integration and involvement. McGregor (1960)

1 Organization development focuses on produced his ‘Theory Y’, which advocated the rec-
maximizing the value gained from the ognition of the needs of both the organization and
organization’s resources. the individual on the basis that, given the chance,
people will not only accept but seek responsibility.
2 Organizational development focuses on an
Likert (1961) added his theory of supportive
organization’s strategy, goals and core
relationships.
purpose.
The two founders of the organization develop-
3 Where an organization’s main competitive ment movement were Beckhard (1969) who probably
advantage is delivered through their people, coined the term, and Bennis (1969) who, according to
organization development will involve Buchanan and Huczynski (2007: 575), described OD
applying behavioural science knowledge and as a ‘truth, trust, love and collaboration approach’.
practice, such as leadership, group dynamics Ruona and Gibson summarized early approaches to
and work design. OD as follows:
4 Organization development is related to
change management in the sense that many
developments are implemented using change
management practices, but also because it is
a kind of planned, ongoing, systematic Source review
change activity that aims to institutionalize
continual improvement within organizations. Early OD interventions can be categorized as
primarily focusing on individuals and interpersonal
relations. OD was established as a social
The story of organization philosophy that emphasized a long-term
orientation, the applied behavioural sciences,
development external and process-oriented consultation,
change managed from the top, a strong emphasis
There are three chapters in the story of organiza- on action research and a focus on creating change
tional development: the original version of the in collaboration with managers.
1960s and ’70s, the extensions and modifications Ruona and Gibson (2004: 53)
to the original approach in the 1980s and ’90s,
and the new look at organization development of
the 2000s.
As originally conceived, OD programmes aimed to can understand and, following a thorough

increase the effectiveness of the various processes diagnosis, act upon. The information relates
that take place in organizations, especially those re- to organizational processes such as inter-
lating to the ways in which people work together. It group relations, interpersonal relations and
was also concerned with improving the quality of communications.
people’s working lives. The original OD philosophy ●● Change management – often using the
was that of humanism – the belief that human fac- techniques advocated by Lewin (1951),
tors are paramount in the study of organizational which consisted of processes of managing
behaviour. This had its roots in the conclusions change by unfreezing, changing and
reached from the Hawthorne studies of 1924 to freezing, and force-field analysis
1932 (Mayo, 1933; Roethlisberger and Dickson, (analysing and dealing with the driving
1939) that the productivity of workers increases forces that affect transition to a
when someone they respect takes an interest in them. future state).
The focus then turned to the needs of people as indi-
●● Action research – seeking transformative
viduals and in groups with an emphasis on process –
change through the simultaneous process of
how people worked together and how this could be
taking action and doing research, which are
improved. Much of the thinking about OD was in-
linked together by critical reflection.
fluenced by developments in behavioural science.
The assumptions and values of OD were that: ●● Survey feedback – a variety of action
research in which data is systematically
●● Most individuals are driven by the need for collected about the system through attitude
personal growth and development as long as surveys and workshops leading to action
their environment is both supportive and plans.
challenging.
●● Appreciative enquiry – a methodology that
●● The work team, especially at the informal does not focus entirely on finding out what is
level, has great significance for feelings of wrong in order to solve problems. Instead it
satisfaction, and the dynamics of such teams adopts the more positive approach of
have a powerful effect on the behaviour of identifying ‘best practices’ – what is working
their members. well – and using that information as a basis
●● Organizations can be more effective if they for planning change. It can be associated
learn to diagnose their own strengths and with action research.
weaknesses. ●● Group dynamics – improving the ways in
●● Managers often do not know what is wrong which people work together by means of
and need special help in diagnosing programmes for increasing the effectiveness
problems, although the outside ‘process of groups through various forms of training
consultant’ ensures that decision making which aim to increase sensitivity, diagnostic
remains in the hands of the client. ability and action skills.
OD during this time was practised predominantly ●● Personal interventions – developing

by external consultants working with senior man- interpersonal skills through such processes
agers. Personnel specialists were not involved to as transactional analysis (an approach to
any great extent. OD programmes consisted then of understanding how people behave and
‘interventions’ such as those listed below. In OD express themselves through transactions
jargon an intervention is a planned activity de- with others), behaviour modelling (the use
signed to improve organizational effectiveness or of positive reinforcement and corrective
manage change. The following are the traditional feedback to change behaviour) and
OD interventions; they still feature in current neurolinguistic programming or NLP
programmes: (teaching people to programme their
reactions to others and develop
●● Process consultation – helping clients to unconscious strategies for interacting
generate and analyse information that they with them).
The second chapter – criticisms of associated with T-groups, participative management

and consensus, Theory Y, and self-actualization – the
the original version of OD and new soft human, touchy-feely kinds of activities.’
approaches An even more powerful critic was Legge (1995:
212), who observed that the OD rhetoric fitted the
The OD movement as originally conceived and era of ‘flower power’ and that: ‘OD was seen, on the
practised was characterized by what Buchanan and one hand as a form of devious manipulation, and
Huczynski (2007: 559) called ‘quasi-religious val- on the other as “wishy-washy” and ineffectual.’ She
ues’. It had, they claimed, some of the features of a noted ‘the relative lack of success of OD initiatives
religious movement, which is one reason why it has in effecting major and lasting cultural change, with
survived as a concept in spite of the criticisms that the aim of generating commitment to new values in
began to be levelled at it in the 1980s. Weidner the relatively small number of organizations in
(2004: 39) wrote that: ‘OD was something that which it was tried’ (ibid: 213), and produced the
practitioners felt and lived as much as they believed’ following devastating critique:
(original emphasis).
One of the earliest critics of OD was McLean
(1981: 4) who noted ‘the moral and ethical misgiv-
ings concerned with the development of what might
Word s of w isd om
be regarded as a sophisticated science of manipula-
tion.’ He cited a comment by Strauss (1976) that at In order to cope with an increasingly complex
times OD is little more than abstract moralization.
and changing environment, many of the
initiatives were, in retrospect, surprisingly
inward looking, involving schemes of
Wo rd s of wi sdom management development, work system
It is becoming increasingly apparent that design, attempts at participation, almost as a
there exists a considerable discrepancy good in their own right, without close
between OD as practised and the attention as to how they were to deliver
prescriptive stances taken by many OD against market-driven organizational success
writers... The theory of change and change criteria. The long-term nature of OD activities,
management which is the foundation of combined with difficulties in clearly
most OD programmes is based on over- establishing to sceptics their contribution to
simplistic generalizations which offer little organizational success criteria (and within a
specific guidance to practitioners faced with UK culture of financial short-termism)
the confusing complexity of a real change rendered the initiatives at best marginal... and
situation. at worst to be treated with a cynical contempt.
McClean (1981: 13) Legge (1995: 213)
Armstrong (1984: 113) commented that: ‘Organi Weidner (2004: 37) commented that: ‘Unfortunately,
zation development has lost a degree of credibility in after sixty years – despite the best efforts and inten-
recent years because the messianic zeal displayed by tions of many talented people – OD finds itself in-
some practitioners has been at variance with the cir- creasingly at the margins of business, academe, and
cumstances and real needs of the organization.’ Burke practice. The field continues to affirm its values, yet
(1995: 8) stated that ‘in the mid-1970s, OD was still has no identifiable voice.’ The main criticisms of
OD, as noted by Marsh et al (2010: 143), were that within most OD models that change can be planned
it was: ‘Oriented to process and tools rather than in a “rational” or linear manner, and that the change
results... where techniques are considered to be ends agent can facilitate this group process, although
in themselves rather than a means to deliver organi- there is little evidence to support this illusion of
zational performance.’ “manageability”.’
Other movements in this period that could be de-
scribed as organization development activities but
exist as distinct entities included total quality man-
Pa us e fo r t houg ht agement (TQM), the Japanese approach of continu-
ous improvement and quality circles. TQM aims to
How valid do you think these criticisms are? ensure that all activities within an organization hap-
pen in the way they have been planned in order to
meet the defined needs of customers. Its approach is
holistic – quality management is not a separate
function to be treated in isolation, but is an integral
The third chapter – culture part of all operations. Continuous improvement –
or in Japanese, Kaizen – refers to activities that
management continuously improve all functions and involve all
During the 1980s and ’90s an alternative approach employees from the CEO to the assembly line work-
emerged, that of culture management, which aimed ers. Quality circles are groups of volunteers engaged
at achieving cultural change as a means of enhanc- in related work who meet regularly to discuss and
ing organizational capability. Culture change or propose ways of improving working methods under
culture management programmes started with an a trained leader.
analysis of the existing culture, which may involve Another approach more closely related to OD
the use of a diagnostic such as the ‘Organizational and culture management that emerged at this time
Culture Inventory’ devised by Cooke and Lafferty was organizational transformation. This was de-
(1989). The desired culture is then defined – one fined by Cummings and Worley (2005: 752) as: ‘A
that enables the organization to function effectively process of radically altering the organization’s stra-
and achieve its strategic objectives. As a result, a tegic direction, including fundamental changes in
‘culture gap’ is identified, which needs to be filled. structures, processes and behaviours.’
This analysis of culture identifies behavioural ex-
pectations so that HR processes can be used to de-
velop and reinforce them. The fourth chapter – changing
This sounds easier than it really is. Culture is a
complex and often hard to define notion and it is
the focus
usually strongly embedded and therefore difficult to Organization-wide approaches to improving over-
change. Anthony (1990: 4) argued that: ‘The man- all capability emerged in the 1990s that were not
agement of culture... purports to define the meaning part of what was conventionally known as OD.
of people’s lives so that they become concomitant These included high-performance working through
with the organization’s view of itself. [It is] the ad- high-performance work systems, high-commitment
justment of human meaning for organizational management, high-involvement management and
ends.’ He also observed that: ‘Published cases do performance management. The development of
exist of organizations within which major changes these processes in the 2000s led to a radically
in culture have been successfully accomplished and changed view of what constituted organization
shown to persist but they are rare’ (ibid: 5). development.
However, culture management became a process in Another significant change in the 2000s was
its own right and OD consultants jumped on the the shift to a strategic perspective. As noted by
bandwagon. Cummings and Worley (2005: 12): ‘Change agents
Culture management involves change manage- have proposed a variety of large-scale or strategic-
ment, another important item in the OD toolkit. change models; each of these models recognizes
But as Caldwell (2003: 132) argued: ‘It is assumed that strategic change involves multiple layers of
the organization and a change in its culture, is date. Far from it. It just needs to be repositioned as
driven from the top by powerful executives, and an HR capability’ (ibid: 143).
has important effects on performance.’ They com- However, Weidner (2004: 37) made the following
mented that the practice of organization develop- more pessimistic comment about OD: ‘Unfortunately,
ment therefore went far beyond its humanistic after sixty years – despite the best efforts and inten-
origins. tions of many talented people – OD finds itself in-
There was also more emphasis on associating or- creasingly at the margins of business, academe, and
ganization design with organization development. practice. The field continues to affirm its values, yet
Marsh et al (2010) suggested that organization de- has no identifiable voice.’ OD ‘interventions’ still
sign and organization development need to be have a role to play in improving performance but as
merged into one HR capability, with organization part of an integrated business and HR strategy
design taking precedence. They considered that this planned and implemented by HR in conjunction with
should all be brought in-house as a necessary part senior management, with or without outside help.
of the business model innovation process. But as The CIPD has emphasized the importance of the
they observed: ‘We do not believe that the field of contribution of organization development special-
organization development has passed its sell-by ists supported by line managers and HR.
Source review
Organization development specialists play a critical and HR practitioners need to have a solid
role in working with line leaders and HR practitioners understanding of the relationship between
to develop the organization to achieve its goals. The organization development, organizational strategy and
specialists have expertise in navigating complexity to the HR agenda. They should leverage their HR
unpick what the organization is trying to achieve; expertise and knowledge of the organization to
diagnose underlying issues, challenges, opportunities; question assumptions, help surface non-obvious
and to select the best approaches to develop the problems/issues, diagnose barriers/enablers to
organization moving forward. Employees are often at execution, and manage change effectively.
the centre of changes to the organization that follow CIPD (2018)
which is broadly the capacity of an organization to

function effectively in order to achieve desired re-
Pa us e for t houg ht sults. It has been defined more specifically by Ulrich
It can be argued that organization and Lake (1990: 40) as ‘the ability to manage people
for competitive advantage’. It is concerned with
development as advocated by the CIPD is
mapping out intentions on how the work system
too idealistic to be of much practical should be developed in line with the concepts of
significance. Do you agree? smart and agile working, on how the organization
should be structured to meet new demands, on
system-wide change in fields such as reward and
performance management, on how change should
be managed, on what needs to be done to improve
Organization development organizational processes involving people such as
job design, teamwork, communications and partici-
strategy pation, and on how the organization can acquire,
retain, develop and engage the talent it needs. These
Organization development strategy is founded on intentions will be converted into actions on work
the aspiration to improve organizational capability, systems development, structure design, the redesign
of jobs and, possibly, OD-type interventions. The 1 Initiation

latter could take the form of action research, survey –– discussion with management (the client)
feedback and programmes for improving group pro- to identify issues that need to be
cesses and interpersonal skills, as described earlier in addressed;
this chapter. The strategy can involve processes of
integrated strategic change, as described below, and –– initial diagnosis of any problems;
will be based on organizational diagnosis leading to –– definition and agreement of objectives and
the design of an organization development pro- deliverables;
gramme, as considered in the following sections. –– project planning.
2 Diagnosis
Integrated strategic change –– choice of diagnostic tools;
The process of integrated strategic change as –– conduct diagnosis;
conceived by Worley et al (1996) can be used to for- –– analyse results.
mulate and implement organization development
3 Project planning
strategies. The steps required are:
–– decide on type of intervention(s);
1 Strategic analysis – a review of the
–– prepare project programme;
organization’s strategic orientation (its
strategic intentions within its competitive –– allocate resources.
environment) and a diagnosis of the 4 Conduct programme
organization’s readiness for change. –– carry out interventions;
2 Develop strategic capability – the ability to
–– draw up and agree proposals on any
implement the strategic plan quickly and
further action required.
effectively.
5 Implement
3 Integrate individuals and groups throughout
the organization into the processes of –– implement agreed actions;
analysis, planning and implementation to –– evaluate effectiveness and if necessary
maintain the firm’s strategic focus, direct propose further action.
attention and resources to the organization’s
key competencies, improve coordination and
integration within the organization and Organizational diagnosis
create higher levels of shared ownership and
commitment. The practice of organization development is based
4 Create the strategy, gain commitment and on an analysis and diagnosis of the circumstances of
support for it and plan its implementation. the organization, the strategic, operational or pro-
5 Implement the strategic change plan, drawing cess issues that are affecting the organization and its
on knowledge of motivation, group dynamics ability to perform well. As defined by Manzini
and change processes, dealing with issues (1988: ix): ‘An organizational diagnosis is a system-
such as alignment, adaptability, teamwork atic process of gathering data about a business
and organizational and individual learning. organization – its problems, challenges, strengths

and limitations – and analysing how such factors in-
6 Allocate resources, provide feedback and fluence its ability to interact effectively and profita-
solve problems as they arise. bly with its business environment.’ This involves the
use of the diagnostic cycle with associated analytical
The consulting cycle and diagnostic tools, which enable those concerned
with development to identify areas of concern that
can be dealt with in an organization development
The framework for organization development is pro-
programme.
vided by the consulting cycle which has five stages:
The diagnostic cycle views on what is closest to the organization’s actual

position. The following are examples of statements:
The diagnostic cycle as described by Manzini (1988:
11) consists of: ●● a good boss is strong, decisive and firm but
fair;
●● data gathering; ●● a good subordinate is compliant, hard-
●● analysis; working and loyal;
●● feedback; ●● people who do well in the organization are
●● action planning; shrewd and competitive, with a strong need
for power;
●● implementation;
●● the basis of task assignment is the personal
●● evaluation.
needs and judgements of those in authority;
●● decisions are made by people with the most
Analytical tools knowledge and expertise about the problem.
The two most used analytical tools are SWOT anal-
ysis and PESTLE analysis. A SWOT analysis is a Organizational culture inventory
‘looking in’ and ‘looking out’ approach that covers
the internal organizational factors of strengths and (Cooke and Lafferty, 1989)
weaknesses and the external factors of opportuni- This instrument assesses organizational culture under
ties and threats. PESTLE analysis is an environmen- 12 headings:
tal scanning tool that covers the following factors:
political, economic, social, technological, legal and 1 Humanistic-helpful – organizations
environmental. managed in a participative and person-
centred way.
2 Affiliative – organizations that place a high
Diagnostics priority on constructive relationships.
Diagnostics are tools such as questionnaires or check- 3 Approval – organizations in which conflicts
lists that gather information about a business or on are avoided and interpersonal relationships
the opinions and attitudes of employees in order to are pleasant – at least superficially.
identify issues and problems that can be dealt with in 4 Conventional – conservative, traditional
an organization development programme. They ena- and bureaucratically controlled
ble those concerned with o rganization development organizations.
to understand what is happening and why it is hap-
5 Dependent – hierarchically controlled and
pening so that they can do something about it.
non-participative organizations.
Diagnostics can be used to assess overall organiza-
tional effectiveness in the shape of general strategic, 6 Avoidance – organizations that fail to
business and operational issues, or they can deal with reward success but punish mistakes.
more specific areas of concern such as a review of the 7 Oppositional – organizations in which
organization’s ideology, culture or climate, or a sur- confrontation prevails and negativism is
vey of levels of engagement or commitment. Examples rewarded.
of the approach used by various diagnostic instru- 8 Power – organizations structured on the
ments are given below. basis of the authority inherent in members’
positions.
Organizational ideology 9 Competitive – a culture in which winning is
valued and members are rewarded for
questionnaire (Harrison, 1972) out-performing one another.
This questionnaire deals with the four orientations 10 Competence/perfectionist – organizations in
defined by Harrison (power, role, task and self) and which perfectionism, persistence and hard
is completed by ranking statements according to work are valued.
11 Achievement – organizations that do things e mployees on such matters as their work, their pay,
well and value members who set and how they are treated, their views about the com-
accomplish challenging but realistic goals. pany and their managers, how well they are kept
12 Self-actualization – organizations that value informed, the opportunities for learning and career
creativity, quality over quantity, and both development, and their working environment and
task accomplishment and individual facilities.
growth. Surveys can be conducted by external providers,
for example the IES engagement survey, the Gallup
engagement survey and the Saratoga engagement
Typical dimensions of and commitment matrix. They are often conducted
annually but with the help of AI ‘pulse surveys’
organizational climate (health checks that happen frequently throughout
questionnaire (Koys and De the year) are increasingly being used.
Cotiis, 1991)
●● Autonomy – the perception of self-
Organization development
determination with respect to work programmes
procedures, goals and priorities.
●● Cohesion – the perception of togetherness or The traditional OD programme was behavioural
sharing within the organization setting. science-based and almost entirely devoted to inter-
●● Trust – the perception of freedom to personal relationships, organizational processes
communicate openly with members at higher and culture change in the broadest sense. There may
organizational levels about sensitive or still be a need for such interventions today but
personal issues with the expectation that the organization development is now a more eclectic
integrity of such communications will not be affair – anything can be included under the organi-
violated. zation development heading as long as it contrib-
utes to organizational effectiveness. As set out in
●● Resource – the perception of time demands Table 23.1 there is a choice of activities or interven-
with respect to task completion and tions and some examples are given of approaches to
performance standards. a major organization development initiative, namely
●● Support – the perception of the degree to culture change.
which superiors tolerate members’ behaviour, These activities can be combined in many ways
including willingness to let members learn so that they become mutually supporting. Ones
from their mistakes without fear of reprisal. such as culture change and team building can in-
●● Recognition – the perception that members’ clude traditional OD interventions such as action
contributions to the organization are learning, survey feedback and group dynamics. It
acknowledged. can be argued that change management is not a
separate organization development activity but is a
●● Fairness – the perception that organizational
fundamental part of all such activities. Each of those
policies are not arbitrary or capricious.
listed above involves change, which has to be man-
●● Innovation – the perception that change and aged using the change management skills described
creativity are encouraged, including risk- in Chapter 66. The following examples of culture
taking into new areas where the member has change activities drawn from research conducted by
little or no prior experience. the CIPD (2011) illustrate the range of activities
covered under the broad heading of culture change:
Employee surveys Arts Council England Interventions focused on

the organizational structure, embedding the
Employee surveys, also known as attitude or opin- new values and demonstrating leadership
ion surveys, can be used as a diagnostic tool. They commitment for the culture change.
are a formal method of obtaining the views of
TA B L E 23.1 Organization development activities and interventions
Organization
development
activity or
intervention Brief description Objective
Business model The process followed by an organization to To obtain insight into the business issues facing
innovation develop a new business model or change an the organization, leading to plans for practical
existing one. interventions that address those issues.
Change The process of planning and introducing To achieve the smooth implementation of
management change systematically. change.
Culture change The process of changing the organization’s To improve organizational effectiveness – the
culture with regard to its features of values, ability of an organization to achieve its goals by
norms and beliefs. Any significant change in making effective use of the resources available
people policies or practices can impact on to it.
these features and this impact needs to be
assessed and managed.
Engagement, The development of improved levels of job To ensure that people are committed to their
enhancement of and organizational engagement. work and the organization and motivated to
achieve high levels of performance.
High- Developing work system processes, practices To impact on the performance of the
performance and policies to enable employees to perform organization through its people in such areas
working to their full potential. as productivity, quality, levels of customer
service, growth and profits.
Knowledge Storing and sharing the wisdom, To get knowledge from those who have it to
management understanding and expertise accumulated in those who need it in order to improve
an organization about its processes, organizational effectiveness.
techniques and operations.
Lean A process improvement methodology that To deliver value to customers.

focuses on continuous improvement, reducing
waste and ensuring the flow of production.
Organizational The acquisition and development of To facilitate performance improvement and

learning knowledge, understanding, insights, major changes in strategic direction.
techniques and practices.
Organization The process of deciding how organizations To ensure that people work effectively
design should be structured in terms of the ways in together to achieve the overall purpose of the
which the responsibility for carrying out the organization.
overall task is allocated to individuals and
groups of people and how the relationships
between them function.
Performance A systematic process for the agreement of To improve organizational performance by

management performance expectations and review of how developing the performance of individuals and
they have been met. teams.
(continued)
Organization
development
activity or
intervention Brief description Objective
Smart working An approach to organizing work through a To drive greater efficiency and effectiveness in
combination of flexibility, autonomy and achieving job outcomes.
collaboration, in parallel with optimizing tools
and working environments for employees.
Agile working The emphasis is on flexibility of management To support rapid decision making and
practices and resources and adaptability to execution.
change.
Team building Using interactive skills training techniques to To increase group cohesion, mutual support
improve the ways in which people in teams and cooperation.
work together (the responsibility of leaders for
teambuilding is described in Chapter 68).
Total reward The combination of financial and non-financial To blend the financial and non-financial elements
rewards available to employees. It involves of reward into a cohesive whole so that together
integrating the various aspects of reward. they make a more powerful and longer-lasting
impact on job satisfaction and performance.
Children’s Trust Southampton Interventions individual and helping each individual to

focused on the organization’s structure, recognize how their own values and
developing values to support the strategy and aspirations could be connected with those of
structure. the organization in a mutually beneficial way.
London Borough of Barnet Interventions
centred on establishing a Lean team to drive
the project. Front-line staff were at the heart Conclusions on organization
of the process, which involves them
identifying what’s wrong with the service and
development
how things could be improved.
Organization development is no longer solely the
National Police Improvements Agency activities preserve of external process consultants with
include a restructuring of the top behavioural science backgrounds. Instead it is a ter-
management team, a review of existing ritory frequently inhabited by business-oriented
processes, the involvement of stakeholders people based in the organization and acting, in
and a focus on retaining respect for past effect, as internal consultants. They include HR spe-
ways of working. cialists who are there not just because they know
NP Paribas focused activities on the about HRM but because they are familiar with how
organization’s structure, processes, values businesses operate, where people management fits
and the importance of leadership. in and the factors that affect employee commitment
Visa Europe established a culture change and engagement.
programme that was called ‘peak The organization development processes with
performance’. The process focused on the which internal specialists and their colleagues are
concerned will be determined by the outcome of
iagnostic reviews. Because these outcomes will

d the case. A number of approaches are available, but
always be different, organizational development pro- which to use and how to use them is a matter of
grammes will always be different. There is no such choice depending on the facts of the situation. This is
thing as a standard ‘OD’ approach, as was formerly why the initial analysis and diagnosis is so important.
Key learning points
Organization development defined OD interventions

Organization development in its traditional form as ‘OD’ OD interventions include process consultation, change
was defined by Rowlandson (1984: 90) as ‘an management, action research, survey feedback, group
intervention strategy that uses group processes to dynamics and personal interventions.
focus on the whole culture of an organization in order
to bring about planned change.’ The CIPD (2010: 1) Criticisms of OD
defined organization development as a ‘planned and
systematic approach to enabling sustained organization The main criticisms of OD, as noted by Marsh et al
performance through the involvement of its people.’ (2010: 143), were that it was ‘Oriented to process and
tools rather than results... where techniques are
considered to be ends in themselves rather than a
Strategic nature of organization means to deliver organizational performance.’
development
The strategic nature of organization development as Organization development strategy
an integral part of HRM arises because it can play a
Organization development strategy is based on the
significant role in the implementation of business
aspiration to improve organizational capability, which
strategy.
is broadly the capacity of an organization to function
effectively in order to achieve desired results.
Assumptions and values of OD
The assumptions and values of OD as originally The practice of organization development
conceived were that:
The practice of organization development is based on
●● Most individuals are driven by the need for an analysis and diagnosis of the circumstances of the
personal growth and development as long as their organization, the strategic, operational or process
environment is both supportive and challenging. issues that are affecting the organization and its ability
to perform well. This involves the use of diagnostic tools.
●● The work team, especially at the informal level, has
great significance for feelings of satisfaction and
the dynamics of such teams have a powerful effect Organization development programmes
on the behaviour of their members. The traditional OD programme was behavioural
●● OD programmes aim to improve the quality of science-based and almost entirely devoted to
working life of all members of the organization. interpersonal relationships, organizational processes
and culture change in the broadest sense. There may
●● Organizations can be more effective if they learn to still be a need for such interventions today but the
diagnose their own strengths and weaknesses. emphasis now is on much more focused activities to
●● Managers often do not know what is wrong and do with high-performance working, Lean
need special help in diagnosing problems, although manufacturing, smart working and the enhancement of
the outside ‘process consultant’ ensures that levels of engagement.
decision-making remains in the hands of the client.
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Argyris, C (1957) Personality and Organization, Relations, 1 (1), pp 5–42
New York, Harper & Row Lewin, K (1951) Field Theory in Social Science,
Armstrong, M (1984) A Handbook of Personnel New York, Harper & Row
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245
PART V
Factors affecting the
behaviour of people
at work
PA R T V CO N T E N T S
24 Motivation
25 Commitment
26 Employee engagement
Introduction of HR specialists who can help to create a work en-

vironment conducive to high performance and can
introduce policies and practices that encourage peo-
A preoccupation shared by all those involved in
ple to do everything expected of them if not more.
managing people is how to get the best out of them.
HR can also provide any advice and help managers
‘The best’ may be difficult to define. It could be high
to fulfil their people management responsibilities.
performance. Or it could be discretionary behav-
To do this, managers and HR specialists need to
iour (the choice made by people to exercise addi-
take into account the general factors that affect
tional effort, care, innovation and productive be-
how people behave at work, as described in Chapter
haviour in their jobs). It could be doing more than
19 – namely, ability, intelligence, personality, atti-
is contracted for so that the words ‘it’s not in my job
tudes, emotions and emotional intelligence. But
description’ or ‘this is above my pay grade’ are sel-
they should also be aware of the following more
dom if ever heard. It could be cooperating fully with
specific factors that influence behaviour and there-
managers and colleagues or showing loyalty to the
fore performance:
organization. It could be any combination of these.
Getting the best out of people is primarily the re- ●● Motivation – the strength and direction of
sponsibility of managers and team leaders by exer- behaviour and the factors that influence
cising effective leadership. But it is also the concern people to behave in certain ways.
246 Part 5 | Factors Affecting the Behaviour of People at Work
●● Commitment – the strength of an individual’s It can be difficult to disentangle the concepts of

identification with, and involvement in, an motivation, commitment and engagement, although
organization. an attempt to do so is made in the three chapters of
●● Engagement – a situation in which people this part. Simplistically, it could be argued that
are committed to their work and the when motivation is extrinsic, ie when things are
organization and are motivated to achieve done to or for people in order to motivate them,
high levels of performance. such as through pay or recognition, the aim is to
make a direct impact on individual performance. In
These are examined in the three chapters of this contrast, both commitment and engagement are
part. states of being that can be affected by managerial
Of the three constructs (a construct is a concep- actions. They are not so direct or immediate as the
tual framework that explains how people perceive direct instruments used in the motivation strategies
and react to their environment), motivation is a long- aimed at individuals. Engagement and commitment
standing one that has been extensively researched strategies may be more about taking action that af-
and written about since the earlier part of the 20th fects employees collectively such as improvements
century. Motivation theory has been used and is still in the work environment.
used to inform decisions on how to get more effort Three other aspects of the behaviour of people at
and better performance from employees, for exam- work are considered in this part. The first of these is
ple the use of performance-related pay. The impor- job satisfaction, ie the attitudes and feelings that
tance of the construct of commitment emerged later, people have about their jobs. This is associated with
notably in the contribution of Richard Walton motivation and engagement but it could be re-
(1985) whose seminal article in the Harvard Business garded as an outcome of engagement rather than a
Review advocated for the adoption of a commitment constituent of it. Whether or not job satisfaction
strategy rather than one based on control. The most improves performance is considered in Chapters 24
recent construct is that of engagement, which was and 26. Second, the relationship between money
first presented in a 1990 Academy of Management and motivation is examined in Chapter 24. This is
Journal article by William Kahn. He defined engage- important because it affects policies and practices
ment as ‘the harnessing of organization members’ concerned with the use of pay as an incentive or
selves to their work roles’ (1990: 694). reward. Third, reference is made in Chapter 26 to
The construct of engagement contains elements the dark side of engagement – burnout – how it
of motivation and commitment. It also embraces happens and what can be done about it. In addition
the notion of organizational citizenship behaviour the increasingly popular concept of ‘the employee
(OCB), which is positive discretionary behaviour at experience’ and its relationship to engagement is
work that goes beyond role requirements. examined in Chapter 26.
References
Kahn, W A (1990) Psychological conditions of Walton, R E (1985) From control to commitment in
personal engagement and disengagement at work, the workplace, Harvard Business Review, March–
Academy of Management Journal, 33 (4), April, pp 77–84
pp 692–724
247
24
Motivation
Introduction The meaning of motivation
Motivation is the force that energizes, directs and The term ‘motivation’ derives from the Latin word
sustains behaviour. High performance is achieved for movement (movere). A motive is a reason for
by well-motivated people who are prepared to exer- doing something. Motivation is the strength and di-
cise discretionary effort, ie independently do more rection of behaviour and the factors that influence
than is expected of them. Hunter et al (1990) found people to behave in certain ways. People are moti-
through their research that even in fairly basic roles, vated when they expect that a course of action is
the difference in value-added discretionary perfor- likely to lead to the attainment of a goal and a valued
mance between ‘superior’ and ‘standard’ performers reward – one that satisfies their needs and wants.
was 19 per cent. For highly complex jobs it was 48 The term ‘motivation’ can refer variously to the goals
per cent. that individuals have, the ways in which individuals
The earliest approaches to understanding choose their goals and the ways in which others try
human motivation date from the time of the Greek to change their behaviour. Locke and Latham (2004:
philosophers and focused on the concept of hedon- 388) observed that: ‘The concept of motivation re-
ism as a principle driving force in behaviour. fers to internal factors that impel action and to exter-
Individuals were seen as directing their efforts to nal factors that can act as inducements to action.’
seeking pleasure and avoiding pain. This principle As described by Arnold et al (1991) the three
was later refined and further developed in the components of motivation are:
works of philosophers such as John Locke and
1 Direction – what a person is trying to do.
Jeremy Bentham in the 17th and 18th centuries.
Motivation theory as we know it today started in 2 Effort – how hard a person is trying.
the earlier part of the 20th century with the contri- 3 Persistence – how long a person keeps on
butions of the exponents of scientific management trying.
(instrumentality theory). In the middle years of
that century the behavioural scientists entered the Well-motivated people engage in positive discre-
field and began to develop the ‘content’ or ‘needs’ tionary behaviour – they decide to make an effort.
theory of motivation. The main process theories Such people may be self-motivated, and as long as it
such as expectancy theory emerged in the 1960s means they are going in the right direction to attain
and ’70s. what they are there to achieve, this is the best form
The aims of this chapter are to explore the mean- of motivation. But additional motivation provided
ing of motivation, define the two main types of mo- by the work itself, the quality of leadership, and
tivation – intrinsic and extrinsic – describe the three various forms of recognition and reward build on
main theories of motivation – instrumentality, con- self-motivation and help people to make the best
tent and process – and outline approaches to moti- use of their abilities and to perform well. There are
vation strategy. two types of motivation, as described below.
Intrinsic motivation The intrinsic motivators, which are concerned with

the ‘quality of working life’ (a phrase and movement
Intrinsic motivation takes place when individuals that emerged from this notion), are likely to have a
feel that their work is important, interesting and deeper and longer-term effect because they are in-
challenging and that it provides them with a reason- herent in individuals and the work – and are not
able degree of autonomy (freedom to act), opportu- imposed from outside in such forms as incentive pay.
nities to achieve and advance, and scope to use and The three main areas of motivation theory as de-
develop their skills and abilities. It can be described scribed below explain the ways in which intrinsic
as motivation by the work itself. It is not created by and extrinsic motivation take place.
external incentives. Deci and Ryan (1985) suggested
that intrinsic motivation is based on the need to be
competent and self-determining (that is, to have a
choice). Michael Sandel (2012: 122) remarked that:
‘When people are engaged in an activity they con- Pau se for th ou gh t
sider intrinsically worthwhile, offering money may Andrzej Huczynski and David Buchanan
weaken their motivation by “crowding out” their
intrinsic interest or commitment.’ wrote: ‘We each have a different reason for
Intrinsic motivation can be enhanced by job de- getting out of bed in the morning. Our
sign. Katz (1964) suggested that jobs should in motives are major determinants of our
themselves provide sufficient variety, complexity,
challenge and skill to engage the abilities of the behaviour. If we understand your motives (a
worker. Hackman and Oldham (1974) in their job desire for more leisure time), we can
characteristics model identified the five core charac-
influence your behaviour (take a day’s
teristics of jobs that result in intrinsic motivation,
namely: skill variety, task identity, task significance, holiday if you finish that assignment).’
autonomy and feedback. Pink (2009) stated that Fine, but how can we be sure that we
there are three steps that managers can take to im-
prove motivation: understand anybody’s motives?
Huczynski and Buchanan (2007)
1 Autonomy – encourage people to set their
own schedule and focus on getting work
done not how it is done.
2 Mastery – help people to identify the steps
they can take to improve and ask them to Instrumentality theory
identify how they will know they are making
progress. Instrumentality theory states in effect that rewards
3 Purpose – when giving instructions explain and punishments are the best instruments with
the why as well as the how. which to shape behaviour. It assumes that people
will be motivated to work if rewards and penalties
Intrinsic motivation is associated with the concept
are tied directly to their performance; thus the
of employee engagement, as explained in Chapter 26.
awards are contingent upon effective performance.
Instrumentality theory has its roots in the scientific
management methods of Taylor (1911: 121) who
Extrinsic motivation wrote: ‘It is impossible, through any long period of
Extrinsic motivation occurs when things are done time, to get workmen to work much harder than the
to or for people in order to motivate them. These average men around them unless they are assured a
include rewards such as incentives, increased pay, large and a permanent increase in their pay.’
praise or promotion; and punishments such as dis- This theory provides a rationale for financial in-
ciplinary action, withholding pay, or criticism. centives such as performance-related pay, albeit a
Extrinsic motivators can have an immediate and dubious one. Motivation using this approach has
powerful effect, but it will not necessarily last long. been and still is widely adopted. It may be successful
Chapter 24 | Motivation 249
in some circumstances, eg piece work, but – for rea- a ssociated with motivation. The theory focuses on
sons explained in Chapter 40 – merit or perfor- the content of motivation in the shape of needs. Its
mance pay is flawed. basis is the belief that an unsatisfied need creates
Instrumentality theory relies exclusively on a sys- tension and a state of disequilibrium. To restore
tem of external controls and does not recognize a the balance a goal is identified that will satisfy the
number of other human needs. It also fails to ap- need, and a behaviour pathway is selected that will
preciate the fact that the formal control system can lead to the achievement of the goal and the satis-
be seriously affected by the informal relationship faction of the need. Behaviour is therefore moti-
existing between workers. vated by unsatisfied needs. A content theory model
is shown in Figure 24.1. Content theory, as the
term implies, indicates the components of motiva-
tion but it does not explain how motivation affects
Pa us e for t houg ht performance – a necessary requirement if the con-
cept is to provide guidance on HR policy and prac-
The carrot and stick approach tice. This is the role of process theory, as will be
to motivation discussed later.
Daniel Pink wrote: ‘At the heart of the carrot

and stick approach are two elegant and simple Maslow’s hierarchy of needs
ideas: Rewarding an activity will get you more of The best-known classification of needs is the one
it. Punishing an activity will get you less of it. formulated by Maslow (1954). He suggested that
there are five major need categories that apply to
Carrots and sticks can produce precisely the people in general, starting from the fundamental
opposite of their intended aims. Methods physiological needs and leading through a hierar-
chy of safety, social and esteem needs to the need
designed to increase motivation can for self-fulfilment, the highest need of all. When a
dampen it. Actions aimed at increasing lower need is satisfied the next highest becomes
creativity can reduce it. Programmes to dominant and the individual’s attention is turned to
satisfying this higher need. The need for self-
promote good deeds can make them fulfilment, however, can never be satisfied. ‘Man is a
disappear, meanwhile, instead of restraining wanting animal’; only an unsatisfied need can moti-
vate behaviour and the dominant need is the prime
negative behaviour, rewards and punishments
motivator of behaviour. Psychological development
can often set it loose – and give rise to takes place as people move up the hierarchy of
cheating, addiction, and desperately myopic needs, but this is not necessarily a straightforward
progression. The lower needs still exist, even if tem-
thinking.’ porarily dormant as motivators, and individuals
If, as Daniel Pink suggests, you should constantly return to previously satisfied needs.
Maslow’s needs hierarchy has an intuitive appeal
not rely on incentives to provide motivation,
and has been very popular. But it has not been veri-
what should you rely on? fied by empirical research such as that conducted by
Pink (2008) Wahba and Bridwell (1979), and it has been criti-
cized for its apparent rigidity – different people may
have different priorities and the underpinning as-
sumption that everyone has the same needs is inva-
Content theory lid. It is difficult to accept that needs progress stead-
ily up the hierarchy and Maslow himself expressed
doubts about the validity of a strictly ordered hier-
The aim of the content or needs theories produced
archy. But he did emphasize that the higher-order
by Maslow, Alderfer, McClelland, Herzberg,
needs are more significant.
and Deci and Ryan was to identify the factors
F I G U R E 24.1 The process of motivation according to content theory
Establish
goal
Take
Need
action
Attain
goal
ERG theory (Alderfer) 1 The need for achievement, defined as the

need for competitive success measured
Alderfer (1972) produced a more convincing and against a personal standard of excellence.
simpler although less well-known theory, which 2 The need for affiliation, defined as the need
postulated three primary categories of needs: for warm, friendly, compassionate
1 Existence needs such as hunger and thirst – relationships with others.
pay, fringe benefits and working conditions 3 The need for power, defined as the need to
are other types of existence needs. control or influence others.
2 Relatedness needs, which acknowledge that
people are not self-contained units but must
engage in transactions with their human Herzberg’s two-factor model
environment – acceptance, understanding, The two-factor model of motivation developed by
confirmation and influence are elements of Herzberg (1957, 1966) was based on an investiga-
the relatedness process. tion into the sources of job satisfaction and dissatis-
3 Growth needs, which involve people in faction of accountants and engineers who were
finding the opportunities to be what they are asked what made them feel exceptionally good or
most fully and to become what they can. exceptionally bad about their jobs. According to
This is the most significant need. Herzberg, this research established that there were
two factors that affected feelings of satisfaction or
dissatisfaction. Motivating factors or ‘satisfiers’ re-
McClelland’s achievement late to the job content and consist of the need for
motivation achievement, the interest of the work, responsibility
and opportunities for advancement. These needs are
An alternative way of classifying needs was devel- the intrinsic motivators. He summed this up in the
oped by McClelland (1961), who based it mainly phrase ‘motivation by the work itself’.
on studies of managers. He identified three needs, of Hygiene factors relate to the job context, includ-
which the need for achievement was the most ing such things as pay and working conditions.
important: ‘Hygiene’ is used in the medical sense of the term,
meaning preventative and environmental. In them- ●● the existence of a universally applicable set
selves, hygiene factors neither satisfy nor motivate of human needs;
and they serve primarily to prevent job dissatisfac- ●● that according to Maslow (1954), needs
tion, while having little effect on positive job atti- conform to a simple ordered hierarchy of
tudes. Pay is not a satisfier but if it is inadequate or need importance, when in reality, needs seem
inequitable it can cause dissatisfaction. However, its to operate in a more flexible, less ordered
provision does not provide lasting satisfaction. and predictable way;
Herzberg’s two-factor theory in effect identifies
●● that the link between needs and behaviours
needs but it has been attacked by, for example,
is direct and automatic, rather than mediated
Opsahl and Dunnette (1966). The research method
by human consciousness, values and choice.
has been criticized because no attempt was made to
measure the relationship between satisfaction and In addition, he pointed out that content theories
performance. It has been claimed that the two-factor ‘underestimate the motivational potency of extrin-
nature of the theory is an inevitable result of the sic rewards, including financial rewards’.
questioning method used by the interviewers. It has
also been suggested that wide and unwarranted in-
ferences have been drawn from small and specialized Process theory
samples and that there is no evidence to suggest that
the satisfiers do improve productivity. The underpin- In process theory, the emphasis is on the psycho-
ning assumption that everyone has the same needs is logical or mental processes and forces that affect
invalid. Denise Rousseau (2006: 263), in her presi- motivation, as well as on basic needs. It is also
dential address to the US Academy of Management, known as cognitive theory because it refers to peo-
summed up these views as follows: ‘Herzberg’s long ple’s perceptions of their working environment and
discredited two-factor theory is typically included in the ways in which they interpret and understand it.
the motivation section of management textbooks, The main process theories are concerned with rein-
despite the fact that it was discredited as an artefact forcement, expectancy, goals, equity and cognitive
of method bias over 30 years ago.’ evaluation. Two other theories – flow and the AMO
In spite of these objections, the Herzberg two- model – are not usually classified as process theories
factor theory continues to thrive; partly because it is but their approach to analysing human behaviour
easy to understand and seems to be based on real- has similarities to the recognized theories so they
life rather than academic abstractions, and partly are included under this heading.
because it convincingly emphasizes the positive
value of the intrinsic motivating factors and high-
lights the need to consider both financial and Reinforcement theory
non-financial factors when developing reward sys-
tems. It is also in accord with a fundamental belief This is the oldest and least complex of the process
in the dignity of labour and the Protestant ethic – theories. It is based on ‘the law of effect’ as formu-
that work is good in itself. Herzberg’s strength as a lated by Thorndike (1911), which states that over
proselytizer rather than a researcher meant that he time people learn about the relationships between
had considerable influence on the job enrichment their actions and the consequences of them and this
movement, which sought to design jobs in a way understanding guides their future behaviour. In
that would maximize the opportunities to obtain other words, if they believe that something has
intrinsic satisfaction from work and thus improve worked previously then they will do it again. It was
the quality of working life. later developed by Hull (1943, 1951).
Skinner (1953) and others later built on these
principles with the notion of ‘operant conditioning’,
Comment on content theories which was influenced by the work of Pavlov and his
salivating dogs. As Shields (2007: 76) put it: ‘Positive
Shields (2007: 74) observed that content theories reinforcement of desired behaviour elicits more of
share some common shortcomings. His criticisms the same; punishment of undesired behaviour
were that they incorrectly assume: (negative reinforcement) elicits less of the same.’

Reinforcement models continue to thrive today as e xplains why intrinsic motivation arising from the
explanatory vehicles for understanding work moti- work itself can be more powerful than extrinsic mo-
vation and job performance, and as a justification tivation. Intrinsic motivation outcomes are more
of performance pay. under the control of individuals, who can place
But reinforcement theory can be criticized for tak- greater reliance on their past experiences to indicate
ing an unduly mechanistic view of human nature. It the extent to which positive and advantageous re-
implies that people can be motivated by treating sults are likely to be obtained by their behaviour.
them as machines – by pulling levers. In assuming Expectancy theory also emphasizes the role of both
that the present choices of individuals are based on person and situational variables as pointed out by
an understanding of the outcomes of their past Nadler and Lawler:
choices, reinforcement theory ignores the existing
context in which choices are made. In addition, mo-
tivational theories based on the principle of rein-
forcement pay insufficient attention to the influence
of expectations – no indication is given of how to Word s of w isd om
distinguish in advance which outcomes would Behaviour is determined by a combination
strengthen responses and which would weaken them.
Above all, they are limited because they imply, in
of forces in the individual and forces in the
Allport’s (1954) vivid phrase, a hedonism of the past. environment. Neither the individual nor the
environment alone determines behaviour.
Expectancy theory Nadler and Lawler (1979: 217)
Expectancy theory states that motivation will be

high when people know what they have to do in
order to get a reward, expect that they will be able
to get the reward, and expect that the reward will This theory was developed by Porter and Lawler
be worthwhile. (1968) into a model shown in Figure 24.2, which fol-
The concept of expectancy was originally con- lows Vroom’s ideas by suggesting that there are two
tained in the valency-instrumentality-expectancy factors determining the effort that people put into
(VIE) theory that was formulated by Vroom (1964). their jobs: first, the value of the rewards to individu-
Valency stands for value; instrumentality is the be- als in so far as they satisfy their needs for security,
lief that if we do one thing it will lead to another; social esteem, autonomy and self-actualization; sec-
and expectancy is the probability that action or ef- ond, the probability that rewards depend on effort,
fort will lead to an outcome. as perceived by individuals – in other words, their
The strength of expectations may be based on expectations about the relationships between effort
past experiences (reinforcement), but individuals and reward. Thus, the greater the value of a set of
are frequently presented with new situations – a awards and the higher the probability that receiving
change in job, payment system, or working condi- each of these rewards depends upon effort, the
tions imposed by management – where past experi- greater the effort that will be put forth in a given
ence is an inadequate guide to the implications of situation.
the change. In these circumstances, motivation may But, as Porter and Lawler emphasized, mere ef-
be reduced. fort is not enough. It has to be effective effort if it is
Motivation is only likely when a clearly per- to produce the desired performance. The two vari-
ceived and usable relationship exists between per- ables additional to effort that affect task achieve-
formance and outcome, and the outcome is seen as ment are: (1) ability – individual characteristics
a means of satisfying needs. This explains why ex- such as intelligence, knowledge, skills; (2) role per-
trinsic financial motivation – for example, an incen- ceptions – what the individual wants to do or thinks
tive or bonus scheme – works only if the link (line they are required to do. These are good from the
of sight) between effort and reward is clear and the viewpoint of the organization if they correspond
value of the reward is worth the effort. It also with what it thinks the individual ought to be doing.
F I G U R E 24.2 Motivation model
Value of rewards Abilities
Effort Performance
Probability that
Role
rewards depend
expectations
upon effort
SOURCE Porter and Lawler (1968)
They are poor if the views of the individual and the achievability – but they tend to be influenced
organization do not coincide. mainly by desirability – they let their tastes
Alongside goal theory (see below), expectancy influence their beliefs;
theory has become the most influential motivation ●● may be able to evaluate the extrinsic rewards
theory, particularly as it affects performance and re- they expect but may find it difficult to
ward management. But reservations have been ex- evaluate the possibility of achieving intrinsic
pressed about it. House et al (1974) remarked that: rewards;
‘Evidence for the validity of the theory is very
●● may find it difficult to distinguish the benefits
mixed.’ They also established that there were a num-
of one possible outcome from another.
ber of variables affecting expectations that make it
difficult to predict how they function. These are: They concluded that: ‘Expectancy theory can ac-
count for some of the variations in work effort but
●● Leadership behaviour – the function of the
far less than normally attributed to it’ (ibid: 386).
leader in clarifying expectations, guiding,
Shields (2007: 80) commented that a problem
supporting and rewarding subordinates.
with expectancy theory is that it assumes that ‘be-
●● Individual characteristics – the subjects’ haviour is rational and premeditated when we
perception of their ability to perform the know that much workplace behaviour is impulsive
required task. and emotional.’
●● Nature of the task – whether accomplishing However, in spite of these objections, the simple
the task provides the necessary message of expectancy theory – that people will be
reinforcements and rewards. motivated if they expect that their behaviour will
●● The practices of the organization – its produce a worthwhile reward – is compelling. And
reward and control systems and how it it provides a useful tool to assess the effectiveness of
functions. motivating devices such as performance-related pay.
Research conducted by Behling and Starke (1973)

established that individuals: Goal theory
●● make crucial personal decisions without Goal theory, as developed by Latham and Locke
clearly understanding the consequences; (1979), following their research states that motiva-
●● do not in practice consistently evaluate their tion and performance are higher when individuals
order of preference for alternative actions; are set specific goals, when goals are demanding but
●● have to assign two values when making a accepted, and when there is feedback on perfor-
decision – its desirability and its mance. Goals must be clearly defined. Participation
in goal setting is important as a means of getting Cognitive evaluation theory

agreement to the setting of demanding goals.
Feedback is vital in maintaining motivation, par- Cognitive evaluation theory contends that the use
ticularly towards the achievement of even higher of extrinsic rewards may destroy the intrinsic mo-
goals. Goal theory has had considerable influence tivation that flows from inherent job interest.
on performance and reward management practices. It was formulated by Deci and Ryan (1985).
However, the universality of goal theory has Referring to their research, they stated that:
been questioned. For example, Pintrich (2000) ‘Rewards, like feedback, when used to convey to
noted that people have different goals in different people a sense of appreciation for work well done,
circumstances and that it is hard to justify the as- will tend to be experienced informationally and
sumption that goals are always accessible and con- will maintain or enhance intrinsic motivation. But
scious. And Harackiewicz et al (2002) warned that when they are used to motivate people, they will be
goals are only effective when they are consistent experienced controllingly and will undermine in-
with and match the general context in which they trinsic motivation.’
are pursued. But support for goal theory was pro- Deci et al (1999) followed up this research by
vided by Bandura and Cervone (1983), who empha- carrying out a meta-analysis of 128 experiments on
sized the importance of self-efficacy (a belief in rewards and intrinsic motivation to establish the
one’s ability to accomplish goals). extent to which intrinsic motivation was under-
mined by rewards. The results of the study indicated
that for high-interest tasks, rewards had significant
Equity theory negative effects on what the researchers called ‘free-
choice measures’, which included the time spent on
Equity theory, as defined by Adams (1965), is con-
the task after the reward was removed.
cerned with the perceptions people have about how
But as noted by Gerhart and Rynes (2003: 52):
they are being treated as compared with others. He
‘The vast majority of research on this theory has
proposed that employees assess the fairness or oth-
been performed in school rather than work settings,
erwise of their rewards (outcomes) in relation to
often with elementary school-aged children.’ But
their effort or qualifications (inputs) and that they
that did not stop other commentators such as Daniel
do this by comparing their own input/output ratio
Pink assuming that the results were equally signifi-
against that of other individuals. If the input/output
cant for working adults. It is interesting to note that
ratio is perceived to be unfavourable, they will feel
research in industry conducted by Deci and Ryan
that there is reward inequity.
(1985), while it found that financial incentives did
Equity theory explains only one aspect of the
decrease intrinsic motivation in high-control organ-
processes of motivation and job satisfaction, al-
izational cultures, also established that in organiza-
though it may be significant in terms of morale and,
tions with the opposite high-involvement culture,
possibly, of performance.
intrinsic and extrinsic motivation were both in-
creased by monetary incentives. Context is all im-
portant. Moreover, a meta-analysis of 145 studies
Social learning theory conducted by Cameron et al (2001) led to the con-
Social learning theory, as developed by Bandura clusion that rewards do not inevitably have negative
(1977), combines aspects of both reinforcement and effects on intrinsic motivation.
expectancy theory. It recognizes the significance of
the basic behavioural concept of reinforcement as a
determinant of future behaviour but also empha- Self-determination theory
sizes the importance of internal psychological fac-
As formulated by Deci and Ryan (2000), this theory
tors, especially expectancies about the value of
states that individuals are motivated by the innate
goals and the individual’s ability to reach them. The
need to achieve three fundamental goals: striving
term ‘reciprocal determinism’ is used to denote the
for competence, autonomy and relatedness. These
concept that while the situation will affect individ-
are associated with inherent growth tendencies that
ual behaviour, individuals will simultaneously influ-
lead to effort and commitment.
ence the situation.
necessary support and avenues for

expression).’
Wo rd s of wi sdom
They also noted that someone’s ability, motivation
The fullest representations of humanity and opportunity to perform would depend on two
show people to be curious, vital and groups of factors: (1) the individual’s experience,
self-motivated. At their best they are intelligence, health personality etc, and (2) the situ-
ational factors of HR policies and practices orien-
agentic and inspired, striving to learn, tated to creating ‘AMO’ and related variables in the
extend themselves, master new skills and production system and the organizational context.
The AMO model provides a useful basis for
apply their talents responsibly. identifying the factors that influence performance
Deci and Ryan (2000: 268) and taking action accordingly as explained in
Figure 6.3 in Chapter 6.
Flow Comment on process theories

Process theories are not based on suspect assump-
The concept of flow was originated by Mihály
tions about the universality of needs, as are content
Csíkszentmihályi (1990), who described it as the
theories. Process theories emphasize the importance
mental state of someone who is fully focused and
of individual decision making on work behaviour.
immersed in an activity and enjoys doing it. It can
As pointed out by Shields (2007: 85), ‘they ac-
be described as fully focused motivation. According
knowledge the importance of social and job context
to Csikszentmihályi, the flow experience is charac-
as co-determinants of motivational strength while
terized by immediate feedback, feeling that you
those other than reinforcement theory also high-
have the potential to succeed and feeling so en-
light the importance of self-efficacy, task or goal
grossed in the experience that other needs become
clarity and motivational learning’.
negligible. The notion of flow usefully encapsulates
a number of familiar concepts from the fields of
motivation, engagement and job design theory
Summary of motivation
The AMO model theories
The AMO model, as developed by Boxall and The main motivation theories are summarized in
Purcell (2003), states that performance depends on Table 24.1.
the individual’s ability, motivation and opportunity.
Employees must have the ability to perform well
and the motivation to do so, while organizations Pau se for th ou gh t
must ensure that they are given the opportunity to
perform. Boxall and Purcell (2016: 155) formu- ‘Motivation is based on growth needs. It is
lated the AMO framework as P = f(A,M,O) and an internal engine, and its benefits show up
explained that ‘Individuals perform when they
over a long period of time. Because the
have:
ultimate reward in motivation is personal
●● the ability (A) to perform (they can do the
job because they have the necessary growth, people don’t need to be rewarded
knowledge, skills and aptitudes); incrementally’.
●● the motivation (M) to perform (they will do Herzberg (1991)
the job because they want to do it or feel
If you agree with this proposition, what use
they must do it); and
can an individual manager make of it?
●● the opportunity (O) to perform (their work
structure and environment provide the
TA B L E 24.1 Summary of motivation theories
Category Type Theorist(s) Summary of theory Implications
Instrumentality Taylorism Taylor (1911) If we do one thing it Basis of crude attempts

leads to another. People to motivate people by
will be motivated to incentives. Often used as
work if rewards and the implied rationale for
punishments are directly performance-related pay
related to their although this is seldom
performance. an effective motivator.
Reinforcement The motivation Hull (1951) As experience is gained Provides feedback which
process in satisfying needs, positively reinforces
people perceive that effective behaviour.
certain actions help to
achieve goals while
others are unsuccessful.
The successful actions
are repeated when a
similar need arises.
Content Hierarchy of Maslow (1954) People are motivated by Focuses attention on the
(needs) theory needs their needs which are various needs that
translated into goals for motivate people and the
them to attain. The notion that a satisfied
content of motivation is need is no longer a
therefore those needs motivator. The concept
and the goals they of a hierarchy has no
generate to which practical significance.
people aspire.
Two-factor Related to Herzberg et al Two groups of factors Identifies a number of

model needs theory (1957) affect job satisfaction: (1) fundamental needs. It
those intrinsic to the work also indicates that
itself; (2) those extrinsic satisfaction from a pay
to the job (extrinsic increase (extrinsic
motivators or hygiene motivation) does not last
factors) such as pay and long.
working conditions.
Process/ Expectancy Vroom (1964), Effort (motivation) For a reward system to

cognitive theory Porter and Lawler depends on the be effective, there must
theory (1968) likelihood that rewards be a link between effort
will follow effort and that and reward (line of
the reward is sight), the reward should
worthwhile. be achievable and it
should be worthwhile.
Goal theory Lathom and Locke Motivation will improve if Influences performance
(1979) people have demanding management and
but agreed goals and learning and
receive feedback. development practices.
(continued )
Category Type Theorist(s) Summary of theory Implications
Equity Adams (1965) People are better Need to have equitable

theory motivated if treated reward and employment
equitably. practices.
Flow Csikszentmihályi The mental state of Emphasis on feedback

(1990) someone who is setting goals and job
focused on work and design.
enjoys doing it.
●● Success or failure. Success obviously creates

Motivation and job satisfaction, especially if it enables individuals
to prove to themselves that they are using
satisfaction their abilities to the full. And it is equally
obvious that the reverse is true of failure.
Job satisfaction can be defined as the attitudes and
feelings people have about their work. Positive and
favourable attitudes towards the job indicate job Job satisfaction and performance
satisfaction. Negative and unfavourable attitudes
towards the job indicate job dissatisfaction. It can It is a commonly held and not unreasonable belief
be distinguished from morale, which is a group that an increase in job satisfaction results in im-
rather than individual variable, related to the degree proved performance. The whole human relations
to which group members feel attracted to their movement led by Mayo (1933) and supported by
group and want to remain a member of it. the Roethlisberger and Dixon (1939) research was
based on the belief that productivity could be in-
creased by making workers more satisfied, primar-
The factors that affect job ily through pleasant and supportive supervision and
by meeting their social needs. But research by Katz
satisfaction et al (1950) and Katz et al (1951) found that the
Levels of job satisfaction or dissatisfaction are influ- levels of satisfaction with pay, job status or fellow
enced by: workers in high-productivity units were no differ-
ent to those in low-productivity units.
●● The intrinsic motivating factors. These relate Meta-analysis by Brayfield and Crockett (1955)
to job content, especially the five dimensions of a number of studies concluded that there was lit-
of jobs identified by Hackman and Oldham tle evidence of any simple or appreciable relation-
(1974): skill variety, task identity, task ship between satisfaction and performance. A later
significance, autonomy and feedback (the job review of research by Vroom (1964) found that the
characteristics model). median correlation between job satisfaction and job
●● The quality of supervision. The Hawthorne performance for all these studies was only 0.14,
studies (Roethlisberger and Dixon, 1939) which is not high enough to suggest any marked re-
resulted in the claim that supervision is the lationship between them. Spector (1997) came to
most important determinant of worker the same conclusion. Indeed, it can be argued that it
attitudes. Elton Mayo (1933) believed that a is not increases in satisfaction that produce im-
man’s desire to be continuously associated in proved performance but improved performance that
work with his fellows is a strong, if not the increases satisfaction. This was confirmed by data
strongest human characteristic. on the link between job satisfaction and p
erformance
for 177 store managers, analysed by Christen et al be argued that extrinsic rewards may erode intrinsic
(2006). It was established that store managers’ per- interest – people who work just for money could find
formance increased their job satisfaction but that their tasks less pleasurable and may not, therefore,
job satisfaction had no impact on job performance. do them so well. What we do know is that a multi-
plicity of factors is involved in performance improve-
ments and many of those factors are interdependent.
Motivation and money Money can therefore provide positive motivation
in the right circumstances not only because people
Money, in the form of pay or some other sort of need and want money but also because it serves as a
remuneration, is regarded by many people as the highly tangible means of recognition. But badly de-
most obvious extrinsic reward. Money seems to signed and managed pay systems can demotivate.
provide the carrot that most people want. Another researcher in this area was Jaques (1961),
Doubts were cast on the effectiveness of money who emphasized the need for such systems to be
by Herzberg (1968), which, although unsupported perceived as being fair and equitable. In other words,
by his research, have some degree of face validity. the reward should be clearly related to effort or level
He claimed that while the lack of money can cause of responsibility and people should not receive less
dissatisfaction, its provision does not result in last- money than they deserve compared with their fellow
ing satisfaction. There is something in this, especially workers. Jaques called this the ‘felt-fair’ principle.
for people on fixed salaries or rates of pay who do
not benefit directly from an incentive scheme. They
may feel good when they get an increase; apart from Conclusions on motivation
the extra money, it is a highly tangible form of rec-
ognition and an effective means of helping people to theory
feel that they are valued. But this feeling of euphoria
can rapidly die away. Other causes of dissatisfaction Instrumentality and reinforcement theories provide
from Herzberg’s list of hygiene factors, such as a simplistic explanation of how motivation works.
working conditions or the quality of management, Needs and content theories are more sophisticated
can loom larger in some people’s minds when they but have their limitations.
fail to get the satisfaction they need from the work
itself. However, it must be re-emphasized that differ-
ent people have different needs and wants. Some
will be much more motivated by money than others.
Word s of w isd om
What cannot be assumed is that money motivates Although the ideas developed by Maslow,
everyone in the same way and to the same extent.
Herzberg and Deci have had considerable
Thus it is naive to think that the introduction of a
performance-related pay scheme will miraculously appeal to many people, the prevailing view
transform everyone overnight into well-motivated, in the academic literature is that the specific
high-performing individuals.
Nevertheless, money is a powerful force because it predictions of these theories is not
is linked directly or indirectly to the satisfaction of supported by empirical evidence. On the
many needs. Money may in itself have no intrinsic
other hand it would be a mistake to
meaning, but it acquires significant motivating power
because it comes to symbolize so many intangible underestimate the influence that these
goals. It acts as a symbol in different ways for differ- theories have had on research and practice.
ent people, and for the same person at different times.
But do financial incentives motivate people? The Pfeffer, Kohn and others continue to base
answer is yes, for those people who are strongly mo- their argument regarding the ineffectiveness
tivated by money and whose expectations are that
of money as a motivator on such theories.
they will receive a worthwhile financial reward.
Gerhart and Rynes (2003: 53)
But less confident employees may not respond to in-
centives that they do not expect to achieve. It can also
And Steers et al (2004) contended that: ‘Motivation subliminal influence on the beliefs of some managers
theories that were discredited long ago still perme- about the power of incentives to motivate people.
ate textbooks’. They were referring mainly to
Maslow and Herzberg.
But, needs theory still offers an indication of the Motivation strategies
factors that motivate people and content theory pro-
vides some useful explanations of how motivation Motivation strategies aim to create a working envi-
takes place. And while instrumentality and ronment and to develop policies and practices that
reinforcement theories may be simplistic they still will provide for higher levels of performance from
explain some aspects of how rewards affect motiva- employees. The factors affecting them and the HR
tion and performance and they continue to exert contribution are summarized in Table 24.2.
TA B L E 24.2 Motivation strategies
Factors affecting motivation strategies The HR contribution
The complexity of the process of motivation Avoid the trap of developing or supporting
means that simplistic approaches based on strategies that offer prescriptions for motivation
instrumentality or needs theory are unlikely to based on a simplistic view of the process or fail to
be successful. recognize individual differences.
People are more likely to be motivated if they Encourage the development of performance
work in an environment in which they are management processes that provide opportunities
valued for what they are and what they do. to agree expectations and to recognize
This means paying attention to the basic need accomplishments.
for recognition.
Extrinsic motivators such as incentive pay can ●● Develop total reward systems which provide
have an immediate and powerful effect, but it opportunities for both financial and non-financial
will not necessarily last long. The intrinsic rewards to recognize achievements. Bear in mind,
motivators, which are concerned with the however, that financial rewards systems are not
‘quality of working life’ (a phrase and necessarily appropriate and the lessons of
movement which emerged from this concept), expectancy, goal and equity theory need to be taken
are likely to have a deeper and longer-term into account in designing and operating them.
effect because they are inherent in individuals ●● Pay particular attention to recognition as a means of
and the work they do and not imposed from motivation and developing intrinsic motivation through
outside in such forms as performance-related job design.
pay.
Some people will be much more motivated by Avoid the introduction of a performance-related
money than others. It cannot be assumed that pay scheme in the belief that it will miraculously
money motivates everyone in the same way transform everyone overnight into well-motivated,
and to the same extent. high-performing individuals.
Recognition should be given to the need for Advise on processes for the design of jobs which
work which provides people with the means take account of the factors affecting the motivation
to achieve their goals, a reasonable degree of to work, providing for job enrichment in the shape
autonomy, and scope for the use of skills and of variety, decision-making responsibility and as
competences. much control as possible in carrying out the work.
(continued )
Factors affecting motivation strategies The HR contribution
The need for the opportunity to grow by ●● Provide facilities and opportunities for learning
developing abilities and careers. through such means as personal development
planning processes as well as more formal training.
●● Develop career planning processes.
The cultural environment of the organization in Advise on the development of a culture which
the shape of its values and norms will supports processes of valuing and rewarding
influence the impact of any attempts to employees.
motivate people by direct or indirect means.
Motivation will be enhanced by leadership ●● Devise competency frameworks which focus on

which sets the direction, encourages and leadership qualities and the behaviours expected of
stimulates achievement and provides support managers and team leaders.
to employees in their efforts to reach goals ●● Ensure that leadership potential is identified through
and improve their performance generally. performance management and assessment centres.
●● Conduct leadership development programmes.
Key learning points
The process of motivation significant theories are those concerned with

expectancy, goal setting, equity and cognitive
Motivation is goal-directed behaviour. People are evaluation, which are classified as process or
motivated when they expect that a course of action is cognitive theories.
likely to lead to the attainment of a goal and a valued
reward – one that satisfies their needs and wants.
Motivation strategies
Types of motivation Motivation strategies aim to create a working
environment and to develop policies and practices
The two basic types are intrinsic and extrinsic that will provide for higher levels of performance
motivation. from employees. They include the design of
intrinsically motivating jobs and leadership
Motivation theories development programmes and the development of
total reward systems and performance management
There are a number of motivation theories that, in the
processes.
main, are complementary to one another. The most
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263
25
Commitment
1 A strong desire to remain a member of the
Introduction organization.
Commitment represents the strength of an individu- 2 A strong belief in and acceptance of the
al’s identification with, and involvement in, an values and goals of the organization.
organization. It is a concept that has played an im- 3 A readiness to exert considerable effort on
portant part in HRM philosophy. As Guest (1987: behalf of the organization.
503) suggested, HRM policies are designed to ‘max-
Appelbaum et al (2000: 183) rephrased this defini-
imize organizational integration, employee commit-
tion as: ‘Organizational commitment is a multi
ment, flexibility and quality of work’. Beer et al
dimensional construct that reflects a worker’s:
(1984: 20) identified commitment in their concept
identification with the organization (loyalty),
of HRM as a key dimension because it ‘can result
attachment to the organization (intention to stay),
not only in more loyalty and better performance for
and willingness to expend effort on the organiza-
the organization, but also in self-worth, dignity,
tion’s behalf (discretionary effort).’ An alternative,
psychological involvement, and identity for the in-
although closely related definition of commitment
dividual’. This chapter starts with a definition of
emphasizes the importance of behaviour in creating
commitment and comments on the related concepts
commitment. Three features of behaviour are im-
of mutuality and mutual gains. It continues with
portant in binding individuals to their acts: the vis-
sections on commitment and engagement, the fac-
ibility of the acts, the extent to which the outcomes
tors affecting commitment and developing a com-
are irrevocable, and the degree to which the person
mitment strategy. The chapter ends with a critical
undertakes the action voluntarily. Commitment, ac-
evaluation of the concept.
cording to Salancik (1977) can be increased and
harnessed to obtain support for organizational ends
and interests through such ploys as participation in
The meaning of decisions about actions.
organizational commitment
Commitment refers to attachment and loyalty. It is Mutuality and commitment
associated with the feelings of individuals about
their organization. Mowday (1998) stated that it is Mutuality is a state that exists when management
characterized by an emotional attachment to one’s and employees are interdependent and both benefit
organization that results from shared values and in- by achieving mutual gains from this interdepend-
terests. The three characteristics of commitment ency. The importance of mutuality and its relation-
identified by Mowday et al (1982) are: ship to commitment was spelt out by Walton as
follows:
Source review minimized, control and lateral coordination

The new HRM model is composed of policies that depend on shared goals. And expertise
promote mutuality – mutual goals, mutual influence, rather than formal position determines
mutual respect, mutual rewards, mutual influence.
responsibility. The theory is that policies of
Walton (1985b: 79)
mutuality will elicit commitment which in turn will
yield both better economic performance and
greater human development.
Walton (1985a: 64)
Expressed like this, a commitment strategy sounds
idealistic (‘the American dream’ as Guest [1990] put
it) but it does not appear to be a crude attempt to
manipulate people to accept management’s values
Walton’s theme was that improved performance and goals, as some have suggested. In fact, Richard
would result if the organization moved away from Walton did not describe it as being instrumental in
the traditional control-oriented approach to work- this manner. His prescription was for a broad HRM
force management, which relies upon establishing approach to the ways in which people are treated,
order, exercising control and achieving efficiency. He jobs are designed and organizations are managed. He
proposed that this approach should be replaced by a believed that the aim should be to develop mutuality.
commitment strategy that would enable workers ‘to However, a review by Guest (1991) of the mainly
respond best – and most creatively – not when they North American literature, reinforced by the limited
are tightly controlled by management, placed in nar- UK research available, led him to the conclusion
rowly defined jobs, and treated like an unwelcome that: ‘High organizational commitment is associ-
necessity, but, instead, when they are given broader ated with lower labour turnover and absence, but
responsibilities, encouraged to contribute and there is no clear link to performance.’ Swailes
helped to achieve satisfaction in their work’ (Walton, (2002: 164) confirmed that: ‘Despite the best efforts
1985b: 77). He described the commitment-based of researchers... the evidence for a strong positive
approach as follows: link between commitment and performance re-
mains patchy.’
It is probably unwise to expect too much from
commitment as a means of making a direct and im-
mediate impact on performance. It is not the same as
Wo rd s o f w isdom motivation. It is possible to be dissatisfied with a par-
ticular feature of a job while retaining a fairly high
Jobs are designed to be broader than level of commitment to the organization as a whole.
before, to combine planning and But it is reasonable to believe that strong commit-
ment to work may result in conscientious and self-
implementation, and to include efforts to directed application to do the job, regular attendance,
upgrade operations, not just to maintain the need for less supervision and a high level of dis-
cretionary effort. Commitment to the organization
them. Individual responsibilities are
will certainly be related to the intention to stay there.
expected to change as conditions change,
and teams, not individuals, often are the
organizational units accountable for
The mutual gains
performance. With management hierarchies perspective
relatively flat and differences in status The mutual gains perspective states that organi
zations should pursue employment policies that
Chapter 25 | Commitment 265
roduce benefits for both employees and them-

p Some commentators have asserted that commit-
selves. It is influenced by social exchange theory ment is a distinct although closely linked entity. As
which states that feelings of loyalty and commit- cited by Buchanan (2004: 19), the US Corporate
ment and discretionary effort are a social reciproca- Executive Board divides engagement into two as-
tion by employees to a good employer. It is related pects of commitment: (1) rational commitment,
to Walton’s notion of mutuality. which occurs when a job serves employees’ finan-
cial, developmental or professional self-interest;
and (2) emotional commitment, which arises when
workers value, enjoy and believe in what they do
Wo rd s of wi sdom and has four times the power to affect performance
as its more pragmatic counterpart. The Corporate
The term mutual gains is appropriate Executive Board (2004: 1) indicated that engage-
because it conveys a key message: ment is ‘the extent to which employees commit to
someone or something in their organization, how
achieving and sustaining competitive
hard they work, and how long they stay as a result
advantage from human resources requires of that commitment.’ Wellins and Concelman
the strong support of multiple (2005: 1) suggested that ‘to be engaged is to be ac-
tively committed’.
stakeholders... employees must commit
their energies to meeting the economic
objectives of the enterprise. In return,
owners must share the economic returns Word s of w isd om
with employees and invest those returns in Organizational commitment is an important
such a way as promotes the long-run facet of the state of engagement when it is
economic security of the workforce. conceptualized as positive attachment to
Kochan and Osterman (1994: 46) the larger organizational entity and
measured as a willingness to exert energy in
support of the organization, to feel pride as
As Peccei et al (2013: 21) point out: ‘The mutual an organizational member, and to have
gains model hypothesizes that HRM has a positive
impact on both employee wellbeing and organiza- personal identification with the
tional performance.’ organization.
The mutual gains perspective extends beyond the Macey and Schneider (2008: 8–9)
concept of mutuality to its application in employ-
ment relations as a factor in achieving partnership
between management and trade unions and as a
framework for collective bargaining (see Chapter 44).
Clearly organizational engagement and commitment
are closely associated, and commitment was in-
Commitment and cluded by the Institute for Employment Studies in
its model (see Chapter 26) as an element of engage-
engagement ment. Appelbaum et al (2000: 183) noted that: ‘The
willingness to exert extra effort is the aspect of or-
The notion of commitment as described above ap- ganizational commitment that has been shown to
pears to be very similar if not identical to that of be most closely related to an employee’s job perfor-
organizational engagement which focuses on at- mance.’ Robinson et al (2004: 7) suggested that the
tachment to, or identification with, the organization closest relationship of commitment to engagement
as a whole. Are there any differences? was ‘affective commitment, ie the satisfaction p
eople
get from their jobs and their colleagues and their

willingness to go beyond the call of duty for the
Developing a commitment
sake of the organization.’ Salanova et al (2005) saw
commitment as part of engagement but not equiva-
strategy
lent to it. A commitment strategy can be based on the high-
The analysis of the concept of commitment as un- commitment model incorporating policies and prac-
dertaken in this chapter is based on a considerable tices in areas of HR such as job design, learning and
body of work exploring its nature and significance, development, career planning, performance man-
and therefore helps to illuminate the somewhat elu- agement, reward management, participation, com-
sive notion of engagement as discussed in Chapter 26. munication and employee wellbeing. HR should
But there are problems with the notion of commit- play a major part in developing a high-commitment
ment, as considered in the last section of this chapter. organization. The 10 steps that can be taken are:
1 Advise on methods of communicating the
Factors affecting values and aims of management and the
achievements of the organization so that
commitment employees are more likely to identify with
the organization as one they are proud to
Kochan and Dyer (1993) indicated that the factors work for.
affecting the level of commitment in what they 2 Emphasize to management that
called ‘mutual commitment firms’ were as follows: commitment is a two-way process;
●● Strategic level: supportive business strategies, employees cannot be expected to be
top management value commitment and committed to the organization unless
effective voice for HR in strategy making management demonstrates that it is
and governance. committed to them and recognizes their
contribution as stakeholders.
●● Functional (human resource policy) level:
staffing based on employment stabilization, 3 Impress on management the need to
investment in training and development and develop a climate of trust by being honest
contingent compensation that reinforces with people, treating them fairly, justly and
cooperation, participation and contribution. consistently, keeping its word, and showing
willingness to listen to the comments and
●● Workplace level: selection based on high
suggestions made by employees during
standards, broad task design and teamwork,
processes of consultation and participation.
employee involvement in problem solving
and a climate of cooperation and trust. 4 Develop a positive psychological contract
(the set of reciprocal but unwritten
The research conducted by Purcell et al (2003) iden- expectations that exist between individual
tified the following key policy and practice factors employees and their employers) by treating
that influence levels of commitment: people as stakeholders, relying on
●● received training last year; consensus and cooperation rather than
control and coercion, and focusing on the
●● satisfied with career opportunities;
provision of opportunities for learning,
●● satisfied with the performance appraisal development and career progression.
system;
5 Advise on the establishment of partnership
●● think managers are good in people agreements with trade unions that
management (leadership); emphasize unity of purpose, common
●● find their work challenging; approaches to working together and the
●● think their firm helps them achieve a work- importance of giving employees a voice in
life balance; matters that concern them.
●● satisfied with communication or company 6 Recommend and take part in the
performance. achievement of single status for all
employees (often included in a partnership Unitary frame of reference

agreement) so that there is no longer an ‘us
and them’ culture. The concept of commitment, especially as put for-
7 Encourage management to declare a policy ward by Walton (1985b), can be criticized as being
of employment security and ensure that simplistic, even misguided, in adopting a unitary
steps are taken to avoid involuntary frame of reference that assumes that organizations
redundancies. consist of people with shared interests. It has been
suggested by people such as Cyert and March
8 Develop performance management (1963), Mangham (1979) and Mintzberg (1983)
processes that provide for the alignment of that an organization is really a coalition of interest
organizational and individual objectives. groups where political processes are an inevitable
9 Advise on means of increasing employee part of everyday life.
identification with the company through Legge (1989: 38) also raised this question in her
rewards related to organizational discussion of strong culture as a key requirement of
performance (profit sharing or gainsharing) HRM, which she criticized because it implies ‘a
or employee share ownership schemes. shared set of managerially sanctioned values... that
10 Enhance employee job engagement, ie assumes an identification of employee and employer
identification of employees with the job interests’. As Coopey and Hartley (1991: 21) put it:
they are doing, through job design ‘Commitment is not an all-or-nothing affair (though
processes that aim to create higher levels of many managers might like it to be) but a question of
job satisfaction (job enrichment). multiple or competing commitments for the indi-
vidual.’ A pluralist perspective recognizes the legiti-
macy of different interests and is more realistic.
Critical evaluation of the It could be argued that values concerned with
performance, quality, service, equal opportunity
concept of commitment and innovation are not wrong because they are
managerial values. But pursuing a value such as in-
A number of commentators have raised questions novation could work against the interests of em-
about the concept of commitment. These relate to ployees by, for example, resulting in redundancies.
three main problem areas: (1) the imprecise nature And flexibility may sound a good idea but, beyond
of the term, (2) its unitary frame of reference, and the rhetoric, as Sisson (1994: 5) observed, the real-
(3) commitment as an inhibitor of flexibility. ity may mean that management can do what it
wants. It would be quite reasonable for any em-
ployee encouraged to behave in accordance with a
The imprecise nature of the term value supported by management to ask, ‘What’s in
Guest (1987: 513) raised the question of what com- it for me?’ It can also be argued that the imposition
mitment really means as follows: from above of management’s values on employees
without their having any part to play in discussing
The case for seeking high commitment among and agreeing them is a form of coercion.
employees seems plausible but the burgeoning
research on the topic has identified a number of
problems. One of these concerns the definition Commitment and flexibility
of the concept. The first issue is – commitment to
what? Most writers are interested in commitment It was pointed out by Coopey and Hartley (1991:
to the organization, but others have examined 22) that: ‘The problem for a unitarist notion of or-
career commitment and job commitment. ganizational commitment is that it fosters a con-
Once the general concept of commitment is formist approach which not only fails to reflect
utilized, then union commitment, workgroup organizational reality, but can be narrowing and
commitment and family commitment should also limiting for the organization.’ They argued that if
be considered. The possibility of multiple and employees are expected and encouraged to commit
perhaps competing commitments creates a more themselves tightly to a single set of values and goals
complex set of issues. they will not be able to cope with the ambiguities
and uncertainties that are endemic in organizational Values need not necessarily be restrictive. They
life in times of change. Conformity to ‘imposed’ val- can be defined in ways that allow for freedom of
ues will inhibit creative problem solving, and high choice within broad guidelines. In fact, the values
commitment to present courses of action will in- themselves can refer to such processes as flexibil-
crease both resistance to change and the stress that ity, innovation and responsiveness to change.
invariably occurs when change takes place. Thus, far from inhibiting creative problem solving,
If commitment is related to tightly defined plans, they can encourage it. But they will not do so if
this will become a real problem. To avoid it, the em- they are imposed from above. Employees need to
phasis should be on overall strategic directions. have a say in defining the values they are expected
These would be communicated to employees with to support.
the proviso that changing circumstances will re-
quire their amendment. In the meantime, however,
everyone can at least be informed in general terms
where the organization is heading and, more spe-
cifically, the part they are expected to play in help-
ing the organization to get there and, if they can be Pau se for th ou gh t
involved in the decision-making processes on mat- What do you think the concept of mutuality
ters that affect them (including management’s val-
ues for performance, quality and customer service), can add to the practice of HRM?
so much the better.
Key learning points
The meaning of commitment His theme was that improved performance would
result if the organization moved away from the
Commitment refers to attachment and loyalty. It is traditional control-oriented approach to workforce
associated with the feelings of individuals about their management, which relies upon establishing order,
organization. The three characteristics of commitment exercising control and achieving efficiency. He
identified by Mowday et al (1982) are: proposed that this approach should be replaced by a
1 A strong desire to remain a member of the commitment strategy.
organization.
The mutual gains perspective
2 A strong belief in and acceptance of the values and
goals of the organization. The mutual gains perspective states that organizations
should pursue employment policies that produce
3 A readiness to exert considerable effort on behalf
benefits for both employees and themselves.
of the organization.
Engagement and commitment

Commitment and mutuality
Organizational engagement and commitment are
In his seminal Harvard Business Review article,
closely associated. Commitment was included by the
Richard Walton (1985a) stated that ‘eliciting employee
IES in its model as an element of engagement. But
commitment will lead to enhanced performance [and]
commitment is a somewhat wider concept in that it is
the evidence shows this belief to be well founded’. The
concerned with both job engagement and
importance of commitment was highlighted by Walton.
organizational engagement.
The factors affecting the level 3 Impress on management the need to develop a
climate of trust.
of commitment
4 Develop a positive psychological contract.
●● Strategic level: supportive business strategies, top
management value commitment and effective voice 5 Advise on the establishment of partnership
for HR in strategy making and governance. agreements with trade unions.
●● Functional (human resource policy) level : staffing 6 Recommend and take part in the achievement of
based on employment stabilization, investment in single status for all employees.
training and development and contingent
7 Encourage management to declare a policy of
compensation that reinforces cooperation,
employment security.
participation and contribution.
8 Develop performance management processes.
●● Workplace level : selection based on high
standards, broad task design and teamwork, 9 Advise on means of increasing employee
employee involvement in problem solving and a identification with the company.
climate of cooperation and trust.
10 Enhance employee job engagement through job
design processes.
HR’s role in enhancing commitment
HR should play a major part in developing a high- Problems with the concept
commitment organization. The 10 steps it can of commitment
take are:
There are four main problem areas: (1) the imprecise
1 Advise on methods of communicating the values nature of the term, (2) its unitary frame of reference,
and aims of management. (3) commitment as an inhibitor of flexibility, and (4) the
2 Emphasize to management that commitment is a extent to which high commitment does in practice
two-way process. result in improved organizational performance.
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271
26
Employee
engagement
Introduction The meaning of employee
Engagement takes place when people are enthusias- engagement
tic about their work and the organization and are
motivated to achieve high levels of performance. Kahn (1990: 894) defined employee engagement as
According to the CIPD (2012: 13): ‘Engagement has ‘the harnessing of organization members’ selves to
become for practitioners an umbrella concept for their work roles; in engagement, people employ and
capturing the various means by which employers express themselves physically, cognitively, and emo-
can elicit additional or discretionary effort from tionally during role performances.’ There have been
employees – a willingness on the part of staff to dozens of definitions since the explosion of interest in
work beyond contract. It has become a new man- the concept during the 2000s, which perhaps explains
agement mantra.’ The notion that individuals can its somewhat elusive nature. Harter et al (2002: 269)
be ‘personally’ engaged in their work was first pro- stated that engagement was ‘the individual’s involve-
posed by Kahn (1990) in his seminal article in the ment and satisfaction with as well as enthusiasm for
Academy of Management Journal. work.’ Saks (2006: 602) defined employee engage-
Reilly and Brown (2008) noted that the terms ment as ‘a distinct and unique construct consisting of
‘job satisfaction’, ‘motivation’ and ‘commitment’ cognitive, emotional and behavioural components
are generally being replaced now in business by ‘en- that are associated with individual role performance.’
gagement’ because it appears to have more descrip- He distinguished between ‘job engagement’ (perform-
tive force and face validity. Truss et al (2013) ing the work role) and organizational engagement
suggested that ‘engagement may constitute the (performing the role as a member of the organization).
mechanism through which HRM practitioners im- A later definition was produced by Macey et al
pact individual and organizational performance.’ (2009: 7) who defined engagement as ‘an individual’s
This chapter starts with an analysis of the mean- purpose and focused energy, evident to others in the
ing of employee engagement and continues with an display of personal initiative, adaptability, effort and
assessment of its components, drivers and out- persistence directed towards organizational goals.’
comes. This is followed by a discussion of ‘burnout’ Alfes et al (2010: 5) saw engagement as having
(a state of complete exhaustion at work) the possi- three core facets:
bility of which should be taken into account in pur- ●● intellectual engagement – thinking hard
suing the engagement strategies described at the end about the job and how to do it better;
of the chapter. The chapter ends with a critical eval-
●● affective engagement – feeling positively
uation of the concept.
about doing a good job;
●● social engagement – actively taking
opportunities to discuss work-related
improvements with others at work.
Job or organizational engagement

or both Word s of w isd om
The term ‘engagement’ can be used in a specific Social exchange theory argues that obligations
job-related way to describe what takes place when are generated through a series of interactions
people are interested in and positive – even
between parties who are in a state of
excited – about their jobs, exercise discretionary
behaviour and are motivated to achieve high levels reciprocal interdependence. A basic tenet of
of performance. Truss et al (2006: ix) stated that: social exchange theory is that relationships
‘Put simply, engagement means feeling positive
about your job.’ They went on to explain that: evolve over time into trusting, loyal and
‘The engaged employee is the passionate employee, mutual commitments as long as the parties
the employee who is totally immersed in his or her
abide by certain ‘rules’ of exchange... [These]
work, energetic, committed and completely dedi-
cated’ (ibid: 1). usually involve reciprocity or repayment rules
Organizational engagement focuses on attach- such that the actions of one party lead to a
ment to or identification with the organization as a
whole. The Conference Board (2006) defined em- response or actions by the other party.
ployee engagement as the heightened connection Saks (2006: 603)
that employees feel for their organization. Robinson
et al (2004: 9) emphasized the organizational aspect
of engagement when they referred to it as ‘a positive
attitude held by the employee towards the organiza- He argued that one way for individuals to repay
tion and its values’. This definition of organizational their organization is through their level of engage-
engagement resembles the traditional notion of ment. In other words, employees will choose to en-
commitment. gage themselves to varying degrees and in response
Perhaps the most illuminating and helpful ap- to the resources they receive from their organization.
proach to the definition of engagement is to recog- This is consistent with the description of engage-
nize that it involves both job and organizational ment by Robinson et al (2004) as a two-way rela-
engagement as suggested by Saks (2006) and Balain tionship between the employer and the employee.
and Sparrow (2009). As discussed below, the concept of engagement
can be further explored in terms of its make-up (its
components), its antecedents (the forces that drive
it), and its outcomes.
What, if anything, is the difference between Pau se for th ou gh t
organizational engagement and job What do you think the concept of
engagement? Does it matter? engagement has to offer organizations?
The components of
The theory of engagement
employee engagement
Saks thought that a strong theoretical rationale for
engagement was provided by social exchange the- Engagement can be regarded as having three over-
ory; he described it as follows: lapping components: motivation and commitment
Chapter 26 | Employee Engagement 273
F I G U R E 26.1 IES model of employee engagement

Commitment Organizational
citizenship
Engagement
Motivation
Source Armstrong et al (2010)
as defined in Chapters 24 and 25 and organizational Engagement and motivation

citizenship behaviour (OCB) as defined below. A
model of engagement containing these components The motivation element in engagement is intrinsic.
produced by the Institute for Employment Studies Macey et al (2009: 67) commented that: ‘When the
(Armstrong et al, 2010) is shown in Figure 26.1. work itself is meaningful it is also said to have in-
Work or job engagement is also associated with job trinsic motivation. This means that it is not the pay
satisfaction. These components of engagement are or recognition that yields positive feelings of en-
considered below. gagement but the work itself.’ They also pointed out
that engaged employees ‘feel that their jobs are an
important part of what they are’ (ibid: 127).
Engagement and commitment
The concepts of commitment and organizational Engagement and organizational
engagement are closely related, although Robinson
et al (2004) stated that while engagement contains citizenship behaviour
many of the elements of commitment it is not a per- Organizational citizenship behaviour (OCB), as
fect match. They suggested that the term commit- originally defined by Organ (1988), is employee be-
ment does not reflect sufficiently two aspects of haviour that goes above and beyond the call of duty
engagement – its two-way nature, and the extent to and contributes to organizational effectiveness. It is
which engaged employees are expected to have pos- discretionary and not explicitly recognized by the
itive attitudes about their job. However, Storey employing organization’s formal reward system.
(2007: 8) referred to the concept of employee en- As Little and Little (2006) observed, OCB is an
gagement as ‘a term that broadly equates with the outcome of the attitudes of job satisfaction and or-
notion of high commitment’. ganizational commitment. It is similar to the defini-
Yalabik et al (2013: 2803) proposed that ‘affec- tions in the engagement literature of being respectful
tive commitment’ (ie an emotional attachment to of and helpful to colleagues and willingness to go
the organization and identification and involvement the extra mile or work longer hours, try harder,
with it) is an antecedent of work engagement. accomplish more and speak positively about the

rganization. They noted that this desirable behav-

o ●● Autonomy – the freedom, independence and
iour has been shown to be related more to the work discretion allowed to employees in
situation than to individual dispositions. scheduling their work and determining the
procedures for carrying it out. It provides a
sense of ownership and control over work
Engagement and job satisfaction outcomes.
Job satisfaction was defined by Locke (1976: 1304) ●● Variety – jobs which allow individuals to
as ‘a pleasurable or positive emotional state result- perform many different activities or use
ing from the appraisal of one’s job and job experi- many different skills.
ences.’ Engaged employees are likely to be satisfied ●● Feedback – providing employees with direct
with their jobs. and clear information about the effectiveness
Job satisfaction, like commitment, is regarded by of their performance.
Yalabik et al (2013: 2805) as an antecedent of work ●● Fit – the existence of compatibility between
engagement. It has been shown to be related to an individual and a work environment (eg,
other attitudes and behaviours. Positively, it is re- job, organization, manager, co-workers) that
lated to organizational commitment, job involve- allows individuals to behave in a manner
ment, organizational citizenship behaviours and consistent with how they see or want to see
mental health. Negatively, it is related to turnover themselves.
and stress.
●● Opportunities for development – these make
work meaningful because they provide
Engagement and the employee pathways for employee growth and
fulfilment.
experience ●● Rewards and recognition – these represent
The term ‘the employee experience’ as considered in both direct and indirect returns on the
more detail in Chapter 30 is associated with that of personal investment of one’s time in acting
engagement. The employee experience refers to every out a work role.
thing that people encounter, observe and feel during In addition, the quality of leadership exercised by
the course of their employment. Having a good line managers is an important driver. Hakanen et al
experience will enhance engagement and taking
(2006) established through their research into
steps to enhance engagement as described later in teachers’ burnout that supervisory support is posi-
this chapter will enhance the employee experience. tively related to employee engagement, as is involve-
When managing this experience the aim is to make it ment in decision making and day-to-day control
positive at each stage and ensure that employees feel over tasks and schedules. Macey and Schneider
valued for what they do. (2008) argued that when leaders have clear expec-
tations, are fair, and recognize good performance
they will have positive effects on employee engage-
Drivers of employee ment by engendering a sense of attachment to the
engagement job. Research by MacLeod and Clarke (2009) con-
firmed that line managers played a key part in pro-
moting engagement by providing clarity of purpose,
To be able to do anything about engagement it is
appreciating employees’ effort and contribution,
necessary to understand the factors that affect it.
treating their people as individuals and ensuring
Crawford et al (2014: 59–62) listed the following
that work is organized efficiently and effectively so
drivers:
that employees feel they are valued, and equipped
●● Job challenge – this takes place when the and supported to do their job.
scope of jobs is broad, job responsibility is Macey et al (2009: 11) emphasized the work en-
high and there is a high work load. It enhances vironment and the jobs people do. They noted that:
engagement because it creates potential for ‘Engagement requires a work environment that does
accomplishment and personal growth. not just demand more but promotes information
sharing, provides learning opportunities and fosters

a balance in people’s lives, thereby creating the bases
Engagement strategy
for sustained energy and personal initiative.’
To enhance engagement the CIPD (2018) suggested
that people strategies should pay attention to:
Outcomes of engagement ●● fair treatment of employees and support for
wellbeing;
Stairs and Galpin (2010) asserted that high levels of ●● empowering employees to shape their jobs;
engagement result in:
●● effective channels for employee voice;
●● lower absenteeism and higher employee ●● good people management skills;
retention;
●● performance management systems that
●● increased employee effort and productivity; motivate and provide opportunities for
●● improved quality and reduced error rates; professional development;
●● increased sales; ●● communications to reinforce purpose and
●● higher profitability, earnings per share and vision and keep employees informed.
shareholder returns; Jenkins and Delbridge (2013) proposed that in line
●● enhanced customer satisfaction and loyalty; with Storey’s (1989) contrast between ‘hard’ and
●● faster business growth; and ‘soft’ HRM it was possible to distinguish between
hard and soft management approaches to enhanc-
●● higher likelihood of business success.
ing engagement. In their case studies of two compa-
But they did not produce convincing evidence to nies, one adopted a soft approach that centred on
support those claims. work design and promoting positive workplace
Alfes et al (2010: 2) suggested that engaged em- conditions and relationships between management
ployees perform better, are more innovative than and employees. Enhanced employee engagement
others, are more likely to want to stay with their was seen as a positive outcome – productivity was
employers, enjoy greater levels of personal wellbeing not the primary goal. In the other case, a ‘hard’ ap-
and perceive their workload to be more sustainable proach concentrated on directly increasing em-
than others. ployee effort to improve organizational performance.
In the company using a soft approach, high levels of
engagement were reported, while in the other com-
pany, high levels of employee disengagement were
evident.
Wo rd s of wi sdom To enhance employee engagement, employers
have to address issues concerning both aspects of
In engagement, organization members
engagement – job and organizational engagement.
harness their full selves in active, complete These are interrelated and any actions taken to
work role performance by driving personal enhance either aspect will be mutually supporting.
However, it is useful to consider what can be done
energy into physical, cognitive and specifically in each area, bearing in mind the par-
emotional labours. Engaged employees are ticular circumstances and needs of the o
rganization.
described as being psychologically fully
there, attentive, feeling, connected, Enhancing job engagement
integrated and focused in their role
An Institute for Employment Studies (IES) review of
performances.
engagement (Robertson-Smith and Markwick, 2009)
Rich et al (2010: 619) established that there was a generic emphasis on six
managerial practices; good-quality line m
anagement,
two-way communication, effective internal coopera- Molina (2002: 130), to increase levels of engage-
tion, a focus on development, commitment to em- ment they should:
ployee wellbeing and clear, accessible HR policies
●● make employees aware of their individual
and practices.
strengths;
A Kings College London survey in 2012 reported
by Guest (2014) found that typical actions to pro- ●● provide continuous feedback on how those
mote engagement included more effective leadership strengths are being used;
and more learning and development opportunities. ●● ‘clear the path’ so that employees can do
But he noted (ibid: 229) that: ‘None of these ac- what they do best without unnecessary
tions… is in any way uniquely linked to employee distractions;
engagement and all would fit equally well with steps ●● build trust by showing commitment to the
to enhance organizational commitment or employee employee’s success;
involvement.’ HR is concerned with developing and
●● challenge people within areas of their
implementing policies and practices dealing with job
distinctive strengths;
design, learning and development, performance
management and reward that are valuable generally ●● focus upon particular skills and knowledge
as well as in terms of their contribution to increasing in order to build talent into strength;
levels of engagement as described below. But the most ●● give employees ownership and creation of
important contribution is made by line managers. their outcomes.
Research by Lewis et al (2012) for the CIPD re-
The role of line managers sulted in the production of the competency frame-
work for employee engagement management set
Line managers play a key role in enhancing job out in Table 26.1.
engagement. According to Coffman and Gonzalez-
TA B L E 26.1 Employee engagement management competency framework
Competency Description
Autonomy and empowerment Trusts and involves employees
Development Helps to develop employees’ careers
Feedback, praise and recognition Gives positive feedback and praise and rewards good work
Individual interest Shows concern for employees
Availability There when needed
Personal manner Positive approach, leads by example
Ethics Treats employees fairly
Reviewing and guiding Helps and advises employees
Clarifying expectations Sets clear goals and defines what is expected
Managing time and resources Ensures resources are available to meet workload
Following processes and procedures Understands and explains processes and procedures
Source Adapted from Lewis et al (2012: 9)

Job design required to provide men and women of promise

with a sequence of learning activities and experi-
Job design as described in Chapter 22 is an impor- ences that will equip them for whatever level of re-
tant factor in enhancing engagement. Macey et al sponsibility they have the ability to reach should be
(2009: 69) commented that: ‘People come to work included in the strategy.
for pay but get engaged at work because the work
they do is meaningful.’ Intrinsic motivation and
therefore increased engagement can be generated by Developing engagement through
the work itself if it provides interest and opportuni-
ties for achievement and self-fulfilment.
performance management
Performance management processes as described in
Chapter 37 can be used to define individual goals
and responsibilities, offer feedback on performance
Wo rd s of wi sdom and provide the basis for developing skills and plan-
ning career development. Although the organiza-
Finding the right people for the right roles is tion can create a performance management system,
not just a matter of matching people in its effectiveness will depend on the interest and
competence of line managers.
skills, but also in values and interests. In this
way performance drives engagement as
much as engagement drives performance,
Developing engagement
which means that people will love their jobs
through reward
more when they are given the chance to Reilly and Brown (2008) suggested that appropri-
ate reward practices and processes, both financial
perform highly and feel proud about what and non-financial and managed in combination (ie
they do at work. a total reward approach), can help to build and im-
Chamorro-Premuzic (2017: 85)
prove employee engagement, and that badly de-
signed or executed rewards can hinder it. Their
model, based on research of how reward policies
influence performance through engagement, is
shown in Figure 26.2.
Learning and development
programmes Enhancing organizational
Learning and development programmes can ensure
that people have the opportunity and are given the
engagement
encouragement to learn and grow in their roles.
The approaches that can be used to enhance organi-
This includes the use of policies that focus on role
zational engagement consist of: (1) high-involvement
flexibility – giving people the chance to develop
management; (2) providing more scope for employee
their roles by making better and extended use of
voice; (3) developing ‘the big idea’; and (4) tackling
their talents. It also means going beyond talent
the work environment.
management for the favoured few and developing
the abilities of the core people on whom the organi-
zation depends.
The strategy should also cover career develop-
High-involvement management
ment opportunities and how individuals can be Organizational engagement can be developed
given the guidance, support and encouragement through high-involvement management – a term first
they need if they are to fulfil their potential and used by Lawler (1986) to describe management sys-
achieve a successful career with the organization in tems based on commitment and involvement, as op-
tune with their talents and aspirations. The actions posed to the old bureaucratic model based on control.
F I G U R E 26.2 How reward policies influence performance through engagement
Culture/people management
• Supportive supervisors
• Regular open feedback
• Teamworking
• Involvement in decision
making Staff attitudes and
• Career development commitment
• Work/life balance • Satisfaction with pay and
recognition Performance
• Treated fairly
Rewards • Feeling involved and
• Performance pay developed
• Variable pay • Identification with organization
• Team rewards
• Recognition
• Reward for customer
service/quality
• Single status
Source Reilly and Brown (2008)
The underlying hypothesis is that employees will in- The ‘big idea’
crease their involvement with the company if they are
given the opportunity to manage and understand A basis for building organizational engagement was
their work. Lawler claimed that high-involvement established by the longitudinal research in 12 com-
practices worked well because they acted as a synergy panies conducted by Professor John Purcell and his
and had a multiplicative effect. colleagues (Purcell et al, 2003: 13). They found that
High-involvement management means treating the most successful companies had ‘the big idea’.
employees as partners in the enterprise, whose in- This was ‘a clear sense of mission underpinned by
terests are respected. It also means providing em- values and a culture expressing what a firm is and
ployees with a voice, as discussed below. its relationship with its customers and employees.’
Employee voice The work environment

Employee voice policies enable employees to effec- Increasing organizational engagement through the
tively communicate their concerns to management. work environment means developing a culture that
Rees et al (2013: 2781) suggested that there is a di- encourages positive attitudes to work, promotes in-
rect relationship between the effectiveness of such terest and excitement in the jobs people do, reduces
policies and levels of employee engagement. They stress, recognizes the importance of social interac-
invoked social exchange theory, which states that tion and, crucially, is concerned about employee
employees engage in reciprocal relationships that wellbeing (see Chapter 50). For example, Lands’
can develop into trusting, loyal and mutual commit- End, the clothing company, believes that staff who
ments when certain ‘rules of exchange’ are observed. are enjoying themselves, who are being supported
Employees will demonstrate positive attitudes and and developed and who feel fulfilled and respected
behaviours when they perceive that their employer at work, will provide the best service to customers.
values them and their contribution. They will dem- It was suggested by Guest (2009) that engage-
onstrate higher levels of performance if the work ment can be achieved through effective leadership of
environment is one in which employees have a voice a strong, positive culture that ensures the enactment
in the sense that they can share their concerns, opin- of organizational values; through strong manage-
ions and ideas with their employers. ment that supports employees’ work and wellbeing;
through careful design of systems and jobs to enable the resources they have available (including their
employees to contribute through full use of their own skills and ability to exert effort). Alfes et al
knowledge and skills; through effective employee (2010) concluded that a responsible approach to
voice; and through provision of appropriate re- engagement requires a work environment that does
sources, tools and information to perform effectively. not just demand more from people but fosters a bal-
ance in their lives.
Wo rd s of wi sdom
Measuring engagement
Finding the right people for the right roles is Engagement surveys provide the basis for the devel-
opment and implementation of engagement strate-
not just a matter of matching people in
gies. A review by Vance (2006) of a number of such
skills, but also in values and interests. In this surveys identified the following common themes:
way performance drives engagement as ●● pride in employer;
much as engagement drives performance, ●● satisfaction with employer;
which means that people will love their jobs ●● job satisfaction;
more when they are given the chance to ●● opportunity to perform well at challenging
work;
perform highly and feel proud about what
●● recognition and positive feedback for one’s
they do at work. contributions;
●● personal support from one’s supervisor;
●● effort above and beyond the minimum;
●● understanding the link between one’s job and
the organization’s mission;
Burnout ●● prospects for future growth with one’s
employer;
There is a negative side to engagement – burnout, ●● intention to stay with one’s employer.
defined by Maslach and Jackson (1981: 99) as ‘a
syndrome of emotional exhaustion and cynicism’. The most commonly used measure within the re-
Burnout can take place when individuals are placed search community has been the one associated with
under too much pressure to perform. It is some- the definition of engagement as ‘a positive, fulfilling,
times called disengagement. Workaholics who put work-related state of mind’. This is known as the
themselves under too much pressure can suffer Utrecht Work Engagement Scale (UWES), which
burnout. captures feelings of vigour, eg ‘At my work, I feel
Burnout is a response to high stress caused by that I am bursting with energy’, dedication, eg ‘I am
excessive job demands, which include attempting to enthusiastic about my job’, and absorption, eg ‘I am
meet challenging, relentless and unreachable stand- immersed in my work’.
ards. It is more likely to happen when workers have There is a developing field of other ways to meas-
no control over their work environment. Burnout ure engagement. There are several measures associ-
can result in failure, absenteeism or leaving the ated with the definition of engagement as the
organization. authentic expression of one’s preferred self at work.
To avoid the pursuit of engagement resulting in The most recent of these is Soane et al’s (2012) nine-
burnout and disengagement, managements need to item ISA engagement measure that captures three
ensure that employees are not put under too much components: intellectual engagement, eg ‘I focus
pressure, are provided with support when required hard on my work’, social engagement, eg ‘I share the
and are recognized for what they can achieve with same work values as my colleagues’, and affective
engagement, eg ‘I feel positive about my job’. In The important thing to do with an engagement
their study, the ISA measure seemed to be more survey, as with any form of employee survey, is to
powerful than the UWES in predicting performance ensure that proper use is made of it through the
indicators. ‘triple-A’ approach: Analysis, Assessment and
However, as the CIPD (2017) pointed out, com- Action. It is also important to inform employees
monly used engagement measures are actually of the results of the survey in full and involve
measuring subjective perceptions of aspects of them in assessing those results and agreeing
working. actions.
C A S E S T U DY
Land Registry – modernizing the public sector
The Land Registry is a government executive agency employ plans, based on Land Registry’s n ational core competency
ing 300 people. Engaging and enthusing its staff has been a framework, provided the opportunity to discuss knowledge,
challenge. The Swansea site was an underperforming office skills and ‘most importantly’ attitudes. The framework bands
within an otherwise successful organization. Today it is one nine competencies in five main performance areas:
of the most productive Land Registry offices as a result of a
1 Delivering results: planning and organizing the
planned high-engagement working change process.
workload; and dealing effectively with/managing
The change process focused on the engagement of indi-
change.
viduals at all levels. An internal project board masterminded
a series of staff surveys and conferences. Senior 2 Effective teamwork: contributing to the team’s
management team away-days and line management train- performance; and building and leading a team.
ing and coaching to improve performance management and 3 Knowledge and experience: acquiring and applying
the development of soft skills were all resourced in-house. technical/specialist knowledge.
Training initially focused on senior management team de- 4 Providing a quality service: meeting customers’ needs;
velopment, so they could understand and lead the changes, and anticipating problems and achieving solutions.
building middle management skills so that they could lead
change and create an atmosphere in which e mployees 5 Personal effectiveness: communicating effectively;
could have confidence in an open appraisal process, and and showing initiative and determination.
team building and development. Service to customers was Each of these competencies can be demonstrated at four
always at the centre of the process. Personal development levels, from entry to senior management level.
Critical evaluation of the

Word s of w isd om
concept of employee
Employee engagement will be manifested in
engagement positive attitudes (for example job
David Guest defined the benefits of engagement as satisfaction, organizational commitment
follows: and identification with the organization)
be difficult for an organization to adopt a

and behaviour (low labour turnover and coherent approach to managing
absence and high citizenship behaviour) on engagement.’
the part of employees; and evidence of 2 The problem of measurement. Unless you
know what you are measuring, ie what
perceptions of trust, fairness and a positive
engagement is, you can’t measure it. This
exchange within a psychological contract reduces the validity of engagement surveys,
where two-way promises and commitments which provide the basis for most analyses of
engagement levels in organizations.
are fulfilled.
3 The problem of redundancy. It was noted
Guest (2009: 1)
by Briner (2014) that: ‘Existing accounts
of engagement describe it in terms of a
whole range of very well-known and in
some cases historic ideas including
He later remarked that: ‘One of the attractions of organizational commitment, job satisfaction,
engagement is that it is clearly a good thing. motivation, organizational identification,
Managers are attracted to the concept because discretionary behaviour, citizenship
they like the idea of having engaged employees behaviours, positive moods, emotions and
and dislike the prospect of having disengaged em- job satisfaction.’ Because of this, Fletcher
ployees’ (2014: 231). But he warned that: ‘The risk and Robinson (2014) suggested that
must be that it [employee engagement] will soon engagement in its current form is a
join the pantheon of laudable aspirations with redundant concept.
which we can all agree, including happiness, qual- 4 The problem of impact on performance.
ity, growth and sustainability; goals that most of Sparrow (2014: 102) warned against
us would like to pursue, concepts that some peo- over-confident claims that high engagement
ple think we can measure, but goals that will re- results in high performance. He suggested
main ultimately elusive in many if not most cases’ that it is possible that being in a well-
(ibid: 233). performing unit makes employees
Difficulties with the concept of engagement engaged, not the other way round. In
include: other words, ‘reverse causation’. And
1 The problem of definition. Definitions of Purcell (2014: 248) noted that: ‘The one
engagement vary widely. Some, for example particular difficulty that advocates of
Robinson et al (2004) and the Conference employee engagement have is showing
Board (2006) define it in terms of conclusive and causal evidence between
engagement with the organization. Others engagement and performance.’ This was
such as Truss et al (2006) and Macey et al confirmed in an extensive study by
(2009) define it in terms of engagement with Briner (2014).
the job. Yet others – Saks (2006) and Balain 5 The problem of idealism. Keenoy (2014:
and Sparrow (2009) – refer to both 198) referred to the message delivered
engagement with the job and engagement by employee engagement prescriptions
with the organization. In their influential as ‘motherhood and apple pie’ and
report on employee engagement, MacLeod suggested that the term engagement could
and Clarke (2009: 8) stated that: ‘There is no be replaced by job involvement,
one agreed definition of employee empowerment, high performance
engagement – during the course of this management or ‘any of the other putative
review we have come across more than 50 solutions’ to the problem of getting
definitions. Without a clear definition it will employees to be more productive.
The problems set out above may mean that engage-

ment programmes can be matters of faith. They
Wo rd s o f w isdom could involve doing a number of seemingly useful
In engagement, organization members harness and necessary things but the hoped-for results are
not guaranteed. However, that does not mean that
their full selves in active, complete work role
the attempt should not be made.
performance by driving personal energy into Even if actions to enhance engagement along the
physical, cognitive and emotional labours. lines suggested earlier in this chapter result in only
a few employees with all these characteristics, it
Engaged employees are described as being could still be worthwhile to have a number of peo-
psychologically fully there, attentive, feeling, ple with more of the characteristics than they had
before. Even if it is an act of faith to pursue en-
connected, integrated and focused in their role
hancement programmes and expect them to signifi-
performances. cantly improve performance, it is a worthwhile act
Rich et al (2010: 619) of faith because there is at least a fair chance that it
will. And even if the contents of the programmes are
no more or less than good people management
practice they are worthwhile in themselves, irre-
Bakker (2009) provided evidence of the psychologi- spective of their impact on engagement. The rela-
cal disposition of engaged employees: low neuroti- tively new term of employee engagement may mean
cism, high extraversion, cheerfulness, sociability, no more than the traditional and well-established
conscientiousness, emotional stability, habitually terms of motivation, commitment and organiza-
careful, reliable, hardworking, well organized. But tional citizenship behaviour. But it does seem to
Purcell made the following point: provide an attractive and useful portmanteau term
for these concepts that can lead to worthwhile ac-
tion. So long as you do it, it doesn’t matter what
you call it.
Source review
The central problem is that the fully engaged
employee, as revealed in these descriptions and
characteristics, is a rare breed. Why then do we
pay so much attention to what must be
unobtainable for the majority of staff? It seems to Keenoy (2014: 213) wrote: ‘It is simply not
describe a perverse picture of the world of work. It possible to fix the identity of ‘engagement’
comes as no surprise to find that measures of work
in any fashion.’ What’s your view?
engagement rarely find that more than a third of
employees are fully engaged.
Purcell (2014: 243)
Key learning points
The meaning of employee engagement interrelated aspects: (1) job engagement, which takes
place when employees exercise discretionary effort
Engagement happens when people are committed to because they find their jobs interesting, challenging
their work and the organization and are motivated to and rewarding; and (2) organizational engagement,
achieve high levels of performance. It has two when they identify with the values and purpose of their
organization and believe that it is a great place in Enhancing engagement

which to work and to continue to work.
Line managers play a key role in enhancing job
engagement with the support of organizational
Components of engagement
initiatives in the areas of job design; learning
The components of engagement are commitment, programmes, including leadership development for
organizational citizenship behaviour, motivation and line managers; and performance and reward
job satisfaction. management systems.
The approaches that can be used to enhance
Theory of engagement organizational engagement include: (1) high-
involvement management; (2) developing ‘the big idea’;
Engagement will have behavioural outcomes leading and (3) tackling the work environment.
to what can be described as an ‘engaged employee’.
A strong theoretical rationale for engagement is
provided by social exchange theory.
Burnout
Burnout can take place when individuals are placed
Drivers of engagement under too much pressure to perform. It is sometimes
called disengagement.
Macey et al (2009) emphasized the importance of the
work environment and the jobs people do. Alfes et al
(2010) established that the main drivers of engagement Measuring engagement
are meaningful work (the most important), senior
Engagement surveys provide the basis for the
management vision and communication, positive
development and implementation of engagement
perceptions of one’s line manager, and employee
strategies.
voice – employees having a say in matters that
concern them.
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287
PART VI
People resourcing
PA R T V I CO N T E N T S
27 Workforce planning
28 Recruitment and selection
29 Talent management
frameworks and profiles can be prepared to define

Introduction the skills and behaviours required and can be used in
selection, employee development and employee re-
People resourcing, often called ‘employee resourcing’ ward processes. Efforts can be made to develop an
or simply ‘resourcing’, is the term used to describe attractive employer brand (the image of the organiza-
the employment activities of workforce planning and tion as an employer) so as to enhance the employee
recruitment and selection that ensure the organi experience. The aim should be to develop a reinforc-
zation has the people it needs. ing bundle of practices along these lines.
Resourcing is a vital organizational activity that The philosophy behind the strategic approach to
recognizes that the strategic capability of a firm de- resourcing is that it is people who implement the
pends on its resource capability in the shape of peo- strategic plan. As Quinn Mills (1983) put it, the
ple (the resource-based view). process is one of ‘planning with people in mind’.
Employee resourcing is not just about recruitment Strategic resourcing involves the integration of
and selection. It is concerned with any means availa- business and resourcing strategies and is based on
ble to meet the firm’s need for certain skills and be- an understanding of the direction in which the or-
haviours. A strategy to ensure the organization has ganization is going and the determination of:
the talented people it needs (a talent management
strategy) may start with recruitment and selection but ●● the numbers of people required to meet
would extend into learning and development to en- business needs;
hance abilities and skills and modify behaviours, and ●● the skills and behaviour required to support
into succession planning. Performance management the achievement of business strategies;
processes can be used to identify development needs
●● the need to create a talent pool of people
(skills and behaviours) and motivate people to make
with high potential as part of a talent
the most effective use of their abilities. Competency
management strategy;
288 Part 6 | People Resourcing
●● the impact of organizational restructuring as but is no longer appropriate in the face of new
a result of rationalization, decentralization, challenges.
delayering, acquisitions, mergers, product or The resourcing strategies that emerge from the
market development, or the introduction of process of strategic resourcing exist to provide the
new technology; people and skills required to support the business
●● plans for changing the culture of the strategy, but they should also contribute to the for-
organization in such areas as ability to mulation of that strategy. HR directors have an ob-
deliver, performance standards, quality, ligation to point out to their colleagues the human
customer service, teamworking and resource opportunities and constraints that will af-
flexibility, which indicate the need for people fect the achievement of strategic plans. In mergers
with different attitudes, beliefs and personal or acquisitions, for example, the ability of manage-
characteristics. ment within the company to handle the new situa-
tion and the quality of management in the new
Strategic resourcing emphasizes the need to find business will be important considerations.
people whose attitudes and behaviour are likely to Strategic resourcing is concerned with defining
fit what management believes to be conducive to the numbers and types of people required to meet
success. This tendency has its dangers. Innovative present and future business needs and planning how
and adaptive organizations need non-conformists, to satisfy those requirements (workforce planning)
even mavericks, who can ‘buck the system’. If man- as dealt with in Chapter 27. It also involves the
agers recruit people ‘in their own image’ there is the development of the employer brand and the em-
risk of staffing the organization with conformist ployee value proposition as described in Chapter 28
clones and of perpetuating a dysfunctional cul- and the operation of talent management programmes
ture – one that may have been successful in the past (see Chapter 29).
Reference
Quinn Mills, D (1983) Planning with people in mind,
Harvard Business Review, November–December,
pp 97–105
289
27
Workforce planning
Introduction
have spared themselves embarrassing
Organizations need to know how many people and
marketplace failures if they had first
what sort of people they need to meet present and
future business requirements. As noted by Peter Reilly recognized that the human resource
(2015: 1): ‘Workforce planning is in essence a simple implications of their strategic plans were
concept: it is about matching the organization’s de-
mand for labour with the supply of labour over time.’ unrealizable.
The purpose of this chapter is to describe how Quinn Mills (1985: 105)
workforce planning operates, bearing in mind that it
is not as straightforward as it was presented when
the notion of ‘manpower planning’ became popular
in the 1960s and ’70s. Workforce planning, or human Workforce planning defined
resource planning as it used to be called, may be well
established in the HRM vocabulary but it does not The process of workforce planning is to establish an
seem to be embedded as a key HR activity. organization’s people requirements so that plans
The chapter starts with a definition of workforce can be made to satisfy them. The following defini-
planning and continues with a discussion of its aims tion was produced by the CIPD.
and the issues involved, including its link with busi-
ness planning. The final section of the chapter
describes the processes used, namely scenario plan-
ning, demand and supply forecasting and action
planning.
Source review
Workforce planning is a process of analysing the
current workforce, determining future workforce
needs, identifying the gap between the present
Wo rd s of wi sdom
and the future, and implementing solutions so that
Companies that have the people in place to an organization can accomplish its mission, goals,
meet their performance objectives are well and strategic plan. It’s about getting the right
number of people with the right skills employed in
equipped to implement their business plans the right place at the right time, at the right cost
successfully. If, however, the right people and on the right contract to deliver an
are unavailable… the plans themselves may organization’s short- and long-term objectives.
CIPD (2018)
require revision. Many companies would
Workforce planning may be conducted as an overall in larger organizations: 20 per cent of organizations
approach to establishing and satisfying people re- planned for less than one year, 41 per cent for one
quirements covering all major employee categories to two years and only 2 per cent for more than five
and skills. However, it frequently concentrates on years. The research established that the top five
key categories of staff, for example, doctors, nurses planning activities were:
and other health workers in the National Health
1 succession planning – 62 per cent;
Service, skilled operatives in a manufacturing com-
pany, sales staff in a retail store or drivers in a trans- 2 flexible working – 53 per cent;
port company. 3 demand/supply forecasting – 53 per cent;
Rothwell (1995: 194) distinguished between HR 4 skills audit/gap analysis – 49 per cent;
planning in the hard sense – ‘to serve as an indicator
5 talent management – 42 per cent.
of the likely match or mismatch of the supply and
demand for the right number of people with appro-
priate skills’ – and HR planning in the soft sense – ‘to
alert the organization to the implications of business
strategy for people development, culture and atti- Pau se for th ou gh t
tudes as well as numbers and skills’. The CIPD The proportion of organizations that go in
(2010a: 4) made a similar distinction between ‘hard’
and ‘soft’ workforce planning. As the report on their for workforce planning is not very high.
research commented: Why might this be the case?
Hard workforce planning is about numbers. In the
past this often revolved around using past trends
to predict the future, matching supply and demand
for labour with the result that plans were often out
of date before the ink was dry. Now there is more The link between workforce
emphasis on management information that can help
understand cause and effect of certain phenomena. and business planning
Soft workplace planning focuses on general issues Workforce planning is an integral part of business
relating to the supply of and demand for people and planning. The strategic planning process defines
how they are deployed. projected changes in the types of activities carried
The precursor to workforce planning – manpower out by the organization and the scale of those ac-
planning as conceived in the 1960s – was almost en- tivities. It identifies the core competences that the
tirely about numbers in the shape of quantitative de- organization needs to achieve its goals and there-
mand and supply forecasts. It was the failure in many fore its skill and behavioural requirements.
organizations to produce accurate forecasts and Workforce planning interprets these plans in
therefore prepare meaningful plans that led to its de- terms of people requirements. But it may influence
cline if not fall. Workforce planning today covers a the business strategy by drawing attention to the
wider range of activities such as succession planning, ways in which people could be developed and de-
smart working, flexible working and talent planning, ployed more effectively to further the achievement
and is not such a numbers game. of business goals. It will also address issues concern-
ing the supply of suitable people that might affect
the achievement of business objectives.
Incidence of workforce
planning Reasons for workforce
The CIPD Annual Survey of Resourcing and Talent
Planning (2010b) found that 61 per cent of organi-
planning
zations conducted workforce planning, although it Research conducted by the Institute for Employment
was most common in the public services sector and Studies (Reilly, 1999) established that there were
Chapter 27 | Workforce Planning 291
three main reasons why organizations engaged in This problem will not be so acute in a stable
workforce planning: marketplace, with largely passive (and static) cus-
tomers, and with scope for long-term forecasting.
1 Planning for substantive reasons, that is, to
But these are rare conditions today, even in the pub-
have a practical effect by optimizing the use
lic sector where workplace planning has thrived for
of resources and/or making them more
a long time.
flexible, acquiring and nurturing skills that
It can be said that workforce planning is more
take time to develop, identifying potential
art than science. Perhaps the accuracy of demand
problems and minimizing the chances of
and supply forecasts is less important than the over-
making a bad decision.
all understanding of what the organization needs in
2 Planning because of the process benefits, the way of people, which can be generated by a sys-
which involves understanding the present in tematic approach to planning.
order to confront the future, challenging
assumptions and liberating thinking, making
explicit decisions that can later be challenged,
standing back and providing an overview
and ensuring that long-term thinking is not Pau se for th ou gh t
driven out by short-term focus. Do you agree that workforce planning is
3 Planning for organizational reasons, which more art than science? Can it be made more
involves communicating plans so as to
obtain support/adherence to them, linking scientific and if so how?
HR plans to business plans so as to influence
them, (re)gaining corporate control over
operating units and coordinating and
integrating organizational decision making
and actions.
Systematic workforce
Workforce planning issues planning
A flow chart of the process of workforce planning is
The main difficulties faced by those involved in shown in Figure 27.1. This identifies the main plan-
quantitative (hard) workforce planning are the im- ning activities described below. Although these are
pact of change and trying to predict the future. referred to as separate areas, they are interrelated
Many organizations therefore adopt a short-term and can overlap. For example, demand forecasts
approach and deal with deficits or surpluses of peo- may be prepared on the basis of assumptions about
ple as they arise. This problem is compounded by the productivity of employees. But a forecast of the
what Rothwell (1995) referred to as the shifting ka- supply of suitable people will also have to consider
leidoscope of policy priorities and strategies within productivity trends and how they might affect the
organizations. It sounds like a good idea to adopt supply.
an integrated approach to workforce and business The business plan provides the basis for the
planning but it won’t work well if business plans workforce plan insofar as it sets out what the or-
are volatile, vague, misleading or non-existent, as ganization intends to do in terms of activities and
they easily can be. Beardwell (2007: 62) commented the scale of those activities.
that HR plans should be treated as ‘tentative, flexi-
ble, and reviewed and modified on a regular basis’.
Cappelli (2009: 10) noted that: ‘The competitive Forecast activity levels
environment for businesses is so changeable, and
firms adjust their own strategies and practices so Forecasts of future activity levels flow from the
frequently that these estimates [of the demand for business plan, which will have implications for the
talent] are rarely accurate and they get much worse demand for people. Activity level forecasts will
the farther out one goes.’ also be affected by external factors, for example
F I G U R E 27.1 Workforce planning flow chart
Business plan
Forecast of activity
levels
Scenario planning Analysis Data collection
Demand forecast Supply forecast
Forecast of future
requirements
Action planning
• Recruitment
• Retention
• Succession
• Talent
• Flexible working
• Learning and development
• Downsizing
Implement
Monitor and evaluate

emographic and political policy trends, especially

d manufacturing plan, giving the numbers and types
in the public sector. Data will need to be collected of products to be made in each period. From this
and analysed for this purpose. information the number of hours to be worked by
each skill category to make the quota for each pe-
riod would be computed.
Scenario planning Details are required of any organizational and
work plans that would result in increased or de-
Scenario planning involves an assessment of changes
creased demands for employees. Examples are set-
in the business and its environment which are likely
ting up a new regional organization, creating a new
to affect the organization. The aim is to produce a
sales department, decentralizing a head office func-
picture of where the organization might be heading
tion to the regions, plans for new methods of work-
and to predict the possible situations that may have
ing, additional outsourcing, increasing productivity
to be dealt with in the future.
and reducing employment costs. The demand fore-
casting methods for estimating the numbers of peo-
Data collection ple required are described below.
The information used in workforce planning can be

collected under the following headings:
Managerial judgement
The most typical method of forecasting used is
●● Qualitative internal data: business managerial judgement. This simply requires manag-
information on product/market ers to sit down, think about their future workloads,
developments, proposed work system and and decide how many people they need. It may be
organizational changes; HR information on quite unscientific and misleading.
people (skills, performance, etc). Forecasting might be done on a ‘bottom-up’
●● Quantitative internal data: workforce data basis with line managers submitting proposals for
on turnover, absence, demographics, skills agreement by senior management. Alternatively, a
audits, etc. ‘top-down’ approach can be used, in which com-
●● Qualitative external data: PESTLE analysis pany and departmental forecasts are prepared by
covering the following factors: political, top management, possibly acting on advice from
economic, social, technological, legal and the HR department. These forecasts are reviewed
environmental. and agreed with departmental managers. A less di-
rective approach is for top management to prepare
●● Quantitative external data: labour market –
planning guidelines for departmental managers, set-
demographics, skills availability.
ting out the planning assumptions and the targets
they should try to meet.
Perhaps the best way of using managerial judge-
Analysis ment is to adopt both the ‘bottom-up’ and ‘top-
The analysis stage brings all the information to- down’ approaches. Guidelines for departmental
gether from the business plan, the activity forecast, managers should be prepared, indicating broad com-
scenarios and internal and external data to provide pany assumptions about future activity levels that
the basis for demand and supply forecasts. will affect their departments. Targets are also set
where necessary. Armed with these guidelines, de-
partmental managers prepare their forecasts to a
Demand forecasting laid-down format. They are encouraged to seek help
Demand forecasting is the process of estimating the at this stage from the personnel or work study de-
future numbers of people required and the likely partments. Meanwhile, the HR department, in con-
skills and competences they will need. The basis of junction as necessary with planning and work study
the forecast is the annual budget and longer-term departments, prepares a company forecast. The two
business plan, translated into activity levels for each sets of forecasts can then be reviewed by a human
function and department. In a manufacturing com- resource planning committee consisting of functional
pany the sales budget would be translated into a heads. This committee reconciles with d epartmental
managers any discrepancies between the two fore- ●● potential losses to existing resources through
casts and submits the final amended forecast to top attrition (employee turnover);
management for approval. This is sometimes called ●● potential changes to existing resources
the ‘right-angle method.’ through internal promotions;
●● changes to the organization structure, new
Ratio-trend analysis methods of working (including flexible
Ratio-trend analysis is carried out by analysing ex- working), more part-time working and
isting ratios between an activity level and the num- different working hours;
ber of employees working on that activity. The ratio ●● effect of increases in productivity;
is applied to forecast activity levels to determine an
●● sources of supply from within the
adjusted number of people required. Account can be
organization – existing employees and the
taken of possible improvements in productivity that
outputs of talent management or training
would affect the ratio. The analysis may be extended
programmes.
to cover employees connected to but not directly in-
volved in the activity – the indirect workers who The external supply analysis examines the local and
provide support to the direct workers responsible national labour markets to assess implications for
for carrying out the activity. The existing ratio of the availability of future people requirements. It
directs to indirects would be applied to the forecast will also take account of environmental changes as
number of directs needed to deal with the new activ- revealed by scenario planning.
ity levels to forecast the number of indirects needed.
Work study techniques Forecast of future requirements

Work study techniques are used in association with To forecast future requirements it is necessary to
activity level forecasts to calculate how long opera- analyse the demand and supply forecasts to identify
tions should take and the number of people re- any deficits or surpluses. The analysis can be made
quired. For direct workers they can be combined with the help of spreadsheets. The basic data can be
with ratio-trend analysis to calculate the number of set out as follows:
indirect workers needed.
1 Current number employed 700
2 Annual level of turnover 10 per cent
Forecasting skill and competency
3 Expected losses during year 70
requirements 4 Balance at end year 630
Forecasting skill and competency requirements is
5 Number required at end year 750
largely a matter of managerial judgement. This
judgement should, however, be exercised on the 6 Number to be obtained (5 – 4) = 120
basis of an analysis of the impact of projected prod- during year
uct/market developments and the introduction of The data on the number of employees required may
new technology such as artificial intelligence appli- be modified by reference to the impact of any pro-
cations, information technology and computerized ductivity plans, organizational changes, new meth-
manufacturing. ods of working or revision of role responsibilities.
Supply forecasting Action planning

Supply forecasting measures the number of people
Action plans to satisfy future requirements are de-
likely to be available from within and outside the
rived from the broad resourcing strategies and the
organization. The internal supply analysis covers
more detailed analysis of demand and supply fac-
the following areas:
tors. However, the plans often have to be short term
●● existing number of people employed by and flexible because of the difficulty of making firm
occupation, skill and potential; predictions about workforce requirements in times
of rapid change. The planning activities start with Implementation

the identification of internal resources available
now or that could be made available through learn- The implementation of the action plans will provide
ing and development programmes. They continue a challenge. A flexible approach involving quick
with plans for recruitment and retention, succession responses is needed to cope with unforeseeable

and talent management, the reduction of employee changes in people requirements.
turnover and absenteeism, flexible working, out-
sourcing, productivity improvement and the revi-
sion of role responsibilities. Monitoring and evaluation
Learning and development programmes may be Because of unpredictable events, the implementa-
prepared to provide for future skill requirements. tion of action plans does not always run smoothly. It
Regrettably, but sometimes inevitably, plans for is necessary to monitor progress carefully, evaluate
downsizing may be necessary, but these can aim to the effects and, as required, amend the action plan.
avoid compulsory redundancies by such means as
recruitment freezes.
Consideration has to be given to the likelihood
of the demand requirements being met by the use of
Approach to workforce
the existing mix of employees. If this is problematic, planning
alternative approaches will have to be explored.
This may involve deploying different types of work- Peter Reilly (2015) suggested that the real problem
ers or changing working arrangements. A core of with workforce planning is its execution.
key workers may be maintained while on the pe- Organizations get the concept but find it hard to
riphery more use may be made of part-time or home put into practice. He believes that HR should keep
workers. Some businesses could employee ‘gig’ workforce planning as simple as possible, concen-
workers – freelancers or people on short-term con- trating on the essential data needed for the task. HR
tracts – or workers on zero-hours contracts. More should identify important business problems (such
work could be sub-contracted or outsourced and as expansion, downsizing or relocation) and work
increasing use made of management consultants. backwards from there as to what it is necessary to
This more flexible ‘core/periphery’ approach char- know to plan the resource implications. The focus
acterizes what has been described as the ‘flexible’ of workforce planning should be on key employ-
firm (see Chapter 32). ment groups determined by their labour market
scarcity and impact on organizational performance.
CASE STUDIES
Buckinghamshire County Council
Business need drove the workforce planning project at The council therefore decided to align strategy and
Buckinghamshire County Council. This recognized that workforce planning in social care for children and fami-
current workforce planning practices would not meet the lies. The workforce plan was developed with the input of
challenge of the Care Standards Act 2000, or of future service a team of representatives from social care for children
delivery. One of the main issues in working with children and and families. It was recognized that workforce planning
families was recruiting and retaining qualified social workers. was essential to anticipate future areas of skills shor
There were insufficient numbers of social workers in post. tages. This council is now in a position to anticipate skills
Turnover levels among established and new employees shortages and has dealt with them innovatively and
were high. immediately.
The workforce plan looked at short- and long-term plan- activities that may span the next five years. Workforce
ning. Short-term planning covered immediate action on planning allowed for an assessment of skills and an explo-
recruitment and promotion. Long-term planning covered ration of the levels employees need to work at.
Plymouth Primary Care Trust

The trust set up a multidisciplinary team drawn from the supply, undertake a gap analysis and subsequent action
workforce planning and development department, finance planning, and carry out implementation and a review of
and public health teams within the organization to introduce the plans.
workforce planning across the whole organization. The It was found that while some managers were skilled in
trust’s 230 managers and budget holders were then invited workforce planning, the majority needed support to link to-
to an awareness programme to introduce the Six Steps gether the financial, workforce and planning elements of
Workforce Planning Methodology developed by the NHS the process. The outcomes were:
Workforce Projects Team (2009). The steps are:
●● trust-wide workforce planning, using electronic staff
1 Define the plan. record and planning tools;
2 Map service change. ●● workforce planning is now part of day-to-day trust
3 Define the required workforce. business;
4 Understand workforce availability. ●● detailed workforce plans across clinical and non-
clinical directorates;
5 Plan to deliver the required workforce.
●● increased awareness of financial position, age
6 Implement, monitor and refresh.
profiles, and workforce risk assessment;
Managers were informed that, using this framework, ●● the development of a more efficient workforce by
they would be required to produce plans over a one- reviewing skill mix and succession planning;
year, two-year and five-year timescale. The guide was
●● integration of workforce planning into the corporate
applied by asking each manager to define their workforce
management programme.
plan, outline forces for change, assess demand, assess
Siemens (UK)
Workforce planning at Siemens (UK), the engineering and The workforce planning process starts with a review of
technology services company, involves obtaining answers the current workforce derived from SAP data [SAP is a
to three fundamental questions: What do we have? What business software system] and onto this is overlaid the
do we want? How do we fill the gap? likely attrition. Future requirements are identified by means
At the highest level, the corporate people strategy gives of a dialogue between HR business partners and business
the context for workforce planning, the key objective of unit managers. This enables the skills in each job family to
which is to ensure that Siemens has the right level of capa- be matched to business initiatives and provides the basis
bility to execute business strategy. In essence, the process for the workforce forecast.
of workforce planning is one in which the business strate-
gy converges with the people strategy.
Key learning points
Workforce planning defined planning is important because it encourages employers

to develop clear and explicit links between their business
The following definition of workplace planning was and HR plans and to integrate the two more effectively.
produced by the CIPD (2010a: 4): ‘Workforce planning
is a core process of human resource management that
Workforce planning issues
is shaped by the organizational strategy and ensures
the right number of people with the right skills, in the The main difficulties faced by those involved in
right place at the right time to deliver short- and workforce planning are the impact of change and
long-term organizational objectives.’ predicting the future.
Incidence of workforce planning Approaches to workforce planning

The CIPD (2010a) research revealed that workforce ●● Business planning.
planning in one form or another is taking place in many
●● Forecast activity levels.
organizations.
●● Scenario planning.
Link to business planning ●● Data collection.
Workforce planning is an integral part of business ●● Analysis.
planning.
●● Demand forecasting.
The rationale for workforce planning ●● Supply forecasting.
Workforce planning provides a basis for a systematic ●● Forecast of future requirements.

approach to assessing the number and type of people
●● Action planning.
needed and, having taken into account information on
the supply of labour and environmental scanning, for the ●● Implementation.
preparation of recruitment, retention, management
●● Monitoring and evaluation.
succession and talent management plans. Workforce
References
Beardwell, J (2007) Human resource planning, in CIPD (2010b) Annual Survey of Resourcing and
(eds) J Beardwell and T Claydon, Human Talent Planning, London, CIPD
Resource Management: A contemporary approach, Quinn Mills, D (1985) Planning with people in mind,
5th edn, Essex, Pearson, pp 189–224 Harvard Business Review, July–August,
Cappelli, P (2009) A supply chain approach to pp 97–105
workforce planning, Organizational Dynamics, 38 Reilly, P (1999) The Human Resource Planning
(1), pp 8–15 Audit, Cambridge, Cambridge Strategy
CIPD (2018) Workforce Planning Fact Sheet, London, Publications
CIPD Reilly, P (2015) Workforce Planning: A framework
CIPD (2010a) Workforce Planning: Right people, for thinking about your own approach [online]
right time, right skills, London, CIPD http://www.employment-studies.co.uk/system/files/
resources/files/mp112_0.pdf (archived at Workforce Projects Team (2009) Skills for Health

https://perma.cc/JK7A-PNJ2) [accessed 25 [online] https://www.skillsforhealth.org.uk/
December 2015] resources/guidance-documents/120-six-steps-
Rothwell, S (1995) Human resource planning, in (ed) methodology-to-integrated-workforce-planning
J Storey, Human Resource Management: A critical (archived at https://perma.cc/9PW4-BLDZ)
text, London, Routledge [accessed 16 July 2019]
299
28
Recruitment
and selection
rived detailed recruitment plans, eg for graduates. But
Introduction requirements are frequently expressed as ad hoc de-
mands for people because of the creation of new posts,
Recruitment is the process of finding and engaging expansion into new activities or areas, or the need for
the people the organization needs. Selection is that a replacement. These short-term demands may put
part of the recruitment process concerned with de- HR under pressure to deliver candidates quickly.
ciding which applicants or candidates should be ap- Requirements should be defined in the form of
pointed to jobs. role profiles or job descriptions and person specifi-
It is not easy to get it right. According to cations. These provide the information required to
Groysberg et al (2009), usually about a third of post vacancies on the company’s website, the inter-
promising new hires depart within three years of net or a social network site such as LinkedIn, draft
being recruited. And it can be costly, especially for advertisements, brief agencies or recruitment con-
senior staff. The 2017 CIPD survey of resourcing sultants and assess candidates by means of inter-
and talent planning found that the average recruit- views and selection tests.
ment cost of filling a vacancy for a director or senior
manager was £6,000 while for other employees it
was £2,000. The aim of this chapter is to describe Role profiles
ways in which an effective recruitment and selection
process can be operated in the following 10 stages: Role profiles define the overall purpose of the role,
its reporting relationships and the responsibilities
1 Defining requirements
involved. For recruiting purposes, the profile is ex-
2 Attracting candidates tended to include information on terms and condi-
3 Sifting applications tions (pay, benefits and hours of work), on special
4 Interviewing/assessment centres requirements such as mobility, travelling or unsocial
hours, and on learning, development and career op-
5 Testing portunities. The recruitment role profile provides
6 Assessing candidates the basis for a person specification.
7 Obtaining references
8 Checking applications
Person specifications
9 Offering employment
Person specifications, also known as recruitment or
10 Following up
job specifications, define the knowledge, skill and
abilities (competences) required – what the job
Defining requirements holder is expected to know and be able to do. They
may also define the behavioural competencies re-
quired to carry out the job. They usually list any-
The number and categories of people required may be
thing that the job holder will be expected to achieve
set out in formal workforce plans from which are de-
in specified areas, eg develop new markets or
roducts; improve sales, productivity or levels of cus-

p The requirements defined in a person specifica-
tomer service; or introduce new systems or processes. tion are a fundamental feature of the selection pro-
It is advisable not to overstate what is required. cess, which becomes more of a person-based than a
Perhaps it is natural to go for the best, but setting an job-based approach. They are used as the basis for
unrealistically high level for candidates increases structured and competency-based interviews and
the problems of attracting applicants and results in provide guidance on which selection techniques
dissatisfaction among recruits when they find their such as psychological testing or assessment centres
talents are not being used. Understating what is are most likely to be useful.
wanted can, of course, be equally dangerous, but it The following is an example of a person
happens less frequently. specification.
Person specification: HR recruitment officer
Knowledge of: ●● able to influence the behaviour and

decisions of people on matters concerning
●● all aspects of recruitment;
recruitment and other HR or individual
●● sources of recruits; issues;
●● different media for use in recruiting; ●● able to cope with change, to be flexible and to
handle uncertainty;
●● relevant test instruments (OPQ qualified).
●● able to make sense of issues, identify and solve
Skills and abilities in:
problems and ‘think on one’s feet’;
●● interviewing techniques;
●● focus on achieving results;
●● test administration;
●● able to maintain appropriately directed energy and
●● role analysis; stamina, to exercise self-control and to learn new
behaviours;
●● use of social media and AI.
●● able to communicate well, orally and on paper.
Behavioural competencies:
●● able to relate well to others and use interpersonal
skills to achieve desired objectives;
Attracting candidates Analyse recruitment strengths

and weaknesses
The process of attracting candidates involves the
following steps: The analysis should cover such matters as the na-
tional or local reputation of the organization, pay,
●● analyse the strengths and weaknesses of the employee benefits and working conditions, the in-
organization as an employer; trinsic interest of the job, security of employment,
●● develop the employer brand and employee opportunities for education and training, career
value proposition; prospects, and the location of the office or plant.
●● analyse the requirement; The analysis could make use of an employee survey
to obtain the views of existing employees and
●● consider how the requirement should be
should take account of the opinions expressed in
satisfied.
Chapter 28 | Recruitment and Selection 301
Glassdoor (the business that publishes reviews of The concept of the employer brand is associated
organizations as employers based on the views of with that of the employee experience which covers
their employees). It is also advisable to identify or- everything that people encounter, observe and feel
ganizations that are in the same market for talent so during the course of their employment from its be-
that the employment offer is competitive. ginning and onwards. The aim is to make this expe-
Candidates are, in a sense, selling themselves, but rience positive at each stage and ensure that
they are also buying what the organization has to employees feel valued for what they do.
offer. If, in the latter sense, the labour market is a To develop an employer brand it is necessary to:
buyer’s market, then the company selling itself to
●● Define the desirable features of the brand on
candidates must study their wants and needs in re-
the basis of an examination and review of
lation to what it can provide. The study can be used
each of the areas that are likely to affect
to develop the employee brand (the image presented
people’s perceptions of the organization.
by an organization as a good employer) and the em-
ployee value proposition (what an organization has ●● Analyse what the best candidates need and
to offer that prospective employees would value want and take this into account in deciding
and that would help to persuade them to join the what should be offered and how it should be
business) as described below. The outcome of the offered.
analysis can contribute to the recruitment material ●● Develop an employer value proposition
used on corporate websites and in advertisements which conveys what the company has to
and brochures to help make the organization ‘an offer people (described in more detail below).
employer of choice’. ●● Use social media to present information on
what the company is like to work for – this
can be linked to company websites and
career sites and made available through
Wo rd s of wi sdom mobile apps; the aim is to steer people to the
company’s career website so that they click
Finding the right people for the right roles is on and apply for relevant jobs.
not just a matter of matching people in ●● Use what is called ‘recruitment content
skills, but also in values and interests. marketing’ to create and maintain the social
media presentations – this means (1) defining
objectives, eg increase brand awareness,
increase traffic to career site by x per cent;
(2) identifying the target audience in terms of
job titles, skills and locations; and (3)
deciding on content such as images,
Employer brand photographs, video and written text which
An employer brand is the image presented by an will achieve objectives for the target audience.
organization as a good employer – ‘a great place to ●● Benchmark the approaches of other
work’. A positive brand will help the business to organizations (the Sunday Times list of the
become an employer of choice thus attracting better 100 best companies to work for is useful) to
applicants for jobs. The key feature of the brand obtain ideas about what can be done to
will be the reputation of the company as an em- enhance the brand and therefore compete
ployer – the way people are treated, the provision of with them but focus on developing a unique
a fair deal, opportunities for growth, work-life bal- proposition rather than replicating what
ance, leadership, the quality of management and other organizations offer.
involvement with colleagues. But the reputation of ●● Check Glassdoor data – the reports made by
the organization in terms of how it does business, present and ex-employees on what they feel
the quality of its products or services, its core values about working for the organization recorded
as revealed by its actions, and how and why it is on the Glassdoor website – and act
successful are also important. accordingly.
C A S E S T U DY
Developing an employer brand at the Ordnance Survey
The Ordnance Survey was finding it difficult to recruit with which Ordnance Survey compared well. It also inclu
technological and commercial staff of the right calibre and ded in-depth interviews with recruitment consultants,
it was therefore decided to deal with the problem by short-service leavers and those who had been offered a
conducting an employer branding exercise. post but not taken it up. Internal research took the form of
focus groups, interviews and consultation with recent
Objectives joiners. The key messages from this external and internal
research were fed into the brand development workshop.
The objectives of the exercise were to:
●● improve external perceptions of Ordnance Survey as The brand development workshop
an employer;
The workshop consisted of a cross-section of staff who
●● get recruitment campaigns ‘right first time’; discussed the attributes of Ordnance Survey and the ways
in which it presented them. Action groups met to consider
●● reduce recruitment costs;
particular aspects of the organization and its policies and
●● attract and recruit high-quality people, especially in how the brand could be developed. The focus was on the
technology and commercial areas; ‘touchpoints’ at which existing and potential employees
engaged with the organization. The aim was to create
●● unlock people’s potential to deliver great performance;
something compelling and achievable with regard to each of
●● match the employee experience to the organization’s these key elements. A leadership development programme
strong corporate brand. was conducted that included looking at the employer brand.
The research programme Outcome

The employee research company ORC was engaged to The employer brand created by this process was used as a
conduct internal and external research and consultation. centre point to inform and shape the people strategy and is
The external research covered four other large employers aligned to the business strategy.
Employee value proposition firm that people want to work for and to stay with,
one in which the employee experience is a good one.
An organization’s employee value proposition con- The conclusions of John Purcell and his colleagues
sists of what it offers to prospective or existing em- on this subject following their research were as
ployees that they will value and that will persuade follows:
them to join or remain with the business. It will in-
clude remuneration – which is important but can be
overemphasized compared with non-financial fac-
tors. The latter may be crucial in attracting and re- Word s of w isd om
taining people and include the reputation of the
organization, the degree to which it acts responsi- What seems to be happening is that
bly, respects diversity and inclusion, and provides successful firms are able to meet people’s
work-life balance and opportunities for personal
and professional growth. The aim is to become a needs both for a good job and to work ‘in a
made to an existing role profile and person specifica-

tion or, if not available or out of date, new ones are
great place’. They create good work and a drawn up. The information on knowledge, skill and
conducive working environment. In this way ability (KSA) and competency requirements are ana-
lysed to determine the education, qualifications and
they become an ‘employer of choice’. People
experience needed to perform the job. In effect, this
will want to work there because their produces a recruitment specification that will inform
individual needs are met – for a good job the choice of the source or sources of candidates and
the basis upon which candidates will be assessed in
with prospects linked to training, appraisal interviews or tests. If not included in a role profile the
and working with a good boss who listens terms and conditions of the job (pay and benefits)
and any special demands on job holders are defined.
and gives some autonomy but helps with
Finally, refer to the analysis of strengths and
coaching and guidance. weaknesses to assess what it is about the job or the
Purcell et al (2003: 72) organization that is likely to attract good candidates,
so that the most can be made of these factors when
reaching potential applicants. Also think about what
might put them off, for example the location of the
job, so that objections can be anticipated. Analyse
To develop an employee value proposition it is nec-
previous successes or failures to establish what does
essary to analyse what the organization has to offer
or does not work. Consider at this stage whether a
people by reference to:
‘realistic job preview’ during interviews might be de-
●● its reputation as a business and as an sirable. This would spell out any challenges the job
employer; will present, for example a lot of travelling.
●● its working environment;
its approach to inclusion and diversity;
●●
Consider how the requirement
●● its approach to work-life balance;
●● its approach to employee wellbeing;
should be satisfied
●● its location; Consideration should first be given to internal can-
didates. In addition, it is worth trying to persuade
●● the career opportunities available;
former employees to return to the organization or
●● the scope that it provides for learning new obtaining suggestions from existing employees (re-
skills; ferrals). These can be encouraged by offering re-
●● the terms and conditions of employment it wards when a referral results in a vacancy being
offers including pay and employee benefits. filled. Talent banks that record candidate details can
be maintained and referred to at this stage.
It is advisable to monitor how the employer brand is Candidate relationship management systems can
being perceived. This can be done by listening to also be used. These allow recruiters to maintain a pool
and recording any comments by applicants and con- of potential candidates that can be brought in for con-
tacts with newly joined employees. It is worth keep- sideration at short notice. While this can be done
ing an eye on Glassdoor, the employee review site, to manually through phone calls or e-mails, dedicated
see how the organization is regarded by its staff. candidate relationship management systems can auto-
mate the process, making it easier to aggregate candi-
dates from various channels, know each candidate’s
Analyse the requirement – level of interest and sort candidates for specific jobs.
producing the recruitment If these approaches do not work, use will have to
be made of one of the sources of candidates such as
specification online recruiting, social media, advertising, recruit-
Analysing the requirement involves establishing ment agencies or consultants as described in the
what jobs have to be filled and by when. Reference is next section of this chapter.
Sourcing candidates Online recruitment

Online or e-recruitment uses the internet to adver-
There are many different sources of candidates. tise or ‘post’ vacancies, provides information about
The use of different ones by respondents to the jobs and the organization and enables e-mail com-
2017 CIPD Survey of Recruitment and Talent munications to take place between employers and
Planning is shown in Table 28.1. When selecting candidates. The latter can apply for jobs online and
the source or, better, sources, consideration should can e-mail application forms and CVs to employers
be given to which are more likely to attract the type or agencies. Tests can be completed online.
of person wanted and when using the selected The advantages of online recruiting are that it can
source(s) the invitation to apply or the advertise- reach a wider range of possible applicants. It is quicker
ment should be tailored to fit the type of candidates and cheaper than traditional methods of advertising,
wanted. more details of jobs and firms can be supplied on the
Note the considerable use of online recruiting in site, and CVs can be matched and applications sub-
the form of corporate websites, professional and mitted electronically. Consider using it in conjunction
social networking sites (social media) and job with other recruitment methods to maximize response.
boards, and the relatively small use of national
newspapers.
General considerations affecting the use of on- Social media
line recruitment and descriptions of the main
Social media consists of online platforms such as
sources of candidates are set out below.
LinkedIn, Facebook, Twitter, or blogs that apply
Web 2.0 technologies for networking or sharing
TA B L E 28.1 Sources of candidates (CIPD survey 2017)
Source Percentage of respondents
Own corporate website 74
Professional networking sites, eg LinkedIn 60
Commercial job boards 58
Recruitment consultants 52
Social media networking sites eg Facebook 40
Specialist journals/trade press 28
Links with schools/colleges/universities 28
Encourage speculative applications/word of mouth 27
Local newspaper 21
Search consultants 20
Jobcentre Plus 15
National newspapers 12
Previous employees 10
i nformation or opinions. They can be used to search to connect. It is also necessary to be selective about
for recruits and find out more about them online. the number and type of jobs that are publicized – it
By far the most popular site for recruiters is is easy to overwhelm people’s feeds and inboxes.
LinkedIn, classified by the CIPD as a professional Other social media networking sites such as
networking site. LinkedIn Recruiter enables em- Facebook and Twitter can also be used to promote
ployers to search for potential candidates by sector, the employer brand and make contacts. They can be
job level, specialism and location and then to con- even more effective when combined together or
tact them directly. It can be used to identify and with LinkedIn. Such cross-platform sharing and
provide details of possible recruits from the target messaging takes account of the fact that each social
audience by entering the job title, company name network has a slightly different audience and can
and key words. A Boolean search, which combines widen the field of potential recruits.
key words with operators such as AND, NOT and Another approach is provided by ‘matching’
OR can be used to produce more specific and rele- technology, which takes the principles of online dat-
vant results. LinkedIn is most effective when the ing into job searching. Candidates are asked to
target audience and the key words appropriate for make a list of the values that matter to them, which
that audience are known. It is best to personalize are then matched by the service provider to poten-
direct approaches, whether in e-mails or invitations tial employers for whom those values are i mportant.
C A S E S T U DY
Examples of the use of social media for recruiting
At CERN, the world’s largest particle physics laboratory, question, whereas the professional network LinkedIn
extensive use has been made of social media for recruiting provides a forum for more specialized discussions.
purposes. All job vacancies are advertised on LinkedIn, T-Mobile International has created a Facebook site for
Facebook and Twitter. These networks provide much more graduate recruitment. Potential graduate recruits estab-
than simple job boards in that they are used as communi lished an individual presence on this invitation-only site.
cation tools to interact with the audience, with candidates The site was used to provide information on selection
and with people who are not necessarily candidates but procedures and processes, for example criteria and time-
may know people who may want to apply. Appropriate use tables, and to allow the potential recruits to communicate
is made of each medium. For example, Facebook is used to with each other. As well as T-Mobile’s IT department, an
host a weekly question and answer session between one internal ‘brand ambassador’ was involved in design
of CERN’s recruiters and anyone who wants to submit a throughout.
Use of AI
AI can revolutionize recruitment, especially in larger surprising to technologists: recruitment
organizations. (and not just in the Googleplex) is full of
routinized actions, relies on analysing
swathes of data, and for decades has hinged
Wo rd s of wi sdom
on humans making the sort of judgements
Algorithms deploying sophisticated machine
we’re heroically bad at.
learning are reshaping recruitment faster Jeffery (2017/2018: 35)
than any other part of HR. That’s not
For some time now organizations have been using apply for jobs, for example by completing online
corporate websites, social media and internet job application forms and tests. Such areas may be
boards as important recruitment sources. Recently, linked directly to an organization’s home page so
AI has come to the fore and the following are exam- that general browsers can access them. An intranet
ples of the ways it can be used: link may be available to enable internal staff to ac-
cess the website. Some organizations are building
●● Algorithms can sift CVs, profile existing high
their own professional communities or talent net-
performers and apply their traits to
works. The management of websites can be out-
candidates, write job descriptions that
sourced to recruitment consultants or specialized
eliminate any form of biased language and
web agencies. A less sophisticated approach is sim-
remove all trace of protected characteristics
ply to list vacancies and contact details. A fully de-
from applications.
veloped site can be a very effective source.
●● ‘Data mining algorithms’ can search social The following are guidelines on the use of
media postings for context that might websites:
support an application (but this raises the
question of whether permission should be ●● keep the content of the site up to date;
sought before doing this). ●● ensure the site is accessible directly or
●● Google Hire is a cloud-based applicant through search engines;
tracking system that complements the ●● provide contact numbers for those with
Google for Jobs search engine. technical problems;
●● Unilever has put around 250,000 candidates ●● take care over the wording of online copy –
globally through a system involving gamified the criteria for good copy in conventional
psychometric testing followed by an analysed advertisements as described later in this
video interview and an algorithm-driven section apply.
selection process.
●● Gamification has been used by the US Army
as a recruitment aid. Candidates download a Commercial job boards
‘shooting’ game and their level of skill in Commercial job boards consist of large databanks
playing it is treated as an indication of their of vacancies. Information about vacancies may re-
potential as a soldier. produce an advertisement so that the site is simply
AI-driven tools can be used to narrow down candi- an additional form of communication, but some va-
dates. Machine learning algorithms enable the pro- cancies are only found online. Links may be pro-
cess of sourcing and matching to be automated by vided to the organization’s website. They are
reference to data from social media, the individual operated by specialized firms such as Monster.co.uk
and the employer. and Fish4jobs.com. Companies pay to have their
Connectifier, a subsidiary of LinkedIn, enables jobs listed on the sites.
recruiters to contact people on their database of To make the best use of a job board:
more than 350 million candidates. Data is collected ●● go for specialized sites rather than generalist;
from across the internet. Connectifier’s platform
●● stick to one or two sites rather than
sorts and combines data to create a complete profile
spreading your vacancy everywhere;
of potential candidates. Recruiters can then feed in
the types of skills and aptitudes they are looking for ●● if you are unsure about the best site, Google
to find matches based on that information. the job and browse the sites that come up in
order to see which is most authoritative;
●● pay to obtain a prominent site;
Corporate websites ●● bear in mind that people who look at the site
The most developed form of a corporate website are seeking a job; job sites are not like print
consists of a dedicated area that gives details of va- advertisements, which have to attract casual
cancies, person specifications, benefits and how to readers;
●● ensure that the information you provide is race is never mentioned or even implied in an adver-
clear about what you are offering and the tisement, you should have no problem in keeping
achievements, qualifications and experience within the law. The Equality Act also makes it un-
you are looking for. lawful to discriminate against employees on ac-
count of their age. Age limits should therefore not
be included in advertisements and the wording
Advertising should not indicate that people below or above a
certain age are not wanted.
Advertising has traditionally been the most obvious
method of attracting candidates but it is no longer
so important, especially at national level, although Recruitment agencies
it is used more at local level and in specialized jour-
nals. Many organizations now prefer to use online Recruitment agencies can be used to recruit office
recruitment, agencies or consultants. staff. They are usually quick and effective but quite
A conventional advertisement should aim to at- expensive. Agencies can charge a fee for finding
tract a sufficient number of good candidates at min- someone of 15 per cent or more of the first year’s
imum cost. To do this it must: salary. It can be cheaper to advertise or use the in-
ternet, especially when the company is in a buyer’s
●● be placed in the appropriate medium; market. Shop around to find the agency that suits
●● attract attention – it must compete for the the organization’s needs at a reasonable cost.
attention of potential candidates against Agencies should be briefed carefully on what is
other employees; wanted. They can produce unsuitable candidates
●● create and maintain interest – it has to but the risk is reduced if they are clear about the
communicate, in an attractive and interesting requirements.
way, information about the job, the company
and the terms and conditions of employment;
●● stimulate action – the message needs to be
Recruitment consultants
conveyed in a way that will prompt a Recruitment consultants advertise, interview and
sufficient number of replies from candidates produce a shortlist. They provide expertise and re-
with the right qualifications for the job. duce workload. The organization can be anonymous
if it wishes. Most recruitment consultants charge a
It is essential to measure the response to advertise-
fee based on a percentage of the basic salary for the
ments to provide guidance on the relative cost-
job, usually ranging from 15 to 20 per cent.
effectiveness of different media. Cost per reply is the
When choosing a recruitment consultant,
basic ratio.
check their reputation and expertise, compare
When drafting advertisements remember the
fees and meet the person who will work on the
anti-discrimination legislation set out in the Equality
assignment to assess his or her quality. To use
Act (2010). This makes it unlawful to discriminate
them effectively:
in an advertisement by favouring either sex, the
only exceptions being a few jobs that can be done ●● Agree terms of reference.
only by one sex. Advertisements must therefore ●● Brief them on the organization, where the
avoid sexist job titles such as ‘salesman’; they must job fits in, why the appointment is to be
refer to a neutral title such as ‘sales representative’. made, terms and conditions and any special
Potential respondents should be referred to only as requirements.
the ‘candidate’ or the ‘applicant’, otherwise you
must specify ‘man or woman’ or ‘he or she’. It is ac- ●● Give them every assistance in defining the
cepted, however, that certain job titles are unisex job and the person specification – they will
and therefore non-discriminatory, including direc- do much better if they have comprehensive
tor, manager, executive and officer. knowledge of what is required and what type
It is also unlawful to place an advertisement that of person is most likely to fit into the
discriminates against any particular race. As long as organization well.
●● Check carefully the proposed programme Comparison of sources

and the draft text of the advertisement.
●● Clarify the arrangements for interviewing A summary of sources and an analysis of their ad-
and shortlisting. vantages and disadvantages is given in Table 28.2.
There is usually a choice between different meth-
●● Clarify the basis upon which fees and ods or combinations of them. The criteria to use
expenses will be charged. when making the choice are: (1) the likelihood that
●● Ensure that arrangements are made to deal it will produce good candidates; (2) the speed with
directly with the consultant who will handle which the choice enables recruitment to be com-
the assignment. pleted; and (3) the costs involved, bearing in mind
that there may be direct advertising costs or con-
sultants’ fees.
Executive search consultants
Use an executive search consultant or ‘headhunter’
for senior jobs where there is only a limited number
Managing the recruitment
of suitable people and a direct lead to them is
wanted. Headhunters are not cheap. They charge a
process
fee of 30 to 50 per cent or so of the first year’s sal- As described below, the process of recruitment is a
ary, but they can be quite cost-effective. complex process.
Executive search consultants first approach
their own contacts in the industry or profession
concerned. The good ones have an extensive Recruitment process advertising
range of contacts and their own data bank. They
will also have researchers who will identify suit- Recruitment process outsourcing (RPO) is a method
able people who may fit the specification or can term used when an organization commissions a
provide a lead to someone else who may be provider to take responsibility for the end-to-end
suitable. The more numerous the contacts, the
delivery of the recruitment process, covering all va-
better the executive search consultant. When a cancies or a selection of them. This involves liaising
number of potentially suitable and interested peo- with hiring managers to define requirements and
ple have been assembled, a fairly relaxed and in- specifications, deciding on the best ways to attract
formal meeting takes place and the consultant candidates, processing applications, and setting up
forwards a shortlist to the client with full reports and facilitating interviews. Some companies do not
on candidates. hand over all recruitment, using RPO only for high-
There are some good and some not so good ex- volume vacancies. They may retain responsibility
ecutive search consultants. Do not use one unless a for senior and specialist jobs.
reliable recommendation is obtained.
Examining information from

Educational and training candidates
establishments Candidates can respond to an online notice or an
Many jobs can, of course, be filled by school leav- advertisement with a formal application (by e-mail
ers. For some organizations the main source of re- or letter), usually supported by a CV. Applicants
cruits for training schemes will be universities and may be asked to provide information about their
colleges as well as schools. Graduate recruitment is education, qualifications, training and experience in
a major annual exercise for some companies, which an application form to provide a structured basis
go to great efforts to produce glossy brochures, visit for drawing up shortlists, the interview itself and
campuses on the ‘milk run’ and use elaborate sifting for the subsequent actions in offering an appoint-
and selection procedures to vet candidates, such as ment and in setting up records. This ensures that all
assessment centres. applicants are considered on the same basis against
the person specification.
TA B L E 28.2 Comparison of sources of candidates
Source Description Advantages Disadvantages
Social media Online platforms such Good for reaching large numbers ●● May generate too
as LinkedIn, Facebook of potential candidates quickly and many names.
or Twitter, that apply cheaply including those who are ●● Employer has to
Web 2.0 technologies not actively looking for jobs but manage own profile.
for networking or are not averse to changing
sharing information or (passive seekers).
opinions.
Company A dedicated area on ●● Can reach a wider range of possible ●● May produce too many
website the company website applicants, and quicker and cheaper irrelevant or poor
that gives details of than traditional methods of applications.
vacancies, person advertising. More details of jobs ●● Not the first choice of
specifications, benefits and firms can be supplied on the many job seekers.
and how to apply for site and CVs can be matched and
jobs. applications submitted
electronically.
●● Can use an organization’s brand to
attract candidates.
●● Keyword searchable. Job details
can be changed and CVs managed
electronically.
Job board Commercial job boards Easy access to a wide range of ●● Expensive and may
consist of large candidates. need other media to
databanks of drive traffic to the site.
vacancies. ●● Job boards are bad for
‘passive seekers’.
Advertising Display or classified ●● Local papers can be effective for ●● Online methods can be
advertisements in recruiting junior staff and manual more cost-effective.
national or local workers. ●● Soon become
newspapers or ●● Journals can target specialists. irrelevant.
journals. ●● Can attract ‘passing trade’ – people
who are not actively looking for a job.
Recruitment Mainly recruit office Convenient, save time and trouble, Can produce unsuitable
agencies and sales staff who are draw on an established pool of candidates. Pool may
registered with them. candidates. be limited.
Job centres Mainly for manual No cost; usually plenty of choice. Limited to relatively
workers and clerical routine jobs.
and sales staff.
Recruitment Advertise, interview Provide expertise and reduce Can be expensive.

consultants and produce a shortlist. workload.
Executive Conduct searches for Can find top-level people who Expensive, limited to
search senior executives. might not otherwise be top jobs.
consultants interested.
(continued )
Source Description Advantages Disadvantages
Educational Universities, colleges Major source of future talent. Recruitment campaigns

establishments and schools. can be costly.
Recruitment Deliver complete Save time, bring outside expertise Feeling that provider is
process recruiting process. to bear on recruitment problems too remote to deal with
outsourcing and free up HR for more value- the real issues and that
adding activities. there is a danger of
losing control.
An application form, an example of which is illus- person specification. This can be done through AI
trated in Figure 28.1, sets out the information re- algorithms or manually. Under the General Data
quired which can be completed online or on paper. Protection Regulation (GDPR) candidates will have
To use application forms more effectively: to be told if they are to be subjected to an auto-
mated process. GDPR also requires explicit consent
●● decide what the criteria for selection are and
from candidates before an organization retains or
how these will be assessed by use of the
uses their details.
application form;
●● keep questions clear, relevant and non-
discriminatory;
●● ask for only the bare minimum of personal Pau se for th ou gh t
details – omit any reference to gender or age;
●● widen your pool of applicants by offering What are the downsides, if any, to the use of
different options and guidance for AI in recruitment?
completing and viewing application forms.
Employers may also refer for further information to
social networks or the candidate’s own blog.
Criteria for screening applications can be classified
under the following three headings so that they can
Processing applications be applied consistently to guide sifting decisions:
When there is a large number of candidates a ●● Essential – applicants will not be considered
computer-based applicant tracking system can be unless this criterion is satisfied.
used. Machine learning (AI) algorithms can model ●● Very desirable – preference will be given to
patterns of hiring to identify the right people quickly applicants who meet this criterion.
and easily. If such aids are not available, the initial ●● Desirable – applicants who meet this
step is to list the applications on a recruitment data- criterion will be given favourable
base setting out name, date application received and consideration but it is not an essential
actions taken (reject, hold, interview, shortlist, requirement. However, if a number of
offer). The next step is to screen applications prior applicants meet the first two criteria,
to drawing up a shortlist and arranging interviews. satisfying desirable criteria would be a factor
in making a choice.
Screening applications A highly structured method of sifting applications is

provided by the use of biodata. These are items of
Applicants are screened by comparing the informa- biographical data that are criterion-based (ie they
tion available about them with the criteria in the relate to established criteria in such terms as
F I G U R E 28.1 Example of application form (compressed)
APPLICATION FORM
Surname First name
Address
Tel (home) Tel (work) Email (personal)
Position applied for
Education
Dates Name of secondary Main subjects taken Qualifications

school, college or
university
From To
Specialized training received
Other qualifications and skills (including languages, keyboard skills, current driving licence etc)
Employment history
(give details of all positions held since completing full-time education, start with your present or
most recent position and work back)
Dates Name of employer, Position and summary of Starting Reasons for

address and nature of main duties and leaving or
business including any leaving wanting to
From To service in the armed rate of pay leave
forces
Add any comments you wish to make to support your application
I confirm that the information given on this application form is correct

Signature of applicant………………………………………………… Date…………………….
ualifications and experience which indicate that

q interview for shortlisted candidates. There may be
individuals are likely to be suitable). These are ob- two or even more face-to-face interviews either fol-
jectively scored and, by measurements of past lowing a video/telephone interview or on their own,
achievements, predict future behaviour. one of which may be conducted by an HR recruiter
Following the analysis, applicants can be sorted and the other or others by line managers.
initially into three categories: possible, marginal The time allowed for an interview will vary ac-
and unsuitable. The more information made avail- cording to the complexity of the job. For a fairly
able and the clearer the criteria, the easier this pro- routine job, 30 minutes or so should suffice. For a
cess is. When there is a large field of applicants with more senior job, 60 minutes or more may be re-
many ‘possibles’, screening may have to be repeated quired both for a video interview and a face-to-face
against more stringent criteria until a shortlist for interview.
interview is identified. It is best not to schedule too many face-to-face
Ideally, the numbers on the shortlist should be be- interviews for senior jobs in a day – interviewers who
tween four and eight. Fewer than four leaves relatively try to conduct more than four or five exacting inter-
little choice (although such a limitation may be forced views will quickly run out of steam and do neither
on the recruiter if an insufficient number of good ap- the interviewee nor the organization any justice. It is
plications have been received). More than eight will advisable to leave 15 to 30 minutes between inter-
mean that too much time is spent on interviewing and views to write up notes and prepare for the next one.
there is a danger of diminishing returns setting in.
Administering the selection

Draw up an interviewing programme
programme A computer-based applicant tracking system can be
An interviewing programme will set out the ar- used to automate the whole recruitment and selec-
rangements for the various types of interviews that tion process from initial application through invita-
can be conducted, the type of interview, the use of tion to interview(s) or rejection, outcome of interview
tests (if any), who is going to conduct the interview (offer, rejection) and on to the outcome of an offer. If
or interviews, who makes the final decision, and the a manual process is used, the actions required are de-
timetable for the whole process leading to the offer scribed below.
of employment. As described below, there is plenty When the interviewing programme has been
of choice on the make-up of the programme, for drawn up, shortlisted candidates can be invited for
example on the use of video, telephone or face-to- interview, using a standard letter or e-mail where
face interviews, on the combination of approaches large numbers are involved. Candidates should be
and on the number of interviews. There is no ‘best asked to complete an application form if they have
practice’ to indicate what should be done. All that is not already done so. There is a lot to be said at this
necessary is to consider the alternative approaches stage for sending candidates more details of the or-
and decide on what best fits the situation. ganization and the job so that too much time is not
For some jobs, particularly more senior or pro- spent in going through this information at the
fessional/technical ones, an interviewing programme interview.
could consist of a preliminary video interview prob- Review the remaining ‘possibles’ and ‘marginals’
ably using Skype. Members of the shortlist pro- and decide if any are to be held in reserve. Send re-
duced after the video interview could be asked to serves a standard ‘holding’ letter and send the oth-
attend face-to-face interviews. Telephone interviews ers a standard rejection letter. The latter should
can be used as an alternative to video. For some jobs thank candidates for the interest shown and inform
only face-to-face interviews are conducted, either them briefly, but not too brusquely, that they have
because there are doubts about the usefulness of a not been successful. A typical reject letter might
video/telephone interview or because the job is a read as follows.
relatively routine manual or administrative one.
Since writing to you on… we have given careful
The interview programme could consist of a video
consideration to your application for the above
or telephone interview followed by a face-to-face position. I regret to inform you, however, that
we have decided not to ask you to attend for an s election decision. Almost all the respondents to the
interview. We should like to thank you for the 2017 CIPD (99 per cent) used the traditional face-
interest you have shown. to-face interview but 65 per cent also used the tele-
phone and 53 per cent used video or Skype.
A face-to-face interview enables the establishment
Selection methods of close contact – rapport – between the interviewer
and the candidate, thus easing the acquisition of infor-
The aim of selection is to assess the suitability of mation about the candidate’s suitability and how well
candidates by predicting the extent to which they he or she would fit into the organization. As described
will be able to carry out a role successfully. It in- below, interviews can be structured or unstructured.
volves deciding on the degree to which the charac-
teristics of applicants match the person specification
and then using this assessment to make a choice Structured interviews
between candidates.
A structured interview is one based on a defined
Table 28.3 shows the outcome of a CIPD survey
framework consisting of a set of predetermined
in 2017 on the use of different methods of selection.
questions. All candidates are asked the same ques-
The next section describes the main selection meth-
tions that will focus on the attributes and behav-
ods: interviews, tests and assessment centres.
iours required to succeed in the job. Guidelines or
scoring criteria are available to evaluate answers.
Selection interviews A structured interview may include experience-
based questions in which candidates are asked to
The interview is the most familiar method of selec- relate how they handled situations in the past re-
tion. The aim is to elicit information about candi- quiring skills and abilities necessary for effective
dates that will enable a prediction to be made about performance in the job for which they are applying.
how well they will do the job and thus lead to a And/or it may include situational questions that
TA B L E 28.3 Use of selection methods
Method Percentage of respondents
Competency-based interviews 78
Interviews following contents of CV/application form 74
Tests for specific skills 56
General ability tests 41
Assessment centres 39
Literary and/or numeracy test 38
Personality/aptitude questionnaire 35
Group exercises 24
On-line selection tests 23
Source CIPD (2017)

provide candidates with hypothetical job-relevant Unstructured interviews

situations and ask how they would deal with them.
Research by Pulakos and Schmitt (1995) found that Unstructured interviews take the form of a general
experience-based interviews yielded higher levels of discussion during which the interviewer asks a few
validity than situation-based ones. But both types of questions that are relevant to what he or she is
questions may be incorporated in an interview. looking for but without any specific aim in mind
Further information on how to conduct a struc- other than getting an overall picture of the candi-
tured interview with examples of questions is given date as an individual. Questions are often random
in Chapter 62. and non-specific and may be only vaguely related to
the actual job requirements. Candidates are judged
on the general impression they make and the pro-
Competency-based interviews cess is likely to be quite subjective. Research quoted
later in this chapter has shown that the predictive
A competency-based interview is a structured inter-
validity (the extent to which it predicts performance
view in which the predetermined set of questions
in a job) of an unstructured interview is fairly low.
put to all candidates aims to establish the extent to
The preferred method is a structured interview that,
which they have the competences/competencies re-
when conducted well, has a higher level of predic-
quired to perform the job as set out in the person
tive validity.
specification.
Competency-based interviews can be used to se-
lect graduates or college/school leavers where it is
not possible to assess them on the basis of their
work experience. Instead, interviewers ask candi-
dates to provide examples of their activities and
educational and extra-curricular experiences which Mike Distifano, President of the Korn Ferry
demonstrate that they have the particular core com-
Institute, quoted by Marr (2018: 131)
petency the organization is looking for.
The term competency-based interview is some- remarked that ‘people get hired for what
times used more loosely to mean any interview that they know and fired for who they are’.
is based on the information contained in the person
specification that will include knowledge, skills If so, what are the implications for
and abilities as well as behavioural competency recruitment and selection?
requirements.
Strength-based interviews Advantages and disadvantages

A strength-based interview is a structured inter of selection interviews
view in which the objective is to find out what can-
didates are good at doing rather than just what they Advantages
are capable of doing. It includes questions such as:
‘What are you good at?’, ‘What comes easily to ●● Provide opportunities for interviewers to ask
you?’ and ‘What have you done recently that you probing questions about the candidate’s
are proud of?’ It is often used with graduates and experience and to explore the extent to
school leavers who have little work experience. which the candidate’s competencies match
Strength-based questions can be incorporated those specified for the job.
alongside experience-based and situation-based ●● Enable interviewers to describe the job
questions as long as the same questions are put to including its demands (a ‘realistic job
each candidate. The strengths that are important in preview’) and the organization in more
a job can be established by identifying the strengths detail, providing some indication of the
of existing high performers in a similar job. terms of the psychological contract.
●● Provide opportunities for candidates to ask s election decision. But the drawbacks are that ques-
questions about the job and to clarify issues tions are often unplanned and delivered at random
concerning training, career prospects, the and the candidates are unable to do justice to them-
organization and terms and conditions of selves because they may not be allowed to expand.
employment.
●● Enable a face-to-face encounter to take place
so that the interviewer can make an
assessment of how the candidate would fit Word s of w isd om
into the organization and what he or she One of the clearest lessons to emerge from
would be like to work with.
decades of research on personnel selection
●● Give the candidate the same opportunity to
assess the organization, the interviewer and is that the traditional face-to-face job
the job. interview is terrible for predicting future job
performance. The sad truth is that no
Disadvantages
selection tool is perfect, and future
●● Can lack validity as a means of making
sound predictions of performance, and lack
performance cannot be predicted precisely,
reliability in the sense of measuring the same but the traditional interview is particularly
things for different candidates. bad. Fortunately, it is easy to improve the
●● Rely on the skill of the interviewer – many
predictive validity of the job interview by
people are poor at interviewing, although
most think that they are good at it. structuring it around hard-to-fake tests of
●● Do not necessarily assess competence in key skills and abilities that actually predict
meeting the demands of the particular job. future performance.
●● Can easily involve stereotyping and lead to Moore (2017: 8)
biased, discriminatory and subjective
judgements by interviewers.
The disadvantages are most common when un-
structured interviews are used, but they can be al- Bias in interviews
leviated, first by using a structured approach, and
second by training interviewers. Selection often de- If handled badly, and they often are, interviews can
pends on the opinion of one line manager although result in superficial decisions and can involve stereo
an HR specialist can provide additional views. For typing, bias and discrimination. People tend to leap
key jobs it is advisable to get another line manager to conclusions about candidates on the basis of first
to conduct an interview and provide a second opin- impressions very quickly.
ion. The availability of another opinion can also As listed by Burt (2019), there are five types of
help to eliminate bias as far as possible or avoid a bias:
superficial decision, especially if the same structured 1 Halo effect – allowing a candidate’s good
approach is adopted by both interviewers. There qualities, or at least those we approve of, to
may be situations where the decision to employ is colour our perception of their less attractive
so crucial and has such wide-ranging implications ones.
that more than two interviews should be held. The
2 Successive contrasting bias – when a
accuracy of the prediction can also be increased by
phenomenal candidate causes recruiters to
the use of selection tests as described in the next sec-
judge any succeeding candidates negatively.
tion of this chapter.
The alternative is a selection board or panel, 3 Confirmation bias – seeking and interpreting
which is often used in the public sector. This brings information from candidates that confirms
together a number of parties interested in the pre-existing beliefs.
4 Groupthink – when a number of people are the order in which candidates are processed –
involved in a recruitment decision the assessing answer by answer rather than alphabeti-
members may too readily defer to a strong cally or in order of submission.
personality in the group who insists that An approach that is becoming increasingly pop-
their preferred candidate is the right one. ular is the use of blind CVs that remove candidates’
5 Anchoring bias – using an initial piece of names, ages and sometimes details of their educa-
information to unduly influence subsequent tion from CVs and application forms. The need to
judgements. omit at least names was demonstrated by a test con-
ducted by the BBC in 2017 which found that a job
seeker with an English-sounding name was offered
three times the number of interviews than an ap-
plicant with a Muslim name. There is a good case
Pa us e fo r t houg ht for removing names, age and gender but leaving out
How can you eliminate or at least mitigate educational details (attendance at university, class
of degree) is more controversial. The aim might be
these types of bias? to broaden the social mix by eliminating bias
against those from backgrounds who are less likely
to get into university. And a degree is only one
measure of capability. But this ignores those from
Dr Thomas Chamorro-Premuzic, quoted by Burt, disadvantaged backgrounds who have worked very
says that: ‘Decision makers and HR professionals hard to get into university. It can also be argued that
really overrate their intuition, and when it comes to the interview process is still subjective and you will
people decisions, the majority of people believe a only be papering over the bias initially by using
short-term interaction, whether it’s a video interview blind CVs. Even if a candidate is able to make it
or even a CV, will predict whether anyone will be a past the first part of a screening process to be of-
good fit in an organization.’ People tend to pair new fered an interview, it does not shield them from pos-
information with subjective memories, steering them sible prejudices that might be there when they get to
towards one option over another, forming opinions interview stage. Whilst anonymity can benefit can-
that feel objective but are nothing of the sort. didates at application stage by removing discrimi-
The use of AI algorithms to indicate who should nation, an entire recruitment process cannot be run
be invited for an interview could lead to biased deci- without disclosing a candidate’s name.
sions because the process of developing the algo-
rithm relies on the analysis of existing data that may
contain bias. Amazon was forced to abandon one of
its first AI recruitment platforms in 2018 when it
Source review
emerged that it was favouring male candidates and
penalizing applications containing the word Reducing bias
‘woman’. This was because the algorithms had de-
All forms of assessment should follow structured
veloped measures of success from CVs which, in
processes and hiring decisions should be based firmly
line with the technology sector, came from a pool
on the aggregated scores or data, rather than gut
containing a majority of men.
feeling. The current weight of evidence suggests that,
Bias will be reduced if more than one interviewer
is involved. Another way to counter bias is to pro- in general, structured interviews are preferable to
vide unconscious bias training to managers who are unstructured interviews. Assessors of CVs and tests
involved in selecting staff. Training won’t eliminate should be as blind as possible to the characteristics of
bias but it might contain it. Managers should be en- the applicant (gender, age, name, and so on) and
couraged to use performance-led interviews that should read through tests and CVs in identical
make them focus on skills rather than personality. circumstances, such as the same time of day, or in the
Online platforms can be used to get candidates same format (for example paper versus online).
to answer skill-based questions linked to a compe- Linos and Reinhard (2015: 22)
tence framework. Another approach is to disrupt
Interviews are still a necessary part of a recruitment ions. Non-discriminatory selection tests such as
process and that it is why it is so important to pro- Raven’s Progressive Matrices can also help. They
vide unconscious bias training for those involved in can be used ‘blind’ to independently assess the capa-
selecting people. The focus should be on structured bilities of candidates. The use of tests is discussed
interviews that are concerned with facts not opin- below.
C A S E S T U DY
Recruitment and retention strategy at Buckingham County Council
Attracting and retaining high-quality staff is considered key to ●● developing a better recruitment website;
the corporate strategy of Buckingham County Council, which
●● developing a talent bank to ensure that vacancies are
employs around 14,000 people. Resourcing is one of the most
filled quickly;
important things the council does to improve performance.
●● streamlining processes to reduce the time to fill
Resourcing and people strategy vacancies;
The resourcing strategy complements and reinforces the ●● the development of a competency framework used for
people strategy, which has five targets: competency-based selection.
●● being the best employer;
Retaining talent
●● bringing in additional talent;
A holistic approach is adopted to retaining talent. This
●● developing existing talent; involves paying attention to every aspect of the employment
●● championing diversity; relationship and setting a ‘best employer’ target. A staff
survey is used to measure employee engagement.
●● transforming the organization.
Total reward strategy
The people strategy dashboard
A total reward approach is adopted, including the use of
A people strategy dashboard has been created to ensure total reward statements.
that human resources are managed more effectively. This
extends the people strategy targets and is used to monitor Talent management
progress in achieving them.
A talent management toolkit is used to identify and develop
Improving recruitment and selection potential high performers at every level in the organi
zation.
This involves:
●● strengthening the employer brand;
characteristics, aptitudes and attainments. Psycho

Selection testing logical tests are measuring instruments, which is
why they are often referred to as psychometric tests:
Selection tests are used to provide valid and reliable ‘psychometric’ means mental measurement. Psycho
evidence of levels of abilities, intelligence, personality metric tests assess intelligence or personality. They
use systematic and standardized procedures to meas- F I G U R E 2 8 . 2 A normal curve

ure differences in individual characteristics, thus ena-
bling selectors to gain a greater understanding of
candidates to help in predicting the extent to which
they will be successful in a job. The other types of
tests described below are ability and aptitude tests.
A recent development in firms such as Deloitte is
to use a recruitment app in the form of a mobile
phone game to test mental agility, persistence and 60 100 140
appetite for taking risks. score
Intelligence tests Personality tests

Intelligence tests measure a range of mental abilities Personality tests attempt to assess the personality of
that enable a person to succeed at a variety of intel- candidates in order to make predictions about their
lectual tasks using the faculties of abstract thinking likely behaviour in a role. There are many different
and reasoning. They are concerned with general in- theories of personality and, consequently, many dif-
telligence (termed ‘g’ by Spearman (1927), one of ferent types of personality tests. These include self-
the pioneers of intelligence testing) and are some- report personality questionnaires and other
times called ‘general mental ability’ (GMA) tests. questionnaires that measure interests, values or
Intelligence tests measure abilities while cognitive work behaviour.
tests measure an individual’s learning in a specific Personality tests can provide interesting supple-
subject area. They contain questions, problems and mentary information about candidates that is free
tasks. The meta-analysis conducted by Schmidt and from the biased reactions that frequently occur in
Hunter (1998) showed that intelligence tests had face-to-face interviews, but they have to be used
high predictive validity. with great care. The tests should have been devel-
The outcome of a test can be expressed as a score oped by a reputable psychologist or test agency on
that can be compared with the scores of members of the basis of extensive research and field testing, and
the population as a whole, or the population of all or they must meet the specific needs of the user.
part of the organization using the test (norms). An
intelligence test may be recorded as an intelligence
quotient (IQ), which is the ratio of an individual’s
mental age to the individual’s actual age as measured
by an intelligence test. When the mental and actual
age correspond, the IQ is 100. Scores above 100 in- Do you think personality tests are a
dicate that the individual’s level of average is above
necessary part of a selection process?
the norm for his or her age, and vice versa. It is usual
now for IQs to be directly computed as an IQ test
score. It is assumed that intelligence is distributed
normally throughout the population; that is, the fre-
quency distribution of intelligence corresponds with Ability tests
the normal curve shown in Figure 28.2.
The normal curve is a way of expressing how Ability tests establish what people are capable of
scores will typically be distributed; for example, that knowing or doing. They measure the capacity for:
60 per cent of the population are likely to get scores ●● verbal reasoning – the ability to comprehend,
between x and y, 20 per cent are likely to get scores interpret and draw conclusions from oral or
below x, and 20 per cent are likely to get more than y. written language;
Intelligence tests can be administered to a single
●● numerical reasoning – the ability to
individual or to a group. They can also be com-
comprehend, interpret and draw conclusions
pleted online.
from numerical information;
●● spatial reasoning – the ability to understand a ccurately as possible. A single criterion is inade-
and interpret spatial relations between quate: multiple criteria should be used. The extent
objects; to which criteria can be contaminated by other fac-
●● mechanical reasoning – understanding of tors should also be considered and it should be re-
everyday physical laws such as force and membered that criteria are dynamic – they will
leverage. change over time.
Aptitude tests Interpreting test results

Aptitude tests are occupational or job-related tests The main methods of interpreting test results are:
that assess the extent to which people can do the ●● Norms. An individual’s score in a test is not
work. They typically take the form of work sample meaningful on its own. It needs to be
tests, which replicate an important aspect of the ac- compared with the scores achieved by the
tual work the candidate will have to do, such as population on whom the test was
using a keyboard or carrying out a skilled task like standardized – the norm or reference group.
repair work. Work sample tests can be used only A normative score is read from a norms table
with applicants who are already familiar with the and might, for example, indicate that
task through experience or training. someone has performed the test at a level
equivalent to the top 30 per cent of the
relevant population.
Characteristics of a good test
●● Criterion scores. Norms simply tell us how
A good test is one that provides data that enables someone has performed a test relative to
reliable predictions of performance or behaviour to other people. A more powerful approach is
be made and therefore assists in the process of mak- to use the relationship between test scores
ing objective and reasoned decisions when selecting and an indication of what the test is designed
people for jobs. It will be based on research that has to measure, such as job success. This is called
produced standardized criteria derived by using the a criterion measure.
same measure to test a number of representative
people to produce a set of ‘norms’ for comparison
purposes. The test should be capable of being objec- The use of tests in a selection
tively scored by reference to the normal or average
performance of the group.
procedure
The two key characteristics of a good test are Validated intelligence and personality tests can pro-
first that it is reliable in the sense that it always duce useful data, but it is best to combine them with
measures the same thing: a test aimed at measuring structured interviews in a selection procedure. Tests
a particular characteristic, such as intelligence, can be used where a large number of candidates
should measure the same characteristic when ap- have to be assessed and where it is not possible to
plied to different people at the same or a different rely entirely on examination results or information
time or to the same person at different times. Second, about previous experience as the basis for predict-
a test should be valid in the sense that it measures ing future performance. In these circumstances it is
the characteristic the test is intended to measure. economical to develop and administer special tests,
Thus, an intelligence test should measure intelli- and a sufficient number of cases can be built up for
gence (however defined) and not simply verbal facil- the essential validation exercise. Tests usually form
ity. A test meant to predict success in a job or in part of an assessment centre programme. They can
passing examinations should produce reasonably be administered online.
convincing (statistically significant) predictions. Intelligence tests are particularly helpful in situa-
A criterion-related approach is used to assess va- tions where intelligence is a key factor and there is no
lidity. This means selecting criteria against which other reliable method of measuring it. Aptitude tests
the validity of the test can be measured. These crite- are most useful for jobs where specific and measura-
ria must reflect ‘true’ performance at work as ble skills are required, such as word p rocessing and
skilled repair work. Personality tests can complement organization and possibly to become a
structured interviews and intelligence and aptitude member of a talent pipeline (see Chapter 29).
tests. Some organizations use them for jobs such as ●● Several candidates or participants are
selling, where they believe that ‘personality’ is impor- assessed together to allow interaction and to
tant and where it is not too difficult to obtain quan- make the experience more open and
tifiable criteria for validation purposes. They may be participative.
used to assess integrity and conscientiousness where
●● Several trained assessors or observers are
these characteristics are deemed to be important.
used in order to increase the objectivity of
In some situations a battery of tests may be used,
assessments.
including various types of intelligence, personality
and aptitude tests. These may be a standard battery The case for assessment centres is that they obtain
supplied by a test agency, or a custom-built battery much more information about candidates than
may be developed. The biggest pitfall to avoid is conventional interviews, even when these are sup-
adding extra tests just for the sake of it, without plemented by tests. But research by Schmidt and
ensuring that they make a proper contribution to Hunter (1998) has shown that on their own, the
the success of the predictions for which the battery ability of assessment centres to predict how well
is being used. someone will perform (predictive validity) is
Tests should be administered only by people who lower than that of intelligence tests combined
have been trained in what the tests are measuring, with structured interviews. Assessment centres
how they should be used, and how they should be are expensive and time-consuming and their use
interpreted. Also, it is essential to evaluate all tests tends to be restricted to large organizations for
by comparing the results at the interview stage with managerial positions, graduates and, sometimes,
later achievements. To be statistically significant, sales staff.
these evaluations should be carried out over a rea-
sonable period of time and cover as large a number
of candidates as possible. Choice of selection methods
There is a choice between selection methods. The
Assessment centres most important criterion is the ability of a selection
method or combination of methods to predict fu-
Assessment centres assemble a group of candidates ture performance. Predictive ability is expressed as
and use a range of assessment techniques over a a coefficient – complete validity would be 1.0; no
concentrated period (one or two days) with the aim validity would be 0.0.
of providing a more comprehensive and balanced The meta-analysis on the validity of different se-
view of the suitability of individual members of the lection methods conducted by Schmidt and Hunter
group. The main features of assessment centres (1998: 265), which covered 85 years of research
are that: findings, produced the predictive validity coeffi-
cients shown in Table 28.4.
●● Exercises are used to capture and simulate
Robertson and Smith (2001) added personality
the key dimensions of the job; these may
assessments to this list with a validity coefficient
include one-to-one role-plays and group
of .37.
exercises. It is assumed that performance in
Schmidt and Hunter (1998) established that the
these simulations predicts behaviour on
reason why intelligence (GMA) is such a good pre-
the job;
dictor of job performance is that intelligent people
●● Gamification is used to test reasoning power, acquire job knowledge more rapidly and acquire
problem solving and decision making. more of it, and it is this knowledge of how to per-
●● Candidates are interviewed and tested. form the job that causes their job performance to be
●● Performance in the centre is measured in higher. Their research clearly indicates that the com-
several dimensions in terms of a competency bination of structured interviews and intelligence
framework which defines what is required to tests is the most effective in terms of predictive va-
achieve success in a career with the lidity. Graphology is useless.
TA B L E 28.4 Validity of different selection methods
Method Coefficient
Intelligence tests and structured interviews .63
Intelligence tests and unstructured interviews .55
Assessment centres and structured interviews .53
Intelligence tests only .51
Structured interviews only .51
Unstructured interviews only .38
Assessment centres only .37
Graphology only .02
Source Schmidt and Hunter (1998)
C A S E S T U DY
Recruitment strategy at Thermo Fisher Scientific
Thermo Fisher Scientific faced the problem of coordinating employer brand and redesigned its recruitment channel
recruitment in 18 divisions, some with internal recruiters, and careers websites. A quarter of vacancies are now
seven different applicant tracking systems and vastly filled internally. Time to hire is down from 77 to 44 days and
different interview procedures. So the company established cost per hire is down 65 per cent from $1,175 to $417.
a new Internal Talent Acquisition team, re-vamped its
a balanced one – the match may not be perfect but it

Making the decision may be felt that it will do. However, for the sake of
the organization and the individual concerned, what
When making the decision the first step is to iden- should be avoided is the selection in desperation of
tify the candidates who have the abilities and per- someone who is not properly qualified to do the job.
sonality that most closely match the specification If there is no one available, it is better to start again.
for the job (person-job fit). Account may also be It can happen that no suitable person emerges, even
taken of the extent to which the candidates’ per- after another attempt or attempts. It could then be
sonality and values will fit into the organization necessary to rethink the job specification to make it
(person-organization fit). more realistic. In these circumstances, organizations
The next step is to make a choice if there is more have been known to resume their internal search,
than one possible candidate. This choice should be recognizing that some special training may be neces-
evidence-based but judgement may still be required, sary for an individual with the potential to do the
which can be difficult. The decision may have to be job but who lacks some of the expertise required.
Inevitably, managers and team leaders will want ●● What work was carried out?
to appoint someone they think they will be able to ●● What was the rate of pay or salary?
work with, but great care has to be taken to avoid
●● How many days’ absence were there over the
superficial or prejudiced decisions based on appear-
last 12 months?
ances rather than the reality of what the candidate
has to offer. It is too easy to make superficial judge- ●● Would you re-employ (if not, why not)?
ments. Managers can also fall into the trap of select- The last question is important, if it is answered hon-
ing ‘like for like’, ie someone they feel is like estly or at all.
themselves rather than someone who can do the job Telephone references may save time and may be
well, even if they are different. more reliable. They can be used as an alternative or
in addition to written references. Ask factual ques-
tions only and keep a record of the conversation.
Provisional offers and
obtaining references References – legal aspects
After the interviewing and testing procedure has The key legal points that should be considered
been completed, a provisional decision to make an when asking for or giving references are:
offer by letter, e-mail or telephone can be made. This ●● Once the decision has been made to make an
is normally ‘subject to satisfactory references’ and offer, the letter should state that ‘this is a
the candidate should, of course, be told that these provisional offer subject to the receipt of
will be taken up. If there is more than one eligible satisfactory references’.
candidate for a job it may be advisable to hold one
●● It has been generally held that there is no
or two people in reserve. Applicants often withdraw,
common law duty on an employer to provide
especially those whose only purpose in applying for
references for a serving or past employee
the job was to carry out a ‘test marketing’ opera-
unless there is a term to that effect in the
tion, or to obtain a lever with which to persuade
employment contract. But it has been ruled
their present employers to value them more highly.
(Spring v. Guardian Assurance, 1994) that
The main purpose of a reference is to obtain in
there might be a moral duty to provide a
confidence factual information about a prospective
reference where it is ‘natural practice’ to
employee. This information is straightforward and
require a reference from a previous employer
essential. It is necessary to confirm the nature of the
before offering employment, and where the
previous job, the period of time in employment, the
employee could not expect to enter that type
reason for leaving (if relevant), the salary or rate of
of employment without a reference.
pay and, possibly, the attendance record.
Opinions about character, competence, perfor- ●● If a reference contains a false or
mance and suitability are unreliable. Referees are unsubstantiated statement that damages the
reluctant to commit themselves and they are not in reputation of the individual, action for
any position to assess suitability – only the prospec- damages may result.
tive employer can do that. Personal referees are, of ●● It is possible to succeed in a claim for
course, useless. All they prove is that the applicant damages if it can be shown that the reference
has at least one or two friends. provided was negligent because reasonable
A written request for a reference could simply care had not been taken in preparing it, which
ask the previous employer to confirm the candi- includes ensuring that it is factually correct.
date’s employment record. More precise answers
may be obtained if a standard form is provided for
the employer to complete. The questions asked on Checking applications
this form should be limited to the following:
●● What was the period of employment? Candidates all too often misinform their prospec-
tive employers about their education, qualifications
●● What was the job title? and employment record. This was confirmed by a
survey carried out by the CIPD (2008), which found work. The contract of employment should also be
that 25 per cent of employers had to withdraw their prepared at this stage.
offers because applicants had lied or misrepresented
their application. It is always advisable to check
with universities, professional institutes and previ- Following up
ous employers that the facts given by applicants are
correct. Other checks can be made such as: It is essential to follow up newly engaged employees
to ensure that they have settled in and to check on
●● interview questions about actual (not
how well they are doing. If there are any problems
hypothetical) experiences, with deep probing
it is much better to identify them at an early stage
to ascertain the extent of the individual’s
rather than allowing them to fester.
personal involvement, decision making and
Following up is also important as a means of
contribution;
checking on the selection procedure. If by any
●● detailed application forms with open-ended chance a mistake has been made, it is useful to find
questions about specific learning related to out how it happened so that the procedure can be
the skills, knowledge and competencies improved. Misfits can be attributed to a number of
required for the vacancies under causes, for example inadequate person specifica-
consideration; tion, poor sourcing of candidates, weak advertis-
●● identification check; ing, poor interviewing techniques, inappropriate or
●● electoral register check; invalidated tests, or prejudice on the part of the
selector.
●● credit reference agency check (especially
appropriate for positions in the financial
services sector);
●● confirmation of previous employment with
Dealing with recruitment
HM Revenue and Customs or through the problems
Department of Work and Pensions;
●● Criminal Records Bureau check; Every experienced HR professional who is respon-
sible for recruitment and selection will occasionally
●● Companies House check (for directors);
come across a vacancy that is particularly difficult
●● fraud prevention check, including Cifas staff to fill. In this situation any compromise that in-
fraud database check (to prevent an volves appointing someone who does not meet the
employer unwittingly employing people specification must be avoided. To deal with the
previously dismissed for fraud somewhere problem constructively it is necessary to take the
else); Cifas is a not-for-profit fraud following actions:
prevention service;
●● Ensure that all the possible sources of
●● the extent to which a CV tallies with a social
candidates have been used.
media profile – one in five employers polled
by YouGov say they have turned down a ●● Consider any ways in which the website or
prospective employee after seeing their media social media notice or advertisement could
profile. be made more attractive.
●● Consider ways of improving the
organization’s employer brand.
Offering employment ●● Check that the person specification is
realistic – that the requirements have not
The final stage in the selection procedure is to con- been overstated.
firm the offer of employment after satisfactory ref-
●● Consider whether it might be necessary to
erences have been obtained, and the applicant has
improve the package offered to candidates –
passed the medical examination required for pen-
check market rates to ensure that the levels
sion and life assurance purposes or because a cer-
of pay and benefits are competitive.
tain standard of physical fitness is required for the
●● In discussion with the line manager, examine ●● If the worst comes to the worst, discuss with
the possibility of reshaping the role to the manager alternative ways of carrying out
increase its attractiveness. the work with existing staff.
C A S E S T U DY
Recruitment assessment processes at Embarq
Embarq is the largest independent local telecoms provider and ‘persistence’. There follows a behaviour-based struc-
in the United States. It suffered catastrophic rates of staff tured interview and a sales-based role-play exercise. This
turnover in its call centres; then a new assessment process exercise takes place over the phone, which tests candi-
designed by PreVisor reduced turnover from 33.5 per cent dates in the most realistic way possible, and is more con-
in the first 90 days to 12.5 per cent. venient and cost-effective.
The new process begins with an online screening tool Sales have since increased by 24 per cent, and custom-
that identifies characteristics and motivations that define er service has also improved.
long-term success in the roles, such as ‘customer focus’
Key learning points
Define requirements ●● A positive brand will help the business to become

an employer of choice, thus attracting better
Requirements are set out in the form of job applicants for jobs.
descriptions or role profiles and person specifications.
These provide the information required to draft ●● The key feature of the brand will be the reputation
advertisements, post vacancies on the internet, brief of the company as an employer – the way people
agencies or recruitment consultants and assess are treated, the provision of a fair deal,
candidates by means of interviews and selection tests. opportunities for growth, work-life balance,
leadership, the quality of management and
Analyse recruitment strengths involvement with colleagues.
and weaknesses
The analysis should cover such matters as the national Employee value proposition
or local reputation of the organization, pay, employee An organization’s employee value proposition consists
benefits and working conditions, the intrinsic interest of what it offers to prospective or existing employees
of the job, security of employment, opportunities for that they will value and that will persuade them to join
education and training, career prospects, and the or remain with the business.
location of the office or plant.
Analyse the requirement
Employer brand
●● Establish how many jobs have to be filled and by
●● An employer brand is the image presented by an when.
organization as a good employer – ‘a great place to
work’.
●● Set out information on responsibilities and Competency-based interviews

competency requirements.
A competency-based interview is a structured
●● Consider where suitable candidates are likely to interview in which the predetermined set of
come from. questions put to all candidates aims to establish the
●● Define the terms and conditions of the job (pay and extent to which they have the competencies required
benefits). to perform the job as set out in the person
specification.
●● Consider what is likely to attract good candidates.
Selection tests
Identify sources of candidates
Selection tests are used to provide valid and reliable
Initially, consideration should be given to internal evidence of levels of abilities, intelligence, personality
candidates. An attempt can be made to persuade characteristics, aptitudes and attainments.
former employees to return to the organization or
obtain suggestions from existing employees (referrals).
If these approaches do not work, the main sources of
Choice of selection methods
candidates are online recruiting, advertising, agencies There is a choice between the selection methods. The
and job centres, consultants, recruitment process most important criterion is the predictive validity of the
outsourcing providers and direct approaches to method or combination of methods. Schmidt and
educational establishments. Hunter (1998) found that the best results were obtained
by combining intelligence tests with structured
Selection methods interviews.
The aim is to assess the suitability of candidates by

predicting the extent to which they will be able to carry
Making the decision
out a role successfully. It involves deciding on the When making the decision the first step is to
degree to which the characteristics of applicants identify the candidates who have the abilities and
match the person specification and using this personality that most closely match the specification
assessment to make a choice between candidates. The for the job (person-job fit). Account may also be taken
interview is the most familiar method of selection. The of the extent to which the candidates’ personality and
aim is to elicit information about candidates that will values will fit into the organization (person-
enable a prediction to be made about how well they organization fit).
will do the job and thus lead to a selection decision.
References and offers
Structured interviews
After the interviewing and testing procedure has been
A structured interview is one based on a defined completed, a provisional offer by telephone or in
framework. Within the framework there may be a set writing can be made. This is normally ‘subject to
of predetermined questions. All candidates are asked satisfactory references’. It is essential to check the
the same questions and the answers may be scored information provided by candidates on qualifications
through a rating system. and their work experience.
References
BBC News (2017) Is it easier to get a job if you’re binaries/a-head-for-hiring_2015-behavioural-
Adam or Mohamed? 5 February [online] science-of-recruitment-and-selection.pdf (archived
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TYC5-8S9K) [accessed 26 January 2019] Marr, B (2018) Data-driven HR, London,
Burt, E (2019) Stop getting hiring wrong, People Kogan Page
Management, February, pp 27–32 Moore, D A (2017) How to improve the accuracy
Chamorro-Premuzic, T (2017) The Talent Delusion, and reduce the cost of personnel selection,
London, Piatkus California Management Review, 60 (1), pp 8–17
CIPD (2008) Survey of Recruitment, Retention and Pulakos, E D and Schmitt, N (1995) Experience-based
Turnover, London, CIPD and situational interviews: studies of validity,
CIPD (2017) Resourcing and Talent Planning Survey Personnel Psychology, 48 (2), pp 289–308
[online] https://www.cipd.co.uk/Images/resourcing- Purcell, J, Kinnie, K, Hutchinson, S, Rayton, B and
talent-planning_2017_tcm18-23747.pdf (archived Swart, J (2003) Understanding the People and
at https://perma.cc/SF3K-4X8V) [accessed Performance Link: Unlocking the black box,
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Groysberg, B, Nohria, N and Fernández-Aráoz, C Robertson, I T and Smith, M (2001) Personnel
(2009) The definitive guide to recruiting in good selection, Journal of Occupational and
times and bad, Harvard Business Review, May, Organizational Psychology, 74 (4), pp 441–72
pp 74–84 Schmidt, F L and Hunter, J E (1998) The validity and
Jeffery, R (2017–2018) Don’t hire the candidate who utility of selection methods in personnel
presses this key, People Management, December/ psychology: practical and theoretical implications
January, pp 35–39 of 85 years of research findings, Psychological
Linos, E and Reinhard, J (2015) A Head for Hiring: Bulletin, 124 (2), pp 262–74
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327
29
Talent management
Talent is what people must have in order to per-
Introduction form well in their roles. They make a difference to
organizational performance through their immediate
The success, indeed the survival of organizations, efforts, they have the ability to learn and grow, and
depends on the quality of the people they employ – they have the potential to make an important contri-
their talent. This has to be managed by being identi- bution in the future. Talent management is based on
fied, obtained, developed and nurtured. the proposition that ‘those with the best people win’.
The term emerged in the late 1990s when McKinsey
and Company coined the phrase ‘the war for talent’.
As suggested by Younger et al (2007), approaches
Wo rd s of wi sdom to talent management include emphasizing ‘growth
The two critical issues in talent management from within’, regarding talent development as a key
element of the business strategy, being clear about the
concern the ability to place the right people competencies and qualities that matter, maintaining
in the right roles and to ensure their typical well-defined career paths, taking management devel-
performance is as close to their maximum opment, coaching and mentoring seriously and
demanding high performance. A policy of ‘talent on
performance as possible. demand’ can be adopted as advocated by Cappelli
Chamorro-Premuzic (2017: 85) (2008) which means that talented people are a vailable
as required to meet emerging needs for senior manag-
ers or other key staff.
There are many versions of talent management
This chapter starts with a definition of talent manage- but in one way or another it can cover such tradi-
ment and continues with a review of talent management tional HRM activities as workforce planning, recruit
policy and strategy. This is followed by a d
escription of ment, managing employee retention, performance
the process of talent management including the opera- management, potential assessment, leadership and
tion of a ‘talent pipeline’ and the creation and mainte- management development, succession planning and
nance of a ‘talent pool’. The global approach to talent career planning. The difference is that talent manage-
management was covered in Chapter 7. ment is a wider-reaching approach which ‘joins up’
these HR practices. The process of talent manage-
ment as described later needs to be directed by an
Talent management defined articulated talent management policy and strategy.
Talent management is about ensuring that the or-

ganization has the capable and well-qualified people Talent management policy
it needs to attain its goals. It involves the systematic
attraction, retention, identification and development An organization developing a talent management
of individuals who are of particular value to a programme has initially to make the following pol-
business. icy decisions.
Talent on demand policy policy in any situation in which it is difficult to pro-

duce precise definitions of future talent require-
The first decision is whether to adopt a ‘talent on ments; and today that is a typical situation.
demand’ policy which means that talented people
are available as required to meet emerging needs for
senior managers or other key staff. Cappelli (2008) Inclusion in talent management
advocated this policy based on the following four
principles:
programme policy
The second policy decision is on who should be in-
1 Make and buy talent to manage the demand-
cluded in a talent management programme. The
side risk.
choice is between an exclusive and inclusive ap-
2 Reduce the uncertainty in talent demand. proach. An exclusive approach may focus on an
3 Earn a return on investment in developing elite group of those assessed as having high poten-
employees. tial – the ‘high flyers’. These will be possible future
4 Employee interests should be balanced by leaders able to fill senior posts in the organization.
creating an internal labour market that offers Huselid et al (2005) argued that talent management
all the advantages of the external labour policies should concentrate on the ‘A list’ people
market to reduce staff turnover and to avoid who fall into this category. But a modified form of
the associated loss of talent and costs. exclusivity recognizes that there are a number of
other key positions with which talent management
may be concerned, for example, pivotal profes-
sional or technical roles or even middle-ranking
Source review managers such as departmental heads and team
leaders.
Succession planning has evolved from the An inclusive approach means that everyone in
traditional short-term focus on replacing senior the organization is seen as actually or potentially
managers if they happened to leave without prior talented, given opportunity and direction.
warning. There is now a more long-term aim of The most common view seems to be that the
developing a cadre of key talent who are able to aims of talent management are to obtain, identify
take on higher-level roles, potentially roles that may and develop people with high potential. But it
not currently exist... The utilization of talent pools should not be at the expense of the development
consisting of employees with key generic type needs of people generally. A case study of a global
competencies and skills allows the organization far management consultancy (Tansley and Tietze,
greater scope when positions become available. 2013) revealed that the consultancy’s approach to
Management will be able to select the most talent management was both inclusive (everyone is
talented) and exclusive (key people were developed
suitable candidate from a pool of candidates and
in ways different to those adopted for ‘everyday tal-
train the person into the specific requirements of
ent’). This was expressed by the company’s Talent
that particular role.
Development Director as follows:
McDonnell and Collings (2011: 64)
Talent in the firm means two things. One, I think
that everybody is a talented individual. We recruit
bright people intellectually. But our business also
This is a more practical approach than the manage- has the responsibility to help them realize that.
ment succession plans that were formerly produced So there is a fundamental belief that everyone
by large bureaucratic organizations. They never is talented, and there is a belief that we do need
worked well and are even less likely to succeed in to identify future leaders, who are going to lead
today’s more flexible and rapidly changing organi- key parts or have key roles in the business in the
zations, where elaborate succession plans are likely future and these would be quite senior roles. And
to be out of date as soon as they are made. There is that identifying talent to these spaces, and helping
much to be said for adopting a talent on demand people to gravitate towards one of these roles, will
be the key challenge for us.
Chapter 29 | Talent Management 329
These beliefs were put into effect by the firm through

a talent progression sequence of four stages:
right context – or role – for his natural
1 Rising talent – highly educated graduate disposition and default behavioural
recruits who are given education and training
for core technical or professional roles. tendencies.
2 Emerging leaders – who are given training What are the implications of these principles
and education for management under the
guidance of sponsors or mentors. for talent management?
3 Next generation leaders – who undertake
leadership development programmes and
may attend a corporate academy.
4 Corporate next generation leaders – who are
provided with one-to-one development
Talent pool policy
through coaches and mentors and briefed on The third policy area is concerned with the need to
corporate/governance strategy. create inclusive talent pools that contain a propor-
tionate number of people from diverse backgrounds.
Talent pool policy should also cover the way in
which talent pools in partner organizations are han-
Pa u s e for t houg ht dled. In circumstances where there are close links
between the partners there is much to be said for
The following four definitions of talent were
sharing talent and thus encouraging the cross-
produced by Chamorro-Premuzic (2017: 30): fertilization of ideas.
The first is the rule of the vital few,

which posits that, in any organization Talent management strategy
or group of individuals, a minority of
A talent management strategy consists of a view on
people will be responsible for most of how to acquire and nurture talent wherever it is and
the collective output. The second is the wherever it is needed by using a number of inter
dependent policies and practices. Talent management
maximum performance rule, which is the notion of ‘bundling’ in action. The strategy
states that a person’s talent can be should take into account the future talent require-
ments of the organization as determined by work-
gauged when he is trying to do his
force planning. It should also take account of talent
best. The third is the effortless management policies as discussed in the next section
performance rule, which asserts that if of this chapter referring to who the talent manage-
ment programme should cover and definitions of
a person has talent he will be able to what is meant by talent in terms of competencies and
achieve the same level of performance potential. The talent resourcing strategy should in-
as a less talented individual despite clude the establishment of an employer brand and
employee value proposition that will attract high-
exerting lower levels of effort, because quality candidates.
performance is ability plus motivation. The aims of a talent management strategy can be
expressed as being to:
The fourth states that talent is
●● generate and maintain a talent pool so that
personality in the right place, in that a
‘talent on demand’ is available to meet
person will display talent if he finds the requirements for high-quality people and to
provide for management succession;
●● develop the organization as an ‘employer of

choice’;
●● plan and implement recruitment and
selection programmes that ensure good- It can be argued that talent management is
quality people are recruited who are likely to no more than a number of familiar HR
thrive in the organization and stay with it for
a reasonable length of time (but not practices bundled together. Is this true? And
necessarily for life); if not, what does the concept of talent
●● plan and implement talent retention management contribute to effective people
programmes;
management?
●● introduce reward policies that help to attract
and retain high-quality staff;
●● design jobs and develop roles that give
people opportunities to apply and grow their
skills and provide them with autonomy, The process of talent
interest and challenge;
management
●● implement talent development programmes;
●● provide talented staff with opportunities for The process of talent management is to establish a
career development and growth; ‘talent pool’ (or talent pools) from which people
●● recognize those with talent by rewarding can be obtained as required to fill key roles. This is
excellence, enterprise and achievement; achieved by operating a ‘talent pipeline’ that pro-
vides for the flow of talent needed to maintain the
Cappelli (2008) suggested that the signs of a suc- talent pool through the processes of resourcing, tal-
cessful talent management strategy are that it is ent identification and talent development. These ac-
inclusive and that it can address and resolve any tivities are initiated by the business strategy that
incongruity between the supply and demand of tal- informs workforce plans. Talent management poli-
ent. He argued that talent management should not cies and strategies determine the scope of the talent
just be about employee development or succession pool and influence workforce plans. The process is
planning, as many of the commonplace definitions modelled in Figure 29.1.
suggest, but should focus on helping the firm attain
its strategic objectives.
F I G U R E 29.1 The process of talent management
Talent
management
policy
TALENT MANAGEMENT PIPELINE
Business Workforce Talent Talent Talent

Resourcing pool
plans planning identification development
Talent
management
strategy
the future taking into account the implications of

The talent pool business plans. It also assesses the type of skills that
will be required and informs decisions on the size
A talent pool contains the resources of talented and composition of the talent pool in accordance
people required by an organization to ensure that with talent management policy. It provides the basis
vacancies for people in pivotal roles can be filled for the resourcing (recruiting) activities required to
readily. Talent management policy will define the ensure that the talent needed by the organization is
view of the organization on what constitutes talent readily available in terms of both numbers and skills.
and who should be included in a talent management
pool. The talent management strategy as informed
by workforce planning will indicate the size of the
talent pool and the operation of the talent pipeline.
Resourcing
Criteria for inclusion in the talent pool in the
Resourcing is the first step in the direction of creating
shape of generic competencies and skills need to be
a talent pool. It is primarily about ensuring that the
defined. These criteria will be used to identify po-
organization obtains the right people with the right
tential and qualify people for membership of a pool.
skills for future roles as well as for immediate vacan-
Inclusion and diversity obligations should be met.
cies. The UK Civil Service has a fast-stream entry
For its senior posts, a Civil Service department
scheme, which is used to attract relatively small num-
uses the three Corporate Leadership Council (2002)
bers of external recruits with the perceived potential
elements:
to reach senior leadership levels over their career.
1 Ability: technical skills, attitudes and These entrants have rapid early career progression
behaviour. and a wide range of early experiences to accelerate the
2 Aspiration: setting and achieving challenging early stages of their career development. Organizations
goals, and seeking opportunities for learning in such fields as accountancy, retailing, aerospace engi-
within their subject area. neering and pharmaceuticals recruit graduates who
have the potential for a career in management, a pro-
3 Engagement: emotional and rational
fessional role, or research and development.
commitment to the organization, resulting in
Role specifications for recruiting purposes
discretionary effort.
should define the competencies required to progress
Fernandez-Araoz (2014) recommended the follow- in the organization. Structured interviews should
ing criteria for defining high talent: focus on these competencies, intelligence and ability
tests should be used, and consideration should be
●● Motivation: a fierce commitment to excel in given to the use of assessment centres. Interviewers
the pursuit of unselfish goals. should be trained in how to assess potential.
●● Curiosity: a penchant for seeking out new The implementation of talent resourcing plans
experiences, knowledge, and candid feedback may be the responsibility of a talent management
and an openness to learning and change. function in an organization but it is often carried
●● Insight: the ability to gather and make sense out by recruitment specialists leaving those con-
of information that suggests new possibilities. cerned with talent management to concentrate on
●● Engagement: a knack for using emotion and the pipeline activities of identification and develop-
logic to communicate a persuasive vision and ment, the management of the talent pool and, im-
connect with people. portantly, keeping in touch with those in the talent
pipeline (talent relationship management).
●● Determination: the wherewithal to fight for It is also necessary to consider what needs to be
difficult goals despite challenges and to done to retain as well as to obtain talent. The steps
bounce back from adversity. that can be taken include demonstrating that the or-
ganization values its talented people, providing ample
scope for learning and growth, recognizing and re-
Talent planning warding achievement and high performance, and
keeping people informed about their progress (regu-
Talent planning as an aspect of workforce planning lar feedback). Talent management specialists will be
estimates the number of talented people needed in responsible for dealing with talent retention issues.
1 Performance difficulties in their role –

Identifying talent remedial action required.
Procedures are necessary for identifying people who 2 Good match now – still room to develop in
are qualified now for membership of a talent pool current role.
or who have the potential to become members after 3 Lateral development – consistent performer,
completing a talent management development pro- consider opportunities for individual in other
gramme. Managers can be asked to assess potential areas.
and make recommendations on who should be in- 4 Ready to go now – high performing, one-step
cluded in such a programme. progression to the next level.
A simple three-box method can be used to clas-
5 Ones to watch – high performing and high
sify people. For example, ‘emerging’, ‘growing’ or
potential, require opportunities to develop
‘high’ potential, or ‘ready now to progress beyond
quickly to senior level.
current grade’, ‘could progress beyond current grade
within two years’ or ‘best suited to current grade’. As A more elaborate method is the nine-box grid for
noted by Campbell and Hirsh (2013), a UK police identifying talent. This is a widely adopted ap-
force uses five categories for talent development: proach – over half of the organizations studied by
F I G U R E 29.2 A nine-point performance/potential assessment grid
Performance
Low Medium High
Shows every sign of the Has the potential to go Demonstrates high potential.
potential to go further but further. Performance is at Regularly achieves
is under-performing in the an acceptable level. challenging and stretching
present role. goals.
High
Capable of taking on greater Has the potential to keep Capable of growing into a
responsibilities if there is a developing and to deliver higher-level role in due
significant improvement in more in either scale or course. A consistently
performance. complexity.Performance is strong performer,
acceptable delivering excellent value.
Medium Potential
No potential for growth Valued in current role but is Highly valued at this level
beyond this level. Is not expected to advance and in current role. A strong
seriously under-performing beyond this level. Generally performer who is a core
in the present role. meets performance team member.
expectations. Low
Campbell and Hirsh were using it or were planning Leadership and management
to. As illustrated in Figure 29.2, the grid uses two
axes – performance and potential – with three levels development
on each axis, forming nine boxes in total. Leadership and management development pro-
The problem is that line managers are not neces- grammes ensure that managers have the leadership
sarily well qualified to judge potential to carry out and managerial qualities required to achieve suc-
higher-level jobs because they may not be aware of cess. A blended learning approach is used, which is
the requirements for their successful performance. based on an analysis of learning needs and com-
This was confirmed by research conducted by bines a number of learning activities. These can
Viswasvaran et al (1996), which established that include planned experience, coaching, mentoring,
potential assessments by line managers can be unre- action learning, outdoor learning and formal train-
liable and inconsistent. To deal with this problem it ing courses. A self-managed learning approach as
is necessary to brief managers on the method and described in Chapter 34 can be encouraged as a
criteria to be used and train them in their use. means of developing talent.
Recommendations need to be reviewed and po- Leadership development programmes prepare
tential talent pool members interviewed by a talent people for leadership roles and situations beyond
management specialist (or whoever in HR is re- their current experience. The aim is to enhance lead-
sponsible for talent management) or better still, by ership qualities by getting participants to under-
a talent management panel of senior managers ad- stand what leadership involves and enabling them
vised by the HR specialist. A further stage in a larger to appreciate, practice and develop the skills re-
organization could be attendance at an assessment quired for effective leadership. They focus on peo-
centre, which would not only confirm who should ple management. As suggested by Bolden (2010),
be included in the programme but would also iden- the essential elements of leadership development
tify what needs to be done to develop potential. are reflection, practice, self-awareness, personal
Whatever approach to assessing potential is support and opportunities to apply the learning to
adopted, it is important to ensure that the line man- work.
ager discusses it with the individual, explaining the Management development programmes aim to
reason for the assessment, and giving performance enhance the ability of participants to achieve
feedback. This should be a two-way conversation in their goals by directing and controlling a whole
which the individual has the opportunity to com- range of resources, including people. They focus
ment. It should lead to a general discussion on the on the hard skills of managing for results as well
career prospects of the individual. If there is room as softer people management skills. Because man-
for performance improvement the aim should be to agers generally have to work on a day-to-day
reach an agreement on what needs to be done – by basis in conditions of variety, turbulence and un-
the individual and by the manager. predictability their development largely takes
place by gaining the right sequence of experience
through the career development activities de-
Talent development scribed below, although this may be supplemented
by self-directed learning and courses on manage-
Talent development is the process of ensuring that ment techniques. Guidance provided by coaching
talented employees gain the skills and experience and from mentors can be an important part of a
required to fulfil their promise, advance their ca- programme. Leadership and management devel-
reers and satisfy the organization’s need to fill opment activities are described in more detail in
senior and key posts with high-quality people. It Chapter 36.
enables those with potential to become a member
of a talent pool but, because there is always room
for further growth, qualified members of a talent Career development
pool will still benefit from continuing develop-
mental activities. Talent development involves Career development is concerned with shaping the
leadership and management development and ca- progression of individuals within an organization in
reer development. order to provide those with promise a sequence of
experience and learning activities that will equip can provide support and guidance to people with
them for whatever level of responsibility they have potential. At Richer Sounds, a system of career
the ability to reach. It includes career counselling to counselling has been introduced. An employee can
help people progress their careers to their advan- request a meeting with a senior person at any time
tage as well as that of the organization. in order to discuss their career, whether there is a
Giving breadth of career experience is more dif- specific problem or whether they are concerned
ficult for those in specialized roles as they often with their whole future direction.
have fewer opportunities for movement. To deal Ultimately, however, it is largely up to individu-
with this problem it is necessary to build on what als to manage their own careers. Schein (1978) orig-
they know through repeat exposure to similar, but inated the notion of ‘career anchors’. He defined
increasingly complex, activities. them as the self-concept of people, consisting of
Career development includes the following self-perceived talents and abilities, basic values and
activities: a sense of motives and needs relating to their ca-
reers. As people gain work experience, career an-
●● a policy of promoting from within wherever
chors evolve and function as stabilizing forces,
possible;
hence the metaphor of ‘anchor’.
●● the definition of career development
pathways as explained below;
●● personal development planning to develop Career development pathways
each individual’s knowledge and skills;
Career development pathways define the routes tal-
●● systems and processes to achieve sharing and ented people can take to advance their careers
development of knowledge across the firm; within an organization by moving vertically or di-
●● multidisciplinary project teams, with a agonally upwards or laterally as opportunities arise.
shifting membership, to offer developmental They can provide aiming points as modelled in
opportunities for as wide a range of Figure 29.3 that indicate levels of competence re-
employees as possible. quired at each career stage and define the develop-
ment needs for career advancement.
The organization can take steps to manage careers Career development pathways can be defined in
as part of its talent management programme and a number of ways. Perhaps the most appropriate
F I G U R E 29.3 Competency band career development pathway
Aiming point
Aiming point
Competency band 1 definition Competency band 2 definition Competency band 3 definition
Basic training and experience Continuation training and experience Advanced training and experience
are either a written definition of competence levels such as marketing, operations, finance, IT, HR or
(an example is given in Table 29.1) or a represen- administration which are related through the ac-
tation as illustrated in Figure 29.4 of the level or tivities carried out and the basic knowledge and
grade structure of the organization and career skills required, but in which levels of responsibil-
paths expressed for different job families (a job ity, knowledge, skills and competency levels
family is a group of jobs in a function or occupation differ).
TA B L E 29.1 Career development pathway example – HR function
Level Role Key responsibilities Key competencies
8 HR Director ●● Contribute to development of Knowledge of:

business strategy ●● the business, its strategy and its
●● Develop HR strategies aligned to drivers

business strategy ●● HRM/HCM at a strategic level
●● Exercise overall direction of all HR Ability to:

activities required to support ●● articulate a vision and set a leadership
achievement of business goals agenda

●● Oversee human capital ●● contribute to business strategic
management projects planning on equal terms with other

directors
●● develop and implement HR strategies
which are aligned to the business

strategy and integrated with one
another
5 Learning and ●● Contribute to the development of Knowledge of:

Development the learning and development ●● current thinking and good practice in
Manager strategy learning and development

●● Identify learning needs and plan ●● advanced concepts and techniques in
blended learning and development the field (Fellow CIPD)

programmes to meet them Ability to:
●● Deliver major programmes ●● analyse key factors affecting activities
●● Direct the activities of learning and in the function

development consultants ●● coordinate and direct complex HRD
programmes
4 Assistant Head ●● Contribute to the preparation of Knowledge of:

of Talent human capital plans ●● techniques of human resource and
Management ●● Assist in preparing management management succession planning

succession plans ●● HRM at the level of Member CIPD
●● Coordinate performance with at least 8 years’ experience

management activities Ability to:
●● Analyse human capital data and ●● analyse business plans and draw
prepare reports conclusions on talent management

requirements
●● carry out the analysis and diagnosis
of people issues and propose

practical solutions
(continued )
Level Role Key responsibilities Key competencies
3 HR Business ●● Contribute to the effective Knowledge of:

Partner management of the division ●● HRM techniques at the level of
●● Ensure the division has the skilled Member, CIPD with at least 4 years’
people it requires experience
●● Work alongside line managers and ●● business imperatives in the division
provide help and advice on HR ●● corporate HR policies and practices
issues Ability to:

●● Deliver HR services required by ●● provide efficient and cost-effective
the division services in each HR area

●● promote the empowerment of line
managers to make HR decisions but

provide guidance as required.
●● anticipate requirements and set up
and operate appropriate services
2 Reward Analyst ●● Maintain information systems on Knowledge of:

pay and benefits ●● the labour market and sources of
●● Assist in the conduct and analysis market data

of market surveys ●● reward management techniques at
●● Maintain data bank of information the level of the CIPD Certificate in

on market rates Reward Management
●● Prepare role profiles for job Ability to:
evaluation purposes ●● carry out numerical and statistical
analysis
●● use IT systems, software and spread
sheets
●● conduct role analyses
1 HR Assistant ●● Place job advertisements Knowledge of:

(recruitment) ●● Arrange interviews ●● HR techniques relevant to recruitment
●● Deal with routine correspondence (studying for CIPD)

to applicants including standard Ability to:
offer letters ●● select appropriate media
●● Ensure records created for new ●● administer fairly complex procedures
employees
1 Administrative ●● Provide word processing services Knowledge of:

Assistant ●● Maintain records ●● Microsoft Office – Word, Excel,
●● Operate office machinery PowerPoint

●● Deal with routine queries Ability to:
●● word process all types of documents,
including reports and complex

tabulations
●● prepare PowerPoint presentations
●● administer standard procedures

F I G U R E 29.4 Career paths in a career family structure
Level 6 Level 6 Level 6
Career family A Career family B Career family C

Each level is defined in terms of the competences required. Examples would be given of
the jobs at each level.
CASE STUDIES
CEMEX Ltd BAE Systems

A model of talent management produced by CEMEX Ltd is At BAE Systems there are five mandated core business
shown in Figure 29.5. management processes to support the delivery of corporate
strategy and foster high performance. Talent management
F I G U R E 29.5 The CEMEX model of talent management
BUSINESS STRATEGY
FUTURE TALENT REQUIREMENTS
Recruitment and
Succession management Development
selection
TALENT POOL
is seen within a business performance context. An annual discussed at corporate level by the board to ensure that
Integrated Business Review Planning process is used by Cargill values are embedded in future talent management
individual businesses to establish and plan for the delivery and succession planning strategy, policies and practices.
of objectives in line with corporate strategy, supported by
quarterly business reviews, customer reviews and data GlaxoSmithKline
from employee surveys. Project performance is assessed
by Contract Reviews. Performance is reviewed throughout GlaxoSmithKline is identifying those positions, at both the
the year by the Performance Management System. A corporate and business-unit levels, that are critical to the
Performance-Centred leadership framework is used to company’s success in a rapidly changing competitive
integrate management, resourcing and people development, environment. As part of that initiative, the company
focusing on the traditional outcomes of performance developed a statement of its workforce philosophy and
(financial, project and behavioural), reward and management guidelines. One of these explicitly addresses
development. There is behavioural performance feedback ‘workforce differentiation’ and reads, in part: ‘It is essential
and a performance potential rating (called Spectrum). Line that we have key talent in critical positions and that the
leaders and functional directors ensure the framework is careers of these individuals are managed centrally.’
implemented. HR’s role is one of assisting in development
interventions and providing some oversight and governance
of the processes. HSBC
Source Sparrow et al (2015)
HSBC has created a system of talent pools that track and
manage the careers of employees with high potential.
BT Employees in these pools are selected initially for new
assignments within their region or line of business and,
BT’s approach to investing in its talent is primarily focused over time, are given positions that cross boundaries in
on responding to individual needs in line with a BT-wide order to demonstrate that they have the potential to reach
‘Talent Deal’. This is a set of commitments made to a senior management role. They can then be placed in the
individuals in BT’s talent pool on the support they can group talent pool, which means that they have the
expect in areas such as career planning and movement, potential to reach the senior executive level in three to
opportunities for networking and meeting top executives, five years and top management in the longer term.
and mentoring. It also specifies the commitments expected Leaders conduct talent relationship dialogues with
of BT’s talent pool members, such as the contribution they members of each pool in order to address their
make to supporting the development of other colleagues. development needs and concerns.
Cargill IBM
The Cargill food business operates a global, corporate-level The overall aim of talent management within IBM is ‘to
labour and talent management process. This is structured develop the leaders of tomorrow’. Part of what makes it a
on the lines of ‘food platforms’ (collections of around eight global company is the importance it places on high-
business units that operate in the food businesses) and has potential people gaining international experience. For
representatives from Latin America, Europe, Asia, etc, employees, being identified as talent therefore drives many
meeting twice per year. They look at the work of the opportunities in the company.
businesses and consider how talent might be managed and Every leader in the company has responsibility for iden-
succession planned in those businesses. A workable model tifying and nurturing talent. The areas for them to look for
exists to look at talent management and succession planning are aptitude, potential and the ability to grow and develop.
at a platform level and at a practical level. Consideration is The identification of talented individuals is based on their
being given to how to integrate talent management and performance against 10 leadership competencies, which
succession planning on a global basis, and a start has been are consistent globally. The leadership competencies are
made on highlighting positive and negative aspects of talent used as a development tool for employees at all levels in
management and succession planning. These will be IBM, not just those already highlighted as having potential.
Readiness for promotion to executive roles is linked to ●● embed talent processes to establish clearer links
competencies. For example, if an individual needs to get between our talent processes and other global people
client relationship-building skills, then his or her next job processes around performance management and
has to include that. Readiness is categorized in terms of engagement;
‘next job’ or ‘two jobs away’ rather than a number of years.
●● encourage more experiential-based learning centred
more on on-the-job learning and learning from others;
Standard Chartered Bank
●● provide support to help our managers and leaders
Standard Chartered stresses the need for transparency, engage and motivate their teams;
education and understanding about the importance of ●● ensure that talented staff continue to perform.
robust talent identification and development. The approach
adopted is to:
Key learning points
Talent management defined situation in which it is difficult to produce precise

definitions of future talent requirements.
●● Talent management is about ensuring that the The second policy decision is on who should be
organization has the talented people it needs to included in a talent management programme. The
attain its goals. choice is between an exclusive (talented people are
●● It involves establishing and maintaining a ‘talent the high flyers in an organization) and inclusive
pool’ (or talent pools). (everyone is talented) approach.
●● This is achieved by operating a ‘talent pipeline’,

Talent management strategy
which provides for the flow of talent needed to
maintain the talent pool through the processes of A talent management strategy consists of a view on
resourcing, talent identification and talent how the processes involved in creating a talent pool
development. should mesh together with an overall objective – to
acquire and nurture talent wherever it is and wherever
it is needed by using a number of interdependent
Talent defined policies and practices.
Talent is what people must have in order to perform
well in their roles. They make a difference to The process of talent management
organizational performance through their immediate
●● The process of talent management involves
efforts, they have the ability to learn and grow, and
operating a talent management pipeline in which
they have the potential to make an important
resourcing, talent identification and talent
contribution in the future.
development activities take place in order to create
the talent pool.
Talent management policy ●● These activities are initiated by the business
An organization developing a talent management strategy which informs workforce plans. Talent
programme has initially to make two policy decisions. management policies and strategies determine the
The first decision is whether to adopt ‘talent on scope of the talent pool and influence workforce
demand’. There is much to be said for doing this in any plans.
The talent pool Talent development

A talent pool contains the resources of talented people Talent development is the process of ensuring that
required by an organization to ensure that vacancies talented employees gain the skills and experience
for people in pivotal roles can be filled readily (talent required to fulfil their promise, advance their
on demand). careers and satisfy the organization’s need to fill
senior and key posts with high-quality and capable
Talent planning people.
Talent planning involves estimating the number of

talented people needed in the future taking into
Leadership and management
account the implications of business plans. It also development
assesses the type of skills that will be required. ●● Leadership and management development
programmes ensure that managers have the
Resourcing leadership and managerial qualities required to
achieve success.
Resourcing is the first step in the direction of creating a
talent pool. It is primarily about ensuring that the ●● A blended learning approach is used which is
organization obtains the right people with the right skills based on an analysis of learning needs and
for future roles as well as for immediate vacancies. combines a number of learning activities
which can include planned experience, self-
Identifying talent managed learning, coaching, mentoring, action
learning, outdoor learning and formal training
●● Procedures are necessary for identifying people courses.
who are qualified now for membership of a talent
pool or who have the potential to become members
after completing a talent management development Career development
programme.
Career development is concerned with shaping the
●● It is usual for assessments of potential to be made progression of individuals within an organization in
initially by the individual’s line manager. They may order to provide those with promise a sequence of
be followed up with additional conversations with a experience and learning activities that will equip them
talent management specialist, and possible for whatever level of responsibility they have the
attendance at an assessment centre for promising ability to reach.
individuals.
References
Bolden, R (2010) Leadership, management and Cappelli, P (2008) Talent on Demand: Managing
organizational development, in (eds) J Gold, R talent in an uncertain age, Boston MA, Harvard
Thorpe and A Mumford, Gower Handbook of Business School Press
Leadership and Management Development, Chamorro-Premuzic, T (2017) The Talent Delusion,
Gower, Farnham, pp 118–32 London, Piatkus
Campbell, V and Hirsh W (2013) Talent Corporate Leadership Council (2002) Building the
management: a four-step approach [online] http:// high performance workforce [online] https://
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resources/files/502.pdf (archived at https://perma. CLC_Building_the_High_Performance_
cc/PF2S-FN9C) [accessed 14 January 2016] Workforce_A_Quantitative_Analysis_of_the_
Effectiveness_of_Performance_Management_ Sparrow, P, Hird, M and Cooper C L (2015) Do We

Strategies1.pdf (archived at https://perma.cc/ Need HR? Basingstoke, Palgrave Macmillan,
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48–56 work perspective, International Journal of Human
Huselid, M A, Beatty, R W and Becker, B E (2005) Resource Management, 24 (9), pp 1799–815
A-players or A-positions? The strategic logic of Viswasvaran, C, Ones, D S and Schmidt, F (1996)
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and evaluation of talent in MNEs, in H Scullion Younger, J, Smallwood, N and Ulrich, D (2007)
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Schein, E H (1978) Career Dynamics: Matching pp 21–29
individual and organizational needs, Reading, MA,
Addison-Wesley
342

343
PART VII
Employment practices
PA R T V I I CO N T E N T S
30 Managing employment
31 Managing diversity and inclusion
32 Managing flexibility
Introduction activities concerned with the introduction, release

and retention of employees and absence manage-
ment, fulfilling the obligations of the organization to
People management involves managing the employee
manage diversity and inclusion, and seeking ways in
experience and dealing with a number of aspects of
which to increase flexibility for the organization and
employment as covered in this part. These include
for individuals.
344

345
30
Managing
employment
well the contribution of employees is recognized;
Introduction being listened to; the ability of the organization to
protect employees from bullying or harassment;
This chapter starts with an analysis of the concept and the ways in which grievances and disciplinary
of the employee experience, the management of issues are handled. Bersin et al (2017) summarized
which provides a framework within which a range the factors that contribute to a positive employee
of HR policies can be placed, including the employ- experience as:
ment management practices of introducing employ-
ees to the organization (induction or onboarding), ●● meaningful work;
retaining employees, releasing employees and ab- ●● supportive management;
sence management. These ‘transactional’ concerns
●● positive work environment;
may not be so exciting as the transformational ac-
tivities of strategic HRM and organization develop- ●● growth opportunity;
ment. But they are vital and the effectiveness of the ●● trust in leadership.
organization and, indeed, the reputation of the HR
function depends on doing them well.
Source review
The employee experience
Traditionally, HR has addressed issues such as
The term ‘employee experience’ refers to what hap- employee engagement, culture, rewards, and
pens to people at work and how they feel about it. learning and career development as separate,
Employees want and deserve a productive, engag- independent programmes in individual silos. Each
ing, enjoyable work experience. The growing inter-
programme has a senior HR leader, a set of tools
est in the concept of ‘the employee experience’ is
and diagnostics, and solutions to drive and
leading organizations to develop a more integrated
measure change. The employee sees the picture
approach to people management that focuses on
differently. Starting as potential hires and recruits,
the factors which affect that experience. These are:
the impression gained of the organization from the employees look at everything that happens at work
beginning; being treated fairly, without bias and as an integrated experience that impacts daily life
with respect and consideration; relationships with in and outside the workplace, including overall
line managers and colleagues; working conditions; physical, emotional, professional and financial
the degree to which jobs are fulfilling; the extent to wellbeing. Candidates assess future employers
which work is stressful; work-life balance; how from the very start of the talent acquisition
346 Part 7 | Employment Practices
experience and make quick judgments about what and then imposing the practices from above. And
life will be like for them in the organization, based this understanding is gained not just by an annual
on how they interact with the enterprise during the engagement survey but by pulse surveys using feed-
recruiting cycle. This integrated view increasingly back apps.
leads to employees demanding a holistic, end-to-
end – recruitment-to-retirement – experience from
their employers, whether they are full-time Improving the employee experience
employees, contingent workers, or even Improvements to the employee experience can be
crowdsourced talent. This also requires a radical achieved through:
change in emphasis on the part of employers.
●● adopting an ethical approach to people
Bersin et al (2017)
management (see Chapter 17);
●● introducing high-performance working (see
Chapter 21);
The term originated with the notion that employees
experience their organization’s ‘brand’ in the same ●● giving close attention to job design (see
way as customers experience a brand they purchase Chapter 22);
from a supplier. In this sense, employees are ●● implementing the various ways of enhancing
customers. engagement listed in Chapter 26 (these
But the management of employee experience overlap with and complement a number of
could easily become no more than ‘brand manage- the other approaches mentioned here);
ment’ in the sense of creating and maintaining an ●● ensuring that inductions (onboarding
employer brand – the image presented by an organ- arrangements) for new employees are
ization as a good employer. It may be suspected that effective (see Chapter 30);
brand management in the commercial sense can be
●● introducing flexible working arrangements
more about improving the image of the product
(see Chapter 32);
than improving the product itself. The employer
brand may be important when attracting people to ●● offering learning programmes that enable
the organization but there is more to people man- people to develop their skills and potential;
agement and the notion of the employee experience ●● conducting leadership development
than just presenting an attractive image. programmes that explain to managers how
Managing the employee experience is essentially they play their part in creating a satisfactory
the pursuit of a policy of integration – developing employee experience (see Chapter 36);
management practices that address the issues raised ●● encouraging and developing managers to
by the factors that affect the experience and dealing lead their teams along the lines of the
with these as a whole, ensuring that a coherent ap- managers quoted in Chapter 39;
proach is adopted and that the practices are mutu-
●● adopting a total reward policy as explained
ally supportive. There is nothing new in this aspect
in Chapter 40;
of managing the employee experience. It is simply
the well-established process of bundling (achieving ●● taking comprehensive steps to provide
horizontal fit) as described in Chapter 2. But the employees a voice on matters that concern
perspective is different. Managing the employee ex- them (see Chapter 48);
perience is a ‘bottom up’ rather than a ‘top down’ ●● paying close attention to dealing with
process. The starting point is to gain understanding wellbeing issues (see Chapter 50).
of how employees perceive their experience of
Taking these steps presents three challenges. The
working in the organization and from that analysis
first is the range and scope of the activities, although
identify what needs to be done to deal with any is-
there is nothing special about them – they are all
sues and enhance that experience taking into ac-
familiar HR practices. The second is the problem of
count the ways it can be improved as set out below.
prioritizing what needs to be done. This is where
It is not a matter of deciding what is best for them
Chapter 30 | Managing Employment 347
understanding the needs and wants of employees and support one another. As emphasized earlier, it is
becomes really important. The third is the need to this process of integration which is the distinguish-
integrate these activities so that they complement ing feature of the employee experience concept.
C A S E S T U DY
Developing the employee experience at Ford
With a focus on innovation, Ford Motor Co., with nearly than 200 HR leaders, and held regional focus groups with
200,000 employees is expanding its business model to employees and people leaders across all areas of Ford’s
fortify and transform its core automotive business while business.
growing in the areas of electrification, autonomy and Ford found that many employees felt that people pro-
mobility. These changes require a change in the way cesses were overly administrative, complex, and not al-
executives think about their people. As the company moves ways useful in getting their work done. People leaders felt
from a product to a consumer focus in its products and that HR business partners were overwhelmed by opera-
services, it is also moving from a product to an employee tional tasks, negatively impacting the time they could
experience focus in its workforce solutions. spend engaging and developing their teams. To address
Starting with a three-week global people strategy lab in these issues, the HR team is now developing products and
which HR leaders from around the world participated, services that are more integrated and focused on the em-
Ford developed a new people strategy, HR vision, integrat- ployee experience, tools that are more intuitive and user
ed plan, and business case. As part of its efforts to define friendly, an interaction model that allows the workforce to
its vision, the HR team deployed a company-wide polling interact with HR through multiple channels, and pro-
process that let employees contribute ideas, share their grammes that are ‘fit for purpose’. It is working to simplify
experiences, and rate and rank which HR products and everything HR does. All of this is aimed at improving the
services they felt were most important. The company also employee experience and freeing HR professionals to sup-
conducted workshops around the world, attended by more port strategic business needs.
wrong from the beginning, the employee will take

too much time to settle down and do a good job. If
Pa us e for t houg ht things go really badly the individual will leave and
The concept of ‘the employee experience’ all the hard work and money put into recruitment
will have been wasted. New employees need help in
has been gaining traction recently. What do adjusting to the performance and social aspects of
you think it has to offer? their new jobs quickly and smoothly. They need to
learn the knowledge, skills and behaviours required
to function effectively within the organization. It is
essential to take care over introducing people to the
organization through effective induction or ‘on-
Introduction to the boarding’ arrangements.
organization
First impressions matter: getting off to a good start
Induction defined
is all important if the experience of the employee in Induction or onboarding is the process of receiving
the firm is going to be a good one. Should it go and welcoming employees when they first join a
company and creating a good impression of the or- ●● reception staff know that they are expected
ganization, giving them the basic information they to be friendly and helpful;
need to settle down quickly and happily and start ●● a guide is provided if the starter has to go to
work. The aims are to: another location unless the route is very
●● smooth the preliminary stages when straightforward;
everything is likely to be strange and ●● the starter is not kept waiting; steady,
unfamiliar to the starter; unhurried, guided activity is a good antidote
●● establish quickly a favourable attitude to the to first-day nerves.
organization in the mind of new employees
so that they are more likely to stay;
●● accelerate progress up the learning curve;
Information for new staff
●● obtain effective output from the new The following information should be made availa-
employee in the shortest possible time; ble to new staff:
●● reduce the likelihood of the employee leaving ●● a brief description of the company – its
quickly; history, products, organization and
●● save the considerable costs which are management;
incurred when someone leaves; ●● basic conditions of employment – hours of
●● enable the process of socialization to take work, holidays, pension scheme;
place smoothly – the social aspects of work ●● sickness – notification of absence, certificates,
are very important for most people and if pay, insurance, pensions;
good relationships with colleagues are ●● leave of absence;
quickly established, employees are likely to
●● company rules and disciplinary, capability
settle in more quickly and enjoy their work
and grievance procedures;
To achieve these aims, the induction arrangements ●● pay – structure or scales and when paid;
as described below should be concerned with recep-
●● trade union arrangements, where
tion, documentation, initial briefing, introduction
applicable;
to the workplace, formal induction course and for-
mal and informal training. ●● learning and development facilities;
●● health and safety arrangements and rules;
●● rules for using the internet.
Reception
New starters will be concerned about who they are
going to work for (their immediate manager or Introduction to the workplace
team leader), who they are going to work with, The departmental induction programme should,
what work they are going to do on their first day, wherever possible, start with the departmental
and the geographical layout of their place of work manager, not the immediate team leader. The man-
(location of entrances, exits, lavatories, restrooms ager may give only a general welcome and a brief
and the canteen). description of the work of the department before
Some of this information may be provided by a handing over new employees to their team leaders
member of the HR department, or an assistant in for the more detailed induction. But it is important
the new employee’s place of work. But the most im- for the manager to be involved at this stage so that
portant source of information is the immediate he or she is not seen as a remote figure. At least this
manager, supervisor or team leader. means that the starter will not be simply a name or
Reception is most likely to go well if: a number to the manager. The detailed induction
●● the person whom the starter meets first (the in the workplace is probably best carried out by
receptionist, HR assistant or manager) knows the immediate team leader who should do six
of their pending arrival and what to do next; things:
1 Put the new employee at ease. comprehensive information at the same time, which
2 Interest the employee in the job, explaining might not be forthcoming if reliance is placed on
its purpose, significance and how it relates to the team leader. A formal course provides an op-
the work going on elsewhere in the portunity to deliver messages about the organiza-
department or company. tion, its products and services, its mission and
values. A range of media can be used which would
3 Interest the employee in the company,
not be available in departments. But formal courses
explaining what it is like to work there.
cannot replace informal induction arrangements in
4 Provide basic information about working the workplace, where the most important require-
arrangements. ment – settling people down – can best be met.
5 Indicate the standards of performance and Decisions will have to be made about who at-
behaviour expected of the employee. tends an induction course and when. It is usual to
6 Tell the employee about training mix people from different departments but less
arrangements and how he or she can common to have people from widely different
progress in the company. levels on the same course. In practice, managers
and senior professional staff are usually dealt
The team leader should introduce new starters to with individually.
their fellow team members. It is best to get one Ideally, induction courses should take place soon
member of the team to act as a guide or ‘starter’s after starting. If there are sufficient new employees
friend’. There is much to be said for these initial available, this could be a half day in the first week,
guides being people who have not been long with but the course may have to be delayed until a suffi-
the organization. As relative newcomers they are cient number of new starters are available.
likely to remember all the small points that were a The content of the induction course could in-
source of worry to them when they started work, clude some or all of the following subjects:
and so help new employees to settle in quickly.
●● information about the organization – its
products, services, structure, mission and
On-the-job induction training values;
●● learning arrangements and opportunities,
Most new starters other than those on formal train-
ing schemes will learn on the job, although this may ●● performance management processes;
be supplemented with special off-the-job courses to ●● health and safety;
develop particular skills or knowledge. But on-the- ●● policies on such matters as diversity and
job learning can be haphazard, inefficient and inclusion, equal opportunity, bullying, sexual
wasteful. A planned, systematic approach is desira- and racial harassment, use of the internet;
ble. This can incorporate an assessment of what the
●● pension arrangements;
new starter needs to learn, the use of designated and
trained colleagues to act as guides and mentors, and ●● trade unions and employee involvement.
coaching by team leaders or specially appointed
and trained departmental trainers.
These on-the-job arrangements can be supple- Managing employee
mented by self-managed learning arrangements in
which individuals take responsibility for meeting
retention
their own learning needs with help and guidance as
necessary, offering access to flexible learning pack- Losing key employees can have a disproportionate
ages or providing advice on learning opportunities. impact on the business. The people that organiza-
tions wish to retain are often the ones most likely to
leave. It has been said that every worker is five min-
Formal induction courses utes away from handing in his or her notice, and
150 working hours away from walking out of the
Formal induction courses assemble new starters in door to a better offer. There is no such thing as a job
groups so that members can be given consistent and for life and today’s workers have few qualms about
leaving employers. Action is required to retain tal- ●● leaving costs – payroll and HR
ented people, but there are limits to what any or- administration;
ganization can do. ●● opportunity cost of time spent by HR and
Employees are more likely to stay willingly if line managers in recruitment, induction and
they feel valued, and ensuring that this happens is training;
the most important message of this chapter. But ac-
●● loss of output from those leaving before they
tions to increase employee retention will be influ-
are replaced;
enced by data on employee turnover or wastage and
this section therefore starts with an examination of ●● loss of output because of delays in obtaining
how turnover can be measured and what can be replacements;
done with the data. The second part of the section ●● loss of output while new starters are on their
covers methods of dealing with employee retention learning curves acquiring the necessary
problems in the light of information about its inci- knowledge and skills.
dence and causes.
Research by Phillips (1990) found that the ‘visible’ (ie
direct) costs of recruitment accounted for only 10 to
15 per cent of total costs. By far the highest costs were
associated with the inefficiencies arising while the
Wo rd s o f w isdom
post was vacant (33 per cent) and the inefficiency of
Rather than worry so much about the war new workers (32 per cent). On average, 12.5 months
for talent in today’s tight job market, were required for executives to be comfortable in a
new position and 13.5 months were required for a
executives ought to focus on the waste of new employee to achieve maximum efficiency.
talent in their ranks. It is necessary to measure employee turnover and
Hymowitz (2007)
calculate its costs in order to identify problems such
as adverse trends and forecast future losses for
planning purposes. Plans can then be made to re-
duce unnecessary turnover and its associated costs.
There are a number of different methods.
Employee turnover
Employee turnover (sometimes known as ‘labour Employee turnover index
turnover’, ‘wastage’ or ‘attrition’) is the rate at which
The employee turnover index (sometimes referred
people leave an organization. It can be disruptive
to as the employee or labour wastage index) shown
and costly. The CIPD (2017) survey of resourcing
below is the traditional formula for measuring
and talent planning found that the average rate of
turnover:
turnover (the number leaving as a percentage of the
number employed) in the UK was 16.5 per cent. Number of leavers in a specified
The cost of employee turnover can be consider- period (usually 1 year)
able. A survey by the CIPD in 2008 established that × 100
Average number of employees
the average cost per employee was £5,800, rising to during the same period
£20,000 for senior managers or directors. Cost esti-
mates are useful as means of backing up a business This method is in common use because it is easy to
case for taking action to reduce turnover. The fol- calculate and to understand. It is a simple matter to
lowing factors should be considered when calculat- work out that, if last year 30 out of an average force
ing costs: of 150 employees left (20 per cent turnover) and this
●● direct cost of recruiting replacements trend continues, then the company will have to re-
(advertising, interviewing, testing, etc); cruit 108 employees during the following year to
increase and to hold the workforce at 200 in that
●● direct cost of introducing replacements
year (50 extra employees, plus 40 to replace the 20
(induction cost);
per cent wastage of the average 200 employees em-
●● direct cost of training replacements in ployed, plus 18 to replace wastage of the 90 r ecruits).
necessary skills;
The formula is simple, but it can be misleading. or years of service. Thus, an analysis of a cohort of
The problem is that the percentage may be inflated 20 trainees who have completed their training
by the high turnover of a relatively small proportion might show that after two years, 10 of the original
of the workforce, especially in times of heavy re- trainees were still with the company, a survival rate
cruitment. Thus, a company employing 1,000 peo- of 50 per cent. The distribution of losses for each
ple might have had an annual wastage rate of 20 per entry group, or cohort, can be plotted in the form of
cent, meaning that 200 jobs had become vacant dur- a survival curve, as shown in Figure 30.1.
ing the year. But this could have been spread The basic shape of this curve has been found to
throughout the company, covering all occupations be similar in many situations, although the peak of
and long- as well as short-service employees. the curve may occur further along the time scale
Alternatively, it could have been restricted to a small and/or may be lower when it relates to more highly
sector of the workforce – only 20 jobs might have skilled or trained entry cohorts. An example of a
been affected although each of these had to be filled survival rate analysis is shown in Table 30.1. This
10 times during the year. These are different situa- indicates that half the number of recruits in any one
tions and unless they are understood, inaccurate year may be lost over the next five years, unless
forecasts would be made of future requirements and something can be done about the factors causing
inappropriate actions would be taken to deal with wastage.
the problem. The turnover index is also suspect if The survival rate is useful as a means of tracking
the average number of employees upon which the a ‘cohort’ of recruits (eg graduates) to assess the ef-
percentage is based is unrepresentative of recent fectiveness of recruitment and retention policies.
trends because of considerable increases or decreases But it cannot be used as a means of measuring the
during the period in the numbers e mployed. turnover rates of whole populations in order to
allow for future wastage when making supply
Stability index forecasts.
The stability index is considered by many to be an

improvement on the turnover index. The formula is: Half-life index
A simpler concept derived from survival rate analy-
umber with 1 year’s service or more
N
× 100 sis is that of the half-life index, which is defined as
Number employed 1 year ago
the time taken for a group or cohort of starters to
reduce to half its original size through the wastage
Survival rate process (five years in the above example).
The survival rate is the proportion of employees Comparisons can then be made for successive entry
who are engaged within a certain period who re- years or between different groups of employees to
main with the organization after so many months
F I G U R E 30.1 A survival curve
Leavers as a
percentage
of total
entrants
Time
TA B L E 30.1 A survival rate analysis
Number surviving to end of year after engagement
Entry cohort Original number Year 1 Year 2 Year 3 Year 4 Year 5
A 40 35 28 26 22 20
B 32 25 24 19 18 16
C 48 39 33 30 27 24
D 38 32 27 24 22 19
E 42 36 30 26 23 21
Total 200 167 142 125 112 100
Average survival rate 100% 83% 71% 62% 56% 50%
show where action may have to be taken to counter deals only with those who leave. A more refined
undesirable wastage trends. analysis would compare for each designated length
of service the numbers leaving with the numbers em-
Leavers’ length of service analysis ployed. If, in the example shown, the total number
employed with less than three months’ service was
The information from measures of stability can be 80 and the total with more than five years’ service
enhanced if an analysis is also made of the average was 80, the proportion of leavers in each category
length of service of people who leave, as in Table would be, respectively, 35 per cent and 14 per cent –
30.2. This analysis is still fairly crude, because it more revealing figures.
TA B L E 30.2 Leavers’ length of service analysis
Leavers by length of service

Index of
Less 6 5 or Total Average employee
than 3 3–6 months– 1–2 3–5 more number number turnover
Occupation months months 1 year years years years leaving employed percentage
A 5 4 3 3 2 3 20 220 9
B 15 12 10 6 3 4 50 250 20
C 8 6 5 4 3 4 30 100 30
Totals 28 22 18 13 8 11 100 570 18

Choice of measurement challenge and achievement opportunities (eg as-

signments), mentors, realistic self-assessment and
It is difficult to avoid using the conventional em-
feedback.
ployee (labour) turnover index as the easiest and
most familiar of all methods of measurement. It
provides the simplest basis for assessing future
levels of supply by allowing for wastage. But it can
Basis of the retention strategy
usefully be supplemented with some measure of sta- A retention strategy takes into account the reten-
bility (eg survival rate or the length of service of tion issues the organization is facing and sets out
leavers) to identify recruitment or retention ways in which these issues can be dealt with. This
problems. may mean accepting the following argument, of-
fered by Cappelli:
Factors affecting retention

Retention strategies should be based on an under-
standing of the factors that affect whether or not
employees leave or stay. These include overall the Word s of w isd om
quality of the employee experience and in more
detail: To adopt the new strategy you have to
●● company image (the employer brand); accept the new reality: the market, not your
●● the employee value proposition – what the company, will ultimately determine the
employer offers in the shape of terms and movement of your employees. Yes, you can
conditions of employment and ‘the employee
experience’; make your organization as pleasant and
●● the effectiveness of recruitment, selection and rewarding a place in which to work as
deployment (fitting people into jobs that suit possible – you can fix problems that might
them;
push people towards the exits. But you can’t
●● leadership – ‘employees join companies and
leave managers’; counter the pull of the market; you can’t
●● social factors (the extent to which individuals shield your people from attractive
get on with their co-workers); opportunities and aggressive recruiters. The
●● learning and career opportunities; old goal of HR – to minimize overall
●● performance recognition and rewards.
employee turnover – needs to be replaced
The propensity to stay or leave is also affected by by a new goal: to influence who leaves and
the stage of employees’ career and their age. For
early-career employees (30 years old and under), when.
career advancement is significant. For mid-career Cappelli (2000: 104)
employees (age 31–50), the ability to manage their
careers and satisfaction from their work are im-
portant. Late-career employees (aged over 50) will
be more interested in security. It is also the case
that a younger workforce will change jobs and em- The strategy should be based on an analysis of the
ployers more often than an older workforce, and risks of leaving.
workforces with a lot of part-timers are less stable
than those with predominately full-time staff.
A study by Holbeche (1998) of high flyers found Risk of leaving analysis
that the factors that aided the retention and moti- As proposed by Bevan et al (1997), risk analysis can
vation of high performers included providing be used to quantify the seriousness of losing key
people. Risk analysis can be carried out by initially 4 Reduce the losses of people who cannot
identifying potential risk areas – the key people adjust to their new job – the ‘induction
who may leave – and, for each of them, as individu- crisis’ – by giving them proper training
als or groups, estimate: and support when they join the
organization.
●● the likelihood of this occurring;
5 Deal with uncompetitive, inequitable or
●● how serious the effects of a loss would be on
unfair pay systems. But as Cappelli (2000)
the business;
pointed out, there is a limit to the extent to
●● the ease with which a replacement could be which people can be bribed to stay.
made and the replacement costs.
6 Encourage the development of social ties
Each of the estimates could be expressed on a scale, within the company. In the words of
say, very high, high, medium, low, very low. An Cappelli (2000: 108), ‘loyalty to companies
overview of the ratings under each heading could may be disappearing but loyalty to
then indicate where action may need to be taken to colleagues is not’.
retain key people or groups of people. 7 Take steps to improve work-life balance by
Information on the reasons for leaving, and developing policies, including flexible
therefore where action needs to be taken, can be working, that recognize the needs of
provided by exit interviews, but they are fallible. employees outside work.
More reliance can be placed on the results of em-
8 Eliminate as far as possible unpleasant
ployee surveys to identify areas of dissatisfaction.
working conditions or the imposition of too
The retention plan should propose actions that
much stress on employees.
would focus on each of the areas in which there is
dissatisfaction or lack of commitment. 9 Select, brief and train managers and team
leaders so that they appreciate the positive
contribution they can make to improving
Areas for action retention by the ways in which they lead
their teams. Bear in mind that people often
Depending on the outcome of the risk and reasons leave their managers rather than their
for leaving analyses, the possible actions that can be organization.
taken are:
10 Improve arrangements for giving employees
1 Take whatever steps are necessary to a voice on matters that concern them
demonstrate that the organization values its 11 Pay close attention to communications with
employees, as long as this is expressed in employees to explain what is happening and
deeds and not just words. underline improvements to their conditions
2 Ensure that selection and promotion of employment. Use all forms of media
procedures match the capacities of including social media.
individuals to the demands of the work they 12 Ensure that policies for controlling bullying
have to do. Rapid turnover can result and harassment are in place and are
simply from poor selection or promotion applied.
decisions.
As established in the CIPD 2017 Survey of
3 Design jobs to maximize skill variety, task
Resourcing and Talent Planning, the most popular
significance, autonomy, control over work
step taken to improve staff retention was through
and feedback, and ensure that they provide
increasing learning and development opportunities
scope for learning and growth. People are
(57 per cent). This was followed by an improved in-
more likely to stay if they believe that they
duction process (56 per cent) and improved benefits
have opportunities to increase their skills and
(50 per cent).
advance their careers.
C A S E S T U DY
Staff retention strategy at UCL Hospital Trust
The staff retention strategy at UCL Hospital Trust included 4 Career progression initiatives to rotate and promote
the following steps: talent and redesign roles.
1 Market research with own staff that revealed a lack of 5 The development of a learning passport for staff,
promotion opportunities for nursing staff. providing bespoke learning packages and senior
mentoring support to secure promotion within 12 to 20
2 In-depth analysis of the NHS resourcing market and
months.
the introduction of programmes for attending job fairs
throughout the UK, with clinical teams giving 6 The introduction of the ‘Good deed feed’, enabling staff
interviews and providing assessments on the day. to publicly thank and recognize one another on the
Trust’s intranet.
3 The introduction of centres providing practical and
theoretical assessments followed by value-based
interviews.
no longer needed. If, unfortunately, redundancy has

Release from the to take place, it is necessary to plan ahead – seeking
organization and implementing methods of avoiding redundancy
as far as possible, making arrangements for volun-
The employment relationship may be ended voluntary redundancy and helping people to find jobs
tarily by someone moving elsewhere. Or it may finish (outplacement). HR usually has the onerous re-
at the end of a career on retirement. However, people sponsibility of handling the redundancy itself.
also have to go involuntarily. Some organizations are Redundancy, like the poor, has always been with
becoming mean as well as lean. Mean or not, busi- us. It frequently results from adverse trading condi-
nesses are ‘managing costs’ by ‘downsizing’ (a euphe- tions, especially during a recession, exacerbated by
mism for redundancy) and they are tightening up global competition. Government austerity pro-
disciplinary procedures to handle cases of incapabil- grammes lead to redundancies in the public sector.
ity as well as misconduct. Resourcing policies and The drive for competitive advantage has forced em-
practices covering release from the organization also ployers ‘to take costs out of the business’, another
have to cover voluntary turnover and retirement. euphemism for getting rid of people, employment
One of the most demanding areas of human re- costs being the ones on which organizations in both
source management in organizations is that of han- the private and public sector focus as they are usu-
dling arrangements for releasing people through ally the largest element in their cost structures.
redundancy, dismissal or retirement. Costs have been reduced by ‘delayering’ (eliminat-
ing what are deemed to be unnecessary layers of
management) and outsourcing. Flexibility pro-
Redundancy grammes (see Chapter 32) have led to headcount
(number employed) reductions. The pursuit of
Redundancy takes place when the organization as a ‘rightsizing’ (another egregious euphemism) has re-
whole is reducing the number of employees, when sulted in losses. The introduction of new technol-
structural changes are being made following merg- ogy, especially computerization, has contributed
ers and acquisitions, and when individual jobs are hugely to the reduction of semi-skilled or unskilled
people in offices or on the shop floor. And bench- Outplacement consultants provide counselling
marking to find out how other organizations ‘do on how people can make the best use of what they
more with less’ is another factor. can offer to other employers. They can be helped to
To manage redundancy, organizations should: identify their strengths and achievements, the type
of job they are qualified to do, and the sort of em-
●● plan ahead to achieve headcount reductions
ployer that is most likely to want people with their
without involuntary redundancy;
experience and qualifications. Assistance can be
●● adopt other methods of reducing numbers or provided in preparing what is sometimes called an
avoiding redundancy; ‘achievement CV’, which spells out what the indi-
●● encourage voluntary redundancy if other vidual has been successful in and prompts the
methods fail; thought in the employer’s mind: ‘What the individ-
●● introduce a redundancy procedure or ensure ual has done for them he or she can do for us.’
that an existing procedure is satisfactory; Counselling involves help and advice in identify-
ing possible moves, preparing CVs, and how to
●● develop fair and considerate methods of
make the best impression in interviews. Counselling
handling redundancy;
may be provided by HR staff, but there is much to
●● help redundant employees through be said for using specialized outplacement
outplacement policies and practices. consultants.
Job shops: the staff of the job shop, who may be
Planning ahead and use of other from HR or are sometimes members of a special-
ized outplacement consultancy, scour the travel-to-
methods work area seeking job opportunities, match people
Planning ahead means that future reductions in to jobs and arrange interviews.
people needs are anticipated and the normal flow of
leavers (natural wastage) is allowed to cater for fu-
ture requirements to reduce the head count. Dismissal
Recruitment can be frozen in the occupations likely
to be affected. Plans to minimize redundancy can Dismissal takes place when an employer terminates
also include calling in outsourced work, reducing or the employment of someone with or without notice.
eliminating overtime, reducing the number of part- A contract can be terminated as a result of demo-
timers and temporary staff, work sharing (two tion or transfer, as well as dismissal. People can be
people splitting one job between them) or, more re- ‘constructively dismissed’ if they resign because of
luctantly, reduction in working hours or temporary their employer’s unreasonable behaviour.
layoffs. Dismissals should be handled in accordance with
the following principles of natural justice:
Voluntary redundancy ●● Individuals should know the standards of

performance they are expected to meet and
Asking for volunteers – with a suitable payoff – is
the rules to which they are expected to
another way of reducing compulsory redundancies.
conform.
The disadvantage is that the wrong people might
go, ie the good workers who find it easy to get other ●● They should be given a clear indication of
work. Such people can be offered a special loyalty where they are failing or what rules they
bonus if they stay on. have broken.
●● Except in cases of gross misconduct, they
Outplacement should be given an opportunity to improve
before disciplinary action is taken.
Outplacement is about helping redundant employ-
ees to find other work and to cope with the prob- These principles should form the basis of a discipli-
lems they face. It can take place through specialized nary procedure, which is staged as follows:
outplacement consultants and counselling or by set-
●● An informal discussion on the problem.
ting up ‘job shops’.
●● A first written warning.
●● A final written warning. respondents suggested that flexible working ar-

●● Dismissal or action short of dismissal such as rangements may help reduce non-genuine absence.
loss of pay or demotion. To do something about this situation means un-
derstanding the causes of absence, adopting com-
Employees should be reminded of their right to be prehensive absence management (or, more p
ositively,
accompanied by a colleague or employee represent- attendance management) policies, measuring ab-
ative in disciplinary hearings. (An example of a full sence and implementing procedures for the man-
disciplinary procedure incorporating the stages agement of short- and long-term absence.
listed above is given in Chapter 53.)
Managers and team leaders should be made
aware of the procedure and told what authority Causes of absence
they have to take action. It is advisable to have all
written warnings and any final action approved by The causes of absence have been analysed by
a higher authority. In cases of gross misconduct, Huczynski and Fitzpatrick (1989) under three head-
managers and team leaders should be given the ings: job situation factors, personal factors and at-
right to suspend if higher authority is not available, tendance factors.
but not to dismiss. The importance of obtaining and
recording the facts should be emphasized. Managers Job situation factors
should always have a colleague with them when is- ●● Job scope – a high degree of task
suing a final warning and should make a note to file repetitiveness is associated with absenteeism,
of what was said on the spot. although job satisfaction itself is a
contributory rather than a primary cause of
absence.
Absence management ●● Stress – it is estimated that 40 million
working days are lost each year in the UK
Absence or attendance management is the develop-
through stress. This can be attributed to
ment and application of policies and procedures
workload, poor working conditions, shift
designed to reduce levels of absenteeism. A CIPD
work, role ambiguity or conflict,
(2018) survey revealed that:
relationships and organizational climate.
●● the average length of employee absence was ●● Frequent job transfers increase absenteeism.
6.9 days per employee per year;
●● Management style – the quality of
●● larger organizations have higher average management, especially that of immediate
levels of absence than smaller organizations; supervisors, affects the level of absenteeism.
●● on average, two-thirds of working time lost ●● Physical working conditions.
to absence is accounted for by short-term
●● Work group size – the larger the organization
absences of up to seven days; one-fifth is
the higher the absence rate.
attributed to long-term absences;
●● the average cost of absence was £554 per
employee per year; Personal factors
●● musculoskeletal injuries and back pain are ●● Employee values – for some workers, doing
the more common causes of absence for less work for the same reward improves the
manual workers, while stress is more deal made with the employer (the effort-
common for non-manual workers. reward bargain). The following positive
outcomes of absence have been shown by
Thirty per cent of respondents to the survey re- research to be particularly important to
ported that non-genuine absence (‘sickies’) is one of employees: break from routine, leisure time,
their top causes of short-term absence for manual dealing with personal business and a break
workers. Twenty-three per cent stated that this was from co-workers.
the top cause for non-manual workers. Some
●● Age – younger employees are more absence). This data can be consolidated for use by
frequently absent than older ones. HR in compiling absence statistics and monitoring
●● Personality – some people are absence-prone against targets. The most common measurement is
(studies have noted that between 5 and 10 the percentage of time available that has been lost
per cent of workers account for about half of due to absence.
the total absence, while a few are never
absent at all). The Bradford Factor
The Bradford Factor provides a useful measure.
Attendance factors This index identifies persistent short-term absence
●● Reward systems – as pay increases by measuring the number and duration of spells of
attendance improves. absence. Its exact origin is a mystery, although IDS
(2007) believes that it has some connection with
●● Sick-pay schemes may increase absenteeism.
Bradford University’s School of Management. It is
●● Work group norms can exert pressure for or calculated using the formula S × S × D = Bradford
against attendance. points score, where S is the number of occasions of
absence in the last 52 weeks and D is the total num-
ber of days’ absence in the last 52 weeks. Thus, for
Absence policies employees with a total of 14 days’ absence in a 52-
Absence policies should cover: week period, the Bradford score can vary enor-
mously depending on the number of occasions in-
●● methods of measuring absence; volved. For example:
●● setting targets for the level of absence;
1 One absence of 14 days is 14 points: 1 × 1
●● deciding on the level of short-term absence × 14.
that would trigger action, possibly using the
2 Seven absences of two days each is 686
Bradford Factor, as explained below;
points: 7 × 7 × 14.
●● the circumstances in which disciplinary
3 Fourteen absences of one day each is 2,744
action might be taken;
points: 14 × 14 × 14.
●● what employees must do if they are unable
to attend work; The Bradford index can be used as a trigger to initi-
ate action. It is typically set at 250 points so that
●● sick-pay arrangements;
action would be initiated if, for example, there had
●● provisions for the reduction and control of been 10 days of absence over five spells.
absence such as return-to-work interviews;
●● other steps that can be taken to reduce
absence, such as flexible working patterns. Controlling short-term absence
The skills required to manage absenteeism are ex- Short-term absence can be controlled by the
amined in Chapter 67. following:
●● return-to-work interviews conducted by line
managers, which can identify problems at an
Recording and measuring absence early stage and provide an opportunity for a
As a basis for action, absence levels need to be re- discussion on ways of reducing absence;
corded so that they can be measured and monitored ●● training line managers in methods of
against targets for minimizing absenteeism. controlling absence, including return-to-
An HR information system (HRIS) can provide work interviews;
the best means of recording absenteeism. If a self-
●● use of a trigger period to review attendance
service approach is in place, managers and team
and if necessary issue a warning (the trigger
leaders have direct access to absence records showing
period at the UK Department of Work and
the incidence of absenteeism (number and lengths of
Pensions is eight days over 12 months); the
Bradford Factor can be used as a trigger modified working hours or a modified role for a
mechanism; period.
●● invoking disciplinary procedures for The CIPD’s 2018 survey of Health and Wellbeing
unacceptable absence levels; at Work found that the five most frequently used
methods of controlling short-term absence were:
●● extending the scope for flexible working.
1 Return-to-work interviews – 75 per cent.
2 Change work patterns – 69 per cent.
Managing long-term absence 3 Case management approach – 65 per cent.
The best way to manage long-term absence is to 4 Occupational health involvement – 62
keep in contact with employees by letter, telephone per cent.
or visits to discuss the situation and, where possible,
5 Disciplinary or capability procedure –
plan the return to work. This plan may include
69 per cent.
CASE STUDIES
Controlling sickness absence at Wincanton
Distribution company Wincanton had a problem controlling date. The system also provides various triggers to line
sickness absence because its large workforce is spread managers. For example, once an employee has been away
over 285 sites. The solution was to outsource absence for more than 15 days, the manager receives a message
management to Active Health Partners, which operates a indicating that contact needs to be made. Managers are
call centre staffed by nurses – employees must report their expected to conduct return-to-work interviews and have
absences and can receive medical advice. An online more formal discussions when an absence exceeds 15
absence recording system is also provided, which provides days. They will explore why there has been this amount of
line managers with information on absences and access to time off, if there is an underlying health issue, if an employ-
absence statistics. ee should be referred to Occupational Health and if the
As soon as an employee calls Active Health Partners, an disciplinary process should be started.
e-mail or text is sent to the employee’s line manager via an As a result, Wincanton reduced sickness absence by
automated system, informing him or her of the absence and 10,000 days in six months.
the reason for it and giving an approximate return-to-work
Absence management at Westminster City Council
Monitoring return to work form. Employees who have been absent for
eight days or more are informed that they will be referred
Sickness absence is recorded by line managers on the to Occupational Health.
intranet system.
Absence trigger points

Return-to-work interviews
An employee who has had more than seven days’ sickness
A return-to-work interview is held between the manager absence in any rolling 365-day period is dealt with through
and the employee after any length of absence, even one the ‘enhanced sickness management procedure’. If
day, although this may only take a couple of minutes. sickness absence exceeds 20 days, the long-term sickness
Employees are required to complete a self-certification/ procedure is applied.
The enhanced sickness management procedure ●● If an employee has been off work, the managers and
Occupational Health hold a case conference to assess
●● Line managers complete a referral form that is
the situation. The employee is required to meet
forwarded to Occupational Health staff who decide to
Occupational Health if this is possible.
conduct a face-to-face consultation or make a desktop
assessment – and in either case provide any advice ●● The manager makes an assessment following the case
necessary to the manager or the individual and send a conference covering the nature and likely length of the
report to the manager and HR. illness, the impact of the absence on the work and how
any impact will be managed.
●● Within 10 days of receiving the report, the manager
meets the employee to review the sickness record, ●● Following this assessment, a face-to-face meeting is
consider any further explanations for the absence, held with the employee to ensure that other relevant
discuss the report from Occupational Health, and agree factors and personal circumstances are taken into
action to improve attendance and minimize sickness. account.
●● As necessary, especially in cases of disability, ●● A sickness absence hearing may be called as a result
Occupational Health will discuss with the manager and of this meeting and the case conference.
the employee any reasonable adaptations to the work
environment that may be helpful.
Employee assistance programme
Long-term sickness absence management An employee assistance programme (EAP) is available
through an external provider. Employees can raise
Every four weeks, managers review cases of long-term
problems with helpline staff, and face-to-face counselling
absence with the Occupational Health service and also
can be made available.
contact the employee.
Absence management at North Star Housing Group
North Star Housing Group had a worrying absence rate of After a period of absence, employees have a return-to-
4.2 per cent. To deal with this the Group focused on upfront work conversation with their manager. All employees can
discussions about absence with employees working with take advantage of a confidential counselling service. The
their managers to develop action plans. A more formal result was that the absence rate fell to 1.4 per cent.
process is only followed if the absence continues for a
longer period of time.
Presenteeism mitigate the impact of presenteeism should take the

form of three steps:
‘Presenteeism’ takes place when someone who is ill
shows up for work. As noted by Garrow (2016: 2): 1 Make managers and employees aware of the
‘Research shows that people are significantly less problem – the drawbacks of coming to work
productive when unwell. They can also be a hazard when really ill.
to others through passing on infection or making 2 Get to know the health issues facing
mistakes and potentially aggravating their condi- employees.
tion, leading to a longer absence. In particular, those 3 Convince employees that they should make
with mental disorders report working less carefully, themselves aware of the problem by not
which could lead to dangerous outcomes depending allowing any serious illness to be
on the type of role.’ undiagnosed and educate them on the risks
Hemp’s (2004) article in the Harvard Business involved and how to manage an illness.
Review suggested that workplace interventions to
Key learning points
The employee experience Detailed induction in the workplace is probably best

carried out by the immediate team leader.
The term ‘employee experience’ refers to what
happens to people at work and how they feel about it. On-the-job induction training
The factors that contribute to a positive employee
experience are: Most new starters other than those on formal training
schemes will learn on the job, although this may be
●● meaningful work; supplemented with special off-the-job courses to
●● supportive management; develop particular skills or knowledge. But on-the-job
learning can be haphazard, inefficient and wasteful. A
●● positive work environment; planned, systematic approach is desirable.
●● growth opportunity;
Formal induction courses
●● trust in leadership.
Bersin et al (2017) Formal induction courses assemble new starters in
groups so that members can be given consistent and
Managing the employee experience is essentially the comprehensive information at the same time which
pursuit of a policy of integration – developing might not be forthcoming if reliance is placed on the
practices that address the issues raised by the factors team leader.
that affect the experience and dealing with these as a
whole, ensuring that a coherent approach is adopted Managing employee retention
and that the practices are mutually supportive.
Measuring employee turnover
Induction It is necessary to measure employee turnover and
calculate its costs in order to forecast future losses for
The importance of induction planning purposes and to identify the reasons that
First impressions matter as does the impact of the people leave the organization. Plans can then be made
initial weeks of employment; getting off to a good start to attack the problems causing unnecessary turnover
is all important. and to reduce costs. The methods available are:
employee turnover index, half-life index, length of
Induction defined service analysis, stability index and survival rate.
Induction is the process of receiving and welcoming

Estimating the cost of employee turnover:
employees when they first join a company and giving
them the basic information they need to settle down ●● direct cost of recruiting replacements;
quickly and happily and start work. ●● direct cost of introducing replacements;
Introduction to the workplace ●● direct cost of training replacements;
New starters will be concerned about who they are ●● leaving costs;
going to work for, who they are going to work with, what ●● opportunity cost of time spent by HR and line
work they are going to do on their first day, and the managers in recruitment, etc;
geographical layout of their place of work (location of
entrances, exits, lavatories, restrooms and the canteen). ●● loss of output.
Retention planning ●● personal – pregnancy, illness, moving away from

area, etc.
Retention strategies should be based on an
understanding of the factors that affect whether or not
Areas for action
employees leave or stay. These include:
Depending on the outcome of the risk and reasons for
●● company image (the employer brand);
leaving analyses, the possible actions that can be
●● the employee value proposition – what the taken are:
employer offers in the shape of terms and
1 Take whatever steps are necessary to demonstrate
conditions of employment;
that the organization values its employees, as long
●● the effectiveness of recruitment, selection and as this is expressed in deeds and not just words.
deployment (fitting people into jobs that suit them;
2 Ensure that selection and promotion procedures
●● leadership – ‘employees join companies and leave match the capacities of individuals to the demands
managers’; of the work they have to do. Rapid turnover can
result simply from poor selection or promotion
●● social factors (the extent to which individuals get
decisions.
on with their co-workers);
3 Reduce the losses of people who cannot adjust to
●● learning and career opportunities;
their new job – the ‘induction crisis’ – by giving
●● performance recognition and rewards. them proper training and support when they join
the organization.
Risk of leaving analysis: 4 Design jobs to maximize skill variety, task
Risk analysis can be carried out by initially identifying significance, autonomy, control over work and
potential risk areas – the key people who may feedback, and ensure that they provide
leave – and, for each of them, as individuals or groups, opportunities for learning and growth. Some roles
estimate: can be ‘customized’ to meet the needs of particular
individuals.
●● the likelihood of this occurring;
5 Deal with uncompetitive, inequitable or unfair pay
●● how serious the effects of a loss would be on the systems. But as Cappelli (2000) pointed out, there is
business; a limit to the extent to which people can be bribed
●● the ease with which a replacement could be made to stay.
and the replacement costs. 6 Encourage the development of social ties within
Reasons for leaving should be analysed, for example: the company. In the words of Cappelli (2000: 108),
‘loyalty to companies may be disappearing but
●● more pay; loyalty to colleagues is not’.
●● better prospects (career move); 7 Take steps to improve work-life balance by
●● more security; developing policies, including flexible working, that
recognize the needs of employees outside work.
●● more opportunity to develop skills;
8 Eliminate as far as possible unpleasant working
●● unable to cope with job; conditions or the imposition of too much stress on
●● better working conditions; employees.
●● poor relationships with manager/team leader; 9 Select, brief and train managers and team leaders
so that they appreciate the positive contribution
●● poor relationships with colleagues; they can make to improving retention by the ways
●● bullying or harassment; in which they lead their teams. Bear in mind that
people often leave their managers rather than their Dismissals should be handled in accordance with
organization. the following principles of natural justice:
10 Improve arrangements for giving employees a ●● Individuals should know the standards of
voice on matters that concern them. performance they are expected to meet and the
rules to which they are expected to conform.
11 Pay close attention to communications with
employees to explain what is happening and ●● They should be given a clear indication of where
underline improvements to their conditions of they are failing or what rules they have broken.
employment. Use all forms of media including
●● Except in cases of gross misconduct, they should
social media.
be given an opportunity to improve before
12 Ensure that policies for controlling bullying and disciplinary action is taken.
harassment are in place and are applied.
These principles should form the basis of a disciplinary
procedure.
Release from the organization
Redundancy Absence management
Redundancy takes place when the organization as a Absence or attendance management is the
whole is reducing the number of employees, when development and application of policies and
structural changes are being made following mergers procedures designed to reduce levels of absenteeism.
and acquisitions, and when individual jobs are no
longer needed. Causes of absence
The causes of absence have been analysed by
What organizations should do about redundancy Huczynski and Fitzpatrick (1989) under three headings:
●● Plan ahead to achieve headcount reductions job situation factors, personal factors and attendance
without involuntary redundancy. factors.
●● Adopt other methods of reducing numbers or

Absence policies
avoiding redundancy.
Absence policies should cover:
●● Encourage voluntary redundancy if other methods
fail. ●● methods of measuring absence;
●● Introduce a redundancy procedure or ensure that ●● setting targets for the level of absence;
an existing procedure is satisfactory.
●● deciding on the level of short-term absence that
●● Develop fair and considerate methods of handling would trigger action, possibly using the Bradford
redundancy. Factor;
●● Help redundant employees through outplacement ●● the circumstances in which disciplinary action
policies and practices. might be taken;
●● what employees must do if they are unable to
Dismissal attend work;
Dismissal takes place when an employer terminates ●● sick-pay arrangements;
the employment of someone with or without notice. A
contract can be terminated as a result of demotion or ●● provisions for the reduction and control of absence
transfer, as well as dismissal. People can be such as return-to-work interviews;
‘constructively dismissed’ if they resign because of ●● other steps that can be taken to reduce absence,
their employer’s unreasonable behaviour.
such as flexible working patterns.
Recording and measuring absence ●● training line managers in methods of controlling

absence, including return-to-work interviews;
As a basis for action, absence levels need to be
recorded so that they can be measured and monitored ●● extending the scope for flexible working.
against targets for maintaining absence at a certain
level, or reducing absenteeism.
Managing long-term absence
Controlling short-term absence The best way to manage long-term absence is to keep
in contact with employees by letter, telephone or visits
Short-term absence can be controlled by the
to discuss the situation and, where possible, plan the
following:
return to work. This plan may include modified working
●● return-to-work interviews conducted by line
hours or a modified role for a period.
managers, which can identify problems at an early
stage and provide an opportunity for a discussion
on ways of reducing absence; Presenteeism
●● use of trigger mechanisms such as the Bradford Presenteeism is showing up for work when one is ill
Factor to review attendance; and therefore becoming a hazard to others. It should be
dealt with by creating awareness, understanding the
●● invoking disciplinary procedures for unacceptable issues and educating employees on the risks involved.
absence levels;
References
Bersin, J, Flynn, J, Mazor, A and Melian V (2017) The CIPD (2018) Health and Wellbeing at Work Survey
employee experience: culture, engagement, and [online] https://www.cipd.co.uk/Images/health-
beyond, 2017 Global Human Capital Trends, and-well-being-at-work_tcm18-40863.pdf
Deloitte Insights [online] https://www2.deloitte. (archived at https://perma.cc/4NPG-DGPZ)
com/insights/us/en/focus/human-capital- [accessed 27 February 2018]
trends/2017/improving-the-employee-experience- Garrow, V (2016) Presenteeism: A review of current
culture-engagement.html (archived at https:// thinking, Brighton, Institute for Employment
perma.cc/QWE8-8B2C) [accessed 10 June 2019] Studies
Bevan, S, Barber, I and Robinson, D (1997) Keeping Hemp P (2004) Presenteeism: at work – but out of it,
the Best: A practical guide to retaining key Harvard Business Review, October, pp 49–58
employees, Brighton, Institute for Employment Holbeche, L (1998) Motivating People in Lean
Studies Organizations, Oxford, Butterworth-Heinemann
Cappelli, P (2000) A market-driven approach to Huczynski, A A and Fitzpatrick, M J (1989)
retaining talent, Harvard Business Review, Managing Employee Absence for a Competitive
January–February, pp 103–11 Edge, London, Pitman
CIPD (2008) Survey of Recruitment, Retention and Hymowitz, C (2007) Oped, The Wall Street Journal,
Turnover, London, CIPD 19 March
CIPD (2017) Resourcing and Talent Planning Survey IDS (2007) Absence Management, HR Study 810,
[online] https://www.cipd.co.uk/Images/resourcing- London, IDS
talent-planning_2017_tcm18-23747.pdf (archived Phillips, J D (1990) The price tag of turnover,
at https://perma.cc/TC7R-AV84) [accessed 22 Personnel Journal, December, pp 58–61
January 2019]
365
31
Managing diversity
and inclusion
and age groups into cohesive and productive organ-
Introduction izational units. It involves formulating and imple-
menting policies and processes that maximize the
Diversity refers to the differences between people – potential advantages of diversity while minimizing
‘the mix’. Inclusion is the deliberate act of welcom- the potential disadvantages. It means developing a
ing diversity and creating an environment where culture which spells out that ‘this is the way we do
different kinds of people can thrive and succeed. things around here about diversity’. It is a concept
Diversity is what you have. Inclusion is what you do. that recognizes the benefits to be gained from differ-
The management of diversity and inclusion is ences. It is not the same as equal opportunity, which
based on the proposition that everyone should be aims to legislate against discrimination, assumes
valued as an individual and treated fairly irrespective that people should be assimilated into the organiza-
of their race, gender, level of disability, religion, sex- tion and, often, relies on affirmative action.
ual orientation or age. A number of personal charac- Managing inclusion is about forming and main-
teristics are covered by discrimination law to give taining an environment in which individuals of all
people protection to ensure that this happens. These backgrounds – not just members of historically fa-
‘protected characteristics’ are race, disability, gender voured groups – are fairly treated and valued for who
reassignment, sex, marriage and civil partnership, they are. Inclusive cultures are characterized by a col-
pregnancy and maternity, religion and belief, sexual lective commitment to integrating diverse identities as
orientation and age. But it is not enough to rely on a source of insight and skill. It is the process of ensur-
the law. More needs to be done to create and maining that people feel they belong and are connected.
tain a culture which recognizes that although people The management of diversity and the management
are different they all need to be treated in ways that of inclusion are closely connected. In fact they overlap
are fair and tailored to their individual needs and and much of what can be done to improve one will
which ensure they feel that they belong and that they affect the other. Both diversity issues concerning dis-
are important to the organization. tinct groups of people as well as more general inclu-
This chapter examines the meaning and signifi- sion issues need to be considered when developing
cance of managing diversity and inclusion, the causes policy and practice and ensuring that everyone knows
of bias, and the ways in which they can be managed. what they need to do through means such as com-
munications, workshops and training interventions.
The meaning and
significance of managing Source review
diversity and inclusion
To the extent that diversity management practices
Managing diversity and inclusion in the workplace that focus specifically on improving the outcomes
means bringing together people of different ethnic of historically disadvantaged groups cause
backgrounds, religions, genders, sexual orientations
resentment or backlash on the part of individuals There is also a business case. The effective man-
who do not directly benefit from these practices,
agement of diversity and inclusion can help to
increase levels of engagement, promote cooperation
they can have the unintended effect of
and reduce conflict. It can provide for the best can-
exacerbating negative stereotypes and perceived
didates from the widest possible source of appli-
intergroup competition… To really manage both the
cants to be selected for jobs.
problems and the potential benefits associated with
diversity, organizations need to create
environments that are inclusive of all employees.
Nishii (2013: 1754–55)
How to manage diversity
and inclusion
The overall aim of a diversity and inclusion pro-
Bias as a factor affecting gramme should be to achieve culture change so that
the approach to dealing with diversity and inclusion
diversity and inclusion issues becomes a way of life for all concerned. To do
this it is necessary to:
Unfortunately, bias, whether conscious or uncon- ●● develop a diversity and inclusion strategy;
scious, is a fact of life in society and the organiza-
●● define the values of the organization
tions that are part of society. Tsui and O’Reilly
concerning diversity and inclusion;
(1989) found through their research that the more
dissimilar a supervisor and subordinate were in ●● set out the diversity and inclusion policies of
terms of race or gender, the less effective the super- the organization;
visor considered the subordinate to be. ●● implement programmes for communicating
As Mor Barak et al (1998) pointed out, social the values and policies;
identity theory explains how we feel about our ●● pay particular attention to potential problem
own and other social groups and how this might areas – recruitment, appointments and
lead to bias. Identity has two components: a per- promotions, learning and career development
sonal one derived from characteristics such as per- opportunities and pay;
sonality traits, and a social one derived from group
●● devise and run training programmes designed
membership. It involves attachment to groups of
to increase awareness and influence
people with whom individuals identify (oneness).
behaviour;
Social identification leads to activities that fit per-
ceptions of other people that may be stereotypes. ●● create diversity networks as described later;
●● monitor progress and evaluate training.
The rationale for managing

Diversity and inclusion strategy
diversity and inclusion
When developing a diversity and inclusion strategy
There is a powerful social justice argument for pursuit is first necessary to ensure that initiatives will
ing diversity and inclusion policies. Everyone has the have the support of the board and senior manage-
right to be treated fairly in a workplace which values ment. The case should cover the following areas
the differences between people and which promotes of diversity and inclusion: gender, ethnicity, age,
an environment of fairness, dignity and respect. disability, sexual orientation and religion.
Everyone should have career development and pro- The strategy should make it plain that the focus
motion opportunities based on merit and be given will be on fairness and inclusion, ensuring that merit,
equal opportunities to improve their work-life bal- competence and potential are the basis for all deci-
ance – for example, through working flexible hours. sions about recruitment and development, and being
Chapter 31 | Managing Diversity and Inclusion 367
alert to the influence of conscious and unconscious Diversity and inclusion policy
biases. But it should emphasize that the aim will be
to support business goals as well as to respond to A policy on managing diversity and inclusion
moral imperatives. The strategy should also cover should be produced to provide guidelines to manag-
the need to define the values of the organization con- ers on their role in managing them and information
cerning diversity and inclusion and it should stress to employees in general on the part they are ex-
the importance of involving employees both in pected to play. It could:
agreeing those values and, importantly, discussing
●● acknowledge cultural and individual
how they should be put into effect as ‘values in use’.
differences in the workplace;
A broad indication of the methods that will be
used in a programme for managing diversity and ●● state that the organization values the
inclusion such as communications, the creation of different qualities that people bring to their
diversity networks and training should be given, jobs;
bearing in mind that managing diversity and inclu- ●● emphasize the need to eliminate bias in such
sion is a continuous process of improvement, not a areas as selection, promotion, performance
one-off initiative. Additionally, the strategy should assessment, pay and learning opportunities;
set out the employment areas that will be covered. ●● indicate the need to promote inclusion, the
These are typically recruitment and selection, per- process of ensuring that people from all
formance management, rewards, opportunities for backgrounds feel they belong and are
learning and development, career development and connected;
talent management, and work-life balance.
●● focus attention on individual differences
Consideration should be given to what needs to
rather than group differences.
be done to deal specifically with diversity and with
inclusion. Actions should be planned which will The aims are to deal with issues concerning diver-
support the management of diversity and other ac- sity and to create an inclusive environment, in
tions proposed which will support the management which it is accepted that inclusion is a way of life.
of inclusion. There will be some planned actions
which support both diversity and inclusion.
For example, Northern Rail introduced diversity Critical areas
ambassadors, an inclusion charter, and e-learning
The critical areas where there can be diversity and
on unconscious bias. It reached out to local schools
inclusion issues are recruitment, appointments and
and colleges, and targeted advertising on Asian TV
promotions, learning and career development op-
networks to encourage candidates from previously
portunities, pay, bullying and harassment, and
untapped audiences.
work-life balance. In each case policies and defini-
tions of good practice need to be developed to avoid
Defining the values biased and prejudiced decisions. These policies
and practices should be communicated extensively
The values could be defined under such headings as: and form the base of training programmes.
●● fairness;
equality;
●●
Communicating
●● inclusion;
It is essential to let everyone know about the diversity
●● respect for the individual;
and inclusion values and policies of the organization
●● care for the individual; and what is being done about them. This is a continu-
●● valuing individuals; ous process, not a one-off campaign. All available
●● developing staff and their careers. media should be used including newsletters, the
intranet, enterprise social networks, consultative

It is important to involve employees in discussing committees, briefing groups, in-house magazines and
these values. notice boards.
Training ●● At Cisco, the women’s network helps

business development by hosting events for
The aims of diversity and inclusion training should prospective and existing customers.
be to alert people to the importance of dealing with ●● At PwC there are four main networks: for
the issues involved, communicate the values and women, ethnic minorities, disabled people
policies of the organization, and indicate the sort of and GLEE (an inclusive business network for
behaviours required. This should be part of the in- gays, lesbians and everyone else).
duction training programmes for new employees. It
should be provided for all existing managers and ●● At BT a disability network focuses on
those who are about to be promoted, and should awareness raising about different disabilities
emphasize the vital part they have to play in creat- to help managers understand them and get
ing an inclusive culture and how they should set the best from people living with a disability.
about doing it. Specifically, the training for manag- ‘Knowledge calls’ are provided which consist
ers should cover how to create an inclusive culture, of presentations done via conference calls
leadership behaviours, interviewing and assessing and desktop technology with expert speakers
people, performance management, and dealing with on particular subjects such as Parkinson’s
bullying and harassment. Briefing programmes for and migraines. They typically include
other members of staff should also be held. someone who has experienced the condition,
The methods used should be participative – the a Q&A session and inputs from HR relating
minimum amount of lecturing and the maximum to the condition or disability. There are
amount of participation in discussions, the analysis online forums and sub-groups offering
of case studies and role-plays illustrating situations support.
where bias might creep in and what can be done
about it.
Evaluation
It is essential to monitor and evaluate progress. The
Diversity networks key performance indicators that can be used are
Diversity networks can be set up which act as sup- representation/demographic data by group of em-
port groups for minority staff to share problems ployee, employee survey results and demographic
and swap tips. But they can additionally help or- trend data on recruitment, promotions and the pro-
ganizations to understand the people who work for vision of learning opportunities. Actions should be
them and help the business to perform better. For tracked to see if they have had the intended results
example: so that changes can be made if necessary.
Key learning points
The meaning and significance of backgrounds – not just members of historically

favoured groups – are fairly treated and valued for
managing diversity and inclusion who they are.
Managing diversity in the workplace means bringing
together people of different ethnic backgrounds, The rationale for managing diversity
religions, genders, sexual orientations and age groups
and inclusion
into cohesive and productive organizational units.
Managing inclusion is about forming and There is a social justice argument for pursuing
maintaining a culture in which individuals of all diversity and inclusion policies: everyone has the right
Chapter 31 | Managing Diversity and Inclusion 369
to be treated fairly in a workplace which values the ●● set out the diversity and inclusion policies of the
differences between people and which promotes an organization;
environment of fairness, dignity and respect.
●● implement programmes for communicating the
There is also a business case. The effective
values and policies;
management of diversity and inclusion can help to
increase levels of engagement, promote cooperation ●● pay particular attention to potential problem
and reduce conflict. areas – recruitment, appointments and promotions,
learning and career development opportunities
How to manage diversity and inclusion and pay;
To manage diversity and inclusion it is necessary to: ●● devise and run training programmes designed to
increase awareness and influence behaviour;
●● develop a diversity and inclusion strategy;
●● create diversity networks;
●● define the values of the organization concerning
diversity and inclusion; ●● monitor progress and evaluate training.
References
Mor Barak, M E, Cherib, D A and Bergman, S (1998) Tsui, A and O’Reilly C A (1989) Beyond simple
Organizational and personal dimensions on demographic effects: the importance of simple
diversity climate, Journal of Applied Behaviour demography in superior-subordinate dyads,
and Science, 34 pp 82–104 Academy of Management Journal, 32,
Nishii, L H (2013) The benefits of climate for pp 402–23
inclusion for gender-diverse groups, Academy of
Management Journal, 56 (6), pp 1754–74
370
32
Managing flexibility
ments is recognized by dealing with this aspect of
Introduction flexibility separately in the second part. Finally, sug-
gestions are made on the role of HR in managing
Managing flexibility takes place at organizational flexibility.
and individual levels. In an organization it involves
the swift and smooth response to significant changes
in operational demands by the reconfiguration of
resources and activities. In so doing the aims are to
maintain the ability to achieve the required results, Word s of w isd om
make the best use of employees’ skills and capacities
and control employment costs. The CIPD (2014) Firms have put a premium on achieving a
emphasized the importance of ‘agility’ which refers workforce which can respond quickly, easily
to workforce agility (flexibility in matching work-
force fluctuations to demand) and operational agil- and cheaply to workforce changes, which
ity (responsiveness and adaptiveness of processes may need to contract as smoothly as they
and structures). It was suggested that three practices
expand, in which worked time precisely
support flexibility:
matches job requirements, in which unit
1 Workforce composition – who works?
labour costs can be held down.
2 Workforce flexibility – when and where do
they work? Atkinson (1984: 28)
3 Skills flexibility – how are the skills

developed and updated?
For employees, flexible working policies and ar-
rangements can give them a degree of flexibility in Forms of flexibility
their working hours and where they work. They can
be ‘family friendly’ in the sense that they make life The four forms of flexibility are:
easier for working parents or carers. The CIPD
(2019: 1) argued that flexible working ‘plays a cru- ●● functional flexibility;
cial role in an organization’s performance through ●● structural flexibility;
enabling better work-life balance, improving em- ●● numerical flexibility;
ployee engagement and retention and key outcomes
●● work flexibility.
including productivity and delivering more flexible
service to customers.’
Flexibility can take a number of forms, as de-
scribed in the first part of this chapter. The impor-
Functional flexibility
tance from a people management point of view of Functional flexibility involves redeploying employ-
developing and managing flexible working arrange- ees quickly and smoothly between activities and
Chapter 32 | Managing Flexibility 371
tasks. It may require multi-skilling – workers who 3 The external workforce – people who work
possess and can apply a number of skills, for exam- for another employer or are self-employed,
ple, both mechanical and electrical engineering – or This includes workers in firms to which
multi-tasking – workers who carry out a number of work has been sub-contracted or outsourced
different tasks in a work team. and agency workers.
A multi-skilling strategy can mean providing
The flexible firm model is a convenient method of
people with a variety of experience by moving them
summing up the ways in which firms can achieve
between different jobs or tasks (job rotation) and by
flexibility by using peripheral workers while re-
secondments. It typically includes setting up flexible
taining a core of essential employees. But it does
work teams, the members of which can be deployed
not fully represent the reality of how firms manage
on all or many of the team’s tasks. Flexible em-
flexibility. This is more likely to be on an ad hoc
ployee resourcing or rostering practices can be used
basis, selecting whatever method of dealing with
to enable people to be rapidly redeployed to meet
employment problems is readily available rather
new demands. This may involve abandoning the
than consciously and systematically applying the
traditional job description that prescribes the tasks
model to their organization. Hunter and MacInnes
to be carried out and replacing it with a role profile
(1991) found little evidence of a drive towards the
that specifies the range of knowledge and skills the
flexible firm in the companies they studied.
role holder needs to achieve the role’s objectives.
However, the model is a help to understanding
Functional flexibility requires arrangements for em-
how the various forms of flexible working can
ployees to rapidly learn any new skills required or
take place.
even be completely retrained to undertake new jobs.
Structural flexibility Numerical flexibility

Structural flexibility takes place when the core of Numerical flexibility is associated with structural
permanent employees is supplemented by a periph- flexibility and means that the number of employees
eral group of part-time employees, employees on can be quickly and easily increased or decreased in
short- or fixed-term contracts or sub-contracted line with short-term changes in the level of demand
workers. This is the ‘flexible firm’ model developed for labour. It is a process through which firms react
by Atkinson (1984). It distinguishes between what to changes in the demand for their products/services
is called the core and the peripheral workforce and by adjusting the number of people they employ.
is sometimes called the ‘core-peripheral model’. The There are several ways of achieving numerical flex-
model consists of: ibility, for example, the use of overtime, part-time
work, variable working hours, fixed-time contracts,
1 The core – workers who have the security of workers on zero-hours contracts, temporary lay-
permanent (ie not fixed term) contracts, and offs, temporary or on-call workers (who work for a
have important skills, which ideally they can firm for a specific period of time but are not part of
apply across a wide range of tasks. The firm the regular work force), freelance workers, seasonal
will want to retain these employees even in workers and independent contractors.
hard times.
2 The peripheral group – workers who are
employed on contracts that have some
degree of permanence (part-timers could be Word s of w isd om
included in this category) or they may be on
temporary contracts. Due to their lower The most resilient firms are those which can
levels of skill they will not have the same evolve a clever balance between stability
amount of security as their colleagues in the
and flexibility while maintain employee trust
core. Typically, their work will be
characterized by little responsibility and and confidence. This is easier said than done.
lower pay. These employees can be laid off Boxall and Purcell (2016: 22)
relatively easily since people with similar
skills can be hired quickly if necessary.
Work flexibility Flexible working

Work flexibility (flexible working as described in
more detail below) is a pattern of working practice ‘Flexible working’ describes a type of working
or working hours that deviates from the standard arrangement that gives a degree of flexibility on
or normal arrangements. It gives a degree of flexi- how long, where, when and at what times employ-
bility on how long, where, when and at what times ees work. Research cited by the CIPD (2019) has
employees work. This can increase the agility with shown that flexible workers have a higher level of
which an organization responds to change but, im- job satisfaction and commitment and are more
portantly, it can also make a contribution to im- likely to increase discretionary effort compared to
proving employee wellbeing by, for example, those who do not work flexibly. Flexible working
providing for better work-life balance. options can reduce absence rates and allow employ-
ees to manage disability and long-term health con-
ditions, as well as supporting their mental health
The problem of flexible and stress. They can also be attractive for new tal-
ent, especially as employee expectations change
labour markets with regard to their jobs, careers and work-life bal-
Jill Rubery and her colleagues spelt out the prob- ance, and demographic changes affect employees’
lems of flexible labour markets as follows: needs to balance their job with other r esponsibilities
such as caring. The CIPD (2016) flexible working
survey revealed that the top three benefits of flexible
working most frequently mentioned by employees
Source review were that it enables better work-life balance, helps
reduce the amount of stress/pressure employees feel
under, and has been a factor in employees staying
Flexible labour markets are increasingly regarded
with their current employer.
as the answer to a wide spectrum of labour market
Flexible working practices include:
and societal challenges, from creating jobs to
reducing segmentation and welfare dependency, ●● Part-time working: a contract to work less
improving public finances and supporting than full-time hours.
workforce diversity and innovation. The contention ●● Term-time working: a worker remains on a
is that, contrary to these claims, flexible labour permanent contract but can take paid/unpaid
markets generate fundamental contradictions and leave during school holidays.
unsustainable long-term trends. The jobs miracle is ●● Job-sharing: a form of part-time working
exaggerated and based on low-productivity jobs, where two (or occasionally more) people
outsiders often lose most from competition, share the responsibility for a job between
claimants must work flexibly but still secure a them.
full-time wage, low-wage employment is shrinking ●● Hot-desking: Individual desks are shared
the fiscal base, jobs are not being adjusted to between several people who use them at
accommodate workers’ changing needs and different times.
capacities and the disposable labour model is
●● Flexitime: allows employees to choose,
undermining long-term productivity.
within certain set limits, when to begin and
Rubery et al (2016: 235) end work.
●● Compressed hours: compressed working
weeks (or fortnights) don’t necessarily
involve a reduction in total hours or any
extension in individual choice over which
Pa us e fo r t houg ht hours are worked. The central feature is
Do you agree with this assessment? reallocation of work into fewer and longer
blocks during the week.
●● Annual hours: the total number of hours to individual is working towards. The employee
be worked over the year is fixed but there is is accountable for results but not how the
variation over the year in the length of the results are achieved (often used for sales
working day and week. Employees may or representatives).
may not have an element of choice over ●● Zero-hours contracts: an individual has no
working patterns. guarantee of a minimum number of working
●● Working from home on a regular basis: hours, so they can be called upon as and when
workers regularly spend time working from required and paid just for the hours they work.
home.
A survey by the CIPD (2018) showed that the most
●● Mobile working/teleworking: this permits commonly available options for working flexibly
employees to work all or part of their are flexitime (available to 42 per cent of workers)
working week at a location remote from the and working from home in normal working hours
employer's workplace. (40 per cent). One in three (34 per cent) have the
●● Career breaks: career breaks, or sabbaticals, chance to reduce their working hours and one in
are extended periods of leave – normally four (25 per cent) the option to work compressed
unpaid – of up to five years or more. hours. Job sharing and working only during school
●● Outcome-based contracts: there are no fixed term times are less common options, being available
hours, only an output target that an to 12 per cent and 11 per cent respectively.
C A S E S T U DY
Flexible working in the Hilton Hotel Group
Introducing flexible working in a hotel is difficult. It is four different proposals for how flexibility could be intro
essential to set people’s schedules in advance so work can duced without impairing operational efficiency All were
be planned around that. In an accounts department, oppor trialed and now anyone who wants to work flexibly has the
tunities for flexible working were poor. However, employees means to do so.
in the department split into four groups to come up with
Zero-hours contracts ●● In some zero-hours contracts the individual

will be obliged to accept work if offered, but
A zero-hours contract is an agreement between two in others they will not.
parties that one may be asked to perform work for ●● The pay arrangements and benefits provided
another but there are no minimum set contracted may differ.
hours. The contract will specify how much pay the
individual will get when he or she does work and They are most suited to situations where work fluc-
will deal with circumstances in which work may be tuates unexpectedly so that the employer cannot
offered and possibly turned down. always guarantee work and are most common in
The exact nature of zero-hours contracts may dif- retail, hospitality and restaurants.
fer from organization to organization. For e xample: Zero-hours contracts have received a very bad
press but the CIPD (2015) has taken a more favour-
●● Individuals on zero-hours contracts may be able view.
engaged as employees or workers.
Source review
Zero-hours contracts have sometimes, it seems, been singled out as an especially unfair form of employment. In
our view, this is unjustified. Our research shows that zero-hours contracts appear to work well for many of those
on them. But they are not for everybody and that’s why zero-hours contract workers need to understand their
employment rights as well as how these contracts are likely to work in practice. Zero-hours contracts work best
when there’s an element of give and take, a recognition that flexibility works both ways. A small minority of
employers using them don’t seem to recognize this, but there are many ‘permanent’ jobs where the actions of
employers can make them anything but secure. There may be too much emphasis at times on the precise terms
of the employment contract with not enough attention given to the spirit in which the employment relationship is
conducted.
CIPD (2015)
for the organization and individual

employees;
●● developing proposals and where appropriate
What do you think of the CIPD’s views on and possible testing their suitability;
zero-hours contracts? ●● managing the change processes required
when introducing new arrangements;
●● ensuring that steps are taken as required to
provide the training needed to update
existing skills or develop new ones;
The role of HR ●● if zero-hours contracts are a possibility,
HR can help to manage flexibility by: giving very careful attention to drawing up
contractual arrangements that minimize any
●● being aware of the business/organizational potential detriments for the workers
issues which indicate that greater operational concerned.
flexibility is required;
●● giving careful consideration to how
structural flexibility can be achieved, eg by
the use of ‘peripheral’ workers; Pau se for th ou gh t
●● analysing the scope for flexible working and How do you think employers could reconcile
discussing the issues with management and
their own need for flexibility with the needs
employee representatives;
●● in the light of these discussions, exploring the of employees?
alternatives and assessing the implications
Key learning points
Flexibility The aim of managing flexibility is to satisfy this

requirement and in so doing, improve the use of
Organizations today have to be able to adjust quickly employees’ skills and capacities, increase productivity
and smoothly to rapidly changing circumstances. and control employment costs.
Forms of operational flexibility Homeworking

The four forms of operational flexibility are: Home-based employees can carry out such roles as
consultants, analysts, designers or programmers, or
●● functional flexibility;
they can undertake administrative work.
●● structural flexibility;
●● numerical flexibility; Zero-hours contracts
●● work flexibility. The CIPD (2015) defines a zero-hours contract as ‘an
agreement between two parties that one may be
asked to perform work for another but there is no
Flexible hour arrangements
minimum set contracted hours. It believes that, used
Flexible hour arrangements can be included in a responsibly, zero-hours contracts can provide
flexibility plan in one or more of the following ways: flexibility that works for both employers and
flexible daily hours, flextime systems, flexible weekly individuals.
hours, compressed working weeks, annual hours.
Hot-desking
Hot-desking means that individual desks are shared
between several people who use them at different times.
References
Atkinson, J (1984) Manpower strategies for the working_tcm18-10886.pdf (archived at https://
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August, pp 28–31 CIPD (2018) Working Lives [online] https://www.
Boxall, P F and Purcell, J (2016) Strategy and Human cipd.co.uk/Images/UK-working-lives-2_tcm18-
Resource Management, 4th edition, Basingstoke, 40225.pdfcomprehensive survey of the UK
Palgrave Macmillan workforce (archived at https://perma.cc/9WX2-
CIPD (2014) HR: Getting Smart About Agile P6LN) [accessed 18 May 2019]
Working [online] https://www.cipd.co.uk/Images/ CIPD (2019) Flexible Working Practices [online] https://
hr-getting-smart-agile-working_2014_tcm18- www.cipd.co.uk/knowledge/fundamentals/relations/
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zero-hours-and-short-hours-contracts-in-the- Use Strategies, London, Employment Department
uk_2015-employer-employee-perspectives.pdf Research Paper No 87
(archived at https://perma.cc/7T4X-3MWP) Rubery, J, Keizer, A and Grimshaw, D (2016)
[accessed 26 December 2015] Flexibility bites back: the multiple and hidden
CIPD (2016) Commuting and Flexible Working costs of flexible employment policies, Human
[online] https://www.cipd.co.uk/Images/employee- Resource Management Journal, 26 (3), pp 235–51
outlook-focus-on-commuting-and-flexible-
376

377
PART VIII
PA R T V I I I CO N T E N T S
33 The basis of learning and development

34 The process of learning and development
35 Learning and development practices
36 Leadership and management development
The initial chapter in this part sets the scene through s elf-managed learning, personal development plan-
a definition of what is involved in learning and de- ning, and blended learning; (3) implementing
velopment (L&D) and explanations of the various planned learning events or programmes; and (4)
concepts that underpin its practices. These concepts evaluating the effectiveness of L&D interventions.
include organizational learning and an analysis of In Chapter 35, L&D practices are described, cover-
how people learn and the effect this has on learning ing workplace learning, social or cooperative learning,
and development activities. e-learning, the use of social media and artificial intel-
The next chapter describes the overall process of ligence, personal development planning and training.
L&D – how it operates as a sequence of activities: Finally in Chapter 36, leadership and manage-
(1) the identification of learning needs; (2) planning ment development is covered by reference to pro-
and implementing the various types of learning ac- grammes for developing leadership qualities and for
tivities covering formal and informal learning, developing managers generally.
378

379
33
The basis of learning
and development
Development – the growth or realization of a
Introduction ●●
person’s ability and potential through the
provision of learning and educational
The aim of this chapter is to provide a general intro- experiences.
duction to learning and development. Its earlier sec-
tions include a broad description of what L&D ●● Training – the systematic application of
involves and a look at strategic L&D. This is followed formal processes to help people to acquire
by an examination of the fundamental processes of the knowledge and skills necessary for them
creating a learning culture, and of organizational and to perform their jobs satisfactorily.
individual learning. The discussion on individual ●● Education – the development of the
learning is then extended into an analysis of how knowledge, values and understanding
people learn (learning theory) which strongly influ- required in all aspects of life rather than the
ences the ways in which learning and development knowledge and skills relating to particular
activities are planned and conducted as covered in areas of activity.
the next two chapters.
Learning should be distinguished from training.
‘Learning is the process by which a person con-
structs new knowledge, skills and capabilities,
Learning and development whereas training is one of several responses an or-
defined ganization can undertake to promote learning’
(Reynolds et al, 2002: 9). Learning is what indivi
Learning and development (L&D) is concerned with duals do; training is what organizations do to
ensuring that organizations have the knowledgeable, individuals. The components of learning and devel-
skilled and engaged people they need. It means ena- opment are shown in Figure 33.1.
bling individuals to acquire knowledge and skills
through experience and social contacts, coaching,
mentoring and guidance provided by line managers Strategic L&D
and others, self-managed learning, and learning events
and programmes provided by the organization. Strategic L&D deals with how the organization’s
The components of L&D are: goals can be attained through its people by encour-
aging and helping them to learn and develop. Like
●● Learning – the process by which a person strategic HRM, it is based on the proposition that
acquires and develops knowledge, skills, the human resources of an organization play a stra-
capabilities, behaviours and attitudes. It tegic role in its success and that L&D strategy should
involves the modification of behaviour therefore be integrated with business strategy.
through experience as well as more formal The objective of strategic L&D is to enhance re-
methods of helping people to learn within or source capability in accordance with the belief that
outside the workplace. a firm’s human resources are a major source of
380 Part 8 | Learning and Development
F I G U R E 33.1 The components of learning and development
Individual Leadership and

Organizational Blended management
learning and Training
learning learning development
development
Knowledge Workplace Workplace

management learning training
Formal off-
Social
the-job
learning
training
Self-directed
learning
E-learning
Coaching and
mentoring
c ompetitive advantage. Its aims are therefore to de- the creation of which is a priority for strategic L&D.
velop the intellectual capital required by the organi- A learning culture is one in which learning is recog-
zation as well as to ensure that people of the right nized by top management, line managers and em-
quality are available to meet present and future ployees generally as an essential organizational
needs. These aims are achieved by creating a learn- process to which they are committed and in which
ing culture and by encouraging organizational and they engage continuously. The characteristics of a
individual learning. learning culture are self-managed learning not in-
Strategic L&D may be business-led but it also struction, long-term capacity building not short-
needs to take into account the needs of individual term fixes, and empowerment not supervision.
employees. The importance of increasing employa- Reynolds (2004: 9) described a learning culture
bility outside as well as within the organization as a ‘growth medium’, in which ‘employees will
should be recognized. commit to a range of positive discretionary behav-
iours, including learning.’ He suggested that to cre-
ate a learning culture it is necessary to develop
Creating a learning culture organizational practices that ‘give employees a sense
of purpose in the workplace, grant employees op-
The foundation for learning and development is portunities to act upon their commitment, and offer
provided by the learning culture of the organization, practical support to learning.’ He also suggested
Chapter 33 | The Basis of Learning and Development 381
that organizations should provide a supportive is identified and corrected. He distinguished

learning environment where people’s learning capa- between these as single-loop and double-loop learn-
bilities can be discovered and applied. Employees ing. They are also described as adaptive or generative
should be able to learn through their work chal- learning.
lenges and should be provided with time, resources Single-loop or adaptive learning is incremental
and, crucially, feedback. The importance of manag- learning that does no more than correct devia-
ers acting as coaches, mentors and role models tions from the norm by making small changes and
should be recognized and learning networks (com- improvements without challenging assumptions,
munities of practice consisting of groups of people beliefs or decisions. Organizations where single-
with shared expertise who work together) should loop learning is the norm define what Argyris calls
be encouraged. the ‘governing variables’, ie what they expect to
achieve in terms of targets and standards and then
monitor and review achievements, and take cor-
Organizational learning rective action as necessary, thus completing the
loop.
strategies Double-loop or generative learning involves
challenging assumptions, beliefs, norms and deci-
Creating a learning culture means formulating or- sions rather than accepting them. On this basis,
ganizational learning strategies to improve organi- learning takes place through the examination of the
zational effectiveness. Organizational learning refers root causes of problems so that a new learning loop
to the methods adopted by organizations to pro- is established that goes far deeper than the tradi-
mote learning; it is not simply the sum of all the tional learning loop provided by single-loop learn-
L&D activities that are carried out. It focuses on ing. It occurs when the monitoring process initiates
collective learning but takes into account the propo- action to redefine the governing variables to meet
sition made by Argyris (1992) that organizations do the new situation, which may be imposed by the
not perform the actions that produce the learning; it external environment. The organization has learnt
is individual members of the organization who be- something new about what has to be achieved in
have in ways that lead to it, although organizations the light of changed circumstances and can then de-
can create conditions that facilitate such learning. cide how this should be done. This learning is con-
The concept of organizational learning recognizes verted into action. The process is illustrated in
that the way in which this takes place is affected by Figure 33.2.
the context of the organization and its culture. It is As Easterby-Smith and Araujo (1999) commented,
sometimes confused with the notion of the learning single-loop learning could be linked to incremental
organization, but, as suggested later, the concepts change. In contrast, double-loop learning is associ-
are different. ated with radical change that may involve a major
change in strategic direction. It is often assumed that
double-loop learning is superior, but there are situa-
The process of organizational tions when single-loop learning is more appropriate.
learning
Organizational learning can be characterized as an The notion of a learning
intricate three-stage process consisting of knowl-
edge acquisition, dissemination and shared imple- organization
mentation. As such, it is closely related to knowledge
management. Knowledge may be acquired from di- A learning organization was described by Senge
rect experience, the experience of others or organi- (1990: 3), who originated the idea, as one ‘where
zational memory. people continually expand their capacity to create
Argyris (1992) explained that organizational the results they truly desire, where new and expan-
learning occurs under two conditions: first, when an sive patterns of thinking are nurtured, where collec-
organization achieves what is intended, and second, tive aspiration is set free, and where people are
when a mismatch between intentions and outcomes continually learning how to learn together.’ Further
F I G U R E 33.2 Single- and double-loop learning

Define expectations
Take action
Decide on corrective Single-loop learning Monitor and

action as necessary review
Double-loop
learning
Redefine
expectations as
necessary
definitions of a learning organization were provided not only individual learners but also have the ca-
by Wick and Leon (1995: 299), who stated that it pacity to learn collaboratively. This is described by
was one that ‘continually improves by rapidly creat- organization learning theory and leads to the belief
ing and refining the capabilities required for future that it is the culture and environment that are im-
success’, and by Pedler et al (1997: 3), who referred portant, not the systems approach implied by the
to it as an organization that ‘facilitates the learning concept of the learning organization.
of all its members and continually transforms itself.’ Burgoyne (1999), one of the earlier exponents of
the learning organization, has admitted that there
has been some confusion about it and that there
Critical evaluation of the learning have been substantial naiveties in most of the early
thinking. He believes that the concept should be in-
organization concept tegrated with knowledge management initiatives so
The learning organization concept is persuasive be- that different forms of knowledge can be linked, fed
cause it seems to provide a rationale for compre- by organizational learning and used in adding value.
hensive learning and development programmes.
However, Scarborough et al (1999) argued that the
learning organization concept is over-concerned The learning organization and
with organization systems and design. Little atten-
tion is paid to what individuals want to learn or
organizational learning
how they learn. The idea that individuals should be The notion of the learning organization is often as-
enabled to invest in their own development seems sociated with the concept of organizational learn-
to have escaped learning organization theorists, ing. But they are different. Easterby-Smith and
who are more inclined to focus on the imposition of Araujo (1999) explained that the literature on or-
learning by the organization, rather than creating a ganizational learning focuses on the observation
climate conducive to learning. and analysis of the processes of individual and col-
Viewing organizations as learning systems is a lective learning in organizations, whereas the learn-
limited notion. Argyris and Schon (1996) explained ing organization literature is concerned with using
that organizations are products of visions, ideas, specific diagnostic and evaluative tools to identify,
norms and beliefs and that their shape is much more promote and evaluate the quality of the learning
fragile than the organization’s material structure. processes inside organizations. In other words, or-
People act as learning agents for the organization in ganizational learning is about how people learn in
ways that cannot easily be systematized. They are organizations, and the learning organization notion
attempts to explain what organizations should do But learning is a complex process and the effec-
to facilitate the learning of their members. tive development and implementation of these strat-
However, as explained above, learning organiza- egies requires an understanding of how people
tion theory provides a dubious base for action. The learn. This is explained in general terms by learning
idea of a learning culture supported by the under- theory and the lessons learnt from neuroscience as
standing of how organizations learn, as provided by summarized below. It is also necessary to appreciate
organizational learning theory and knowledge the many ways in which people learn – their learn-
management initiatives, has more to offer. ing styles and the phenomenon of the learning curve.
How people learn

Learning theory indicates that people learn by doing
What do you think of the contrast between
(experiential learning) and from each other (social
organizational learning theory and the or cooperative learning) and by instruction.
notion of the learning organization? What, if Discretionary, self-managed learning is important.
It takes place when individuals of their own volition
anything, does the latter contribute to our actively seek to acquire the knowledge and skills
understanding of the learning process in they need to carry out their work. The organization
can help by providing customized learning that al-
organizations?
lows people to adapt their learning to enable them
to achieve their goals.
The 70/20/10 model for learning and develop-
ment based on research conducted by the Centre for
Creative Leadership (Lombardo and Eichinger,
Individual learning 1996) claims that people’s development will be about
strategies 70 per cent from work experience, about 20 per cent
from social learning and 10 per cent from formal
Individual learning comprises the processes and pro- training courses. In other words, most learning takes
grammes used to increase the capabilities of individ- place in the workplace, while formal instruction
ual employees. Strategies for individual learning are plays a much less significant part. This model has
driven by the organization’s people requirements as been criticized by Clardy (2018) on the grounds that
expressed in terms of the skills and behaviours re- it has been under-researched and the evidence for it
quired to achieve business goals. Strategies can cover: is therefore weak. In reality, he argued, learning
doesn’t happen in these three neat boxes and think-
●● how learning needs will be identified; ing of it in this way can do more harm than good. If
●● the role of self-managed learning; this is the case, the model should not be taken too
●● the facilitation of workplace learning; literally and should instead be regarded simply as an
illustration of the belief in the value of experiential
●● the encouragement of collaborative or social and social learning. But it is still necessary to recog-
learning; nize the importance of formal training which can
●● the use of blended learning; play an important role in helping people to acquire
●● the support that should be provided for specific knowledge and skills, especially when it is
individual learning in the form of guidance, blended with other forms of learning.
coaching, mentoring, learning resource
centres, e-learning, the use of social media
and internal or external training programmes Pau se for th ou gh t
and courses;
What do you think is the main contribution
●● the evaluation of learning.
that formal training can make to learning?
These are described in Chapters 34 and 35.
Further explanations of the way people learn are on it so that it can be understood and
provided by learning theory, neuroscience, the con- applied. Thus people become active agents of
cept of the learning curve and the influence of learn- their own learning.
ing styles. ●● Social learning theory – this states that
effective learning requires social interaction.
Wenger (1998) suggested that we all
Learning theory participate in ‘communities of practice’
The main learning theories are: (groups of people with shared expertise who
work together) and that these are our
●● Reinforcement theory – based on the work primary sources of learning. Bandura (1977)
of Skinner (1974) this expresses the belief viewed learning as a series of information-
that changes in behaviour take place as a processing steps set in train by social
result of an individual’s response to events or interactions.
stimuli and the ensuing consequences
●● Dual coding theory (Welcome et al, 2011)
(rewards or punishments). Individuals can be
posits that all learners will learn more
‘conditioned’ to repeat the behaviour by
efficiently when some degree of visual
positive reinforcement in the form of
stimulation is added to the inevitable verbal
feedback and knowledge of results. This is
component.
known as ‘operant conditioning’.
●● Motivation theory – People will learn more
effectively if they are motivated to learn. Two
motivation theories are particularly relevant
to learning. Expectancy theory states that Word s of w isd om
goal-directed behaviour is driven by the The disposition and commitment of the
expectation of achieving something that the
individual regards as desirable. If individuals learner – their motivation to learn – is one
feel that the outcome of learning is likely to of the most critical factors affecting training
benefit them they will be more inclined to
pursue it. When they find that their
effectiveness. Under the right conditions, a
expectations have been fulfilled, their belief strong disposition to learn, enhanced by
that learning is worthwhile will be solid experience and a positive attitude, can
reinforced. Goal theory states that
motivation is higher when individuals aim to lead to exceptional performance.
achieve specific goals, when these goals are Reynolds et al (2002: 34)
accepted and, although difficult, are
achievable, and when there is feedback on
performance. Learning goals may be set for
individuals (but to be effective as motivators
they must be agreed) or, better still, Lessons from neuroscience
individuals may set their own goals (self-
Traditional learning theory provides a useful basis
managed learning).
for understanding how people learn but more has
●● Cognitive learning theory – learning involves been discovered recently through neuroscience, the
gaining knowledge and understanding by study of how the brain works, about the best way
absorbing information in the form of to learn.
principles, concepts and facts and then The AGES model developed by Davachi et al
internalizing it. Learners can be regarded as (2010) draws on neuroscience research and pro-
powerful information-processing machines. poses that learning is more effective and engage-
●● Experiential learning theory – experiential ment with learning is achieved when the following
learning takes place when people learn from four factors are considered in the design and deliv-
their experience by absorbing and reflecting ery of learning processes and events:
●● A (Attention): We need to ensure minimal Learning styles

distractions and avoid cognitive overload;
undivided attention is essential for effective People learn all the time and through doing so
learning. Novelty and varied techniques and acquire knowledge, skills and insight. But they will
approaches enhance attention. learn more effectively if they ‘learn how to learn’.
●● G (Generation): We maximize the likelihood People have individual learning styles – a preference
of positive engagement and formation of for particular approaches to learning – and an un-
long-term memories when learning has derstanding of their style or styles can help them to
personal meaning and significance. L&D do this. The two most familiar classifications of
practitioners should relate learning to learning styles are those produced by Kolb and his
existing knowledge and support personal, colleagues and by Honey and Mumford.
meaningful associations and applications.
●● E (Emotion): This is a key factor in fostering Kolb’s learning cycle
attention and enhancing memory function. Kolb et al (1974) identified a learning cycle consist-
Generating positive emotional experiences ing of four stages, as shown in Figure 33.3.
and social activities is key to effective learning These stages are defined as follows:
transfer. Conversely, if learners have a negative
1 Concrete experience – this can be planned or
emotion associated with learning, such as a
accidental.
fear of failure, they are less likely to engage.
2 Reflective observation – this involves actively
●● S (Spacing): It’s better to distribute learning
thinking about the experience and its
in discrete blocks delivered over short time
significance.
periods than cram lots of content into a
prolonged session. ‘Chunked’ learning results 3 Abstract conceptualization (theorizing) –
in more effective transfer and aids long-term generalizing from experience to develop
memory. various concepts and ideas that can be
applied when similar situations are
The 2011 report by the Royal Society (2011: v) encountered.
noted that: ‘Biological factors play an important
4 Active experimentation – testing the concepts
role in accounting for differences in learning ability
or ideas in new situations. This gives rise to a
between individuals.’ The Royal Society listed four
new concrete experience and the cycle begins
things that neuroscience has taught about what
again.
makes learning effective:
The key to this model is that it is a simple descrip-
1 emotional engagement with what is being
tion of how experience is translated into concepts
learnt;
2 keeping up physical exercise to prepare the
brain for learning as well as maintaining
learning energy; F I G U R E 3 3 . 3 The Kolb learning cycle
3 stimulating environments, both online and
Concrete
physically; experience
4 time to reflect to embed the learning.
The CIPD (2014) commented that: ‘Although our
development arises from an interaction of our genes
Active Reflective
with the environment, the brain’s plasticity demon- experimentation observation
strates very clearly that our genes only partly deter-
mine our progress. External environmental factors
strongly influence how our brains are constructed
and an important external factor, perhaps the most Abstract
important for many of us, is our education. That conceptualization
includes opportunities for training. (theorizing)
that are then used to guide the choice of new experi- The Maritz Institute (Hendel-Giller, 2010: 6)
ences. To learn effectively, individuals must shift produced the following learning design principles
from being observers to being participants, from based on research linking the Kolb learning cycle to
direct involvement to a more objective analytical what neuroscience teaches us about the structure of
detachment. Every person has his or her own learn- the brain:
ing styles.
1 Engage the entire Kolb learning cycle. Make
One of the most important arts that trainers
time for reflection, creating and active testing
have to develop is to adjust their approaches to the
as well as absorbing new information.
learning styles of trainees. Trainers must acknowl-
edge these learning styles rather than pursue their 2 Make a connection with the learner’s prior
own preferred approach. knowledge and experience.
3 Create opportunities for social engagement
The Honey and Mumford and interaction as part of the learning
process.
learning styles 4 Engage both feeling and thinking. Learning
Another analysis of learning styles was made by needs emotion as well as intellect.
Honey and Mumford (1996). They identified the
5 Actively attend to attention-gaining, holding
following four styles:
and focusing the learner’s attention.
1 Activists – who involve themselves fully
without bias in new experiences and revel in
new challenges. The learning curve
2 Reflectors – who stand back and observe The concept of the learning curve refers to the time
new experiences from different angles. They it takes an inexperienced person to reach the re-
collect data, reflect on it and then come to a quired level of performance in a job or a task, which
conclusion. is sometimes called the experienced worker’s stand-
3 Theorists – who adapt and apply their ard (EWS). The existence of the learning curve needs
observations in the form of logical theories. to be taken into account when planning and imple-
They tend to be perfectionists. menting training or instruction programmes. The
4 Pragmatists – who are keen to try out new standard learning curve is illustrated in Figure 33.4.
ideas, approaches and concepts to see if they But rates of learning vary, depending on the ef-
work. fectiveness of the training, the experience and natu-
ral aptitude of the learner and the latter’s interest in
However, none of these four learning styles is exclu- learning. Both the time taken to reach the EWS and
sive. It is quite possible that one person could be the variable speed with which learning takes place
both a reflector and a theorist and someone else at different times affect the shape of the curve, as
could be an activist/pragmatist, a reflector/pragma- shown in Figure 33.5.
tist or even a theorist/pragmatist.
Use of learning style theory F I G U R E 3 3 . 4 A standard learning curve

Learning style theory can be used in the design and
conduct of learning events or personal develop-
ment programmes. Learning situations can be set
Performance
up to fit the learning style of participants. Indivi EWS (experienced

duals can be helped to find out the style that most workers’ standard)
suits them. The problem is that people do not nec-
essarily have a single learning style and there cer-
tainly will be a large range of styles in any learning
group. It may therefore be difficult to fit the
approach to the style. Time
F I G U R E 33.5 A stepped learning curve When a training module is being prepared that
describes what has to be learnt and the training
needed to achieve the required levels of skill and
speed, it is often desirable to proceed step by step,
taking one task or part of a task at a time, reinforc-
Performance
EWS (experienced ing it and then progressively adding other parts,

workers’ standard)
consolidating at each stage. This is called the ‘pro-
gressive parts method’ of training.
Time
What does learning theory tell us about how
Learning is often stepped, with one or more pla- an organization should set about developing
teaus, while further progress is halted. This may be a learning strategy?
because learners cannot continually increase their
skills or speeds of work and need a pause to con-
solidate what they have already learnt. The exist-
ence of steps such as those shown in Figure 33.5 can Implications
be used when planning skills training to provide
deliberate reinforcement periods when newly ac- The practical implications of the learning concepts
quired skills are practised in order to achieve the and theory covered in this chapter are set out in
expected standards. Table 33.1.
TA B L E 33.1 The practical implications of learning concepts and theory
Concept/ Content Practical implications

theory
The process of Learning is complex and is Different learning needs require different learning methods,
learning achieved in many different often in combination. Learning effectiveness depends on the
ways. The context is extent to which the organization believes in learning and
important. supports it.
Learning Every person has their own Learning programmes need to be adjusted to cope with
styles learning style. different learning styles. Trainers also have to flex their methods.
People will learn more effectively if they are helped to ‘learn how
to learn’ by making the best use of their own style but also
by experimenting with other styles.
The learning The time required to reach an Recognize that progress may vary and may not be continuous.
curve acceptable standard of skill or Enable learners to consolidate their learning and
competence, varies between introduce reinforcement periods in training programmes to
people. Learning may proceed recognize the existence of learning steps and plateaus.
in steps with plateaus rather
than being a continuous
process.
(continued )
TA B L E 33 .1 (Continued)
Concept/ Content Practical implications

theory
The motivation People need to be motivated Learners should be helped to develop learning goals and to
to learn to learn effectively. understand the benefits to them of achieving them. Performance
management processes leading to personal development plans
can provide a means of doing this.
Reinforcement Behaviours can be Reinforcement theory underpins training programmes

theory strengthened by reinforcing concerned with developing skills through instruction. In these,
them with positive feedback the learner is conditioned to make a response and receives
(conditioning). immediate feedback and progress is made in incremental steps,
each directed to a positive outcome.
Cognitive Learners acquire The knowledge and understanding of learners can be enriched
learning theory understanding, which they and internalized by presenting them with learning materials (eg
internalize by being exposed e-learning). Case studies, projects and problem-solving activities
to learning materials and by can also be used for this purpose. Self-directed learning,
solving problems. personal development planning activities and discovery learning
processes with help from facilitators, coaches or mentors are
underpinned by cognitive learning theory.
Experiential People learn by constructing Learning through experience in the workplace can be enhanced
learning theory meaning and developing their by encouraging learners to reflect on and make better use of
skills through experience. what they learn through their own work and from other people.
Self-directed learning and personal development planning
activities with help from facilitators, coaches or mentors are also
underpinned by experiential learning theory, as is action learning.
Social learning Learning is most effective in a Learning can be encouraged in communities of practice and
theory social setting. Individual learning communities and in project teams and networks.
understanding is shaped by
active participation in real
situations.
Dual coding Learners will learn more Provides support from research to the well-known principle that
theory efficiently when visual when lecturing or teaching, the use of visual aids will provide
stimulation is added to the valuable support to the spoken word.
verbal component.
Neuroscience Understanding the way in The aids to effective learning include:

which the brain functions ●● Emotional engagement with what is being learnt.
provides useful insights into ●● Stimulating environments, both online and physically.
approaches to learning and ●● Creating opportunities for social engagement and interaction
development. ●● as part of the learning process.
●● Time for the brain to reflect to embed the learning.

C A S E S T U DY
Developing a learning strategy for Remploy
Remploy is a government-funded organization that provides strategy was developed with learning centres as a major
employment and development opportunities for disabled element in all 83 sites. Although the use of each learning
people. It operates 83 factories. The company’s strategy for centre is locally determined, they all have the following in
learning is explicit and well understood in the organization, common: a physical location (with at least some PCs); a
and was developed from the bottom up rather than from the relationship with a local college whose tutors will visit the
top down. Its starting point was recognition that a number site to advise and facilitate; and access to a suite of
of local initiatives in the factories were proving successful e-learning programmes, made available from the

and could be developed on a national basis. LearnDirect library (the national e-learning initiative).
The trade unions advocated enhanced opportunities for
skill development in basic areas. As a result, a national
Key learning points
Learning and development defined Learning and development strategies

Learning and development (L&D) is concerned with Learning and development strategies are the active
ensuring that organizations have the knowledgeable, components of an overall approach to strategic L&D.
skilled and engaged people they need. It means They express the organization’s intentions on how L&D
enabling individuals to acquire knowledge and skills activities will take place in the organization and
through experience and social contacts, coaching, provide guidance on how these activities should be
mentoring and guidance provided by line managers planned and implemented.
and others, self-managed learning, and learning
events and programmes provided by the Learning culture
organization.
A learning culture is one in which learning is
recognized by top management, line managers and
Strategic L&D
employees generally as an essential organizational
Strategic L&D is an approach to helping people learn process to which they are committed and in which
and develop that is concerned with how the they engage continuously.
organization’s goals will be achieved through its
human resources by means of integrated L&D Organizational learning
strategies, policies and practices. Strategic L&D aims
to produce a coherent and comprehensive Organizational learning is about the development and
framework for developing people through the acquisition in organizations of knowledge,
creation of a learning culture and the formulation understanding, insights, techniques and practices in
of organizational and individual learning order to improve organizational effectiveness. It is
strategies. concerned with the processes adopted by
organizations in promoting learning; it is not simply the Learning theories

sum of all the learning and development activities that
are carried out in an organization. The key learning theories are reinforcement theory,
cognitive learning theory, experiential learning theory
and social learning theory.
The learning organization
Neuroscience tells us how the brain works in the
Defined by Pedler et al (1997) as an organization that learning process.
‘facilitates the learning of all its members and continually Learning theories describe in general terms how
transforms itself.’ Learning organization theory provides people learn but individual learners will have different
a dubious base for action. The idea of a learning culture, styles – a preference for a particular approach to
supported by the understanding of how organizations learning.
learn, as provided by organizational learning theory and The concept of the learning curve refers to the time
knowledge management initiatives, has more to offer. it takes an inexperienced person to reach the required
Organizational learning strategies aim to develop a level of performance in a job or a task. People learn all
firm’s resource-based capability. the time and through doing so acquire knowledge,
skills and insight.
Individual learning strategies People learn by doing (experiential learning) and
from each other (social or cooperative learning) and to
The individual learning strategies of an organization a lesser extent by instruction. Discretionary, self-
are driven by its human resource requirements, the managed learning is important.
latter being expressed in terms of the sort of skills
and behaviours that will be required to achieve
business goals.
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392
34
The process of learning
and development
on capability needs can be collected through a gap
Introduction analysis and review of corporate, collective and indi-
vidual needs. These three areas are interconnected, as
The process of learning and development as shown in Figure 34.1. The analysis of corporate
described in this chapter consists of the following needs will lead to the identification of collective
steps: learning needs in different departments, functions or
1 Analyse – identify learning and development occupations, while these in turn will indicate what
needs. individual employees need to learn. The process oper-
2 Plan – consider the various overall ates in reverse. As the needs of individual employees
approaches available to meet those needs, for are analysed separately, common needs emerge,
example, the use of formal and informal which can be dealt with on a group basis. The sum of
learning, self-managed learning and blended group and individual needs will help to define corpo-
learning, and decide on the use of learning rate needs, although there may be some overarching
and development activities such as workshop learning requirements that can be related only to the
learning, digital learning and training in the company as a whole to attain its business goals.
light of conclusions on the preferred overall These areas of analysis are discussed below.
approach(es).
3 Implement. Gap analysis
4 Evaluate.
Learning needs analysis is often described as the
process of identifying the learning gap – the gap be-
Identify learning needs tween what is and what should be, as illustrated in
Figure 34.2.
Gap analysis involves identifying the gap be-
All learning activities need to be based on an under-
tween what people know and can do and what they
standing of what should be done and why it should
should know and be able to do. The learning needed
be done. The purpose of the activities must be de-
to fill the gap can then be specified. Information on
fined by identifying and analysing learning needs for
the nature of the gap may be obtained by one or
the groups and individuals within the organization.
more of the methods described below. But this ‘defi-
ciency model’ – only putting things right that have
gone wrong – is limited. Learning is much more
Approaches to learning or positive than that. It should be concerned with iden-
capability needs analysis tifying and satisfying development needs – fitting
people to take on extra responsibilities, acquire new
Learning needs analysis focuses on establishing the
skills to deal with changing work demands, or
capabilities people in particular occupations require –
develop a range of skills to facilitate multitasking.
what they need to know and be able to do. Evidence
Chapter 34 | The Process of Learning and Development 393
F I G U R E 34.1 Learning needs analysis – areas and methods
Corporate Collective Individual
Analysis of Performance
Analysis of
human and Role Learning
business Surveys
resource development analysis specification
plans
plans reviews
F I G U R E 34.2 The learning gap
What is Learning gap What should be
• Performance levels
• Actual performance
required
levels
• Knowledge and skill
• Knowledge and skill
(capabilities)
possessed
required
Analysis of business and on what they need to learn. However, the material
gathered from a survey may be unspecific and, when
workforce plans interviewed, people may find it difficult to articulate
Business and workforce plans should indicate in what they want. In the latter case it is best to lead
general terms the types of skills and competencies with a discussion of the work they do and identify
that may be required in the future and the numbers any areas where they believe that their performance
of people with those skills and competencies who and potential could be developed. This could lead to
will be needed. An analysis should also be made of the identification of any additional things they feel
any areas where future changes in work processes, they need to know or be able to do. Individual views
methods or job responsibilities are planned and any can be amalgamated to provide a picture of com-
additional knowledge or skills that may be required. mon learning needs.
These broad indicators have to be translated into
more specific plans that cover, for example, the out-
puts from training programmes of people with par-
Role analysis
ticular skills or a combination of skills (multiskilling). Role analysis is the basis for preparing role pro-
files that provide a framework for analysing and
identifying learning needs. Role profiles set out the
Surveys key result areas of the role but, importantly, also
Special surveys or an interviewing programme can define the competencies required to perform it.
obtain the views of managers and other employees Performance management should ensure that role
profiles are updated regularly, and the review can
be built on an analysis of the results achieved by Skills analysis

reference to the key result areas and agreed objec-
tives. The competency framework for the role is Skills analysis, as described in Chapter 63, deter-
used to assess the level of competency displayed. mines the skills required to achieve an acceptable
An assessment can then be made of any learning standard of performance. It is mainly used for tech-
required to develop levels of competency. Ideally, nical, craft, manual and office jobs to provide the
this should be a self-assessment by individuals basis for devising learning and training programmes.
who should be given every encouragement to
identify learning needs for themselves. But these
can be discussed with the individual’s manager Performance management
and agreement reached on how the learning needs Performance management processes, as described in
should be met by the individuals through self- Chapter 38, should be a prime source of information
managed learning, and with the help and support about individual learning and development needs.
of their managers. The output of role analysis Performance management is based on an analysis of
could be a learning specification, as illustrated in role requirements in the shape of knowledge, skills
Figure 34.3. and abilities (KSAs) and the behavioural competen-
This method of assessing individual learning cies needed to perform effectively, taking into ac-
needs can generate information on common learning count any new demands that will be made on the role
needs. The information can be related to the organi- holder. Performance reviews, which should be held
zation’s competency framework and used to inform whenever appropriate rather than simply being an
the design of competency-based learning events. annual event, will include discussions on the extent to
F I G U R E 34.3 A learning specification
LEARNING SPECIFICATION
Role: Product Manager Department: Marketing
What the role holder must understand
Learning outcomes Learning methods

• The product market • Coaching: marketing manager and
• The product specification advertising manager
• Market research availability • Coaching: operations manager
• Interpretation of marketing data • Coaching: market research manager
• Customer service requirements • Coaching: market research manager
• Techniques of product management • Coaching: customer service manager
• Institute of Marketing courses
What the role holder must be able to do

Learning outcomes Learning methods
• Prepare product budget • Coaching: budget accountant
• Prepare marketing plans • Coaching: mentor
• Conduct market reviews • Coaching: market research department
• Prepare marketing campaigns • Read: product manager’s manual
• Specify requirements for advertisements and • Attachment to agency
promotional material • Coaching: mentor, read analyses
• Liaise with advertising agents and creative • Read: previous reports; observe
suppliers • Marketing review meetings
• Analyse results of advertising campaigns
• Prepare marketing reports
which the individual would benefit, in career progres- Formal and informal learning
sion as well as performance terms, from some form
of learning and development activity. Problems of People learn both formally and informally. Formal
performance arising from lack of knowledge or skill learning can occur face to face (F2F) in the workplace,
can be identified so that remedial action can be taken. lecture rooms or training. It can also take place through
A joint assessment can then be made of what sort of various forms of digital learning (see Chapter 35).
development programme is required. This can lead to Informal learning is primarily experiential learn-
personal development plans and learning contracts, ing and can be self-managed, although support should
which involve action plans, self-managed learning be made available from managers, coaches, mentors
and an agreement on what support will be provided and social media. According to Hoyle (2015), infor-
to the individual by the organization and the man- mal learning is not entirely directed and controlled by
ager. An overall analysis of performance and develop- the learner. He describes it as a continuum as illus-
ment review reports can reveal any common learning trated in Figure 34.4. In the south-west quadrant
needs that can be satisfied by tailored learning events. there are traditional courses and programmes. But
these sessions only work if a degree of informal learn-
ing takes place to effect the change in behaviour that
Learning evaluations improves performance. In the north-west quadrant
there is performance support. This may be provided
Further information should be obtained from learn-
by the organization in the shape, for example, of
ing evaluations, as described at the end of this chapter.
e-learning programmes. Support may also be availa-
ble from social networks. The south-east quadrant
covers such activities as coaching and learning with
colleagues – trying new things and reporting back on
Pa us e for t houg ht experiences. The north-east quadrant refers to work
experiences from which people learn by reflecting,
You have been asked to examine the drawing conclusions and planning future actions.
learning needs of a trainee manager in a This model indicates that there are many varieties of
informal training and that formal training does have
bakery. How would you set about doing this? a part to play but not in the old way of relying on
classroom training and ignoring everything else.
Further learning is required on the job.
Hoyle recommends that the formal training pro-
vided on induction courses should be interspersed
Overall approaches to with on-the-job experience. Following that experi-
ence the employee can return to the classroom for a
learning and development review of the learning that has been achieved.
There are a number of general ways in which learn-

ing and development can take place including the
use of formal and informal learning, self-managed Word s of w isd om
learning, blended learning and connected learning. It For a formal programme to result in learning
is necessary to be aware of these approaches before
planning specific learning activities. All the ap- that actually enables people to do different
proaches are influenced by learning theory as pre- things, training courses must require
sented in Chapter 33, especially experiential learning
learners to take some tentative steps to try
theory. This emphasizes that people learn mainly
from experience and therefore most learning takes things out, to experience through trial and
place in the workplace. Learning theory also indi- error, to reflect on lived experience, and to
cates that people learn best when they are motivated
to do it for themselves – self-managed learning. But discuss and connect with others.
they need support and help. Hoyle (2015: 3)
F I G U R E 34.4 Formal and informal learning
Learner directed
Performance Learning through
support work
Formal Informal
Organization directed
Courses
Guided discovery
and programmes
Source Hoyle (2015)
Self-managed learning Self-managed learning is based on the principle

that people learn and retain more if they find things
Self-managed or self-directed learning takes place out for themselves (discovery learning). But they still
when individuals set their own learning goals and need to be given guidance on what to look for and
plan for themselves how they are to be attained. It is help in finding it. Learners have to be encouraged to
based on a process of recording achievement and ac- define, with whatever help they need, the knowledge
tion planning, which means that individuals review and skills required to do their work. They need infor-
and reflect on what they have learnt, what they have mation on where they can get the material or informa-
achieved, what their goals are, how they are going to tion that will help them to learn (curating) and how to
achieve those goals and what new learning they make good use of it. This can be done through per-
need to acquire. The learning programme can be sonal development planning, as described below. They
‘self-paced’ in the sense that learners can decide for also need support from their manager and the organi-
themselves, up to a point, the rate at which they zation with the provision of coaching, mentoring and
learn, and are encouraged to measure their own pro- learning facilities, including e-learning. The use of so-
gress and adjust the programme accordingly. cial media as described in Chapter 35 is helpful.
C A S E S T U DY
Self-managed learning in Vestas Blades UK Ltd
Vestas Blades UK Ltd is a wind turbine blade research, of Wight and Southampton. The L&D policy adopted by
development and manufacturing company based in the Isle Vestas was to give ownership of learning to individuals.
Learning needed to be continuous, timely and relevant for that the business’s strategic and operational objectives
people whose roles would present new challenges as the had on each participant’s current and future level of
business grew. It wanted employees to have a choice performance.
about what they learnt, when and how. A menu of training Once participants were made aware of the wealth of
courses not only seemed unattractive but was also seen to learning resources available through books or e-learning,
have limited effectiveness in terms of the transfer of they chose the learning group they wanted to join. Each
learning to the workplace. A requirement of any new group consisted of four people from across the organiza-
approach was that it should motivate employees by serving tion who would meet regularly every six weeks in confi-
their own individual learning needs while at the same time dence – serving as a support structure for its members.
meeting those of the business. Such support was critical. The opportunity to talk about
The self-managed learning programme began by intro- how to apply learning in the workplace not only helped
ducing the concept of personal awareness (via the Myers- group members make sense of the effect that their learning
Briggs Type Indicator) and its relevance to learning. An had but also supported fellow learners in the group work-
inquiry tool was developed to help participants identify ing on the same or similar topics.
their own learning needs, known as the Needs Analysis During the first year, each group had its own facilitator,
Process (NAP). Individuals decided the learning goals that drawn primarily from Acuition consultants but also from
would have the greatest benefit to them and their part of within the company. The facilitator’s role was to accelerate
the business. The NAP focused attention on the impact the group’s capability to learn.
Blended learning Connected learning

Blended learning is the use of a combination of Connected learning involves the creation of knowl-
learning methods to increase the overall effective- edge between participants in semi-structured, semi-
ness of the learning process by providing for differ- directed learning activities. It links the individual’s
ent parts of the learning mix to complement and need to learn and interests in learning with the op-
support one another. It recognizes that the best portunities available in the workplace, including
approach to learning is to appreciate that it can be those provided by fellow workers (social learning).
accomplished in a number of different ways, for ex- It means helping individuals to recognize their learn-
ample, through experience, through other people ing needs and to develop their interests in learning,
and by formal training. A blended learning pro- and ensuring that there is scope for satisfying these
gramme might be planned for an individual using a interests by providing support and guidance and by
mix of planned experience, self-managed learning means of social interactions with other workers.
activities defined in a personal development plan, Connected learning therefore offers an approach
e-learning facilities, group action learning activities, to workplace learning that fits between the directed,
coaching or mentoring, and instruction provided in structured knowledge transfer (ie training or
an in-company or external course. e-learning) that has been the way that L&D has
Generic training for groups of people might in- traditionally operated, and the unstructured, self-
clude e-learning, planned instruction programmes directed knowledge sharing that happens in work
and selected external courses. Within a training teams and groups during the flow of work.
course a complementary mix of different training
activities might take place; for example, a skills de-
velopment course for managers or team leaders Plan learning and
might include some instruction on basic principles,
but much more time would be spent on case development activities
studies, simulations, role playing, games and other
exercises. Learning and development activities are the means
by which the various approaches outlined are put
into practice. They comprise:
●● Workplace learning – learning on the job. 2 Design – the learning content is analysed and
This can be largely informal (learning by decisions are made on the methods to be
doing) but may include more formal activities used. These could be blended, making use as
such as face-to-face (F2F) instruction, appropriate of formal instruction,
coaching, mentoring and buddying. presentations, discussions, case studies, role
●● Social and collaborative learning – learning plays, simulations, games, planned
by interactions with other people especially experience, coaching and mentoring.
working colleagues. This is also largely 3 Development – in the development phase the
informal but can include more formal detailed programme is constructed as
arrangements such as learning communities. conceived in the design phase. This includes
●● Digital learning – e-learning, virtual learning session plans for training courses setting out
environments, knowledge sharing, and the use the content and learning outcomes of each
of social media and smart phones. This can be session, nomination and briefing of the
planned, as in e-learning, or it can support people who will be involved in delivering the
self-managed learning, as in knowledge programme, methods of delivery, preparation
sharing, social media and smart phones. of visual aids, handouts, supporting material,
training aids, games and exercises and the
●● Training – the formal provision of face-to-
arrangements for administering the
face learning by the use of systematic and
programme.
planned instruction activities either on or off
the job.
●● Personal development planning – a self-
managed learning action plan. Pau se for th ou gh t
●● Apprenticeship – a genuine job with an What is the most important consideration
accompanying skills development
when planning a learning event?
programme.
Fuller descriptions of these activities are contained
in Chapter 35. Instructional, coaching and mentor-
ing skills are covered in Chapter 64.
The planning process involves providing encour- Implement
agement and support to individuals so that they can
self-manage their learning and to managers so that L&D or HR specialists are usually responsible for
they can play their part in enabling workplace implementing formal training courses with outside
learning. It also involves the design of learning help as required and managing extended training or
events (eg training courses to teach specific skills development programmes. They also have to pro-
or cover a range of subjects such as management) vide guidance and encouragement to line managers
and programmes (eg apprenticeships, management in fulfilling their responsibilities for workplace
development). learning. Line managers play a crucial role, not only
Preparations vary according to the type of event in promoting learning within their departments but
or programme but they generally take place in the also in ensuring that individuals have the opportu-
following phases: nity to use and develop the skills they have acquired
on off-the-job training courses.
1 Analysis – the learning goals and objectives
are defined as criterion or terminal behaviour
(what participants will learn and be able to
do as a result of the training), and the Pau se for th ou gh t
learning environment and learners’ existing What are the key factors that might affect
knowledge and skills are identified.
This determines the learning content of the the implantation of a learning event or
training event or programme. programme?
3 Reactions – what participants felt about the

Evaluate event.
It is important to evaluate learning to assess its ef- 4 Outcomes – the impact the event had on
fectiveness in producing the outcomes specified individual, departmental and organizational
when the activity was planned. Evaluation can indi- performance.
cate where improvements or changes are required The most familiar form of evaluation is the
in order to make the training even more effective. Kirkpatrick (1994) system which has four levels: (1)
As noted by Tamkin et al (2002), learning can be reaction to the training event; (2) learning from the
modelled as a chain of impact from the planning training event; (3) behaviour on return to work;
of learning to meet organizational or individual and (4) evaluate results in terms of impact on or-
learning needs, to the learning that takes place in a ganizational performance. This is mainly used for
learning event, from learning to changed behaviour, the evaluation of training events. Evaluations sel-
and from changed behaviour to impact on others dom tend to go beyond the first level. Other meth-
and the organization as a whole. ods of evaluation are described below.
Evaluation is an integral feature of learning ac-
tivities. In essence, it is the comparison of objectives
with outcomes to answer the question of how far Return on expectations
the event has achieved its purpose. The setting of
A qualitative approach to the validation of learning
objectives and the establishment of methods of
processes and the outcomes of learning is to focus on
measuring results are, or should be, an essential part
return on expectation measures. This means assessing
of the planning stage of any L&D programme.
the extent to which the objectives and anticipated
Evaluation provides guidance on what needs to be
benefits of any learning investment have been realized.
done to ensure that learning activities are effective.
Return on investment
Approach to evaluation
Return on investment (RoI) is advocated by some
It is at the planning stage that the basis upon which commentators as a means of assessing the overall
each category of learning event or programme is to impact of learning actvities on organizational per-
be evaluated should be determined. This means de- formance. It is calculated as:
fining expectations on the impact that the event will
make in terms of criterion behaviour (the perfor-
mance standards or changes in behaviour on the job Benefits from training (£) − costs of training (£)
to be achieved if a learning process is to be regarded ×100
Costs of training (£)
as successful) and terminal behaviour (the actual
work behaviour of learners when they complete
their learning programme), for example: ‘On com-
pleting this programme, participants will be able Kearns and Miller (1997) believe that only this sort
to…’. The aim is to establish the extent to which the of measure is useful in evaluating the overall impact
event has achieved its purpose. At the same time, it is of training. They argue that particular hard meas-
necessary to consider how the information required ures should be used to evaluate specific training; for
for evaluation should be obtained and analysed. example, if development aims to bring about greater
The areas that need to be evaluated are: awareness of customers then it should be measured
by the eventual effect on customer spend, customer
1 Planning – the extent to which needs were
satisfaction and number of customers.
properly evaluated and objectives set.
The pressure to produce financial justification
2 Conduct – how well the programme or event for any organizational activity, especially in areas
was organized and managed, the degree to such as learning and development, has increased the
which the inputs and methods were interest in RoI. The problem is that while it is easy
appropriate and effective, and its cost to record the costs it is much harder to produce
compared with the budget. convincing financial assessments of the benefits.
C A S E S T U DY
Measuring the contribution of learning to business performance at Lyreco Ltd (UK)
Lyreco UK is part of a large family-owned office supplies are scrutinized to identify areas for attention, and the learning
group operating extensively in Europe, Canada and Asia. and development team run learning sessions and activities
Metrics are a central part of all management processes at aimed at helping people to improve their performance. When
Lyreco and these inform the learning investment and sales margin was identified as an area for attention, over 150
planning processes. In field sales, measures include sales people attended focused workshops and subsequent per
turnover, margin and new business, whilst in customer formance results were tracked to measure improvements.
service the performance and productivity metrics include Similarly, warehouse supervisors with the highest staff
costs per line, abandoned call rate, average call time, and turnover attended learning programmes and, as a con
average wait time. Monthly performance results in all areas sequence, staff turnover was at its lowest ever levels.
Learning analytics data about learners and their contexts, for purposes
of understanding and optimizing learning and the
Learning analytics uses ‘big data’, defined as data environments in which it occurs.’ The use of learn-
which is too complex to be analysed by normal sta- ing analytics is a way of avoiding the rather crude
tistical techniques. It means translating multiple calculations that have to be made to produce
sources of data into insights about the effectiveness return-on-investment figures
and impact of learning and development interven- The purpose of learning analytics is to find out
tions. The Technology Enhanced Knowledge Re what bits of a learning programme work and what
search Institute (TEKRI) at Athabasca University, bits don’t work. To do this, Paine made the follow-
Canada (2015) defines learning analytics as ‘the ing suggestions:
measurement, collection, analysis and reporting of
Source review
We need to know who has taken the programme, what networks they belong to and what they have been saying
about the programme. We need to know how they learnt and their degree of engagement with the programme. We
need to know why they took this programme and the working context that led to that decision. We need to know
where they learnt and their mode of learning, and we need to know the precise times when they were engaged
and, if possible, the depth of engagement. Finally we need to know how much of the programme met their needs,
helped them in a specific work problem or equipped them to deal with contingencies they have yet to meet but
could encounter in the future.
Paine (2015: 130–31)
Paine commented that it could be impossible to cap- impact assessment of how well a programme worked.
ture all this data manually but there are technologies He gave an example of how learning analytics could
that can provide enough of it to obtain a significant be used to evaluate a leadership programme.
The starting point would be an assessment by the 3 a lack of clear objectives attached to training
manager and possibly the colleagues of the individ- programmes so that actually knowing what
ual taking the programme to indicate what sort of to evaluate against is difficult if not
behaviours will be expected as a result of the pro- impossible;
gramme. The individual could be scored on a scale 4 the limited budgets available to training
of, say, 1 to 10 and an indication given of where it departments means that resources are
would be desirable for the individual to end up after devoted to training provision rather than
the programme. The same questions could be asked training evaluation;
one or two months later to produce another score
5 the risks associated with evaluation may be
which would reveal the impact the programme had
too great, given that the evaluation data might
achieved. So, if before the course the average score of
reveal that the training had little impact.
the participants was 4, and after it the score had in-
creased to 6, some hard data has been obtained on
the programme’s effectiveness.
Word s of w isd om
Pa us e for t houg ht Traditional approaches to evaluation set out
What do you think is the best way to to prove the merit of specific learning
evaluate the effectiveness of a learning interventions and to demonstrate their
event? cost-effective delivery. Such proof, however,
while identifying that the trainer has done
good work, does not necessarily assess the
extent of the training intervention with the
The problem with evaluation organization’s strategic priorities... Whereas
The need for evaluation is generally recognized by a traditional approach to evaluation focuses
L&D specialists and the Kirkpatrick model is well on the reactions and consequences for
known, but Grove and Ostroff (1990) noted that
there were five barriers that appeared to explain learners and trainers resulting from
why training evaluations were not carried out very discrete and individual training
effectively in organizations:
interventions, a strategic approach requires
1 senior management often not insisting on or a focus on the aggregate value contribution
requesting information on the impact of the
training that was provided; made by a more dispersed range of
2 the lack of expertise among L&D learning processes.
professionals on how to carry out training Anderson (2007)
evaluations;
Key learning points
The process of learning and development Approaches to learning and development

This consists of the following steps: Approaches to learning and development are
influenced by learning theory, especially experiential
1 analyse – identify learning and development needs;
learning theory.
2 plan – consider the various overall approaches They are concerned with the use of formal and
available to meet those needs, for example, the use informal learning, self-managed learning, learning how
of formal and informal learning, self-managed to learn, blended learning and the use of social media.
learning and blended learning, and deciding on the
use of learning and development activities such as Formal and informal learning
workshop learning, digital learning and training in
the light of conclusions on the preferred overall People learn both formally and informally. Formal
approach(es); learning is essentially classroom or training centre
learning or prescribed e-learning. Informal learning is
3 implement; primarily experiential learning and may be self-
4 evaluate. managed, although support may be available from
managers, coaches, mentors and social media.
Identifying learning needs

Self-managed learning
All learning activities need to be based on an
understanding of what needs to be done and why. Self-managed learning is based on a process of
Evidence should be collected on needs through a gap recording achievement and action planning, which
analysis and review of corporate, collective and means that individuals review and reflect on what they
individual needs as follows: have learnt, what they have achieved, what their goals
are, how they are going to achieve those goals and
●● gap analysis – identifying the gap between what what new learning they need to acquire.
people know and can do and what they should
know and be able to do;
Blended learning
●● business and workforce plans should indicate in
Blended learning is the use of a combination of
general terms the types of skills and competencies
learning methods to increase the overall effectiveness
that may be required in the future;
of the learning process by providing for different parts
●● special surveys can obtain the views of of the learning mix to complement and support one
managers and other employees on what they need another.
to learn;
●● role analysis indicates the level of competencies Connected learning
required; Connected learning involves the creation of
●● skills analysis determines the skills required knowledge between participants in semi-structured,
to achieve an acceptable standard of semi-directed learning activities.
performance;.
Planning
●● performance management reviews include
discussions on the extent to which the individual Planning varies according to the type of event or
would benefit from some form of learning and programme but it generally takes place in the following
development activity. phases:
1 analysis; Evaluation of learning

2 design; Evaluation is an integral feature of learning activities. In
3 development. essence, it is the comparison of objectives with
outcomes to answer the question of how far the event
has achieved its purpose. The four levels of evaluation
Implementation
in the Kirkpatrick methodology are: (1) reaction,
L&D or HR specialists are usually responsible for (2) evaluate learning, (3) evaluate behaviour, (4) evaluate
implementing formal training courses. They also have to results.
provide guidance and encouragement to line managers Other methods of evaluation are return on
in fulfilling their responsibilities for workplace learning. investment, the use of learning analytics and return on
Line managers also play a crucial role. expectations.
References
Anderson, V (2007) The Value of Learning: From Kirkpatrick, D L (1994) Evaluating Training
return on investment to return on expectation, Programmes, San Francisco, CA, Berret-Koehler
London, CIPD Paine, N (2015) The Learning Challenge, London,
Grove, D A and Ostroff, C (1990) Training Kogan Page
programme evaluation, in (eds) K N Wexley and J Tamkin, P, Yarnall, J and Kerrin, M (2002)
R Hinrichs, Developing Human Resources, Kirkpatrick and Beyond: A review of training
Washington, DC, Bureau of National Affairs evaluation, Report 392, Brighton, Institute for
Hoyle, R (2015) Informal Learning in Organizations, Employment Studies
London, Kogan Page TEKRI (2015) Definition of learning analytics
Kearns, P and Miller, T (1997) Measuring the impact [online] http://www.tekri.athabascau.ca [accessed
of training and development on the bottom line, 6 November 2015]
FT Management Briefings, London, Pitman
404
35
Learning and
development
practices
induction training – ensuring that new starters have
Introduction the necessary knowledge and skills and additional
formal training may be provided later to develop
This chapter describes the following L&D practices:
new skills or enhance existing ones.
workplace learning, social and cooperative learning,
A study by Eraut et al (1998) established that in
digital learning, the use of artificial intelligence,
organizations adopting a learner-centred perspec-
personal development planning, and training.
tive, formal education and training provided only a
small part of what was learnt at work. Most of the
learning described
THIS PAGE IS INTENTIONALLY LEFT BLANKto the researchers was non-
formal, neither clearly specified nor planned. It arose
Wo rd s o f w isdom naturally from the challenges of work. Effective
Instead of putting learning into work (which learning was, however, dependent on the employees’
confidence, motivation and capability. Some formal
is what a course essentially is) you extract training to develop skills (especially induction train-
learning from work and ensure it is ing) was usually provided, but learning from experi-
ence and other people at work p redominated.
accessible and shared.
Paine (2015)
Word s of w isd om
The simple act of observing more
Workplace learning experienced colleagues can accelerate
Learning happens mainly in the workplace. Much of learning; conversing, swapping stories,
it is informal although line managers have an impor- cooperating on tasks and offering mutual
tant part to play in facilitating it through coaching
and by arranging supporting activities, including
support deepen and solidify the process.
formal training sessions. Workplace learning is This kind of learning – often very informal
largely experiential learning – learning by doing. But in nature – is thought to be vastly more
is also social or cooperative learning – learning from
other people. It involves self-managed learning and effective in building proficiency than more
is enhanced by coaching, mentoring, e-learning and formalized training methods.
planned experience. But some more formal training Reynolds (2004)
activities can take place on the job. These include
Chapter 35 | Learning and Development Practices 405
But there are disadvantages. Learning on the job Enhancing workplace learning
was once anathematized as ‘sitting by Nellie’ (this
was when Nellie was a fairly common name), mean- Experiential learning in the workplace is important
ing that trainees were left to their own devices to but it should not be left to chance. It needs to be
pick up bad habits from their neighbours. It can be enhanced by such means as induction learning,
argued that formal training has its limits but at least planned experience, job rotation, coaching, mentor-
it is planned and systematic. The systematic training ing, ‘buddying’, shadowing, performance manage-
movement of the 1960s was a reaction against tra- ment, personal development planning, e-learning,
ditional laissez faire approaches. and the development of connected learning ap-
A further difficulty is that workplace learning de- proaches, as described below.
pends largely on the willingness and ability of line
managers and supervisors to take responsibility for Induction training
it. Some will, many won’t. This crucial aspect of
Most new starters other than those on formal train-
learning may therefore be neglected unless the L&D
ing schemes such as apprenticeships will learn on the
or HR function does something about it. And that
job, although this may be supplemented with special
isn’t easy.
off-the-job courses to develop particular skills or
knowledge. On-the-job training can be haphazard,
The characteristics of workplace inefficient and wasteful. A planned, systematic ap-
proach is desirable. This can incorporate the defini-
learning tion to new starters of what they are expected to do
The characteristics of workplace learning were ex- (their roles), an assessment of what they need to
plained by Stern and Sommerlad (1999) as follows: learn (a learning specification), the use of designated
and trained colleagues to act as guides and mentors,
1 The workplace as a site for learning. In this and coaching by team leaders or specially ap-
case, learning and working are spatially pointed and trained departmental trainers. A
separated with some form of structured planned experience programme as described below
learning activity occurring off or near the may be d esirable. These on-the-job arrangements
job. This may be in a ‘training island’ in the can be supplemented by self-managed learning ar-
department or on the shop floor where rangements that offer access to e-learning m aterial.
the production process is reproduced for
trainees.
Planned experience
2 The workplace as a learning environment. In
Planned experience involves deciding on a sequence
this approach, the workplace itself becomes
of experience that will enable people to obtain the
an environment for learning. Various
knowledge and skills required in their jobs and pre-
on-the-job activities such as coaching,
pare them to take on increased responsibilities. This
mentoring, job rotation, job shadowing and
enables experiential learning to take place to meet a
cross-functional or cross-site project work
learning specification. A programme is drawn up
can be conducted. These are structured to
that sets down what people are expected to learn in
different degrees. Learning is intentional and
each department or job in which they are given ex-
planned and the aim is to support, structure
perience. This should spell out what they are ex-
and monitor the learning of employees.
pected to discover for themselves. A suitable person
3 Learning and working are inextricably mixed. (a mentor) should be available in order to see that
In this case, learning is informal. It becomes people in a development programme are given the
an everyday part of the job and is built into right experience and opportunity to learn.
routine tasks. Zuboff (1988) commented that Arrangements should be made to check progress. A
learning was at the heart of productive good way of stimulating people to find out for
activity. Workers develop skills, knowledge themselves is to provide them with a list of ques-
and understanding through dealing with the tions to answer. It is essential, however, to follow up
challenges posed by the work. This can be each segment of experience to check what has been
described as continuous learning. learnt and, if necessary, modify the programme.
Planned experience can be provided by job rota- of them but also understand what they need
tion, which involves the movement of employees to know and be able to do to complete the
from one task to another to gain additional experi- task satisfactorily; this gives managers an
ence. It can also reduce monotony by increasing opportunity to provide guidance at the
variety. outset: guidance at a later stage may be seen
as interference;
Coaching ●● making people aware of how well they are
Coaching is a personal (usually one-to-one) ap- performing by, for example, asking them
proach to helping people develop their skills and questions to establish the extent to which
knowledge and improve their performance. The they have thought through what they are
need for coaching may arise from formal or infor- doing;
mal performance reviews, but opportunities for ●● encouraging people to look at higher-level
coaching will emerge during everyday activities. problems and how they would tackle them.
Coaching as part of the normal process of manage- Coaching has an important role in workplace learn-
ment consists of: ing. Executive coaching is used frequently as part of
●● using whatever situations may arise as a blended learning approach (ie one that includes a
opportunities to promote learning; number of complementary learning activities) to
●● controlled delegation – ensuring that leadership and management development. Coaching
individuals not only know what is expected skills are described in Chapter 64.
C A S E S T U DY
Coaching at Marks & Spencer
Traditionally M&S trained its customer assistants by taking additional training they may need once qualified. Formal
them off the shop floor for classroom-style training, but the coaching cards are used, which address both service and
company has introduced a new role, that of coach. When technical skills and tell the coaches what to assess and
trainees join M&S, their coaches take them through all of what the learning should be. Each trainee is also provided
the training required for their immediate role, as well as any with a booklet summarizing the main learning points.
Mentoring Buddy system

Mentoring is the process of using specially selected In a ‘buddy system’ an individual works alongside
and trained individuals (mentors) to provide guid- someone with more experience. The buddy will be
ance, pragmatic advice and continuing support that charged with assisting as and when required, pro-
will help the person or persons allocated to them to viding guidance on how best to get the job done.
learn and develop. Mentoring promotes learning on
the job. It also complements formal training by pro- Shadowing
viding those who benefit from it with individual
guidance from experienced managers who are ‘wise Shadowing is a type of buddying except that the
in the ways of the organization’. Mentoring can trainee is simply observing what an experienced
play an important part in a leadership and manage- colleague does. It will only work if the colleague is
ment development programme. briefed on how to ensure that the trainee is really
learning what needs to be learnt. To this end, coach-

ing sessions need to be held regularly so that the
trainee can reflect on and learn from the experience. Pau se for th ou gh t
If you were given the job of improving the
Performance management quality of workplace learning in an
Performance management processes as described in organization, how would you set about
Chapter 38 enable managers and individual mem-
bers of their teams to work together to identify any doing it?
areas where there is a need to enhance skills or
knowledge in order to help someone to progress or
to deal with a performance problem.
Personal development planning

Social and collaborative
Personal development planning as described later in working
this chapter is carried out by individuals with guid-
ance, encouragement and help from their managers, Social and collaborative working are synonymous
usually on the basis of performance assessments. terms. As defined by Hart (2014): ‘Social learning is
about people connecting, conversing, collaborating
and learning from, and with, one another on a daily
basis at work… It’s about helping teams learn as
Pa us e for t houg ht they work, rather than taking them out and forcing
them to endure a learning “experience”.’ Social
How can L&D or HR specialists encourage learning theory as formulated by Bandura (1977)
and develop workshop learning? What regards learning as a series of information-
processing steps set in train by social interactions
difficulties might they meet and how can
and emphasizes that effective learning requires such
they overcome them? interaction. Wenger (1998) suggested that we all
participate in ‘communities of practice’ (groups of
people with shared expertise who work together)
and that these are our primary sources of learning.
A survey conducted by Jane Hart (2014) into
Making workplace learning how people valued 10 different forms of learning
effective established the following order of preference from
respondents:
Workplace learning of a sort will take place even if
nothing is done about it. But it will be haphazard 1 collaborative working within your team;
and incomplete. People will pick up bad habits and 2 web search for resources;
will be lucky if they acquire the skills to do the
work properly. Some or all of the activities de- 3 general conversations and meetings with
scribed above need to take place as appropriate people;
and it is only line managers and supervisors – the 4 personal and professional networks and
people on the spot – who can do this. In large de- communities;
partments, departmental learning advisors and 5 external blogs and news feeds;
trainers can be appointed on a full-time or part- 6 content curated from external sources;
time basis. In smaller departments a team leader
can be given additional responsibilities for promot- 7 self-directed study of external courses;
ing learning. But L&D specialists still have an 8 internal job aids;
important role to play in promoting workplace
9 internal documentation;
learning by providing encouragement, advice and
10 company training and e-learning.
guidance to line managers.
As she commented, this clearly shows that social Some form of social or collaborative learning hap-
and collaborative learning activities – and in par- pens continually in the workplace as individuals
ticular self-organized activities – are the main ways and groups work together. Groups solve problems
that the survey respondents preferred to learn. She jointly and learn in doing so. Project teams do the
noted that, in particular, knowledge workers want same. Individuals observe what their colleagues do
to learn as an integral part of their daily job and like and learn from their observations. But it shouldn’t
to learn continuously from the constant flow of in- be left to chance. Social learning involves connected
formation they encounter from other people – learning which addresses the learning needs and in-
which may come from both internal and external terests of individuals and how these can be linked
channels. Knowledge workers need to be able to with the opportunities for learning provided by fel-
find answers to their learning and performance low workers through such means as communities of
problems as soon as they encounter them. They practice and learning communities.
don’t want to have to wait to go on a course or get
some other response. They want to solve their prob-
lems immediately and get on with their jobs. If
when sitting at their desk they encounter a problem Pau se for th ou gh t
with a task they are working on they tend either to
seek help from their professional network or to go What can L&D or HR specialists do to
straight to Google and search for a solution. promote social learning?
Wo rd s o f w isdom
Learning communities
It is in the area of workforce collaboration
Learning communities are groups of people carry-
where there are plenty of new opportunities ing out similar or related work who get together to
for L&D to support work teams and groups. learn from one another. They can be established
within departments by managers or individuals and
Since people learn from one another as a operate in a fairly informal way. But L&D can and
consequence of working together, rather should encourage and support them as an approach
than focusing exclusively on the learning, it to learning that offers more than traditional train-
ing. L&D may appoint a community facilitator
is more about helping them work who provides guidance and help but does not dic-
collaboratively and enabling continuous tate what the community members discuss.
Learning communities can also be set up on a
learning to take place as part of that process.
more formal basis by L&D professionals to support
It is also important to reiterate that a training course or an online programme. They
supporting continuous learning in the flow might be established before a course to prepare par-
ticipants and give them some preliminary material
of work is not about providing them with to absorb. After the course community members
courses as they do their work, helping them can get together to discuss what they have learnt
and how they are applying it. Problems can be
to find their own courses, or even helping
raised and solutions considered. The emphasis is on
them to create their own courses for one interaction, sharing and conversations between the
another – rather it is about helping them participants. In effect, learning communities may
become communities of practice – groups of people
share their knowledge, experiences, ideas bound together by shared expertise who meet to-
and resources as part of their daily workflow. gether to share knowledge.
Hart (2010) Although learning communities may sometimes
be added on to a traditional training course they
work best if the community itself, with help as nec- These enable people to share with others what they
essary from L&D, decides on what they need to know and what they have learnt. The learning is
learn together and how they will learn it. They can real – based on the actual experiences of col-
benefit from the use of online learning resources leagues – and therefore more effective than a formal
(digital learning) as described later in this chapter. presentation by a trainer on a course.
C A S E S T U DY
Social networking in the Santa Fe Group
In the Santa Fe Group, a global organization with 1,700 employees to produce, share and comment on learning
employees involved in security risk management amongst content. They can quickly post links to online learning
other things, the learning and development team realized content and The Academy Online is used to deliver
that the traditional model of residential workshops was blended learning and development. An intervention may
not converting learning into practice. The solution was to start with a presentation or workshop and go on to self-
develop The Academy Online, a learning management directed e-learning through an online platform. As a social
system fully integrated with a social networking platform. network, the platform facilitates conversations between
Based on the social media product Fuse, it enables colleagues.
Digital learning and web-based communities. It takes the forms of

e-learning, virtual learning environments, social
Digital learning uses Web 2.0 technology. This is the network learning, knowledge sharing, seeking in-
second generation of the world wide web, where it formation online (Googling), the use of smart
moved static HTML pages to a more interactive phones and the use of game-based learning. The
and dynamic web experience. Digital learning fo- power of cloud computing, which allows massive
cuses on the ability for people to collaborate and storage capacity and ready access for content, en-
share information online via social media, blogging hances the use of these learning technologies.
C A S E S T U DY
Learning system innovation at Rentokil
Rentokil introduced its revolutionary U+ platform in order to to cater for colleagues in 64 countries, speaking more than
move away from classroom training to a new era of blended 31 different languages, 34 per cent without an e-mail
learning, allowing employees to develop at their own pace address or personal technology in a highly decentralized
using digital resources. Crucially, these resources needed organization.
E-learning tion for e-learning administration, curriculum man-

agement, documentation, tracking the progress of
E-learning is the term used to describe formal train- learners, reporting and delivery. E-learning mod-
ing online. E-learning technology can provide con- ules, especially those designed for compliance train-
tent in the form of training courses or ‘bite-sized’ ing, often test participants on what they have learnt
leaning material delivered in small, easily assimi- by getting them to tick boxes in such formats as
lated nuggets lasting up to 10 minutes or so. As multiple choice questions.
established by the CIPD (2011) survey it is most The drawbacks of e-learning are the time and ef-
commonly used for compliance training (for exam- fort required to develop and update material and the
ple, health and safety, hygiene and data protection). problem of providing adequate support to learners.
It is also often used for induction training. E-learning The CIPD’s 2015 Learning and Development Survey
supplements face-to-face (F2F) learning rather than found that while e-learning was the fourth most
replacing it and it can support informal learning in used learning method after on-the-job training, in-
the workplace. It can be accessed at any time from house development programmes and coaching, it
anywhere. was rated as the seventh most effective. The CIPD’s
The content of e-learning programmes is devel- 2011 survey of e-learning found that the completion
oped in-house or obtained from external suppliers. rates of e-learning modules were poor, as was user
A form of e-learning can be provided by Massive experience.
Open Online Courses (MOOCs). These are online Innovative L&D departments are now focusing
courses accessible to everyone, which often have an more on recent developments in learning technol-
unlimited number of participants. ogy described below, which provide for greater flex-
E-learning can be managed by means of a learn- ibility and increased scope for collaborative and
ing management system (LMS), a software applica- self-directed learning.
C A S E S T U DY
Integrated e-learning in a telecommunications company
E-learning in this company was based on the establishment 60 modules commissioned by the company. In the first
and promotion of a single platform for learning. This is a year since the e-learning system was launched, three-
learning management system that is available to quarters of the workforce used it. Some 20,000 e-learning
employees as a portal labelled ‘iLEARN’. All training activities were accessed and 15,000 hours of e-learning
delivery channels are linked to this portal. The library of were undertaken in total.
generic material consists of some 15,000 items plus about
Knowledge-sharing technologies software (which enables those without program-

ming skills to design content using programmes
Knowledge-sharing and acquisition technologies in- such as PowerPoint). One of the more popular
clude blogs (websites on which individuals or forms of self-managed learning is through web
groups post their observations and experiences), searches (Googling). L&D professionals can ‘cu-
podcasts (digital audio files made available on the rate’ this type of learning by showing employees
internet for downloading to a computer or portable how to find the best material from external sources.
media player), wikis (websites which allow collabo- Microblogs can also be used. These are miniature
rative modification of their content and structure blogs posted on sites such as Twitter. The process of
directly from a web browser) and rapid authoring microblogging can be harnessed for corporate
learning through knowledge-sharing tools like threaded conversations through user updates and
Yammer. Microblogs can be captured and distilled replies. As the CIPD (2013) pointed out, enter-
into learning points. prise social networks can support learning and
development in a number of ways. They can gen-
erate discussion and engage employees with learn-
Virtual learning environment ing events before and after they take place, thus
boosting interest and focusing attention in the
A virtual learning environment (VLE) or virtual
first instance and helping embed learning in day-
learning system is a set of learning tools designed to
to-day work afterwards.
enhance an individual’s learning experience by in-
Social media itself provides a source for learning
cluding computers and the internet in the learning
content. It helps to locate expertise within the or-
process. A VLE package will include online support
ganization and to catalogue insight and informa-
for both trainer and learner, electronic communica-
tion for future reference. It can provide employees
tion such as e-mail, threaded discussions (online
with access to bite-sized learning material so that
discussions initiated by a trainer – contributions are
they can learn in slots of five minutes or so. Forums
posted on a discussion forum) and internet links to
can be created, as with Marks & Spencer, where
outside resources. VLE tools such as Moodle take
employees can discuss training materials with the
learners through a whole system of learning experi-
experts who created them, giving the employees
ences and integrate the online interactions of the
greater clarity on how to use them.
learner. It may involve the use of virtual classrooms
Within an organization, people can share their
and webinars.
experiences and thoughts and learn from one an-
A virtual classroom is an online learning envi-
other. In using an ESN, individuals will be learning
ronment. The environment can be either web-based
for themselves (self-managed learning) but also
and accessed through a portal, or software-based
from their colleagues – their work teams and com-
and therefore require a downloadable executable
munities. Learning is no longer seen as a separate
file. Trainers and individuals are logged into the vir-
activity from working and it can become a continu-
tual learning environment at the same time to pro-
ous, social experience.
vide and receive instruction.
As the CIPD (2013: 14) reported: ‘The main ben-
Webinars (short for web-based seminars) are
efit of social media as a learning tool lies not in
presentations, workshops or seminars that are
hosting formally designed tools and programmes,
transmitted over the web using video conferencing
but in supporting informal learning. Through build-
software. A key feature of a webinar is its interac-
ing relationships with new people and joining com-
tive elements – the ability to give, receive and dis-
munities of interest, social media can help us locate
cuss information.
the expertise we are looking for or, indeed, lead us
to stumble upon useful or interesting information
we were not aware of.’
Social media On the basis of its research, the CIPD (2014: 4)
Social media such as Facebook and LinkedIn can be concluded that: ‘While there will always be a place
used as platforms for learning, acting as conduits for face-to-face learning interventions, social
for locating expertise and information. media can transform many aspects of learning and
Social learning can be encouraged through so- development, being used to curate knowledge, lo-
cial media by the use of an enterprise social net- cate experts and facilitate peer-to-peer support,
work (ESN) such as Yammer. Enterprise social support self-directed learning and help employees
networks are open communication tools that prepare for and embed learning from training
combine various functions, including being able courses.’ The CIPD also commented that: ‘Social
to post announcements, comments, micro-blogs, media blurs the traditional boundaries of learning
questions and resources, join and set up special and development. Sharing information and point-
interest groups, follow colleagues and take part in ing to resources naturally leads to learner-led de-
forum discussions. ESN technology is similar to velopment, whereby people find out what they
public social networking tools like Facebook in need to know when they need to know it’
that it supports a constant flow of real-time, (ibid: 19).
Smart phones c oncerned with achieving the motivation of learners

through competition, incentives and rewards such
The development of smart phone technology has as the use of ‘leader boards’ (tables listing game
enabled mobiles to become an important part of the leaders), the award of points for achieving higher
learning environment, and this trend has acceler- levels and the provision of ‘badges’ (digital indica-
ated through the increased use of ‘apps’. These can tions of the level of skills reached).
be specifically designed for organizations and will Game-based learning is not an easy option; time
contain learning material in ‘bites’, which facilitates and effort are needed to plan and implement its use.
learning in any place and at any time – ‘learning on The steps required are:
the move’. Apps are available for note-taking on
smart phones so that learning can be recalled and 1 Define objectives – the sort of behaviours the
reflected on. game is intended to develop.
Research by Hird and Sparrow (2012) found 2 Select or produce a game which will focus on
that in one organization, apps were used in three those behaviours and fits the people who are
ways: going to play it.
1 Follow-ups to a learning intervention, 3 Decide on any help that can be provided
broadening access out to different ‘layers’ through e-learning.
of sites that provide basic information, 4 Define to participants how they should
and access to broader communities of analyse their performance in the game under
practice. such headings as problem solving, teamwork
2 Awareness-building material, for example and leadership.
enhancing leadership models with provision 5 Ensure that participants carry out this
of additional guidance, and support tools analysis and draw up a list of lessons learnt.
that lay out different options for 6 Get participants to define what action they
development, providing feedback and intend to take at work to apply the lessons
progress checks. learnt.
3 Process confirmation, where learners can
record information, and the L&D function
can check for process alignment and Use of artificial intelligence
behavioural reinforcement.
The use of artificial intelligence (AI) in learning and
development is still in its relative infancy but the
Game-based learning following ways in which it can be applied have been
identified by Eubanks (2019):
Game-based learning involves the use of computer
games as part of an online learning programme or ●● helping with the scheduling, planning and
during a more conventional formal course. Games resource allocation involved in delivering
offer ‘immersive experiences’ in which players can learning programmes;
learn about problem solving, collaboration, leader- ●● developing fully automated learning
ship and communication. Players have to take in management systems;
information from many sources, as in real life, and
●● identifying skills gaps and skill development
make decisions quickly, to deduce a game’s rules
needs;
from playing rather than by being told, to create
strategies for overcoming obstacles and to under- ●● providing for individualized instruction and
stand complex systems through e xperimentation. coaching – learning programmes tailored to
The unlovely term ‘gamification’ is used to de- the needs of individuals;
scribe what is claimed to be a different approach to ●● analysing the adoption rates of learning
using games for learning purposes. But the only sig- programmes to asses impact and indicate
nificant difference is that gamification is more where changes may be required.
The systematic training model is illustrated in

Training Figure 35.1.
Formal face-to-face training can be provided by
Training provides for face-to-face (F2F) learning by on-the job or off-the-job courses. It uses instruc-
the use of systematic and planned instruction actional techniques, coaching and facilitation as de-
tivities. It is one of several responses an organiza- scribed in Chapter 64. F2F learning can take place
tion can undertake to promote learning. As as part of a blended learning programme in which
Reynolds (2004: 45) pointed out, training has a complementary methods of learning such as
complementary role to play in accelerating learn- e-learning are incorporated.
ing: ‘It should be reserved for situations that justify
a more directed, expert-led approach rather than
viewing it as a comprehensive and all-pervasive Requirements for effective learning
people development solution.’ He also commented
that the conventional training model has a tendency Formal training provides for effective learning
to ‘emphasize subject-specific knowledge, rather when it is systematic in that it is specifically de-
than trying to build core learning abilities.’ signed, planned and implemented to meet defined
Training should be systematic in that it is specifi- needs. The purpose of the training should be clearly
cally designed, planned and implemented to meet defined in terms of the behaviour required as a re-
defined needs. It should be provided by people who sult of it (terminal behaviour). Learning will only be
know how to train and the impact of training effective if learners are fully engaged in the process.
should be carefully evaluated. The concept was This means providing them with the motivation to
originally developed for the industrial training learn by convincing them of the benefits that will be
boards in the 1960s and consists of a simple four- forthcoming. The outcomes of training should be
stage model: evaluated.
1 identify training needs;
2 decide what sort of training is required to Transfer of learning
satisfy these needs;
The focus of off-the-job training should be to de-
3 use experienced trainers to implement velop transferable skills and it will only be success-
training; ful if those skills are put to good use in the place of
4 follow up and evaluate training to ensure work. Account should therefore be taken of the
that it is effective. problem of transferring learning from a formal
F I G U R E 35.1 Systematic training model
1 Identify learning needs
2 Plan training programmes
Techniques Facilities Locations Trainers
3 Implement training
4 Evaluate training
training course programme. Training can seem to performance, p roviding goals and accountability,
be remote from reality and the skills and knowl- managing workload during the development pro-
edge acquired can appear to be irrelevant. Transfer gramme, and providing feedback on performance.
of learning problems often occurs after manage- Support from peers is important. Transfer is also
ment or supervisory training, but the manual skills more likely if ‘bite-sized’ and ‘just-in-time’ train-
learnt in a training centre can also be difficult to ing approaches are used, as described below.
transfer.
Bite-sized training
Bite-sized training involves the provision of oppor-
Wo rd s o f w isdom tunities to acquire a specific skill or a particular
piece of knowledge in a short training session fo-
Some types of intervention can disrupt cused on one activity, such as using a particular
self-directed learning by paying insufficient piece of software, giving feedback, or handling an
enquiry about a product or service of the company.
attention to the needs of the learner in the
It is often carried out through e-learning. It can be a
work context. Methods that rely heavily on useful means of developing a skill or understanding
the transfer of external expertise or content by means of a concentrated session or learning ac-
tivity without diversions. Support to the practice of
to employees carry the highest risk in this bite-sized training is provided by the neuroscience
regard, since their design is often removed concept of ‘spacing’, which states that it is better to
distribute learning in discrete blocks delivered over
from the context in which work is created.
short time periods than cram lots of content into a
As a result it is impossible to meet learning prolonged session. This results in more effective
needs adequately. transfer and aids long-term memory. Bite-sized
training is best for training employees in straight-
Reynolds (2004)
forward techniques that they can use immediately
in their work.
To tackle this problem it is necessary to make the

training as relevant and realistic as possible, an-
Just-in-time training
ticipating and dealing with any potential transfer Just-in-time training is training that is delivered as
difficulties. Individuals are more likely to apply close as possible to the time when the activity is
learning when they can put what they have learned taking place (just-in-time as distinct from just-in-
into practice, do not find it too difficult, believe case). It is effective because it happens in the work-
what they learnt is relevant, useful and transfera- ing e nvironment where the learning can be applied
ble, are supported by line managers, have job au- immediately. The training will be based on an
tonomy, believe in themselves, and are committed identification of the current learning needs of the
and engaged. A literature search by Burke-Smalley participants. It should address specific knowledge
and Hutchins (2007) established that by far the or skill gaps when they arise and be brief (‘bite-
most important factor in transferring learning sized’) and easily assimilated. It can be provided
was the opportunity to perform learned skills. on a bespoke social learning platform so that the
They suggested that successful transfer of learning material is easily accessible, for example, on a
would be achieved by discussing the new learning, smart phone. Use can be made of infographics
the participation of the supervisor in the develop- (graphic visual representations of information,
ment programme, providing opportunity and en- data or knowledge intended to present informa-
couragement to use new skills in the workplace, tion quickly and clearly) or a short piece of
assisting managers with overcoming obstacles to e-learning.
CASE STUDIES
Training overhaul for Scottish police
A radical overhaul of training for the Scottish police police officer and you have got to want to learn. After 15
created more opportunities for promotion and culminated weeks of initial training, a two-week ‘reconvention’ period
in a prestigious National Training Award. The improved helps staff with the areas they particularly need to address.
training scheme uses facilitated learning delivery, where This training is tailored to individual requirements;
trainees pre-read all information before attending sessions syndicates of recruits with similar needs are put together
and then discuss issues and learn from each other. to receive it. This ‘partnership approach’ has helped the
Responsibility for learning is now firmly placed on the participants to focus on communication and problem-
shoulders of the individual – you have got to want to be a solving skills.
Training and learning at a customer support centre
The customer support centre employs 300 people. they spend periods in a pod sitting next to a ‘buddy’, listen-
Customer service agents work in a group of five, known as ing to calls. At the end of that week they are allocated to a
a ‘pod’. One of the pod members will be a team coach who pod team and receive close ongoing support from the pod
provides support and advice to his or her agent colleagues. team coach.
A working knowledge of each customer support system Given the emphasis on learning in the workplace, the
is essential to do the job and one of the central tasks of the role of the team coach is critical and there are a number of
training department is to bring new entrants up to compe- steps in place to support and enhance their role. A set of
tence as quickly as possible. The following pattern is skills and needs has been defined and these are delivered
adopted. New entrants join in cohorts of 8 to 10 and spend to the 30 centre team coaches in 90-minute modules in the
their first week in the training room. As the week progresses training room.
1 Analyse current situation and development

Personal development needs. This can be done as part of a
planning performance management process.
2 Set goals. These could include improving
Personal development planning is a method of for- performance in the current job, improving or
malizing self-managed learning. It is carried out by acquiring skills, extending relevant
individuals with guidance, encouragement and help knowledge, developing specified areas of
from their managers, usually on the basis of perfor- competence, moving across or upwards in
mance and development reviews. A personal devel- the organization, or preparing for changes in
opment plan sets out the actions people propose to the current role.
take to learn and to develop themselves. They take 3 Prepare action plan. The action plan sets out
responsibility for formulating and implementing what needs to be done and how it will be
the plan but they receive support from their manag- done under headings such as outcomes
ers in doing so. The purpose is to provide what expected (learning objectives), the
Tamkin et al (1995) called a ‘self-organized learning development activities, the responsibility for
framework’. The stages of personal development development (what individuals are expected
planning are: to do and the support they will get from
their manager, the L&D or HR department

or other people), and timing. A variety of
Apprenticeships
activities tuned to individual needs should be
included in the plan, for example observing As defined by the Education and Skills Funding
what others do, project work, planned use of Agency, an apprenticeship is a genuine job with an
e-learning programmes and internal learning accompanying skills development programme.
resource centres, working with a mentor, Through their apprenticeship, apprentices gain the
coaching by the line manager or team leader, technical knowledge, practical experience and
experience in new tasks, guided reading, wider skills they need for their immediate job and
special assignments and action learning. future career. The apprentice gains this through a
Formal training to develop knowledge and wide mix of learning in the workplace, formal off-
skills may be part of the plan but it is not the the-job training and the opportunity to practice
most important part. new skills in a real work environment.
The Apprentice Levy Scheme was established by
4 Implement. Take action as planned. the UK Government in 2017 to encourage the ex-
The plan can be expressed in the form of a learning tended use of apprenticeships to provide the skilled
or capability contract, which is a formal agreement people the country needs. Under the scheme, all em-
between the manager and the individual on what ployers with a wage bill greater than £3m pay 0.5
learning needs to take place, the objectives of such per cent of their payroll into a central fund. In re-
learning and what part the individual, the manager, turn they receive vouchers, which can be used to
the L&D function or a mentor will play in ensuring fund apprenticeships.
that learning happens. The partners to the contract But research by the CIPD (2017) revealed that
agree on how the objectives will be achieved and only 9 per cent of organizations planned to use the
their respective roles. It will spell out learning pro- levy to create new apprenticeships, while 18 per
grammes and indicate what coaching, mentoring cent said they would use the funding to enhance ex-
and formal training activities should be carried out. isting apprenticeship training programmes.
It is, in effect, a blueprint for learning.
Personal development planning sounds like
a good idea but how do you get people to
do it?
Key learning points
Workplace learning Workplace learning involves self-directed and

self-managed learning and is enhanced by coaching,
Learning in the workplace is mainly informal, although mentoring, e-learning and planned experience. But
line managers have an important part to play in some more formal training activities can take place
facilitating it through coaching and by arranging there.
supporting activities, including formal training
sessions.
Social learning
Much of it is experiential learning – learning by
doing and by reflecting on experience so that it can be As defined by Hart (2014): ‘Social learning is about
understood and applied. people connecting, conversing, collaborating and
learning from, and with, one another on a daily basis at ●● developing fully automated learning management
work.’ Some form of social learning happens systems;
continually in the workplace as individuals and groups
●● identifying skills gaps and skill development needs;
work together.
●● providing for individualized instruction – learning
Use of social media programmes tailored to the needs of individuals;
Social media can be used within the organization as a ●● analysing the adoption rates of learning
learning and development aid through enterprise programmes to asses impact and indicate where
social networks – open communication tools that changes may be required.
combine various functions, including being able to
post announcements, comments, micro-blogs, Training
questions and resources, join and set up special
Training is the use of systematic and planned
interest groups, follow colleagues and take part in
instruction activities to promote learning.
forum discussions.
Training should be systematic in that it is
specifically designed, planned, implemented and
Smart phones evaluated to meet defined needs.
The development of smart phone technology has It may be difficult to transfer the learning acquired
enabled mobiles to become an important part of the on a training course to the workplace. Special efforts
learning environment. This trend has accelerated need to be made to affect this transfer.
through the increased use of ‘apps’. These can be Just-in-time training is training that is closely linked
specifically designed for organizations and will to the pressing and relevant needs of people by its
contain learning material, in ‘bites’, which facilitates association with immediate or imminent work
learning in any place and at any time – ‘learning on activities.
the move’. Bite-sized training involves the provision of
opportunities to acquire a specific skill or a particular
Game-based learning piece of knowledge in a short training session focused
on one activity.
Game-based learning involves the use of computer The process of planning and delivering training or
games as part of an online learning programme or learning events and programmes is described by the
during a more conventional formal course. Games ADDIE model, which has five phases: analysis, design,
offer ‘immersive experiences’ in which players can development, implementation and evaluation.
learn about problem solving, collaboration, leadership
and communication.
Apprenticeships
Use of artificial intelligence An apprenticeship is a genuine job with an
accompanying skills development programme.
The use of artificial intelligence (AI) in learning and
Through their apprenticeship, apprentices gain the
development is still in its relative infancy but the
technical knowledge, practical experience and wider
following ways in which it can be applied have been
skills they need for their immediate job and future
identified by Eubanks (2019):
career.
●● helping with the scheduling, planning and resource The Apprentice Levy Scheme was established by
allocation involved in delivering learning the UK Government to encourage the extended use of
programmes; apprenticeships.
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36
Leadership and
management
development
programmes are different. The conclusion is reached
Introduction that while they are closely associated, and indeed
may be conducted jointly, they are sufficiently differ-
ent to justify being examined separately, which is un-
Wo rd s of wi sdom dertaken in the last two sections of the chapter.
Research on organizational climate over the

past half-century has shown that 60 to 75 Leadership and
per cent of employees in any organization – management development
no matter when or where the survey was
defined
completed and no matter what occupational
group was involved – report that the worst Leadership and management development pro-
grammes aim to provide managers with the leader-
or most) stressful aspect of their job is their ship and managerial qualities required to achieve
immediate supervisor. success. They are concerned with unlocking poten-
Pfeffer and Sutton (2006) tial and form a vital ingredient in talent manage-
ment. A blended learning approach is used, which
combines in programmes based on an analysis of
learning needs a number of learning activities such
This chapter is about what organizations can do to as planned experience, self-managed learning,
develop effective leaders and managers, bearing in coaching, mentoring, action learning, outdoor
mind the point made by Drucker (1955: 158) that: learning and formal education and training.
‘The prosperity if not the survival of any business
depends on the performance of its managers of
tomorrow.’ The nature of leadership
The chapter starts with a definition of leadership
and management development. This leads to a dis- and management
cussion of the nature of leadership and management
as a basis for an analysis of what leadership and man- There has been much debate on how leadership dif-
agement development programmes might cover and fers from management. The problem is that leader-
an examination of the extent, if at all, to which lead- ship involves management and management
ership development and management development involves leadership so that it may be difficult to
separate the two. There is some consensus on the The traditional model of what managers do is
essential nature of both and the skills involved, as that it is a logical and systematic process of plan-
set out below, but there is more disagreement on ning, organizing, motivating and controlling. But
which is the most important. this is misleading. Managers often carry out their
work on a day-to-day basis in conditions of vari-
ety, turbulence and unpredictability. Managers
Leadership may have to be specialists in ambiguity, with
the ability to cope with conflicting and unclear
Leadership means inspiring people to do their best
requirements.
to achieve a desired result. It involves developing
and communicating a vision for the future, motivat-
ing people and securing their engagement. As de-
fined by Dixon (1994: 214): ‘Leadership is no more
What are the differences?
than exercising such an influence upon others that Are leadership and management the same or differ-
they tend to act in concert towards achieving a goal ent? Some commentators regard leadership as syn-
which they might not have achieved so readily had onymous with management; others see them as
they been left to their own devices.’ Leadership distinct but closely linked and equally necessary
skills include the ability to: activities; others consider management to be a sub-
set of leadership; and yet others praise leadership
●● inspire others;
and demonize management. Bennis (1989) viewed
●● persuade others willingly to behave managers as those who promote efficiency, follow
differently; the rules and accept the status quo, while leaders
●● clarify what needs to be done and why; focus on challenging the rules and promoting ef-
●● communicate a sense of purpose to the team; fectiveness. Kotter (1991) saw managers as being
the ones who plan, budget, organize and control,
●● understand, as established by research
while leaders set direction, manage change and
conducted by Tamkin et al (2010), that
motivate people. Hersey and Blanchard (1998)
leaders cannot create performance
claimed that management merely consists of lead-
themselves but are conduits for performance
ership applied to business situations; or in other
through their influence on others;
words, management forms a subset of the broader
●● get the team into action so that the task is process of leadership. It can be said that leadership
achieved. is about managing people while management is
about managing all the available resources, includ-
ing people.
Management But as Birkinshaw (2010: 23) commented: ‘By
Management is the process of achieving goals by dichotomizing the work of executives in this way,
deciding what to do and then getting it done through Kotter, Bennis and others squeezed out the essence
the effective use of resources. Management has of what managers do and basically left them with
often been defined as ‘getting things done through the boring work that “leaders” don’t want.’ His
people’. But managers are also responsible for guid- view was that: ‘To put it simply, we all need to be
ing and controlling the business or their part of it by both leaders and managers’ (ibid: 23). Burgoyne
managing their other resources – finance, work sys- (2010: 42) observed that: ‘Both [management and
tems and technology – as well as people. leadership] are needed and need to work closely to-
Managers are doers. They deal with events as they gether, often through the same person or team.’
occur. But they must also be concerned with where Earlier, Mintzberg (2004: 22) summed it all up (as
they are going. This requires strategic thinking, espe- he often did) when he wrote: ‘Let’s stop the dysfunc-
cially at higher levels. As strategic thinkers, managers tional separation of leadership from management.
develop a sense of purpose and frameworks for de- We all know that managers who don’t lead are bor-
fining intentions and future directions. They are en- ing, dispiriting. Well, leaders who don’t manage are
gaged in the process of strategic management. distant, disconnected.’
Chapter 36 | Learning and Management Development 421
statement for those who are not leaders by

Leadership and birthright. It may be true to the extent that some
management development exceptional people seem to be visionaries, have
built-in charisma and a natural ability to impose
compared their personality on others. However, even they
probably have to develop and hone these qualities
In some quarters the term ‘leadership development’ when confronted with a situation demanding lead-
has replaced ‘management development’, perhaps ership. Ordinary mortals need not despair; they too
because the importance of ensuring that people can build on their natural capacities and develop
have leadership qualities has been recognized, while their leadership abilities. As defined by Burgoyne
it is believed that they can be safely left to acquire (2010: 43): ‘Leadership development in the widest
management skills in other ways, eg experience. sense involves the acquisition, development and
However, they are not the same, although they are utilization of leadership capability or the potential
closely associated. for it.’
The difference between them is that leadership
development tends to be concerned with nurturing
the softer skills of leadership through various edu-
cational processes, including formal learning events
and programmes and coaching. This is illustrated in Word s of w isd om
the three case studies at the end of the next section
of this chapter. The will to lead is largely innate but the
In contrast, management development relies ability to do it well is largely learnt.
more on ensuring that managers acquire the ability Burgoyne (2010: 42)
to do their jobs by managing a whole range of re-
sources, including people. Because they have to
work on a day-to-day basis in conditions of variety,
turbulence and unpredictability their development
largely takes place by gaining the right sequence of Yukl (2006) proposed the following conditions for
experience, although this may be supplemented by successful leadership development:
self-managed learning and courses on management
techniques. Further guidance can be provided by ●● clear learning objectives;
coaching and from mentors. ●● clear, meaningful content;
●● appropriate sequencing of content;
●● appropriate mix of training methods;
●● opportunity for active practice;
Pa us e for t houg ht ●● relevant, timely feedback;
What is the significance of the difference ●● high trainee confidence;
between management and leadership? ●● appropriate follow-up activities.
But it is not all about subjecting leaders to develop-
ment programmes. The organization has to play its
part in ensuring that leaders are provided with the
support and the working conditions they need to
Leadership development carry out their role properly. As Fiedler (1967: 276)
emphasized: ‘If we wish to increase organizational
Leadership development programmes prepare peo- and group effectiveness we must learn not only to
ple for leadership roles and situations beyond their train leaders more effectively but also to build an
current experience. It is sometimes said that leaders organizational environment in which the leaders
are born not made. This is a rather discouraging can perform well.’
CASE STUDIES
Cargill
Cargill is an international provider of food, agricultural and knowledge to enable them to lead Cargill businesses. All of
risk management products and services. Those in Cargill’s these courses are interspersed with more challenging pro-
different talent pools, such as the ‘Next Generation Leaders’ jects and work assignments. Cargill corporate leaders also
and ‘Emerging Leaders’ undertake both formal and informal take part in the Leadership Academy, where they learn
development. In Cargill’s high-performance Leadership transformational leadership skills and the essentials of
Academy, entrants learn about the fundamentals of leader- coaching and mentoring in formal programmes and informal
ship and management in the company and work through a learning activities, all of which form an important part of
number of accelerated leadership modules, gaining the their leadership development.
Diageo
At Diageo, the international beverages company, a series of The company’s first leadership development programme,
development strategies, particularly for leadership, have 1998’s ‘Building Diageo talent’, was designed to help link
been based on Diageo’s five values, which were created as strategy and organizational performance with individual
the common heartbeat of all the component businesses. performance. This had many components, including
The values – ‘Be the best’, ‘Passionate about consumers’, coaching and benchmarking for leadership development
‘Proud of what we do’, ‘Freedom to succeed’ and ‘Valuing for 4,000 managers. Over the past six years the company’s
each other’ – have become central to Diageo’s success, leadership training has evolved to focus more on building
alongside a comprehensive performance management ‘a core Diageo mindset’. The senior team has prioritized
framework. Conversations about performance are now on a developing a ‘total talent strategy’ and HR processes
‘partnership’ basis, where managers, with their employees, have been thoroughly embedded in management thinking
are expected to discuss the latter’s aspirations and how worldwide.
their growth needs can be satisfied by the business.
HML
At HML (a financial services company) the leadership de- ●● four modules: profit, client, effectiveness, engagement;
velopment programme for middle and senior managers
●● big event – transformational residential learning;
consisted of the following elements:
●● self-directed modules;
●● orientation event – introduction and contracting;
●● individual 360-degree feedback – benchmark scores;
●● action learning sets (sets of six people, three sets in
one programme group); ●● accreditation and celebration event.
Interview
Leadership development – the views of many of our clients, whatever the industry, they all are
coming to me saying their No. 1 challenge is getting the
Pierre Nanterme, former CEO of right talent. So first, I figured out that leadership and
Accenture, the global professional talent is the name of the game. Second, it’s all about
services firm with 330,000 employees how you motivate people, how you’re making sure
they’re going to stretch their own boundaries.
The following answer was given by Pierre Nanterme
It’s about selecting, hiring the best people, but
to the question: ‘You served as Accenture’s chief
that’s not enough. Performance management is
leadership officer at one point. What’s your philosophy
extraordinarily important to get people to their very
on the best way to train employees to be better
best. Do you feel good in your role? If yes, that’s the
leaders?’
perfect time for you to experiment with something
I learned a lot through that role, which frankly I had to new, to get out of your comfort zone. This willingness
figure out a bit, because it was quite new. My to learn is probably the most important thing for
background is around economics and finance; yet of leaders of today and tomorrow.
course, in professional services, talent is key. And for Cunningham (2015)
Management development Formal approaches to

management development
Management development is concerned with im-
proving the performance of managers in their pre- Formal approaches to management development
sent roles, preparing them to take on greater consist of processes and events that are planned and
responsibilities in the future and also developing provided by the organization. These should be based
their leadership skills. It was defined by Peters (2010: on the identification of development needs. The
28) as: ‘A complex process by which individuals methods of defining learning needs described in
learn to perform effectively in a management role.’ Chapter 34 can be used to determine collective
A systematic approach to management development needs. For individuals, performance management
is necessary to meet the needs of organizations for reviews are an important means of producing per-
the talented managers they require and because the sonal development plans and learning contracts as
increasingly onerous demands made on line manag- described in Chapter 35. This can be done more sys-
ers mean that they have to possess a wider range of tematically at development centres. These consist of
developed skills than ever before. a concentrated (usually one or two days) programme
The aim of management development is to find of exercises, tests and interviews designed to identify
ways in which the organization can produce, managers’ development needs and to provide coun-
mainly from within, a supply of managers better selling on their careers. Com petency frameworks
equipped for their jobs at all levels. The principal can be used as a means of identifying and expressing
method of doing this is to ensure that managers development needs and pointing the way to self-
gain the right sequence and variety of experience, managed learning programmes or the provision of
in good time, which will equip them for whatever learning opportunities by the organization.
level of responsibility they have the ability to reach The formal approaches that can be used are:
in the course of their career. This experience can be ●● Planned experience – which includes job
supplemented – but never replaced – by courses rotation, job enlargement, taking part in
carefully timed and designed to meet particular project teams or task groups and secondment
needs. Management development policies involve outside the organization – this is possibly the
the use of both formal and informal approaches. most effective approach on the grounds that
managers learn to manage mainly by ●● The use of performance management

managing. processes to provide feedback and satisfy
●● Coaching – a personal and usually one-to- development needs; these would be
one approach to helping people develop their competency based in the sense that they
skills and levels of competence (coaching would specify the competencies required and
skills are dealt with in Chapter 64). assess the degree to which individuals needed
to develop those competencies.
●● Mentoring – the process of using specially
selected and trained individuals (mentors) to ●● Structured self-development following a
provide guidance, pragmatic advice and self-managed learning programme set out in
continuing support that will help the person a personal development plan and agreed as a
or persons allocated to them to learn and learning contract with the manager or a
develop (see also Chapter 64). management development adviser.
●● Action learning – a method originated by ●● Training by means of internal or external
Revans (1989) of helping managers develop courses or through e-learning.
their talents by exposing them to real A blended approach using two or more of these
problems; they are required to analyse them, methods is best, although in most programmes for-
formulate recommendations and then take mal training plays an important part. Training
action. should be action-oriented – care must be taken to
●● Outdoor learning – getting teams of ensure that what is learnt on a course is translated
participants to carry out physical activities into action in the workplace. A useful checklist pro-
so that they can learn about how they act duced by the CIPD is set out below.
under pressure as team leaders or team
members.
Source review
Checklist for planning and delivering management training events:
1 Integrate the programme with the organization’s business strategy.
2 Set multiple aligned goals for participants.
3 Keep senior management support.
4 Encourage participants to seek opportunities to apply new learning.
5 Consider a range of post-training activities.
6 Ensure the programme’s goals and actions are integrated with the organization’s performance management
system.
7 Maintain opportunities for participants to practice and get feedback on their learning.
8 Enhance learning by using action learning sets.
9 Make participants accountable for applying their learning.
10 Create opportunities for participants to teach others.
11 Use after-event reviews and conduct follow-up with participants.
12 Use a mentor or colleague to hold participants accountable for applying learning.
CIPD (2017)
to determine how and why it contributed to success

or failure. This retrospective or reflective learning
Pa us e for t houg ht will be effective if managers can apply it success-
How can L&D make a meaningful fully in the future.
Managers also learn from their managers. This
contribution to leadership and management
may include how not to do things as well as what to
development? do. Again, they will learn more if they have the ca-
pacity to reflect on what they have learnt and apply
it to their own circumstances.
Experiential and reflective learning is potentially
the most powerful form of learning. It comes natu-
The content of training programmes and events will
rally to some managers. They seem to absorb, un-
be determined by established learning needs. But
consciously and by some process of osmosis, the
the significance of the line manager’s contribution
lessons from their experience, although in fact they
to the implementation of HR policies and practices
have probably developed a capacity for almost in-
as explained in Chapter 10 suggests that a choice
stantaneous analysis, which they store in their men-
according to needs from the following areas of line
tal databank to retrieve when necessary.
manager HR responsibilities should be made:
But many managers either find it difficult to do
●● performance appraisal and review practices; this sort of analysis or do not recognize the need.
●● assessing potential; This is where informal or at least semi-formal ap-
proaches can be used to encourage and help manag-
●● selection interviewing;
ers to learn more effectively. These comprise:
●● coaching and instructing;
●● emphasizing self-assessment and the
●● induction of employees;
identification of development needs by getting
●● job design; managers to assess their own performance
●● handling absenteeism; against agreed objectives and analyse the
●● handling discipline; factors that contributed to effective or less
effective performance – this can be provided
●● conducting challenging conversations.
through performance management;
These are best made available in bite-sized learning ●● getting managers to produce their own
modules using digital techniques as well as more personal development plans – self-managed
formal classroom training. The self-management of learning programmes;
learning through these modules should be encour-
●● encouraging managers to discuss their
aged and L&D should take the responsibility of
problems and opportunities with their
keeping managers informed on sources of learning
manager, colleagues or mentors to establish
materials either provided by the firm or available
for themselves what they need to learn or be
elsewhere (curating).
able to do;
●● helping managers to understand their own
Informal approaches to learning styles so that they can make the best
use of their experience and increase the
management development effectiveness of their learning activities (this
Informal approaches to management development guidance may have to be provided more
make use of the learning experiences managers en- formally).
counter during the course of their everyday work.
Managers are learning every time they are con-
fronted with an unusual problem, an unfamiliar The role of the organization
task or a move to a different job. They then have to The traditional view is that the organization need
evolve new ways of dealing with the situation. They not concern itself with management development.
will learn if they reflect on what they did, in order The natural process of selection and the pressure of
competition will ensure the survival of the fittest.

Managers, in fact, are born, not made. Cream rises
to the top (but then so does scum). Management assigned the responsibility for helping all
development has also been seen as a formal process men working with him to focus, direct and
using management inventories, multicoloured re-
apply their self-development efforts
placement charts, ‘Cook’s tours’ around different
departments for newly recruited graduates, detailed productively. And every company can
job rotation programmes, elaborate points schemes provide systematic development challenges
to appraise personal characteristics, and lots of for-
mal courses operating on the ‘sheep-dip’ principle to its managers.
(ie everyone undergoes them). Drucker (1955: 163)
The true role of the organization in management
development lies somewhere between these two ex-
tremes: on the one hand, it is not enough, in condi-
tions of rapid growth (when they exist) and change, The ability to manage is eventually something indi-
to leave everything to chance – to trial and error; on viduals mainly develop for themselves while carry-
the other hand, elaborate management developing out their normal duties. But they will do this
ment programmes cannot successfully be imposed much better if they are given encouragement, guid-
on the organization. A mix of formal and informal ance and opportunities by their organization and
methods is required that has to fit the organization’s their managers.
context and specific requirements.
The success of any management development
programme depends upon the degree to which there
is commitment to it at all levels of management. It is
not a separate activity to be handed over to a spe- Word s of w isd om
cialist and forgotten or ignored. The development Managers are grown – they are neither born
of subordinates must be recognized as a natural and
essential part of any manager’s job. But the lead nor made. The individual will grow into
must come from the top. what he is capable of becoming, providing
we can create the proper conditions for that
The role of the individual growth.
As Drucker perceptively wrote many years ago McGregor (1960: 192)
(1955: 162): ‘Development is always self-
development. Nothing could be more absurd than
for the enterprise to assume responsibility for the
development of a man. The responsibility rests with
the individual, his abilities, his efforts.’ But he went
The role of learning and
on to make the following point: development and HR specialists
However, L&D and HR specialists still have an im-
portant role to play. They interpret the needs of the
business and advise on how management develop-
Wo rd s o f w isdom ment as a business-led activity can play its part in
meeting these needs. They encourage managers to
Every manager in a business has the
carry out their developmental activities, providing
opportunity to encourage individual guidance as required, and they act as coaches or
self-development or to stifle it, to direct it or mentors. They also, of course, conduct or manage
formal learning events and programmes, but their
to misdirect it. He should be specifically most important role is to help in developing a cli-
mate in which managers can grow.
builds on and develops the qualities, skills

Criteria for leadership and ●●
and attitudes of participants;
management development ●● is supported by appropriate HR policies to do
with recruitment and selection, talent
The effectiveness and value of any approach to management, succession planning and reward;
leadership and management development include ●● has the full commitment of those responsible
the extent to which it: for the operation of the process, including
●● links to organizational goals and context – line managers;
and so has relevance for the organization as ●● is motivating to those encouraged to
well as for individuals; participate in it.
Key learning points
Leadership and management mentors. Management development programmes

traditionally also cover leadership skills.
development defined
Leadership and management development Leadership development
programmes ensure that managers have the
leadership and managerial qualities required to Leadership development programmes prepare people
achieve success. for leadership roles and situations beyond their
current experience.
Leadership
Management development
Leadership means inspiring people to do their best to
achieve a desired result. It involves developing and Management development is concerned with improving
communicating a vision for the future, motivating the performance of managers in their present roles,
people and securing their engagement. preparing them to take on greater responsibilities in the
future and also developing their leadership skills.
Formal approaches to management development
Management consist of processes and events planned and provided
Defined as deciding what to do and then getting it by the organization. They include planned experience,
done through the effective use of resources. coaching and mentoring, action learning, outdoor
learning, performance management, formal training
Leadership development compared with and structured self-development.
Informal approaches to management development
management development make use of the learning experiences that managers
Leadership development tends to be concerned with encounter during the course of their everyday work.
nurturing the softer skills of leadership through various
educational processes, including formal learning Responsibility for management
events and programmes and coaching.
development
Management development relies more on ensuring
that managers have the right sequence of experience, Individual managers are largely responsible for their
which may be supplemented by self-directed learning own development but need guidance, support and
and courses on management techniques. Further encouragement from their own managers and the HR
guidance may be provided by coaching and from function.
References
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York, Addison Wesley Effectiveness, New York, McGraw-Hill
Birkinshaw, J (2010) An experiment in reinvention, Hersey, P and Blanchard, K H (1998) Management of
People Management, 15 July, pp 22–24 Organizational Behaviour, Englewood Cliffs, NJ,
Burgoyne, J (2010) Crafting a leadership and Prentice Hall
management development strategy, in (eds) J Gold, Kotter, J P (1991) Power, dependence and effective
R Thorpe and A Mumford, Gower Handbook of management, in (ed) J Gabarro, Managing People
Leadership and Management Development, and Organizations, Boston, MA, Harvard Business
Farnham, Gower, pp 42–55 School Publications
CIPD (2017) Developing managers to manage McGregor, D (1960) The Human Side of Enterprise,
sustainable employee engagement, health and New York, McGraw-Hill
well-being [online] https://www.cipd.co.uk/Images/ Mintzberg, H (2004) Enough leadership, Harvard
developing-managers-to-manage-sustainable- Business Review, November, p 22
employee-engagement-health-and-well- Peters, K (2010) National and international
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March 2019] Mumford, Gower Handbook of Leadership and
Cunningham, L (2015) Accenture CEO explains why Management Development, Gower, Farnham,
he’s overhauling performance reviews, Washington pp 23–38
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news/on-leadership/wp/2015/07/23/accenture-ceo- Half-Truths & Total Nonsense, Boston, Harvard
explains-the-reasons-why-hes-overhauling- Business School Press
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Oxford, Heinemann
429
PART IX
Performance management
PA R T I X CO N T E N T S
37 The concept of performance management

38 Performance management systems
39 Reinventing performance management
explores the conceptual framework of performance

Introduction management, its aims, the principles that influence
how it is supposed to work and the requirements
Performance management is a systematic and con- for success. Chapter 38 describes how, ideally, a per-
tinuous process for improving organizational performance management system functions. Chapter
formance by developing the performance of 39 reviews the inadequacies of traditional methods
individuals and teams. The purpose of this part is to and suggests new approaches.
explain how it can and should work. Chapter 37
430

431
37
The concept of
performance
management
and development and increasing levels of employee
Introduction engagement.
The purpose of this chapter is to define the concep-
tual framework of performance management, its
aims, the principles that influence how it is sup-
The conceptual framework
posed to work and the requirements for success.
The theoretical basis of performance management
is discussed below under the following headings:
Performance management ●● the meaning of performance;
defined ●● measuring performance;

●● the factors affecting performance;
Performance management is the continuous process ●● underpinning theories.
of improving performance by setting individual and
team goals that are aligned to the strategic goals of
the organization, planning performance to achieve The meaning of performance
the goals, reviewing and assessing progress, and de-
It can be said that if you can’t define performance
veloping the knowledge, skills and abilities of people.
you can’t measure or manage it. Bates and Holton
Managing performance is what line managers do
(1995) pointed out that performance is a multi
and performance management is supposed to help
dimensional construct, the measurement of which
them do it. Performance management is managing
varies depending on a variety of factors. They also
the business. It should be a powerful means of en-
stated that it is important to determine whether the
suring that the organization’s strategic goals are
measurement objective is to assess performance
achieved. It should also contribute to the achieve-
outcomes or behaviour or both.
ment of culture change and be integrated with other
Latham et al (2007) emphasized that an appro-
key HR activities, especially human capital manage-
priate definition of performance is a prerequisite
ment, talent management, learning and develop-
for feedback and goal-setting processes. They
ment and reward management. Thus performance
stated that a performance theory is needed which
management helps to achieve horizontal integration
stipulates:
and the ‘bundling’ of HR practices so that they are
interrelated and therefore complement and rein- ●● the relevant performance dimensions;
force each other. An effective system of performance ●● the performance standards or expectations
management can play an important part in learning associated with different performance levels;
432 Part 9 | Performance Management
●● how situational constraints should be go beyond task competence and which foster be-
weighed (if at all) when evaluating haviours that enhance the climate and effectiveness
performance; of the organization.
●● the number of performance levels or
gradients; Performance as both outcomes
●● the extent to which performance should be and behaviour
based on absolute or comparative standards.
It can be argued that a more comprehensive view of
There are different views on what performance is. It performance is achieved if it is defined as embracing
could just mean outputs – the results obtained. Or it both outcomes and behaviour. When people are
could mean behaviour – how the results were ob- said to be performing well it does not solely refer to
tained. Or it could be both results and behaviour. what results they deliver; it is also concerned with
how they deliver them:
Performance as outputs
Kane (1996) argued that performance ‘is something
that the person leaves behind and that exists apart
from the purpose’. Bernadin et al (1995) thought
Word s of w isd om
that performance should be defined as the outcomes Performance means both behaviours and
of work.
results. Behaviours emanate from the
performer and transform performance from
Performance as behaviour
Campbell (1990) explained that: ‘Performance is
abstraction to action. Not just the
behaviour and should be distinguished from the instruments for results, behaviours are also
outcomes because they can be contaminated by sys- outcomes in their own right – the product
tems factors.’ Aguinis (2005) was positive that:
‘Performance is about behaviour or what employ- of mental and physical effort applied to
ees do, and not about what employees produce or tasks – and can be judged apart from
the outcomes of their work.’
results.
Campbell et al (1993) focused on the measure-
ment of performance, which they defined as behav- Brumbach (1988: 388)
iour or action relevant to the attainment of the
organization’s goals that can be scaled, that is, meas-
ured. They suggested that performance is multi
dimensional and that each dimension is characterized Defining performance like this leads to the conclu-
by a category of similar behaviour or actions. The sion that when managing the performance of indi-
components consist of: (1) job-specific task profi- viduals and teams, both outputs (results) and inputs
ciency, (2) non-job specific proficiency (eg organiza- (behaviour) need to be considered. This is the gener-
tional citizenship behaviour), (3) written and oral ally accepted ‘mixed model’ of performance man-
communication proficiency, (4) demonstration of ef- agement, which is concerned with both the ‘what’
fort, (5) maintenance of personal discipline, (6) facili- and the ‘how’.
tation of peer and team performance, (7) supervision/
leadership and (8) management/administration.
Borman and Motowidlo (1993) formulated the
notion of contextual performance, which covers Pau se for th ou gh t
non-job-specific behaviours such as cooperation,
Why is it important to consider both the
dedication, enthusiasm and persistence and is dif-
ferentiated from task performance covering job spe- ‘what’ and the ‘how’ when assessing
cific behaviours. As Fletcher (2001) mentioned, performance?
contextual performance deals with attributes that
Chapter 37 | The Concept of Performance Management 433
Measuring performance no powerful, cohering vision, ineffective

structure, culture or work systems,
Performance is measured by comparing results with unsupportive employee relations policy and
expectations. Quantitative measures can be finan- systems, or inappropriate leadership and
cial or non-financial. Financial measures at organi- management style.
zational level include volumes – profits and
sales – and ratios – for example, earnings per share, These can be analysed into individual, systems and
return on investment. Another important financial contextual factors.
measure is added value – in accounting language,
the difference between the value of sales and the Individual factors
cost of labour and bought-in parts; more generally Vroom (1964) suggested that performance is a func-
the extra value (the benefit to the business) gener- tion of ability and motivation as shown in the for-
ated by the expenditure of effort, time or money. At mula: Performance = ƒ (Ability × Motivation). The
individual level, financial measures include sales effects of ability and motivation on performance
value, return on investment, added value, cost per are not additive but multiplicative. People need
unit of output and cost control. both ability and motivation to perform well and if
Quantified non-financial measures consist of at either ability or motivation is zero there will be no
organizational level market share, and at both or- effective performance.
ganizational and individual levels output volumes, The ‘AMO’ formula put forward by Boxall
productivity ratios and data on such operational and Purcell (2003) is a development of Vroom’s
matters as customer service levels, waste, downtime ideas. This model states that performance is a
and quality. For people, the key measures are levels function of Ability + Motivation + Opportunity to
of engagement, turnover, absenteeism and sickness. Participate (note that the relationship is additive not
Qualitative measures at organizational level refer multiplicative).
to the extent to which values in the following areas These formulas focus mainly on individual per-
have been upheld: care for the environment, care formance but systems factors are also important.
and consideration for people, competence, competi-
tiveness, customer service, innovation, quality and
teamwork. For individuals, the main qualitative Systems factors
measure is the extent to which their behaviour meets Individual performance is influenced by systems
the standards set out in the organization’s compe- factors as well as person factors (Cardy and
tency framework or agreed with their m anager. Dobbins, 1994). Systems theory as formulated by
Miller and Rice (1967) states that organizations
should be treated as open systems that transform
Factors affecting performance inputs into outputs within the environments (exter-
nal and internal) upon which they are dependent.
Four major influences on performance were identi-
Systems theory is the basis of the input-process-
fied by Harrison (1997):
output-outcome model of managing performance
●● the learner, who needs the right level of which assesses the entire contribution that an indi-
competence, motivation, support and vidual makes within the system in carrying out his
incentives in order to perform effectively; or her allotted tasks. Inputs are the skills and
●● the learner’s work group, whose members knowledge that an individual brings to a job.
will exercise a strong positive or negative Process is how people actually perform their jobs.
influence on the attitudes, behaviour and Outputs are the results of performance expressed in
performance of the learner; quantified terms such as sales volume, income gen-
erated or units of production, and outcomes are a
●● the learner’s manager, who needs to provide visible effect which is the result of effort but cannot
continuing support and act as a role model, necessarily be measured in quantified terms. The
coach and stimulator related to performance; input-process-output-outcome model of managing
●● the organization, which may produce performance is important first because it provides
barriers to effective performance if there is the basis for measuring performance, and second
because all the factors that influence performance, c ulture, the employment relations climate, the peo-
including the system and the context, can be taken ple involved and the internal environment in terms
into account when assessing it. of the organization’s structure, its size and its tech-
It was claimed by Deming (1986) that differ- nology and working practices.
ences in performance were largely due to systems
variations. Systems factors include the support peo- Organizational culture
ple get from the organization and other factors out-
side the control of individuals. Jones (1995) Organizational culture is the pattern of shared be-
proposed that the aim should be to manage context liefs, norms and values in an organization that
and not performance, and went on with the follow- shape the way people act and interact and strongly
ing explanation: influence the ways in which things get done. From
the performance management viewpoint one of the
most important manifestations of organizational
culture is management style. This refers to the ways
in which managers behave in managing people and
Wo rd s o f w isdom how they exercise authority and use their power. If
the prevailing management style in a command and
In this equation, the role of management control-type structure is autocratic, directive, task-
focuses on clear, coherent support for oriented, distant and tough, then a ‘caring and shar-
employees by providing information about ing’ philosophy of performance management is not
likely to work, even if it were felt to be desirable,
organization goals, resources, technology, which is unlikely. Alternatively, a non-directive, par-
structure, and policy, thus creating a context ticipative and considerate style is more likely to
support a ‘partnership’ approach to performance
that has multiplicative impact on the
management, with an emphasis on involvement,
employees, their individual attributes empowerment and ownership.
(competency to perform), and their work
effort (willingness to perform). In short, Employment relations climate
The employment relations climate of an organiza-
managing context is entirely about helping
tion represents the perceptions of employees and
people understand; it is about turning on their representatives about the ways in which rela-
the lights. tionships between management and employees are
maintained. It refers to the ways in which formal or
Jones (1995: 428)
informal employee relations are conducted and
how the various parties (managers, employees and
trade unions or staff associations) behave when in-
teracting with one another.
Clearly, a good climate will be conducive to the
design and operation of effective performance man-
Pa us e fo r t houg ht agement processes as long as these are developed
Do you agree that systems variations are jointly by the stakeholders and take account of the
interests of all involved. An improved employee re-
the major factor affecting performance? If lations climate may also result from pursuing the
so, what can be done about them? development and implementation of performance
management in accordance with the ethical princi-
ples set out later in this chapter.
Contextual factors People

Systems operate within the context of the organiza- Performance management processes will vary in ac-
tion. The context includes the organizational cordance with the composition of the workforce.
For example, a firm employing mainly knowledge s elf-belief that he or she will be able to accomplish
workers is likely to adopt a different approach to certain tasks).
that in a manufacturing firm. Within the organiza- Bureaucratic methods of working may also affect
tion, approaches may vary between different groups the design and operation of performance manage-
of employees. In the Victoria and Albert Museum, ment. Organizations that function as bureaucracies,
for example, it is recognized that the way in which appropriately or inappropriately, are more likely
objectives are agreed by a curator will be different to have a formalized performance management sys
from how the standards of performance are agreed tem. The system may be centrally controlled by HR
for security guards. and the emphasis will be on the annual appraisal
carried out in accordance with strictly defined rules.
Structure The appraisal may be a top-down judgemental a ffair
referring to personality traits. Performance and po-
A hierarchical or functional structure with well-
tential will be rated.
defined layers of authority is more likely to support
Organizations which work flexibly with an em-
a directive, top-down approach to setting objectives
phasis on horizontal processes and teamwork are
and reviewing performance. A flatter, process-based
more likely to have a less formal process of perfor-
structure will encourage more flexible participative
mance management, leaving more scope for manag-
approaches with an emphasis on teamwork and the
ers and teams to manage their own processes in
management of performance by self-directed teams.
accordance with agreed principles.
A structure in which responsibility and authority
are devolved close to the scenes of action will prob-
ably foster a flexible approach to performance man-
agement. A highly centralized organization may
Underpinning theories
attempt to impose a monolithic performance man-
Performance management practice is underpinned
agement system, and fail.
and explained by the theories summarized below.
Goal theory has perhaps been the most influential
Technology and working practices because setting goals and assessing performance
There is no conclusive evidence that advanced tech- against the goals is such a significant part of a con-
nology and working practices are associated with ventional performance management system. But
advanced approaches to performance management. other theories are relevant, such as those relating to
But it is reasonable to assume that high-technology control and reinforcement that explain the funda-
firms or sophisticated organizations are more likely mental mechanism of feedback, and expectancy
to innovate in this field. Another aspect of work theory that indicates how performance manage-
practices is the extent to which the work is comment can help to motivate people. Social learning
puter or machine controlled, or routine. theory links reinforcement and expectancy theory,
Performance management tools using apps can and self-efficacy theory highlights the importance of
provide continuous feedback that could be more ef- helping people to believe in themselves and their
fective than the formal feedback limited to the ability to improve.
once-a-year performance appraisal meeting. Com
puterized performance monitoring (CPM) provides
an entirely different method of measuring perfor- Goal theory
mance that is related directly to outputs and/or er-
Goal theory as developed by Latham and Locke
rors. As Bates and Holton (1995) noted following
(1979) highlights four mechanisms that connect
their research, this can have detrimental effects by
goals to performance outcomes: (1) they direct at-
transforming a helpful supervisory style into one
tention to priorities; (2) they stimulate effort; (3)
that is more coercive. But earlier research conducted
they challenge people to bring their knowledge and
by Earley (1986) found that employees trusted feed-
skills to bear to increase their chances of success;
back from a computer more than feedback from a
and (4) the more challenging the goal, the more
supervisor. He claimed that computer feedback
people will draw on their full repertoire of skills.
could have a greater impact on performance be-
This theory underpins the emphasis in performance
cause of higher self-efficacy (ie the individual’s
management on setting and agreeing goals against Social learning theory

which performance can be measured and managed.
This was the premise upon which an earlier version Social learning theory as formulated by Bandura
of performance management – management by (1977), combines aspects of reinforcement and ex-
objectives – was based. pectancy theory. It recognizes the significance of the
basic concept of reinforcement as a determinant of
future behaviour but also emphasizes the impor-
Expectancy theory tance of internal psychological factors, especially
expectations about the values of goals and the abil-
Expectancy theory as originally formulated by
ity of individuals to reach them.
Vroom (1964) states that effort (motivation) de-
pends on the extent to which people expect that re-
wards will follow effort and that the reward is
worthwhile.
Self-efficacy theory
Performance management is concerned with in- Self-efficacy theory was also developed by Bandura
fluencing behaviour to achieve better results. It op- (1982), and indicates that self-motivation will be
erates in line with expectancy theory by defining the directly linked to the self-belief of individuals that
relationship between effort, achievement and re- they will be able to accomplish certain tasks, achieve
ward, thus motivating people and providing them certain goals or learn certain things. An important
with a sense of direction. Positive feedback provides aim of performance management is to increase self-
a reward in the shape of the recognition of work efficacy by giving individuals the opportunity to
well done. This is intrinsic motivation provided by consider and discuss with their managers how they
the work itself, which arises when work satisfies can do more. But the onus is on managers to en-
needs for accomplishment, provides opportunities courage self-belief in the minds of those with whom
for growth and the scope to use and develop abili- they discuss performance and development.
ties, and fosters self-belief.
Control theory Pau se for th ou gh t

Control theory focuses attention on feedback as a
Which do you think is the most significant
means of shaping behaviour. As people receive feed-
back they appreciate the discrepancy between what theory relating to performance
they are doing and what they are expected to do management and why?
and take corrective action to overcome the discrep-
ancy. Feedback is recognized as a crucial part of
performance management processes.
Control theory provides the basis for feedback
intervention theory as formulated by Kluger and Aims of performance
DeNisi (1996). This focuses attention on feedback
as a means of shaping behaviour. management
The overall objective of performance management
Reinforcement theory is to develop and improve the performance of indi-
viduals and teams and therefore organizations.
Reinforcement theory (Hull, 1951) states that suc- When done well, it ensures that people are clear
cesses in achieving goals and rewards act as positive about what success looks like and the part they play
incentives and reinforce the successful behaviour in delivering this success. A strategic approach
that is repeated the next time a similar need arises. means that performance management processes
Positive feedback therefore provides for positive re- such as setting objectives are explicitly designed to
inforcement. Constructive feedback can also rein- align individual objectives with the organization’s
force behaviours, which seek alternative means of strategic objectives.
achieving goals.
As noted by VerWeir and Van Den Bergh (2004), strategic goals of the enterprise and specify what
performance management involves creating motiva- the organization expects from them in terms of be-
tion and commitment to achieve objectives. Shields haviour and results in order to achieve those goals.
(2007) pointed out that ‘it provides performance This means defining what doing a good job entails.
direction and recognition without which employees Second, it can help with relationship building be-
will be at a loss as to the nature and level of work tween employees and their managers. Involving
effort required.’ Performance management aims to both managers and their staff in performance plan-
develop the capacity of people to meet and exceed ning and review can widen the dialogue between
expectations and to achieve their full potential to them and enhance inter-personal trust.
the benefit of themselves and the organization. It is A summary of what management and individu-
about ensuring that the support and guidance peo- als can gain from performance management is given
ple need to develop and improve is readily available. in Table 37.1.
The Lloyds Banking Group produced the follow-
ing definition of the purpose of its performance
management system.
What do you think of the argument that a
formal performance management is not Source review
required when managers carry out their
Performance management aims: Lloyds
basic responsibilities of providing direction
Banking Group
and recognition properly?
The aim is to improve performance. Rather than just
saying that somebody’s been very effective and
The following is definition of what performance ticking a box, the process is actually to sit down
management systems are there to do: and have a discussion around the requirements of
the role, dealing with what aspects are being done
well and what aspects are not so good. Overall the
purpose is to make it clear to people how their
Wo rd s of wi sdom performance links in with the performance of the
business.
The real goals of any performance Managing performance is about coaching,
management system are threefold – to guiding, appraising, motivating and rewarding
colleagues to help unleash potential and improve
correct poor performance, to sustain good
organizational performance. Where it works well it
performance and to improve performance… is built on excellent leadership and high-quality
All performance management systems coaching relationships between managers and
teams. Through all this our colleagues should be
should be designed to generate information
able to answer three straightforward questions:
and data exchange so that the individuals
1 What is expected of me? How will I be clear
involved can properly dissect performance, about what is expected of me in terms of both
discuss it, understand it, and agree on its results and behaviour?
character and quality. 2 How am I doing? What ongoing coaching and
Lee (2005: 60) feedback will I receive to tell me how I am doing
and how I can improve?
3 What does it mean for me? How will my
As explained by Shields (2007), effective perfor- individual contribution, potential and aspirations
mance management has two other important pur- be recognized and rewarded?
poses. First, it can communicate to employees the
TA B L E 37.1 What management and individuals can gain from performance

management
What management can gain What individuals can gain
The opportunity to: They will:

●● integrate individual, team and corporate objectives; ●● know what is expected of them;
●● guide individual and team effort to meeting overall ●● know how they stand;
business needs; ●● know what they need to do to reach their goals;
●● motivate and engage employees; ●● be able to discuss with their manager their present
●● recognize individual contribution; job, their development and training needs and their
●● plan individual careers (talent management); future.
●● introduce relevant and effective learning and
development programmes to meet identified needs.
The following description of the purpose of perfor- ●● to develop a performance culture –

mance management was produced by Hitachi 17 per cent;
Europe: ●● to improve individual performance –
14 per cent;
●● to align individual behaviour to
Source review organizational values – 6 per cent;
●● to provide the basis for personal
Performance management purpose: development – 3 per cent;
Hitachi Europe ●● to inform performance pay decisions –
3 per cent.
The process is as much about building
relationships with employees in order to agree Note the low priority given to informing perfor-
what is reasonably attainable in the year as it is mance pay decisions.
about setting objectives. It is effective because it Here is a typical statement of objectives from
focuses people’s intentions and produces new one respondent to the e-reward 2005 survey:
thinking on the way they work rather than simply To support culture change by creating a
continuing to perform at the same level day in, performance culture and reinforcing the values
day out. of the organization with an emphasis on the
importance of these in getting a balance between
‘what’ is delivered and ‘how’ it is delivered.
Respondents to the e-reward 2014 survey of perfor-
mance management reported that their most impor-
tant performance management objective was: Principles of performance
●● to improve organizational performance – management
33 per cent;
●● to align individual and organizational The overarching principles governing the ideal ap-
objectives – 22 per cent; proach to performance management were defined
well by Egan (1995: 36)
●● Regular discussions during the year between

Source review individuals and their managers to discuss
progress.
Most employees want direction, freedom to get ●● Formal meeting at the end of the year to
their work done, and encouragement not control. record whether objectives have been achieved
The performance management system should be a and levels of competence demonstrated.
control system only by exception. The solution is to
make it a collaborative development system in two
ways. First, the entire performance management
What makes good performance
process – coaching, counselling, feedback, management – Scottish Parliament
tracking, recognition, and so forth – should
●● New staff know what is expected of them
encourage development. Ideally, team members
from the outset.
grow and develop through these interactions.
Second, when managers and team members ask ●● Everyone is clear about corporate goals and
works towards them.
what they need to be able to do to do bigger and
better things, they move to strategic development. ●● Objectives are SMART.
Egan (1995: 36) ●● A system exists to accommodate day-to-day
performance feedback.
●● Evidence is available to support assessments.
●● The personal development plan is used to
help self-developmental activities or improve
Examples of approaches to performance.
performance management ●● The line manager provides and the jobholder

undertakes the training needed to support
the individual and the organization.
Performance management stages
in Astra Zeneca The impact of performance
1 Business role clarification – clear statement
of agreed role and objectives.
management
2 Performance planning – agreement of targets Performance management is expected to improve
to achieve the ‘plan-do-evaluate’ elements of organizational performance generally by creating a
managing performance. performance culture in which the achievement of
3 Performance development – agree skills high performance is a way of life. Improved perfor-
required and prepare individual development mance is meant to happen when people understand
plan. what they are expected to do, receive feedback on
4 Performance measurement – provide ongoing how well they are doing it and agree and implement
feedback and an annual summary of an development plans that build on strengths and help
employee’s performance (no overall ratings). to overcome weaknesses.
Jones (1995) suggested that performance man-
agement could:
Civil Service basic design principles ●● communicate a shared vision throughout the
●● Stretching objectives agreed at the beginning organization to establish and support
of the year. appropriate leadership and management
styles;
●● Individuals know the competencies and
behaviours they are expected to demonstrate. ●● define individual requirements and
expectation of all employees in terms of the
inputs and outputs expected from them thus ●● be closely allied to a clear and adequately
reducing confusion and ambiguity; resourced training and development
●● provide a framework and environment for infrastructure;
teams to develop and succeed; ●● make crystal clear the purpose of any direct
●● provide the climate and systems which link to reward and build in proper equity
support reward and communicate how and transparency safeguards;
people and the organization can achieve ●● be regularly and openly reviewed against its
improved performance; success criteria.
●● help people manage ambiguity. Performance management also needs to be evidence-
But this level of impact may be hard to attain. based. Assessments of performance and feedback
The requirements for success as set out below are should be based on facts not opinions. Evidence-
demanding. based performance management refers to results,
events, critical incidents and significant behaviours
that have affected performance in specific ways. It
Requirements for success compares what has actually happened with what
was supposed to have happened. It refers to agreed
Strebler et al (2001) suggested that for performance objectives, goals, success criteria and performance
management to work well it should: measures, and uses the latter to establish outcomes.
●● have clear aims and measurable success

criteria;
●● be designed and implemented with
appropriate employee involvement; Pau se for th ou gh t
●● be simple to understand and operate;
What is the most important thing you have
●● play a major part in the achievement of
management goals; learned from the above list that would
●● allow employees a clear ‘line of sight’ influence your approach to introducing and
between their performance goals and those managing performance management?
of the organization;
●● focus on role clarity and performance
improvement;
Key learning points
Performance management defined The meaning of performance

Performance management is the continuous process It can be said that if you can’t define performance you
of improving performance by setting individual and can’t measure or manage it. It can be argued that a
team goals which are aligned to the strategic goals of more comprehensive view of performance is achieved
the organization, planning performance to achieve the if it is defined as embracing both behaviour and
goals, reviewing and assessing progress, and outcomes. When people are said to be performing well
developing the knowledge, skills and abilities of it does not solely refer to the results they deliver; it is
people. also concerned with how they behave.
Factors affecting performance psychological factors, especially expectations

about the values of goals and the ability of
Four major influences on performance were identified individuals to reach them.
by Harrison (1997):
●● the learner; Aims of performance management
●● the learner’s work group; Ideally, the overall objective of performance
management is to develop and improve the
●● the learner’s manager;
performance of individuals and teams and therefore
●● the organization. organizations.
When done well, it ensures that we are all clear
Underpinning theories about what success looks like and the part we each
play in delivering this success.
The following theories underpin performance A summary of what management and individuals
management practice. can gain from effective performance management is
●● Goal theory: This theory highlights four given in Table 37.1.
mechanisms that connect goals to performance
outcomes: (1) they direct attention to priorities; (2) Requirements for success
they stimulate effort; (3) they challenge people to
It was suggested by Strebler et al (2001) that the
bring their knowledge and skills to bear to increase
principles set out below were required for
their chances of success; and (4) the more
performance management to work well. They should:
challenging the goal, the more people will draw on
their full repertoire of skills. ●● have clear aims and measurable success criteria;
●● Expectancy theory: Performance management is ●● be designed and implemented with appropriate
concerned with influencing behaviour to achieve employee involvement;
better results. It operates in line with expectancy
●● be simple to understand and operate;
theory by defining the relationship between effort,
achievement and reward, thus motivating people ●● play a major part in the achievement of
and providing them with a sense of direction. management goals;
Positive feedback provides a reward in the shape
●● allow employees a clear ‘line of sight’ between
of the recognition of work well done.
their performance goals and those of the
●● Control theory: This focuses attention on feedback organization;
as a means of shaping behaviour.
●● focus on role clarity and performance
●● Reinforcement theory: This states that successes improvement;
in achieving goals and rewards act as positive
●● be closely allied to a clear and adequately
incentives and reinforce the successful behaviour
resourced training and development
which is repeated the next time a similar need
infrastructure;
arises.
●● make crystal clear the purpose of any direct link to
●● Social learning theory: This combines aspects of
reward and build in proper equity and transparency
reinforcement and expectancy theory. It recognizes
safeguards;
the significance of the basic concept of
reinforcement as a determinant of future behaviour ●● be regularly and openly reviewed against its
but also emphasizes the importance of internal success criteria.
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38
Performance
management systems
Introduction
A performance management system is the defined
What are the common elements in these
set of procedures – planning, monitoring and re-
viewing performance – that in sequence constitute performance management models?
an organization’s formal approach to performance
management. This chapter starts with an explana-
tion of how such a system is supposed to operate as
illustrated by various models. It continues by de- A model of how a performance management system
scribing the three main elements of a system. The is supposed to function over a year is shown in
next section deals with the introduction of perfor- Figure 38.6.
mance management and this is followed with a dis- These models depict an apparently logical se-
cussion of the realities of performance management quence of activities, each of which contributes cumu-
systems – they don’t necessarily work as well as they latively to the achievement of the objective of im-
are supposed to do. Finally, the chapter describes a proved performance. There is nothing wrong with the
version of performance management – 360-degree logic. But the success of the process depends on each
feedback. stage being conducted properly. And this makes de-
mands on the participants – managers and their team
members – that can be very hard to meet. The nature
How a performance of these demands under each of the three headings of
the cycle as shown in Figure 38.1 is described below.
management system works
Conceptually, a performance management system Performance and
flows from the organization’s objectives and then
through processes of planning, monitoring and development planning
reviewing. It operates as a continuous and self-

renewing cycle as modelled in Figure 38.1. Other Performance and development planning is carried
ways in which organizations model the system are out within the context of the corporate strategy. It
shown in Figures 38.2–5. Naturally, there are varia- is based on performance agreements. These emerge
tions, but they all contain the basic elements of the from the analysis of role requirements and from
model shown in Figure 38.1 and all illustrate the performance reviews where assessments of perfor-
ways in which these elements are expected to form mance lead to the definition of future requirements.
a continuous process. Agreement is reached during the planning process
F I G U R E 38.1 The performance management cycle
Organization’s
strategic
objectives
PLAN
Performance and
development agreement
1. Define role
2. Set performance objectives
3. Agree development plan
REVIEW MONITOR
Joint analysis Manage performance
of performance throughout the year
1. Review performance 1. Monitor performance
2. Assess (rate) performance 2. Provide continuous feedback
3. Provide coaching
4. Deal with under-performers
F I G U R E 38.2 Model of the performance management system in Astra-Zeneca

Stage 1
Business roles
Stage 2
Performance
planning
Stage 4 Stage 3
Performance Performance
improvement development
Do
on how performance will be measured. The type of a ccomplished in key result areas can be defined in the
measures available were described in Chapter 37. form of objectives or goals (the terms are synony-
Changes to the role profile and objectives can be mous). An important aspect of performance planning
made as required by changing circumstances. is the process of aligning individual goals with the
Expectations are defined generally in role profiles strategic goals of the organization. The acronym
that specify key result areas; the knowledge, skills and ‘SMART’ is a popular way of defining a good objec-
abilities (KSAs) required and the behavioural compe- tive. Traditionally, S stands for specific (sometimes
tencies needed to perform well. What has to be ‘stretching’), M for measurable, A for agreed, R for
Chapter 38 | Performance Management Systems 445
F I G U R E 38.3 Model of the performance management system in Centrica
• Creates a
compelling future
• Business and • Inspires others to
individual achieve
performance • Demonstrates a
Centrica strategy contract passion for
and management • Financial customers
agendas • Customer • Delivers great
• Operational business
• People performance
• Learns and
shares knowledge
• Performance rating
• Potential rating
• Development plan
F I G U R E 38.4 Model of the performance management system in Halifax Bank
Performance planning Personal development planning
Balanced scorecard Development framework

Manager
as coach
Individual performance plan Personal development plan

Individual performance
F I G U R E 38.5 Model of the performance management system in Pfizer Inc

Performance planning
Ongoing
Total compensation coaching and Development planning
feedback
Performance review
F I G U R E 38.6 The sequence of performance management activities over a year
Start of year • Define role profile, updating as

necessary
• Ensure that role profiles set out
updated key result areas and
competency requirements
Performance agreement • Define objectives or goals and
standards of performance
• Identify and define key performance
indicators
• Draw up performance development
plans
• Draw up personal improvement plans
• Monitor progress and review evidence

of achievements
Monitor-manage
• Provide informal feedback as required
Continuing dialogue performance
• Provide coaching as required
throughout the year
• Update role profiles and goals as
necessary
• Prepare for performance review by

analysing achievements (work and
learning) against goals and plans
• Identify specific strengths and
weaknesses on the basis of evidence
Performance review
• Assess overall performance
• Provide feedback
• Use conclusions of performance
End of year review as the basis for next year’s
performance agreement
realistic and T for time-related. Line managers and in- The manager and the individual also agree on a
dividual employees do indeed require some guidance development plan that specifies what the latter
on setting objectives but not in this simplistic form. needs to do to achieve objectives and develop per-
Rather than using this facile formula they should be formance. The plan should incorporate a personal
encouraged to focus on the five key requirements of a development plan that provides a learning action
good objective or goal, namely that it should be: programme to be actioned by the individual with
the support of the manager. This may include for-
1 clear;
mal training but, more importantly, it will cover a
2 challenging; wider set of learning and development activities
3 achievable but not too easily; such as self-managed learning, coaching, mentor-
4 measurable either in quantified or in ing, project work and e-learning.
qualitative terms;
5 agreed.
One issue with goal setting is the extent to which it Pau se for th ou gh t
is realistic to set goals over the 12-month period –
These activities make quite considerable
the typical gap between formal performance re-
views. Research conducted by Yearta et al (1993) demands on both managers and individuals.
raised this question and the conclusion was reached How can you persuade them that it is
that goal-setting periods should be considerably re-
duced to a few months. worthwhile?
Individuals should be encouraged to assess

Managing performance ●●
their own performance and become active
throughout the year agents for change in improving their results.
●● Managers should adopt an enabling role,
Perhaps one of the most important features of per- coaching and providing support and
formance management is that it is a continuous guidance.
process, which reflects normal good management ●● There should be no surprises – performance
practices of setting direction, monitoring and meas- issues should have been dealt with as they
uring performance and taking action accordingly. arise throughout the year.
Performance management should not be imposed
●● Positive feedback should be given on the
on managers as something ‘special’ they have to do.
things that the individual did well in addition
It should instead be treated as a natural function
to areas for improvement.
that all good managers carry out.
The process of managing performance through- ●● The review should be forward looking,
out the year needs to take into account that in focusing on the development needs of the
these turbulent times it is probable that an annual individual and how they can be met by the
objective-setting exercise will not be appropriate. individual with the help of the manager.
Objectives need to be reviewed as circumstances These guidelines may sound straightforward and
and demands change. obvious enough but they can be hard to apply in the
traditional formal appraisal review. Too often, this
takes the form of a dishonest annual ritual. Its pri-
mary purpose is often to inform performance pay
Pa us e for t houg ht decisions (or worse, in some systems, whether or
not the individual should be retained). Reviews are
Is a formal performance management backward looking and judgemental rather than
system required to ensure that managers looking to the future to establish development
manage performance throughout the year? needs. Traditional formal reviews can be stressful
for both parties. Managers often hate doing them
Isn’t that what managers are required to do and therefore do them badly, treating them as a rit-
anyhow? ual to be observed at the behest of HR and dishon-
estly fudging their judgements. Mueller-Hanson
and Pulakos (2015) noted that: ‘Study after study
has shown that the performance review is dreaded –
it is not only perceived to be of little value but it is
highly demotivating to employees.’
Performance reviews
Traditionally, formal performance reviews provided
an annual (usually) focal point for the considera- Pau se for th ou gh t
tion of key performance and development issues.
They led to the completion of the performance
It [performance management] is surely the
management process by informing performance very bluntest of all the very blunt tools in the
agreements and often involved some form of assess- HR toolbox. Yet, each year, we drag ourselves
ment, as examined in the next section of this chap-
ter. The following are some basic guidelines for the through the soul-destroying ritualistic charade
satisfactory conduct of a traditional formal review: that is the annual performance appraisal. This
●● The review should be rooted in the reality of is not thoughtful or considered performance
the individual’s performance. management. Let’s just not do it.
●● The review should be conducted as a Briner (2015)
dialogue between partners.
So, what’s the solution?
can be told that they are doing a perfectly good job

Performance assessment and discussions can take place on how they can
build on their strengths or on any learning activity
Performance management schemes usually include (preferably self-managed) that might help them to
an assessment, often referred to as ‘performance ap- do even better. Another problem with overall assess-
praisal’, which is conducted during or after a per- ments is that they can be bland, superficial and
formance review meeting. This may be carried out overgeneralized. This is why many schemes use
by overall assessment, rating or visual assessment, rating.
as described below.
Overall assessment Rating

Rating summarizes on a scale the views of the rater
An overall assessment is based on a general analysis on the level of performance achieved. A rating scale
of performance under the headings of the perfor- is supposed to assist in making judgements that in-
mance agreement. The aim is to reach agreement form performance pay decisions, or it simply pro-
about future action rather than to produce a sum- duces an instant summary for the record of how
marized and potentially superficial judgement. well or not so well someone is doing.
Managers are expected to reach an understanding Rating scales can be defined alphabetically (a, b,
with each member of their team as a result of the c, etc), or numerically (1, 2, 3, etc). Initials (x for
analysis, which will ensure that the latter will ap- excellent, etc) are sometimes used in an attempt to
preciate how well or not so well they are doing. The disguise the hierarchical nature of the scale. The
analysis should also identify the high flyers and alphabetical or numerical points scale may be

those who are failing to meet acceptable standards. described adjectivally, for example, a = excellent,
An overall assessment is recorded in a narrative b = good, c = satisfactory and d = unsatisfactory.
consisting of a written summary of views about the The e-reward 2014 survey of performance man-
level of performance achieved. This at least ensures agement found that overall ratings were used by 79
that managers have to collect their thoughts to- per cent of respondents. The most popular number
gether and put them down on paper. But different of levels was five (43 per cent of respondents).
people will consider different aspects of perfor- However, some organizations settled for three lev-
mance and there will be no consistency in the crite- els. There is no evidence that any single approach is
ria used for assessment, so it is necessary to have a superior to another, although the greater the num-
framework for the analysis. This could be provided ber of levels the more is being asked of managers in
on a ‘what’ and ‘how’ basis. The ‘what’ is the the shape of discriminatory judgement. It is, how-
achievement of previously agreed objectives related ever, preferable for level definitions to be positive
to the headings on a role profile. The ‘how’ is behav- rather than negative and for them to provide as
iour relating to competency framework headings. much guidance as possible on the choice of ratings.
The results for each ‘what’ and ‘how’ heading could It is equally important to ensure that level defini-
be recorded following a joint analysis during a re- tions are compatible with the culture of the organi-
view meeting. zation and that close attention is given to ensuring
One problem with this form of assessment, in- that managers use them as consistently as possible.
deed any form of assessment, is that we can recog- The main problem with ratings is that they are
nize people at either extreme (top performers and largely subjective and it is difficult to achieve con-
inadequate performers) but cannot accurately dis- sistency between the ratings given by different man-
tinguish performance differences in the bulk of peo- agers. Because the notion of ‘performance’ is often
ple lying between those extremes. What managers unclear, subjectivity can increase. Even if objectivity
can do is to tell an individual that he or she has is achieved, to sum up the total performance of a
done exceptionally well and that they will therefore person with a single rating is a gross oversimplifica-
be included in the talent management programme, tion of what may be a complex set of factors influ-
or managers can inform another individual that he encing that performance. To do this after a detailed
or she has not done very well and that they must discussion of strengths and weaknesses suggests
discuss what needs to be done about it. The others
that the rating will be a superficial and arbitrary business, but there is no evidence that this is the
judgement. To label people as ‘average’ or ‘below case. A mechanistic ‘rank and yank’ system will
average’, or whatever equivalent terms are used, is only create a climate of fear and will at best inhibit
both demeaning and demotivating. and at worst destroy any possibility that perfor-
mance management is perceived and used as a de-
velopmental process. It is better to have good pro-
cesses for identifying performance problems and
helping underperformers to improve, coupled with
Pa us e for t houg ht effective capability procedures.
What are the arguments for and against
ratings?
● Poor ratings can stigmatize performance
The whole performance review session may be and cause unnecessary resistance to the
dominated by the fact that it will end with a rating, acceptance of feedback.
thus severely limiting the forward-looking and ● The goal is to have the employee assist us
developmental focus of the meeting, which is all in describing, interpreting and redirecting
important. This is particularly the case if the rating performance feedback, not reacting to the
governs performance pay or contribution pay ratings. Feedback can accomplish the same
increases. positive goal as a rating without the
Another problem is that managers may inflate negative side effects.
ratings to avoid confrontation with the individuals
● If the goal is performance improvement,
concerned. Some organizations attempt to counter
then feedback – not labelling past efforts –
this by using forced distribution, which requires the
is the preferred tool.
rater to conform to a laid-down distribution of rat-
ings between different levels, for example: A = 5 per Lee, C D (2005)
cent, B = 15 per cent, C = 60 per cent, D = 15 per To what extent do you agree with these
cent and E = 5 per cent. This achieves consistency of
sentiments?
a sort but managers and staff rightly resent being
forced into this sort of straitjacket.
An alternative to forced distribution is forced
ranking. This is most common in the United States
where the outcome is sometimes known as a ‘vital-
ity curve’. Managers are required to place their staff Visual assessment
in order from best to worst. The problem with Visual assessment is an alternative to rating. It takes
forced ranking, as with forced distribution, is that the form of an agreement between the manager and
the notion of performance may not be defined and the individual on where the latter should be placed
is therefore not measurable. In the case of ranking it on a matrix or grid, as illustrated in Figure 38.7.
is therefore unclear what the resulting order of em- The vertical axis of the grid in this example assesses
ployees truly represents. the behavioural style adopted by the individual in
Some organizations, mainly in the United States, carrying out the role, ie inputs. The elements of be-
have gone as far as adopting the practice of annu- haviour to be assessed would be defined in a compe-
ally terminating the employment of 5 to 10 per cent tency framework and this would be amplified in
of the consistently lowest performers. This is some- schedules of what would be regarded as acceptable
times called ‘stack ranking’ and may be referred to or unacceptable behaviour for each area of compe-
colloquially as ‘rank and hank’. It is claimed that tency. The horizontal axis measures the level of
this practice ‘raises the bar’, ie it is said that it business performance, ie outputs or what the indi-
improves the overall level of performance in the vidual delivers. The assessment can place someone
F I G U R E 38.7 Visual performance assessment matrix

High
Employees placed here have

an effective behavioural style Employees placed here are top
but are not delivering well performers
Possible actions Possible actions

• medium reward • full recognition and high reward
• provide feedback • challenge/stretch
• coach/train to improve delivery • fast-track career (talent
• set milestones management programme)
• coaching
Behavioural
style
Employees placed here Employees placed here have

have both behavioural and good business results but need
performance problems to focus on style
Possible actions Possible actions

• provide feedback • medium reward
• coach/train
• set milestones • recognize contribution
• monitor • provide feedback
• decision whether to continue or • coach to improve style
end employment
Low
Low High
Business performance
anywhere in one of the four quadrants according to serve as a working document. It should be regularly
behavioural style and delivery. Examples of possible used by managers and individuals as a reference
actions are provided. A picture is thus provided of document on objectives and plans when reviewing
the individual’s overall contribution, which is pre- progress. It is a means of recording agreements on
sented visually and as such provides a better basis performance achievements and actions to be taken
for analysis and discussion than a mechanistic to improve performance or develop competence
rating. and skills. It should be dog-eared from much use – it
should not be condemned to moulder away in a file.
Examples of forms are given in Figures 38.8a
Recording the performance and 38.8b.
In order to simplify the process and give manag-
agreement and review ers the maximum degree of autonomy, some organ-
izations do without forms completely. Managers
The performance agreement and outcomes of a re- and individuals simply make notes of the content of
view can be recorded on a performance manage- a role profile as updated and on the agreed develop-
ment form; the simpler the form the better. It should ment plan.
F I G U R E 38.8 (a) Performance management form (part 1)
PERFORMANCE AND DEVELOPMENT: AGREEMENT AND PERSONAL DEVELOPMENT PLAN
Name: Forename(s):
Job title: Department:
Reviewer’s name Job title:
PERFORMANCE AND DEVELOPMENT AGREEMENT
Objectives Performance measures
Competencies Agreed actions
PERSONAL DEVELOPMENT PLAN

Development need How it is to be met Action by whom Target completion date
Web-enabled performance Introducing a performance

management management system
Web-enabled or online performance management
makes it easier for managers and employees to re- The programme for introducing a performance
cord role profiles and performance agreements, mon- management system should take into account that
itor progress against the plans, access performance one of the main reasons why it fails is that either
documents, and gather multisource (360-degree ap- line managers are not interested, or they don’t have
praisal) comments. All this data can be used to assist the skills, or both. It is important to get buy-in from
in performance reviews and record further agree- top management so that their leadership can en-
ments emerging from the reviews. The aim is to re- courage line managers to play their part. Line man-
duce paperwork and simplify the process. agers should be involved in planning the scheme
F I G U R E 38.8 (b) Performance management form (part 2)
PERFORMANCE AND DEVELOPMENT REVIEW

Objectives Achievements
Competencies Actions taken
Development needs Actions taken
Comments by reviewer:
Signed: Date:
Comments by person reviewed:
Signed: Date:
and its implementation. They have to be convinced

that the time they spend will pay off in terms of
Requirements for success
improved performance. To encourage buy-in, the
process has to be simple (not too much paper). The Research by Haines and St-Onge (2012) established
demanding skills of concluding performance agree- that performance management is more likely to be
ments, setting objectives, assessing performance, successful when:
giving feedback and coaching need to be developed ●● there is more performance management
by formal training, and supplemented by coaching training for managers covering performance
and the use of mentors. coaching and constructive feedback;
●● employee recognition is emphasized; by a number of people which is fed back to the indi-
●● the corporate culture values engagement; vidual. The assessors usually include their manager
and subordinates but to these may be added col-
●● performance management is strategically
leagues and even, rarely, customers. It is also known
integrated with human resource management
as multi-source feedback. Assessors rate aspects of
and the business plans of the organization;
performance such as leadership, teamwork, commu-
●● human capital is valued; nication, organizational skills, decisiveness, drive
●● there is a positive employee relations climate. and adaptability. Questionnaires are normally pro-
cessed with the help of software developed within
To which could be added the following comments:
the organization or, most commonly, provided by
external suppliers. Feedback is presented to individ-
uals, often anonymously but sometimes by their
manager.
Wo rd s of wi sdom If the purpose of the system is primarily develop-
mental, as should be the case, the action may be left
Managers at all levels in a hierarchy can to individuals as part of their personal development
play an important role in the operation of plans, but the planning process may be shared be-
tween individuals and their managers if they both
the performance management system. If have access to the information. Even if the data only
the performance management system is goes to the individual it can be discussed in a per-
formance review meeting so that joint plans can be
going to be tied into the business strategy,
made, and there is much to be said for adopting this
it is critical that senior management take a approach. Expert counselling and coaching for indi-
role and make the tie between business viduals as a result of the feedback may be provided
by a member of the HR department or an outside
strategy and the performance management consultant.
system. The behaviour of management is The advantage of 360-degree feedback is that in-
dividuals can get a more rounded view of their per-
also an indication of how important the
formance from different perspectives than they can
performance management system is and as obtain if their only assessment is by their manager.
a result is likely to have a strong influence The disadvantages are that the process can be stress-
ful, people do not necessarily give frank or honest
on how the system is actually executed. feedback, and it involves quite a lot of administra-
Lawler and McDermott (2003: 55) tion. Grint (1993: 68) argued that 360-degree feed-
back ‘merely replaces single-assessor subjectivity
with multi-assessor subjectivity’.
The term ‘360-degree feedback’ is sometimes
used loosely to describe upward feedback where
But getting performance management to work well this is given by subordinates to their managers. This
is hard. The need to ‘reinvent performance manage- is the most common approach and is more properly
ment’ was argued convincingly in the Harvard described as 180-degree feedback. The 360-degree
Business Review by Buckingham and Goodall feedback or a variant of it was used by only 19
(2015) and many other commentators since then. per cent of the respondents to the 2014 e-reward
These views and the actions that can be taken are survey.
considered in the next chapter.
360-degree feedback
360-degree feedback, also known as multi-source
feedback, is the assessment of someone’s performance
Key learning points
Performance management system defined performance and development issues. They led to the
completion of the performance management process
A performance management system is the defined set by informing performance agreements and often
of procedures – planning, monitoring and reviewing involved some form of assessment.
performance – that in sequence constitute an
organization’s formal approach to performance
Introducing performance management
management.
The programme for introducing performance
Models of the performance management management should take into account that one of
the main reasons why it fails is that either line
system managers are not interested, or they don’t have the
Ideally, the system flows from the organization’s skills, or both.
objectives and then through processes of planning, The demanding skills of concluding performance
monitoring and reviewing as a continuous and agreements, setting objectives, assessing
self-renewing cycle as modelled in Figure 38.1. performance, giving feedback and coaching need to
be developed by formal training supplemented by
Performance and development planning coaching and the use of mentors.
Performance and development planning is carried out

Requirements for success
within the context of the corporate strategy. It is based
on performance agreements. These emerge from the These are:
analysis of role requirements and from performance ●● more performance management training;
reviews where assessments of performance lead to
the definition of future requirements. Agreement is ●● emphasis on employee recognition;
reached during the planning process on how ●● the corporate culture emphasizes the importance
performance will be measured. of performance and values engagement;
●● performance management is strategically
Managing performance throughout integrated with human resource management and
the year the business plans of the organization;
Perhaps one of the most important features of ●● a positive employee relations climate.
performance management is that it is a continuous
process, which reflects normal good management, 360-degree feedback
practices of setting direction, monitoring and
measuring performance and taking action accordingly. 360-degree feedback is the assessment of someone’s
performance by a number of people which is fed back
to the individual. The assessors usually include their
Performance reviews
manager and subordinates but to these may be added
Traditionally, formal performance reviews provided an colleagues and even, rarely, customers. It is also
annual (usually) focal point for the consideration of key known as multi-source feedback.
References
Briner, R W (2015) What’s the evidence for Lee, C D (2005) Rethinking the goals of your
performance management? HR Magazine, May performance management system, Employment
Buckingham, M and Goodall, A (2015) Reinventing Relations Today, 32 (3), pp 53–60
Performance Management, Harvard Business Mueller-Hanson, R A and Pulakos, E D (2015)
Review, April, pp 40–50 Putting the ‘Performance’ Back in Performance
e-reward (2014) Survey of Performance Management Management [online] https://www.shrm.org/
Practice, Stockport, e-reward hr-today/trends-and-forecasting/special-reports-
Grint, K (1993) What’s wrong with performance and-expert-views/Documents/SHRM-SIOP%20
appraisal? A critique and a suggestion, Human Performance%20Management.pdf (archived at
Resource Management Journal, 3 (3) pp 61–77 https://perma.cc/3BK9-Z5LQ) [accessed 22
Haines, V Y and St-Onge, S (2012) Performance December 2015]
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International Journal of Human Resource An exploratory study of goal setting in theory
Management, 23 (6), pp 1158–75 and practice: a motivational technique that
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performance management practices; examining the pp 237–52
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456
39
Reinventing
performance
management
Introduction Performance management
criticisms
Some years ago Grint (1993: 62), referring to per-
Wo rd s o f w isdom formance appraisal, asserted, famously, that: ‘Rarely
Performance management is known as the in the history of business can such a system have
promised so much and delivered so little.’ Coens
‘Achilles heel’ of human capital and Jenkins delivered the following judgement
management, and it is the most difficult HR later:
system to implement in organizations.
Pulakos (2009: 3)
Word s of w isd om
Throughout our work lives, most of us have
This observation by one of the most distinguished
struggled with performance appraisal. No
US researchers and commentators on performance
management rings true. Anyone who has had the matter how many times we redesign it,
experience of introducing and running a perfor- retrain the supervisors, or give it a new
mance management system, like the writer, will
agree with it. The traditional approach to perfor- name, it never comes out right. Again and
mance management has been heavily criticized, as again, we see supervisors procrastinate or
reviewed in the first section of the chapter. There
just go through the motions, with little
are also problems with the system itself and the
role of line managers and these are considered in taken to heart. And the supervisors who do
the next two sections. The chapter continues with take it to heart and give it their best mostly
a discussion of what can be done to deal with the
issues by ‘reinventing’ performance management. meet disappointment.
It is concluded with a proposal on a radical new Coens and Jenkins (2002: 1)
approach.
Chapter 39 | Reinventing Performance Management 457
Shields (2007: 6) argued that: ‘Ill-chosen, badly de- outside the area of HR. It was found that while
signed or poorly implemented performance man- nearly half (49 per cent) of the HR leaders’ organi-
agement schemes can communicate entirely the zations used annual appraisals, most of them
wrong messages as to what the organization expects (55 per cent) did not consider them effective. Six-
from its employees.’ monthly appraisals seem to work slightly better, but
Performance management can be modelled con- were still seen as ineffective in a third (37 per cent)
vincingly as a system but the acts or failures to act of cases. Senior leaders from outside HR were even
of fallible human beings prejudice the effectiveness more critical, with three in four (73 per cent) con-
of the system in practice. The following comment sidering annual appraisals ineffective and nearly
refers to this issue. half (46 per cent) considering six-monthly apprais-
als ineffective.
There is also the issue of the extent to which em-
ployees believe that performance management has
Wo rd s of wi sdom improved their performance. A survey by the CIPD
The problems [of performance (2014) found that only 22 per cent of respondents
thought that performance management had been
management] are... not of ambition or effective in improving their performance, while 22
intent, but rather practice and delivery. Low per cent felt that it was ineffective and 16 per cent
rates of coverage and even more frequently that it was very ineffective.
low-quality conversations and non-existent

follow-up are commonplace, in the wake of
uncommitted directors, incompetent line
If 38 per cent of the CIPD’s respondents
managers, uncomprehending employees
thought that their performance
and hectoring HR with their still complex
management system was ineffective, why
and bureaucratic HR processes.
Brown (2010: 1)
on earth don’t they do something about it?
Performance management can indeed be very hard

On the basis of research conducted by the Institute to do well. This is partly because of its many-
for Employment Studies, Brown (2011: 16) also faceted nature in its traditional form. Cascio
observed that: ‘The main areas of concern [about summed it up as follows:
performance management] were the skills and at-
titudes of reviewing managers, the consistency and
quality of approach across large organizations, the
complexity of the paperwork and the value of out- Word s of wisd om
puts... Performance management, it appears, isn’t
It [performance management] is an exercise
working.’
Postuma and Campion (2008: 50) noted that: in observation and judgement, it is a
‘Too much attention has been placed on the de- feedback process, it is an organizational
sign of a [performance management] system and
not enough on how it works when implemented’ intervention. It is a measurement process as
(ibid: 50). well as an intensely emotional process.
A number of senior HR leaders were surveyed by
Above all, it is an inexact, human process.
the CIPD (2016) to obtain their opinions about per-
formance management. Their views were compared Cascio (2010: 334)
with those of a sample of business leaders working
This is what Julian Richer, the founder and chair- Performance reviews
man of the highly successful hi-fi and TV business
Richer Sounds had to say: Performance reviews or appraisals are often ex-
pected to fulfil numerous functions including per-
formance improvement, feedback, coaching, goal
setting, skill development, the assessment of poten-
Wo rd s o f w isdom tial, pay determination and the identification of
underperformers. No performance appraisal system
If you have to sit down with your staff to can meet all these ends. Peter Reilly (2015) com-
find out how they’re doing, as a manager mented that: ‘All-singing, all-dancing performance
you’re not doing your job properly. You appraisal… requires managers to review a wide
range of content (reward, training needs, business
should already be familiar with the quality alignment, etc) and use of multiple processes (eg
of their work. personal development planning, performance rank-
ing, potential assessment etc), but also to apply dif-
An annual assessment is purely a ferent modes of management – appreciation,
snapshot, it captures the employee’s evaluation and coaching – which can be very tough
performance at that time, their views and on them to deliver.’ It is no wonder that line manag-
ers do not live up to the expectations of HR or that
moods (and their manager’s) on that day the perfunctory training in performance manage-
only. People aren’t machines, they have their ment provided by most organizations fails to pro-
duce the multi-skilled, multi-tasking paragon the
ups and downs and so a snapshot is not a
system demands.
realistic portrayal of anyone’s performance. This might explain why the e-reward 2014 sur-
Too often the assessment is carried out in a vey of performance management established that
one of the main problems concerning respondents
rush to hit some arbitrary deadline. about their performance management processes
Assessments can be very intimidating, was line managers who are reluctant to conduct
performance management reviews.
especially as they are normally linked to pay
rises. Just as some people do badly in
interviews, some otherwise good people get Performance ratings
freaked out over assessments and do not do The main problem with performance ratings is that
they are largely subjective and it is difficult to
themselves justice. achieve consistency between the ratings given by
Richer (2017: 111) different managers. Because the notion of ‘perfor-
mance’ is often unclear, subjectivity can increase. A
meta-analytic study of the reliability of performance
ratings by Viswesvaran et al (1996) found that on
average, two supervisors rating the same employee
on average correlate at around .5, implying only 25
Performance management per cent overlap between their evaluations. As
system issues Chamorro-Peremizic (2017: 56) commented: ‘In
other words, if two managers are asked to rate 10
Performance management system issues are con- employees, their views would be different for at
cerned with the annual performance review, perfor- least seven of those employees.’
mance rating, forced ranking, performance pay and Research by Scullen and Mount (2000) revealed
objective setting. the subjective nature of ratings. Their study – in
which 4,492 managers were rated on certain per- Supporters of forced ranking say it is a good way
formance dimensions by two bosses, two peers, and of weeding out unsatisfactory employees as well as
two subordinates – showed that 62 per cent of the identifying and rewarding the top players. But the
variance in the ratings could be accounted for by following trenchant criticism of forced ranking has
individual raters’ peculiarities of perception. Actual been made:
performance accounted for only 21 per cent of the
variance. This led the researchers to conclude that:
‘Our results show that a greater proportion of vari-
ance in ratings is associated with biases of the rater Word s of wisd om
than with the performance of the ratee.’ We couldn’t find a shred of evidence that it
Neuroscience research reported by Rock et al
(2014) has shown why numbers-based performance is better to have just a few alpha dogs at the
management is obsolete. He noted that labelling top and treat everyone else as inferior.
people with any form of numerical rating or ranking
Rather, the best performance comes in
automatically generates an overwhelming ‘fight or
flight’ response that impairs good judgement. This organizations where as many people as
neural response is the same type of ‘brain hijack’ possible are treated as top dogs. If you want
that occurs when there is an imminent physical
threat like a confrontation with a wild animal. It people to keep working together and keep
primes people for rapid reaction and aggressive earning together, it is better to grant
movement. But it is ill-suited for the kind of thought-
prestige to many rather than few, and to
ful, reflective conversation that allows people to
learn from a performance review. avoid big gaps between who gets the most
Pulakos et al (2008) noted that if a system is rewards and kudos.
strictly developmental, there is less need for ratings
Pfeffer and Sutton (2006: 28):
and in fact they may detract from development.
This is because employees tend to be more con-
cerned about their ‘score’ than understanding of
their development needs. A forced ranking approach will not work unless em-
Even if objectivity is achieved, to sum up the ployees understand what is expected of them, there
total performance of a person with a single rating are fair procedures for reviewing and classifying lev-
is a gross oversimplification of what may be a els of performance, and employees trust their manag-
complex set of factors influencing that perfor- ers to use these procedures to assess their performance
mance. To do this after a detailed discussion of correctly. These are exacting requirements.
strengths and weaknesses suggests that the rating
will be a superficial and arbitrary judgement. To
label people as ‘average’ or ‘below average’, or Performance pay
whatever equivalent terms are used, is both
demeaning and demotivating. Focusing on performance management as a means
of deciding on performance pay awards may con-
flict with the developmental purposes of perfor-
Forced ranking mance management. This is more likely to be the
case if ratings are used – the performance review
In a forced ranking or ‘stack ranking’ system, the meeting will concentrate on the ratings that emerge
rank order is divided into percentiles, eg the top 20 from it and how much money will be forthcoming.
per cent, the middle 70 per cent and the bottom 10 The non-financial reward elements of performance
per cent. The aim is to place employees into catego- management associated with feedback and recogni-
ries such as high flyers (eg the top 20 per cent in this tion will be subordinated to this preoccupation
example), unacceptable (the bottom 10 per cent) or with pay. Many organizations attempt to get over
those performing at an acceptable but not excep- this problem by holding development and pay re-
tional level (the remaining 70 per cent). view meetings on separate dates, often several
months apart (decoupling). Some do without for- Use of the SMART acronym
mulaic approaches (ratings) altogether, although it
The acronym ‘SMART’ is often used to define a
is impossible to dissociate performance pay com-
good performance objective or goal. Traditionally, S
pletely from some form of assessment, even if this is
stands for specific (sometimes stretching), M for
limited to making decisions on which employees
measurable, A for agreed, R for realistic and T for
should have above average, average or below aver-
time-related. But an emphasis on being SMART
age increases or no increase at all.
may give managers the impression that everything
has to be quantified, which leads to frustration
when they find out that it can’t be done and results
Pa us e fo r t houg ht in the setting of unrealistic targets. And a formulaic
approach like this can lead to superficial a ssessments.
What do you think should be done about
performance ratings? Aligning individual and
organizational objectives
The text books on performance management usu-
ally recommend that individual objectives should
Objective setting be aligned to those of the organization. But they do
not make it clear how this can be done. It is difficult.
There are three issues relating to setting objectives: Individual roles can seem to be remote from the or-
(1) an over-emphasis on quantification; (2) the use ganization’s goals. Where the attempt is made to
of the ‘SMART’ acronym; and (3) linking individual establish a link it can too easily be expressed as a
and organizational objectives. bland declaration of intent rather than a specific ob-
jective. Only half the respondents to e-reward’s
Over-emphasis on quantification 2014 performance management survey said they
A performance objective or goal (the terms are in- did it.
terchangeable) describes what someone has to ac-
complish. Ideally objectives should be defined as
specific targets – eg ‘reduce reject levels by 3 per The role of line managers
cent within nine months’, ‘introduce x by y’. The
problem is that, as a hangover from the largely dis- However well designed, the effectiveness of a per-
credited management-by-objectives system, some formance management system ultimately depends
organizations insist that all objectives should be on the commitment and skills of line managers.
quantified in this way. For some jobs or parts of Postuma and Campion remarked that:
jobs where the job holder is responsible for provid-
ing advice this can be difficult. For example, HR
business partners are there, amongst other things, to
provide advice and support to their line manager Word s of w isd om
clients. A quantified target of, say: ‘Provide a mini- One of the most dreaded tasks managers
mum of five pieces of good advice a week’ would be
meaningless. But it is possible to define the condi- face is meeting with employees to discuss
tions that would exist if the task of providing advice their job performance. These meetings
has been well done, for example: ‘The advisory as-
present a dilemma for managers. On one
pect of the job will have been done well when the
job holder consistently provides prompt, good and hand, managers need to give constructive
actionable advice to line manager clients as re- criticism so that employees can improve
quired.’ This can be termed a standard of perfor-
mance. Line managers risk being frustrated by their performance. On the other hand,
having to pursue the will-of-the-wisp of quantifica- managers do not like to give negative
tion for the sake of quantification.
those who expect too much of them in handling

feedback because of the bad feelings that over-complex systems and fail to provide them with
often result. It is not surprising, then, that the training, guidance and help they need to develop
and apply the demanding skills required.
managers avoid giving accurate evaluations,
give overly generous evaluations or avoid
the process altogether.
Postuma and Campion (2008: 47)
Is this a fair comment?
Line managers are often blamed for the failure of

performance management for lack of commitment The following were the findings of research con-
or skill but the real blame should be attached to ducted by the Institute for Employment Studies:
Source review
Training in performance management was quite cases had modules in managing poor performance, but
haphazard or cursory in several of the cases. It could PM training was often not mandatory. Training still
be included as a small item in a general introduction to tends to the ‘sheep dip’ approach rather than being
management. Such training often concentrated on how tailored to the manager’s needs and level of existing
to fill in the forms rather than the purpose of expertise.
performance management (PM) or how to have Institute for Employment Studies (2011: 15)
performance and development conversations. Some
CASE STUDIES
Reinvented performance management at Adobe
Background The changes

●● 13,000 employees. ●● No annual review, no ratings, no prescribed format, no
forms, no PM technology ‘system’.
●● Adobe estimated that managers spent 80,000 hours
on PM. ●● Manager and employee ‘check-ins’.
●● Had tried to realign and make incremental changes for ●● Check-in content: expectations, feedback, growth and
five years and failed to satisfactorily align to needs for development agenda.
collaboration, creativity and innovation.
●● Frequency of check-ins – whenever sensible but at
●● ‘Genuine, Exceptional, Innovative and Involved’ – least quarterly.
Adobe’s founding values.
●● Employee support centre established.
●● Super-competitive industry.
●● Extensive training support for managers – role plays, ●● Fear of feedback gone.
lectures and online.
●● Frequent feedback is the new currency for employees
●● Managers manage pay outcomes and allocated and managers.
budgets – entirely.
●● Demand for training on coaching others, difficult
●● Regular pulse survey provides insights on decisions conversations, mentoring, career development and
and impact. managing reward up.
●● Managers able to define their own processes and ●● Focus on process, chasing numbers and ratings wiped
requirements for HR support. out.
●● Belief in changes being real and aligned to values up.
Results
●● Regularity of ‘check-ins’, average of one a month per
●● Voluntary turnover down 30 per cent in two years. employee.
●● Employee engagement up. ●● Managers’ knowledge of performance of individuals
significantly greater than ever before.
Reinvented performance management at Deloitte
The performance management system developed by member about current work. These brief conversations al-
Deloitte is underpinned by a new way of collecting reliable low leaders to set expectations for the upcoming week,
performance data. It has no cascading objectives, no review priorities, comment on recent work, and provide
once-a-year reviews, and no 360-degree-feedback tools. correction, coaching, or important new information and
It was decided that the first objective of the new system clarify what is expected of the team member and why,
would be to recognize performance, particularly through what great work looks like, and how the best work can be
variable compensation. But to recognize performance it is accomplished.
necessary to see it clearly. Every team leader is now required to check in with each
The second objective was therefore to measure perfor- team member once a week. These check-ins are not in ad-
mance. Note was taken of the fact that while people may dition to the work of a team leader; they are the work of a
rate other people’s skills inconsistently, they are highly team leader. There was a direct and measurable correla-
consistent when rating their own feelings and intentions. It tion between the frequency of these conversations and the
was therefore decided to get team leaders to decide on engagement of team members. However, team leaders
what future actions they wanted taken for each of their have many demands on their time and it was established
team members rather than rate their skills. Team leaders that the best way to ensure frequency was to have check-
are asked what they would do with each team member ins initiated by the team member – who more often than not
rather than what they think of that individual. is eager for the guidance and attention they provide –
The third objective was to fuel performance. Research rather than by the team leader.
into the practices of the best team leaders in Deloitte re- Buckingham and Goodall (2015)
vealed that they conduct regular check-ins with each team
Reinvented performance management at Microsoft
The formal annual performance review has been replaced Microsoft does not apply any strict rules. Ratings were
by less formal but regular performance and development abolished.
conversations between managers and employees called As Microsoft’s Director – Global Performance Pro
‘Connects’. Every employee is expected to have a grammes, Lisa Dodge explained: ‘The outcome of the old
minimum of two Connects a year – but beyond this, end-of-year review usually felt like a judgement, rather
than an opportunity for employees to learn and get better. Meanwhile, the regular discussions employees and
The focus of our current approach is designed to help peo- managers have during the year focus on the impact some-
ple deliver great impact by working together, reflecting and one is having, what they are learning and what they can do
getting feedback more often, and more intentionally con- in the upcoming few months – there is no discussion of
sidering learning and growing – and as a result deliver rewards.’
continually better business results. Regular performance Lisa Dodge also observed that: ‘Our employees don’t
conversations have been separated from the reward con- need ratings to know how they are doing… We want rich
versations. Instead of the end-of-year review, managers conversations rather than assuming an employee’s perfor-
and employees have a short reward discussion to share mance can be boiled down to a simple label.
the merit, bonus and stock outcomes with the employee. e-reward (2017)
Dealing with the issues –

Source review
reinventing performance
Personnel management textbooks are full of
management touching accounts of how to design and implement
performance appraisal and management schemes
A number of companies such as those in the above
in organizations. The models they propose are
case studies have recently introduced radical
based on a rational and linear logic, which
changes to their performance management systems.
assumes that an organization’s goals can be
They have come to realize that, in the words of one
of them, ‘traditional performance management is translated into individual goals, which, in turn, can
broken’. As proposed by Buckingham and Goodall be delivered through feedback, training,
(2015), it has to be reinvented. This applies to the development and reward. The reality of
annual performance review meeting, appraisal rat- organizational life is somewhat different.
ing, especially forced distribution, the direct link Strebler et al (2001: 53)
with performance-related pay, and the use of
SMART objectives.
The focus is now on continuous coaching and
The research conducted by the Institute for
development rather than one annual and stressful
Employment Studies led to the conclusions set out
review, the abolition of ratings, and ‘de-coupling’
below.
performance management from performance-
related pay. Accenture has scrapped annual apprais-
als for its 300,000-plus workforce and instead has
instituted a ‘continuous feedback’ culture. Expedia Source review
has introduced a ‘Passport to Performance’ system
of regular performance and development conversa- Performance management is about how people are
tions that are more coaching-oriented. managed all year round. This is the central
message, which so often seems to get lost. So
managers and employees need to hear about
Approach to reinvention performance management throughout the year, not
The approach adopted to reinventing performance just when the forms have to be filled in. They should
management has to recognize the problems in- hear about performance management in terms of
volved in meeting possibly demanding aims and priorities, feedback and development and how
overcoming the practical and political difficulties these link to business results. These messages
that will occur. The following comments by Strebler need to come from senior managers, not just from
and colleagues based on their research were made HR. Even just talking about managing performance
on design issues:
avoid surprises when it comes to ratings

(what people do) rather than performance
and encourage individuals to focus on
management (an odd piece of HR jargon) may help
performance throughout the year). Make a
HR people remember what this is really about when performance management system open and
they are talking to others. Once performance is available all year round rather than
genuinely an all-the-year-round activity this opens releasing an appraisal at certain set times of
the door to using different conversations for the year. Analyse the data on performance
different aspects of performance management and ratings to see trends, highlight areas for
not cramming everything into the end-of-year improvement and ensure no discriminatory
review. bias. Train.’
The fundamentals of performance management ●● ‘Ensure the paperwork (hardcopy or e-) does
are setting priorities, giving feedback and agreeing not drive the process. The appraisal should
action, especially development action. All the other be clearly aligned to the organization’s
things – ratings, links to reward, competencies, strategic objectives and values. It is the
potential and talent assessments – are legitimate conversation between the manager and
concerns but should not be allowed to compromise employee that is most important. Managers
the quality of actually managing performance. If need to be given the skills to manage difficult
your managers are still struggling with giving conversations and all staff need to know
honest feedback or with agreeing sensible how to give and receive feedback.’
priorities, leave the other clutter out for now. ●● ‘Ensure the system isn’t hampered by
Institute for Employment Studies (2011: 17-18) bureaucracy and tedious paperwork. Make it
easy for all to actively engage with the
system and put the focus on having quality
open conversation between reviewer and
Advice from practitioners reviewee.’
The practitioners who responded to the e-reward ●● ‘Consistency – one scheme for all, make it
(2014) performance management survey recom- about good conversations, not just a
mended the following actions: process.’
●● ‘Clear line of sight between objective setting,
●● ‘Train, communicate, evaluate performance
performance review and business goals.
management through employee engagement
Regularly review and update in accordance
surveys, have HR business partners work
with any changes in business needs.’
with line managers, organize round tables
(calibration), provide details of expected ●● ‘Acknowledge any link to remuneration – if
competency levels per job type/level, clarify you don’t, people will create their own links.’
that good is acceptable (not everyone can be
a star), encourage ongoing performance
management. It’s more than just an annual Possible new arrangements
administrative hoop – it’s a powerful A framework for analysing possible new perfor-
management tool.’ mance management arrangements is shown in
●● ‘Keep it very, very simple, be able to translate Table 39.1.
strategy to individual goals and give people a
clear line of sight, ensure all people managers
are capable to deliver performance
management, ie have a performance dialogue Pau se for th ou gh t
(this is the key!) at any time and not just at To what extent do you think it would be a
the annual review.’
good idea to adopt the suggestions made
●● ‘Focus on the positives, create a culture of
continual performance management rather above?
than restricting it to an annual appraisal (to
TA B L E 39.1 Analysis of possible new performance management arrangements
Possible new arrangement Advantages Disadvantages
Annual performance Gets rid of the ‘dishonest annual Abolishing the annual review
review ritual’ of the yearly formal means that there will no longer
Replace the annual performance review and appraisal be an opportunity to hold what
performance review with session, which is often dreaded by might be called a stock taking
more frequent ‘performance both managers and individuals and, exercise which provides a
and development if done at all, is carried out defined framework for
conversations’, which perfunctorily. This is replaced by development planning and
provide informal feedback much less formal conversations, objective setting.
and include the discussion which arise naturally out of the
and revision of priorities and normal process of work.
development plans.
Ratings Overcomes the fundamental Abolishing ratings would mean

Abolish ratings objections to rating performance. that the following advantages
These are that ratings are largely would disappear:
subjective and it is difficult to
●● they provide a convenient
achieve consistency between the
means of summing up
ratings given by different managers.
judgements
Even if objectivity is achieved, to
●● they motivate people by
sum up the total performance of a
giving them something to
person with a single rating is a gross
strive for in the shape of
over-simplification of what may be a
higher ratings
complex set of factors influencing
●● they provide a basis for
that performance. To label people as
identifying potential.
‘average’ or ‘below average’, or
whatever equivalent terms are used, It can also be argued that it is
is both demeaning and impossible to have
demotivating. performance pay without
rating, but there are ways of
overcoming this.
Forced ranking Get rid of the climate of fear and the No longer possible to use
Abolish forced ranking likelihood that those ranked highest forced ranking as a means of
on the scale are more competitive identifying those employees
and less cooperative than those who should be dismissed for
ranked. poor performance.
Link with performance Avoids the conflict between Makes the process more
pay focusing on performance complex. It is easy to rate
Decouple performance pay management as a means of performance at an annual
decisions from performance deciding pay increases and review and link the rating
reviews satisfying its developmental directly to a performance pay
purposes. increase.
(continued )
Possible new arrangement Advantages Disadvantages
Objective setting The process is simpler and easier to Abandoning the disciple of
Replace complex objective- understand and operate. Managers setting SMART objectives
setting procedures involving, can feel that they have better things related to rigorous definitions
for example the requirement to do than draw up lists of key result of key result areas and
for ‘SMART’ objectives, key areas and performance indicators performance indicators might
result areas and key and may find it difficult to meet the result in a vacuum, which will
performance indicators, with SMART objective criteria. not be filled by the vaguer
a system based simply on concept of priorities. This
determining and agreeing a might fail to provide people
limited number of key with adequate information
priorities. The priorities can about job requirements and
include targets and delivery leave them with insufficient
time scales as appropriate direction.
and will indicate how the
extent to which they have
been met can be assessed.
Training line managers

Source review
Some managers such as those quoted later in this
chapter are naturally good at managing perfor-
Train all managers, especially new ones or newly
mance because they are effective managers and have
recruited ones, in how to do performance
learned to be so over the years from experience, ob-
serving other successful managers and more formal management, not just in how to fill in the
coaching and mentoring procedures. However, paperwork. That means understanding how to align
these skills are not shared amongst all managers priorities, how to give and receive feedback, how
and steps need to be taken to develop the essential to coach, how to motivate, how to manage poor
skills, namely: performance. All employees should be equipped to
play their role fully in the process – written
●● defining roles and setting objectives; guidance or a half-hour session is probably not
●● conducting informal performance and enough to achieve this. Experienced managers are
development discussions; likely to need refresher training and senior
●● giving feedback; managers need skill progression in the art of
●● handling challenging conversations. performance management so they can give wise
advice to others on how to handle trickier
The learning required will not be achieved by a situations. Not all performance conversations are
‘sheep-dip’ process of half-day training sessions. It ‘difficult conversations’ but they are all important
is far better to cater for it by an extended leadership ones. Coaching managers as they tackle
development programme, an important part of
demanding performance management situations
which should be conducted through mentoring and
may be an effective complement to formal training.
coaching. Experienced managers who have demon-
Such coaching can come from more senior
strated that they have the skills required and are
managers or HR experts in performance
keen to help can usefully act as mentors.
The recommendations made by the Institute management or from HR Business Partners as part
for Employment Studies of training are: of the way they work with the line.
Institute for Employment Studies (2011: 20-21)
‘Every week I have a one-to-one session

A radical way ahead? ●●
with people who work for me. And it’s
half an hour; it’s the opportunity to talk
Reinvention along the lines described above may things over with people. I say to people
be desirable but there is a fundamental question it’s your time with me. But, to be honest,
that should be answered: ‘To what extent is there it’s not just that; it’s me getting to talk to
any need for a formal performance management them.’
system at all?’ Clearly it is essential to have some
sort of process for clarifying objectives, providing ●● ‘This organization has a very structured
feedback on performance, reviewing performance performance management framework,
and identifying development needs. But does it as you would imagine from a big
need to be formalized in a performance manage- company. I try and avoid using it
ment system? unless I have to; I would rather try and
Julian Richer does not have annual formal as- develop the personal relationship with
sessments at Richer Sounds. Instead, assessment is someone, to understand their issue and
seen as a normal process of management (see below) try and improve their performance by
and a system of career counselling has been intro- working with them, rather than going
duced. An employee can request a meeting with a through procedural ways of managing
senior person at any time in order to discuss their performance.’
career, whether there is a specific problem or Perhaps the best way to deal with the annual per-
whether they are concerned with their whole future formance review issue, indeed the whole problem of
direction. making performance management work, is for
The Institute for Employment Studies published managers to act like this rather than compel them
in 2013 the results of interesting research by Dilys to conform to the bureaucratic requirements of a
Robinson on how managers who had achieved high typical performance management system. These
levels of engagement in their teams went about it. managers are managing performance, not operating
Here is what four of those managers told her about a system. They are constantly communicating with
how they managed performance: their team members, they clarify what has to be
●● ‘So, the key for me is just one-to-one time, done and take swift action to deal with underper-
and they know what they’re aiming for, and formance, they praise when praise is due and they
we talk about it regularly. So it never really coach their staff. To get this sort of manager is a
gets to the situation where there’s like a matter of selection, development through coaching
really great big formal sit-down to say let’s and mentoring, and constant encouragement. It
review everything you’ve done.’ would take a lot of time and effort but it would be
time well spent.
●● ‘I think it’s regular dialogue... at least
once a fortnight for an extended period
of time, just one to one and just about
them and the work they’re doing and
what’s going on... just so that I understand
what they’re doing and so I can give a What do you think of this idea? Is it utopian
bit of a steer or give them a bit of
or can something be done about it? If so,
coaching if they need some coaching;
help them if they want some help and what?
support.’
Key learning points
The problem with performance The role of line managers

management However well designed, the effectiveness of a
Performance management can be modelled performance management system ultimately depends
convincingly as a system but the acts or failures to act on the commitment and skills of line managers.
of fallible human beings prejudice the effectiveness of
the system in practice. What is happening to performance
Performance management can indeed be very hard management?
to do well. This is partly because of its many-faceted
nature in its traditional form. The focus is now on continuous coaching and
development rather than one annual and stressful
review, the abolition of ratings, and ‘de-coupling’
Performance management system issues
performance management from performance-
Performance management system issues are related pay.
concerned with the annual performance review,
performance rating, forced ranking, performance pay
and objective setting.
References
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Performance Management, Harvard Business appraisal? A critique and a suggestion, Human
Review, April, pp 40–50 Resource Management Journal, 3 (3) pp 61–77
Cascio, W F (2010) Managing Human Resources, 8th Institute for Employment Studies (2011) Performance
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470

471
PART X
Reward management
PA R T X CO N T E N T S
40 The basis of reward management

41 The practice of reward management
42 Managing reward for special groups
43 The gender pay gap
activities of market pricing, job evaluation, manag-

Introduction ing grade and pay structures (base pay manage-
ment), contingent pay, employee recognition,
Reward management as described in this part is de- employee benefits and reward administration; (c)
fined as how organizations develop and implement rewarding special groups (executives, knowledge
a reward system of interrelated reward practices. workers, sales and customer service staff and man-
The part covers: (a) an analysis of the process of ual workers; and (d) the steps required to reduce the
reward management – what it is and how, in gen- gender pay gap.
eral, it works; (b) descriptions of the main reward
472

473
40
The basis of reward
management
two fundamental questions: (1) How do we value
Introduction people? and (2) How are we going to reward them
according to that value?
Reward management can be described as a process Reward management in action is about the de-
that is based on a philosophy and guiding princi- sign, implementation and maintenance of reward
ples and is put into effect by a reward system that systems. These consist of reward processes, prac-
consists of a number of interrelated reward practices and procedures and cover: how jobs and peo-
tices. The effective management of reward can ple should be valued; the design and administration
make a significant impact on the performance of of grade and pay structures (base pay management);
the organization by ensuring that high-quality peo- rewarding and recognizing achievements and per-
ple are attracted and retained and that they are mo- formance; providing employee benefits; and imple-
tivated by rewards that recognize their value and menting procedures for managing reward.
contribution. Reward systems exist to satisfy the needs of the
This chapter contains: organization to attract, retain and motivate high-
●● A definition of reward management quality people and thus improve performance and
●● An analysis of the factors that drive reward achieve corporate goals. But importantly, they are
also there to meet the needs of the people in the
●● Explanations of the aims, values and beliefs organization. And they must also meet various ex-
of reward management ternal requirements such as complying with govern-
●● An examination of the nature of reward ment regulations, for example, those requiring
policy and strategy certain organizations to report on the ratio of their
●● A description of the reward system chief executives’ remuneration to the median pay of
their UK employees, employment law and taxation.
●● A review of three of the key elements of a
Reward management is not just about pay and
reward system: financial rewards, non-
employee benefits. It is equally concerned with non-
financial rewards and total reward
financial rewards such as recognition, autonomy,
learning and development opportunities, and in-
Reward management creased job responsibility.
defined
Aims of reward management
Reward management deals with the strategies, poli- The aims of reward management are to:
cies and practices required to ensure that the value
of people and the contribution they make to achiev- ●● support the achievement of business goals by
ing organizational, departmental and team goals is developing a performance culture and
recognized and rewarded. It provides answers to stimulating high performance;
474 Part 10 | Reward Management
●● attract and retain the high-quality people the enable the employer to recruit and retain people,
organization needs; supported by internal pay levels and ranges; and
●● motivate and win the engagement of performance-related factors linked to guarantee-
employees; ing the delivery of the strategic goals of the
organization and ensuring pay budgets are afford-
●● reward people according to the value they
able, as well as rewarding and recognizing em-
create;
ployee performance.
●● deliver value on the investment in rewards to
both the employer and the employees;
●● align reward practices with employee needs. Values and beliefs
But Ghoshal and Bartlett (1995) reminded us that
Reward policies and practices are affected by the
reward management is essentially about adding
values and beliefs of the organization about how
value to people. It is not just about attaching value
people should be rewarded and how the reward sys-
to them.
tem should be managed. These may be articulated
as a reward philosophy that sets out the broad val-
ues of the organization or as a set of guiding princi-
Reward drivers ples such as:
Reward is a complicated field, but it can be ar-
●● developing reward policies and practices
gued that there are three fundamental determi-
which support the achievement of business
nants of any reward management system as
goals;
illustrated in Figure 40.1 below: internal consid-
erations of fairness and relativities, supported by ●● providing rewards which help to develop a
job evaluation systems and grading structures; ex- high-performance culture and attract, retain
ternal considerations of market rates of pay, to and motivate staff;
F I G U R E 40.1 Reward drivers
Flexibility
Competing for the
Internal External talent that the
relativities relativities business needs
in the recruitment
Reward market, measured
system through external
benchmarking
Fairness
Taking account of: Performance
• Job content
Affordability
• Equal pay issues
Taking account of:
• Grading structures
• Achievement of annual
objectives
• Longer-term contribution
and potential
Source Brown (2018)

Chapter 40 | The Basis of Reward Management 475
●● maintaining competitive rates of pay;

●● rewarding people according to their Source review
contribution;
●● recognizing the value of all staff who are Colt: Reward philosophy
making an effective contribution, not just the
exceptional performers; Colt believes that talented and motivated people
make a difference; talented people put us ahead of
●● emphasizing the importance of dealing with
the competition and deliver the results on which
gender pay issues;
the success of Colt is built. Colt seeks to offer a
●● accepting the need to deal with reward compensation and benefits package that rewards
matters ethically;
people for their contribution to the success of the
●● allowing a reasonable degree of flexibility in company and ensures that external market
the operation of reward processes and in the competitiveness and internal relativities are taken
choice of benefits by employees; into account.
●● devolving more responsibility for reward
decisions to line managers.
Reward management can be controversial and prin-
ciples are therefore important to define the desired
state in the organization, what ‘good’ and ‘effective’ Source review
mean from a reward perspective in any employer
setting. Some employers for example regard paying Reward guiding principles at Diageo
market rates as the be all and end all of their pay
●● Performance: rewards are developed that
systems, while others regard internal relativities as
reflect team and individual achievements.
more important; and some employers focus heavily
on cash rewards while others believe in offering a ●● Market: rewards reflect the market in which an
good benefits package. These policies are driven by employee is based, whether that be
their beliefs and principles about what motivates geographical or functional, and compare
people, what the organization stands for, and what favourably with those of competitors.
they believe is right.
Guiding principles are often agreed by top man- ●● Communication: Diageo aims to explain to
agement with advice from company reward spe- ‘everyone the components and value of their
cialists or external consultants. But they will be reward package, the criteria that affect it, and
more acceptable if members of the organization how they can influence it’.
are involved in their definition. Guiding principles
●● Effectiveness: the company seeks ‘best
can then be communicated generally to increase
practice’ and ensures its benefits programmes
understanding of what underpins reward policies
and practices. However, employees will suspend ‘remain effective for the business and our
their judgement of the principles until they experi- employees’.
ence how they are applied. What matters to them
is not the principles themselves but the pay prac-
tices emanating from them and the messages about
the employment ‘deal’ that they get as a conse- Reward policy
quence. It is the reality that is important, not the
rhetoric. Reward policy sets guidelines for decision making
The following are examples of a reward philoso- and action and therefore provides the framework
phy produced by Colt Telecom and the guiding for managing a reward system. It indicates what the
principles adopted by Diageo. organization and its management are expected to do
about managing reward and how they will behave in of the impact they make on organizational results
given circumstances when dealing with reward is- and by reference to the levels of responsibility and
sues. It can be distinguished from guiding principles, skill required to perform them. Increases in impact
which usually express a more generalized philoso- and these levels lead to higher rates of pay. This
phy. Reward policy areas are described below. concept provides the theoretical base for job evalu-
ation. However, as an explanation of the value
attached to jobs it is limited because it ignores ex-
Level of rewards ternal relativities.
The policy on the level of rewards indicates whether
the company is a high payer, is content to pay me- Value of the person
dian or average rates of pay or even, exceptionally, Individuals are valued by organizations for three
accepts that it has to pay below the average. Policies main reasons: (1) the contribution they make to or-
on pay levels will also refer to differentials and the ganizational success, (2) their competencies and skills
number of steps or grades that should exist in the and (3) the experience they bring to their jobs. People
pay hierarchy. This will be influenced by the struc- also have their own value in the marketplace – their
ture of the company. In today’s flatter organizations market worth – which has to be taken into account
an extended or complex pay hierarchy may not be by employers in setting their rates of pay.
required on the grounds that it does not reflect the
way in which work is organized and will constrain
flexibility. Policies on the level of rewards also cover
employee benefits – pensions, sick pay, health care, Pau se for th ou gh t
holidays and perks such as company cars.
Policies on the level of rewards can be explained Can you think of a time when you were
in general terms by the theories summarized in really happy about the way in which you
Table 40.1.
had been rewarded for an achievement? If
The process of determining pay levels and the
rates of pay for individual jobs within organizations you can, why did you feel that way?
are influenced generally by the factors described
above. Levels of pay are affected by an implicit be-
lief in efficiency wage theory – that higher rates of
pay attract good candidates (the sorting effect), en- Internal relativities
hance performance (the incentive effect) and help to It can be argued that the value of anything, includ-
retain employees. There will be policies and prac- ing jobs, is always relative to something else, that is,
tices on the range or dispersion of pay between dif- other jobs. Views on job values within organiza-
ferent levels in the organization. The organization tions are based on perceptions of the worth of one
will have a defined or implicit ‘pay stance’ policy, ie job compared with others. This may be a matter of
the relationship desired between the levels of pay opinion, but attempts can be made to measure rela-
within the organization and market rates. tive worth through job evaluation, which is essen-
Specific factors affecting rates of pay are beliefs tially a comparative process. The aim is to achieve
about the value of the job and the value of the per- internal equity, which occurs when people are re-
son, internal relativities, financial considerations warded appropriately in relation to others accord-
(the ability to pay), the influence of trade unions ing to the value of their contribution. The case for
and the minimum or living wage. equal pay for work of equal value is based on the
imperative to achieve internal equity.
Value of the job
The intrinsic value of a job is a measure of what a Financial circumstances of the
job (not a person) is worth in terms of what it con- organization
tributes to achieving the purpose of the organiza-
Affordability is an important concept in reward
tion. An intrinsic value is attached to jobs because
management. The aim is to ensure that pay systems
TA B L E 40.1 Theories explaining pay levels
Name of theory Summary of theory Practical significance
The law of supply and Other things being equal, if there is a Highlights the role of labour market
demand surplus of labour and supply exceeds factors in affecting rates of pay and
demand, pay levels go down; if there therefore emphasizes the importance
is a scarcity of labour and demand of market pricing, ie establishing the
exceeds supply, pay goes up. level of market rates.
Efficiency wage theory Firms will pay above the market rate Firms use efficiency wage theory
because they believe that high levels (although they will not call it that)
of pay will increase productivity by when they formulate pay policies that
helping to motivate and retain place them as above the average, eg
employees. in the upper quartile of the
distribution of market rates.
Human capital theory Workers have a set of skills Employers and employees each
developed by education and training benefit from investment in creating
that generate a stock of productive human capital. Pay should be fixed at
capital. a level which supplies both parties
with a reasonable return on that
investment.
Agency theory (also The owners of a firm (the principals) A system of incentives is needed to
known as principal are separate from the employees (the motivate and reward acceptable
agent theory) agents). The difference can create behaviour. This process of ‘incentive
‘agency costs’ because the agents alignment’ consists of paying for
may not be so productive as the measurable results that are deemed
principals would like them to be. The to be in the best interests of the
latter therefore have to devise ways owners. (Agency theory is particularly
of motivating and controlling the relevant as a means of explaining the
efforts of the employees. high levels of executive pay.)
Tournament theory The motivation of high-quality staff Provides a rationale for increasingly
will be increased by offering lucrative large pay differentials between jobs in
prizes (ie pay) for a small number of the hierarchy. Is also a justification for
people who are promoted to higher- high levels of pay for chief executives.
level jobs, with the highest price of all
to the person who wins the
tournament by getting the top job.
The effort/reward Workers aim to strike a bargain about Management has to assess what
bargain the relationship between what they level and type of inducement it has to
regard as a reasonable contribution offer in return for the contribution it
and what their employer is prepared requires from its workforce. Pay
to pay to elicit that contribution. negotiations in effect centre on the
effort bargain.
do not cost more than the organization can afford perity of the business. The amount of pressure they
and this will influence the level of pay that can be can exert on pay levels will depend on the relative
offered to employees. Extra expenditure on pay, eg bargaining strengths of the employer and the union.
bonus payments, should add value in the sense that
the benefits resulting from improved performance The minimum or living wage
outweigh the cost.
Minimum or living wage regulations in the UK sets
minimum rates of pay. The amount is increased
Trade union influence from time to time.
Pay levels may be determined through collective
bargaining with trade unions. They will want their Example of pay policy
members’ pay to keep ahead of inflation, to match
market rates and to reflect any increases in the pros- An example of a policy on pay levels is given below.
C A S E S T U DY
Pay policy at Aegon UK
The reward system is designed to recognize three core which market forces affect the salaries required to
factors which affect the level of pay individuals should attract and retain quality staff.
receive for their ‘personal commitment and consistent
●● Value of the person – individual employees may be
contribution within their roles’. These are:
rewarded at a higher level because they are making a
●● Internal job value – the bigger the job, the higher the greater contribution, are performing better, meeting
reward. objectives and have achieved a higher level of skill or
competence than their colleagues (measured through
●● External job value – the level of reward will be
the performance management process).
influenced by external market rates and the degree to
External competitiveness versus The pay management process must cope as best
it can when the irresistible force of market pressures
internal equity meets the immovable object of internal equity.
Reward policy is also concerned with the extent to There will always be some degree of tension in these
which rewards are market driven (ie primarily influ- circumstances, and while no solution will ever be
enced by market rate pressures) rather than equita- simple or entirely satisfactory, there is one basic
ble (ie employees are paid fairly in relation to one principle that can enhance the likelihood of success.
another). The policy will be influenced by the cul- That principle is to make explicit and fully identifi-
ture and reward philosophies of the organization able the compromises with internal equity that have
and the pressures on the business to obtain and to be made in response to market pressures.
keep high-quality staff. Any organizations that have The policy may indicate that market considera-
to attract and retain staff who are much in demand tions will drive levels of pay in the organization. It
and where market rates are therefore high, may, to may, however, allow for the use of market supple-
a degree, have to sacrifice their ideals (if they have ments – a payment that reflects market rates in ad-
them) of internal equity to the realism of the market dition to the rate for a job as determined by internal
place. They will provide ‘market pay’; in other equity. The policy may lay down that these pay-
words, they will be ‘market driven’. ments should be reviewed regularly and no longer
offered if they are unnecessary. Market supplements package can be tailored to meet these needs.
for those who have them may not be withdrawn Rewards may be segmented to take account of key
(the people concerned would not have their pay re- employee differences. This could mean individual
duced), but adjustments may be made to pay pro- performance-related pay for some, team reward for
gression to bring their rates more into line with others, and other forms of pay progression and rec-
those for comparable jobs. Market pay and market ognition rather than incentives for a third group.
supplements can lead to gender inequalities if, as is This is a flexible approach to reward management
often the case, men in comparable jobs are paid although it should be flexibility within a frame-
more generally or more men get market supple- work, the framework being provided by guiding
ments than women. Equal pay case law has ruled principles that apply to all aspects of reward.
that market pay and market supplements should be
‘objectively justified’ by reference to observable
market pressures, and the requirement to do this Reward strategy
should be included in the pay policy.
The 2007 e-reward survey of grade and pay Reward strategy provides the impetus for reward
structures revealed that respondents with market system design and operation in order to achieve
supplements adopted the following policies when three major objectives: performance, competitive-
such supplements were no longer required: ness and fairness. It aims to provide answers to two
basic questions: (1) what do we need to do about
●● remove immediately – 33 per cent;
our reward practices to ensure that they are fit for
●● retain until upgraded – 30 per cent; purpose, and (2) how do we intend to do it?
●● reduce progressively – 19 per cent; Reward strategy is a declaration of intent that de-
●● protect in line with policy – 18 per cent. fines what the organization wants to do in the future
to develop and implement reward policies, practices
and processes that will further the achievement of its
business goals and meet the needs of its stakehold-
Pa us e for t houg ht ers. The aim is to provide a sense of purpose and
direction and a basis for developing reward policies,
In what circumstances, if any, can recruiting practices and processes. The strategy is based on an
someone at a considerably higher salary understanding of the needs of the organization and
its employees and how they can best be satisfied.
than existing staff in jobs of a similar level
be justified?
If an organization did this, (1) how would Word s of w isd om
it explain it to existing staff, and (2) what
Strategic reward is a means of enhancing
should it do, if anything, to reduce the
company performance and securing
inequity?
competitive advantage, through the
alignment of pay strategies, systems, practices
and processes to the organizational strategy.
Segmentation As a management tool, pay is no longer
Segmentation involves varying the reward package purely a cost of hiring necessary labour, but a
for different jobs either to reflect the types and lev-
els of contribution people make, or to provide re- means of aligning a company’s unique and
wards that are tailored to meet individual needs. inimitable asset – their employees – to the
A policy on segmentation will recognize that
strategic direction of the organization.
parts of the workforce and individuals in the suc-
cessive stages of their career may be motivated by Trevor (2011: 8)
different combinations of rewards. A total reward
The content of reward strategy Reward strategy may be a broad-brush affair,

simply indicating the general direction in which
As Armstrong and Murlis (2007: 33) stated: it is thought reward management should go.
‘Reward strategy will be characterized by diversity Additionally or alternatively, reward strategy may
and conditioned both by the legacy of the past and set out a list of specific intentions dealing with par-
the realities of the future.’ All reward strategies are ticular aspects of reward management, for
different, just as all organizations are different. Of example:
course, similar aspects of reward will be covered in
the strategies of different organizations but they ●● the development of a ‘total reward’ system;
will be treated differently in accordance with varia- ●● the introduction of performance pay;
tions between organizations in their contexts, busi- ●● replacement of an existing contingent pay
ness strategies and cultures. But the reality of reward scheme;
strategy is that it is not such a clear-cut process as ●● the introduction of a new grade and pay
some believe. It evolves, it changes and it has some- structure;
times to be reactive rather than proactive.
Reward strategy often has to be a balancing act ●● the replacement of a decayed job evaluation
because of potentially conflicting goals. For exam- scheme;
ple, it may be necessary to reconcile the competing ●● the introduction of a formal recognition
claims of being externally competitive and inter- scheme;
nally equitable – paying a specialist more money to ●● the development of a flexible benefits system;
reflect market rate pressures may disrupt internal
●● the conduct of equal pay reviews with the
relativities. Or the belief that a universally applica-
objective of ensuring that work of equal
ble reward system is required may conflict with the
value is paid equally.
perceived need to adopt a policy of segmentation.
Source review
Examples of key themes in reward strategies

Airbus: Introduce performance pay for all employees, ensure that its rates are competitive with the external
market and deal with anomalies caused by previous rigidities, such as grade drift brought about by people
having to be promoted to a higher grade to receive additional pay.
AstraZeneca: Promote a culture that values, recognizes and rewards outstanding performance.
Centrica: Establish a link between pay and performance and align pay with the market.
The Children’s Society: Develop flexible and fair reward systems, which will support its mission and corporate
objectives by recognizing contribution, accountability, team working and innovation, and are market
sensitive but not market led.
Diageo: Release the potential of every employee to deliver Diageo’s performance goals.
Kent County Council: Pay people a fair rate for the job and give additional reward for excellent contribution.
National Union of Teachers: Develop a new broad-graded pay structure and introduce a new job evaluation
scheme as a basis for the structure.
Tesco: Reward staff for their contribution in a way that enables them to benefit directly from the success they
help to create.
Critical evaluation of the concept

of reward strategy lever for organizational transformation’ that
The problem with a strategic approach to reward is appears so seductive in the writing of
that it can promise more than it achieves. This American commentators.
contradicts the main message that it provides a
Thompson (1998: 70)
powerful lever for improving business performance
delivered by US writers such as Lawler (1990) in his
Strategic Pay and Schuster and Zingheim (1992) in
their The New Pay.
Trevor (2011) posed the question: to what extent
can pay be strategic? He claimed that rationalism is
limited and pointed out that pay systems tend to be
selected for their legitimacy (best practice as advo-
Wo rd s of wi sdom cated by institutions such as the CIPD and by
management consultants) rather than for purely

The most that companies can hope to do in economic reasons. He observed (ibid: 35) that:
their approach to reward is to make sure ‘What is desired (approach), and what is intended
that it does not distort the relationship (design), may not be reflected in what is achieved
(operation).’
between management and employees. However, it cannot be denied that to have a sense
Managing reward is thus a job of damage of purpose and direction is a good thing and with
all its limitations, this justifies a strategic approach
limitation and perhaps not the ‘strategic
to reward which is implemented by the reward sys-
tem as described below.
C A S E S T U DY
Reward strategy at BT
Reward strategy at BT (British Telecom) is a fairly broad- Guiding principles
brush affair simply indicating the general direction in
which it is thought reward management for the 90,000 staff BT’s reward strategy is underpinned by a set of guiding
at BT should go, with an emphasis on adopting a more principles defining the approach the organization takes to
holistic, total reward approach. It is summarized as dealing with reward. These guiding principles are the basis
follows: for reward policies and provide guidelines for the actions
contained in the reward strategy. They express the reward
Use the full range of rewards (salary, bonus, benefits philosophy of the organization – its values and beliefs
and recognition) to recruit and retain the best people, about how people should be rewarded. The six guiding
and to encourage and reward achievement where principles governing the design of the reward system at BT
actions and behaviours are consistent with the BT are as follows:
values.
1 business linkage; 2 The competitiveness of the individual’s existing salary,

together with the actual (and anticipated) salary
2 clarity and transparency;
movement in relevant local markets – how does salary
3 market competitiveness; align to the external market?
4 performance differentiation; 3 The company’s business results and ability to pay –

can the company afford to invest money in terms of
5 choice and flexibility;
additional reward?
6 equal pay.
Underpinning these pillars are the principles of clarity (a
Broadly speaking, the three principal elements driving ‘focus on roles’), equal pay and choice.
individual reward are:
1 The individual’s performance and contribution in the
role – what does it mean to have high individual
performance?
The reward system may be used to inform performance or contribution

pay decisions. All these components combine to
achieve the aims of reward management.
The reward system as illustrated in Figure 40.2 con-
Three basic elements of a reward system –
sists of the interrelated processes and practices that
financial rewards, non-financial rewards and total
combine to ensure that reward management is car-
rewards – are described below. The components of
ried out effectively to the benefit of the organization
the financial reward system are described in the
and the people who work there. The system is
next chapter. These are market pricing, job evalua-
driven by the business and HR strategies from
tion, the management of grade and pay structures
which flow the reward strategy. As described below,
(base pay management), pay progression through
its major components are financial and non-
contingent pay (pay for performance, competence
financial rewards that are combined to form the
or contribution), employee recognition and em-
system. Performance management plays an impor-
ployee benefit and pension schemes.
tant part in supporting non-financial rewards and
C A S E S T U DY
Reward system development in a technology company

This smaller, entrepreneurial technology company evolved understanding of culture and change processes is at least
a more logical, structured approach to its pay and rewards as important as the technical design of reward plans if
in order to better align them with its growth plans, rather improvements are to be achievable and delivered into
than largely reflecting the history of its development. The practice. He stressed the need to: ‘Pay attention to the
Head of Reward and Development emphasized that reward organization, its culture and its needs, gather information
systems development is an evolutionary process that can’t and evidence for (reward) change, then establish consistent
just be determined on the basis of abstract reward frameworks to guide decisions and help managers to
principles and hard measures of effectiveness. A subtler understand, support and make necessary changes.’
F I G U R E 40.2 The reward system
Non-financial rewards
Market rate
analysis
Job evaluation
Grade and pay

structure
Reward values
Achieve aims:
• Performance
Business and Reward Base pay Total • Define/influence
Total reward
HR strategy/policy management remuneration behaviour
• Attract and
retain
Pay progression • Motivate and
Context through contingent engage
pay
Variable pay
eg bonuses
Pension and
benefits
Allowances
Performance
management
Financial rewards levels are examined in the last section of this

chapter.
Financial rewards consist of job-based pay, which ●● Base pay management – developing and
provides pay related to the value of the job, and operating pay structures which group
person-based pay, which provides rewards that rec- jobs into grades, bands or levels in
ognize the individual’s contribution. They also in- accordance with internal and external
clude employee benefits and pensions and financial relativities and usually provide for pay
recognition schemes. The management of job- and progression.
person-based pay involves:
●● Contingent pay – planning and managing
●● Pay determination – making decisions on the schemes which provide for pay progression
value of jobs by means of market pricing and related to performance, contribution,
job evaluation. The factors that affect pay competence, skill or length of service.
Labour economists distinguish between the incen- work and private life (work-life balance). Non-
tive effect of financial rewards (generating more financial rewards can be extrinsic, such as praise or
engagement and effort) and the sorting effect (at- recognition, or intrinsic, associated with job chal-
tracting better-quality employees). The fundamental lenge and interest and feelings that the work is
issue is the extent to which financial rewards pro- worthwhile.
vide an incentive effect. The sorting effect is impor-
tant but creates less controversy, perhaps because it
is more difficult to pin down. Total reward
The case for and against financial rewards as incen-
In total reward, the various aspects of reward,
tives and a description of the contingent pay schemes
namely base pay, contingent pay, employee benefits
that provide such awards are dealt with in Chapter 41.
and non-financial rewards, which include intrinsic
rewards from the work itself, are linked together
and treated as an integrated and cohesive whole as
Non-financial rewards shown in Figure 40.3. The concept of total reward
Non-financial rewards focus on the needs people describes an approach to reward management that
have to varying degrees for recognition, achieve- emphasizes the need to consider all aspects of the
ment, personal growth and acceptable working employee experience, not just a few such as pay and
conditions. They include the non-financial recogni- employee benefits. It is therefore a major vehicle for
tion of achievements as described in Chapter 41, the improving that experience.
design of fulfilling jobs, giving people the scope to A total reward approach recognizes that it is nec-
develop their skills and careers, and offering a work essary to get financial rewards (pay and benefits)
environment which provides a high quality of work- right. But it also appreciates the importance of pro-
ing life and an appropriate relationship between viding people with rewarding experiences that arise
F I G U R E 40.3 Total reward model

Common examples Reward elements Definition
• Quality of work
Intrinsic
• Work/life balance Engagement
• Inspiration/values factors Total
Elements which • Enabling environment reward
contribute to • Growth/opportunity
internal value
• Tangible benefits eg
or motivation cars Active
• Prof memberships benefits
• Discounts Total
• Retirement
Passive
remuneration
Extrinsic • Health and welfare
benefits
• Holidays
All the things to Long-term Total direct
• Stock/equity
which we can rewards/incentives
• Performance shares compensation
assign a
monetary value • Annual incentive Short-term
• Bonus/split awards
variable Total
• Team awards
cash
• Base salary
Base cash
• Hourly wage
Source Armstrong (2019)

from their work environment (the job they do and

how they are managed) and the opportunity to de-
velop their skills and careers. It contributes to the Word s of w isd om
production of an employee value proposition that Employers have clung to the rhetoric of
provides a clear, compelling reason why talented
total reward strategies, claiming for the past
people should work for a company and is an impor-
tant approach to improving the employee experi- two decades to be replacing inflexible,
ence (see Chapter 30). paternalistic, fixed-cost-focused rewards
with attractive business and employee-
Critical evaluation of the total
driven flexible packages. In reality, many
reward concept
were simply following market practice and
The basic premise of total reward – that it is impor-
tant to consider both financial and non-financial in the United Kingdom, looking for tax and
means of rewarding people – is sound. Intrinsic moti- National Insurance contribution savings.
vation factors – those that arise from the work itself –
Brown (2014: 149)
can have a more powerful affect in the longer term
than the short-lived satisfaction resulting from a pay
increase. Why not therefore treat these as rewards in
the sense that they are what people get when they Brown, probably the leading commentator on re-
work for an organization and do something about ward matters in the UK, returned to the fray in
enhancing them in order to make the best use of both 2019:
financial and non-financial rewards? Even if the pre-
scriptions in the models for non-financial rewards are
simply good HR practices or typical components in a
high-performance work system, they do clarify that
these should be associated with the reward system. As
Word s of w isd om
Giancola (2009) suggested, the main purpose of total The boardroom and recruitment website
reward is to consider the standard list of human re-
rhetoric has never matched the shop floor
source programmes from a reward perspective when
developing strategy. It is necessary to consider these reality on total rewards. The practical impact
elements as well as the more obvious financial re- never lived up to the policy intent. Rather
wards. Total reward sounds like common sense. But
does it work as it is supposed to? than being genuinely motivated by
Total reward is not an easy option. Worldat delivering higher levels of choice and
Work (2000) commented that total reward is
perceived value to employees in an
‘simple in concept but, at best, complex in execu-
tion’. And the extent to which it is being applied increasingly tight and diverse labour
by organizations in practice can be questioned. market, too often the concept was used – as
According to Duncan Brown (2014), exaggerated
claims for what total reward can do have led to trade unions often alleged – as an
lots of aspirations but few achievements. He sug- alternative to decent pay levels and
gested that the terminology and concept of total increases and, even worse, as a front to cut
reward is becoming increasingly meaningless and
outdated in our post- recessionary economy of pension and benefit costs and shift risk from
austerity and inequality. Its generic and unthink- employer to employee.
ing application in uniform packages risks isolat- Brown (2019: 4)
ing the rewards profession into an administrative
backwater.
These are convincing arguments. It seems that the

concept of total reward is good in theory but dubi-
ous in practice. Pau se for th ou gh t
Do you agree with that last comment?
CASE STUDIES
McDonald’s: demonstrating reward effectiveness
McDonald’s is a company with a strong culture of measure the business means that reward arrangements are
ment and has built its own people-profit chain methodology reviewed regularly and changed if they are not found to be
to produce impressive evidence that demonstrates how delivering. But the subtler processes of consultation and
rewards can enhance employee engagement and thereby change management are equally vital in maintaining and
business performance. The operational and cost focus in strengthening reward effectiveness.
The NSPCC: approaches to achieving reward effectiveness
The experience of the NSPCC was that while measures of purpose of the organization was the major driver behind
organizational and reward effectiveness may differ, the the extensive research undertaken into effectiveness. The
delivery of them is every bit as critical, if not more so, in culture of the organization and its values were important
voluntary organizations. It also shows that limited considerations, as was ensuring that the values of the
resources need not be a barrier to assessing and demon people in the organization were aligned to them.
strating effectiveness. Establishing links to the core
Key learning points
Reward management defined Values and beliefs

Reward management deals with the strategies, Reward policies and practices are affected by the
policies and processes required to ensure that the values and beliefs of the organization about how
value of people and the contribution they make to people should be rewarded and how the reward
achieving organizational, departmental and team goals system should be managed. These may be articulated
is recognized and rewarded. as a reward philosophy that sets out the broad values
of the organization or as a set of guiding principles.
Aims of reward management
Reward management provides answers to two
Reward policy
fundamental questions: (1) How do we value people? Reward policy sets guidelines for decision making and
and (2) How are we going to reward them according to action and therefore provides the framework for
their value? managing a reward system. It indicates what the
organization and its management are expected to do The management of job- and person-based pay
about managing reward and how they will behave in involves:
given circumstances when dealing with reward issues.
●● Pay determination – making decisions on the value
of jobs by means of market pricing and job
Reward policies can cover: evaluation.
●● external competitiveness versus internal equity; ●● Base pay management – developing and operating
●● level of rewards; pay structures which group jobs into grades, bands
or levels in accordance with internal and external
●● segmentation. relativities and usually provide for pay progression.
●● Contingent pay – planning and managing schemes
Reward strategy which provide for pay progression related to
Reward strategy defines what an organization wants performance, contribution, competence, skill or
to do about reward in the next few years and how it length of service.
intends to do it.
Reward strategy may be a broad-brush affair, Non-financial rewards
simply indicating the general direction in which it is
thought reward management should go. Additionally or Non-financial rewards focus on the needs people have
alternatively, reward strategy may set out a list of to varying degrees for recognition, achievement,
specific intentions dealing with particular aspects of personal growth and acceptable working conditions.
reward management. Non-financial rewards can be extrinsic, such as praise
or recognition, or intrinsic, associated with job
challenge and interest and feelings that the work is
Reward system worthwhile.
A reward system consists of the interrelated processes
and practices of financial and non-financial rewards Total reward
that combine into a total rewards approach to ensure
that reward management is carried out to the benefit of In total reward the various aspects of reward, namely
the organization and the people who work there. base pay, contingent pay, employee benefits and
non-financial rewards, which include intrinsic rewards
from the work itself, are linked together and treated as
Financial rewards an integrated and cohesive whole.
Financial rewards consist of job-based pay, which The concept of total rewards describes an
provides pay related to the value of the job, and approach to reward management that emphasizes the
person-based pay, which provides rewards that need to consider all aspects of the work experience of
recognize the individual’s contribution. They also value to employees, not just a few such as pay and
include employee benefits and pensions and financial employee benefits.
recognition schemes.
References
Armstrong, M (2019) Handbook of Reward Brown, D (2014) The Future of Reward
Management Practice, 6th edn, London, Kogan Management: From total reward strategies to
Page smart rewards, Compensation & Benefits Review,
Armstrong, M and Murlis, H (2007) Reward 46 (3), pp 147–51
Management, revised 5th edn, London, Kogan Page
Brown, D (2018) Fairness, flexibility and Giancola, F L (2009) Is total reward a passing fad?
affordability: what are the lessons from pay and Compensation & Benefits Review, 41 (4), pp
reward approaches and trends in the UK? Institute 29–35
for Employment Studies [online] http://www. Lawler, E E (1990) Strategic Pay, San Francisco, CA,
employment-studies.co.uk/resource/fairness- Jossey-Bass
flexibility-and-affordability (archived at https:// Schuster, J R and Zingheim, P K (1992) The New Pay,
perma.cc/AK2T-ZTEA) [accessed 10 March 2019] New York, Lexington Books
Brown, D (2019) 2019: A totally rewarding year? Thompson, M (1998) Trust and reward, in (eds)
Institute for Employment Studies https://www. S Perkins and St J Sandringham, Trust, Motivation
employment-studies.co.uk/resource/2019-totally- and Commitment: A reader, Farringdon, Strategic
rewarding-year (archived at https://perma. Remuneration Research Centre
cc/8MPM-VJ7T) [accessed 10 March 2019] Trevor, J (2011) Can Pay be Strategic? Basingstoke,
e-reward (2007) Survey of Grade and Pay Structures, Palgrave Macmillan
Stockport, e-reward, WorldatWork (2000) Total Reward: From
Ghoshal, S and Bartlett, C A (1995) Changing the strategy to implementation, WorldatWork,
role of top management: beyond structure to Scottsdale, AZ
process, Harvard Business Review, January–
February, pp 86–96
489
41
The practice of
reward management
rate for the job or the person. The aim is to ensure
Introduction that the rates are competitive. It helps to develop
the pay structure – the pay ranges attached to
In this chapter the following reward management grades. Information on market rates may lead to the
practices are described: introduction of market supplements for individual
●● Market pricing (salary surveys) jobs or the creation of separate pay structures (mar-
●● Job evaluation ket groups) to cater for particular market rate pres-
sures. It is referred to as ‘extreme market pricing’
●● Base pay management when market rates are the sole means of deciding
●● Pay progression through individual on internal rates of pay and relativities, and conven-
contingent pay tional job evaluation is not used. An organization
●● Team pay that adopts this method is said to be ‘market-
driven’. Market pricing may be associated with
●● Paying for organizational performance
formal job evaluation, which establishes internal

●● Bonus schemes relativities and the grade structure.
●● Recognition schemes
●● Employee benefits
●● Administering reward management
Acceptability of market pricing
The acceptability of either form of market pricing is
dependent on the availability of robust market data
Market pricing and, when looking at external rates, the quality of
the job-to-job matching process, ie comparing like
Market pricing is the process of making decisions on with like. It can therefore vary from analysis of data
pay structures and individual rates of pay and obtain- by job titles to detailed matched analysis collected
ing information on market rates (market rate analysis through bespoke surveys focused on real market
or a salary survey). A policy decision is required on equivalence. Extreme market pricing can provide
the relationship between market rate levels and levels guidance on internal relativities. But it can lead to
of pay within the organization. This is called the ‘mar- pay discrimination against women, where the mar-
ket or pay stance’, which may be expressed in such ket has traditionally been discriminatory, and it
terms as matching median (average) rates or paying does not satisfy UK equal pay legislation.
upper quartile rates (within the top 25 per cent).
The concept of a market rate

Use of market pricing Market pricing attempts to establish the market
Market pricing informs decisions on base rates of rate for jobs, but the notion of a market rate is a
pay, ie the amount of pay that constitutes the basic more elusive concept than it seems. There is no such
thing as a definitive market rate for any job, even More than one source should be used if
when comparing identically sized organizations in possible. Advertisements are useless.
the same industry and location. Different market 3 Collect, analyse and interpret the
information sources for the same types of jobs pro- information. The pay data for jobs may be
duce different results because of variations in the presented in the form of a range of pay from
sample, the difficulty of obtaining precise matches lowest to highest, the median rate (the
between jobs in the organization and jobs elsewhere midpoint in a distribution of rates of pay)
(job matching), and timing (the dates on which the and the upper and lower quartiles (the values
data is collected may differ). which, respectively, are exceeded by a quarter
This means that market rate analysis is most un- of the values in the distribution or below
likely to produce definite information on the rate which a quarter of the values in a
for the job. The possibly incomplete data from a distribution occur). Interpreting the data may
number of sources, some more reliable than others, mean producing a derived market rate from
has to be interpreted to indicate what the organiza- the different sources.
tion should do about it. This may be expressed as a
4 Apply the information in line with a policy
‘derived market rate’, which is an average of aver-
decision on market stance – the pay levels
ages covering a range of pay information – a dubi-
required to be competitive and affordable.
ous notion. Data may be available for some jobs but
not for others that are unique to the organization.
Job evaluation
Job evaluation is a systematic and formal process
for defining the relative worth or size of jobs within
It has been said that ‘a job is worth what the an organization in order to establish internal rela-
market says it is worth’. Do you agree? tivities. It is carried out through either an analytical
or a non-analytical scheme.
Analytical job evaluation schemes

Market rate analysis
Analytical job evaluation is based on a process of
Market rate analysis involves the following steps: breaking down whole jobs into a number of defined
1 Identify and define the jobs for which market elements or factors and then comparing them factor
rate data is required. These are benchmark by factor, either with a graduated scale of points at-
jobs that are representative of different levels tached to a set of factors, or with grade or role pro-
and occupations and can be compared with files analysed under the same factor headings.
similar jobs. In conducting the survey the The advantages of an analytical approach are
aim will be to ‘match’ these jobs as closely as that: first, evaluators have to consider each of the
possible with jobs elsewhere. characteristics of the job separately before forming
a conclusion about its relative value; second, evalu-
2 Identify the sources of information in the
ators are provided with defined yardsticks or guide-
form of salary surveys. These can include
lines that help to increase the objectivity and
published surveys conducted by a pay
consistency of judgements. It can also provide a de-
consultancy or research organization, surveys
fence in the UK against an equal pay claim.
conducted specially by the organization, ‘pay
The main analytical schemes, as described below,
clubs’ (groups of employers who exchange
are point-factor rating and analytical matching.
pay information) and advertisements.
Published surveys are likely to provide the
most convenient source of robust information. Point-factor rating
Special surveys and pay clubs can produce Point-factor schemes are the most common forms
useful data but they are time-consuming. of analytical job evaluation. They were used by
Chapter 41 | The Practice of Reward Management 491
70 per cent of the respondents with job evaluation Analytical matching can be used to grade jobs or
schemes to the e-reward 2017 job evaluation s urvey. place them in levels following the initial evaluation
The basic methodology is to break down jobs of a sufficiently large sample of benchmark jobs, ie
into factors. These are the elements in a job such as representative jobs that provide a valid basis for
the level of responsibility, knowledge and skill or comparisons. This can happen in big organizations
decision making that represent the demands made when it is believed that it is not necessary to go
by the job on job holders. For job evaluation pur- through the whole process of point-factor evaluation
poses it is assumed that each of the factors will con- for every job, especially where ‘generic’ roles are con-
tribute to the value of the job and is an aspect of all cerned. It takes much less time than using a point-
the jobs to be evaluated, but to different degrees. factor scheme and the results can be just as accurate.
Each factor is divided into a hierarchy of levels,
typically five or six. Definitions of these levels are
produced to provide guidance on deciding the de- Non-analytical job evaluation
gree to which the factor applies in the job to be
Non-analytical job evaluation schemes enable
evaluated. A maximum points score is allocated to
whole jobs to be compared in order to place them in
each factor. The scores available may vary between
a grade or a rank order – they are not analysed by
different factors in accordance with beliefs about
reference to their elements or factors. They can op-
their relative significance. This is termed ‘explicit
erate on a job-to-job basis in which a job is com-
weighting’. If the number of levels varies between
pared with another job to decide whether it should
factors, this means that they are implicitly weighted
be valued more, less, or the same (ranking and ‘in-
because the range of scores available will be greater
ternal benchmarking’ processes). Alternatively, they
in the factors with more levels.
may function on a job-to-grade basis in which
The total score for a factor is divided between
judgements are made by comparing a whole job
the levels to produce the numerical factor scale. The
with a defined hierarchy of job grades (job classifi-
complete scheme consists of the factor and level
cation) – this involves matching a job description to
definitions and the scoring system (the total score
a grade description. Non-analytical schemes are
available for each factor and distributed to the fac-
simple to introduce and operate but provide no de-
tor levels). This comprises the ‘factor plan’.
fined standards of judgement. Differences between
Jobs are ‘scored’ (ie allocated points) under each
jobs are not measured and they do not provide a
factor heading on the basis of the level of the factor
defence in an equal pay case.
in the job. This is done by comparing the features of
the job with regard to that factor with the factor
level definitions in order to find out which defini-
tion provides the best fit. The separate factor scores
are then added together to give a total score, which
indicates the relative value of each job and can be Many organizations, especially in the United
used to place the jobs in rank order, or allocate States, rely on market pricing rather than
them into grades in a graded pay structure that have
been defined in terms of job evaluation points. job evaluation to establish the relative
value. (1) Why should this be the case? (2)
Analytical job matching Are there any risks involved?
Like point-factor job evaluation, analytical job match-
ing is based on the analysis of a number of defined
factors. Profiles of roles to be evaluated that have been
analysed and described in terms of job evaluation fac-
tors are compared with grade, band or level profiles Base pay management
that have been analysed and described in terms of the
same job evaluation factors. The role profiles are then The management of base pay (the rate for the job or
‘matched’ with the range of grade or level profiles to the person) uses the information from market pric-
establish the best fit and thus grade the job. ing and job evaluation to design and operate grade
and pay structures that cater for job-based pay and ●● be flexible enough to adapt to pressures
allow scope for pay to progress within the structure arising from market rate changes and skill
through person-based pay. shortages;
●● facilitate operational flexibility and
continuous development;
Formal grade and pay structures ●● provide scope as required for rewarding
Grade and pay structures provide the framework performance, contribution and increases in
for base pay management in order to implement an skill and competence;
organization’s pay policies. They enable the organi- ●● clarify reward, lateral development and
zation to determine where jobs should be placed in career opportunities;
a hierarchy, define pay levels and the scope for pay
●● be constructed logically and clearly so that
progression and provide the basis upon which rela-
the basis upon which they operate can
tivities can be managed, equal pay can be achieved
readily be communicated to employees;
and the processes of monitoring and controlling the
implementation of pay practices can take place. ●● enable the organization to exercise control
Grade and pay structures also enable organizations over the implementation of pay policies and
to communicate the career and pay opportunities budgets.
available to employees
A grade structure consists of a sequence or hier- Types of grade and pay structures
archy of grades, bands or levels into which groups
The most typical types of pay structures are illus-
of jobs which are broadly comparable in size are
trated in Figure 41.1.
placed. A pay structure consists of pay ranges,
The main types of grade and pay structures and
brackets or scales that are attached to each grade,
their advantages and disadvantages are summarized
band or level in a grade structure. Pay structures are
in Table 41.1.
defined by the number of grades they contain and
the span or width of the pay ranges attached to each
grade. Span is the scope the grade provides for pay
progression and is usually measured as the differ-
Unstructured pay systems
ence between the lowest point in the range and the Many organizations (41 per cent of the respondents
highest point in the range as a percentage of the to the CIPD 2017 survey) do not have a graded
lowest point. Thus a range of £20,000 to £30,000 structure at all for any jobs, or for certain jobs such
would have a span of 50 per cent. Pay progression as directors. Instead they use spot rates or individ-
takes place in the grades on the basis of perfor- ual job grades as described below. Smaller organiza-
mance, contribution or time served in the grade. tions responding to the survey were more likely to
adopt this approach. These arrangements are also
common for manual workers irrespective of the or-
Guiding principles for grade ganization’s size.
and pay structures
Grade and pay structures should: Spot rates
●● be appropriate to the culture, characteristics A spot rate is a rate for a job which does not define
and needs of the organization and its or prescribe any scope for the progression of base
employees; pay. This means that there are no pay ranges or sal-
●● facilitate the management of relativities and ary brackets although cash bonuses may be pro-
the achievement of equity, fairness, vided on top of the base rate. There will be scope for
consistency and transparency in managing moving on to higher spot rates as skill, competence
gradings and pay; or contribution increases. Spot rates may be at-
tached to a person rather than a job (person-based
●● enable jobs to be graded appropriately and
pay) and thus reflect the perceived value of the indi-
not be subject to grade drift (unjustified
vidual to the organization.
upgradings);
F I G U R E 41.1 Typical grade and pay structures
Multi-graded Broad-graded Broad-banded
TA B L E 41.1 Summary description of different formal grade and pay structures
Type of
structure Features Advantages Disadvantages
Narrow- ●● A sequence of job ●● Clearly indicate pay ●● Create hierarchical rigidity

graded grades – 10 or more relativities ●● Prone to grade drift
●● Narrow pay ranges eg ●● Facilitate control ●● Inappropriate in a
20– 40% ●● Easy to understand delayered organization
●● Progression usually linked
to performance
Broad- ●● A sequence of between 6 As for narrow-graded ●● Too much scope for pay
graded and 9 grades structures but in progression
●● Fairly broad pay ranges eg addition: ●● Control mechanisms can
40–50% ●● the broader grades be provided but they can
●● Progression linked to can be defined more be difficult to manage
contribution and may be clearly ●● May be costly
controlled by thresholds or ●● better control can be
zones exercised over grade

drift
Broad- ●● A series of, often, 5 or 6 ●● More flexible ●● Create unrealistic

banded ‘broad’ bands ●● Reward lateral expectations of scope for
●● Wide pay bands – typically development and pay rises
between 50% and 80% growth in ●● Seem to restrict scope for
●● Progression linked to competence promotion
contribution and ●● Fit new-style ●● Difficult to understand
competence organizations ●● Equal pay problems
(continued )
TA B L E 4 1. 1 (Continued)
Type of
structure Features Advantages Disadvantages
Job family ●● Separate grade and pay ●● Facilitate pay ●● Can appear to be divisive
structures for job families differentiation ●● May inhibit lateral career
containing similar jobs between market development
●● Progression linked to groups ●● May be difficult to
competence and/or ●● Define career paths maintain internal equity
contribution against clear criteria between job families
unless underpinned by job
evaluation
Pay spine ●● A series of incremental ●● Easy to manage ●● No scope for

pay points covering all jobs ●● Pay progression not differentiating rewards
●● Grades may be based on managerial according to performance
superimposed judgement ●● May be costly as staff
●● Progression linked to drift up the spine
service
Individual job grades pay systems based on salary ranges in a graded

structure (54 per cent of respondents) to be more
Individual job grades are spot rates to which a de-
common than those based on spot rates (26 per
fined pay range of, say, 20 per cent on either side of
cent) or incremental scales (20 per cent). The survey
the rate has been attached to provide scope for pay
also established that, typically, organizations with
progression based on performance, competency or
graded pay structures had eight pay ranges while
contribution. The mid-point of the range may be
those with incremental scales (pay spines) had
fixed by reference to market rates or, less often, by
seven.
means of job evaluation. Individual grades are usu-
The CIPD 2017 reward survey found that 35
ally attached to jobs, not persons.
per cent of respondents had multi- or narrow-
graded structures, 34 per cent had pay spines and
25 per cent had broad-banded or broad-graded
Incidence of pay structures structures.
Research by Incomes Data Services (2014) for the
Office for Manpower Economics (OME) showed
CASE STUDIES
Broad grading at Bristol-Myers Squibb
Pay is determined in relation to the market, and is pitched span of between 80 per cent and 100 per cent, covering
at the median, though the total reward package is upper everyone apart from the UK’s dozen or so senior executives.
quartile. There are eight overlapping bands, each with a The bands are:
D1 Basic clerical, factory semi-skilled. D7 Function heads.
D2 Clerical and factory semi-skilled. D8 Business heads, eg oncology, finance.
D3 Clerical and factory supervisor. These eight bands are used in all the countries in which
Bristol-Myers Squibb operates, though the salaries
D4 Senior supervisor, entry level for
attached to them are locally determined. But the bands are
professionals (eg scientists), customer-facing
seen as more of a safety net than anything else and
sales staff.
something that the US parent is keen to retain, although the
D5 Customer-facing sales staff. market is more important in the UK. The company says the
bands are helpful if there is an intention to recruit someone
D6 First-level manager, head
at a salary way over or under the band, which signals that
of department.
the job may need to be regraded.
Broad grading at Camelot

The broad-graded structure at Camelot is market driven – ●● Around a fifth of employers appoint new joiners at the
its focus is on paying the market rate for each job. Every bottom of the range; however, respondents operating
salary is benchmarked against the market to ensure that salary ranges were more likely to appoint new joiners
jobholders are being ‘paid fairly for the job that they do’, at the target rate (38 per cent) compared to those with
with base pay set at the median market rate. The following incremental scales (14 per cent).
six-level banding structure, covering everyone except the
●● Respondents with salary ranges said staff can either
chief executive, is used:
progress to the maximum (69 per cent), or there is no
Bands A and B cover administrative support and IT roles. upper limit to progression (22 per cent).
Band C includes supervisors, professionals and ●● It takes longer for a standard performer to progress
specialists. from entry level to the top of the grade at firms with
salary ranges (6.5 years) than those with incremental
Band D is for middle management. scales (5 years).
Band E is for heads of department. ●● The survey showed market rates have a greater
Band F covers functional directors. impact on progression for those employers using
salary ranges, with 36 per cent of respondents
Bands have some overlap, and each job has its own pay reporting employees progressed at a different rate
range within a band. The range is 85 per cent to 115 per when paid above the market rate, compared to only 8
cent, with 100 per cent being the rate for the job. The per cent of those with incremental scales.
ranges are benchmarked against the market twice a
●● Just over half of respondents said they continue to
year.
award cost-of-living increases or revalorize pay scales
for staff once they reach the maximum of the pay range.
The practice of managing pay in grade and pay
structures ●● Around a third award discretionary increases to staff
at the maximum and a fifth pay one-off, non-
The research by Incomes Data Services (2014) identified consolidated bonuses to staff at the maximum.
the following pay management practices adopted by
respondents:
●● Performance matrices are used by some employers to
give the highest pay rises to the highest performers
●● The majority of respondents set the ‘market rate’ at the low in their salary range. Some systems provide
mid-point of the pay range and treated that as the managers with the discretion to vary pay awards
‘target rate’. within the overall pay matrix.
be taken of the following five criteria for effective

Source review individual contingent pay:
1 Individuals have a clear line of sight between
One of the problems with a graded pay structure is what they do and what they will get for
what should be done about someone who reaches the doing it.
top of their scale but for whom there are no 2 Rewards are worth having.
opportunities for promotion to a higher grade. Do they
3 Fair and consistent means are available for
now remain on the same rate apart from cost-of-living
measuring or assessing performance,
increases? Or is there some other way of rewarding
competence, contribution or skill.
exceptional performance?
4 People are able to influence their
performance by changing their behaviour
and developing their competencies and skills.
5 The reward follows as closely as possible the
Contingent pay accomplishment that generated it.
These requirements are exacting and few schemes
Contingent pay provides financial rewards that take
meet them in full. That is why contingent pay ar-
two forms as summarized below and described in
rangements can often promise more than they de-
more detail later in this section.
liver. Research conducted by Thompson into the
1 Consolidated increases to base pay that are operation of performance-related pay (by far the
related to individual performance, competence, most popular form of individual contingent pay)
contribution, skill or length of service and led to the following conclusion:
provide for pay progression through a pay range
or an increase to a spot rate. These are referred
to in this chapter as individual contingent pay.
When service-related pay is excluded they are
sometimes called merit pay. Especially when Word s of wisd om
performance-related, individual contingent pay The benefits most often claimed for PRP
is the most typical method of rewarding
(performance-related pay) are not met in
individuals financially – 74 per cent of the
respondents to the 2017 CIPD reward survey practice. Firstly, PRP does not serve to
used it as the criterion for base pay progression. motivate (even those with high performance
2 Cash bonuses related to individual, team or
ratings) and may do more to demotivate
organizational performance. Individual cash
bonuses are sometimes referred to as variable employees. Secondly, there was little
pay although this term could equally well be evidence to suggest that PRP could help to
used as an alternative to individual
contingent pay. retain high performers and no evidence to
point to poor performers seeking to leave
the organizations. Thirdly, employees were
Individual contingent pay
negative or broadly neutral on its impact on
The features, advantages and disadvantages and the
appropriateness of individual contingent pay organizational culture even in schemes that
schemes are set out in Table 41.2. had been in operation for three or more
There is a choice between the different types of
years. Lastly, employees were unclear
scheme. A segmented approach might be adopted,
ie the schemes vary for different categories of staff. whether PRP rewards fairly (neither
Typically, directors and senior executives may have agreeing nor disagreeing).
separate schemes. In making the choice and then de-
Thompson (1992: ix)
signing and managing the scheme, account should
TA B L E 41.2 Summary of individual contingent pay schemes
Type of
scheme Main reatures Advantages Disadvantages When appropriate
Performance- Increases to basic pay ●● May motivate (but this is ●● May not motivate ●● For people who are likely to be
related pay or bonuses are uncertain) ●● Relies on judgements of motivated by money
(performance related to assessment ●● Links rewards to performance which may be ●● In organizations with a
pay) of performance objectives subjective performance-oriented culture
●● Meets the need to be ●● Prejudicial to teamwork ●● When performance can be
rewarded for achievement ●● Focuses on outputs, not measured objectively
●● Delivers message that quality
good performance is ●● Relies on good performance
important and will be management processes
rewarded ●● Difficult to manage well
Competency- Pay increases are ●● Focuses attention on ●● Assessment of competency ●● As part of an integrated approach
related pay related to the level of need to achieve higher levels may be difficult to HRM where competencies are
competency levels of competency ●● Ignores outputs – danger of used across a number of activities
●● Encourages competency paying for competencies ●● Where competency is a key factor
development that will not be used where it may be inappropriate or
●● Can be integrated with ●● Relies on well-trained and hard to measure outputs
other applications of committed line managers ●● Where well-established
competency-based HR competency frameworks exist
management
Contribution- Increases in pay or Rewards people not only As for both PRP and When it is believed that a well-
related pay bonuses are related for what they do but how competence-related pay – it rounded approach covering both
both to inputs they do it may be hard to measure inputs and outputs is appropriate
(competency) and contribution and it is difficult to
outputs (performance) manage well
Skill-based pay Increments related to Encourages and rewards Can be expensive when people On the shop floor or in retail
the acquisition of skills. the acquisition of skills are paid for skills they don’t use organizations
Service-related Increments are related It is perceived to be fair and Fails to recognize differences in In public-sector organizations where
pay to service in the grade is easy to manage performance it is favoured by the unions
497
No research conducted since then has contradicted among the members of the team in accordance with
these findings. a published formula or on an ad hoc basis in the
case of exceptional achievements. Rewards for indi-
viduals may also be influenced by assessments of
their contribution to team results.
Paus e fo r t houg ht Team pay can:
A lot of people, for example Alfie Kohn ●● encourage team working and co-operative
behaviour;
(1993), Jeffrey Pfeffer (1998) and Daniel Pink
●● enhance flexible working within teams and
(2009) have strongly criticized PRP. But if you encourage multi-skilling, clarify team goals
believe that people should be rewarded when and priorities and provide for the integration
of organizational and team objectives;
they perform well, what’s the alternative?
●● encourage less effective performers to
improve in order to meet team standards;
●● serve as a means of developing self-managed
or self-directed teams.
Individual bonuses But:
Individual bonus schemes provide cash payments ●● The effectiveness of team pay depends on the
to employees that are related to their performance. existence of well-defined and mature teams
A single criterion for bonus payments such as profit and they may be difficult to identify and,
before tax may be used for directors, with a thresh- even if they can be, do they need to be
old performance level to generate a bonus and a motivated by a purely financial reward?
sliding scale up to a maximum that determines the
size of the bonus. In a scheme applying to all staff, ●● Team pay may seem unfair to individuals who
ratings may be used that determine the size of the could feel that their own efforts are unrewarded.
bonus for individuals by reference to the extent to ●● Pressure to conform, which is accentuated by
which objectives have been achieved. The advan- team pay, could result in the team
tages of bonus schemes are that cash sums, as long maintaining its output at lowest common
as they are sizeable, can have a more immediate im- denominator levels – sufficient to gain what
pact on motivation and engagement and they have is thought collectively to be a reasonable
to be re-earned; unlike consolidated contingent pay reward but no more.
increases they are not ‘a gift that goes on giving’. ●● It can be difficult to develop performance
Individual bonus schemes providing lump-sum measures and methods of rating team
payments are an increasingly important part of the performance that are seen to be fair – team
remuneration package. The 2017 CIPD reward sur- pay formulae may well be based on arbitrary
vey established that 66 per cent of the respondents assumptions about the correct relationship
have them. The 2012 CIPD survey found that the between effort and reward.
highest bonuses went to the more senior employ-
●● There may be pressure from employees to
ees – for executives and directors the most common
migrate from poorly performing teams to
maximum bonus amounts available were 59 per
high-performing teams which, if allowed, could
cent of base pay, for senior and middle managers
cause disruption and stigmatize the teams from
they were 19 per cent of base pay, and for technical,
which individuals transfer, or if refused, could
professional, clerical and manual employees they
leave dissatisfied employees in the inadequate
were less than 10 per cent.
teams, making them even worse.
For many organizations, the disadvantages outweigh
Team pay the advantages. The notion of team pay a ppeals to
many people but the number of organizations using
Team pay links bonus payments in cash payments
it is relatively small. The CIPD 2012 survey found
to members of a formally established team to the
that only 18 per cent of respondents had team pay.
performance of that team. The rewards are shared
Recognition schemes
Pa u s e for t houg ht
Recognition involves showing appreciation to indi-
Surely the advantages of team performance
viduals for their achievements, either informally on
pay are so strong and the disadvantages of a day-to-day basis or through formal recognition
individual performance pay so powerful that arrangements. It can take place quietly between
managers and their teamworkers or be a visible cel-
team pay must be the answer. Why, ebration of success.
therefore, has it not become more popular? A recognition scheme can be formal and o rganization-
wide, providing scope to recognize achievements by gifts
or treats or by public applause. Typically, the awards are
non-financial but some organizations provide cash
awards. Importantly, recognition is also given less for-
Pay for organizational mally when managers simply say, ‘Well done’, ‘Thank
performance you’, or ‘Congratulations’ – face to face or in a brief note
of appreciation.
Many organizations believe that their financial re- But a survey by the Aberdeen Group (2013)
ward systems should extend beyond individual con- found that only 14 per cent of organizations pro-
tingent pay, which does not recognize collective vided managers with the necessary tools for rewards
effort, or team pay, which is difficult. They believe and recognition.
that their system should help to enhance engage-
ment and commitment and convince employees
that they have a stake in the business as well as pro-
viding them with additional pay. The response to
Employee benefits
this belief is to offer financial rewards which are Employee benefits consist of arrangements made by
related to business or organizational performance employers for their employees that enhance the lat-
(sometimes known as company-wide or factory- ter’s wellbeing. They are provided in addition to pay
wide schemes). and form important parts of the total reward pack-
The three types of formal business performance age. As part of total remuneration, they may be de-
schemes are: ferred or contingent such as a pension scheme, in-
1 Profit sharing – the payment of sums in cash surance cover or sick pay, or they may be immediate
or shares related to the profits of the such as a company car or a loan. Employee benefits
business; the 2017 CIPD reward survey also include holidays and leave arrangements,
found that 47 per cent of respondents had which are not strictly remuneration. Benefits are
such a scheme. sometimes referred to dismissively as ‘perks’ (per-
quisites) or ‘fringe benefits’, but when they cater for
2 Share schemes – employees are given the
personal security or personal needs they could
opportunity to take out share options or
hardly be described as ‘fringe’. Flexible benefit
participate in a save-as-you-earn scheme of a
schemes give employees a choice, within limits, of
share incentive plan; 41 per cent of the
the type or scale of benefits offered to them by their
respondents to the 2012 CIPD survey had a
employers. The CIPD (2018) reward management
share scheme.
survey found that three of the most common bene-
3 Gain sharing – the payment of cash sums to fits were pensions (75 per cent of respondents),
employees related to the financial gains child care vouchers (61 per cent) and employee as-
made by the company because of its sistance programmes (60 per cent).
improved performance; only 3.6 per cent of Pension provision has undergone considerable
the CIPD 2012 respondents had such change recently. The traditional defined benefit
schemes. scheme, which provides a pension based on final
salary, is disappearing rapidly (too costly) and is higher or lower than 100 per cent mean that, re-
being replaced by defined contribution schemes spectively, pay is above or below the policy target
where the retirement pension is whatever annual rate. For example, if the target (policy) rate in a
payment can be purchased with the money accumu- range were £20,000 and the average pay of all the
lated in the fund for a member (cheaper). individuals in the grade were £18,000, the compa-
Employee benefits are a costly part of the remu- ratio would be 90 per cent. Compa-ratios establish
neration package. They can amount to one-third or differences between policy and practice. The rea-
more of basic pay costs and therefore have to be sons for such differences need to be established.
planned and managed with care.
General pay reviews

Administering reward General reviews take place when employees are
management given an increase in response to general market rate
movements, increases in the cost of living, or union
The administration of reward management is con- negotiations. General reviews are often combined
ducted through three main activities: base pay with individual reviews, but employees are usually
management by means of compa-ratio analysis,
informed of both the general and individual
general pay reviews, and individual pay reviews. It components of any increase they receive.

is also affected by the legislation for pay reporting. Alternatively, the general review may be conducted
separately to enable better control to be achieved
over costs and to focus employees’ attention on the
Base pay management through performance-related aspect of their remuneration.
Some organizations have completely abandoned
compa-ratio analysis the use of across-the-board reviews. They argue that
A compa-ratio (short for ‘comparative ratio’) meas- the decision on what people should be paid should
ures the relationship in a graded pay structure be- be an individual matter, taking into account the per-
tween actual and policy rates of pay as a percentage. sonal contribution people are making and their
The policy value used is the mid-point or reference ‘market worth’ – how they as individuals are valued
point in a pay range, which represents the ‘target in the marketplace. This enables the organization to
rate’ for a fully competent individual in any job in adopt a more flexible approach to allocating pay
the grade. This point is aligned with market rates in increases in accordance with the perceived value of
accordance with the organization’s market stance. individuals to the organization.
Compa-ratios can be used to define the extent to The steps required to conduct a general review
which pay policy is achieved (the relationship be- are:
tween the policy and actual rates of pay). The analy- 1 decide on the budget;
sis of compa-ratios indicates what action may have
2 analyse data on pay settlements made by
to be taken to slow down or accelerate increases if
comparable organizations and rates of
compa-ratios are too high or too low compared
inflation;
with the policy level. This is sometimes called ‘mid-
point management’. Compa-ratios can also be used 3 conduct negotiations with trade unions as
to measure where an individual is placed in a pay required;
range and therefore provide information on the size 4 calculate costs;
of pay increases when a pay matrix is used, as de- 5 adjust the pay structure – by either increasing
scribed later in this chapter. Compa-ratios are cal- the pay brackets of each grade by the
culated as follows: percentage general increase or by increasing
actual rate of pay pay reference points by the overall
× 100 percentage and applying different increases
mid or reference point of range
to the upper or lower limits of the bracket,
A compa-ratio of 100 per cent means that actual thus altering the shape of the structure;
pay and policy pay are the same. Compa-ratios
6 inform employees.
Individual pay reviews a read-across but it is not so immediate. Some try to

do without formulaic approaches (ratings and pay
Individual pay reviews determine contingent pay matrices) altogether, although it is impossible to dis-
increases or bonuses. The e-reward 2009 survey of sociate merit pay completely from some form of as-
contingent pay found that the average size of the sessment.
pay awards made by respondents was 3.3 per cent.
Individual awards may be based on ratings, an
overall assessment that does not depend on ratings,
Guidelines to managers on
or ranking, as discussed below. conducting individual pay reviews
Guidelines have to be issued to managers on how
Individual pay reviews based on they should conduct reviews. The guidelines will
stipulate that they must keep within their budgets
ratings and may indicate the maximum and minimum in-
Managers propose increases on the basis of their creases that can be awarded, with an indication of
performance management ratings within a given how awards could be distributed. For example,
pay review budget and in accordance with pay re- when the budget is 4 per cent overall, it might be
view guidelines. suggested that a 2.5 per cent increase should be
There is a choice of methods. The simplest way is given to the majority of staff and the others given
to have a direct link between the rating and the pay higher or lower increases as long as the total per-
increase. An example is given in Table 41.3. centage increase does not exceed the budget.
A more sophisticated approach is to use a pay ma- Managers in some companies are instructed that
trix, as illustrated in Table 41.4. This indicates the they must follow a forced pattern of distribution
percentage increase payable for different performance (a forced choice system).
ratings according to the position of the individual’s
pay in the pay range (the individual ‘compa-ratio’).
Many people argue that linking performance
Steps required
management too explicitly to pay through ratings The steps required to conduct an individual pay re-
prejudices the essential developmental nature of per- view are:
formance management. However, realistically, it is 1 agree the budget;
accepted that decisions on performance-related or
2 prepare and issue guidelines on the size,
contribution-related increases have to be based on
range and distribution of awards and on
some form of assessment. One solution is to ‘decou-
methods of conducting the review;
ple’ performance management and the pay review
by holding them several months apart. There is still 3 provide advice and support;
4 review proposals against budget and
guidelines and agree modifications to them if
TA B L E 41.3 A direct link between ratings necessary;
and pay increases
5 summarize and cost proposals and obtain
approval;
Rating Percentage increase
6 update the payroll;
A 6 7 inform employees.
B 4
C 3
D 2
E 0
TA B L E 41.4 A pay matrix
Percentage pay increase according to performance rating and

position in pay range (compa-ratio)
Position in pay range
Rating 80–90% 91–100% 101–110% 111–120%
Excellent 12% 10% 8% 6%
Very effective 10% 8% 6% 4%
Effective 6% 4% 3% 0
Developing 4% 3% 0 0
Ineligible 0 0 0 0
Reporting pay information: The Companies (Miscellaneous

government regulations Reporting) Regulations 2018
A section of these regulations makes it a statutory
The following two government regulations require
requirement from 2020 for companies listed on the
organizations to report on certain details of their
London Stock Exchange with more than 250 staff
pay arrangements.
to disclose the ratio of their chief executives’ remu-
neration to the median pay of their UK employees
The Equality Act 2010 (Gender Pay every year, and to justify the difference. They will
Gap Information) Regulations 2017 also need to explain how directors take staff and
other stakeholder interests into account when they
These require organizations with 250 or more em-
decide on salaries and bonuses.
ployees to publish statutory calculations every year
showing how large the pay gap is between their
male and female employees.
Key learning points
Market pricing Job evaluation

Market pricing is the process of making decisions on Job evaluation is a systematic and formal process
pay structures and individual rates of pay and for defining the relative worth or size of jobs within
obtaining information on market rates (market rate an organization in order to establish internal
analysis). relativities.
Base pay management number of organizations using it is relatively small. The

CIPD 2012 survey found that only 18 per cent of
The management of base pay uses the information respondents had team pay.
from market pricing and job evaluation to design and
operate grade and pay structures that cater for
Pay for organizational performance
job-based pay and allow scope for pay to progress
within the structure through person-based pay. The provision of financial rewards that are related to
business or organizational performance (sometimes
Grade and pay structures known as ‘company-wide’ or ‘factory-wide’ schemes).
They include profit sharing, share schemes and gain
Grade and pay structures provide a framework within sharing.
which an organization’s pay policies can be
implemented.
Recognition schemes
A grade structure consists of a sequence or
hierarchy of grades, bands or levels into which groups Recognition schemes as part of a total reward
of jobs that are broadly comparable in size are placed. package enable appreciation to be shown to
A grade structure becomes a pay structure when pay individuals for their achievements, informally on a
ranges, brackets or scales are attached to each grade, day-to-day basis or through formal recognition
band or level. The main types of grade and pay arrangements.
structures are narrow-graded, broad-graded,
broad-banded and pay spines. Employee benefits
Employee benefits consist of arrangements made by
Contingent pay employers for their employees that enhance the
Contingent pay provides financial rewards in two latter’s wellbeing. They are provided in addition to pay
forms: and form important parts of the total reward package.
●● consolidated increases to base pay that are related
to individual performance, competence, Administering reward management

contribution, skill or length of service and provide
for pay progression through a pay range or an The administration of reward management is
increase to a spot rate; conducted through three main activities: base pay
management through compa-ratio analysis,
●● cash bonuses related to individual, team or conducting general pay reviews, and conducting
organizational performance. individual pay reviews.
Government regulations require all organizations
with 250 or more employees to report on their gender
Team pay pay gap and all organizations listed on the Stock
Team pay links payments to members of a formally Exchange with 250 or more employees to report on the
established team to the performance of that team. The ratio between the pay of their chief executive and the
notion of team pay appeals to many people but the average pay of their employees.
References
Aberdeen Group (2013) The Power of Employee Incomes Data Services (2014) Private Sector Practice
Recognition. Waltham, Aberdeen Group on Progression: A research report for the Office of
CIPD (2012) Reward Management Survey, London, Manpower Economics, London, IDS
CIPD Kohn, A (1993) Why incentive plans cannot work,
CIPD (2017) Reward Management Survey, London, Harvard Business Review, September–October,
CIPD pp 54–63
CIPD (2018) Reward Management (Employee Pfeffer, J (1998) Six dangerous myths about pay,
Benefits) Survey, London, CIPD Harvard Business Review, May–June, pp 109–19
e-reward (2009) Survey of Contingent Pay, Stockport, Pink, D H (2009) Drive: The surprising truth about
e-reward what motivates us, New York, Riverhead Books
e-reward (2017) Survey of Job Evaluation, Stockport, Thompson, M (1992) Pay and Performance: The
e-reward employee experience, Brighton, IMS
505
42
Managing reward for
special groups
Introduction Executive remuneration
Many organizations have one reward system ap- Chief executive officers are well paid and so are the
plied to all categories of staff below the levels of directors and executives associated with them. The
chief executive and executive directors. However, CIPD (2019) reported that the pay of CEOs rose
others find it necessary to cater for the needs of spe- from 59 times the mean pay of their employees in
cial groups of staff by adopting different reward 1999 to nearly 145 times in 2017. The main reason
practices. This is called reward segmentation and, as for this is the perceived need to compete in the mar-
described in this chapter, frequently applies to the ketplace for executives by offering high levels of
methods used for directors and senior executives, remuneration. The views of the CIPD are given
knowledge workers, sales and customer service below:
staff, expatriate employees and manual workers.
Source review
The myth of ‘super talent’ continues to drive excessive reactions to an abrupt departure. This is despite
pay – remuneration committees continue to fear that questionable evidence of the impact of a single
executives will walk out on the company if their pay executive on company performance.
demands are refused, and worry about stock market CIPD (2019: 6)
In the opinion of the CIPD (2019: 10), high execu- Decisions on executive pay are affected by the deci-
tive pay awards are a major driver of economic in- sions of remuneration committees.
equality across the UK economy as a whole, with
negative consequences for the incomes of low and
middle earners. Remuneration committees
The Financial Reporting Council Corporate Gover
nance Code (2018) contains a provision for remu
Pa us e for t houg ht neration committees to provide an independent
basis for setting the salary levels and the rules
What do you think should be done about covering incentives, share options, benefit entitle-
excessively high levels of executive pay? ments and contract provisions for executive
directors. Such committees are accountable to

shareholders for the decisions they take and the too much importance on external benchmarks while
non-executive directors who sit on them should giving too little consideration to internal fairness.’
have no personal financial interests at stake. The They recommended that companies should consider
Code states that when determining executive establishing a formal ‘people and culture’ committee
director remuneration policy and practices, the in place of their remuneration committee.
remuneration committee should address the

following:
●● Clarity – remuneration arrangements should
The elements of executive
be transparent and promote effective remuneration
engagement with shareholders and the
The main elements of executive remuneration are
workforce.
basic pay, short- and long-term bonus or incentive
●● Simplicity – remuneration structures should schemes, share option and share ownership schemes,
avoid complexity and their rationale and benefits and service contracts. The salary is usually
operation should be easy to understand. a one-off, negotiated rate and commonly incorpo-
●● Risk – remuneration arrangements should rates a golden hello or pay-off deal. It should be set
ensure reputational and other risks from through a remuneration committee that meets good
excessive rewards, and behavioural risks that practice guidelines.
can arise from target-based incentive plans,
are identified and mitigated. Basic pay
●● Predictability – the range of possible values of Decisions on the base salary of directors and senior
rewards to individual directors and any other executives are usually founded on views about the
limits or discretions should be identified and market worth of the individuals concerned.
explained at the time of approving the policy. Remuneration on joining the company is commonly
●● Proportionality – the link between individual settled by negotiation, often subject to the approval
awards, the delivery of strategy and the of a remuneration committee. Reviews of base sala-
long-term performance of the company ries are then undertaken by reference to market
should be clear. Outcomes should not reward movements and success as measured by company
poor performance. performance. Decisions on base salary are impor-
●● Alignment to culture – incentive schemes tant not only in themselves but also because the
should drive behaviours consistent with level may influence decisions on the pay of both
company purpose, values and strategy. senior and middle managers. Bonuses are expressed
as a percentage of base salary, share options may be
Remuneration committees are now well established allocated as a declared multiple of basic pay and,
as bodies for making recommendations on direc- commonly, pension will be a generous proportion
tors’ pay, often with the advice of remuneration of final salary.
consultants. But as Perkins and Hendry (2005) ob-
served following their discussions with remunera-
tion committee members, these consultants tend to Bonus schemes
adopt a ‘pernicious process of choosing compara- Virtually all major employers in the UK have incen-
tors that just leads to the ratcheting up of top pay... tive (bonus) schemes for senior executives. Bonus
The problem becomes particularly acute when com- schemes provide directors and executives with cash
panies all strive to achieve the statistically impossi- sums or shares based on the measures of company
ble feat of setting reward levels to locate themselves and, frequently, individual performance. They are
in the upper quartile of their benchmark group.’ often paid annually but can be deferred for a longer
They also noted the ambiguities and weaknesses of period.
the non-executive directors who were committee Typically, bonus payments are linked to achieve-
members. The CIPD (2019: 22) commented that: ment of profit and/or other financial targets and
‘Remuneration committees’ conceptions of com- they are sometimes ‘capped’; that is, a restriction is
pany performance are… too narrow and they place placed on the maximum amount payable. There
Chapter 42 | Managing Reward for Special Groups 507
may also be elements related to achieving specific Share option schemes

goals and to individual performance. Bonuses tend
Many companies have share option schemes that
to be high – 70 per cent of base salary or more. They
give directors and executives the right to buy a
are ostensibly intended to motivate directors to
block of shares on some future date at the share
achieve performance improvements for the business.
price ruling when the option was granted. They are
A more common although not always disclosed rea-
a form of long-term incentive on the assumption
son for bonuses is to ensure that what is believed to
that executives will be motivated to perform more
be a competitive remuneration package is available:
effectively if they can anticipate a substantial capi-
‘Everyone else is doing it so we must too.’
tal gain when they sell their shares at a price above
One of the problems with high bonus expecta-
that prevailing when they took up the option.
tions is that of the ‘moral hazard’ involved. For
example, directors might be tempted to manipulate
reported profits to drive up the share price, frequently Performance share schemes
an important determinant of bonuses. Or they may Some companies have performance share schemes
go for high returns in risky short-term projects, ig- under which executives are provisionally awarded
noring the possible downside of longer-term losses. shares. The release of the shares is subject to the
Executives may benefit by receiving bonuses for company’s performance, typically determined on a
performance which meets objectives but they do sliding scale by reference to the company’s total
not lose pay when their objectives are not achieved. shareholder return (a combination of share price
They only gain, they never lose. It can be argued growth and dividend yield) ranking against its cho-
that they should get their base salary for doing their sen peer companies over a three-year period. Release
jobs, ie achieving their objectives, and only receive is also conditional on the executive remaining em-
more in the shape of a bonus if they exceed expecta- ployed by the company at the vesting date. Such a
tions. It could also be argued that if they fail to meet scheme rewards loyalty to the company and the
their objectives they should be penalized by not re- value delivered to shareholders in the form of share
ceiving a portion of their base salary which would price performance and dividends but does not link
then truly be pay-at-risk. Earn-back pay schemes directly to business performance.
try to remedy this situation. Such schemes require
executives to meet agreed objectives in order to
earn back an element of base pay placed at risk. If
Executive restricted share schemes
they do not succeed against the objectives, some or Under such schemes, free shares are provisionally
all of the earn-back pay will be lost. awarded to participants. These shares do not belong
to the executive until they are released or vested;
hence they are ‘restricted’. The number of shares ac-
Long-term bonuses tually released to the executive at the end of a defined
Cash bonus schemes can be extended over periods period (usually three or, less commonly, five years)
of more than one year on the grounds that annual will depend on performance over that period against
bonuses focus too much on short-term results. The specific targets. Thereafter there may be a further re-
most common approach to providing longer-term tention period when the shares must be held, al-
rewards is through share ownership schemes as de- though no further performance conditions apply.
scribed later.
Benefits
Deferred bonus schemes Employee benefits for executives may amount to over
Some companies have adopted deferred bonus 20 per cent of the total reward package. The most im-
schemes under which part of the executive’s annual portant element is the pension scheme, and directors
bonus is deferred for, say, two years. The deferred may be provided with a much higher accrual rate than
element is converted into shares, each of which is in a typical final salary scheme. This means that, typi-
matched with an extra, free share on condition the cally, the maximum two-thirds pension can be achieved
executive remains employed by the company at the after 20 years’ service or even less, rather than the 40
end of the deferral period. Such a scheme is designed years it takes in a typical one-sixtieth scheme. Pensions
to reward performance and loyalty to the company. are easily inflated, as in a recent notorious case, by
presenting the departing director with a last-minute customers, and this also applies to people in call
substantial increase in pensionable salary. centres.
There are no hard-and-fast rules governing how
Service contracts sales representatives or customer service staff
should be paid. It depends on the type of company,
Long-term service contracts for directors have been the products or services it offers its customers and
fairly typical, but they are disliked in the City be- the nature of the sales process – how sales are or-
cause of the high severance payments to departing ganized and made.
chief executives and directors that are made if the
contract is two or three years, even when it was sus-
pected or actually the case that they had been voted Rewarding sales representatives
off the board because of inadequate performance.
Rolling contracts for directors are now more likely Sales representatives are more likely to be eligible
to be restricted to one year. for commission payments or bonuses than other
staff on the grounds that their sales performance
will depend on or at least be improved by financial
Reward management for incentives. Many companies believe that the special
nature of selling and the type of person they need to
sales and customer service attract to their sales force requires some form of ad-
ditional bonus or commission to be paid. The nature
staff of the work of sales staff means that it is usually
easy to specify targets and measure performance
Sales and customer service staff make an immedi- against them, and sales incentive schemes are there-
ate impact on business results. This has led to an fore more likely to meet the line of sight requirement
emphasis on financial incentives, especially for (ie that there should be a clear link between effort
sales representatives and sales staff in retailers, and performance) than schemes for other staff such
who are often treated quite differently from other as managers and administrators. Sales staff, includ-
employees. The reward system for sales and ser- ing those in retail establishments, are often paid spot
vice staff also has to take account of the fact that rates with a commission on sales. A summary of pay
they are the people who are in direct contact with arrangements for sales staff is given in Table 42.1.
TA B L E 4 2 . 1 Summary of payment and incentive arrangements for sales staff
When
Method Features Advantages Disadvantages appropriate
Salary only Straight salary, Encourage customer No direct motivation When

no commission service rather than through money; may representing the
or bonus. high-pressure selling; attract under- company is more
deal with the problem achieving people who important than
of staff who are are subsidized by high direct selling; staff
working in a new or achievers; increases have little
unproductive sales fixed costs of sales influence on sales
territory; protects because pay costs volume (they may
income when sales are not flexed with simply be ‘order
fluctuate for reasons sales results. takers’); customer
beyond the individual’s service is all
control. important.
(continued )
When
Salary plus Basic salary Direct financial Relating pay to the When it is believed
commission plus cash motivation is provided volume or value of that the way to get
commission related to what sales sales is too crude an more sales is to
calculated as a staff are there to do, approach and may link extra money
percentage of ie generate sales; but result in staff going for to results but a
sales volume or they are not entirely volume by base salary is still
value. dependent on concentrating on the needed to attract
commission – they easier-to-sell products, the many people
are cushioned by not those generating who want to be
their base salary. high margins; may assured of a
encourage high- reasonable basic
pressure selling as in salary which will
some financial not fluctuate but
services firms in the who still aspire to
‘80s and ‘90s. increase that
salary by their own
efforts.
Salary plus Basic salary Provide financial Do not have a clear line When flexibility in
bonus plus cash bonus motivation but targets of sight between effort providing rewards
based on or objectives can be and reward; may be is important; it is
achieving and flexed to ensure that complex to administer; felt that sales staff
exceeding sales particular sales goals sales representative need to be
targets or are achieved, eg may find them hard to motivated to focus
quotas and high-margin sales, understand and resent on aspects of their
meeting other customer service. the use of subjective work other than
selling judgements on simply maximizing
objectives. performance other sales volume.
than sales.
Commission Only Provide a direct Lead to high-pressure When sales

only commission financial incentive; selling; may attract performance
based on a attract high- the wrong sort of depends mainly on
percentage of performing sales people who are selling ability and
sales volume or staff; ensure that interested only in can be measured
value is paid, selling costs vary money and not by immediate sales
there is no directly with sales; customer service; results; staff are not
basic salary. little direct focus attention on involved in non-
supervision required. high volume rather selling activities;
than profitability. continuing
relationships with
customers are
relatively
unimportant.
(continued )
When
Additional Incentives, Utilize powerful May be difficult to When it is believed

non-cash prizes, cars, non-financial administer; do not that other
rewards recognition, motivators. provide a direct methods of
opportunities to incentive. payment need to
grow. be enhanced by
providing
additional
motivators.
Rewarding customer service staff Rewarding expatriates

Customer service staff work mainly in retail estab-
lishments and in call or customer contact centres. The policy of most organizations is to ensure that
Their rewards need to reflect the nature of their du- expatriates are no worse off because they have been
ties, ie enhancing levels of customer service as well posted abroad. In practice, various additional allow-
as selling. ances or payments, such as hardship allowances,
Research conducted by West et al (2005) estab- mean that they are usually better off financially than
lished that most employees in the researched or- if they had stayed at home. The basic choice is
ganizations had the opportunity to progress their whether to adopt a home-based or host-based policy.
base pay on the basis of their performance or
competence, either through a range or up a pay
spine, or between grades/levels of job. Such ar- Home-based pay
rangements have generally supplanted spot rates The home-based pay approach aims to ensure that the
for service roles in call centres and retail shops. value of the remuneration (pay, benefits and allow-
Low base pay/high commission arrangements ances) of expatriates is the same as in their home coun-
were rare. try. The home-base salary may be a notional one for
At Boots the Chemists, shop staff can progress long-term assignments (ie the salary that it is assumed
up through a number of pay points according to would be paid to expatriates were they employed in a
their level of performance and skill – from entry job of equivalent level at the parent company). For
level, to experienced, to advanced, to expert/special- shorter-term assignments it may be the actual salary of
ist. At B&Q, customer advisors are paid on one of the individual. The notional or actual home-base sal-
six different spot rates. Pay progression is based on ary is used as the foundation upon which the total re-
the acquisition – and application – of skills and muneration package is built. This is sometimes called
knowledge. There are four additional spot rates be- the ‘build-up’ or ‘balance sheet’ approach.
yond the established rate designed to reward high The salary ‘build-up’ starts with the actual or
performance. Each additional level represents an notional home-base salary. To this is added a cost-
hourly increase up to a maximum rate. At House of of-living adjustment that is applied to ‘spendable
Fraser, employees are allocated to one of four com- income’ – the portion of salary that would be used
petency bands – training, bronze, silver and gold – at home for everyday living. It usually excludes in-
with staff assessed for a ‘promotion’ every six come tax, social security, pensions and insurance
months. At Lands’ End, there is a six-grade pay and can exclude discretionary expenditure on
structure for hourly paid staff, with spot rates for major purchases or holidays on the grounds that
starters. these do not constitute day-to-day living expenses.
The expatriate’s salary would then consist of the

actual or notional home-base salary plus the cost-
Paying manual workers
of-living adjustment. In addition, it may be neces-
sary to adjust salaries to take account of the host The pay of manual workers takes the form of time
country’s tax regime in order to achieve tax equali- rates, also known as day rates, day work, flat rates
zation. Moves of less than one year, which might or hourly rates. Incentive payments by means of
give rise to double taxation, require particular at- payment-by-results schemes may be made on top of
tention. Some or all of the following allowances a base rate.
may be added to this salary:
●● ‘incentive to work abroad’ premium; Time rates
●● hardship and location; Time rates provide workers with a predetermined
●● housing and utilities; rate for the actual hours they work. They are com-
●● school fees; monly used when it is thought that it is impossible or
●● ‘rest and recuperation’ leave. undesirable to use a payment-by-results system, for
example in maintenance work. From the viewpoint
of employees the advantage of time rates is that their
Host-based pay earnings are predictable and steady and they do not
have to engage in endless arguments with rate fixers
The host-based pay approach provides expatriates and supervisors about piece rate or time allowances.
with salaries and benefits such as company cars and The argument against them is that they do not pro-
holidays that are in line with those given to nation- vide a direct incentive relating the reward to the ef-
als of the host country in similar jobs. This method fort or the results. Two ways of modifying the basic
ensures equity between expatriates and host coun- time rate approach are to adopt high day rates as
try nationals. It is adopted by companies using what described below or measured day work.
is called a market rate system, which ensures that Time rates may take the form of what are often
the salaries of expatriates match the market levels called high day rates. These are higher than the
of pay in the host country. minimum time rate and may contain a consoli-
Companies using the host-based approach com- dated bonus rate element. The underlying assump-
monly pay additional allowances such as school tion is that higher base rates will encourage greater
fees, accommodation and medical insurance. They effort without the problems created when operat-
may also fund long-term benefits such as social se- ing an incentive scheme. High day rates are usually
curity, life assurance and pensions from home. above the local market rates to attract and retain
The host-based method is certainly equitable workers.
from the viewpoint of local nationals, and it can be
less expensive than home-based pay. But it may be
much less attractive as an inducement for employ- Pay structures
ees to work abroad, especially in unpleasant loca-
tions, and it can be difficult to collect market rate Pay systems for manual workers are seldom graded
data locally to provide a basis for setting pay levels. in the ways described in Chapter 41 unless their
conditions have been harmonized, ie brought into
line with salaried staff. Time rates are usually paid
in the form of spot rates: that is, a fixed rate for a
Pa us e for t houg ht job or an individual. However, spot rates may be
Is it right that if allowances are added to designated for different levels of skill. A person-
based pay system may be adopted with three basic
pay and pay is determined on the home- rates of pay attached to people – unskilled, semi-
based method as it commonly is, expats are skilled and skilled – above which there might be
likely to be much better remunerated than special rates for highly skilled occupations such as
toolmakers. Earnings from payment-by-result
local nationals? schemes are added to these rates. Other arrange-
ments include the use of a more discerning hierar- are an alternative to individual PBR and plant-
chy of rates linked to skill levels (a type of skills- wide schemes can produce bonuses which are
based pay), a job-based pay system with different paid instead of individual or team bonuses or in
rates for different jobs, or individual job grades addition to them. Each of these methods is
which are, in effect, spot rates to which a defined described in Table 42.2 together with an assess
pay is attached to provide scope for pay progression ment of their advantages and disadvantages for
based on performance. employers and employees and when they are

appropriate.
Payment-by-result schemes
Payment-by–result (PBR) schemes provide incen-
tives to workers by relating their pay or, more
usually, part of their pay to the number of items
they produce or the time taken to do a certain What is the case for and against
amount of work. The main types of PBR or in-
harmonizing the pay arrangements with
centive schemes for individuals are piece work,
work measured schemes, measured day work and those of salaried staff?
performance-related pay. Team bonus schemes
Key learning points
Segmentation Pay for customer service staff

Many organizations have one reward system applied Customer service staff usually have the opportunity to
to all categories of staff below the level of chief progress their base pay on the basis of their
executive. However, others find it necessary to cater performance or competence, either through a range or
for the needs of special groups of staff by adopting up a pay spine, or between grades/levels of job.
different reward practices. This is called reward
segmentation. Rewarding expatriates
The policy of most organizations is to ensure that
Executive pay levels
expatriates are no worse off because they have been
The level of executive pay is excessive. The main posted abroad. In practice, various additional
reason for this is the perceived need to compete in the allowances or payments, such as hardship
marketplace for executives by offering high levels of allowances, mean that they are usually better off
remuneration. financially than if they had stayed at home. The basic
choice is whether to adopt a home-based or host-
Elements of directors’ and senior based policy.
executives’ pay
Pay for manual workers
Basic, pay, bonus schemes, share options, executive
restricted share schemes. The pay of manual workers takes the form of time
rates, also known as day rates, day work, flat rates or
hourly rates. Incentive payments by means of
Payment and incentive schemes
payment-by-results schemes may be made on top of a
for sales staff base rate.
Summarized in Table 42.1.
TA B L E 42.2 Comparison of shop floor payment-by-result schemes
For employers For employees

When
Scheme Main features Advantages Disadvantages Advantages Disadvantages appropriate
Piece work Bonus directly Direct motivation; Lose control over Predict and More difficult to Fairly limited
related to output. simple, easy and output; quality control earnings predict and application to
to operate. problems. in the short control earnings work involving
term; regulate in the longer unit production
pace of work term; work may controlled by the
themselves. be stressful and person, eg
produce RSI. agriculture,
garment
manufacture.
Work Work Provides what Schemes are Appear to Ratings are still For short-cycle
measured measurement appears to be a expensive, provide a more prone to repetitive work
schemes used to determine ‘scientific’ method time-consuming objective subjective where changes in
standard output of relating reward and difficult to run method of judgement and the work mix or
levels over a period to performance; and can too easily relating pay to earnings can design changes
or standard times can produce degenerate and performance; fluctuate are infrequent,
for job/tasks; bonus significant cause wage drift employees can because of down time is
based by reference increases in because of loose be involved in changes in work restricted, and
to performance productivity, at rates. the rating requirements management and
ratings compared least in the short process to outside the supervision are
with actual term. ensure fairness. control of capable of
performance or employees. managing and
time saved. maintaining the
scheme.
(continued )
513
514
For employersw For employees

When
Scheme Main features Advantages Disadvantages Advantages Disadvantages appropriate
Measured day Pay fixed at a high Employees are Performance High predictable No Everyone must
work rate on the under an targets can earnings are opportunities be totally
understanding obligation to work become easily provided. for individuals committed to
that a high level of at the specified attained norms to be rewarded making it work;
performance level of and may be in line with their high standards
against work- performance. difficult to change. own efforts. of work
measured measurement
standards will be are essential;
maintained. good control
systems to
identify shortfalls
on targets.
Performance- Payments on top Reward individual Measuring Opportunity to Assessment As part of a

related pay of base rate are contribution performance can be rewarded for informing reward
made related to without resource be difficult; no own efforts performance harmonization
individual to work direct incentive without having pay decisions (shop floor and
assessments of measurement; provided. to submit to a may be biased, staff)
performance. relevant in pressured PBR inconsistent or programme; as
high-technology system. unsupported by an alternative to
manufacturing. evidence. work measured
schemes or an
enhancement of
a high day rate
system.
Group or team Groups or teams Encourage team Direct incentive Bonuses can be Depend on When team
basis are paid bonuses co-operation and may be limited; related clearly to effective work working is
on the basis of effort; not too depends on good the joint efforts measurement, important and
their performance individualized. work of the group; which is not team efforts can
as indicated by measurement or fluctuations in always available; be accurately
work the availability of earnings individual effort measured and
measurement clear group output minimized. and contribution assessed; as an
ratings or the or productivity not recognized. alternative to
achievement of targets. individual PBR if
targets. this is not
effective.
Factory wide Bonuses related Increase No direct Earnings Bonuses often As an addition to
bonuses to plant commitment by motivation. increased small and other forms of
performance – sharing success. without unpredictable. incentive when
added value or individual increasing
productivity. pressure. commitment is
important.
515
References
CIPD (2019) RemCo Reform: Governing successful Code-FINAL.PDF (archived at https://perma.
organisations that benefit everyone [online] cc/59AR-CTS7) [Accessed 14 March 2019]
https://www.cipd.co.uk/Images/2019-remco- Perkins, S and Hendry, P (2005) Ordering top pay:
reform-report_tcm18-52535.pdf (archived at interpreting the signals, Journal of Management
https://perma.cc/96WC-VVL8) [accessed Studies, 42 (7), pp 1443–68
14 March 2019] West, M, Fisher, G, Carter, M, Gould, V and Scully, J
Financial Reporting Council Corporate Governance (2005) Rewarding Customer Service? Using
Code (2018) https://www.frc.org.uk/ reward and recognition to deliver your customer
getattachment/88bd8c45-50ea-4841-95b0- service strategy, London, CIPD
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517
43
The gender pay gap
pay gaps have been virtually halved as obviously
Introduction discriminatory structures have been outlawed and
the minimum wage has reduced disparities amongst
The gender pay gap is the difference between the lower-paid employees.
average hourly earnings (excluding overtime) of The lack of women in higher-paying roles was
men and women as a proportion of the average noted by Brown and Rickard (2018), who reported
hourly earnings (excluding overtime) of men. that because of the vertical segregation of the UK
As reported by the Office of National Statistics, labour market, two-thirds of the UK’s low-paid em-
the gender pay gap for full-time employees in April ployees are female while over 80 per cent of high-
2018 was 8.6 per cent in favour of men. It ranged earning executives are men. Research by Brown
from 4.8 per cent for sales and customer service oc- (2017) has indicated that the uneven distribution of
cupations to 23.9 per cent for skilled trades. jobs between men and women is key to the mainte-
The gender pay gap is an overall figure and nance of gender disparities.
should be distinguished from equal pay which deals Brown and Rickard (2018), commented that:
with the pay differences between men and women ‘Our research and consulting experience at IES
who carry out the same jobs, similar jobs or work of (Institute for Employment Studies) points to the
equal value. Unequal pay does contribute to a pay complex, deeply rooted historical, cultural and so-
gap but, as explained below, there are other cial causes of gender pay gaps.’ Unequal pay may
important factors. This chapter starts with an expla- not be the major cause in many cases but it is still an
nation of why the gender pay gap occurs and contin- important factor. An analysis of the other main
ues with suggestions on what can be done about it. causes is set out below.
Reasons for the gender Lack of transparency

pay gap Being secretive about pay structures allows gender
gaps to flourish. A study by the Equality and Human
Respondents to the CIPD reward survey in 2017 cited Rights Commission in 2016 revealed that employers
a lack of women in high-paid jobs as the major cause with greater pay transparency have narrower gender
of a gender gap. Forty-three per cent of them thought pay gaps. And the research by Brown (2017) showed
that this was the main issue for managers but a con- how the gender gap is reduced or at least controlled
siderably smaller proportion (18 per cent) believed when employers are transparent about pay ranges.
that it applied to other employees. Much less impor-
tance was attached to unequal pay as a cause (9 per
cent for both managers and other employees). Pay increase decisions
Contrary to popular belief it seems that unequal
Brown (2017) found that when there is considera-
pay is not the principle reason for gender pay gaps.
ble flexibility for managers to make individual and
The equal pay legislation does seem to have had
discretionary decisions on pay increases, men seem
some effect on pay practice. In the 49 years since the
to be better than women in exploiting such flexibil-
original UK Equal Pay Act was introduced, gender
ity to their advantage.
Recruitment potential, which can restrict pay increases and

reduce promotion prospects.
A number of studies, for example Parken et al
(2014) have identified that the uneven distribution
of jobs between men and women is key to the main- Learning and development
tenance of gender disparities. Gender bias against
A limitation of learning opportunities for women
women can limit those shortlisted for interview,
can contribute to a gender pay gap by restricted ac-
lead to selection decisions that favour men, and re-
cess to more skilled and therefore better-paid jobs.
sult in men being offered higher starting salaries.
An analysis was made in 2017 by the Knowledge
Academy (cited by Brown and Rickard, 2018). This
Return to work after maternity covered data from Eurostat alongside a survey of
more than 6,000 adults conducted by the UK
leave Commission for Employment and Skills and the
A major problem for women returning to work after National Institute of Adult Continuing Education
maternity leave is that they may have missed out on (NIACE). It revealed that just 6 in 10 women were
opportunities for promotion and opportunities to offered training by their employer, compared with 8
gain more experience and acquire additional skills. in 10 men. This appeared to be related to its finding
The combined effect of these is that they will have that 32 per cent of full-time staff said that they had
lost ground with their male colleagues who have re- accessed both on- and off-the-job training in the
mained at work. This problem is exacerbated by the last year, compared with just 19 per cent of part-
likelihood that the pay of those colleagues will have time workers, who are predominantly female
been increased during the leave period, especially (Kirton, 2017). Olsen et al (2010) found that train-
when incremental pay scales are in operation. ing paid for by employers was associated with six
per cent higher hourly wages.
The problem starts at school where fewer girls
Under-representation of women on tend to opt for A level ‘STEM’ (science, technology,
engineering and maths) subjects. This can restrict
boards earning opportunities. Research by London Econo
The under-representation of women on boards con- mics (2015) showed that pay is greater when a
tributes directly to gender pay gaps. But it also STEM A level is undertaken – girls taking one such
makes a difference to how organizations respond to level can expect annual wages to be £4,500 higher,
the gap. Cardoso and Winter-Ebmer (cited by on average, than if they had not.
Hensvik, 2014) found that female earnings in-
creased when organizations appointed a female
chief executive and Bell (also cited by Hensvik) Careers advice
found that the earnings of female executives were Careers advice to girls can lead them towards oc-
higher and women were more likely to be among cupations or industries that are believed by advisors
the highest-paid executives in female-led firms. to be more suitable for women. This reinforces high
In 2015, as reported by the Department for occupational gender skews in industries such as en-
Business, Innovation and Skills, the proportion of gineering and IT and increases gender gaps in those
women directors on the boards of FTSE 100 com- industries.
panies was 28.5 per cent but of the 263 women
directors only 24 were executive directors; the re-
maining 239 held non-executive and therefore less Actions to reduce gender
influential posts.
pay gaps
Performance management It was concluded by O’Reilly et al (2015) on the
basis of their research that ‘progress towards clos-
There may be bias, conscious or unconscious, by
ing the gender pay gap will not be easy, will r equire
men against women when rating performance and
Chapter 43 | The Gender Pay Gap 519
a collective effort of various actors, and will not be calculations. This should generally explain the rea-
quick.’ It was also concluded by Brown and sons for the results and give details about actions
Rickard (2018) that: ‘There is no magic “silver that are being taken to reduce or eliminate the gen-
bullet” solution and that only multiple actions der pay gap.
over sustained periods of time involving all key The following advice on examining the data in a
stakeholders can be effective in addressing such a report was given by Emma Codd, Managing Partner
complex, deep-rooted and intractable social, cul- for Talent, Deloitte:
tural and economic phenomenon.’ But attempts
are being made, as described below, through gov-
ernment legislation and initiatives and within
organizations. Source review
The picture the data provides is critical – while you
Reporting gender pay gaps need to make sure you have the right processes in
Various parts of the public sector have been replace to confirm the data’s accuracy, it is also
quired to promote equality and report on their gen- equally important to analyse the data to really
der pay gaps for some time. But in the private sector understand what the figures say about your
the issue was generally being given low priority. At organization. Our data overwhelmingly confirmed
first the government tried to encourage companies that Deloitte’s gender pay and bonus gaps are due
to report on and address their gaps voluntarily, but to the disproportionate number of men in senior
while more than 250 major employers initially positions; however, it also told us some things we
signed up to the UK government’s ‘Think, Act, had not previously realized, in particular that more
Report’ voluntary initiative, only 11 of these com- of our women than men avail themselves of some
panies had voluntarily published their gaps by the of our salary sacrifice benefits (in particular
start of 2016. purchasing extra holiday).
This lack of progress led the government to com- Codd (2017)
pel employers to report. The Equality Act 2010
(Gender Pay Gap Information) Regulations 2017
require all UK-based employers with 250 or more
employees to calculate and publicly report on the
gaps in pay between their female and male employ- Equal Pay
ees each year on a fixed date. An employer must The Equal Pay Act (1970) ended the previous com-
publish six calculations showing their: mon practice of employers paying men and women
●● average gender pay gap as a mean average; different amounts of money for doing jobs that
were either the same or very similar. It became un-
●● average gender pay gap as a median average;
lawful to operate separate male and female pay
●● average bonus gender pay gap as a mean scales or to pay men and women differently for
average; doing jobs that should have been paid at the same
●● average bonus gender pay gap as a median grade when a job evaluation system was in opera-
average; tion. Later, in 1983 after the UK joined the
●● proportion of males receiving a bonus European Union, it became possible for employees
payment and proportion of females receiving to pursue claims in an Employment Tribunal when
a bonus payment; they believed that their work, despite being differ-
ent in nature from that of a comparator of the op-
●● proportion of males and females when
posite sex, was nonetheless of ‘equal value to his or
divided into four groups ordered from lowest
hers’. The relevant law is now all found in the
to highest pay.
Equality Act 2010. It applies equally to men and
The results must be published on the employer’s to women, but in practice the large majority of
website and a government website. Employers cases are brought by women using men as their
have the option to provide a narrative with their comparators.
Aside from these three headings under which a below board level and greater representation in
claim can be brought (ie like work, work that has executive as opposed to non-executive roles.

been rated as equivalent, and work of equal value), Although a voluntary initiative rooted in individual
the Equality Act sets out the major defences that corporate actions, the tacit threat of legislation has
are available to employers. The most widely de- undoubtedly also encouraged progress.
ployed is known as the ‘material factor defence’,
which involves satisfying the tribunal that the dif-
ference in the level of payment between the claim- Educational opportunities
ant and her comparator is genuinely explained by
factors that have nothing to do with gender. The
and careers advice
most common examples are situations in which a Government action is needed to encourage girls to
man works longer hours or takes on a less desirable take STEM subjects at A level and to ensure that
shift pattern than the woman and those in which careers advice covers the whole spectrum of occu-
there are marked differences in relative levels of pations rather than only those in which women pre-
skill, performance or experience. It is also common dominate.
for employers to pay more to people who have
achieved certain formal qualifications and also to
pay London-based employees more than those liv- Narrowing the gap at
ing elsewhere in the UK. These are both accepted as
‘material factors’ provided that they genuinely ex- organizational level
plain the difference in pay. The same is true of situ-
ations in which a group of employees enjoys a There are a number of initiatives that can be taken
higher level of ‘protected pay’ following a merger to narrow gender pay gaps at organizational level,
or acquisition that brings together two groups of as summarized in Table 43.1. A multi-pronged ap-
people who were previously employed by different proach is required. Appointing a diversity manager
employers. with the responsibility for initiating and coordi-
nating actions to reduce the gap will be a great
help. But perhaps the most important thing to do
Minimum pay is to develop a culture that will ensure that ‘the
way we do things around here’ as far as gender
The introduction of the UK’s National Minimum equality is concerned is one that supports, indeed
Wage, followed by the more rapidly increasing drives, initiatives to reduce a gap and maintain any
National Living Wage in 2015, benefited women, as reductions achieved. The two case studies at the
they hold the majority of minimum wage jobs. end of this chapter illustrate this point perfectly.
However, the impact on the national gender pay But changing an embedded culture can be a long
gap has been limited by the preponderance of low- haul.
paid females in part-time work.
Representation of women on Pau se for th ou gh t

boards What would you do if you were asked to
The UK government is encouraging employers to investigate why the pay gap in an
voluntarily set targets and improve board-level fe-
male representation. A new five-year plan was organization was too high?
agreed in 2016, focusing on building the talent pool
TA B L E 43.1 Actions that can be taken by organizations to reduce a gender pay gap
Area Possible actions by the organization
Unequal pay Conduct an equal pay audit, communicate the results to employees
and take action to deal with any equal pay problems it reveals.
Ensure job evaluation scheme is unbiased.
Ensure pay structure is unbiased.
Lack of transparency Adopt a policy of complete transparency on pay structures and use it
as the basis upon which pay decisions are made.
Pay increase decisions Provide awareness training on avoiding bias in making pay decisions.
Monitor proposed increases to detect and correct any bias.
Recruitment issues Ensure that a good proportion of women are included in shortlists.
Introduce ‘blind’ applications, ie interviewers are not told the name,
sex, age or race group of applicants.
Issue clear guidelines on recruitment salaries which emphasize that all
applicants have to be treated the same.
Monitor proposed starting salaries and question any apparent bias.
Use structured interviews with prepared and gender neutral questions.
Return to work after Provide enhanced support for maternity returners including flexible
maternity leave working opportunities, mentoring and confidence-building activities.
Fix returning pay at the rates the returner would have achieved had she
not been on maternity leave.
Provide unconscious bias training for managers dealing with maternity
returners.
Under-representation on Talent management – plan and manage the talent pipeline to ensure
boards and in more senior that women have the same opportunities as men to benefit from
roles career development programmes and to be classified as potential
senior management.
Review all board and senior appointments to ensure that eligible
women are given a fair share of positions.
Learning and Monitor distribution of learning and development opportunities to

development ensure that women get their fair share.
Flexible working Educate all employees on the right to request flexible working
arrangements and ensure that it is available whenever possible.
Performance Provide unconscious bias training to assessors.

management Ensure criteria for assessment are unbiased, clear and understood.
Monitor ratings to identify possible bias and take corrective action
where needed.
C A S E S TU D IE S
Managing the gender pay gap in the FDM Group
The FDM Group is a global professional services provider The firm supports career labs in schools and runs about
with a focus on IT. The firm had almost 2,000 UK employees 600 events on university campuses each year. It also spon-
in 2017 and over 1,500 in the rest of the world. The FDM sors the FDM Everywoman in Technology awards, champi-
Group’s 2017 gender pay report indicated that the median oning the advances and achievements of women in STEM
pay gap was 0.0 per cent and the mean pay gap was 6.0 per and technology careers. FDM was one of the Guardian’s
cent. A contributory factor to the achievement of a zero Most Popular Graduate Employers in 2017/18.
median and a 6 per cent mean pay gap is that globally, 26
per cent of FDM employees and about 50 per cent of the Recruitment and selection practice
senior management team are female. FDM adopts a multi-
pronged and evolving approach to reducing the gap. The firm goes to considerable lengths to ensure that when
applications are considered, being a woman has no
implications whatsoever on their chances of being
Culture
selected by the firm. Specific practices to support this
The culture is deliberately managed by FDM because the include:
company sees it as important for both a positive employee
●● unconscious-bias training for recruiters;
experience as well as the customer experience. To
communicate and practice this culture in a dispersed ●● use of ‘blind CVs’ that omit personal and university
organization, extensive staff communications refer to its detail so that only the specific job and skill
initiatives around diversity, inclusion and gender balance requirements are considered;
through employee newsletters, company events and digital
●● use of structured, strength-based interviewing
screens in the office to ensure that all employees are aware
techniques; and
of the strong commitment to diversity. Gender pay reporting
as it takes place at FDM is a manifestation of an open, high- ●● game-based testing at assessment centres.
communications culture in which relevant gender and
other diversity data is regularly circulated and discussed.
Recruitment policy The company operates a mentoring scheme aimed at all
new and developing employees with an equal male/female
First, the firm recruits people who have the aptitude, skills
senior management team taking part as mentors. This is
and the potential required, regardless of background,
thought to be particularly important in helping to role model
creed or colour. Second, FDM has a very strong ‘grow your
and prepare women for future senior management roles.
own’ staffing policy, rather than trying to recruit in a tight
labour market for large numbers of experienced and, still,
mostly male IT consultants, Pay structure
FDM has clear and well-written policies on pay, equal A key feature of the FDM pay structure is that base pay is
opportunities, development, diversity and inclusion, based the same for all individuals in the same role. There are no
on a principle ‘of being open and transparent’ and fully ac- pay ranges around these rates and therefore no scope for
cessible on its intranet. Diversity Champions are spread managers and employees to bargain over base pay level,
across the business to publicize and promote the benefits which research studies suggest may contribute to gender
that stem from diversity, as well as ensuring that these pay disparities.
principles are put into practice day to day. Source Brown (2017)
Managing the gender pay gap in Lewisham Council
Lewisham Council had 6,912 employees in 2018 of whom 60 The Council’s pay policy is to balance reward and fair-
per cent were women. The average pay for women has ness. The reward policy has been used to drive gender par-
exceeded that of men since at least 2010, and Lewisham ity, the cornerstone of which is a single status approach,
currently has a gender pay differential in favour of women which involved the re-evaluation of all roles through a rig-
of 10.9 per cent. There has been a long history at the orous job evaluation process to ensure equity. This is sup-
Council of an informal, tactical and pragmatic approach to plemented by monitoring and pay audits.
securing gender equality. Lewisham adopts a comprehensive and consistent ap-
A values-based, culture-driven and pragmatic approach proach to monitoring people management processes and
over many years was seen as being at the heart of the pro- profiling its workforce. Managers are provided with
gress made, with senior managers setting the example and regular people management metrics on pay, attendance,
signalling and monitoring its importance, followed by a learning and appointments, analysed by under-represented
range of HR policies reinforcing it, particularly in terms of areas including gender. Annually, each management team
talent management and development. is asked to consider the profile of their workforce, particu-
Management and career development was the key HR larly by gender, as part of their workforce planning pro-
activity to achieving gender parity. The approach to achiev- cess. The data has been used to change people manage-
ing parity was pragmatic rather than a hard adherence to ment practices such as recruitment and job evaluation,
set targets and quotas. Opportunities were seized to make which have the greatest impact on gender parity.
‘signalling appointments’ in key areas when a female ap- Source Brown (2016)
pointment would be very noticeable in the Council.
Key learning points
The gender pay gap ●● return to work after maternity leave;
The gender pay gap is the difference between the ●● under-representation of women on boards.
average hourly earnings (excluding overtime) of men
and women as a proportion of the average hourly
Actions at national level
earnings (excluding overtime) of men.
●● equal pay;
Reasons for the gender pay gap ●● minimum pay;
A lack of women in highly paid jobs is the major cause ●● representation of women on boards;
of a gender gap. In detail, the reasons are a failure to
give sufficient attention to gender equality in the ●● educational opportunities.
following areas:
●● lack of transparency; Actions at organizational level
●● pay increase decisions; See Table 43.1.
●● recruitment;
References
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Institute for Employment Studies, Research Kirton, H (2017) Men more likely than women to be
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525
PART XI
Employment relations
PA R T X I CO N T E N T S
44 The basis of employment relations

45 The employment relationship
46 The psychological contract
47 The practice of industrial relations
48 Employee voice
49 Employee communications
move away from collectivism towards individualism

Introduction in the ways in which employees relate to their em-
ployers.
Employment relations, also known as employee This part starts with a review of the basis of
relations, are concerned with managing the employment relations – strategies, policies, and the
employment relationship and the psychological
approaches used by organizations to managing with
contract and relating to employees either collec- or without trade unions. The next two chapters ex-
tively through trade unions or other formal groups amine the fundamental concepts that affect employ-
or individually. Employment relations also involve ment relations, namely the nature of the employment
providing employees with a voice and developing relationship and the psychological contract. These
communications between them and management. chapters provide the background to Chapter 47,
Employment relations cover a wider spectrum of which deals with the practice of industrial relations,
the employment relationship than industrial rela- covering union recognition, the c oncept of mutual
tions, which are essentially about what goes on be- gains and the processes of collective bargaining and
tween management and trade union representatives dispute resolution. The last two chapters deal re-
and officials involving collective agreements, collec- spectively with employee voice (participation and
tive b argaining and disputes resolution. This wider involvement) and c ommunications.
definition of employment relations recognizes the
526

527
44
The basis of
employment relations
In contrast, the pluralist viewpoint is that the
Introduction interests of employees will not necessarily coincide
with their employers and that the unitary view is
This chapter deals with: naive, unrealistic and against the interests of em-
●● The meaning of employment relations ployees. In the radical pluralist view, as pointed out
●● Employment relations policies and strategies by Dundon et al (2017: 67), ‘the employer-worker
relationship is fundamentally grounded in coercive
●● The concept of the employment relations relations and arises in a context of power and de-
climate pendence.’ This was called ‘structural antagonism’
●● Approaches to managing with and without by Edwards (1996) which means that employers
unions and workers are locked into a relationship of de-
pendency that is compounded by contradictory
tensions. People who believe this claim that partner-
The meaning of employment ship agreements can never work. Perhaps the
difference between the unitarist and the pluralist
relations views is that the former is idealistic while the latter
is realistic.
Employment relations are concerned with manag- The meaning of employment relations can be de-
ing and maintaining the employment relationship – scribed somewhat simplistically in terms of the
how managements and employees live together and pay-work bargain – the agreement made between
what can be done to make that work. This includes employers and employees whereby the former
relating to people individually and dealing with undertakes to pay for the work done by the latter.
them collectively through trade unions where they According to this notion, many employers simply
exist (industrial relations). want employees who will do what they are told
There are two views about the relationship. The without costing too much. They want engagement
first is the unitarist viewpoint which is the belief and commitment on their own terms. But e mployees
that management and employees share the same want a ‘fair day’s pay for a fair day’s work’ and a say
concerns and it is therefore in both their interests to in their terms and conditions of employment and the
cooperate – ‘what is good for the firm is good for way in which their work is organized. They want
the worker’. This was referred to by Walton (1985: security of employment, good working conditions, a
64) as the principle of mutuality. A similar belief is healthy and safe working environment and the scope
expressed in the idea of social partnership, which to raise and resolve grievances. Conflicts of interest
states that as stakeholders, the parties involved in can arise between employers and employees on these
employment relations should aim to work together issues, and where there are unions these conflicts are
to the greater good of all. Partnership agreements resolved by the various industrial relations proce-
try to put this idea into practice. dures described in Chapter 47. Because of this,
528 Part 11 | Employment Relations
e mployment relations need to be managed by refer- employees and their unions, the construction of a
ence to understood and c ommunicated policies and cooperative and constructive employment relations
strategies. climate, the effective management of the work pro-
cess, the control of labour costs, and the develop-
ment of an engaged and committed workforce.
Employment relations When these policies are articulated, they provide
guidelines for taking action on employment rela-
policies tions issues and can help to ensure that these issues
are dealt with consistently. They provide the basis
Employment relations policies express the philoso- for defining management’s intentions (its employ-
phy of the organization on what sort of relationships ment relations strategy) on key matters such as
are wanted between management and employees union recognition and collective bargaining.
and, where necessary, their unions, and how the
pay-work bargain should be managed. A social
partnership policy will aim to develop and maintain Employment relations policy areas
a positive, productive, cooperative and trusting
climate of employment relations. The areas covered by employment relations policies
are:
●● The employment relationship – the extent to
Approaches which terms and conditions of employment
There are four approaches to employment relations: should be governed by collective agreements
or based on individual contracts of
1 Adversarial: the organization decides what it employment (ie collectivism versus
wants to do, and employees are expected to individualism).
fit in. Employees only exercise power by
●● Trade union recognition – whether trade
refusing to cooperate.
unions should be recognized or de-
2 Traditional: a reasonably good day-to-day recognized, which union or unions the
working relationship but management organization would prefer to deal with, and
proposes and the workforce reacts through whether or not it is desirable to recognize
its elected representatives, if there are any; if only one union for collective bargaining and/
not, employees just accept the situation or or employee representational purposes. The
walk. policy will have to consider the factors
3 Partnership: the organization involves affecting managing with or without unions,
employees in the drawing up and execution as discussed later in this chapter.
of organization policies, but retains the right ●● Collective bargaining – the extent to which it
to manage. should be centralized or decentralized and
4 Power sharing: employees are involved in both the scope of areas to be covered by collective
day-to-day and strategic decision making. bargaining.
Adversarial approaches are much less common now ●● Employment relations procedures – the
than in the 1960s and ’70s. The traditional approach nature and scope of procedures for
is still the most typical but more interest is being redundancy, grievance handling and
expressed in partnership. Power sharing is rare. discipline.
●● Participation and involvement – how far the
organization is prepared to go in giving
Objectives of employment relations employees a voice on matters that concern
them.
policies
●● Partnership – the extent to which a
The objectives of employment relations policies partnership approach is thought to be
may include the maintenance of good relations with desirable.
Chapter 44 | The Basis of Employment Relations 529
Harmonization – providing the same terms

●●
and conditions of employment for staff and
Employment relations
manual workers. strategies
●● Working arrangements – the degree to which
management has the prerogative to Employment relations strategies set out how policy
determine working arrangements without aims are to be achieved. The intentions expressed by
reference to trade unions or employees (this strategies may direct the organization towards any
includes job-based or functional flexibility). of the following:
●● altering the forms of recognition, including
Policy choices single union recognition, or de-recognition;
●● changes in the form and content of
The following policy options for organizations on procedural agreements;
industrial relations and HRM were set out by Guest
(1995): ●● new bargaining structures, including
decentralization or single-table bargaining (ie
●● The new realism – a high emphasis on HRM bringing all the unions in an organization
and industrial relations. The aim is to together as a single bargaining unit);
integrate HRM and industrial relations. ●● developing a ‘partnership’ with trade unions,
●● Traditional collectivism – priority to industrial recognizing that employees are stakeholders
relations without HRM. This involves and that it is to the advantage of both parties
retaining the traditional industrial relations to work together;
arrangements within an unchanged industrial ●● deliberately bypassing trade union
relations system. Management may take the representatives to communicate directly with
view in these circumstances that it is easier to employees;
continue to operate with a union, since it
provides a useful, well-established channel for ●● the achievement of increased levels of
communication and for the handling of commitment through involvement or
grievance, discipline and safety issues. participation;
●● Individualized HRM – high priority to HRM ●● increasing the extent to which management
with no industrial relations. According to controls operations in such areas as flexibility;
Guest, this approach is not very common ●● generally improving the employment
except in US-owned firms. It is, he believes, relations climate, as discussed below, to
essentially piecemeal and opportunistic. produce more harmonious and cooperative
●● The black hole – no industrial relations. This relationships.
option is becoming more prevalent in
organizations in which HRM is not a policy
priority for management but where they do Employment relations
not see that there is a compelling reason to
operate within a traditional industrial
climate
relations system. When such organizations
The employment relations climate of an o rganization
are facing a decision on whether or not to
refers to the perceptions of the parties involved
recognize a union, they are increasingly
(management, employees and their representatives)
deciding not to do so.
about the ways in which employment relations are
conducted and how those parties behave when
dealing with one another. An employment relations
climate may be created by the management style
adopted by management (see below), by the
Make out the case for any of these options. behaviour of the trade unions or employment repre-
sentatives (cooperative, hostile, militant, etc), or by
the two interacting with one another. It can be good, Improving the climate
bad or indifferent according to perceptions about
the extent to which: Improvements to the climate can be attained by
developing fair employment relations policies and
●● management and employees trust one procedures and implementing them consistently.
another; Line managers and team leaders who are largely
●● management treats employees fairly and with responsible for the day-to-day conduct of employ-
consideration; ment relations need to be educated and trained on
●● management is open about its actions and the approaches they should adopt. Transparency
intentions – employment relations policies should be achieved by communicating policies to
and procedures are transparent; employees, and commitment increased by involve-
●● harmonious relationships are generally ment and participation processes. Problems that
maintained with trade unions and employees need to be resolved can be identified by simply talk-
generally; ing to employees, their representatives and their
trade union officials. Importantly, as discussed below,
●● a mutual gains approach (see Chapter 47) is the organization can address its obligations to em-
adopted; ployees as stakeholders and take steps to build trust.
●● conflict, when it does arise, is resolved
without resort to industrial action and
resolution is achieved by integrative
processes that result in a ‘win-win’ solution;
●● employees are generally committed to the
interests of the organization and, equally, What does treating employees as
management treat them as stakeholders
stakeholders mean?
whose interests should be protected as far as
possible.
Source review
Management style in employment
relations
The development of a positive employment climate The term ‘management style’ refers to the overall
is important as it forms the backdrop against which approach the management of an organization
mutual gains may occur. In a positive employment adopts to the conduct of employment relations.
climate, management may seek to make assurances Purcell and Sisson (1983) identified five typical
about job security… If workers believe that styles:
partnership helps to enhance individual job security
and the long-term survival of the workplace, levels 1 Authoritarian – employment relations are
of buy-in are likely to be higher. Second, a positive
not regarded as important and people issues
are not attended to unless something goes
employment climate is associated with a
wrong.
sophisticated approach to HR; this includes the
development of a complementary HR infrastructure 2 Paternalistic – in some ways this resembles
and integrated practices. Third, a positive the authoritarian style but a more positive
employment climate requires the development of attitude to employees is adopted.
meaningful relationships with unions. 3 Consultative – trade unions are welcomed
Glover et al (2014: 896) and employment consultation is a high
priority.
4 Constitutional – there is a trade union

presence but the management style tends to
Managing with unions
be adversarial.
Managements and trade unions can learn to live to-
5 Opportunistic – management style is gether, often on a give-and-take basis, the presump-
determined by local circumstances, which in tion being that neither would benefit from a climate
turn determine whether or not unions are of hostility or by generating constant confrontation.
recognized and the extent to which It would be assumed in this situation that mutual
employment involvement is encouraged. gains would be achieved by acting in accordance
Purcell (1987: 535) defined management style as ‘a with the spirit as well as the letter of agreed joint
guiding set of principles which delineate the bound- regulatory procedures. However, both parties would
aries and direction of acceptable management probably adopt a realistic pluralist viewpoint. This
action in dealing with employees.’ He described two means recognizing the inevitability of differences of
major dimensions: (1) individualism, which refers opinion, even disputes, but believing that with
to the extent to which personnel policies are fo- goodwill on both sides they could be settled with-
cused on the rights and capabilities of individual out resorting to industrial action.
workers; and (2) collectivism, which is concerned The reality back in the 1960s and ’70s was
with the extent to which management policy is di- often different. In certain businesses, for example
rected towards e ncouraging the development of col- in the motor and shipbuilding industries, hostility
lective representation by employees and allowing and confrontation were rife, and newspaper pro-
employees a collective voice in management d ecision prietors tended to let their unions hold sway in
making. According to Purcell, style is a deliberate the interests of peace and profit. Times have
choice linked to business policy. Organizations may changed. Trade union power has diminished in
choose to focus on one or both aspects. Not all the private sector, if not in the public sector.
firms have a distinctive preferred management style. Managements in the private sector have tended to
seize the initiative. They may be content to live
with trade unions but they give industrial rela-
An ethical approach tions lower priority. They may feel that it is easier
to continue to operate with a union because it
Businesses aim to achieve prosperity, growth and provides a useful, well-established channel for
survival. Ideally, success should benefit all the stake- communication and for the handling of grievance,
holders in the organization – owners, management, discipline and safety issues. In the absence of a
employees, customers and suppliers. However, the union, management would need to develop its
single-minded pursuit of business objectives can act own alternatives, which would be costly and dif-
to the detriment of the wellbeing and security of ficult to operate effectively. The management per-
employees. There may be a tension between spective may be that it is safer to marginalize the
accomplishing business purposes and the social and unions than to formally derecognize them and
ethical obligations of an organization to the people risk provoking a confrontation.
who work there. But the chances of attaining a The pattern varies considerably but there is gen-
good climate of employment relations are slight if eral agreement based on studies such as the
no attempt is made to recognize and act on an Workplace Employment Relations Survey (2004)
organization’s obligations to its members. that employers have been able to assert their pre-
An ethical approach will be based on high- rogative – ‘management must manage’ – in the
commitment and high-involvement policies. The workplace. They seem generally to have regained
commitment will be mutual and the arrangements control over how they organize work, especially
for involvement will be genuine, ie management will with regard to the flexible use of labour and multi-
be prepared not only to listen but to act on the views skilling. The ‘status quo’ clause, typical of many
expressed by employees or, at least, if it cannot take agreements in the engineering industry whereby
action, explain why. It will also be transparent and, management could not change working arrange-
although the concept of a ‘job for life’ may no longer ments without union agreement, has virtually
be valid in most if not all organizations, an attempt disappeared in the private sector.
will be made to maintain full employment policies.
Four types of industrial relations managements these issues before they become disputes. This
have been identified by Purcell and Sisson (1983): means adopting a more positive partnership ap-
proach. Where collective agreements are being
●● Traditionalists, who have unitary beliefs and
made, a cooperative or integrative bargaining
are anti-union with forceful management.
philosophy can be adopted, based on perceptions
●● Sophisticated paternalists, who are about the mutual interdependence of management
essentially unitary but they do not take it for and employees and the recognition by both parties
granted that their employees accept the that this is a means to achieve more for themselves.
organization’s objectives or automatically
legitimize management decision making.
They spend considerable time and resources Managing without unions
in ensuring that their employees adopt the
right approach. Some firms, especially larger ones, manage without
●● Sophisticated moderns, who are either trade unions by adopting what is in effect a union
constitutionalists – where the limits of substitution policy which offers employment
collective bargaining are codified in an policies and pay packages that employees will see
agreement but management is free to take as an attractive alternative to trade union
decisions on matters that are not the subject membership. They may focus on communications
of such an agreement – or consulters – they and information sharing but they will basically
accept collective bargaining but do not want deal with people individually rather than collec-
to codify everything in a collective tively. Others, especially smaller firms, simply deal
agreement, and instead aim to minimize the with employees individually – sometimes well,
amount of joint regulation and emphasize sometimes not – and make no attempt to provide
joint consultation with ‘problems’ having to substitute arrangements.
be solved rather than ‘disputes’ settled.
●● Standard moderns, who are pragmatic or
opportunist. Trade unions are recognized,
but industrial relations are seen as primarily
fire-fighting and are assumed to be non- Pau se for th ou gh t
problematic unless events prove otherwise. How would you persuade management to
This is by far the most typical approach.
recognize a union in the absence of one or
On the whole, pluralism prevails and management
to derecognize a union if one already exists?
and unions will inevitably disagree from time to
time on employment issues. The aim is to resolve
Key learning points
Employment relations Employment relations policies

Employment relations are concerned with managing Employment relations policies express the philosophy
and maintaining the employment relationship, taking of the organization on what sort of relationship is
into account the implications of the concept of the wanted between management and employees and
psychological contract. Employment relations are their unions, and how the pay-work bargain should be
basically about how managements and employees managed. The areas covered by employment relations
live together and what can be done to make that policies are trade union recognition, collective
work. bargaining, employment relations procedures,
participation and involvement, partnership and their representatives about the ways in which
harmonization and working arrangements. employment relations are conducted and how the
various parties (managers, employees and trade
Employment relations strategies unions) behave when dealing with one another. An
employment relations climate may be created by the
Employment relations strategies set out how management style adopted by management, by the
employment relations policy objectives are to be behaviour of the trade unions or employee
achieved. The intentions expressed by employment representatives (cooperative, hostile, militant, etc), or
relations strategies may direct the organization by the two interacting with one another.
towards any of the following:
●● altering the forms of recognition, including single Managing with unions
union recognition, or derecognition;
Ideally, managements and trade unions learn to live
●● changes in the form and content of procedural together, often on a give-and-take basis, the
agreements; presumption being that neither would benefit from a
climate of hostility or by generating constant
●● new bargaining structures, including
confrontation. It would be assumed in this ideal
decentralization or single-table bargaining (ie
situation that mutual advantage would come from
bringing all the unions in an organization together
acting in accordance with the spirit as well as the
as a single bargaining unit);
letter of agreed joint regulatory procedures. However,
●● the achievement of increased levels of commitment both parties would probably adopt a realistic pluralist
through involvement or participation; viewpoint. This means recognizing the inevitability of
differences of opinion, even disputes, but believing
●● deliberately bypassing trade union representatives
that with goodwill on both sides they could be settled
to communicate directly with employees;
without resource to industrial action.
●● increasing the extent to which management
controls operations in such areas as flexibility; Managing without trade unions
●● developing a ‘partnership’ with trade unions, Some firms, especially larger ones, manage without
recognizing that employees are stakeholders and that trade unions by adopting a union substitution policy
it is to the advantage of both parties to work together; that offers employment policies and pay packages that
●● generally improving the employment relations employees will see as an attractive alternative to trade
climate to produce more harmonious and union membership. They may focus on
cooperative relationships. communications and information sharing but they will
basically deal with people individually rather than
collectively. Others, especially smaller firms, simply
Employment relations climate deal with employees individually – sometimes well,
The employment relations climate of an organization sometimes not – and make no attempt to provide
refers to the perceptions of management, employees substitute arrangements.
References
Dundon, T, Cullinane, N and Wilkinson, A (2017) A Glover, L, Tregaskis, O and Butler, P (2014) Mutual
Very Short, Fairly Interesting and Reasonably gains? The workers’ verdict: a longitudinal study,
Cheap Book About Employment Relations, The International Journal of Human Resource
London, Sage Management, 25 (6), pp 895–914
Edwards, P K (1986) Conflict at Work, Oxford, Guest, D E (1995) Human resource management:
Blackwell trade unions and industrial relations, in (ed) J
Storey, Human Resource Management: A critical G Bain, Industrial Relations in Britain, Oxford,
text, London, Routledge Blackwell
Purcell, J (1987) Mapping management styles in Walton, R E (1985) From control to commitment in
employment relations, Journal of Management the workplace, Harvard Business Review, March–
Studies, 24 (5), pp 78–91 April, pp 77–84
Purcell, J and Sisson, K (1983) Strategies and practice Workplace Employment Relations Survey (2004)
in the management of industrial relations, in (ed) HMSO, Norwich
535
45
The employment
relationship
Introduction concern for employee wellbeing and dealing with
employment problems.
The employment relationship describes how em- Underpinning the employment relationship is the
ployers and employees work together. A positive psychological contract, which expresses certain as-
employment relationship is one where there is mu- sumptions and expectations about what managers
tual trust and in which management and employees and employees have to offer and are willing to de-
are interdependent and both benefit from this inter- liver. The dimensions of the employment relation-
dependency. Such a relationship may be difficult to ship as described by Kessler and Undy (1996) are
achieve but it can provide a sound basis for employ- shown in Figure 45.1.
ment relations policies. This chapter describes the
employment relationship, how it is managed and
how a climate of trust can be created. The basis of the
employment relationship
The nature of the
The starting point of the employment relationship
employment relationship is an undertaking by an employee to provide skill
and effort to the employer in return for which the
It is possible to express the employment relation- employer provides the employee with a salary or a
ship formally by what Rubery et al (2002) regarded wage (the pay-work bargain). Initially the relation-
as its cornerstone, namely the contract of employ- ship is founded on a legal contract. This may be a
ment. It can additionally be defined by such means written contract, but the absence of such a contract
as procedure agreements and work rules. But it is does not mean that no contractual relationship ex-
essentially an informal and constant process that ists. Employers and employees still have certain im-
happens whenever an employer has dealings with plied legal rights and obligations even if there is no
an employee, and vice versa. formal contract. The employer’s obligations include
Thus the employment relationship is concerned the duty to pay salary or wages, provide a safe
with the employee experience of working in an or- workplace, act in good faith towards the employee
ganization, which covers everything that people en- and not to act in such a way as to undermine the
counter, observe and feel during the course of their trust and confidence of the employment relation-
employment. This includes the effect on employees ship. The employee has corresponding obligations,
of management practices such as providing leader- which include obedience, competence, honesty and
ship, exercising control, performance management, loyalty.
F I G U R E 45.1 Dimensions of the employment relationship
Parties
• Managers
• Employees
• Employees’ representative
Operation Substance
• Level Individual:
• Process • Job
• Style • Reward
The employment • Career
relationship • Communications
• Culture
Collective:
• Joint agreements
Structure • Joint machinery
• Formal rules/procedures
• Informal understandings,
expectations,
assumptions
Source Kessler and Undy (1996)
and by the management style prevailing throughout

Source review the organization or adopted by individual m anagers.
An important point to remember about the em-
At the heart of the employment relationship lies a ployment relationship is that, generally, it is the em-
‘zone of acceptance’ within which employees
ployer who has the power to dictate the contractual
terms unless they have been fixed by collective bar-
agree to let management direct their labour. This
gaining. Individuals, except when they are in demand,
may relate to the range of tasks that employees are
have little scope to vary the terms of the contract
willing to undertake at management’s direction, but
imposed upon them by employers. Inevitably there
it may also include the priority to be accorded to
are conflicts of interest, between employers who
different types of work, and the willingness to vary want to control compliant and high-performing em-
working time according to management’s ployees, and the employees who want to maintain
requirements. Depending on how large this zone is, their rights to ‘a fair day’s pay for a fair day’s work’.
and how its boundaries are drawn, it provides
organizations with varying degrees of flexibility to
respond to changing production and market Labour process theory and
requirements.
Marsden (2007: 1263) the employment
relationship
Marsden and Canibano (2010) referred to this as The employment relationship is sometimes ex-
the ‘frontier of control’. plained by labour process theory. In its original
The employment relationship exists at different form, as defined by Braverman (1974), this stated
levels in the organization (management to employ- that the application of modern management tech-
ees generally, and managers to individual employees niques, in combination with mechanization and au-
and their representatives or groups of people). The tomation, secures the subordination of labour and
operation of the relationship will also be affected by deskilling of work in the office as well as on the
processes such as communications and consultation, shop floor. Thompson and Harley (2007: 149)
Chapter 45 | The Employment Relationship 537
noted that: ‘The notion of the workplace as con-

tested terrain is a central motif of labour process
Managing the employment
theory.’ They pointed out that what is happening is
a process of ‘capitalizing on humanity’ rather than
relationship
investing in human capital. However, they did com- The dynamic and often nebulous nature of the
ment that: ‘In the employment relationship there employment relationship increases the difficulty
will always be (actual and potential) conflict, but of managing it. The problem is compounded by
simultaneously there will be shared interests’ (ibid: the multiplicity of factors that influence the con-
156). And they suggested that: ‘In an environment tract – the culture of the organization, the pre-
where employee skills and commitment are central vailing management style, the values (espoused
to organizational success, it is precisely by giving and practised) of top management, the existence
more that organizations will gain more’ (ibid: 149). or non-existence of a climate of trust, day-to-day
interactions between employees and line manag-
ers, and the HR policies and practices of the busi-
ness.
Pa us e for t houg ht The latter are particularly important. The nature
What is the contribution of labour process of the employment relationship is strongly influ-
enced by HR actions. These cover all aspects of
theory to our understanding of the HRM, especially how people are treated in such
employment relationship? areas as recruitment, performance reviews, promo-
tion, career development, reward, involvement and
participation, grievance handling, disciplinary pro-
cedures and redundancy. A significant impact on the
employment relationship is also made by the ways
Employment relationship in which people are required to carry out their work
contracts (including flexibility and multiskilling), how perfor-
mance expectations are expressed and communi-
cated, and how people are managed. HR specialists
Two types of contracts defining the employment re-
can contribute to the development of a positive and
lationship have been distinguished by Rousseau and
productive employment relationship in the follow-
Wade-Benzoni (1994), namely transactional con-
ing ways:
tracts and relational contracts. Transactional con-
tracts are formal contracts that have well-described ●● during recruitment interviews – presenting
terms of exchange between employer and employ- the unfavourable as well as the favourable
ees, often expressed financially. They contain speci- aspects of a job in a ‘realistic job
fied performance requirements. Relational contracts preview’;
are largely informal contracts with more abstract ●● in induction (onboarding) programmes –
terms and refer to an open-ended membership of communicating to new starters the
the organization. Performance requirements at- organization’s HR policies and procedures
tached to this continuing membership are incom- and its core values, indicating to them the
plete or ambiguous. There is also the psychological standards of performance expected in
contract, which is implied rather than stated. such areas as quality and customer service,
More specifically, the employment relationship is and spelling out requirements for
governed by express agreements between employers flexibility;
and employees. These consist of written contracts of
●● by encouraging the maximum amount of
employment but they may be conveyed orally at an
contact between managers and team leaders
interview or even set out in an advertisement. In ad-
and their team members – to achieve mutual
dition, express terms may be included in collective
understanding of expectations and to
agreements or works rules. The employment rela-
provide a means of two-way
tionship is also affected by the terms implied by
communications;
common law and statutory requirements.
●● by adopting a general policy of Building trust

transparency – ensuring that on all matters
affecting them, employees know what is As Thompson (1998: 69) noted, trust is an outcome
happening, why it is happening and the of good management. He also commented that a
impact it will make on their employment, number of writers have generally concluded that
development and prospects. trust is ‘not something that can, or should, be di-
rectly managed’. He cited Sako (1994) who wrote
These approaches to managing the employment re- that: ‘Trust is a cultural norm which can rarely be
lationship cover all aspects of people management. created intentionally because attempts to create
It is important to remember, however, that this is a trust in a calculative manner would destroy the ef-
continuous process. The effective management of fective basis of trust.’
the relationship means ensuring that values are up- In the end, trust is about relationships and mutual
held and that a transparent, consistent and fair ap- support. Trust is created and maintained by manage-
proach is adopted in dealing with all aspects of em- rial behaviour and by the development of better mu-
ployment. It is also important to remember that tual understanding of expectations – employers of
perhaps the best way of improving the employment employees, and employees of employers. The sort of
relationship is to develop a climate of trust in the behaviour that is most likely to engender trust is
organization. when management is honest with people, keeps its
word (delivers the deal) and practises what it
preaches. Organizations that espouse core values
Developing a climate of trust (‘people are our greatest asset’) and then proceed to
ignore them will be low-trust organizations. More
specifically, trust will be developed if management
acts fairly, equitably and consistently; if a policy of
Source review transparency is implemented; if intentions and the
reasons for proposals or decisions are communicated
Trust in one’s employer relates to an employee’s both to employees generally and to individuals; if
belief about the likelihood that the employer’s there is full involvement in developing HR processes;
future actions will be beneficial, favourable or at
and if mutual expectations are agreed through per-
formance management. Leaders have a crucial role.
least not harmful to an employee’s own interest,
As O’Toole and Bennis (2009: 54) pointed out: ‘We
and is therefore a crucial factor influencing an
won’t be able to rebuild trust in institutions until
employee’s behaviour.
leaders learn how to communicate honestly – and
Alfes et al (2012: 412)
create organizations where that’s the norm.’
A climate of trust in the shape of a high-trust or-

ganization is an essential ingredient in a positive Pau se for th ou gh t
employment relationship. Trust should be regarded What contribution can HR make to building
as social capital – the fund of goodwill in any social
group that enables people within it to collaborate trust?
with one another.
Chapter 45 | The Employment Relationship 539
Key learning points
The employment relationship defined Managing the employment relationship

The employment relationship describes how The nature of the employment relationship is strongly
employers and employees work together and relate to influenced by HR actions. These cover all aspects of
one another. HRM. Of particular importance is how people are treated
in such areas as recruitment, performance reviews,
Basis of the employment relationship promotion, career development, reward, involvement
and participation, grievance handling, disciplinary
The basis of the employment relationship is an procedures and redundancy. The ways in which people
undertaking by an employee to provide skill and effort are required to carry out their work (including flexibility
to the employer in return for which the employer and multiskilling), how performance expectations are
provides the employee with a salary or a wage. The expressed and communicated, how work is organized,
employer’s obligations also include the duty to provide and how people are managed will also have a significant
a safe workplace, to act in good faith towards the impact on the employment relationship.
employee and not to act in such a way as to
undermine the trust and confidence of the employment
Developing a high-trust organization
relationship. The employee has corresponding
obligations, which include obedience, competence, A high-trust organization exists when management is
honesty and loyalty. honest with people, keeps its word (delivers the deal)
and practises what it preaches. Trust is created and
Employment relationship contracts maintained by managerial behaviour and by the
development of better mutual understanding of
The three types of employment relationship contracts expectations – employers of employees, and
are transactional, relational and psychological. employees of employers.
References
Alfes, K, Shantz, A and Truss, C (2012) The link Lewins, The Oxford Handbook of Participation in
between perceived HRM practices, performance Organizations, Oxford, Oxford University Press,
and wellbeing: the moderating effect of trust in the pp 131–63
employer, Human Resource Management Journal, O’Toole, J and Bennis, W (2009) What’s needed next:
22 (4), pp 409–27 a culture of candor, Harvard Business Review,
Braverman, H (1974) Labour and Monopoly Capital, June, pp 54–61
New York, Monthly Review Press Rousseau, D M and Wade-Benzoni, K A (1994)
Kessler, S and Undy, R (1996) The New Employment Linking strategy and human resource practices:
Relationship: Examining the psychological how employee and customer contracts are created,
contract, London, IPM Human Resource Management, 33 (3), pp 463–89
Marsden, D (2007) Individual employee voice: Rubery, J, Earnshaw, J, Marchington, M, Cooke, F L
renegotiation and performance management in and Vincent, S (2002) Changing organizational
public services, International Journal of Human forms and the employment relationship, Journal of
Resource Management, 18 (7), pp 1263–78 Management Studies, 39 (5), pp 645–72
Marsden, D and Canibano, A (2010) An economic Sako, M (1994) The informational requirement of
perspective on employee participation, in (eds) A trust in supplier relations: evidence from Japan,
Wilkinson, P J Gollan, M Marchington and D the UK and the USA, unpublished
Thompson, M (1998) Trust and reward, in (eds) Thompson, P and Harley, B (2007) HRM and the
S Perkins and St J Sandringham, Trust, worker: labour process perspectives, in (eds) P
Motivation and Commitment: A reader, Boxall, J Purcell and P Wright, Oxford Handbook
Faringdon, Strategic Remuneration Research of Human Resource Management, Oxford,
Centre, pp 66–71 Oxford University Press, pp 147–65
541
46
The psychological
contract
Introduction organization as a whole.) Because psychological
contracts represent how people interpret
The psychological contract underpins the employ- promises and commitments, both parties in the
ment relationship. This chapter defines the psy same employment relationship (employer and
chological contract, explains its significance and employee) can have different views regarding
describes how a positive contract can be developed. specific terms.
Rousseau and Wade-Benzoni (1994: 464)
The psychological contract

defined
Within organizations, as Katz and Kahn (1966)
A psychological contract is a set of unwritten expec-
pointed out, every role is basically a set of behav-
tations that exist between individual employees and
ioural expectations. These expectations are often
their employers. As Guest (2007: 133) explained, it
implicit – they are not defined in the employment
is concerned with: ‘The perceptions of both parties
contract. Basic models of motivation such as expec-
to the employment relationship, organization and
tancy theory (Vroom, 1964) maintain that emplo
individual, of the reciprocal promises and obliga-
yees behave in ways that they expect will produce
tions implied in that relationship.’ It is a system of
positive outcomes. But they do not necessarily
beliefs that encompasses the actions employees be-
know what to expect, although they are likely to
lieve are expected of them and what response they
believe that they should be treated fairly as human
expect in return from their employer, and, recipro-
beings, be provided with work that uses their abili-
cally, the actions employers believe are expected of
ties, be rewarded equitably in accordance with their
them and what response they expect in return from
contribution, be able to display competence, have
their employees.
opportunities for further growth, know what is re-
The following is an expanded definition.
quired of them and be given feedback (preferably
positive) on how they are doing. Employers may
expect employees to do their best on behalf of the
Source review organization – ‘to put themselves out for the com-
pany’ – to be fully committed to its values, to be
Psychological contracts refer to beliefs that compliant and loyal, and to enhance the image of
individuals hold regarding promises made, the organization with its customers and suppliers.
accepted and relied upon between themselves and Sometimes these assumptions are justified – often
another. (In the case of organizations, these parties
they are not. Mutual misunderstandings can cause
friction and stress and lead to recriminations and
include an employee, client, manager, and/or
poor performance, or eventually to a termination of
the employment relationship. As observed by Guest ●● scope to demonstrate competence;

and Conway (1998: ix), the psychological contract ●● career expectations and the opportunity to
lacks many of the characteristics of the formal con- develop skills;
tract: ‘It is not generally written down, it is some-
●● involvement and influence;
what blurred at the edges, and it cannot be enforced
in a court or tribunal.’ ●● trust in the management of the organization
to keep their promises.
The CIPD (2012: 16) suggested that to build trust
The significance of the leaders need to tell the truth and be willing to admit
psychological contract mistakes. They must share information openly,
support transparency, and seek information from

multiple sources, not merely relying on what they are
The concept of the psychological contract highlights
told by their close advisers. Finally, and importantly,
the fact that employee/employer expectations take the
they should be candid in their dealings with followers.
form of unarticulated assumptions. Disappointments
From the employer’s point of view, the psycho-
on the part of management as well as employees may
logical contract covers such aspects of the employ-
therefore be inevitable. These disappointments can,
ment relationship as competence, effort, compliance,
however, be alleviated if management appreciate that
commitment and loyalty. The research conducted by
one of their key roles is to manage expectations,
Guest and Conway led to the f ollowing conclusion:
which means clarifying what they believe employees
should achieve, the competencies they should possess
and the values they should uphold. This is a matter
not just of articulating and stipulating these require-
ments but of discussing and agreeing them with indi- Word s of w isd om
viduals and teams. The management of the psychological
contract is a core task of management and
The psychological contract is acknowledged as such by many senior HR
and the employment and employment relations managers, and

shows that it has a positive association with
relationship a range of outcomes within the employment
As described by Guest et al (1996), the psychological relationship and is a useful way of
contract may provide some indication of the conceptualizing that relationship.
answers to the two fundamental employment rela-
Guest and Conway (2002: 22)
tionship questions that individuals pose: ‘What
can I reasonably expect from the organization?’
and ‘What should I reasonably be expected to
contribute in return?’ But it is unlikely that the
psychological contract, and therefore the employ- How psychological contracts
ment relationship, will ever be fully understood by
either party. develop
The aspects of the employment relationship cov-
ered by the psychological contract will include, Psychological contracts are not developed by
from the employees’ point of view: means of a single transaction; they evolve over
time and can be multifaceted. There are many con-
●● how they are treated in terms of fairness,
tract makers who exert influence over the whole
equity and consistency;
duration of an employee’s involvement with an
●● security of employment; organization.
Chapter 46 | The Psychological Contract 543
learning, training and development, focus on job

security, promotion and careers, minimizing status

Wo rd s of wi sdom differentials, fair reward systems and comprehensive
Every day we create relationships by means communication and involvement processes will all
contribute to a positive psychological contract. The
other than formal contracts... As individuals
steps required to develop such a contract are:
form relationships they necessarily bring
1 define expectations during recruitment and
their accumulated experience and developed induction programmes;
personalities with them. In ways unknown to 2 communicate and agree expectations as part
them, what they expect from the of the continuing dialogue implicit in good
performance management practices;
relationship reflects the sum total of their
3 adopt a policy of transparency on company
conscious and unconscious learning to date. policies and procedures and on
Spindler (1994: 326) management’s proposals and decisions as
they affect people;
4 generally treat people as stakeholders, relying
on consensus and cooperation rather than
The problem with control and coercion.
psychological contracts Guest and Conway (2002), on the basis of their re-
search, emphasized the importance of communica-
The problem with psychological contracts is that tions in shaping the psychological contract, e specially
employees are often unclear about what they want at the recruitment and induction stage when promises
from the organization or what they can contribute and commitments can be made by employers on such
to it. Some employers are equally unclear about matters as interesting work, learning and develop-
what they expect from their employees. ment opportunities, not making unreasonable de-
Because of these factors, and because a psycho- mands on employees, feedback on performance, fair
logical contract is essentially implicit, it is likely to treatment, work-life balance, a reasonable degree of
develop in an unplanned way with unforeseen con- security and a safe working environment. At this stage
sequences. Anything that management does or is it is advisable to provide what is called a ‘realistic job
perceived as doing that affects the interests of preview’, which means communicating to candidates
employees will modify the psychological contract. any special demands that will be made on them in the
Similarly, the actual or perceived behaviour of em- job for which they are applying, such as the standards
ployees, individually or collectively, will affect an they will be expected to achieve, the working condi-
employer’s concept of the contract. tions, the hours they may have to work, the travelling
they have to do and any requirement for mobility in
the UK or abroad.
Developing and maintaining Guest and Conway concluded that following the
recruitment and induction stage, communications
a positive psychological are most effective if they are personal and j ob-related.
contract Top-down communications are less i mportant. They
also stressed that a positive p sychological contract
can only be achieved if management keeps its
As Guest et al (1996: v) explained: ‘A positive psycho-
word – if it does not breach the contract.
logical contract is worth taking seriously because it is
strongly linked to higher commitment to the organi-
zation, higher employee satisfaction and better em-
ployment relations. Again this reinforces the benefits Pau se for th ou gh t
of pursuing a set of progressive HRM practices.’ They
also emphasized the importance of a h igh-involvement What is the role of HR in developing a
climate and suggested in particular that HRM prac- positive psychological contract?
tices such as the provision of o pportunities for
Key learning points

The psychological contract defined ●● career expectations and the opportunity to develop
skills;
A psychological contract is a set of unwritten
expectations that exist between individual ●● involvement and influence;
employees and their employers. It is a system of ●● trust in the management of the organization to keep
beliefs encompassing the actions employees
their promises.
believe are expected of them and the response
they expect in return from their employer, and, From the employer’s point of view, the psychological
reciprocally, the actions employers believe are contract covers such aspects of the employment
expected of them and the response they expect in relationship as competence, effort, compliance,
return from their employees. commitment and loyalty.
The significance of the psychological How psychological contracts develop

contract Psychological contracts are not developed by means
The concept of the psychological contract highlights of a single transaction; they evolve over time and can
the fact that employee/employer expectations take the be multifaceted. The steps required to develop a
form of unarticulated assumptions. Disappointments positive psychological contract are:
on the part of management as well as employees may
1 define expectations during recruitment and
therefore be inevitable.
induction programmes;
The psychological contract and the 2 communicate and agree expectations as part of the
continuing dialogue implicit in good performance
employment relationship management practices;
The aspects of the employment relationship covered
3 adopt a policy of transparency on company policies
by the psychological contract will include, from the
and procedures and on management’s proposals
employees’ point of view:
and decisions as they affect people;
●● how they are treated in terms of fairness, equity
4 generally treat people as stakeholders, relying on
and consistency;
consensus and cooperation rather than control and
●● security of employment; coercion.
●● scope to demonstrate competence;
References
CIPD (2012) Where Has all the Trust Gone? Human Resource Management, Oxford, Oxford
[online] http://www.cipd.co.uk/hr-resources/ University Press, pp 128–46
research/where-trust-gone.aspx (archived at Guest, D E and Conway, N (1998) Fairness at Work
https://perma.cc/76GF-ZAV8) [accessed 3 and the Psychological Contract, London, IPD
January 2016] Guest, D E and Conway, N (2002) Communicating
Guest, D (2007) HRM and the worker: towards a the psychological contract: an employee
new psychological contract, in (eds) P Boxall, perspective, Human Resource Management
J Purcell and P Wright, Oxford Handbook of Journal, 12 (2), pp 22–39
Chapter 46 | The Psychological Contract 545
Guest, D E, Conway, N and Briner, T (1996) The created, Human Resource Management, 33 (3),
State of the Psychological Contract in pp 463–89
Employment, London, IPD Spindler, G S (1994) Psychological contracts in the
Katz, D and Kahn, R (1966) The Social Psychology of workplace: a lawyer’s view, Human Resource
Organizations, New York, John Wiley Management, 33 (3), pp 325–33
Rousseau, D M and Wade-Benzoni, K A (1994) Vroom, V (1964) Work and Motivation, New York,
Linking strategy and human resource practices: Wiley
how employee and customer contracts are
546
47
The practice of
industrial relations
Introduction Trade union membership
Industrial relations is concerned with how manage- As published by the Department for Business,
ments and trade unions relate to one another in con- Energy and Industrial Strategy (2018), trade union
cluding collective agreements, collective bargaining, membership in the UK in 2017 was 6.2 million.
disputes resolution and dealing with issues concern- Union density (ie the proportion of those in em-
ing the employment relationship and the working ployment who are union members) was 23.5 per
environment. This chapter begins with an analysis cent of employees – 14.2 per cent in the private
of trade union membership and the factors affecting sector and 54.3 per cent in the public sector. The
union recognition. It continues with a description of overall density in 2017 was down from 32.4 per
the formal procedures and arrangements that take cent in 1995. According to the 2011 Workplace
place when unions are recognized. But industrial re- Employment Relations Survey (WERS), 22 per cent
lations are also conducted on a daily informal and of workplaces with five or more employees recog-
semi-formal basis, and this is considered in the last nized at least one trade union.
section. The employment relations processes of pro- Overall union membership has declined signifi-
viding employees with a voice and communicating cantly in the UK from its peak of some 12 million in
with employees, which can take place in either a un- 1979. This has been largely in the private sector for
ionized or a non-unionized environment, are cov- structural reasons – the demise of large manufactur-
ered in the next two chapters. ing firms, the rise in the service industries and the
growing numbers of part-time workers. Trade un-
ions remain strong in the public sector.
Wo rd s o f w isdom
Unions and collective bargaining need to be
packaged as a sort of cooperative adjunct to Pau se for th ou gh t
the employers’ quest for increased profit, What effect do you think the decline in
competitiveness and effective management union membership in the private sector has
of change. had on the conduct of employment
Dundon et al (2017: 81) relations?
Chapter 47 | The Practice of Industrial Relations 547
the history of relationships with the existing

Union recognition ●●
union;
An employer fully recognizes a union for the pur- ●● the proportion of employees who are union
poses of collective bargaining when pay and condi- members and the degree to which they
tions of employment are jointly agreed between believe they need the protection that their
management and trade unions. Partial recognition union provides; a decision on derecognition
takes place when employers restrict trade unions to has to weigh the extent to which its
representing their members on issues arising from perceived advantages outweigh the
employment (representational rights). Full recog disadvantages of upsetting the status quo;
nition provides unions with negotiating and repre- ●● any preferences as to a particular union,
sentational rights; partial recognition only gives because of its reputation or the extent to
unions representational rights. The following dis- which it is believed that a satisfactory
cussion of union recognition is only concerned with relationship can be maintained.
the more common practice of full recognition.
In considering recognition arrangements, employers
Unions can be derecognized, although this does not
may also consider entering into a ‘single-union deal’
happen often. But as established by the 2011
ie recognizing only one union.
Workplace Employ ment Relations Study (van
Wanrooy et al, 2013: 59), in the private sector only
around 10 per cent of workplaces with five or more
employees recognized a union for collective bar-
Collective bargaining
gaining purposes compared with 90 per cent of
Relationships with unions involve collective
public sector establishments.
bargaining – the establishment by negotiation and
discussion of agreements on matters of mutual con-
cern to employers and unions covering the
Factors influencing recognition or employment relationship and terms and conditions
derecognition of employment. Collective bargaining is a joint reg-
ulating process, dealing with the regulation of man-
Employers in the private sector are in a strong po-
agement in its relationships with work people as
sition now to choose whether they recognize a
well as the regulation of conditions of employment.
union or not, which union they want to recognize
It was described by Flanders (1970) as a social pro-
and the terms on which they would grant recogni-
cess that continually turns disagreements into
tion: for example, a single union and a no-strike
agreements in an orderly fashion.
agreement.
Collective bargaining can also be seen as a po-
When setting up on greenfield sites employers
litical relationship in which trade unions, as
may refuse to recognize unions. Alternatively, they
Chamberlain and Kuhn (1965) noted, share with
can hold ‘beauty contests’ to select the union they
managements industrial sovereignty or power over
prefer to work with, one that will be prepared to
those who are governed – the employees. The sover-
reach an agreement in line with what management
eignty is held jointly by management and union in
wants.
the collective bargaining process.
An organization deciding whether or not to rec-
Above all, collective bargaining is a power rela-
ognize a union will take some or all of the following
tionship that takes the form of a measure of power
factors into account:
sharing between management and trade unions (al-
●● the perceived value or lack of value of having though recently the balance of power has shifted
a process for regulating collective bargaining; markedly in the direction of management in the pri-
●● if there is an existing union, the extent to vate sector). Bargaining power is the ability to in-
which management has freedom to manage; duce the other side to make a decision or take a
for example, to change working course of action that it would otherwise be unwill-
arrangements and introduce flexible working ing to make. Each side is involved in assessing the
or multiskilling; bargaining preferences and bargaining power of the
other side. The process of collective bargaining as parties, with the subsequent generation of options
described below takes account of the concept of and finally, the choosing of those that offer the high-
mutual gains and takes different forms. est joint returns’ (ibid: 819).
Boxall (2013: 5) set out three conditions under
which the quality of employment relationships may
facilitate the achievement of mutual gains: (a) capa-
Wo rd s o f w isdom bility match – fit between employer’s need for a
The relevance of collective bargaining lies in competent workforce and employees’ need for a
conducive work environment; (b) commitment
accepting that divergent interests and match – fit between employer’s need for employees’
concerns need to be ‘worked out’. commitment and employees’ need for job security
and fair treatment from the employer; and (c) con-
Employers and employees should negotiate tribution match – the extent to which the employer
the terms on which cooperation is provided. and employees perceive that their respective needs
Negotiations involve not just the art of are being met.
The concept of mutual gains is associated with
persuasion and force of argument but the the notion of mutuality as formulated by Walton
effective threat of power and sanction. (1985). Mutuality was defined by Guest and Peccei
Dundon et al (2017: 80)
(2001: 212) as: ‘The idea of focusing on the shared
interests and shared goals of two or more inter
dependent parties while recognizing that they have
other potentially differing interests.’ But the term
mutual gains is used more nowadays, perhaps be-
The concept of mutual gains cause it conveys more clearly the outcomes of mu-
tuality by defining what happens when the principle
The concept of mutual gains was originated by
of mutuality is applied, for example, as a basis for
Kochan and Osterman (1994), who argued that
negotiation.
rather than being blockages to productivity im-
provements, worker representatives, in collabora-
tion with management and underpinned with
institutional supports, could engage in joint prob-
lem solving to improve both firm performance and
returns for workers. Management and workers are
still held to maintaining their own separate inter- What do you think the concept of mutual
ests, but ultimately seek to satisfy such contiguous gains adds, if anything, to older concepts
interests through cooperation. They suggested that:
‘Employees must commit their energies to meeting such as mutuality?
the economic objectives of the enterprise. In return,
owners (stakeholders) must share the economic re-
turns with employees and invest those returns in
ways that promote the long-run economic security Forms of collective bargaining
of the workforce’ (ibid: 46).
As described by Cullinane et al (2014: 810), the Walton and McKersie (1965) made the distinction
idea of mutual gains ‘outlines that whilst manage- between distributive bargaining, defined as the
ment and workers’ interests may diverge, there is complex system of activities instrumental to the at-
ample opportunity, through problem-solving ar- tainment of one party’s goals when they are in basic
rangements, to create shared benefits for both par- conflict with those of the other party, and integra-
ties.’ They also observed that: ‘Mutual gains rotates tive bargaining, defined as the system of activities
on an assumption that, in the process of problem that are not in fundamental conflict with those of
solving, both sides exchange information to ad- the other party and which therefore can be inte-
vance interests that are deemed beneficial to both grated to some degree.
development in the 1990s of the so-called ‘new

Source review style’ agreements, they might include a no-strike
clause to the effect that issues should be resolved
without recourse to industrial action. They might
Distributive bargaining has the function of resolving
also provide for agreements on flexibility arrange-
pure conflicts of interests and aims to allocate fixed
ments and the achievement of single status (ie no
sums of resources (dividing the pie) and hence
differences in basic conditions of employment) or
often has a ‘zero-sum’, or conflictual, outcome.
the harmonization of terms and conditions by, for
Tactics centre on developing the negotiators’
example, placing all employees in the same grade
relative power, convincing the other party of the and pay structure.
first party’s power and resolution, modifying the
other party’s expectations, closely guarding
information and preventing the other side from Procedural agreements
using the same tactics. Integrative bargaining, by
contrast, aims to identify common or Procedural agreements set out the methods to be
used and the procedures or rules to be followed in
complementary interests and fosters a problem-
the processes of collective bargaining and the settle-
solving collaboration between both parties. The aim
ment of industrial disputes. Their purpose is to reg-
is to work towards achieving joint gains (expanding
ulate the behaviour of the parties to the agreement,
the size of the pie) and identifying opportunities for
but they are not legally enforceable and the degree
‘win-win’ outcomes.
to which they are followed depends on the goodwill
Wilkinson et al (2014: 740–41) of both parties or the balance of power between
them. Like substantive agreements, procedural
agreements are seldom broken and, if so, never
lightly – the basic presumption of collective bar-
Another analysis of collective bargaining forms was
gaining is that both parties will honour agreements
made by Chamberlain and Kuhn (1965), who dis-
that have been made freely between them.
tinguished between conjunctive bargaining, in
The scope and content of such agreements varies
which both parties are seeking to reach agreement,
widely. Some provide for full negotiating rights but
and cooperative bargaining, in which it is recog-
others allow representational rights only. Most have
nized that each party is dependent on the other and
provisions for dispute resolution as described below.
can achieve its objectives more effectively if it wins
the support of the other.
Dispute resolution
Collective agreements The aim of dispute resolution is to resolve differ-
ences between management and a trade union. The
The formal outcomes of collective bargaining are aim of collective bargaining is, of course, to reach
agreements between management and unions deal- agreement, preferably to the satisfaction of both
ing with terms and conditions of employment or parties. Grievance or negotiating procedures pro-
other aspects of the relationships between the two vide for various stages of ‘failure to agree’ and often
parties. They consist of substantive agreements, include a clause providing for some method of
procedural agreements and partnership agreements. reaching agreement in the event of the procedure
being exhausted. The types of dispute resolution are
conciliation, arbitration and mediation.
Substantive agreements
Substantive agreements set out agreed terms and Conciliation
conditions of employment covering pay, allowances Conciliation is the process of reconciling disagree-
and overtime, working hours and holidays. They ing parties. It is carried out by a third party, in the
may be single-union deals that provide for one UK often an ACAS conciliation officer, who acts in
union to represent all employees. In line with the effect as a go-between, attempting to get the
e mployer and trade union representatives to agree to accept. It is a cheap and informal alternative to
on terms. Conciliators can only help the parties to an employment tribunal and offers a quick resolu-
come to an agreement. They do not make recom- tion to problems, privacy and confidentiality.
mendations on what that agreement should be; that
is the role of an arbitrator or a mediator.
The incentives to seek conciliation are the hope Partnership agreements
that the conciliator can rebuild bridges and the be-
In partnership agreements both parties (manage-
lief that a determined, if last-minute, search for
ment and the trade union) agree to collaborate to
agreement is better than confrontation, even if both
their mutual advantage and to achieve a climate of
parties have to compromise.
more cooperative and therefore less adversarial in-
dustrial relations. Management may offer job secu-
Arbitration rity linked to productivity and the union may agree
Arbitration is the process of settling disputes by get- to more flexible working. The perceived benefits of
ting a third party, the arbitrator, to review and partnership agreements are that management and
discuss the negotiating stances of the disagreeing unions will work together in a spirit of cooperation
parties and make a recommendation on the terms and mutuality. This is clearly preferable to an adver-
of settlement, which is binding on both parties, who sarial relationship. Glover et al (2014) noted that
therefore lose control over the settlement of their the distinction between employee gains from part-
differences. The arbitrator is impartial and the role nership and gains from traditional collective bar-
is often undertaken in the UK by ACAS officials, gaining is that employees will come to enjoy a
although it is sometimes carried out by industrial higher level of influence in day-to-day decision-
relations academics. Arbitration is the means of last making processes. Partnership agreements were de-
resort for reaching a settlement, where disputes can- scribed by Freeman and Medoff (1984: 165) as
not be resolved in any other way. Procedure agree- ‘management and unions working together to pro-
ments may provide for either side unilaterally to duce a bigger pie as well as fighting over the size of
invoke arbitration, in which case the decision of the their slices’.
arbitrator is not binding on both parties. The pro- Guest and Peccei (2001) described partnership as
cess of arbitration in its fullest sense, however, only a hybrid that draws on both pluralist and unitarist
takes place at the request of both parties, who agree perspectives on trade union relations, arguing that
in advance to accept the arbitrator’s findings. ACAS the role of partnership within a mutual gains model
will not act as an arbitrator unless the consent of was to combine integrative systems of employee
both parties is obtained, conciliation is considered, representation with direct forms of employee par-
any agreed procedures have been used to the full, ticipation. They suggested that the distinctive fea-
and a failure to agree has been recorded. ture of the partnership process was the nurturing of
The notion of ‘pendulum’ or ‘final offer’ arbitra- trust between managers, workers and their repre-
tion emerged in the 1980s. It increases the rigidity sentatives. Guest et al (2008: 128) later noted that
of the arbitration process by allowing an arbitrator an essential condition for successful partnership is
no choice but to recommend either the union’s or not just the establishment of high-trust relation-
the employer’s final offer – there is no middle ships between the ‘champions of partnership among
ground. The aim is to get the parties to avoid adopt- management and employee representatives’ but
ing extreme positions. But the evidence from the also the creation of ‘positive attitudes towards, and
Workplace Employee Relations Survey (2004) was enthusiasm for the principles and practices associ-
that the full version of pendulum arbitration as de- ated with partnership among a wider section of
fined here was rare. management and the workforce’.
But research findings on partnership have been
mixed. Guest and Peccei (2001) found what they
Mediation called ‘constrained mutuality’ meant that, despite
Mediation takes place when a third party (often employees enjoying some benefits, the balance of
ACAS) helps the employer and the union by making advantage was likely to be skewed towards employ-
recommendations that they are not, however, bound ers. An analysis by Guest et al (2008) of evidence
from the 2004 Workplace Employee Relations outside that framework, informal employee rela-
Survey suggested that partnership practice remains tions processes are taking place continuously.
relatively undeveloped and that it is only weakly re- Informal employee relationships happen whenever
lated to trust between management and employee a line manager or team leader is handling an issue in
representatives and to employees’ trust in manage- contact with a union representative, an individual
ment. They observed that direct forms of participa- employee or a group of employees. The issue may
tion generally have a more positive association with concern methods of work, allocation of work and
trust than representative forms. overtime, working conditions, health and safety,
In contrast, data gathered by Roche (2009) from achieving output and quality targets and standards,
a large representative sample of employees in discipline, or pay – in the latter case especially if a
Ireland showed that some mutual gains are associ- payment-by-results scheme is in operation, which can
ated with partnership. Employees gained from en- generate continuous arguments about times, stand-
hancement to the intrinsic aspects of their work, eg ards, re-timings, payments for waiting time or when
autonomy, but did not gain security or more pay carrying out new tasks, and fluctuations or reductions
and did not seem to be more willing to accept in earnings because of alleged managerial inefficiency.
change. Employers gained more commitment, an Line managers and supervisors handle day-to-day
improved climate of employee relations, and better grievances arising from any of these issues and are
supervisor/employee relationships. Unions gained expected to resolve them to the satisfaction of all par-
influence and more members. ties without involving a formal grievance procedure
or allowing the issue to become a formal dispute. The
thrust for devolving responsibility to line managers
Informal employment for HR matters has increased the onus on them to
handle employee relations effectively. A good team
relations processes leader will establish a working relationship with the
union representative of his or her staff that will ena-
The formal processes of union recognition, collec- ble issues arising on the shop floor or with individual
tive bargaining and dispute resolution described employees to be settled amicably before they become
above provide the framework for industrial rela- a problem. The 2011 Workplace Employment
tions in so far as this is concerned with agreeing Relations Survey found that in 78 per cent of the
terms and conditions of employment and working workplaces employment relations issues were part of
arrangements and settling disputes. But within or the wider duties of the owner or general manager.
Key learning points
Union recognition The formal outcomes of collective bargaining are

substantive, procedural and partnership agreements,
An employer fully recognizes a union for the purposes and dispute resolution procedures.
of collective bargaining when pay and conditions of
employment are jointly agreed between management
Mutual gains
and trade unions. Partial recognition is when
employers restrict trade unions to representing their The mutual gains perspective indicates that
members on issues arising from employment. organizations should pursue employment policies
that produce benefits for both employees and
Collective bargaining themselves.
Collective bargaining is a joint regulating process,

Disputes resolution
establishing by negotiation and discussion agreements
on matters of mutual concern to employers and unions The processes of dispute resolution are conciliation,
covering the employment relationship and terms and arbitration and mediation.
conditions of employment.
Informal industrial relations an issue in contact with an individual employee,

a group of employees or an employee
Informal industrial relations processes take place representative.
whenever a line manager or team leader is handling
References
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Resource Management Journal, 23 (1) pp 3–17 Kochan, T A and Osterman, P (1994) The Mutual
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553
48
Employee voice
Introduction enhance the legitimacy of management within the
organization. This, ultimately, is their justification.
Employee voice is ‘a means by which employees’ inde- Boxall and Purcell (2016: 147)
pendent, and often collective, concerns are articulated
at work’ (Dundon et al, 2017: 121). The CIPD (2019:
3) defined it as ‘the ability of employees to express Employee voice is an expression of the desire of work-
their views, opinions, concerns and suggestions, and ers to have their own say over matters that affect their
for these efforts to influence decisions at work.’ working lives (Dundon and Rollinson, (2011). As ex-
plained by Boxall and Purcell (2003: 164), employee
voice is important because ‘it was necessary to recog-
nize a plurality of interests and interest groups which
Wo rd s of wi sdom would need to learn to live together and resolve their
[It is] possible to be a free citizen in the differences without the use of force.’ Budd (2004: 23)
asserted that ‘voice does not need to fulfil a construc-
public sphere but a slave in the workplace. tive purpose; it is sufficient in itself for voice to be a
Democracy [cannot] end outside the factory means of employee self-determination.’ The CIPD
(2019) research showed that voice and job satisfac-
gates: workers [are] stakeholders in the firm tion are strongly linked.
and must have industrial citizenship rights.
Hyman (2015: 12)
Source review
The chapter covers in turn the need for voice, the Two potential purposes of voice are highlighted in
degrees of voice and the forms of direct and indirect the management literature. First, the ‘organizational
voice. voice’ perspective focuses on the positive benefits
that voice can bring to the organization, such as
higher innovation, a more engaged workforce and
The need for employee voice lower absenteeism. Initiatives such as suggestion
schemes, for example, enable this type of voice by
allowing organizations to benefit from employees’
ideas. A second purpose of voice flows from the
Source review so-called social justice perspective. According to
this view, voice is a fundamental individual right
Employee voice institutions are important for required for work to have meaning, allowing
reasons of social legitimacy, both inside the worker involvement in decision-making through
organization and in wider society. They help to deepening industrial democracy.
ensure that companies respect employment laws CIPD (2019: 2)
and important social norms, and they help to
Wo rd s o f w isdom simply view workers as a disposable means

The workplace is where we spend much of to a profitable end and see worker
our lives doing things under the direction of involvement, participation and voice as
others. Given this, workers need a voice to irksome and unnecessary.
express their concerns and creativity, while Dundon et al (2017: 100)
employers should provide them with the

opportunity to do so.
Dundon et al (2017: 99 –100) And Boxall and Purcell (2016: 143) observed that
‘the quality of employee voice is extremely variable.’
But as Tony Dundon and his colleagues pointed out,

this doesn’t always happen.
What would be your response to someone
who said to you, ‘Management has the right
Wo rd s o f w isdom to manage’?
Most businesses (at least in the private
sector) are designed to produce profits and
wealth for the firm’s owners, not to provide Degrees of employee voice
employee voice. This harsh reality in turn is
echoed in the sentiments of employers who There are degrees, as shown in Figure 48.1, to which
employee voice can be expressed and to which man-
agements are prepared to give up their prerogative to
F I G U R E 48.1 Stages of employee voice
Management joins
with employees in
Degree to which making decisions
management prerogative
is preserved
Management consults
with employees before
making final decision
Management
communicates
decisions to
employees Degree to which
employees have a voice
Management decides
unilaterally
Chapter 48 | Employee Voice 555
command and control. At one end of the scale, man- recorded that 80 per cent of workplace managers
agement makes decisions unilaterally and exercises agreed or strongly agreed that they would not intro-
its full prerogative; at the other end, decisions are duce changes ‘without first discussing the implica-
made jointly. Between these extremes there are three tions with employees’.
intermediate points. The point on this scale at which
arrangement for the expression of employee voice
should or can take place depends on the a ttitudes, Employee surveys
willingness and enthusiasm of both management
Employee surveys, also known as attitude or opin-
and employees. Management may be reluctant to
ion surveys, seek the views of employees on matters
give up much of its authority except under pressure
affecting their work and are used extensively by
from a trade union (which is less likely today, at least
managements to measure levels of engagement, but
in the private sector).
they can also address particular issues such as pay
Where managements and managers are at least
and benefits. Pulse surveys measure employee feel-
prepared to listen and respond, employee voice can
ings on a quarterly, monthly or even weekly basis
be expressed in two forms: direct voice and indirect
rather than the more usual annual survey. Surveys
voice.
typically include about 20 or 30 questions or items.
Respondents may be invited to indicate the extent
to which they agree or disagree with statements
Direct voice such as ‘My work is very satisfying’. The response
can be on a five-point ‘Likert’ scale: ‘Strongly agree’,
Direct voice takes place when individuals or work ‘Inclined to agree’, ‘Neither agree nor disagree’,
teams communicate directly to management or indi- ‘Inclined to disagree’ and ‘Strongly disagree’. The
vidual managers rather than through some form of responses are scored 5 for the most positive option,
representative body. This may involve informal face- 1 for the most negative option. Adding these item
to-face communications on matters of interest or scores produces an overall score for, say, engage-
concern, workforce meetings when a number of em- ment, which can be used to assess trends as measured
ployees are gathered together to hear from manage- by successive surveys or, as part of an HR analytics
ment and discuss issues, ‘speak up’ programmes that exercise to assess the impact of an HR innovation
provide channels for individual employees to raise or policy. But there are drawbacks as, the CIPD
points with management and, as described in more pointed out:
detail below, employee surveys, social media, team
briefing, suggestion schemes and quality circles. As
established by the CIPD (2019) research, the most
important channel for employee voice is the infor-
mal one of day-to-day contacts with line managers. Source review
Managements often prefer to use direct voice
rather than adopt collective approaches through Because senior managers love the simplicity of
trade unions or works councils (indirect voice). numbers, there’s a huge over-reliance on
Purcell and Hall (2012: 4) noted that the 2009 standardized tick boxes, particularly the notorious
European Company Survey found that 72 per cent agree/disagree Likert scale. The focus on
of the UK respondents agreed that ‘we would prefer quantitative scores means that leaders can often
to consult directly with our employees’. get distracted by historical, sub-group and external
There is quite a lot of direct voice activity about. comparisons, rather than focusing on the real task
The 2011 Workplace Employment Relations Survey at hand: acting on the results. Moreover, survey
(van Wanrooy et al, 2013) found that in workplaces reports solely comprising metrics often make it
with 20 or more employees, 95 per cent have either very difficult for leaders to obtain any meaningful
workforce meetings or team briefings or both and insight to initiate an effective action plan.
38 per cent conduct an employee survey. The 2011 CIPD (2013)
Workplace Employment Relations Survey also
The CIPD also referred to the problem of the time it Suggestion schemes
takes surveys to be distributed, completed and ana-
lysed. Organizational trends can develop quickly if Suggestion schemes are procedures for submitting
left undetected, and no matter how frequently sur- and evaluating ideas from employees for increased
veys are conducted they will never be able to pro- productivity or efficiency with tangible recognition
vide feedback in real time. The CIPD suggests that for those that have merit. They have traditionally
the use of social media as a channel for voice can used ‘suggestion boxes’ but can now be part of a
overcome these objections in that it is immediate social media arrangement. A highly successful
and allows much more scope for employees to ex- scheme is run by Richer Sounds, the hi-fi and TV
press their views. retailer. The founder and chairman of Richer Sounds
gave the following advice on how one should be run
based on the arrangements in his business (Richer,
Social media 2017: 37–41):
Social media has become such an important feature ●● the most senior person in the organization
of many people’s personal lives that employees are should be involved in the scheme;
ready to use it in their working lives. Organizations ●● make it easy for people to enter their
are responding to this by establishing internal social suggestions;
networks (enterprise social networks such as those
●● answer all the suggestions;
provided by Yammer, Chatter and Jive). These func-
tion in the same way as social networks like ●● answer questions quickly;
Facebook, and allow people to post opinions, join ●● encourage people to meet in small groups to
in discussions and respond to questions. This has generate ideas;
moved voice on from giving employees a say behind ●● reward little and often;
closed doors to enabling them to engage in an open
●● measure and publish the results;
forum. Social media can enable people to ‘speak-up’
more readily than in the face-to-face sessions used ●● use the ideas;
in traditional speak-up programmes. ●● remember that suggestions are not just about
Communication is no longer one way or two saving money – they should cover such
way but multidimensional. This involves ‘crowd- things as customer service.
sourcing’, which encourages groups of people to
exchange knowledge and generate ideas and ena-
bles these to be aggregated so that the organization Quality circles
acquires comprehensive and current information
A quality circle or improvement group is a number
about what people are thinking. Internal social
of volunteers engaged in related work who meet
media platforms can also be used by management
regularly to discuss and propose ways of improving
to hold regular question and answer sessions online,
working methods under a trained leader. The idea
thus giving scope for immediate responses, which
was imported from Japan in the 1970s but quality
are not constrained by the tick boxes in employee
circles were difficult to manage and maintain and
surveys.
have largely faded away.
Team briefing Indirect voice

Team briefing (sometimes called cascade briefing)
aims to overcome the limited scope for communica- Indirect voice takes place when representatives are
tion through individuals or even joint consultative collectively involved in discussions with manage-
committees by involving everyone in an organiza- ment, either through joint consultation or their trade
tion, level by level, in face-to-face meetings to pre- unions. This can take the form of participation or
sent, receive and discuss information. involvement, although as Wilkinson and Dundon
(2010: 168) noted: ‘Employee participation, involve- Trade unions

ment and voice are somewhat elastic terms with
considerable width in the range of definitions.’ Trade unions with representational rights can express
However, an attempt to define the difference be- the views of their members on terms and conditions
tween them was made by Brewster et al as follows: of employment, health and safety, learning opportuni-
ties and any other issues that affect employees. But
private sector workers are not very interested in trade
unions. This raises a problem for managements on
Source review how they should deal with joint consultation in
situations when union membership and influence is
At the most modest level, involvement entails declining and when unions have the monopoly of
consultation, or soliciting of opinions that may or consultative rights, thus leaving a large proportion of
may not be acted on, rather than bargaining. In the workforce out of the consultation process. It was
contrast, participation accords employees a suggested by Boxall and Purcell (2016) that one solu-
genuine – clearly demarcated – input into how the tion to this problem would be for management to set
firm is governed, even if this input is limited. up a joint consultative body for all employees while
Brewster et al (2007: 1248) preserving collective bargaining on pay and condi-
tions with the union. An alternative would be to get
the union to sit on joint consultative committees
alongside non-union members, although trade unions
Joint consultation might not want to do this.
Joint consultation involves management and em-
ployee representatives meeting regularly to exchange
views and deal with matters of common interest that
Employees’ experience of
are not the subject of collective bargaining. It can voice
take place in works councils or joint consultative
committees (JCCs). The 2011 Workplace Employ The CIPD (2019) survey found that only a quarter
ment Relations Survey (WERS) established that the of employees felt they were able to express them-
latter existed in 74 per cent of workplaces with be- selves at work and that this was particularly low in
tween 200 and 999 workers and 80 per cent of the public sector. One quarter of the respondents re-
workplaces with 1,000 or more employees (Adam et ported that they often chose not to speak up at work
al, 2014). But it was also found that there was a fall although they had something to say. But just over a
in their use from 67 per cent in 2004 to 44 per cent fifth stated that they had plenty of opportunity to
in companies with 10,000 or more employees. speak up and express new ideas. It was established
For joint consultation to work well it is initially that employee voice is encouraged by leadership and
necessary first to discuss, define and agree its objec- is most likely to flourish in an organization climate
tives. These should be concerned with tangible and of innovation and flexibility. The survey established
significant aspects of work and the policies and the importance of informal mechanisms, especially
plans of management that affect the interests of em- one-to-one conversations with line managers which
ployees. They should not focus on peripheral mat- were the main voice channel for employees.
ters such as social amenities and the quality of the
sausages in the canteen, which can happen. Manage
ment must believe in and be seen to believe in in-
volving employees. It should listen, aim to achieve Pau se for th ou gh t
consensus decisions and take action accordingly.
Equally, employees should be prepared to listen and In the light of these findings, what do
respond. But although consultative committees can you think the role of HR should be in
serve a useful purpose, direct involvement with the
promoting voice?
line manager can be a more effective means of exer-
cising voice.
C A S E S T U DY
Cougar Automation: Creating effective voice mechanisms
Involvement of staff in the decisions that impact the unanimous, unfortunately we’d have to go down the
organization is a distinctive feature of the way Cougar redundancy route.
Automation, a medium-sized software engineering company,
Since then transparency and employee involvement in
is run. This way of working was demonstrated at a
decision making are principles for Cougar Automation. The
particularly difficult time during the recession. At the time,
leadership team commented on the value that employee
the company was struggling to maintain cash flow and was
voice brings to making the right decisions for the organization:
forced by the creditor to make more cuts to remain in
operation. One of the current employees said: This doesn’t mean we always give a ‘yes’ answer on the
suggestions that are made. But we must explain why
When the recession came, we were at the lowest
we’re taking the decision we’re taking, and how we
point of the spend cycle in the water industry [that the
came to that decision. The question might get referred
business relied on] so it hit us quite heavily financially.
to the company council, so a selection of employees
And the management team put a proposal together:
across the company will discuss it, and then there might
‘Either the whole company sinks or we have to make
be a resounding ‘no’. So we have to be consistent.
some changes’. The two options were making
colleagues redundant or everybody tightening their There have been a couple of occasions where things
belts and we ride it through. were put on for discussion at the company council
[and the leadership team thought] people were going
It was put up for a vote, and everybody decided that
to love this, but the discussion showed they didn’t. So,
they would take a salary sacrifice. I think that was the
had we decided as a leadership team to go ahead with
first big vote that we had in the organization, where it
that, without asking the staff, it would have been hated
could affect the business as a whole. It was spelled
within the company.
out that everybody had to vote, and unless it was
Source CIPD (2015)
Key learning points
Employee voice ●● workforce meetings when a number of employees

are gathered together to hear from management
Employee voice is the say employees have in matters and discuss issues;
of concern to them in their organization.
●● ‘speak up’ programmes that provide channels for
individual employees to raise points with senior
Direct voice management;
Direct voice takes place when individuals or work ●● employee surveys;
teams communicate directly to management or
●● social media;
individual managers rather than through some form of
representative body. This may involve: ●● team briefing;
●● informal face-to-face communications on matters

●● suggestion schemes;
of interest or concern; ●● quality circles.
Indirect voice management, either through joint consultation or

their trade unions.
Indirect voice takes place when representatives are
collectively involved in discussions with
References
Adam, D, Purcell, J and Hall, M (2014) Joint CIPD (2019) Talking About Voice: An employee
Consultative Committees Under the Information perspective [online] www.cipd.co.uk/knowledge/
and Consultation of Regulations, a WERS work/future-voice/employee-experiences (archived
Analysis, Research Paper 04/14, London, ACAS at https://perma.cc/S9VZ-2UPT) [accessed 22 May
Boxall, P F and Purcell, J (2003) Strategy and Human 2019]
Resource Management, Basingstoke, Palgrave Dundon, T, Cullinane, N and Wilkinson, A (2017) A
Macmillan Very Short, Fairly Interesting and Reasonably
Boxall, P F and Purcell, J (2016) Strategy and Human Cheap Book About Employment Relations,
Resource Management, 4th edn, Basingstoke, London, Sage
Palgrave Macmillan Dundon, T and Rollinson, D (2011) Understanding
Brewster, C, Croucher, R, Wood, G and Brookes, M Employment Relations, London, McGraw-Hill
(2007) Collective and individual voice: Hyman, R (2015: 12) The very idea of democracy at
convergence in Europe? International Journal of work, Transfer: European Review of Labour and
Human Resource Management, 18 (7), Research, 22 (1), pp 11–24
pp 1246–62 Purcell, J and Hall, M (2012) Voice and Participation
Budd, J (2004) Employment with a Human Face: in the Modern Workplace: Challenges and
Balancing efficiency, equity, and voice, Ithaca, NY, prospects, Future of Workplace Relations
ILR Press Discussion Paper, London, ACAS
CIPD (2013) Social Media and Employee Voice Richer, J (2017) The Richer Way, London, Business
[online] http://www.cipd.co.uk/binaries/social- Books
media-and-employee-voice_2013-current- Van Wanrooy, B, Bewley, H, Bryson, A, Forth, J,
landscape-sop.pdf (archived at https://perma.cc/ Stokes, I and Wood, S (2013) Employment
W7MF-SSA6) [accessed 21 March 2019] Relations in the Shadow of Recession: Findings
CIPD (2015) Best to Good Practice HR: Developing from the 2011 Workplace Employment Relations
the principles [online] http://www.cipd.co.uk/ Study, Basingstoke, Palgrave
hr-resources/research/best-good-practice-hr- Wilkinson, A and Dundon, T (2010) Direct employee
developing-principles-profession.aspx (archived at participation, in (eds) A Wilkinson, P J Gollan, M
https://perma.cc/8XCQ-SGC7) [accessed 21 March Marchington and D Lewins, The Oxford
2019] Handbook of Participation in Organizations,
Oxford, Oxford University Press, pp 167–85
560
49
Employee
communications
Introduction The importance of employee
Employee communication processes and systems communications
are used by managements to inform employees on
matters that concern them and to persuade employ- Good communications from management to em-
ees to accept a management initiative or request. ployees are important for three reasons:
They also provide for upward communication by 1 They are a vital part of any change
giving employees a voice – ‘two-way communica- management programme. If any change is
tion’. Voice can be provided either to individuals proposed – in terms and conditions of
through workforce meetings, ‘speak up’ pro- employment, HR processes such as
grammes, social media and team briefings or performance pay, working methods,
collectively through trade unions or joint consulta- technologies, products and services, or
tion. These ‘upward’ means of communication organization (including mergers and
were described in the last chapter; this chapter acquisitions) – employees need to know what
therefore focuses mainly on the process of ‘down- is proposed and how it will affect them.
ward’ communication from management to Resistance to change often arises simply
employees. It starts with an assessment of the im- because people do not know what the
portance of communicating and then considers change is or what it implies for them.
what should be communicated, the approach to
2 Commitment to the organization will be
communication and methods of communicating. It
enhanced if employees know what the
is completed with a discussion of employee com-
organization has achieved or is trying to
munications strategy.
achieve and how this benefits them.
3 Effective communication generates trust as
organizations take the trouble to explain
Wo rd s o f w isdom what they are doing and why.
In order to function effectively in a social It should be emphasized, however, that these three
benefits of good communications will only be real-
context and make accurate attributions ized in full if employees are given a voice – the
about a situation, an employee must have opportunity to comment and respond to the infor-
adequate and unambiguous information. mation they obtain from management.
Bowen and Ostroff, C (2004: 208)
Chapter 49 | Employee Communications 561
or groups is both direct and swift and it provides an

What should be opportunity to gauge the reactions of people who can
communicated respond on the spot and ask questions. But it should
be supplemented by written material or intranet com-
Managements need to communicate to employees munications, particularly where the information is
about the objectives, strategies, policies and perfor- important or complex.
mance of the organization; what they are expected Written communication is most effective when
to do; learning and development opportunities; and the information is important, the topic requires de-
any proposed changes to conditions of employ- tailed and accurate explanation, the audience is
ment, working arrangements and requirements, or widespread or large, and there is need for a perma-
the structure, policies and HR practices of the or- nent record or a back-up to face-to-face communi-
ganization. In each case they need to explain why cation. Judicious use should be made of a mix of
the changes have been made and how they affect face-to-face and written communication, using a
employees. selection of the methods described below.
Employees need the opportunity to communi-
cate upwards their comments and reactions to what
is proposed will happen or what is actually happen- Communication methods
ing in matters that affect them, for example, pay
and other terms of employment, working condi- Individual face-to-face
tions, work-life balance, equal opportunity, job se-
curity, health and safety, and learning and develop- communication
ment programmes. This is, of course, the most common method of com-
munication but it can be the most problematic. The
quality, accuracy and acceptability of the information
Approach to communication depend largely on the skill of the managers or team
leaders involved and on their commitment to doing it
To be effective, communication needs to be clear, well. Information can be distorted or plain wrong.
easily understood and concise. Information should Briefing notes are helpful but they will not necessarily
be presented systematically on a regular basis and be be used well. Individual communications are inevita-
as relevant, local and timely as possible. Empathy is ble and necessary but should not be relied upon by
required by management in the sense of appreciating themselves when the subject matter is important.
the concerns of employees and what they want and
need to hear. Possible reactions to proposed changes
should be assessed and anticipated in the communi- Intranet
cation. Attitude surveys can be used to find out what
information employees want and where they feel An internal e-mail system (the intranet) can be used
there are any gaps that need to be filled. to communicate information, especially in work-
The purpose of communication can simply be to places where all or most of the employees have ac-
provide information but it is also a means of what cess to a computer. The advantage of intranet com-
is called ‘message-based persuasion’. This takes the munications is that they can be transmitted swiftly
form of a two-step process of ‘reception’ – encoding to a wide audience.
of the message (exposure to the message, attention A communication dashboard can be created for
to its content, comprehension of the content) – and departmental websites which displays performance
‘yielding’ – acceptance of the message (agreeing metrics in a visual form (as on a car dashboard).
with the message and storing it in memory). For a
message to have its desired effect, both reception
and yielding are necessary.
Social media
A variety of communication methods will be Enterprise social networking using internal social
needed: via an intranet, spoken and written, direct and networks such as Yammer is increasingly being used
indirect. Face-to-face communication to individuals instead of the intranet for communicating to

employees. Their advantages are that they provide Consultative committees
for more interaction, facilitate the sharing of infor-
mation and avoid cluttering up computers with Joint consultation provides a channel for two-way
e-mails. As the CIPD (2014) observed, by drawing communication. But committees are not always ef-
people into conversations (a ‘pull’ style of commu- fective. Their discussions can be confined to rela-
nications) rather than simply broadcasting mes- tively trivial issues and there is still the problem of
sages (a ‘push’ style), social media can be used to disseminating information around the organiza-
engage people who are interested and help get the tion – committee members cannot do this on their
‘right’ information to the ‘right’ people. own. Minutes can be posted on notice boards or
through the intranet but may not be read. It is better
to highlight key points either on notice boards or
through other channels.
Is social media the future of employee
Notice boards
communication?
Notice boards are the most obvious and familiar
means of communication but they can too easily be
cluttered up with redundant information. It is nec-
Team briefing essary to control what goes on to boards and ensure
that out-of-date or unauthorized notices are re-
Team briefing (sometimes called cascade briefing) moved.
aims to overcome the limited scope for communica-
tion through individuals or even joint consultative
committees by involving everyone in an organization, Magazines
level by level, in face-to-face meetings to present, re-
ceive and discuss information. It operates as follows: Glossy magazines or house journals are obvious
ways to keep employees informed about the activi-
●● Organization – covers all levels in the ties and achievements of the organization. There is,
business with the fewest possible steps from however, a danger of such magazines being more
top to bottom. There should be between 4 about public relations than about matters of real
and 18 in each group and the group should interest to employees.
be run by its team leader or manager (who
must be given training).
●● Subjects – policies, plans, progress and people. Newsletters and bulletins
●● Operation – work to a brief prepared by the Newsletters can appear more frequently than
board on key issues. The brief is written up magazines and can angle their contents more to
and cascaded down the organization. Briefs the concerns of employees. They may be distrib-
are discussed at meetings and comments are uted in addition to a house magazine, treating the
fed back to the top to provide for two-way latter mainly as a public relations exercise.
communication. Bulletins can be used to give employees immediate
●● Timing and duration – meet when there is information that cannot wait for the next issue of
something to discuss. Meetings last no more a newsletter. They can be issued as hard copy or
than 20–30 minutes. on the intranet.
Employee communication
What are the conditions required for a
strategy
successful team briefing system? A strategy for employee communications will deal
with what information the organization wants to
Chapter 49 | Employee Communications 563
give to employees and how it wants to provide it. the introduction of a new pay structure is a major
Provision should also be made for upward change exercise and will need to be supported by a
communications. planned communications strategy.
Information to be made available Providing the information

The strategy should be based on an analysis, on a The strategy should cover the mix of methods that
regular basis, of what management wants to say will be used to convey the information – face to face
and what employees want to hear. It should also (individual or team), notice boards, intranet, social
cover provision for upwards communications. The media, and magazines, newsletters or bulletins.
analysis could refer to the areas of interest set out
earlier in this chapter.
It may also be necessary to develop a specific Upward communication
communications strategy for any proposed major
The strategy should also provide for upward com-
changes to terms and conditions, working arrange-
munication through consultative committees, team
ments such as downsizing, or organization s tructure,
briefing, speak-up programmes and the intranet.
including mergers and acquisitions. For example,
Key learning points
The importance of employee The approach to communication

communications Communication needs to be clear, easily understood
Communication is a vital part of a change management and concise. Information should be presented
programme, in order to increase commitment and systematically on a regular basis and be as relevant,
generate trust. local and timely as possible. More than one medium
should be used.
What should be communicated
Communication methods
Managements and individual managers need to
communicate to employees about terms and Individual face-to-face communication, intranet, social
conditions of employment; what they are expected to media, team briefing, consultative committees, notice
do; learning and development opportunities; the boards, speak-up programmes, magazines,
objectives, strategies, policies and performance of the newsletters and bulletins.
organization; and any proposed changes to conditions
of employment, working arrangements and Employee communication strategy
requirements, or the structure and policies of the
A strategy for employee communications will deal
organization. Employees need the opportunity to
with what information the organization wants to give
communicate upwards their comments and reactions
to employees and how it wants to provide it.
to what is proposed will happen or what is actually
Provision should also be made for upward
happening in matters that affect them.
communications.
References
Bowen, D E and Ostroff, C (2004) Understanding Images/putting-social-media-to-work-lessons-
HRM-firm performance linkages: the role of the from-employers_tcm18-10319.pdf (archived at
‘strength’ of the HRM system, Academy of https://perma.cc/3UKF-KGK2) [accessed 21
Management Review, 29 (2), pp 202–21 November 2015]
CIPD (2014) Putting Social Media to Work: Lessons
for employers [online] https://www.cipd.co.uk/
565
PART XII
Employee wellbeing
PA R T X I I CO N T E N T S
50 The principles and practice of employee wellbeing

51 Health and safety
they feel in control of what they do. It is about both

Introduction their physical wellbeing (working conditions and
safety) and, importantly, their mental wellbeing,
Wellbeing is defined by the Oxford English Dic including stress.
tionary as ‘the state of being comfortable, healthy The first chapter of this part (Chapter 50) covers
or happy’. Healthy and safe working conditions are the case for paying close attention to wellbeing, the
clearly vital to wellbeing and comfort and happi- dimensions of wellbeing, the factors affecting well-
ness are important. But wellbeing at work is a being and the steps that can be taken to promote
broader concept than happiness. For people in work wellbeing including the provision of individual and
the level of wellbeing is also related to how satisfied group employee services. The focus is on subjective
they are with their job and how the organization experiences arising from work and the psychologi-
treats them, the quality of relationships with their cal aspects of wellbeing. The physiological aspects
line manager and their colleagues, the extent to of wellbeing – occupational health and safety – are
which they have a sense of purpose and how much dealt with in Chapter 51.
566

567
50
The principles and
practice of employee
wellbeing
Introduction hedonic, eudaimonic, and evaluative. The hedonic
aspect of wellbeing refers to people’s feelings or
emotions, such as happiness or anxiety. The eudai-
Employee wellbeing has been defined by Warr
monic aspect of wellbeing refers to leading ‘a life
(1987) as ‘the overall quality of an individual’s sub-
well lived’, interacting with the world around you
jective experience and functioning at work’. The
to meet basic psychological needs. The evaluative
wellbeing of employees depends on the quality of
aspect of wellbeing refers to the way that people
working life provided by their employers – the work
evaluate their lives with regard to their own
environment and the feelings of satisfaction and
appraisals of how life is going, or particular aspects
happiness arising from the work itself.
of their lives, such as job satisfaction (New
A long time ago, Martin (1967: 21) put up a
Economics Foundation, 2014: 10).
good case for welfare, as it was then known, as fol-
lows: ‘People [at work] are entitled to be treated as
full human beings with personal needs, hopes and
anxieties.’ There has been no change in this require-
The dimensions of wellbeing
ment since then. Two main dimensions of wellbeing have been
This chapter deals with the principles of em- described by Peccei et al (2013: 18). The first
ployee wellbeing, the case for caring about it, the dimension is concerned with individuals’ subjective
factors that affect wellbeing and, taking account of experiences of work, and is sometimes called ‘hap-
these factors, the practice of wellbeing in terms of piness wellbeing’ (Grant et al, 2007). This dimen-
what organizations can do to develop a wellbeing sion refers to elements such as job satisfaction and
strategy. positive and negative responses to the work envi-
ronment. The second dimension covers the physio-
logical and psychological aspects of employee
The principles of wellbeing health at work including, for example, job-related
anxiety and burnout (exhaustion). The latter is
Wellbeing is about how people feel and function, sometime referred to as mental wellbeing as
and how they evaluate their lives. The concept of described below.
wellbeing can be separated into three key aspects:
568 Part 12 | Employee Wellbeing
Source review where people feel more confident to discuss

any health issues and receive the support they
Mental wellbeing is a dynamic state in which the
individual is able to develop their potential, work need. Employers who are intent on creating a
productively and creatively, build strong and healthy workplace could therefore benefit
positive relationships with others and contribute to
from considering how to integrate
their community. It is enhanced when an individual
is able to fulfill their personal and social goals and compassion as part of their wellbeing strategy.
achieve a sense of purpose in society. Mental Sir Cary Cooper in CIPD (2019: 3)
wellbeing at work is determined by the interaction
between the working environment, the nature of
the work and the individual.
The moral case for caring about wellbeing is strong
NICE (2009)
but there is also a business case. The CIPD (2017a: 2)
reported that academic and practitioner evidence
demonstrates that employee health, wellbeing and
engagement are important for organizational suc-
The case for caring about cess. For example, in a meta-analysis, Peccei (2004)
wellbeing suggested that wellbeing had a key role in enhanc-
ing organizational performance. Donald et al (2005)
found that almost a quarter of the variance in
Employers have a duty of care. This means adopting
employee productivity is explained by psychologi-
a socially responsible approach to looking after their
cal wellbeing. Ford et al (2011) established links
people by creating a good work environment. As
between employee psychological health and wellbe-
Brown et al (2019: 5–6) pointed out: ‘Employers seem
ing and overall performance.
to be becoming more, not less, focused on the wellbe-
An assessment of 55 wellness programmes through
ing of their employees, recognizing that high perfor-
out industry by PricewaterhouseCoopers (2008)
mance in a service- and knowledge-based economy
found that on average the interventions resulted in
generally can’t be programmed and regulated into
a 45 per cent reduction in sickness absence, 18 per
people; that they have to be engaged, supported and
cent reduction in staff turnover, 16 per cent reduc-
enabled by leaders and HR professionals to deliver it.’
tion in accidents/injuries, an increase in employee
job satisfaction of 14 per cent, an 8 per cent increase
in productivity and a drop of 7 per cent in health
and employer liability claims.
Wo rd s o f w isdom David Guest (2017: 22–23) made a strong ethi-
Compassionate leadership is a far from fluffy cal case for focusing on employee wellbeing. He
noted the following wellbeing issues:
concept. It is supported by a hard business
case showing desired outcomes such as ●● Changes in technology can increase demand
and create work overload (Derks and Bakker,
improved relationships as well as higher 2010), lead to work-home interference
motivation and job satisfaction levels, all of (Derks et al, 2014).
which can lead to enhanced performance and ●● New technologies contribute to skill
obsolescence and associated job insecurity.
productivity. Not surprisingly, there is also a
●● Felstead et al (2015) find that in the UK,
strong association with better health and
average levels of autonomy have declined
wellbeing because a compassionate culture is while work demands have increased, notably
one which engenders trust and openness, and in low-skill jobs.
●● Bryson and Forth (2015) found widespread
increases in workload alongside static wages.
Chapter 50 | The Principles and Practice of Employee Wellbeing 569
This has reduced fairness and threatened including the wellbeing of 1,882,131
wellbeing but failed to improve productivity. employees and the performance of 82,248
●● Countries with less dispersion of wealth show business units, originating from 230
higher wellbeing among their populations. independent organizations across 49
industries in the Gallup database. A
●● Growth of temporary employment has
significant and strong positive correlation
increased the numbers within what
was found between employees’ satisfaction
Standing (2011) describes as the ‘precariat’
with their company and employee
and created employment insecurity.
productivity and customer loyalty, and a
Research on job insecurity convincingly
strong negative correlation with staff
demonstrates its negative impact on
turnover. Ultimately, higher wellbeing at
wellbeing (De Witte et al, 2016).
work is positively correlated with more
●● Wellbeing may also be affected by lack of business-unit level profitability.
optimism about the future; at work, this is
reflected in threats to career prospects, to
employment security and to the long-term Factors affecting wellbeing
economic security of a decent pension.
●● Krekel et al (2019) of the Saïd Business The internal factors that affect wellbeing and
School surveyed the evidence in a meta possible actions to deal with them are set down in
analysis of 339 independent research studies, Table 50.1.
TA B L E 50.1 Wellbeing factors and actions
Wellbeing
factor Description Possible actions
The work Physical and mental wellbeing resulting Provide a good work environment in terms
environment from the system of work, working of working conditions and take account of
conditions, and health and safety the need to provide a healthy and safe
considerations. system of work including minimalizing stress
and paying attention to ergonomic
considerations in the design of equipment
and work stations. Provide amenities such as
subsidized restaurants, sports and social
clubs, gyms and childcare facilities.
Job design The extent to which the jobs people Review job design practices to ensure that
and demands have match their abilities and allow the principles of good design are being met.
individuals to control their work (self- Account needs to be taken of the principle
determination) and use their skills and of self-determination and the job demands-
abilities. The physical and mental resources model (see Chapter 20).
demands involved in meeting job Review job demands to ensure that they
requirements especially when work are not excessive and therefore negatively
intensification has taken place. affect work-life balance and lead to undue
stress and even burnout.
Review working conditions and ergonomic
factors to ensure that they provide for the
physical wellbeing of employees.
(continued )
Wellbeing
factor Description Possible actions
Relationships How people are treated at work by their Select people as managers who are likely to
with line managers can strongly affect wellbeing. have the leadership qualities to create and
managers Research by Pfeffer and Sutton (2006) maintain good working relationships with
found that 60 to 75 per cent of the their team members.
employees in the organization surveyed Make responsibility for employee health and
reported that the worst or most stressful wellbeing an important part of the line
aspect of their job was their immediate manager's role so that they help to ensure
supervisor. employees feel valued, content and able to
Line managers are in regular contact discuss any concerns before they reach a
with the employees they are responsible crisis point (NICE, 2009).
for, so they are in a good position to Provide training and coaching in approaches
identify the early signs of stress. A line to managing stress including the leadership
manager can have a significant influence skills needed and the skills required to plan
on employee attitudes and behaviours. tasks and design jobs.
Relationships The quality of social relationships and Provide facilities for socializing at work.
with the extent to which negative behaviours Introduce robust bullying and harassment
colleagues such as bullying and harassment exist. policies and ensure that they function
effectively.
Work-life The achievement of a satisfying Introduce family-friendly policies providing

balance equilibrium between work and non-work for a reasonable degree of flexibility (see
(eg family) activities. A survey by Chapter 32). Minimize excessive job
Eurofound (2013) established that poor demands.
ratings of work-life balance were the
strongest predictor of stress.
Financial Financial wellbeing is defined by the Pay people fairly. Provide counselling for
wellbeing CIPD (2017b) as ‘a state of both employees with financial worries.
emotional and physical wellbeing,
produced by a set of conditions and
abilities. It includes making the most of
an adequate income to enjoy a
reasonable quality of life and having the
skills and capabilities to manage money
well, both on a daily basis and for the
future.’
Stress Stress at work is a major factor. It can be Take action as required in any of the areas
caused by problems in any of the areas set out above. Introduce an Employee
set out above. Assistance programme (EAP) to provide
counselling and advice (See the B&Q case
study below). Dealing with stress is
considered in more detail in Chapter 51.
Pa us e for t houg ht Word s of w isd om

There are a lot of factors and a lot of things Stress at work is rising year on year, with
to do. What do you think are likely to be the long working hours seemingly becoming the
priorities in a typical organization? norm. This is not only having a detrimental
effect on employee health, happiness and
productivity, but also impacting on the
External factors affecting employee wellbeing in- organization’s bottom line. Human
clude the pressure on organizations from the gov- resources (HR) professionals are uniquely
ernment, regulatory authorities and the media to
behave responsibly in the way they treat their peo- placed to manage this modern workplace
ple. But there is also a need for organizations to crisis by implementing a wellbeing strategy.
take account of the pressures their employees have Cooper and Hesketh (2019: 1)
to face outside the organization; these include main-
taining a reasonable balance between life and work,
taking care of children and dependents, health is-
sues and financial problems. The strategy should also take into account the fol-
lowing factors affecting wellbeing as established by
Guest (2017: 27)
Employee wellbeing ●● Warr (1987) identified 10 antecedents of
work-related wellbeing: opportunity for
strategy control, opportunity for skill use, variety at
work, opportunity for interpersonal contact,
externally generated goals, environmental
clarity, availability of money, physical
Source review security and a valued social position.
●● The job demands-resources model (Bakker
Building and integrating a health and wellbeing and Demerouti, 2007) proposed that
strategy for the organization that is contingent on wellbeing is a function of balancing the
its specific requirements is how employers can demands of work and the resources available
avoid the pitfall of developing a ‘menu’ of initiatives to do the work.
that are not joined up or closely linked to the needs ●● The quality of working life (QWL) concept –
of employees. Walton (1974) summarized eight core
CIPD (2019: 9) conditions for a high QWL covering a safe
and healthy working environment, the
development of human capacities, growth
The purpose of an employee wellbeing strategy is to and security, social integration, rights and
provide a framework for the introduction of poli- representation, the social relevance of work,
cies and practice designed to increase the level of consideration of the total life space, and
wellbeing amongst the employees of an organiza- adequate and fair compensation.
tion. The following case for developing and imple-
On this basis Guest (ibid: 30–31) suggested five sets
menting a wellbeing strategy was made by Professor
of practices that might be included in a wellbeing
Sir Cary Cooper and Ian Hesketh:
strategy:
1 Investment in employees – enhancing reactions of employees to key aspects of wellbeing:

competence through training and the work environment, their jobs, relationships with
development and providing a sense of an their managers and work-life balance. HR analytics
attractive career future leading to a feeling of should be used to analyse the causes of any sickness
security and the development of self-efficacy, absence to identify the incidence of stress and to
an important antecedent of wellbeing. examine indicators of employee dissatisfaction such
2 Engaging work – the provision of as absenteeism and disputes.
opportunities for autonomy, control, skill use The evidence should indicate any areas in which
and variety at work through the core HR prioritized action is required. Consideration should
practice of job design. be given to possible developments in consultation
with employees at meetings and/or through the
3 The creation of a positive social and physical
ESN. When decisions have been agreed, the work of
environment – prioritizing employee health
developing policy and practices such as those set
and safety, providing opportunities for social
out in Table 50.1 can begin. Account should be
interaction at work, avoiding bullying and
taken not only of the form and contents of the pol-
harassment, promoting equal opportunities
icy or practice but also of how it is to be implemented.
and diversity, ensuring fair rewards, often
Proposals should be discussed with those affected
linked to high basic pay rather than incentive
by them and managers and employees enlisted to
schemes, and providing employment security,
support their detailed development and implemen-
including steps to maintain employability.
tation. A change management programme may have
4 Enhancing the role of voice – extensive to be drawn up with provision for communications,
two-way communication, opportunities for further involvement and any training required for
individual expression of voice, including those concerned. The implementation plan may be
attitude surveys, and relevant forms of phased or test runs could be carried out. The whole
collective representation. implementation process should be carefully moni-
5 The provision of organizational support – tored to ensure that it is going a ccording to plan.
participative, supportive management, an The wellbeing strategy should be aware of the im-
organization climate that facilitates employee plications of research conducted by Alfes et al (2012:
involvement, participative and developmental 422), which found that employees who perceive
rather than judgemental and potentially punitive HRM practices positively experience higher levels of
performance management, and family-friendly wellbeing. This shows the advisability of reviewing
and flexible working arrangements. all the key HR policy practices that may affect well-
being, including learning and development, perfor-
The strategy should be evidence-based. Pulse sur-
mance management and reward to identify any
veys should be conducted, possibly through an
areas where changes may enhance wellbeing.
enterprise social network (ESN), to measure the
CASE STUDIES
B&Q’s employee assistance programme
The aims of the B&Q employee assistance programme are ●● Support carers of the chronically sick, disabled or
to: elderly by offering advice and information; locate care
options and community resources.
●● Support employees of all ages and backgrounds
through the full spectrum of life experiences by ●● Save time for working parents by helping them find and
offering advice, information, practical help and arrange good-quality, affordable and reliable care
emotional support free of charge and in confidence. arrangements for children of all ages.
●● Support parents through a wide range of parenting ●● Offer information and support to managers and HR staff
issues, including understanding and choosing with their personal issues, and issues facing their staff.
education options, and understanding and monitoring
●● Raise employee morale and commitment by showing
behaviour of children.
the caring face of the employer.
●● Reduce unplanned absence by encouraging
●● Improve customer service and productivity by saving
employees with personal, practical, emotional and
employees’ time and solving and avoiding work-life
financial problems to seek early help and advice.
conflicts.
Nuffield Health Support Centre

The Nuffield Health support centre includes an onsite academy, and a modern wellbeing café with a series of
fitness and wellbeing centre, dedicated clinical and breakout points encouraging employees to share initiatives
relaxation rooms, a bespoke learning and development and ideas on a regular basis.
Key learning points
Employee wellbeing defined The case for wellbeing

Employee wellbeing has been defined by Warr (1987) The moral case for caring about wellbeing is strong
as ‘the overall quality of an individual’s subjective but there is also a business case.
experience and functioning at work’. The wellbeing of
employees depends on the quality of working life Factors affecting wellbeing
provided by their employers – the work environment
and the feelings of satisfaction and happiness arising ●● The work environment.
from the work itself. ●● Job design and demands.
●● Relationships with line managers.
The dimensions of wellbeing
●● Relationships with colleagues.
Two main dimensions of wellbeing have been
described by Peccie et al (2014: 18). The first ●● Financial wellbeing.
dimension is concerned with individuals’ subjective
●● Stress.
experiences of work. It is sometimes called
‘happiness wellbeing’. This dimension refers to
elements such as job satisfaction and positive and Employee wellbeing strategy
negative responses to the work environment. The The purpose of an employee wellbeing strategy is to
second dimension covers the physiological and provide a framework for the introduction of policies
psychological aspects of employee health at work and practice designed to increase the level of
including, for example, job-related anxiety and wellbeing amongst the employees of an organization.
burnout (exhaustion). The strategy should be evidence-based.
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576
51
Health and safety
Introduction those working there under contract. But the onus is
on management to achieve and indeed go beyond
Health and safety policies and programmes provide
the high standard in health and safety matters re-
for employee wellbeing by protecting employees –
quired by the legislation – the Health and Safety at
and other people affected by what the company
Work etc Act 1974 and the various regulations and
produces and does – against accidents and risks of
Codes of Practice.
ill-health arising from their employment or their
The importance of healthy and safe policies and
links with the company.
practices is, sadly, often underestimated by those
Safety programmes deal with the prevention of
concerned with managing businesses and by indi-
accidents and with minimizing the resulting loss
vidual managers within those businesses. But the
and damage to people and property. They relate
achievement of the highest standards of health and
more to systems of work than the working
safety in the workplace is important because the
environment.
elimination, or at least minimization, of health and
Occupational health programmes deal with the
safety hazards and risks is the moral as well as the
prevention of ill health and the reduction of stress
legal responsibility of employers – this duty of care
arising in the working environment.
is the overriding reason. Close and continuous at-
This chapter starts with a general discussion on
tention to health and safety is important because ill
the importance of paying attention to health and
health and injuries created by the system of work or
safety at work as an important element in an em-
working conditions cause suffering and loss to indi-
ployee wellbeing programme. It then deals in turn
viduals and their dependents. In addition, accidents
with the following aspects of health and safety:
and absences through ill health or injuries result in
health and safety policies, risk assessments, audits,
losses and damage for the organization. This ‘busi-
inspections, accident prevention, occupational health,
ness’ reason is much less significant than the ‘human’
managing stress, measuring performance, communi-
reasons, but it is still a consideration, albeit a tan-
cations, training, and organizing health and safety
gential one.
management.
Managing health and safety Health and safety policies

at work Written health and safety policies are required to
demonstrate that top management is concerned
The achievement of a healthy and safe place of work about the protection of the organization’s employ-
and the elimination to the maximum extent possible ees from hazards and risks to health at work and
of hazards to health and safety are the responsibility to indicate how this protection will be provided.
of everyone employed in an o rganization, as well as The policies are, therefore: (1) a declaration of in-
tent; (2) a definition of the means by which that
Chapter 51 | Health and Safety 577
intent will be realized; (3) a statement of the Implementing health and safety
guidelines that should be followed by everyone

concerned – which means all employees – in imple- policies
menting the policy. The basis for implementing health and safety poli-
The policy statement should consist of three cies is provided by three review methods:
parts:
1 risk assessments, which identify the existence
1 the general policy statement; of hazards;
2 the description of the organization of health 2 health and safety audits, which provide for a
and safety; comprehensive review of all aspects of health
3 details of arrangements for implementing the and safety policies, procedures and practices;
policy. 3 health and safety inspections, which locate
and define any faults in the system,
equipment, plant or machines, or any
The general policy statement operational errors that might be a danger to
The general policy statement should be a declara- health or the source of accidents.
tion of the intention of the employer to safeguard
the health and safety of employees. It should em-
phasize four fundamental points: Conducting risk assessments
●● that the health and safety of employees and
Risk assessments are concerned with the identifica-
the public is of paramount importance;
tion of hazards and the analysis of the risks attached
●● that health and safety takes precedence over to them. A hazard is anything that can cause harm
expediency; (working on roofs, lifting heavy objects, chemicals,
●● that every effort will be made to involve all electricity, etc). A risk is the chance, large or small,
managers, team leaders and employees in the of harm being actually done by the hazard.
development and implementation of health The purpose of risk assessments is to initiate pre-
and safety procedures; ventative action. They enable control measures to
●● that health and safety legislation will be be devised on the basis of an understanding of the
complied with in the spirit as well as the relative importance of risks. Risk assessments must
letter of the law. be recorded if there are five or more employees.
Organization Types of risk assessment

This section of the policy statement should describe There are two types of risk assessment. The first is
the health and safety organization of the business quantitative risk assessment, which produces an ob-
through which high standards are set and achieved jective probability estimate based upon risk
by people at all levels in the organization. information that is immediately applicable to the
This statement should underline the ultimate re- circumstances in which the risk occurs. The second
sponsibility of top management for the health and is qualitative risk assessment, which is more subjec-
safety performance of the organization. It should tive and is based on judgement backed by general-
then indicate how key management personnel are ized data. Quantitative risk assessment is preferable
held accountable for performance in their areas. if the specific data is available. Qualitative risk as-
The role of safety representatives and safety sessment may be acceptable if there is little or no
committees should be defined, and the duties of spe- specific data, as long as it is made systematically on
cialists such as the safety adviser and the medical the basis of an analysis of working conditions and
officer should be summarized. hazards and an informed judgement of the likeli-
hood of harm actually being done.
Typical hazards that can be identified by risk as- Assessing the risk
sessments include:
When the hazards have been identified it is neces-
●● lifting and carrying, eg heavy or unwieldy sary to assess how high the risks are. This involves
objects; answering three questions:
●● stacking and storage, eg falling materials;
1 What is the worst result?
●● movement of people and materials, eg falls,
collisions; 2 How likely is it to happen?
●● processing of raw materials, eg exposure to 3 How many people could be hurt if things go
toxic substances; wrong?
●● maintenance of buildings, eg roof work, A probability rating system can be used such as:
gutter cleaning;
1 Probable – likely to occur immediately or
●● maintenance of plant and machinery, eg shortly.
lifting tackle, installation of equipment;
2 Reasonably probable – probably will occur
●● using electricity, eg using hand tools, in time.
extension leads;
3 Remote – may occur in time.
●● operating machines, eg operating without
4 Extremely remote – unlikely to occur.
sufficient clearance or at an unsafe speed; not
using safety devices;
●● failure to wear protective equipment, eg hats, Taking action
boots, clothing;
Risk assessment should lead to action. The type of
●● distribution of products or materials, eg action can be ranked in order of potential effective-
movement of vehicles; ness in the form of the following safety precedence
●● dealing with emergencies, eg spillages, fires, sequence:
explosions;
●● Hazard elimination – use of alternatives,
●● health hazards arising from the use of design improvements, change of process.
equipment or methods of working, eg VDUs,
repetitive strain injuries from badly designed ●● Substitution – for example, replacement
work stations or working practices. of one chemical with another that is less
risky.
Most accidents are caused by a few key activities. ●● Use of barriers – removing the hazard from
Assessors should concentrate initially on those that the worker or removing the worker from the
could cause serious harm. Operations such as roof hazard.
work, maintenance and transport movement cause
far more deaths and injuries each year than many ●● Use of procedures – limitation of exposure,
mainstream activities. dilution of exposure, safe systems of work
When carrying out a risk assessment it is also (these depend on human response).
necessary to consider who might be harmed. This ●● Use of warning systems – signs, instructions,
means both employees and visitors (including clean- labels (these also depend on human
ers and contractors and the public when calling in response).
to buy products or enlist services). ●● Use of personal protective clothing – this
Hazards should be ranked according to their po- depends on human response and is used as a
tential. A simple three-point scale can be used such side measure only when all other options
as ‘low’, ‘moderate’ and ‘high’, or ‘negligible’, ‘mar- have been exhausted.
ginal’ and ‘critical’.
Monitoring and evaluation ●● How committed are other managers, team

leaders and supervisors to health and safety?
Risk assessment is not completed when action has ●● Is there a health and safety committee? If
been initiated. It is essential to monitor the hazard not, why not?
and evaluate the effectiveness of the action in elimi-
nating it or at least reducing it to an acceptable ●● How effective is the committee in getting
level. things done?
Procedures
Health and safety audits How effectively do the procedures:
Risk assessments identify specific hazards and ●● support the implementation of health and
quantify the risks attached to them. Health and safety policies?
safety audits provide for a much more comprehen- ●● communicate the need for good health and
sive review of all aspects of health and safety poli- safety practices?
cies, procedures and practices. ●● provide for systematic risk assessments?
●● ensure that accidents are investigated
thoroughly?
Who carries out a health and
●● record data on health and safety that is
safety audit? used to evaluate performance and initiate
Safety audits can be conducted by safety advisers action?
and/or HR specialists, but the more that managers, ●● ensure that health and safety considerations
employees and employee representatives are in- are given proper weight when designing
volved the better. Audits are often carried out under systems of work or manufacturing and
the auspices of a health and safety committee, with operational processes (including the design
its members taking an active part in conducting of equipment and work stations, the
them. Some organizations also use outside agencies specification for the product or service, and
such as the British Safety Institute to conduct inde- the use of materials)?
pendent audits. ●● provide safety training, especially induction
Managers can also be held responsible for con- training and training when jobs or working
ducting audits within their departments and, even methods are changed?
better, individual members of these departments can
be trained to carry out audits in particular areas. The
conduct of an audit will be facilitated if checklists are Safety practices
prepared and a simple form used to record results. The following questions should be considered:
●● To what extent do health and safety practices
in all areas of the organization conform to
What is covered by a health and the general requirements of the Health and
safety audit? Safety at Work etc Act and the specific
requirements of the various regulations and
A health and safety audit should cover policies, pro-
Codes of Practice?
cedures and safety practices, as outlined below.
●● What risk assessments have been carried
out? What were the findings? What actions
Policies were taken?
The following questions should be asked: ●● What is the health and safety performance of
●● Do health and safety policies meet legal the organization as shown by the
requirements? performance indicators? Is the trend positive
●● Are senior managers committed to health or negative? If the latter, what is being done
and safety? about it?
●● How thoroughly are accidents investigated? ●● Carry out special investigations as necessary
What steps have been taken to prevent their to deal with special problems, such as
recurrence? operating machinery without guards to
●● What is the evidence that managers and increase throughput.
supervisors are really concerned about health ●● Set up a reporting system (a form should be
and safety? used for recording the results of inspections).
●● Set up a system for monitoring that safety
inspections are being conducted properly and
What should be done with the on schedule.
audit? ●● Ensure that corrective action is taken where
necessary.
The audit should cover the questions above but its
purpose is to generate action. Those conducting the
audit will have to assess priorities and costs and
draw up action programmes for approval by top Accident prevention
management.
The prevention of accidents is achieved by the fol-
lowing actions:
Health and safety ●● Identify the causes of accidents and the
conditions under which they are most likely
inspections to occur.
Health and safety inspections are designed to exam- ●● Take account of safety factors at the design
ine a specific area of the organization – an opera- stage – build safety into the system.
tional department or a manufacturing process – to ●● Design safety equipment and protective
locate and define any faults in the system, equip- devices and provide protective clothing.
ment, plant or machines, or any operational errors ●● Carry out regular risk assessments, audits,
that might be a danger to health or the source of inspections and checks and take action to
accidents. Health and safety inspections should be eliminate risks.
carried out on a regular and systematic basis by line ●● Investigate all accidents resulting in damage
managers and supervisors with the advice and help or harm in order to establish the cause and
of health and safety specialists. The steps to be to initiate corrective action.
taken in carrying out health and safety inspections
are as follows: ●● Maintain good records and statistics in order
to identify problem areas and unsatisfactory
●● Allocate the responsibility for conducting the trends.
inspection. ●● Conduct a continuous programme of
●● Define the points to be covered in the form education and training on safe working
of a checklist. habits and methods of avoiding accidents.
●● Divide the department or plant into areas ●● Encourage approaches to leadership and
and list the points to which attention needs motivation that do not place excessive
to be given in each area. demands on people.
●● Define the frequency with which inspections
should be carried out – daily in critical
areas. Occupational health
●● Use the checklists as the basis for the
inspection.
programmes
●● Carry out sample or spot checks on a Occupational health programmes are designed to
random basis. minimize the impact of work-related illnesses. The
control of occupational health and hygiene problems

can be achieved by taking the following actions:
Managing stress
●● Eliminate the hazard at source through Stress is a state of mental or emotional strain or ten-
design and process engineering. sion resulting from adverse or demanding circum-
●● Isolate hazardous processes and substances stances. Undue stress can seriously affect mental
so that workers do not come into contact health. In the workplace it can impact significantly
with them. on productivity, performance and happiness. The
UK Health and Safety Executive reported in 2018
●● Change the processes or substances used in
that 12.5 million working days were lost to absence
order to promote better protection or
caused by stress, anxiety and depression in 2016/17
eliminate the risk.
in the UK and that this accounted for 49 per cent of
●● Provide protective equipment, but only if all working days lost. Research by the Institute for
changes to the design, process or Employment Studies (Bevan, 2018) found that over
specification cannot completely remove the 60 per cent of UK manufacturers surveyed inter-
hazard. vened to assess the risk of physical injury and to
●● Train workers to avoid risk. promote better physical safety, but the majority of
●● Maintain plant and equipment to eliminate investment remained in traditional areas of risk as-
the possibility of harmful emissions, sessment, prevention and rehabilitation for those
controlling the use of toxic substances and exposed to physical hazards. Fewer than 15 per cent
eliminating radiation hazards. assessed the risk that work will damage mental
health and only one in five invested in measures to
●● Adopt good housekeeping practices to keep
reduce the risk. Yet, productivity increases are most
premises and machinery clean and free from
likely when the mental health of employees is posi-
toxic substances.
tive and when employees operating in ‘lean’ produc-
●● Conduct regular inspections to ensure that tion environments are given appropriate support,
potential health risks are identified in good training and a ‘voice’ in the way production pro-
time. cesses are run.
●● Carry out pre-employment medical There are many causes of stress, as indicated by
examinations and regular checks on those the factors affecting employee wellbeing set out in
exposed to risk. Chapter 50 (Table 50.1), and individuals vary
●● Ensure that ergonomic considerations (ie hugely in their resilience – their ability to with-
those concerning the design and use of stand pressure, cope with adversity and bounce
equipment, machines, processes and work back. Good levels of personal resilience are re-
stations) are taken into account in design quired to cope physiologically and psychologically
specifications, establishing work routines and with stress. Evidence quoted by Cooper and
training – this is particularly important as a Hesketh (2019) shows that that higher levels of re-
means of minimizing the incidence of silience can improve performance and enhance
repetitive strain injury (RSI). psychosocial functioning. Southwick and Charney
(2012: 7) defined the following factors affecting
●● Maintain preventive medicine programmes
resilience:
that develop health standards for each job
and involve regular audits of potential health ●● a positive attitude;
hazards and regular examinations for anyone ●● cognitive flexibility;
at risk. Particular attention needs to be
●● moral compass;
exercised in the control of noise, fatigue and
stress. The management and control of stress ●● role models;
should be a major part of any occupational ●● facing fears;
health programme. ●● coping skills;
●● Use stress management approaches to deal ●● supportive networks;
with the major problem of the effects of
●● physical wellbeing;
stress at work as described below.
●● regular training; ●● Targets and performance standards – setting

●● signature (character) strengths. reasonable and achievable targets that may
stretch people but do not place impossible
There are four reasons why organizations should be burdens on them.
concerned about stress and do something about it.
●● Performance management processes –
First, they should act in a socially responsible way
encouraging a dialogue to take place between
to provide a good quality of working life; second,
managers and individuals about the latter’s
because excessive stress causes illness; third, be-
work problems and ambitions.
cause it can result in inability to cope with the de-
mands of the job, which of course creates more ●● Counselling – giving individuals the
stress; and fourth, because excessive stress can re- opportunity to talk about their problems
duce employee effectiveness and therefore organiza- with someone, preferably a trained
tional performance. counsellor reached through an employee
The overall approach to managing stress pro- assistance programme.
posed by Cooper and Hesketh is as follows: ●● Anti-bullying campaigns – bullying at work
is a major cause of stress.
●● Management training – training in what
managers can do to alleviate their own stress
Wo rd s o f w isdom and reduce it in others.
Employees should feel that their working ●● Resilience training – helping to cope with stress.
environment is one that, to a large extent, ●● Mindfulness programmes involving meditation
increases or enhances their ability to cope which focus the attention of people on their
current experiences – ‘the present moment’.
with the work… A supportive, well-planned,
well-thought-out and well-led working
environment should feature highly and, of
course, be subject to regular review and/or
If you were given the job of introducing a
evaluation.
stress reduction programme in an
Cooper and Hesketh (2019: 45)
organization, what approach would you
adopt?
The specific ways in which stress can be managed
are:
●● Job design – clarifying roles, reducing the Measuring health and safety
danger of role ambiguity and conflict, and
giving people more autonomy within a performance
defined structure to manage their
responsibilities. It is essential to measure health and safety perfor-
mance as a means of identifying in good time where
●● Job placement – taking care to place people
actions are necessary. Account should be taken not
in jobs that are within their capabilities.
only of current and recent figures but also trends.
●● Career development – planning careers and The most common measures are:
promoting staff in accordance with their
capabilities, taking care not to over- or The frequency rate
under-promote. number of injuries × 100,000
number of hours worked
The incidence rate Approaches to briefing staff on the

number of injuries × 1,000 importance of health and safety
average number employed
Advice to a group of staff on the importance of
during the period
health and safety in the workplace must be based
Some organizations adopt a ‘total loss control’ ap- on a thorough understanding of the organization’s
proach, which covers the cost of accidents to the health and safety policies and procedures and an
business under such headings as ‘pay to people off appreciation of the particular factors affecting the
work’, ‘damage to plant or equipment’ and ‘loss of health and safety of the group of people concerned.
production’. A cost severity rate can then be calcu- The latter can be based on information provided by
lated, which is the total cost of accidents per 1,000 risk assessments, safety audits and accident reports.
hours worked. But the advice must be positive – why health and
safety is important and how accidents can be pre-
vented. The advice should not be overweighted by
Communicating the need for unpleasant warnings. The points to be made
include:
better health and safety ●● A review of the health and safety policies of
practices the organization with explanations of the
reasoning behind them and a positive
It is necessary to deliver the message that health and statement of management’s belief that health
safety is important; this should supplement rather and safety is a major consideration because:
than replace other initiatives. The following steps (1) it directly affects the wellbeing of all
can be taken to increase the effectiveness of safety concerned; and (2) it can, and does, minimize
messages: suffering and loss.
●● A review of the procedures used by the
●● Avoid negatives – successful safety
organization for the business as a whole, and
propaganda should contain positive
in the particular area, to assess risks and
messages, not warnings of the unpleasant
audit the safety position.
consequences of actions.
●● An explanation of the roles of the members
●● Expose correctly – address the message to
of the group in carrying out their work safely
the right people at the point of danger.
and giving full consideration to the safety of
●● Use attention-getting techniques carefully – others.
lurid images may only be remembered for
●● A reiteration of the statement that one of the
what they are, not for the message they are
core values of the organization is the
trying to convey.
maintenance of safe systems of work and the
●● Maximize comprehension – messages should promotion of safe working practices.
be simple and specific.
●● Messages must be believable – they should
address real issues and be perceived as being Health and safety training
delivered by people (ie managers) who
believe in what they say and are doing Health and safety training is a key part of the pre-
something about it. ventative programme. It should start as part of the
●● Messages must point the way to action – the induction course. It should also take place follow-
most effective messages call for positive ing a transfer to a new job or a change in working
actions that can be achieved by those who methods. Safety training spells out the rules and
receive them and will offer them a tangible provides information on potential hazards and how
benefit. to avoid them. Further refresher training should be
provided and special courses laid on to deal with management and managers have the duty to
new aspects of health and safety or areas in which communicate and train, individuals also have
safety problems have emerged. the duty to take account of what they have
heard and learnt and apply it in the ways
that they carry out their work.
Organizing health and ●● Health and safety advisers advise on policies
and procedures and on healthy and safe
safety methods of working. They conduct risk
assessments, safety audits and investigations
Health and safety concerns everyone in an establish-
into accidents (in conjunction with managers
ment, although the main responsibility lies with
and health and safety representatives),
management in general and individual managers in
maintain statistics and report on trends and
particular. Specific roles should be defined as follows:
necessary actions.
●● Management develops and implements ●● Health and safety representatives deal with
health and safety policies and ensures that health and safety issues in their areas and are
procedures for carrying out risk assessments, members of health and safety committees.
safety audits and inspections are
●● Medical advisers have two functions:
implemented. Importantly, management has
preventative and clinical. The preventative
the duty of monitoring and evaluating health
function is most important, especially on
and safety performance and taking corrective
occupational health matters. The clinical
action as necessary.
function is to deal with industrial accidents
●● Managers can exert a greater influence on and diseases and to advise on the steps
health and safety. They are in immediate necessary to recover from injury or illness
control and it is up to them to keep a arising from work. They do not usurp the role
constant watch for unsafe conditions or of the family doctor in non-work-related
practices and to take immediate action. They illnesses.
are also directly responsible for ensuring that
●● Safety committees consisting of health and
employees are conscious of health and safety
safety representatives advise on health and
hazards and do not take risks.
safety policies and procedures, help in
●● Employees should be aware of what conducting risk assessments and safety
constitute safe working practices as they audits, and make suggestions on improving
affect them and their fellow workers. While health and safety performance.
Key learning points
Managing health and safety at work Health and safety policies

The achievement of a healthy and safe place of work, Written health and safety policies are required to
and the elimination to the maximum extent possible of demonstrate that top management is concerned about
hazards to health and safety, is the responsibility of the protection of the organization’s employees from
everyone employed in an organization, as well as hazards at work and to indicate how this protection
those working there under contract. But the onus is on will be provided.
the management to achieve and indeed go beyond the
high standard in health and safety matters required by Risk assessments
the legislation – the Health and Safety at Work etc Act
1974 and the various regulations laid down in the Risk assessments are concerned with the
Codes of Practice. identification of hazards and the analysis of the risks
attached to them. The purpose is to initiate ●● isolate hazardous processes and substances so
preventative action. that workers do not come into contact with them;
●● change the processes or substances used to
Health and safety audits promote better protection or eliminate the risk;
Health and safety audits provide for a much more ●● provide protective equipment, but only if changes
comprehensive review of all aspects of health and to the design, process or specification cannot
safety policies, procedures and practices. completely remove the hazard;
●● train workers to avoid risk;
Health and safety inspections
●● control stress as a major part of a programme.
Health and safety inspections should be carried out on
a regular and systematic basis by line managers and
supervisors, with the advice and help of health and Measuring health and safety performance
safety advisers.
This is important as a guide to action using the standard
measures of frequency, incidence and severity rate.
Accident prevention
Checklist: Communicating the need for better health
●● Identify the causes of accidents. and safety practices
●● Take account of safety factors at the design stage. It is necessary to deliver the message that health and
safety is important as long as this supplements rather
●● Design safety equipment and protective devices
than replaces other initiatives.
and provide protective clothing.
●● Carry out regular risk assessment audits and Health and safety training
inspections and take action to eliminate risks.
Health and safety training is a key part of the
●● Investigate all accidents. preventative programme. It should start as part of the
●● Maintain good records and statistics in order to induction course. It should also take place following a
identify problem areas and unsatisfactory trends. transfer to a new job or a change in working methods.
●● Conduct a continuous programme of education and

Organizing health and safety
training on safe working habits.
Health and safety concerns everyone in an
Occupational health programmes establishment, although the main responsibility lies
with management in general and individual managers
Implementing occupational health programmes can: in particular. The specific roles should be defined for
●● eliminate the hazard at source through design and managers and employees, health and safety advisers,
process engineering; medical advisers and the health and safety committee.
References
Bevan S (2018) Unlocking Employee Productivity: medium=refferal&utm_campaign=annualstats&utm_
The role of health and wellbeing in manufacturing, term=stats&utm_content=home-page-news (archived
EEF – The Manufacturers’ Organisation at https://perma.cc/T35M-D6WG) [accessed 25
Cooper, C and Hesketh, I (2019) Wellbeing at Work, March 2019]
London, Kogan Page Southwick, S and Charney, D (2012) Resilience: The
Health and Safety Executive (2018) Health and Safety science of mastering life’s greatest challenges,
Statistics [online] http://www.hse.gov.uk/statistics/ Cambridge, Cambridge University Press
index.htm#utm_source=hse.gov.uk&utm_
587
PART XIII
HRM policies and practices
and employment law
PA R T X I I I CO N T E N T S
52 HR policies
53 HR procedures
54 HR information systems
55 Employment law
Introduction
This part describes four areas of HRM that are
concerned with administering the employment
relationship.
588

589
52
HR policies
of consistency and understanding may appear to be
Introduction obvious, but there are disadvantages: written poli-
cies can be inflexible, constrictive, platitudinous, or
HR or people policies set out the approaches that all three. To a degree, policies have often to be ex-
the organization adopts to dealing with key as- pressed in abstract terms and managers do not gen-
pects of HRM and provide continuing guidelines erally care for abstractions. But they do want to
on how these approaches should be applied. They know where they stand – people like structure – and
define the philosophies and values of the organiza- formalized HR policies can provide the guidelines
tion on how people should be treated, and from they need.
these are derived the principles upon which man- Formalized HR policies can be used in induction,
agers are expected to act when dealing with HR team leader and management training to help par-
matters. ticipants understand the philosophies and values of
HR policies should be distinguished from HR the organization and how they are expected to be-
procedures. A policy provides generalized guidance have within that context. They are a means for de-
on how HR issues should be dealt with. A proce- fining the employment relationship and the psycho-
dure spells out precisely what steps should be taken logical contract. HR policies can be expressed
to deal with major employment issues such as griev- formally as overall statements of the values of the
ances, discipline, capability and redundancy. In this organization or in relation to specific areas, as dis-
chapter consideration is given to the reason for HR cussed in this chapter.
policies, the areas in which general and specific pol-
icies are formulated and the development and im-
plementation of policies.
Overall HR policy
The overall HR policy defines how the organization
Why have HR policies? fulfils its social responsibilities for its employees
and sets out its attitudes towards them. It is an ex-
HR policies define how the organization wants to pression of its values or beliefs about how people
handle key aspects of people management. As guide- should be treated. The values expressed in an over-
lines the aim is to ensure that any HR issues are dealt all statement of HR policies may explicitly or im-
with consistently in accordance with the values of plicitly refer to the following concepts:
the organization and in line with certain defined
principles. All organizations have HR policies. Some, Wellbeing – paying close attention to all
however, exist implicitly as a philosophy of manage- aspects of the work experience that
ment and an attitude to employees that is expressed contribute to feelings of satisfaction, fulfilment
in the way in which HR issues are handled; for ex- and happiness at work. This includes concern
ample, the introduction of a new grade and pay with the quality of working life and working
structure. The advantage of explicit policies in terms conditions.
590 Part 13 | HRM Policies and Practices and Employment Law
Quality of working life – consciously and policies should be entirely business led implies that
continually aiming to improve the quality of human considerations are unimportant. Yet organi-
working life. This involves increasing the zations have obligations to all their stakeholders,
sense of satisfaction that people obtain from not just their owners.
their work by – so far as possible – reducing It may be difficult to express these overall p
olicies
monotony; increasing variety, autonomy and in anything but generalized terms, but employers
responsibility; avoiding placing people under increasingly have to recognize that they are subject
too much stress; and providing for an to external as well as internal pressures and moral
acceptable balance between work and life imperatives, which act as constraints on the extent
outside work. to which they can disregard the higher standards of
behaviour towards their employees that are ex-
Working conditions – providing healthy, safe
pected of them. What needs to be done to avoid ac-
and – so far as practicable – pleasant
cusations that general HR policy statements are
working conditions.
mere rhetoric is to convert them into reality through
Equity – treating employees fairly and justly by specific HR policies and enforce their application.
adopting an ‘even-handed’ approach. This
includes protecting individuals from any
unfair decisions made by their managers, Specific HR policies
providing equal opportunities for
employment and promotion, and operating The most common areas in which specific HR poli-
an equitable payment system. cies exist are age and employment, AIDS, bullying,
discipline, diversity management, e-mails and the
Consideration – taking account of individual
internet, employee development, employee rela-
circumstances when making decisions that
tions, employee voice, the employment relationship,
affect the prospects, security or self-respect
equal opportunity, grievances, health and safety,
of employees.
new technology, promotion, redundancy, reward,
Organizational learning – a belief in the need to sexual harassment, substance abuse, whistleblow-
promote the learning and development of all ing and work-life balance.
the members of the organization by
providing the processes and support
required. Age and employment
Performance through people – the importance The policy on age and employment should take into
attached to developing a performance culture account the UK legislation on age discrimination
and to continuous improvement; the and the following facts:
significance of performance management as a
●● Age is a poor predictor of job performance.
means of defining and agreeing mutual
expectations; the provision of fair feedback ●● It is misleading to equate physical and
to people on how well they are performing. mental ability with age.
●● More of the population are living active,
These values are espoused by many organizations in
healthy lives as they get older.
one form or another. But to what extent are they
practised when making ‘business-led’ decisions
(which can, of course, be highly detrimental to em-
ployees if, for example, they lead to redundancy)?
AIDS
One of the dilemmas facing all those who formulate An AIDS policy could include the following points:
HR policies is: how can we pursue policies focusing
●● The risk through infection in the workplace
on business success and at the same time fulfil our
is negligible.
obligations to employees in such terms as equity,
consideration, quality of working life, security and ●● Where the occupation does involve blood
working conditions? To argue, as some do, that HR contact – as in hospitals, doctors’ surgeries
and laboratories – the special precautions
Chapter 52 | HR Policies 591
advised by the Health and Safety backgrounds are fairly treated and valued for who
Commission will be implemented. they are. This was considered in more detail in
●● Employees who know that they are infected Chapter 31.
with AIDS will not be obliged to disclose the
fact to the company, but if they do it will
remain completely confidential. E-mails and use of the internet
●● There will be no discrimination against The policy on e-mails could state that the sending
anyone with or at risk of acquiring AIDS. or downloading of offensive e-mails is prohibited
●● Employees infected by HIV or suffering from and that the senders or downloaders of such mes-
AIDS will be treated no differently from sages are subject to normal disciplinary procedures.
anyone else suffering a severe illness. The policy may also prohibit internet browsing, for
example of social networks, or downloading mate-
rial not related to the business, although this can be
Bullying difficult to enforce. Some companies have always
believed that reasonable use of the telephone is ac-
An anti-bullying policy will state that bullying will ceptable and that policy may be extended to the
not be tolerated by the organization and that those internet.
who persist in bullying staff will be subject to disci- If it is decided that employees’ e-mails should
plinary action, which could be severe in particularly be monitored to check on excessive or unaccepta-
bad cases. The policy will make it clear that indi- ble use, this should be included in an e-mail policy,
viduals who are being bullied should have the right which would therefore be part of the contractual
to discuss the problem with another person, a rep- arrangements. A policy statement could be in-
resentative or a member of the HR function, and to cluded to the effect that: ‘The company reserves
make a complaint. The policy should emphasize the right to access and monitor all e-mail messages
that if a complaint is received it will be thoroughly created, sent, received or stored on the company’s
investigated. system.’
Discipline The employment relationship

The disciplinary policy should state that employees Employment policies should be concerned with fun-
have the right to know what is expected of them damental aspects of the employment relationship.
and what could happen if they infringe the organi- They should take account of the requirements of
zation’s rules. It should also make the point that, in relevant UK and European legislation and case law,
handling disciplinary cases, the organization will as covered in Chapter 55.
treat employees in accordance with the principles of
natural justice. It should be supported by a discipli-
nary procedure (see Chapter 53). Employee development
The employee development policy could express the
Diversity and inclusion organization’s commitment to the continuous de-
velopment of the skills and abilities of employees in
A policy on managing diversity and inclusion sets order to maximize their contribution and to give
out the ways in which the organization, while rec- them the opportunity to enhance their skills, realize
ognizing the differences between people, ensures their potential, advance their careers and increase
that those of different ethnic backgrounds, reli- their employability, both within and outside the or-
gions, gender and age groups are brought together ganization. The policy could also express the belief
to work in cohesive and productive organizational that age should not be a barrier to learning oppor-
units. The policy will indicate how a culture is de- tunities from which everyone can benefit, irrespec-
veloped and maintained in which individuals of all tive of how old they are.
Employee voice Grievances

The employee voice policy should spell out the or- The policy on grievances could state that employees
ganization’s belief in giving employees an opportu- have the right to raise their grievances with their
nity to have a say in matters that affect them. It manager, to be accompanied by a representative if
should define the mechanisms for employee voice they so wish, and to appeal to a higher level if they
such as joint consultation and suggestion schemes. feel that their grievance has not been resolved satis-
factorily. The policy should be supported by a griev-
ance procedure (see Chapter 53).
Equal opportunity
The equal opportunity policy should spell out the
organization’s determination to give equal opportu-
Health and safety
nities to all, irrespective of sex, sexual orientation, Health and safety policies cover how the organiza-
race, creed, disability, age or marital status. The tion intends to provide healthy and safe places and
policy should also deal with the extent to which the systems of work (see Chapter 51).
organization wants to take ‘affirmative action’ to
redress imbalances between the numbers employed
according to sex or race or to differences in the lev- Industrial relations
els of qualifications and skills they have achieved.
The employment relations policy will set out the or-
The policy could be set out as follows:
ganization’s approach to the rights of employees to
●● We are an equal opportunity employer. This have their interests represented to management
means that we do not permit direct or through trade unions, staff associations or some
indirect discrimination against any employee other form of representative system. It will also
on the grounds of race, nationality, sex, cover the basis upon which the organization works
sexual orientation, disability, religion, marital with trade unions, eg emphasizing that this should
status or age. be regarded as a partnership.
●● Direct discrimination takes place when a
person is treated less favourably than others
are or would be treated in similar New technology
circumstances. A new technology policy statement could state that
●● Indirect discrimination takes place when, there will be consultation about the introduction of
whether intentional or not, a condition is new technology and the steps that would be taken
applied that adversely affects a considerable by the organization to minimize the risk of compul-
proportion of people of one race, nationality, sory redundancy or adverse effects on other terms
sex, sexual orientation, religion or marital and conditions or working arrangements.
status, or those with disabilities or older
employees.
●● The firm will ensure that equal opportunity Promotion
principles are applied in all its HR policies A promotion policy could state the organization’s
and in particular to the procedures relating intention to promote from within wherever this is
to the recruitment, training, development and appropriate as a means of satisfying its require-
promotion of its employees. ments for high-quality staff. The policy could, how-
●● Where appropriate and where permissible ever, recognize that there will be occasions when the
under the relevant legislation and codes of organization’s present and future needs can only be
practice, employees of under-represented met by recruitment from outside. The point could
groups will be given positive training and be made that a vigorous organization needs infu-
encouragement to achieve equal sions of fresh blood from time to time if it is not to
opportunity. stagnate. In addition, the policy might state that
employees will be encouraged to apply for inter- ●● Employees subjected to sexual harassment
nally advertised jobs and will not be held back from will be given advice, support and counselling
promotion by their managers, however reluctant as required.
the latter may be to lose them. The policy should ●● Every attempt will be made to resolve the
define the approach that the organization adopts to problem informally with the person
engaging, promoting and training older employees. complained against.
It should emphasize that the only criterion for selec-
●● Assistance will be given to the employee to
tion or promotion should be ability to do the job.
complain formally if informal discussions
fail.
Redundancy ●● A special process will be available for
hearing complaints about sexual harassment.
The redundancy policy should state that the aim of This will provide for employees to bring
the organization is to provide for employment secu- their complaint to someone of their own sex
rity. It is the organization’s intention to use its best if they so wish.
endeavours to avoid involuntary redundancy
●● Complaints will be handled sensitively and
through its redeployment and retraining pro-
with due respect for the rights of both the
grammes. However, if redundancy is unavoidable,
complainant and the accused.
those affected will be given fair and equitable treat-
ment, the maximum amount of warning and every Sexual harassment is regarded as gross misconduct
help that can be provided to obtain suitable alterna- and, if proved, makes the individual liable for in-
tive employment. The policy should be supported stant dismissal. Less severe penalties may be re-
by a redundancy procedure (see Chapter 53). served for minor cases, but there will always be a
warning that repetition will result in dismissal.
Reward
The reward policy could cover such matters as:
Substance abuse
A substance abuse policy could include assurances
●● providing an equitable pay system;
that:
●● equal pay for work of equal value;
●● Employees identified as having substance
●● paying for performance, competence, skill or
abuse problems will be offered advice and
contribution;
help.
●● sharing in the success of the organization
●● Any reasonable absence from work necessary
(gain sharing or profit sharing);
to receive treatment will be granted under
●● the relationship between levels of pay in the the organization’s sickness scheme, provided
organization and market rates; there is full cooperation from the employee.
●● the provision of employee benefits, including ●● An opportunity will be given to discuss the
flexible benefits, if appropriate; matter once it has become evident or
●● the importance attached to the non-financial suspected that work performance is being
rewards resulting from recognition, affected by substance-related problems.
accomplishment, autonomy and the ●● Employees have the right to be accompanied
opportunity to develop. by a friend or employee representative in any
such discussion.
Sexual harassment ●● Agencies will be recommended to which the

employee can go for help if necessary.
The sexual harassment policy should state that: ●● Employment rights will be safeguarded
●● Sexual harassment will not be tolerated. during any reasonable period of treatment.
Whistle-blowing home, special leave for parents and carers, career

breaks and various kinds of child care.
Whistle-blowing takes place when someone reports A flexibility policy will need to take account of
a suspected wrongdoing at work. Dismissal of an the Work and Families Act 2006, as described in
employee for whistle-blowing is deemed in law as Chapter 53.
automatic unfair dismissal if a ‘protected disclo-
sure’, for example referring to a criminal offence by
the employer, is made and the employee ‘reasonably Developing HR policies
believes’ that the disclosure is in the ‘public inter-
est’. Obviously employers want to avoid that situa- HR or people policies need to address the key HR
tion and employees need guidance on what they can issues that have been identified in the organization.
and can’t do and how they should act. Hence the They must also take account of external factors such
need for a whistle-blowing policy that will: as legislation. The maximum amount of consulta-
●● Explain that the organization believes that tion should take place with managers, employees
it is important to deal with any wrongdoing, and their representatives and the policies should be
especially those malpractices specifically communicated widely with guidelines on their
referred to in the Public Interest Disclosure application. The following steps should be taken

Act 1998, including criminal offences, risks when formulating HR policies:
to health and safety, failure to comply with ●● Gain understanding of the corporate culture
a legal obligation, a miscarriage of justice and its shared values.
and environmental damage. Specific
●● Analyse existing policies – written and
examples of unacceptable behaviour could
unwritten. HR policies will exist in any
be given.
organization, even if they are implicit rather
●● Indicate that if anyone becomes aware of an than expressed formally.
issue that needs to be dealt with they should
●● Analyse external factors. HR policies are
raise the matter inside the organization,
subject to the requirements of UK
either with their line manager or, if the
employment legislation, European
allegation is about their line manager, with a
Commission employment regulations, and
more senior manager.
the official Codes of Practice issued by
●● State that employees will not be penalized bodies in the UK, such as ACAS (the
for informing management about a Advisory, Conciliation and Arbitration
malpractice. Service), the Commission for Equality and
Human Rights, and the Health and Safety
Executive. The Codes of Practice issued by
Work-life balance relevant professional institutions, such as the
Work-life balance policies define how the organiza- CIPD, should also be consulted.
tion intends to allow employees greater flexibility ●● Assess any areas where new policies are
in their working patterns so that they can balance needed or existing policies are inadequate.
what they do at work with the responsibilities and ●● Check with managers, preferably starting at
interests they have outside work. The policy will the top, on their views about HR policies and
indicate how flexible work practices can be devel- where they think they could be improved.
oped and implemented. It will emphasize that the
●● Seek the views of employees about the HR
numbers of hours worked must not be treated as a
policies, especially the extent to which they
criterion for assessing performance. It will set out
are inherently fair and equitable and are
guidelines on the specific arrangements that can be
implemented fairly and consistently. Consider
made, such as flexible hours, compressed working
doing this through an attitude survey.
week, term-time working contracts, working at
●● Seek the views of union representatives. Implementing HR policies

●● Analyse the information obtained in the
first seven steps and prepare draft The aim will be to implement policies fairly and con-
policies. sistently. Line managers have an important role in
●● Consult, discuss and agree policies with doing this, as it is they who will be largely responsi-
management and union representatives. ble for policy implementation. Members of the HR
function can give guidance, but it is line managers
●● Communicate the policies with guidance who are on the spot and have to make decisions
notes on their implementation as required about people. The role of HR is to communicate and
(although they should be as self-explanatory interpret the policies, convince line managers that
as possible). Supplement this communication they are necessary, and provide training and support
with training. that will equip managers to implement them.
Key learning points
The reasons for having HR policies relations, employee voice, the employment
relationship, equal opportunity, grievances, health and
HR policies provide guidelines on how key aspects of safety, new technology, promotion, redundancy,
people management should be handled. The aim is to reward, sexual harassment, substance abuse and
ensure that any HR issues are dealt with consistently work-life balance.
in accordance with the values of the organization and
in line with certain defined principles.
Formulating HR policies
Overall HR policy HR policies need to address the key HR issues that
have been identified in the organization. They must
The overall HR policy defines how the organization also take account of external factors such as
fulfils its social responsibilities for its employees and legislation. The maximum amount of consultation
sets out its attitudes towards them. It is an expression should take place with managers, employees and their
of its values or beliefs about how people should be representatives, and the policies should be
treated. communicated widely with guidelines on their
application.
Specific HR policies
Specific HR policies cover age and employment, AIDS, Implementing HR policies
bullying, discipline, e-mails and the internet, employee The aim will be to implement policies fairly and
development, diversity management, employee consistently. Line managers have a key role in doing this.
596
53
HR procedures
Introduction Capability procedure
HR procedures set out the ways in which certain Some organizations deal with matters of capability
actions concerning people should be carried out by under a disciplinary procedure, but there is much to
the management or individual managers. In effect, be said for dealing with poor performance issues
they constitute a formalized approach to dealing separately, leaving the disciplinary procedure to be
with specific matters of policy and practice. invoked for misconduct cases. An example of a ca-
They should be distinguished from HR policies, pability procedure is given below.
as described in Chapter 52, which serve as guide-
lines on people management practices but do not
necessarily lay down precisely the steps that should Policy
be taken in particular situations. Procedures are
The company aims are to ensure that performance
more exacting. They state what must be done as
expectations and standards are defined, perfor-
well as spelling out how to do it.
mance is monitored and employees are given ap-
It is desirable to have the key HR procedures
propriate feedback, training and support to meet
written down in order to ensure that related HR
these standards.
policies are applied consistently and in accordance
with both legal requirements and ethical considera-
tions. The existence of a written and well-publicized
procedure ensures that everyone knows precisely
Procedure
what steps need to be taken when dealing with cer- If a manager/team leader believes that an employee’s
tain significant and possibly recurring employment performance is not up to standard, an informal
issues. discussion will be held with the employee to try to
The introduction or development of HR proce- establish the reason and to agree the actions re-
dures should be carried out in consultation with quired to improve performance by the employee
employees and their representatives. It is essential to and/or the manager/team leader. If, however:
brief everyone on how the procedures operate and
●● it is agreed that the established standards are
they should be published either in an employee
not reasonably attainable, they will be
handbook or as a separate document. Line manag-
reviewed;
ers may need special training on how they should
apply the procedures, and the HR department ●● it is established that the performance
should provide guidance wherever necessary. HR problems are related to the employee’s
will normally have the responsibility of ensuring personal life, the necessary counselling/
that procedures are followed consistently. support will be provided;
Procedures are required to deal with capability ●● it is decided that the poor performance
and disciplinary issues, grievances and redundancy, emanates from a change in the organization’s
as discussed below. standards, those standards will be explained
Chapter 53 | HR Procedures 597
to the employee and help will be offered to in writing before being required to make a
obtain conformity with the standards; decision;
●● it is apparent that the poor performance ●● in the absence of suitable alternative work,
constitutes misconduct, the disciplinary the employee will be informed and invited to
procedure will be invoked. give his or her views on this before the final
decision is taken.
Should the employee show no (or insufficient) im-
provement over a defined period (weeks/months), a Employees may appeal against their dismissal. The
formal interview will be arranged with the em- appeal must be made within three working days.
ployee (together with a representative if so desired).
The aims of this interview will be to:
●● explain clearly the shortfall between the
Disciplinary procedure
employee’s performance and the required
A disciplinary procedure sets out the stages through
standard;
which any disciplinary action should proceed. An
●● identify the cause(s) of the unsatisfactory example is given below.
performance and to determine what – if
any – remedial treatment (training,
retraining, support, etc) can be given; Policy
●● obtain the employee’s commitment to
It is the policy of the company that if disciplinary
reaching that standard;
action has to be taken against employees it should:
●● set a reasonable period for the employee to
reach the standard and agree on a ●● be undertaken only in cases where good
monitoring system during that period; reason and clear evidence exists;
●● tell the employee what will happen if that ●● be appropriate to the nature of the offence
standard is not met. that has been committed;
●● be demonstrably fair and consistent with
The outcome of this interview will be recorded in
previous action in similar circumstances;
writing and a copy will be given to the employee.
At the end of the review period a further formal ●● take place only when employees are aware of
interview will be held, at which time: the standards that are expected of them or the
rules with which they are required to conform;
●● if the required improvement has been made,
●● allow employees the right to be represented
the employee will be told of this and
by a representative or colleague during any
encouraged to maintain the improvement;
formal proceedings;
●● if some improvement has been made but the
●● allow employees the right to know exactly
standard has not yet been met, the review
what charges are being made against them
period will be extended;
and to respond to those charges;
●● if there has been no discernible improvement
●● allow employees the right of appeal against
and performance is still well below an
any disciplinary action.
acceptable standard this will be indicated to
the employee and consideration will be given
to whether there are alternative vacancies
that the employee would be competent to fill;
Disciplinary rules
if there are, the employee will be given the The company is responsible for ensuring that up-to-
option of accepting such a vacancy or being date disciplinary rules are published and available
considered for dismissal; to all employees. These will set out the circum-
●● if such vacancies are available, the stances in which an employee could be dismissed
employee will be given full details of them for gross misconduct.
Procedure Summary dismissal

The procedure is carried out in the following stages: An employee may be summarily dismissed (ie given
instant dismissal without notice) only in the event
1 Informal warning. A verbal or informal
of gross misconduct, as defined in company rules.
warning is given to the employee in the first
Only departmental managers and above can recom-
instance or instances of minor offences. The
mend summary dismissal, and the action should not
warning is administered by the employee’s
be finalized until the case has been discussed with
immediate manager or team leader.
the HR manager and the appeal procedure has been
2 Formal warning. A written formal warning carried out. To enable this review to take place, em-
is given to the employee in the first instance ployees should be suspended pending further inves-
of more serious offences or after repeated tigation, which must take place within 24 hours.
instances of minor offences. The warning is
administered by the employee’s immediate
manager or team leader. It states the exact Appeals
nature of the offence and indicates any
future disciplinary action that will be taken In all circumstances, an employee may appeal against
against the employee if the offence is suspension, dismissal with notice, or summary dis-
repeated within a specified time limit. A missal. The appeal is conducted by a member of
copy of the written warning is placed in the management who is more senior than the manager
employee’s personal record file but is who initially administered the disciplinary action.
destroyed 12 months after the date on The HR manager should also be present at the hear-
which it was given, if the intervening service ing. If he or she wishes, the employee may be repre-
has been satisfactory. The employee is sented at the appeal by a fellow employee of his or
required to read and sign the formal her own choice. Appeal against summary dismissal
warning and has the right to appeal to or suspension should be heard immediately. Appeals
higher management if he or she thinks the against dismissal with notice should be held within
warning is unjustified. The HR manager two days. No disciplinary action that is subject to
should be asked to advise on the text of the appeal is confirmed until the outcome of the appeal.
written warning. If an appeal against dismissal (but not suspen-
sion) is rejected at this level, the employee has the
3 Further disciplinary action. If, despite
right to appeal to the chief executive. The head of
previous warnings, an employee still fails to
HR and, if required, the employee’s representative
reach the required standards in a reasonable
should be present at this appeal.
period of time, it may become necessary to
consider further disciplinary action. The
action taken may be up to three days’
suspension without pay, or dismissal. In
Grievance procedure
either case the departmental manager should
A grievance procedure spells out the policy on handling
discuss the matter with the HR manager
grievances and the approach to dealing with them. An
before taking action. Staff below the rank of
example of a grievance procedure is given below.
departmental manager may only recommend
disciplinary action to higher management,
except when their manager is not present
(for example, on night shift), when they may
Policy
suspend the employee for up to one day It is the policy of the company that employees should:
pending an inquiry on the following day.
●● be given a fair hearing by their immediate
Disciplinary action should not be confirmed
supervisor or manager concerning any
until the appeal procedure has been
grievances they may wish to raise;
carried out.
●● have the right to appeal to a more senior Definition

manager against a decision made by their
immediate supervisor or manager; Redundancy is defined as the situation in which
●● have the right to be accompanied by a fellow management decides that an employee or employees
employee of their own choice when raising a are surplus to requirements in a particular occupa-
grievance or appealing against a decision. tion and cannot be offered suitable alternative work.
Employees may be surplus to requirements be-
The aim of the procedure is to settle the grievance cause changes in the economic circumstances of the
as nearly as possible to its point of origin. company mean that fewer employees are required,
or because changes in methods of working mean
that a job no longer exists in its previous form. An
Procedure employee who is given notice because he or she is
The main stages through which a grievance may be unsuitable or inefficient is not regarded as redun-
raised are as follows: dant and would be dealt with in accordance with
the usual disciplinary or capability procedure.
●● The employee raises the matter with his or
her immediate manager or team leader and
may be accompanied by a fellow employee Objectives
of his or her own choice.
The objectives of the procedure are to ensure that:
●● If the employee is not satisfied with the
decision, the employee requests a meeting ●● employees who may be affected by the
with a member of management who is more discontinuance of their work are given fair
senior than the manager or team leader who and equitable treatment;
initially heard the grievance. This meeting ●● the minimum disruption is caused to
takes place within five working days of the employees and the company;
request and is attended by the manager, an ●● as far as possible, changes are effected with
HR manager or business partner, the the understanding and agreement of the
employee appealing against the decision, unions and employees concerned.
and, if desired, his or her representative. The
HR manager records the results of the
meeting in writing and issues copies to all Principles
concerned.
●● If the employee is still not satisfied with the The principles governing the procedure are as
decision, he or she may appeal to the follows:
appropriate director. The meeting to hear this ●● The trade unions concerned will be informed
appeal is held within five working days of the as soon as the possibility of redundancy is
request and is attended by the director, the foreseen.
head of HR, the employee making the appeal ●● Every attempt will be made to:
and, if desired, his or her representative. The
manager responsible for HR records the −− absorb redundancy by the natural wastage
result of this meeting in writing and issues of employees;
copies to all concerned. No further appeal −− find suitable alternative employment
can be made beyond this stage. within the company for employees who
might be affected, and provide training if
this is necessary;
Redundancy procedure −− give individuals reasonable warning of
pending redundancy in addition to the
A redundancy procedure aims to meet statutory, statutory period of notice.
ethical and practical considerations when dealing ●● If alternative employment in the company is
with this painful process. not available and more than one individual is
affected, the factors to be taken into
consideration in deciding who should be a dvice of the HR manager on the principles that
made redundant will be: should be adopted.
−− length of service with the company; The HR manager should explore the possibilities
of transferring affected employees to alternative
−− value to the company; work. The HR manager should inform management
−− other things being equal, length of service of proposed action (either redundancy or transfer)
should be the determining factor. to obtain approval.
●● The company will make every endeavour to The union(s) will be informed of the numbers af-
help employees find alternative work if that fected, but not of individual names.
is necessary. The departmental manager and the HR manager
will jointly interview the employees affected either
The procedure for dealing with employees who are to offer a transfer or, if a suitable alternative is not
surplus to requirements is set out below. available, to inform them that they will be redun-
dant. At this interview, full information should be
available to give to the employee on the following,
Review of employee requirements as appropriate:
Management will continuously keep under review
●● the reasons for being surplus;
possible future developments that might affect the
number of employees required, and will prepare ●● the alternative jobs that are available;
overall plans for dealing with possible redundancies. ●● the date when the employee will become
surplus (that is, the period of notice);
the entitlement to redundancy pay;
Measures to avoid redundancies ●●
●● the employee’s right to appeal to an

If the likelihood of redundancy is foreseen, the com- appropriate director;
pany will inform the union(s), explaining the rea-
●● the help the company will provide.
sons, and in consultation with the union(s) will give
consideration to taking appropriate measures to An appropriate director will hear any appeals with
prevent redundancy. the HR manager.
Departmental managers will be warned by the The HR manager will ensure that all the required
management of future developments that might af- administrative arrangements are made.
fect them so that detailed plans can be made for If the union(s) have any points to raise about the
running down the numbers of employees by allow- selection of employees or the actions taken by the
ing natural wastage to take place without replace- company, these should be discussed in the first place
ments, retraining, or transfers. with the HR manager. If the results of these discus-
Departmental managers will be expected to keep sions are unsatisfactory, a meeting will be arranged
under review the work situation in their departments with an appropriate director.
so that contingency plans can be prepared and the
HR manager is informed of any likely surpluses.
Alternative work within
Consultation on redundancies the company
If all measures to avoid redundancy fail, the com- If an employee is offered and accepts suitable alter-
pany will consult the union(s) at the earliest oppor- native work within the company, it will take effect
tunity in order to reach agreement. without a break from the previous employment and
will be confirmed in writing. Employees will receive
appropriate training and will be entitled to a four-
Selection of redundant employees week trial period to see if the work is suitable. This
trial period may be extended by mutual agreement
In the event of impending redundancy, the individu- to provide additional training. During this period,
als who might be surplus to requirements should be employees are free to terminate their employment
selected by the departmental manager with the
and, if they do, would be treated as if they had been Alternative employment
made redundant on the day their old job ended.
They would then receive any redundancy pay to Employees for whom no suitable work is available
which they are entitled. in the company will be given reasonable opportuni-
ties to look for alternative employment.
Key learning points

●● HR procedures set out the ways in which certain certain significant and possibly recurring
actions concerning people should be carried out by employment issues.
the management or individual managers. In effect,
●● The introduction or development of HR procedures
they constitute a formalized approach to dealing
should be carried out in consultation with
with specific matters of policy and practice.
employees and, where appropriate, their
●● They should be distinguished from HR policies, representatives.
which serve as guidelines on people management
●● It is essential to brief everyone on how the
practices but do not necessarily lay down precisely
procedures operate, and they should be published
the steps that should be taken in particular
either in an employee handbook or as a separate
situations. Procedures are more exacting: they
document.
state what must be done as well as spelling out
how to do it. ●● Line managers may need special training on how
they should apply the procedures and the HR
●● It is desirable to have the key HR procedures
department should provide guidance wherever
written down to ensure that HR policies are applied
necessary. HR will normally have the responsibility
consistently and in accordance with both legal
of ensuring that procedures are followed
requirements and ethical considerations.
consistently.
●● The existence of a written and well-publicized
●● Procedures are required to deal with capability and
procedure ensures that everyone knows precisely
disciplinary issues, grievances and redundancy.
what steps need to be taken when dealing with
602
54
HR information
systems
to improve flexibility of information to
Introduction ●●
support business planning;
An HR information system (HRIS) is a computer- ●● to improve services to employees;
based information system for managing the admin- ●● to produce HR metrics;
istration of HR processes and procedures. ‘e-HRM’ ●● to aid human capital reporting;
is an alternative term for the use of computer tech-
●● to improve productivity;
nology within the HR function. Parry and Tyson
(2011: 335) defined an HRIS as: ‘A way of imple- ●● to reduce operational costs;
menting HR strategies, policies and practices in ●● to manage people’s working time more
organizations through a conscious and directed
effectively.
support of and/or with the full use of web
technology-based channels.’ They listed five goals
for e-HRM: efficiency, service delivery, strategic ori- The functions of an HRIS
entation, manager empowerment and standardiza-
tion (ibid: 335). The chapter covers: The functions that an HRIS can perform (its ‘func-
tionality’) are set out below. They cover almost
●● the reasons for using an HRIS;
every aspect of HRM:
●● the functions of an HRIS;
●● absence recording and management;
●● the features of an HRIS;
●● data management;
●● introducing an HRIS.
●● employee records;
●● employee surveys;
Reasons for introducing ●● employee turnover analysis;
an HRIS ●● e-learning;
●● equal opportunity modelling;
A CIPD (2007) survey established that the top 10 ●● expenses;
reasons for introducing an HRIS were:
●● to improve the quality of information ●● HR planning and forecasting;
available;
●● job evaluation;
●● to reduce administrative burden on the HR
●● knowledge management;
department;
●● intranet;
●● to improve speed at which information is
available; ●● manage diversity;
Chapter 54 | HR Information Systems 603
●● manager and employee self-service; and expensive, so it is important to limit it to what

●● metrics and human capital reporting; is absolutely necessary.
The choice of a supplier should be made as
●● online recruitment;
follows:
●● online performance management systems
and 360-degree feedback; ●● research HR software market through trade
exhibitions and publications;
●● payroll administration;
●● review HR processes and existing systems;
●● pay reviews;
●● produce a specification of system
●● pensions and benefits administration;
requirements;
●● social enterprise networks.
●● send an invitation to tender to several
The 2007 CIPD survey found that the 10 most pop- suppliers;
ular uses to which respondents put their HRIS in ●● invite suppliers to demonstrate their
descending order were: products;
●● absence management; ●● obtain references from existing customers,
●● training and development; including site visits;
●● rewards; ●● analyse and score the product against the
specification.
●● managing diversity;
●● recruitment and selection; However, organizations are increasingly moving
into cloud computing.
●● other (usually payroll);
●● appraisal/performance management;
●● HR planning; Cloud computing
●● knowledge management; Cloud computing involves providing on-demand
●● expenses. shared computing resources and information. Data
is stored and processed in separate data centres.
Services such as servers, storage and applications
Features of an HRIS are delivered to an organization’s computers and
devices through the internet. It can replace local ar-
The features of particular interest in an HRIS sys- rangements using bought-in software packages.
tem are the use of traditional software packages, Cloud computing can be provided by an SaaS
cloud computing, enterprise resource planning sys- (software-as-a-service) system – an on-demand soft-
tems (ERPs), the intranet, internal social networks, ware delivery model in which users are charged for
integration and provisions for self-service. accessing and managing HR IT provision via a net-
work. The system stores and processes data in a
standardized form which can then be configured for
Traditional software packages use in the organization.
The advantages of cloud computing are high
The traditional and still most typical approach is to computing power – the ability to store and process
buy software modules from an external supplier to masses of data – accessibility and, potentially, lower
run in-house applications such as personal records, costs. A further benefit provided by using cloud is
absence management or payroll. ‘Application suites’ that it is highly adaptive and changes can be made
can be purchased which cover a linked set of mod- very quickly, although it may be costly to do so.
ules. There is a choice between buying a ‘vanilla sys-
tem’ (ie an ‘off-the-shelf’ system without any
upgrades) or customizing the supplier’s system to Integration
meet specified business requirements. Extensive cus-
tomization can make future upgrades problematic In a traditional in-house arrangement, enterprise re-
source planning (ERP) systems can be used to
integrate all data processing processes of an organi- Self-service

zation into a unified system with the same database.
HR systems are not frequently integrated to this A human resource self-service system (HRSS) al-
extent although they often link payroll administra- lows managers and employees access to informa-
tion with other HR functions. Integration of the HR tion and the facility to interact with the system to
system with IT systems in the wider organization so input information or make choices of their own.
that they can ‘talk to one another’ will enable the This can operate through an HR portal (a site that
more effective management of HR data. However, functions as a point of access to information on the
many HR functions retain stand-alone systems, be- intranet), which may be specially designed to pro-
cause they believe integration would compromise duce a brand image of the HR function. This is
their own system, potential lack of confidentiality, sometimes referred to as a ‘business-to-employees’
and the cost and perceived risks involved. (B2E) portal.
For managers, self-service means that they can
access information immediately. This might be HR
Intranet metrics in such areas as absenteeism, personal de-
tails, performance management data, learning and
An intranet system is one where computer terminals
development progress, and pay (as a basis for pay
are linked so that they can share information within
reviews). They can also input data on their staff.
an organization or within part of an organization.
This facilitates the devolution of responsibility to
The scope of the information that can be shared
line managers and reduces the administrative bur-
across terminals can be limited to preserve confi-
den on HR.
dentiality and this security can be enhanced by
Employees can also access information, input
using passwords. HR intranet systems can be used
data about themselves, request training and apply
for purposes such as updating personal details, ap-
for jobs online.
plications for internal jobs online, requests for
training, access to e-learning, administration of que-
ries and communications. Data management
Data management involves acquiring, validating,
Internal social networks storing, protecting, and processing the required
data concerning people to ensure the accessibility,
Internal social networks (enterprise social networks
reliability, and timeliness of the data for its users. It
such as those provided by Yammer, Chatter and
is therefore an important element in evidence-based
Jive) function in the same way as social networks
HRM and HR analytics. Large installations will ap-
such as Facebook. They allow people to post opin-
point a data manager or administrator to control all
ions, join in discussions and respond to questions
the activities required (a role profile for a data ad-
and are used as employee voice channels and to
ministrator is given in Chapter 63).
support social learning.
Key learning points
Reasons for using an HRIS ●● to improve speed at which information is available;
The top five reasons are (CIPD, 2007): ●● to improve flexibility of information to support
business planning;
●● to improve quality of information available;
●● to improve services to employees.
●● to reduce administrative burden on the HR
department;
Chapter 54 | HR Information Systems 605
Functions of an HRIS ●● the use of traditional software packages;
Top five uses of an HRIS (CIPD, 2007): ●● the use of cloud computing;
●● absence management; ●● integration with other IT systems in the

organization;
●● training and development;
●● use of the intranet;
●● rewards;
●● use of internal social networks;
●● managing diversity;
●● provisions for self-service.
●● recruitment and selection.
Features of an HRIS
The features of particular interest in an HRIS system
are:
References
CIPD (2007) HR and Technology: Impact and Human Resource Management Journal,
advantages, London, CIPD 21 (3), pp 335–54
Parry, E and Tyson, S (2011) Desired goals
and actual outcomes of e-HRM,
606
55
Employment law
Introduction ●● how employment law is enforced;
●● HRM and employment law;
The employment relationship is subject to a great deal ●● The General Data Protection Regulation
of regulation in all industrialized counties and is in- (GDPR).
creasingly a feature of HRM practice in developing
economies too. While the details and extent of regula-
tory protection vary from country to country as well The purpose of employment
as the enforcement mechanisms, the aims of employ-
ment legislation are remarkably similar (Ashiagbor, law
2005; Slattery and Broadbent, 2013). It is also the
case that in all countries the trend in recent years has There has never been any grand strategy behind
been towards greater levels of employment regula- the construction of modern employment law.
tion, not least due to the actions of supra-national Instead it has been built up steadily over 50 years,
bodies such as the International Labour Organization step by step, new laws being introduced in re-
(ILO) and the European Union (EU), which have per- sponse to political pressure of one kind or another,
sistently promoted higher standards of employment and only rarely being repealed. Sometimes the im-
practice underpinned by law. petus for new regulation has come from European
For employers in the UK the adjustment required institutions, such as the transfer of undertakings
by the introduction of extensive employment law regulations which protect employees’ terms and
has often been problematic as the UK’s labour mar- conditions when their organizations are acquired
ket was historically one of the least regulated in the by others, outsourced or merged. On other occa-
world. There thus remains a strong tendency for sions governments have used employment law to
employers and their representatives to resist the in- increase their popularity and try to ensure re-
troduction of new regulation and to campaign for a election. A good example was the introduction by
reduction in the existing ‘regulatory burden’ on the the UK Government of substantially improved ma-
grounds that it both deters organizations from tak- ternity and paternity rights in April 2015 just
ing new staff on, while also making the UK econ- ahead of the general election. New employment
omy as a whole less globally competitive than it law can be introduced in response to events (eg
would otherwise be. Despite these misgivings, it is stricter laws on industrial action following major
clear that employment law is here to stay and that it strikes) or campaigns by trade unions and other
makes good business sense to comply with its re- groups (eg the National Minimum Wage and dis-
quirements. Most employers have to face employability discrimination laws).
ment tribunal claims from time to time and most Despite this apparent lack of coherence in its de-
HR professionals have to deal with their conse- velopment, it is nonetheless possible to identify a
quences on a fairly regular basis. number of key aims that governments hope to
This chapter covers: achieve by regulating the labour market. In 2013
the UK government issued a progress report on its
●● the purpose of employment law; programme of employment regulation in which
●● how these objectives are achieved; three distinct objectives were set out (DBIS 2013a).
Chapter 55 | Employment Law 607
Here ministers stated that they sought to create a who choose not to (eg early retirees) to put their
labour market that was: skills at the disposal of the economy. Governments
have also wanted to make their countries an attrac-
●● flexible – encouraging job creation and
tive destination to highly skilled migrants from
making it easy for people to stay in work
overseas who might otherwise choose to settle else-
and find work;
where. Ensuring that employers operate fairly and
●● effective – enabling employers to manage promoting partnership approaches both serve to
staff productivity; and help meet these objectives. Secondly, governments
●● fair – employers competing on a level playing are keen to promote flexibility and competition in
field and workers benefiting from core the labour market. They want to ensure that em-
employment protections. ployees are free to leave their employment and join
another organization easily and that they are not
The idea of a level playing field has been particu-
prevented from working because of domestic com-
larly important in the context of European Union
mitments. They also want to ensure that when peo-
employment regulation. The aim here is to help en-
ple persistently perform their jobs poorly or when
sure that defined minimum standards are observed
their jobs are genuinely redundant employers are
across all member states so that no one country is
able to terminate their contracts swiftly and cheaply.
able to undercut its labour costs in order to steal an
Above all, ministers want to avoid a situation in
unfair competitive march on the others. It is very
which employers are deterred from creating new
likely that the UK will continue to adhere to these
jobs due to fear of employment legislation. There is
high standards for the foreseeable future.
thus always a need to balance legitimate protection
In practice most employment law exists to pro-
of employees’ rights with the need of employers to
tect employees from unjust exploitation or unfair
hire and fire with relative ease.
treatment by their employers. It is necessary because
Employment law also incorporates the regula-
for the vast majority of workers, the employment
tion of trade unions. And here too the aim is to
relationship is very unequal in terms of the power
achieve a balance between the need to protect the
that each side is able to exercise over the other.
right of all workers to form and join trade unions
Employers are vastly more powerful, making it rela-
and the need to ensure that trade unions do not be-
tively easy for them to abuse that power by treating
come so powerful as to threaten the economic inter-
their employees poorly, by dismissing them or dis-
ests of the majority of people. Finding this balance
criminating against them for no good reason, un-
has always been difficult and controversial, and the
derpaying and overworking them, or causing them
position varies considerably from country to coun-
to risk their health, safety and welfare while at
try. In the UK, for example, our law makes it very
work. In the early and middle years of the 20th cen-
difficult for an employer to dismiss someone for a
tury, trade unions tended to offer employees a much
trade union reason or to prevent a union from or-
greater level of protection than they are now able
ganizing a strike which its members have voted for
to, and so to a considerable extent the state has had
in sufficient numbers. On the other hand, the way
to step in to provide protection of the kind that
that unions are governed and the extent to which
strong unions with high levels of membership were
they can gain power over an employer are limited
once able to provide.
very effectively by the law.
There are, however, two major further reasons
behind employment regulation in today’s economic
context. First, governments have sought to use em- Equal pay law
ployment law to promote good practice in the
employment relationship. Ministers are always
The Equal Pay Act (1970) ended the previous com-
mindful of the presence of skill shortages and of the mon practice of employers paying men and women
presence in our labour market of large numbers of different amounts of money for doing jobs that
people (typically 20 per cent) who are economically were either the same or very similar. It became un-
inactive despite being of working age. One aim is to lawful to operate separate male and female pay
encourage people off welfare and into work; an- scales or to pay men and women differently for
other is to encourage people who could work but doing jobs that should have been paid at the same
grade when a job evaluation system was in opera- Moreover, in many workplaces quite strict confi-
tion. Later, in 1983 after the UK joined the European dentiality rules have the effect of deterring people
Union, it became possible for employees to pursue from telling their colleagues about the true level of
claims in the Employment Tribunal when they be- their earnings. As a result, even if someone was will-
lieved that their work, despite being different in na- ing to challenge unequal payments between men
ture from that of a comparator of the opposite sex, and women, their ability to do effectively has been
was nonetheless of ‘equal value’. The relevant law is seriously curtailed.
now all found in the Equality Act 2010. It applies Important reforms aimed at reducing this barrier
equally to men and to women, but in practice the and putting pressure on employers to act proac-
large majority of cases are brought by women using tively in respect of equalizing pay have been estab-
men as their comparators. lished since 2017. These require all organizations
Aside from these three headings under which a employing more than 250 people to publish specific
claim can be brought (ie like work, work that has statistics about their own gender pay gaps on their
been rated as equivalent, and work of equal value), website. This serves to alert senior managers, em-
the Equality Act sets out the major defences that ployees and potentially clients about the issue.
are available to employers. The most widely de- Negative publicity is generated when pay gaps are
ployed is known as the ‘material factor defence’ particularly high or when they grow rather than re-
which involves satisfying the tribunal that the dif- tract in a given year. Large pay gaps are mainly
ference in the level of payment between the claim- explained by the presence of so many men in the
ant and her comparator is genuinely explained by highest paying job groups, and the pay gap report-
factors that have nothing to do with gender. The ing system highlights this very clearly. Over time it
most common examples are situations in which a will hopefully lead to the appointment of more
man works longer hours or takes on a less desirable women to senior roles.
shift pattern than the woman and those in which
there are marked differences in relative levels of
skill, performance or experience. It is also common Dismissal law
for employers to pay more to people who have
Former employees who have completed more than
achieved certain formal qualifications and also to
two years’ service are entitled to seek compensation
pay London-based employees more than those liv-
or reinstatement when they have been unfairly dis-
ing elsewhere in the UK. These are both accepted as
missed. This means that they have either been
‘material factors’ provided that they genuinely ex-
sacked for an unfair reason (eg pregnancy, refusal to
plain the difference in pay. The same is true of situ-
work in unsafe conditions) or for a lawful reason
ations in which a group of employees enjoys a
(eg misconduct, incapability, redundancy) but in an
higher level of ‘protected pay’ following a merger
unreasonable manner. In practice the large majority
or acquisition that brings together two groups of
of cases concern the manner in which someone has
people who were previously employed by different
been dismissed, and here the law is very helpful
employers.
from an employer’s point of view. The test which is
Partly, if not largely as a result of this law, the
used to judge ‘reasonableness’ is known as ‘the band
hourly ‘gender pay gap’ between male and female
of reasonable responses test’. When applying this a
workers in the UK has declined from 37 per cent in
tribunal is required to refrain from judging the mat-
the early 1970s to around 9 per cent today, depend-
ter with reference to what the judge would have
ing on how it is measured. The reasons for its per-
done in similar circumstances, or even from making
sistence despite the presence of equal pay law are
a general judgement as to what most people would
widely debated, a number of distinct and plausible
consider ‘reasonable’. Instead the requirement is to
explanations having been put forward (see Rubery
ask the question: could the employer’s actions in
and Grimshaw, 2014). One possibility simply arises
dismissing the employee be said to have been
from the requirement that the law places on women
reasonable?
to challenge their employers either by threatening
This means that dismissals which 90 per cent of
or actually taking legal action. This is a difficult
people would consider to have been unreasonable
path for any employee to take and one which, quite
can nonetheless be found to have been reasonable
understandably, most are reluctant to embark on.
in law, simply because a case for their reasonable- an employer was to cut someone’s contractual pay
ness can be put. In practice this means that many and the employee was to resign in protest, that
dismissals fall into the ‘harsh but fair’ category. would generally constitute a constructive dismissal.
That said, in order to be lawful it is essential that Implied terms are many and varied, but are deemed
any dismissal is managed in accordance with a fair to be present in every contract. The most significant
procedure. In a case of poor work performance this is the ‘duty to maintain a relationship of mutual
means that an employee must be invited to a formal trust and confidence’. If that is broken by an em-
meeting, given a formal warning in writing, allowed ployer, as happens for example in cases of serious
an opportunity to appeal, given a reasonable op- bullying at work, the employee is entitled to resign
portunity to improve and, only then, dismissed fol- and claim constructive dismissal.
lowing a further formal meeting with a right to ap-
peal. Formal warnings are also required in cases of
long-term ill health (where disability discrimination Health and safety law
law can also be highly relevant) and relatively minor
UK health and safety law can be divided into two
acts of misconduct. Only when an employee is
very distinct parts. On the one hand, we have the
guilty of gross misconduct such as stealing, fighting,
criminal law which is enforced by health and safety
serious insubordination or some other breach of
inspectors employed by local authorities and, at na-
trust and confidence is an employer entitled to dis-
tional level, by the Health and Safety Executive
miss summarily without notice. Here too, though, a
(HSE). On the other hand, we have personal injury
fair procedure must always be followed, the em-
law under which a worker who suffers an injury at
ployee being given every opportunity to defend
work or falls ill as a result of their work can sue
themselves and to appeal the dismissal. A further
their employer for damages.
requirement is that employees facing hearings at
Health and safety inspectors carry out routine
which they may be dismissed must always be al-
inspections of employers’ premises without warn-
lowed to be accompanied by a work colleague and
ing, following which they can issue improvement
represented by a trade union official.
notices requiring that changes are made to opera-
Aside from unfair dismissal, UK law provides
tions or prohibition notices which prevent the em-
that employees cannot be wrongfully dismissed or
ployer from using a piece of equipment or operating
constructively dismissed. Wrongful dismissals occur
a system until recommended changes have been
when the manner of a dismissal breaches the con-
made. In either case a failure to make the required
tract of employment. It occurs most commonly
changes can result in a criminal prosecution. Such
when an employee’s contract stipulates a notice pe-
prosecutions are also brought when an employer’s
riod which is not then observed when notice is
negligence or recklessness leads either to a death or
given. So if someone with the right to eight weeks’
a serious injury. In the most serious cases, charges of
notice is dismissed with one week’s notice, they
corporate manslaughter can be brought against an
would be able to bring a claim for compensation.
organization.
Constructive dismissals are actually resignations.
Most personal injury claims also involve demon-
The law in this area was introduced alongside un-
strating that an employer or a fellow employee has
fair dismissal law in 1971 in order to prevent
acted negligently. Importantly, the doctrine of vi-
employers from circumventing the new rights by
carious liability applies here, meaning that employ-
treating their employees so badly that they resigned
ers are deemed to be legally responsible for the
without needing to be dismissed. The test that is
actions of their employees while at work. So if an
now used is contractual. This means that an em-
accident is caused as result of a fellow employee’s
ployee resigns in response to (and soon after) their
negligence, the injured person brings the case
employer breaching their contract. In such circum-
against the employer rather than the colleague
stances the tribunals treat the incident as if it were a
whose fault the accident was. There are a number of
dismissal and order that appropriate compensation
defences that employers can deploy when faced
is paid. Importantly, relevant breaches of contract
with personal injury claims. The most common in-
can involve either express or implied terms. Express
volves satisfying the court that the accident ‘was not
terms are those that the parties agree at the time
reasonably foreseeable’. In practice this requires an
they first form their relationship. So, for example, if
employer to have carried out formal risk assess- after consulting with the Low Pay Commission. The
ments and to have recorded these. Managers then main adult rate is now called the National Living
need to show that the injury was sustained in spite Wage. In April 2019 this was £8.21, and it is ex-
of the fact that the risks were low, that full training pected to reach £9 an hour in 2020. In addition
had been provided and that safe systems of work there is a lower hourly rate for workers between the
were always observed. ages of 21 and 25 (£7.70 in 2019), another for peo-
In recent years many claims of this kind have re- ple aged 18–20 (£6.15), a youth rate for 16- and
lated to mental breakdowns brought about through 17-year-olds (£4.35) and an apprentice rate (£3.90).
stressful work situations. These are not at all easy Failure to pay the NMW is not only a civil offence
for workers to win because unless they have suf- which can result in any back pay that is owed being
fered two breakdowns, the second after returning to paid to a claimant, but also a criminal offence which
work, it is difficult to show that an excessive work- can result in large fines being paid as well.
load was the main trigger for the illness. Another significant area of employment law con-
cerns the situations in which an employer can and
cannot make deductions from a worker’s pay
Hours and wages packet. These are fairly limited, in most cases re-
quiring prior consent on the part of an employee (eg
A variety of laws regulate working time and the
trade union dues), authorization via statute (eg tax)
amount of money that workers should be paid. The
or a court order (eg in order to pay a fine).
most important statute covering hours of work is
Importantly this means that as a rule, employers
the Working Time Regulations 1998. This is
cannot deduct wages as part of a disciplinary pro-
European law which has always been controversial
cess. If suspended from work for any reason an em-
in the UK where we have a tradition of working
ployee must continue to be paid while a matter is
long hours and claiming overtime payments in re-
investigated. Moreover, if a worker is found to have
turn. The key right here is not to be required to
committed an act of misconduct, the employer can-
work in excess of 48 hours a week. However, in
not lawfully fine them by way of a punishment.
practice, many employees continue to do so. This is
partly because actually the law only limits working
time to 48 hours averaged over 17 weeks. So em-
ployers can lawfully require their staff to work
Family-friendly employment law
many more hours in particularly busy weeks, pro- In recent years it is in the area of family-friendly
vided that on average over any 17-week period the employment rights that the biggest changes in regu-
48-hour rule is observed. In the UK there is also an lations have been made. Every two or three years
opt-out system in place, under which employees can since the mid-1990s new rights have been intro-
remove themselves from the right not to work more duced, while existing rights have been extended.
than 48 hours a week. This is common because em- This step-by-step approach has disguised the radi-
ployers can lawfully require new starters to sign cal improvement in employment rights which has
opt-out agreements as a condition of being offered occurred over time. The major family-friendly rights
a job. There is also a right to opt back into the regu- that applied in 2019 were as follows for most
lations without suffering any detriment, but this is employees:
not widely known. The Working Time Regulations
●● up to one year of shared parental, maternity
also provide that minimum rest breaks are provided
or adoptive leave;
during a day’s work and between shifts. Moreover,
they give all workers the right to take 28 days paid ●● nine months of shared parental, maternity or
holiday a year (pro rata for part-timers) comprising adoptive pay;
eight bank holidays and 20 further days statutory ●● the right to paid time off to attend ante-natal
annual leave. appointments;
The National Minimum Wage regulations also ●● two weeks of statutory paternity leave;
date from 1998. These require that all workers are
●● the right to time off to deal with family
paid a minimum amount for every hour that they
emergencies;
work, rates being set by the government each year
●● eighteen weeks of unpaid parental leave seek their approval before dismissing staff.
during the first five years of a child’s life; Elsewhere, officials bring criminal prosecutions
●● the right to request a change of contract in when they have evidence that an employer has acted
order to work more flexibly. unlawfully. In France, for example, even when an
employer settles a discrimination claim with an em-
Since 2014, all employees with six months’ service ployee, it can still find itself having to defend its ac-
have been able formally to request flexible working. tions in the criminal courts.
Employers can only lawfully turn down a request In the UK the inspectorate model is used in the
when one of eight straightforward business reasons enforcement of health and safety law, in matters
apply, and must in any event handle requests reason- concerning the illegal employment of overseas mi-
ably. In 2015, new regulations were introduced al- grants and, to an extent, in the enforcement of the
lowing parents to opt for ‘shared parental leave’ in National Living Wage. But in most areas of employ-
place of established maternity leave. Under such an ment law criminal sanctions play no role. The onus
arrangement the allocation of paid and unpaid leave is overwhelmingly on aggrieved employees and,
previously available only to mothers can now be more commonly, former employees to bring their
shared by both parents. Importantly, this can be cases before the civil courts. When a complaint re-
taken concurrently, allowing both a new mother and lates to the alleged breach of an employment statute
father to take six months’ leave together when their such as unfair dismissal or unlawful discrimination,
new baby is born. Further extensions of family- claimants bring their cases before their local
friendly employment rights are being discussed for Employment Tribunal. Here the case will either be
the future, including a right for grandparents to heard by an Employment Judge sitting alone, or
share some of the ‘parental leave’ currently allocated sometimes by a panel of three in which the judge is
to fathers and mothers. assisted by two lay members who have industrial
experience. In most cases the burden of proof lies
with the claimant (ie the person bringing the case),
How is employment law but on some questions of law it can reverse so that
the respondent (ie the employer) must satisfy the
enforced? tribunal that it did not act unlawfully as is alleged.
Employment tribunals then decide cases ‘on the bal-
It is in the area of enforcement and remedies that ance of probabilities’, having weighed the evidence
employment law varies most from country to that is presented to them by each party or its
country (Slattery and Broadbent 2013). In many
representatives.
countries, including Australia, Germany, India and Employment tribunals operate in a relatively in-
Japan, specialized employment tribunals are charged formal way. Anyone can carry out the duty of repre-
with deciding cases that are brought by aggrieved senting a party, the role being in no way restricted
employees or ex-employees who believe that an em- to professional lawyers. Sometimes claimants repre-
ployer has treated them in an unlawful manner. sent themselves or are represented by a family mem-
Sometimes these institutions take an arbitration ber or a friend. Trade union officials increasingly
approach, seeking to promote a settlement to the carry out this kind of work too. Respondents are
dispute between the parties. In other jurisdictions more likely to employ lawyers to represent them,
tribunals are more clearly part of a court system, but sometimes represent themselves too. As a result,
simply deciding cases in favour of one party or the the Employment Tribunal provides a relatively swift
other after hearing evidence. Elsewhere, notably in and low-cost forum in which a case can be decided.
the United States, cases are heard by standard civil Appeals on questions of law can be taken to the
courts with no specialist brief in the field of employ- Employment Appeals Tribunal and, subsequently,
ment. A rather different type of system operates in on to the Court of Appeal, Supreme Court and, if
countries where the criminal law plays a much appropriate, the European Court of Justice. But ap-
greater role in employment matters. Here local la- pealing a case is usually more costly. Since 2013,
bour officials or inspectors have a central place in UK claimants whose income is above a set thresh-
the administration of the law. In some jurisdictions, old have been obliged to pay fees to the Employment
such as the Netherlands, employers are obliged to Tribunal when lodging their claims. Despite the fact
that these fees are refunded when claimants win

their cases, the impact of their introduction has
HRM and employment law
been to reduce the number of claims being brought
very significantly. It is important for HR managers to have a good,
Employment tribunals do not hear cases that re- basic understanding of the principles of employ-
late to breaches of contract or alleged committing of ment law because this enables them to take an in-
torts such as negligence. So people wanting to pursue formed view of the balance of risk associated with
wrongful dismissal cases or personal injury claims taking different courses of action. If the outcome of
must instead take their case to the County Court or a decision is likely to be a tribunal claim, a substan-
High Court. In practice this requires them to hire tial payout and negative press coverage, it makes
lawyers and to be represented by a barrister. Costs sense to avoid taking it. Often, though, it is far from
are awarded against losing parties too, making this a clear whether a course of action does in fact pose
riskier and potentially expensive route to take. any significant legal risk. Sometimes there is a theo-
In practice, awards against losing respondents are retical risk, as is the case when jobs are filled with-
rarely very high. Ahead of a case, solicitors represent- out any advertising or when casual staff are paid
ing claimants often set out a schedule of losses which holiday pay in a ‘rolled up’ form, but this is very
is a good deal inflated and does not realistically rep- small.
resent the actual sum that would be won following a The extent to which employment law influences
successful hearing in court. This is done in a bid to the way that people are managed in organizations
frighten unwary employers into settling the case for a thus varies considerably. Larger corporations with
higher sum than they need to in order to avoid the high-profile reputations to defend have a tendency
hassle of defending the case in court. The truth, ac- to settle claims ahead of any tribunal hearing. The
cording to the annual statistics published by the estimated costs associated with defending a claim
Employment Tribunal Service, is that the sums typically dwarf the size of the award that the claim-
awarded are typically much lower than claimants ant can hope to win. So rather than tie up days of
might in theory hope to gain (see Table 55.1). management time defending a case, claimants are
simply paid off on condition that they sign a settle-
ment agreement which precludes them from publi-
TA BL E 55.1 Median awards made in cizing the case (CBI, 2012: 29). The advantage of
different types of employment tribunal case such a policy is that it effectively enables managers
2017–18 to run their organizations without taking too much
notice of the expectations of employment law. The
disadvantage, of course, is that it encourages people
Type of case Average median award
whose claims are not strong in law to bring cases in
Unfair dismissal £15,007 any event in the hope of securing a payout. The
strategy can also fail to protect an employer from
Race discrimination £24,322 negative publicity, as in the juicier cases journalists
tend to get hold of the story in any event.
Sex discrimination £13,212 A rather different approach is typically taken in
the public and third sectors where considerable ef-
Disability £30,698 forts are made to comply with employment legisla-
discrimination tion. Here HR departments often gain a reputation
for being over cautious in the way that they handle
Religious £5,074 employee grievances, so great is their wish to avoid
discrimination having to defend a case in the Employment Tribunal.
This means that, in practice, the vast majority of
Sexual orientation £12,550 tribunal hearings involve smaller private-sector en-
discrimination terprises that do not have the resources available to
either pay people off as a matter of routine, or to
Age discrimination £6,796 ensure that they are complying with the require-
ments of the law. Managers in smaller enterprises
Source ETS Annual Report 2018
also tend to prefer an informal management style tribunal that causes them to consider employment
which can make legal challenges more likely (DBIS, law to be a burden as much as their personal experi-
2013b). ence (DBIS, 2013b).
Published evidence suggests that in practice em- In fact the chances that any job applicant, em-
ployment law has a major impact on the way that ployee or former employee will win a claim against
HR managers approach their work. As long ago as an employer are slim. Employers end up winning
2002, when the volume of employment legislation four out of five of the claims that are heard in the
was a good deal less than it is now, the Chartered UK employment tribunals, while over 30 per cent of
Institute of Personnel and Development established those that are lodged are withdrawn without a set-
that two-thirds of HR specialists were spending in tlement before the case ever comes to court.
excess of 20 per cent of their time ‘dealing with em- Avoiding tribunal claims which have any serious
ployment law issues’, while a quarter reported that prospect of being won is thus not at all difficult. It
over 40 per cent of their working days were being is really just a question of adhering to the major
spent in this way (CIPD, 2002). A further CIPD sur- principles of the law, such as paying staff the
vey of HR professionals carried out five years later National Living Wage and avoiding unlawful dis-
reported that 40 per cent of respondents rated ‘se- crimination, while also taking care to handle dis-
curing compliance with employment regulations’ as missals in a procedurally fair manner. Moreover, in
one of their top five objectives, while 90 per cent 90 per cent of situations that arise in the workplace,
saw employment regulation as likely to become there is no need for managers to pay for legal ad-
more important for their organizations in the future vice. Free guidance is available on numerous web-
(CIPD, 2007). These findings are unsurprising when sites, including the government’s own employment
it is considered that around half a million people webpages (www.gov.uk/browse/employing-people)
are dismissed for one reason or another in the UK and those provided by the Advisory, Conciliation
each year (DBIS, 2013b: 23). and Arbitration Service (ACAS) (www.acas.org.uk/
Surveys of employer opinion regularly report index.aspx?articleid=1339). ACAS also provide a
that managers find the volume of employment regu- free, confidential telephone helpline staffed by advi-
lation that they have to comply with to be burden- sors who give excellent advice about all employ-
some, but it is not generally the principles that ment law issues.
causes them to complain. The aims of the law are
generally supported by employers. What they dis-
like is its complexity and the time that they are
obliged to devote to keeping up with changes (CIPD, Pau se for th ou gh t
2005). As a result, particularly in the case of smaller How does employment law promote
firms, managers have a strong tendency to worry
that they may be found not to be complying with all
flexibility?
the expectations of the law. It is the fear of the
CASE STUDIES
Jenkins v Legoland Windsor Park Ltd (2003)
Mr Jenkins was employed at the Legoland theme park in to all employees who had completed over three years’
Windsor Great Park as an ‘attractions team leader’. Due to service. Mr Jenkins was one of the 58 employees who
a motorbike accident he had suffered at the age of 16, Mr received awards at this ceremony. Each award took the
Jenkins’ left arm was very seriously injured. This required form of a human model made out of Lego. Most of the
him to use a sling at all times. In March 2001 the company employees received models which related directly in some
held a ceremony at which long service awards were given way to their work. Cafe staff, for example, were given
models of people eating pizzas or drinking coffee, parking a detriment as he had been singled out at a presentation
attendants got models of people holding traffic cones, and ceremony and identified by a wrongly characterized
managers got models holding clipboards. Mr Jenkins, disability. Mr Jenkins won his case in the Employment
however, was presented with a model of a man with his Appeals Tribunal (EAT) having lost in the tribunal. It was
right arm in a sling. The day after the ceremony Mr Jenkins found that he had been subjected to a detriment for a
was absent and never returned to work. He was diagnosed reason related to his disability, and the employer had not
by a consultant psychologist as ‘suffering from a depressive been able to objectively justify its actions. He won damages
episode triggered by an insensitive experience at his place of over £30,000 to compensate him for financial losses and
of work’. He then brought a disability discrimination claim injury to feelings.
to the employment tribunal. He argued that he had suffered
West Bromwich Building Society Ltd v Townsend (1983)
A building society branch in Wolverhampton was subjected 1 The building society had considered how it could best
to a routine health and safety inspection by a local authority protect its employees and included such
environmental health officer called Mr Townsend. considerations in risk assessments that were regularly
Following his inspection, Mr Townsend took the decision to kept under review.
use the branch as a test case and to issue an improvement
2 The cost of installing protective screens in all its 86
notice requiring the building society to install ‘anti-bandit
branches would be over £500,000, yet the amount of
screens’ to protect staff from the possibility of a violent
cash kept on any one of its premises at any one time
robbery. The notice stated that it was Mr Townsend’s
was only £3,500 maximum.
opinion that the employer was contravening the Health and
Safety at Work Act (HSWA) 1974 by not providing such 3 The improvement notice merely stated that it was Mr
screens: Townsend’s opinion that the building society was in
contravention of the HSWA 1974. No particulars were
The reasons for my said opinion are that staff engaged
given about which clause in the Act was being
in the handling of money and in general office duties in
contravened and no justification given to back up the
the premises are not protected as far as is reasonably
general opinion.
practicable from the risk of attack or personal injury
from persons frequenting the area of the premises 4 The improvement notice was not really concerned with
normally open to the general public and I hereby bringing about necessary improvements in health and
require you to remedy the said contraventions or, as safety at the particular branch concerned. Its real aim
the case may be, the matter occasioning them by was to create a precedent that would apply to all
September 22nd 1982, in the manner stated in the building society branches across the whole country.
schedule which forms part of this notice.
The appeal was successful. The tribunal considered that
The employer appealed against the improvement notice in the costs associated with complying with the order would
the employment tribunal. In doing so it made the following be disproportionate given the level of risk from a health and
points: safety point of view.
Proctor v British Gypsum Ltd (1992)
Mr Proctor was employed as a foreman by the British dismissed for rather more serious incidents of fighting
Gypsum company. He was summarily dismissed from this and assault. He therefore claimed that the employer had
job after one of his subordinates claimed to have been acted unreasonably in summarily dismissing him – on
assaulted by him. In his defence, Mr Proctor presented grounds of inconsistency. Moreover, his previous record
evidence to show firstly that he had been provoked, and of conduct had been impeccable. The employer claimed
secondly that in the past employees had not been that the other incidents had occurred some time
previously and that their policy on such matters had management had the right to tighten up in the way that
toughened in the years since. They also claimed that Mr they had. The main purpose of the inconsistency rule was
Proctor's position as a foreman made his case materially to stop victimization – employees really being picked on
different. Mr Proctor lost his case. The EAT took the and dismissed for other reasons (eg not getting on with
opportunity to set out the circumstances in which their boss).
consistency/inconsistency is significant. They said that Each case had to be looked at on its merits and the
time was significant as no employer could be expected to employers had acted reasonably in expecting higher

act consistently with cases that were some years old – standards from this man, given his position.
To be informed
Pa us e for t houg ht Under the right to access provision, individuals
Why has the volume of employment law have the right to be informed about the collection
and use of their personal data. This is a key trans-
grown so much recently?
parency requirement under the GDPR. Individuals
must be provided with information in the shape of
a privacy notice at the time the personal data is col-
lected from them. The information must be concise,
transparent, intelligible, easily accessible, and it
The General Data Protection must use clear and plain language. The privacy no-
Regulation (GDPR) tice should detail exactly what information is col-
lected, why it is being collected and how long it will
be stored for. It should set out the employee’s rights
The General Data Protection Regulation (GDPR),
under the GDPR to:
which came into force in May 2018, is a regulation
in EU law on data protection and privacy for indi- ●● have access to their records;
vidual employees. The rights of individuals (known ●● have the data erased (the right to be
as data subjects) under the Regulation are as forgotten);
follows.
●● rectification (correcting errors);
●● object to the processing of data.
To give consent There are a few circumstances when privacy
Employers are required to obtain the consent of em- information need not be provided, such as if an in-
ployees or job candidates to process their personal dividual already has the information or if it would
data. The consent must be ‘freely given, specific, in- involve a disproportionate effort to provide it to
formed and unambiguous’. There must be a lawful them.
purpose for processing such as:
●● the legitimate interest of the employer, eg Privacy by design
processing attendance records for the
purposes of providing statutory sick pay; This calls for the inclusion of data protection from
the onset of the designing of systems, rather than as
●● the need to perform a contract;
an addition.
●● compliance with a legal obligation.
Key learning points
The purpose of employment law Tribunal. However, in the field of health and safety, the
government employs inspectors to carry out the main
The major purpose of employment law is to deter enforcement duties.
employers from treating their employees unfairly or
from exploiting them unjustly. However, governments
also use employment regulation to help make work
Employment law and HRM
more attractive to people and to promote flexibility in Published evidence demonstrates that employment
the labour market. law can have a major impact on the way that
employers carry out HRM activities. It consumes a
How are these objectives achieved? great deal of HR professionals’ time and is high on
their agendas. A variety of good sources of free advice
In most jurisdictions employment laws give employees about the expectations of employment law is available
a strong measure of protection from unfair to managers.
discrimination and unfair dismissal. Regulation also
helps ensure that high levels of health and safety
practice are observed and that workers are paid
The GDPR
reasonably and are not overworked. Family-friendly This is a regulation in EU law on data protection and
employment law helps people to achieve an effective privacy for individual employees. Employers have to
work-life balance. gain the assent of employees to the use of their
personal data and employees have the right to be
Enforcing employment law. informed about its use.
Enforcement is mainly something employees do for

themselves by bringing claims to the Employment
References
Ashiagbor, D (2005) The European Employment DBIS (2013b) Employment regulation: Employer
Strategy: Labour market regulation and new perceptions and the impact of employment
governance, Oxford, Oxford University Press regulation, London, Department for Business,
CBI (2012) Facing the Future, Confederation of Innovation and Skills
British Industry ETS (2018) Annual Report and Statistics, London,
CIPD (2002) Employment Law: Survey report, Employment Tribunals Service
London, Chartered Institute of Personnel and Rubery, J and Grimshaw, D (2014) The 40-year
Development pursuit of equal pay: a case of constantly moving
CIPD (2005) Employment and the Law: Burden or goalposts, Cambridge Journal of Economics, 39,
benefit? London, Chartered Institute of Personnel pp 1–25
and Development Slattery, E and Broadbent, J (2013) The International
CIPD (2007) The Changing HR Function: A survey Comparative Legal Guide to Employment and
report, London, Chartered Institute of Personnel Labour Law, 3rd edn, London, Global Legal
and Development Group
DBIS (2013a) Employment Law 2013: Progress on
reform, London, Department for Business,
Innovation and Skills
617
PART XIV
People management skills
PA R T X I V CO N T E N T S
56 Strategic people management skills

57 Business skills
58 Problem-solving and decision-making skills
59 Analytical and critical skills
60 Research skills
61 Statistical skills
62 Selection interviewing skills
63 Job, role, competency and skills analysis
64 Learning and development skills
65 Negotiating skills
66 Change management
67 Influencing skills
68 Leadership skills
69 Handling people problems
70 Handling challenging conversations
71 Managing conflict
72 Political skills
73 Dealing with business issues from an HR perspective
74 Project management
618 Part 14 | People Management Skills
HRM practices, especially selection interviewing,

Introduction job and competency analysis, learning and develop-
ment techniques and negotiating. Then there are
It can be argued that fully fledged HR professionals
the skills they need because they have a complex
have to be able to deploy a range of skills supported
role to play within their organizations. They are in-
by knowledge that is wider than that required by
volved in leading change and exercising leadership
any other professional working in organizations.
in their own functions and, indirectly, in their deal-
Even if this claim cannot be substantiated, it is in-
ings with line managers – providing guidance and
controvertible that a very wide variety of skills have
advice. They have to exert influence, not just by
to be used by HR specialists on a day-to-day basis.
using the authority of their position but by the ef-
As business partners they need strategic and
fective exercise of skills in persuading managers to
business skills. As professionals constantly faced
agree to innovations or adopt different courses of
with the need to gain insight into the organizational
action in people management. They will be con-
and business issues they have to address, they need
stantly involved in handling people problems and,
problem-solving, analytical and critical skills. HR
from time to time, in managing conflict. Politics is
professionals need to know about research method-
a feature of life in organizations and HR people
ology to understand the contribution of HR re-
must know how to cope with political situations.
search and, increasingly, to initiate research and
Finally, they are often involved in implementing
take part in research projects. They must be able to
new systems and to do this they need project man-
analyse and present information on what is happen-
agement skills.
ing in their organizations by using statistical skills.
The purpose of this part is to provide guidance
Another major group of skills that HR profes-
on the application of all the skills mentioned, to-
sionals need to have are those concerned with
gether with any supporting knowledge required.
619
56
Strategic people
management skills
expressed in the strategic business partner model, as
Introduction described below.
HR management professionals have a strategic
role when they take part in conjunction with their
line manager colleagues in the development and
The strategic business
implementation of innovative people strategies partner model
that are aligned with business strategies and thus
help to achieve them. This chapter examines what HR practitioners share responsibility with their line
this means and describes the knowledge and skills management colleagues for the success of the enter-
required. prise. HR practitioners can be described as business
partners who have the capacity to identify business
opportunities, to see the broad picture and to un-
The strategic role of the HR derstand how their role can help to achieve the
company’s business objectives. They integrate their
professional activities closely with top management and ensure
that they serve a long-term strategic purpose. They
HR strategic activities support the achievement of anticipate needs, act flexibly and are proactive.
the organization’s goals and values by aligning HR
strategies with business strategies. Senior people
management professionals are involved in the de-
velopment and implementation of forward-looking
The strategic skills required
HR strategies that are integrated with one another.
HR professionals who act strategically will think
Importantly, they work with their line management
about what the organization wants to be and be-
colleagues in the continuous formulation and exe-
come and what they can do to ensure this happens.
cution of the business strategy.
They will have insight into the real needs of the
People management professionals, especially at
business and its people and will take a broad view
the highest level, make a strategic contribution that
of where the business is going. They will be capable
ensures that the organization has the quality of
of seeing ‘the big picture’, looking beyond the con-
skilled and engaged people it needs. Sparrow et al
fines of the immediate problems they and the busi-
(2010: 88) observed that: ‘HR must be fully respon-
ness face to what lies ahead, how these problems
sive to the strategy and business model of the busi-
can be solved, and what they can do to support the
ness. HR is not a rule to itself. It is not “HR for
efforts of other people. This means that they need
HR”, but HR (as broadly defined across the com-
business, problem-solving and analytical skills, as
peting stakeholders whom HR has to satisfy) for
described in the next three chapters of this book.
the business.’ The strategic nature of HR has been
Key learning points
The strategic role of the HR professional opportunities, to see the broad picture and to
understand how their role can help to achieve the
HR professionals are involved in the development and company’s business objectives.
implementation of forward-looking HR strategies that
are integrated with one another.
The strategic skills required
The strategic business partner model HR professionals who act strategically will think about
what the organization wants to be and become and
HR practitioners can be described as business what they can do to ensure this happens.
partners who have the capacity to identify business
Reference
Sparrow, P, Hesketh, A, Hird, M, Marsh, C and P Sparrow, A Hesketh, M Hird and C Cooper,
Balain, S (2010) Using business model change to Leading HR, Basingstoke, Palgrave Macmillan,
tie HR into strategy: reversing the arrow, in (eds) pp 68–89
621
57
Business skills
Introduction
Source review
HR professionals need to see themselves – and be
seen – as business people with particular exper- It is also evident that for some HR functions, they
tise and interest in people, rather than HR people see HR as an applied business discipline first and a
who happen to work for a business. To make an people discipline second. The ability to understand
effective contribution, they must possess business the business agenda in a deep way means that they
and financial skills. They need to understand are then able to help the business see how critical
what their business model is – how their organi- objectives can only truly be delivered if the people
zation delivers value to its customers and how the and cultural issues are fully factored in – insight
business achieves competitive advantage and into what it would take to truly deliver. In these
makes money. They need to understand and be places HR has a real share of voice and
able to use the language of the business and, be- credibility… Where HR is grounded in the business
cause this will generally be expressed in monetary and delivering the fundamentals well, then it is able
terms, they need to appreciate how the financial to engage in higher value-adding ‘OD’ and
systems of the business work. This means that talent-related activities that speak to the critical
they have to understand the budgeting processes challenges faced in that organization.
of the organization and be able to manage their
CIPD (2010: 5)
own financial budgets. They also need to know
about the concepts of the business model and
business model innovation in order to understand
how the business makes money now and intends Business skills
to do so in the future so that they can do some-
thing about it. Business skills are required to adopt a businesslike
Equipped with this knowledge, HR professionals approach to management – one that focuses on al-
can develop the skills needed to interpret the organ- locating resources to business opportunities and
ization’s business or corporate strategies, to contrib- making the best use of them to achieve the required
ute to the formulation of those strategies, to develop results. HR managers who are businesslike under-
integrated HR strategies and to run their own func- stand and act upon:
tion in a business-like way. This requirement was
spelt out by Ulrich (1997: 7) when he wrote that: ●● the business imperatives of the organization –
‘HR professionals must know the business, which its mission and its strategic goals;
includes a mastery of finance, strategy, marketing, ●● the organization’s business model – the basis
and operations.’ Research by the CIPD led to the upon which its business is done (how its
following conclusion: mission and strategic goals will be achieved);
●● the organization’s business drivers – the the liquidity position (how much cash or easily real-
characteristics of the business that move it izable assets are available) and capital structure.
forward;
●● the organization’s core competencies – what The balance sheet equation
the business is good at doing; The balance sheet equation is: Capital + Liabilities =
●● how performance in the organization is Assets. Capital plus liabilities shows where the money
measured in financial and non-financial comes from, and assets indicate where the money is now.
terms (see Chapter 37);
●● the factors that will ensure the effectiveness of Make-up of the balance sheet
its activities including specific issues
The balance sheet contains four major sections:
concerning profitability, productivity, financial
budgeting and control, costs and benefits, ●● Assets or capital in use, which is divided into
customer service and operational performance; long-term or fixed assets (eg land, buildings and
●● the key performance indicators (KPIs) of the plant) and current or short-term assets, which
business (the results or outcomes identified include bank balances and cash, debtors, stocks
as being crucial to the achievement of high of goods and materials and work in progress.
performance) that can be used to measure ●● Current liabilities, which are the amounts
progress towards attaining goals; that will have to be paid within 12 months
●● the factors that will ensure that the firm’s of the balance sheet date.
resources, especially its human resources, create ●● Net current assets or working capital, which
sustained competitive advantage because they are current assets less current liabilities.
are valuable, imperfectly imitable and non- Careful control of working capital lies at the
substitutable (the resource-based view). heart of efficient business performance.
●● Sources of capital, which comprise share
capital, reserves including retained profits,
Financial skills and long-term loans.
A businesslike approach means using financial skills

Liquidity analysis
to know how to analyse and interpret balance
sheets, cash flow and trading statements and profit Liquidity analysis is concerned with the extent to
and loss accounts, and to understand and make use which the organization has an acceptable quantity
of the financial techniques of budgeting and budget- of cash and easily realizable assets to meet its needs.
ary control, cash budgeting and costing. The analysis may be based on the ratio of current
assets (cash, working capital, etc) to current liabili-
ties (the working capital ratio). Too low a ratio may
Interpreting balance sheets mean that the liquid resources are insufficient to
cover short-term payments. Too high a ratio might
A balance sheet is a statement on the last day of the indicate that there is too much cash or working
accounting period of the company’s assets and lia- capital and that they are therefore being badly man-
bilities and the share capital or the shareholders’ aged. The working capital ratio is susceptible to
investment in the company. Balance sheet analysis ‘window dressing’, which is the manipulation of the
assesses the financial strengths and weaknesses of working capital position by accelerating or delaying
the company, primarily from the point of view of transactions near the year end.
the shareholders and potential investors, but also as Liquidity analysis also uses the ‘quick ratio’ of
part of management’s task to exercise proper stew- current assets minus stocks to current liabilities.
ardship over the funds invested in the company and This concentrates on the more realizable of the cur-
the assets in its care. With the help of balance sheet rent assets and therefore provides a stricter test of
ratios, the analysis focuses on the balance sheet liquidity than the working capital ratio. It is there-
equation, considers the make-up of the balance fore called ‘the acid test’.
sheet in terms of assets and liabilities, and examines
Chapter 57 | Business Skills 623
Capital structure analysis 5 profit before interest and taxation (3 plus 4);
Capital structure analysis examines the overall means 6 profit before taxation (5 minus loan interest);
by which a company finances its operations, which is 7 taxation;
partly by the funds of their ordinary shareholders 8 net profit (6 minus 7).
(equity) and partly by loans from banks and other
lenders (debt). The ratio of long-term debt to ordi-
nary shareholders’ funds indicates ‘gearing’. A com- Profitability analysis ratios
pany is said to be highly geared when it has a high
level of loan capital as distinct from equity capital. Profitability is expressed by the following ratios:
●● Return on equity – profit after interest and
preference dividends before tax in relation to
Classification of profits ordinary share capital, reserves and retained
Profit is basically the amount by which revenues ex- profit. This focuses attention on the efficiency
ceed costs. It is classified in trading statements and of the company in earning profits on behalf
profit and loss accounts in the following four ways: of its shareholders; some analysts regard it as
the best profitability ratio.
1 Gross profit – the difference between sales
●● Return on capital employed – trading or
revenue and the cost of goods sold. This is
operating profit to capital employed. This
also referred to as gross margin, especially in
measures the efficiency with which capital is
the retail industry.
employed.
2 Operating or trading profit – the gross profit
●● Earnings per share – profit after interest,
less sales, marketing and distribution costs,
taxation and preference dividends in relation
administrative costs and research and
to the number of issued ordinary shares. This
development expenditure.
is an alternative to return on equity as a
3 Profit before taxation – operating profit plus measure of the generation of ‘shareholder
invested income minus interest payable. value’ (the value of the investment made by
4 Net profit – profit minus taxation. shareholders in the company in terms of the
return they get on that investment). Its
drawback is that it depends on the number of
Trading statements shares issued, although it is often referred to
within companies as the means by which their
Trading statements or accounts show the cost of
obligations to shareholders should be assessed.
goods manufactured, the cost of sales, sales revenue
and the gross profit, which is transferred to the ●● Price-earnings (P/E) ratio – market price of
profit and loss account. ordinary shares in relation to earnings per
share. This ratio is often used by investment
analysts.
Profit and loss accounts ●● Economic value added (EVA) – post-tax
operating profit minus the cost of capital
Profit and loss accounts provide the information re-
invested in the business. This measures how
quired to assess a company’s profitability – the re-
effectively the company uses its funds.
turn in the shape of profits that shareholders obtain
for their investment in the company. This is the pri-
mary aim and best measure of efficiency in com-
petitive business. Profit and loss accounts show:
Financial budgeting
Budgets translate policy into financial terms. They
1 the gross profit from the trading account;
are statements of the planned allocation and use of
2 selling and administration expenses; the company’s resources. They are needed to: (1)
3 the operating profit (1 minus 2); show the financial implications of plans; (2) define
4 investment income; the resources required to achieve the plans; and (3)
provide the means of measuring, monitoring and s ystematic process of ensuring that problems of li-
controlling results against the plans. Heads of HR quidity are minimized and that funds are managed
functions need to know how budgets should be pre- effectively. The aim is to ensure that the company is
pared and controlled. not over-trading, ie that the cost of its operations
The procedure for preparing financial budgets does not significantly exceed the amount of cash
consists of the following steps: available to finance them. The old adage is that
whatever else is done, ensure that ‘cash in exceeds
1 Budget guidelines are prepared that have
cash out’.
been derived from the corporate plan and
Cash flow statements report the amounts of cash
forecasts. They will include the activity levels
generated and cash used for a period. They are used
for which budgets have to be created and the
to provide information on liquidity (the availability
ratios to be achieved. The assumptions to be
of cash), solvency and financial adaptability.
used in budgeting are also given. These could
include rates of inflation and increases in
costs and prices.
Cash budgeting
2 Initial budgets for a budget or cost centre are
prepared by departmental managers with the An operating cash budget deals with budgeted re-
help of budget accountants. ceipts (forecast cash inflows) and budgeted pay-
ments (forecast cash outflows). It includes all the
3 Departmental budgets are collated and
revenue expenditure incurred in financing current
analysed to produce the master budget,
operations, ie the costs of running the business in
which is reviewed by top management, who
order to generate sales.
may require changes at departmental level to
bring it into line with corporate financial
objectives and plans. Costing
4 The master budget is finally approved by top
management and issued to each Costing techniques provide information for deci-
departmental (budget centre) manager for sion making and control. They are used to establish
planning and control purposes. the total cost of a product for stock valuation, pric-
ing and estimating purposes and to enable the com-
pany to establish that the proposed selling price will
Budgetary control enable a profit to be made.
Costing involves measuring the direct costs of
Budgetary control ensures that financial budgets are material and labour plus the indirect costs (over-
met and that any variances are identified and dealt heads) originating in the factory (factory overheads)
with. Control starts with the budget for the cost cen- and elsewhere in the company (sales, distribution,
tre, which sets out the budgeted expenditure under marketing, research and development and adminis-
cost headings against activity levels. A system of tration). Overheads are charged to cost units – this
measurement or recording is used to allocate expen- process is called ‘overhead recovery’. It provides in-
ditures to cost headings and record activity levels formation on total costs. There are four main meth-
achieved. The actual expenditures and activity levels ods of doing this:
are compared and positive and negative variances
noted. Cost centre managers then act to deal with ●● Absorption costing – this involves allocating
the variances and report their results to higher man- all fixed and variable costs to cost units and
agement. Heads of HR functions need to understand is the most widely used method, although it
how they should monitor and control expenditure. can be arbitrary.
●● Activity-based costing – costs are assigned to
activities on the basis of an individual
Cash management product’s demand for each activity.
Cash management involves forecasting and con- ●● Marginal costing – this segregates fixed costs
trolling cash flows (inflows or outflows of cash to and apportions the variable or marginal
or from the company). It is an important and costs to products.
●● Standard costing – is the preparation of successfully repeat and increase in scale. Key
predetermined or standard costs, which are processes also include a company’s rules,
compared with actual costs to identify metrics and norms.
variances. It is used to measure performance.
Business model innovation

Business models Business model innovation is the process of devel-
oping new business models or changing existing
HR professionals also need to know about the con- ones in order to deliver better value to customers,
cept of business models and how this influences their achieve competitive advantage and increase profit-
activities. A business model provides a picture of an ability. Johnson defined the concept in more detail
organization, explaining how it achieves competitive as follows:
advantage and makes money. As defined by Magretta
(2002: 87), business models ‘are at heart stories –
stories that explain how enterprises work… They
answer the fundamental questions every manager Word s of wisd om
needs to ask: How do we make money in this busi-
ness? What is the underlying economic logic that Business model innovation (BMI) refers to
explains how we can deliver value to customers at the creation or reinvention of a business.
an appropriate cost?’ She explained that a business
model ‘focuses attention on how all the elements in
Though innovation is more often seen in the
a system fit into a working whole’ (ibid: 90). form of a new product or service offering, a
business model innovation results in an
Elements of a business model entirely different type of company that
Johnson et al (2008: 52) stated that: ‘A business competes not only on the value proposition
model, from our point of view, consists of four in- of its offerings, but aligns its profit formula,
terlocking elements that, taken together, create and
resources, and processes to enhance that
deliver value.’ These are:
value proposition, capture new market
●● The customer value proposition: how the
business will create value for its customers; segments, and alienate competitors.
this is the most important element. Johnson (2010: 20)
●● The profit formula: the blueprint that defines
how the company creates value for itself
while providing value to the customer. It Johnson also observed that: ‘Business model inno-
consists of the revenue model, cost structure, vation thrives in cultures of inquiry, environments
margin model (the contribution needed from in which new value propositions and ideas for new
each transaction to achieve desired profits) business models are met with interest and encour-
and resource velocity (how fast the business agement’ (ibid: 177).
needs to turn over inventory and assets and
how well resources should be utilized).
●● Key resources: the assets such as people, Business model analysis and design
technology, products, facilities, equipment, Business model analysis is a necessary part of busi-
channels, and brand required to deliver the ness model innovation. It is concerned with two key
value proposition to the targeted customer. issues: (1) how the organization creates value, and
●● Key processes: recurrent tasks such as (2) how the organization establishes unique re-
training, development, manufacturing, sources, assets or positions that will achieve com-
budgeting, planning and sales that allow petitive advantage. It may involve an analysis of
firms to deliver value in a way they can how value is generated at each stage of the value
chain (a value chain identifies the sequence of ac- ●● Plan organization development activities that
tivities in a firm that are strategically relevant and systematically improve organizational
underlie its key capabilities). capability in terms of process – how things
get done.
●● Mastermind change management
The role of HR in business model programmes that provide for the
innovation acceptance and smooth implementation of
change.
On the basis of extensive research into how HR de-
●● Conduct workforce planning exercises that
partments dealt with business model innovation,
identify more specifically the numbers of
their role was spelt out by Paul Sparrow and his
people required with specified skills and
colleagues as follows:
knowledge.
●● Formulate and implement talent
management strategies that provide for the
Source review development, deployment, recruitment and
retention of talented people – those
A central task for HR directors is to identify how individuals who can make a difference to
they as leaders, and how their function’s own organizational performance through their
delivery model, structure, and the people immediate contribution and in the longer
processes it manages, add value during periods of term.
business model change. In order for organizations ●● Develop performance management and
to make their models work, they have to understand contingent reward systems – what Sparrow
the potentially deep implications they have for et al (2010: 16) call ‘performance-driven
people management. People management experts processes’.
have to make sure that those engineering the new ●● Plan and manage learning programmes to
business models are working on assumptions that ensure that people have the skills required to
can reasonably be executed. implement the new or changed business
Sparrow et al (2010: 14–15) model.
●● Establish knowledge management procedures
for storing and sharing the wisdom,
understanding and expertise accumulated in
To play their part in business model innovation,
the organization about its processes,
heads of HR need to:
techniques and operations.
●● Understand the implications of the existing
In addition, as Schuler and Jackson (2007: 31)
and potential business model in terms of the
pointed out: ‘Because an innovation strategy re-
organization structure and the new or
quires risk taking and tolerance of inevitable fail-
enhanced capabilities the people involved
ures, HRM in firms pursuing this strategy should be
will require.
used to give employees a sense of security and en-
●● Contribute to the redesign of the courage a long-term commitment.’
organization to meet the requirements of the
business model change programme.
Key learning points
The need for business and financial skills understand what the business model is – how the
organization delivers value to its customers and, in
To make an effective contribution, HR professionals commercial organizations, how the business achieves
must have business and financial skills. They need to competitive advantage and makes money.
Business skills primary aim and best measure of efficiency in

competitive business. Profitability is a measure of the
Business skills are required to adopt a businesslike return in the shape of profits that shareholders obtain
approach to management – one that focuses on allocating for their investment in the company. It is expressed in
resources to business opportunities and making the best the following ratios: return on equity, return on capital
use of them to achieve the required results. employed, earnings per share, price-earnings (P/E)
ratio and economic value added (EVA).
Financial skills
A businesslike approach means using financial skills Financial budgeting
to analyse and interpret balance sheets, cash flow and Budgets translate policy into financial terms. They are
trading statements and profit and loss accounts, and statements of the planned allocation and use of the
to understand and make use of the financial company’s resources.
techniques of budgeting and budgetary control, cash
budgeting and costing.
Budgetary control
Interpreting balance sheets Budgetary control ensures that financial budgets are
met and that any variances are identified and dealt with.
A balance sheet is a statement on the last day of the
accounting period of the company’s assets and
Cash management
liabilities and the share capital or reserves or
shareholders’ investment in the company. Balance Cash management involves forecasting and controlling
sheet analysis assesses the financial strengths and cash flows (inflows or outflows of cash). An operating
weaknesses of the company primarily from the point of cash budget deals with budgeted receipts (forecast cash
view of the shareholders and potential investors, but inflows) and budgeted payment (forecast cash outflows).
also as part of management’s task to exercise proper
stewardship over the funds invested in the company Costing
and the assets in its care.
Costing techniques provide information for decision
making and control. They are used to establish the
Classification of profits total cost of a product for stock valuation, pricing and
It is necessary to understand the different ways in estimating purposes, and to enable the company to
which profits can be classified as recorded in trading establish that the proposed selling price will enable a
statements and profit and loss accounts. There are profit to be made.
four headings: gross profit, operating or trading profit, Overheads are charged to cost units to provide
profit before tax, and net profit. information on total costs – this is called ‘overhead
recovery’. There are four methods of doing this:
Trading statements absorption costing, activity-based costing, marginal
costing and standard costing.
Trading statements or accounts show the cost of
goods manufactured, the cost of sales, sales revenue
Business model
and the gross profit, which is transferred to the profit
and loss account. A business model provides a picture of an organization
that explains how it achieves competitive advantage and
Profit and loss accounts makes money. Business model innovation is the process
of developing new business models or changing existing
Profit and loss accounts provide the information ones to deliver better value to customers, achieve
required to assess a company’s profitability – the competitive advantage and increase profitability.
References
CIPD (2010) Next Generation, London, CIPD organizations and their environments, in (eds) R S
Johnson, M (2010) Seizing the White Space, Boston, Schuler and S E Jackson, Strategic Human
MA, Harvard Business Press Resource Management, Oxford, Blackwell,
Johnson, M, Christensen, C and Kagermann, H pp 23–48
(2008) Reinventing your business model, Harvard Sparrow, P, Hesketh, A, Hird, M and Cooper, C
Business Review, December, pp 52–9 (2010) Introduction: performance-led HR, in (eds)
Magretta, J (2002) Why business models matter, P Sparrow, A Hesketh, M Hird, and C Cooper,
Harvard Business Review, May, pp 86–93 Leading HR, Palgrave Macmillan, Basingstoke
Schuler, R S and Jackson, S E (2007) Understanding Ulrich, D (1997) Judge me by my future not my past,
human resource management in the context of Human Resource Management, 36 (1), pp 5–8
629
58
Problem-solving and
decision-making skills
Introduction A contingent approach to problem
solving
Problem solving is a constant feature of life in or-
ganizations and elsewhere. It is something that HR The ways in which problem-solving skills are exer-
professionals do all the time. A logical approach is cised will be contingent on the circumstances. Karen
desirable but this is not easy – the situations where Legge (1978: 99) advocated the following steps:
problems have to be solved are often messy, with ●● An objective-setting exercise based on a
conflicting evidence, lack of data and political and diagnosis of what specific objectives are
emotional issues affecting those involved. But even appropriate to the organizational context
if it is not possible to apply neat, logical and sequen- involved.
tial methods, the principles of getting and analysing
●● An analytical classification of the alternatives
what information is available, considering alterna-
that are the subject of the exercise.
tives and making the best choice based on the evi-
dence, an analysis of the context and an assessment ●● An analysis of the context in which such an
of the possible consequences, remain the same. alternative is to apply.
Decision making as considered at the end of this ●● The selection of one of the alternatives on
chapter is an outcome of problem solving. Analytical the basis that it ‘fits’ the context in which it
and critical skills are required for both problem is to operate in such a way as to facilitate the
solving and decision making and they are dealt with achievement of the specified objectives.
in Chapter 59. ●● A recognition of the need to evaluate
systematically not only the basis for
selecting a specific alternative in the first
Problem solving place, but its degree of success following
implementation.
Problem solving is the process of analysing and un-
derstanding a problem, diagnosing its cause and de-
ciding on a solution that solves the problem and Problems and opportunities
prevents it being repeated. You will often have to
react to problems as they arise, but as far as possible It is often said that ‘there are no problems, only
a proactive approach is desirable, involving antici- opportunities’. This is not universally true, of
pating potential problems and dealing with them in course, but it does emphasize the point that a
advance by taking preventative action using the problem should lead to positive thinking about
normal approaches to problem solving set out what is to be done now, rather than to recrimina-
below. Proactive problem solving may require crea- tions. If a mistake has been made, the reasons for
tive thinking; the approach to problem solving is it should be analysed to ensure that it does not
affected by decision theory. happen again.
Improving your skills everyone arrives jointly at a solution, freely agreed

to be the one best suited to the situation (the law of
How can you improve your ability to solve prob- the situation again).
lems? There are a few basic approaches you should Further consideration of the processes of evalu-
use as discussed below. ating evidence and options and to the consulting
skills used in problem solving is given in the next
Improve your analytical ability chapter.
A complicated situation can often be resolved by sep-
arating the whole into its component parts. Such an Twelve problem-solving steps
analysis should relate to facts, although, as Peter
Drucker (1955) pointed out, when trying to under- The 12 steps of problem solving are:
stand the root causes of a problem you may have to
1 Define the situation – establish what has
start with an opinion. Even if you ask people to search
gone wrong or is about to go wrong.
for the facts first, they will probably look for those
facts that fit the conclusion they have already reached. 2 Specify objectives – define what is to be
Opinions are a perfectly good starting point as achieved now or in the future to deal with
long as they are brought out into the open at once and an actual or potential problem or a change
then tested against reality. Analyse each hypothesis in circumstances.
and pick out the parts that need to be studied and 3 Develop hypotheses – develop hypotheses
tested (analytical skills are covered in Chapter 59). about what has caused the problem.
Mary Parker Follett’s (1924) ‘law of the situation’ – 4 Get the facts – find out what has actually
the logic of facts and events – should rule in the end. happened and contrast this with an
assessment of what ought to have happened.
Be creative This is easier said than done. Insidious
political factors may have contributed to the
A strictly logical answer to the problem may not be
problem and could be difficult to identify
the best one. Creative thinking is often necessary to
and deal with. The facts may not be clear
develop an entirely new approach.
cut. They could be obscured by a mass of
conflicting material. There may be lots of
Keep it simple opinions but few verifiable facts. Remember
One of the basic principles of problem solving is that people will see what has happened in
known as Occam’s razor. It states that ‘entities are terms of their own position and feelings
not to be multiplied without necessity’. That is, al- (their framework of reference). Try to
ways believe the simplest of several explanations. understand the political climate and the
attitudes and motivation of those
concerned. Bear in mind that, as Pfeffer
Focus on implementation (1996: 36) commented, ‘smart organizations
A problem has not been solved until the decision has occasionally do dumb things’. Obtain
been implemented. Think carefully not only about information about internal or external
how a thing is to be done (by whom, with what re- constraints that affect the situation.
sources and by when) but also about what will hap-
5 Analyse the facts – determine what is
pen when it is put into effect – its impact on the
relevant and what is irrelevant. Diagnose the
organization, the people concerned and the extent to
likely cause or causes of the problem. Do
which they will cooperate. Unforeseen consequences
not be tempted to focus on symptoms rather
can upset the most carefully prepared plans.
than root causes. Test any assumptions.
Distinguish between opinions and facts. Dig
Involve people into what lies behind the problem.
You will get less cooperation if you impose a solu- 6 Identify possible courses of action – spell
tion. The best method is to arrange things so that out what each involves.
Chapter 58 | Problem-solving and Decision-making Skills 631
7 Evaluate alternative courses of action – ●● intelligence: finding occasions for making a

assess the extent to which they are likely to decision;
achieve the objectives, the cost of ●● design: inventing, developing and analysing
implementation, any practical difficulties possible courses of action;
that might emerge and the possible
●● choice: selecting a particular course of action
reactions of stakeholders. Consider possible
from those available; and
consequences. Critical evaluation
techniques, as described in Chapter 59, can ●● review: assessing past choices.
be used for this purpose. However, Simon (1979) put forward his concept of
8 Weigh and decide – determine which bounded rationality, admitting that the rational man-
alternative is likely to result in the most ager does not always have complete information and
practical and acceptable solution to the that optimal choices are not always required. What is
problem. This is often a balanced done in organizations with the evidence depends
judgement. Decision making is considered largely on the context in which it is done. Cultural,
in more detail below. social and political factors influence perceptions and
9 Decide on the objective – set out goals for judgements, and the extent to which people behave
implementation of the decision. rationally is limited by their capacity to understand
the complexities of the situation they are in and by
10 Adopt a ‘means-end’ approach where
their emotional reactions to it.
appropriate – in complicated situations with
long-term implications it may be useful to
identify the steps required and select an
action at each step that will move the
Characteristics of the decision-
process closer to the goal. making process
11 Plan implementation – prepare a timetable The doyen of management thinkers, Peter Drucker
and identify and assemble the resources (1955: 310), noted that ‘a good deal of decision
required. making tends to centre on problem solving, that is,
12 Implement – monitor progress and evaluate on giving answers. And that is the wrong focus.
success. Remember that a problem has not Indeed the most common source of mistakes in
been solved until the decision has been management decisions is the emphasis on finding
implemented. Always work out the solution the right answer rather than the right question.’ The
to a problem with implementation in mind. following is his later description of the
decision-making process:
Decision making
Decision making is essentially about making choices,
often in conditions of uncertainty. This involves ana-
Word s of w isd om
lysing a situation or problem, identifying possible A decision is a judgement. It is a choice
courses of action, weighing them up, defining the
between alternatives. It is rarely a choice
preferred action, implementing it and evaluating its
effectiveness. Decision-making theory provides a between right and wrong. It is at best a
background to the process of decision making and choice between almost right and probably
the skills required.
wrong – but much more often a choice
between two courses of action, neither of
Decision-making theory which is probably more nearly right than
Decision-making theory is concerned with the ra- the other.
tional model that assumes that a rational manager
Drucker (1967: 120)
follows a logical sequence of steps such as those
given by Simon (1977):
He also argued that the best decisions emerge from conclusions about the nature of the
conflicting viewpoints and that you should not ex- situation and what should be done about it.
pect or even welcome a bland consensus view. He 5 Be careful about assumptions – we have a
observed that: ‘The first rule in decision making is tendency to leap to conclusions and seize on
that one does not make a decision unless there is assumptions that support our case and
disagreement’ (ibid 124). You can benefit from a ignore the facts that might contradict it.
clash of opinion to prevent falling into the trap of
6 Learn from the past – build on your
starting with the conclusion and then looking for
experience in decision making; what
the facts that support it.
approaches work best. But don’t rely too
much on precedents. Situations change. The
right decision last time could well be the
Ten approaches to decision making wrong one now.
1 Define the problem – as Drucker (1955: 7 Be systematic – adopt a rigorous problem-
312) emphasized: ‘The first job in decision solving approach as described earlier in this
making is to find the real problem and to chapter.
define it.’ 8 Talk it through – before you make a
2 Avoid procrastination – it is easy to put an significant decision talk it through with
e-mail demanding a decision into the ‘too someone who is likely to disagree so that
difficult’ section of your actual or mental any challenge they make can be taken into
in-tray. Avoid the temptation to fill your account (but you have to canvass opinion
time with trivial tasks so that the evil swiftly).
moment when you have to address the issue 9 Leave time to think it over – swift decision
is postponed. Make a start. Once you have making is highly desirable but you must
got going you can deal with the unpleasant avoid knee-jerk reactions. Pause, if only for
task of making a decision in stages. A a few minutes, to allow yourself time to
challenge often becomes easier once we think through the decision you propose to
have started dealing with it. Having spent make. And confirm that it is logical and
five minutes on it we don’t want to feel it fully justified.
was time wasted, so we carry on and 10 Consider the potential consequences – This is
complete the job. called ‘consequence management’. Every
3 Expect the unexpected – you are then in the decision has a consequence, and you should
frame of mind needed to respond decisively consider very carefully what that might be
to a new situation. and how you will manage it. When making a
4 Think before you act – this could be a decision it is a good idea to start from where
recipe for delay, but decisive people use you mean to end – define the end result and
their analytical ability to come to swift then work out the steps needed to achieve it.
Key learning points
Problem solving To improve problem-solving skills it is necessary to:

improve your analytical ability, be creative, keep it
Problem solving is a constant feature of life in simple and focus on implementation.
organizations and elsewhere. It is the process of The 12 steps of problem solving are:
analysing and understanding a problem, diagnosing its
cause and deciding on a solution that solves the 1 Define the situation.
problem and prevents it being repeated. 2 Specify objectives.
Chapter 58 | Problem-solving and Decision-making Skills 633
3 Develop hypotheses. 11 Implement

4 Get the facts. 12 Review and evaluate.
5 Analyse the facts.
6 Identify possible courses of action. Decision making
7 Evaluate alternative courses of action. Decision making is essentially about making choices,
8 Weigh and decide. often in conditions of uncertainty. This involves analysing
9 Decide on the objective. a situation or problem, identifying possible courses of
action, weighing them up, defining the preferred action,
10 Plan implementation.
implementing it and evaluating its effectiveness.
References
Drucker, P (1955) The Practice of Management, Pfeffer, J (1996) When it comes to ‘best practices’,
London, Heinemann why do smart organizations occasionally do dumb
Drucker, P (1967) The Effective Executive, London, things? Organizational Dynamics, Summer, pp
Heinemann 33–44
Follett, M P (1924) Creative Experience, New York, Simon, H A (1977) The New Science of Management
Longmans Green Decision, Englewood Cliffs, NJ, Prentice Hall
Legge, K (1978) Power, Innovation and Problem Simon, H A (1979) Rational decision making in
Solving in Personnel Management, Maidenhead, business organizations, American Economic
McGraw-Hill Review, 69 (4), pp 493–513
634
59
Analytical and critical skills
Analytical skills are used to gain a better under-
Introduction standing of a complex situation or problem. They
involve the ability to visualize, articulate and solve
The effectiveness of HR initiatives and the processes complex problems and concepts and make decisions
of problem solving and decision making in which based on available information. Analytical skills in-
HR practitioners are constantly involved depend clude the capacity to evaluate that information to
largely on thorough analysis, logical reasoning and assess its significance, and the ability to apply logical
critical thinking as described in this chapter. These and critical thinking to the situation. They provide
processes are the basis for evidence-based manage- the basis for a diagnosis of the cause or causes of a
ment as covered in Chapter 11. problem and therefore for its solution. Importantly,
Analytical and critical skills are needed to pro- they are a means of gaining insight into issues that
vide for clear and logical thinking – a necessary skill affect the success of the business and which influ-
for HR professionals who are constantly faced with ence business and HR strategy.
problems to be solved and decisions to be made.
The following are words of wisdom from the phi-
losopher L Susan Stebbing (1939), largely forgotten
now but influential in her day. She certainly influ-
Logical reasoning
enced the writer in his student days at the London
If you say people are logical, you mean that they
School of Economics and that influence has contin-
draw reasonable inferences – their conclusions can
ued ever since.
be proved by reference to the facts used to support
them – and they avoid ill-founded and tendentious
arguments, generalizations and irrelevancies. Logical
Analytical skills reasoning is the basis of critical thinking and evalua-
tion. It takes place when there is a clear relationship
Analysis is the process of breaking down a condition (a line of reasoning) between the premise (the origi-
or state of affairs into its constituent parts and estab- nal proposition) and the conclusion, which is sup-
lishing the relationships between them. In the ported by valid and reliable evidence and does not
Aristotelian sense, analysis involves discerning the rely on fallacious or misleading argument. Logical
particular features of a situation. Note should be reasoning is what Stebbing (1959) called ‘Thinking
taken of attribution theory which deals with how in- to some purpose’. Clear thinking is required to estab-
dividuals explain the causes of behaviour and events. lish the validity of a proposition, concept or idea.
The validity of such explanations depends on: It is necessary to question assumptions, especially
●● the degree of distinctiveness – the event and when a belief is expressed as a fact. You need to ask
its effect are highly observable; yourself – and others – ‘What’s the evidence for
●● consistency – the event and its effect present that?’ You have to spot fallacious and misleading ar-
themselves as being the same across time; and guments. A fallacy is an unsound form of argument
leading to an error in reasoning or a misleading im-
●● consensus – there is agreement among pression. The most common form of fallacies that
individuals’ views of the relationship need to be discerned in other people’s arguments or
between the event and its effect. avoided in one’s own are summarized below:
Chapter 59 | Analytical and Critical Skills 635
Affirming the consequent – leaping to the

●●
conclusion that a hypothesis is true because a
Critical thinking
single cause of the consequence has been
observed. Critical thinking is the process of analysing and
evaluating the quality of ideas, theories and con-
●● Begging the question – taking for granted cepts to establish the degree to which they are valid
what has yet to be proved. and supported by the evidence and the extent to
●● Chop logic – ‘Contrarywise,’ said Tweedledee, which they are biased. It involves reflecting on and
‘if it was so, it might be, and if it were so, it interpreting data, drawing warranted conclusions
would be; but as it isn’t, it ain’t. That’s logic.’ and recognizing ill-defined assumptions.
Chop logic may not always be as bad as that, ‘Critical’ in this context does not mean disap-
but it is about drawing false conclusions and proval or being negative. There are many positive
using dubious methods of argument. For uses of critical thinking, for example testing a hy-
example: selecting instances favourable to a pothesis, proving a proposition or evaluating a con-
contention while ignoring those that are cept, theory or argument. Critical thinking can occur
counter to it, twisting an argument used by an whenever people weigh up evidence and make a
opponent to mean something quite different judgement, solve a problem or reach a decision. The
from what was intended, diverting opponents aim is to come to well-reasoned conclusions and so-
by throwing on them the burden of proof for lutions and to test them against relevant criteria and
something they have not maintained, ignoring standards. Critical thinking calls for the ability to:
the point in dispute, changing the question to
one that is less awkward to answer, and ●● recognize problems and establish ways of
reiterating what has been denied and ignoring dealing with them;
what has been asserted. Politicians know all ●● gather and marshal pertinent (relevant)
about chop logic. information;
●● Confusing correlation with causation – ●● identify unstated assumptions and values;
assuming that because A is associated with B ●● interpret data, to appraise evidence and to
it has caused B. It may or may not. evaluate arguments;
●● False antithesis – the error of thinking two ●● recognize the existence (or non-existence) of
things are in opposition to one another when logical relationships between propositions;
really they are not. ●● draw warranted conclusions and make valid
●● False choice – a situation in which only two generalizations;
alternatives are considered, when in fact ●● test assertions, conclusions and
there are additional options. generalizations;
●● Potted thinking – using slogans and ●● reconstruct ideas or beliefs by examining and
catchphrases to extend an assertion in an analysing relevant evidence.
unwarrantable fashion.
●● Reaching false conclusions – forming the
view that because some are, then all are. An Critical evaluation
assertion about several cases is twisted into
an assertion about all cases. The conclusion Critical evaluation is the process of making in-
does not follow the premise. This is what formed judgements about the validity, relevance
logicians call the ‘undistributed middle’. and usefulness of ideas and arguments. Critical
●● Selective reasoning – selecting instances evaluation means not taking anything for granted
favourable to a contention while ignoring and, where necessary, challenging propositions. It
those that conflict with it. uses critical thinking by analysing and evaluating
the quality of theories and concepts to establish the
●● Sweeping statements – over-simplifying the facts.
degree to which they are valid and supported by the
●● Special pleading – focusing too much on evidence (evidence-based) and the extent to which
one’s own case and failing to see that there they are biased. The arguments for and against are
may be other points of view. weighed and the strength of the evidence on both
sides is assessed. On the basis of this assessment, a 7 Are inferences, findings and conclusions
conclusion is reached on which proposition or ar- derived from reliable and convincing
gument is to be preferred. Critical evaluation is re- evidence?
quired when testing propositions and evaluating the 8 Has a balanced approach been adopted?
outcomes of research.
9 Have any underlying assumptions been
identified and justified?
Testing propositions 10 Have the component parts been covered in
terms of their interrelationships and their
Propositions based on research investigations and relationship with the whole?
evidence can be tested by using the following
11 Have these component parts been
checklist:
disaggregated for close examination?
●● Was the scope of the investigation sufficiently 12 Have they been reconstructed into a coherent
comprehensive? whole based on underlying principles?
●● Are the instances representative or are they
It is worth repeating that critical evaluation does
selected simply to support a point of view?
not necessarily mean negative criticism; it means
●● Are there contradictory instances that have reaching a judgement based on analysis and evi-
not been looked for? dence, and the judgement can be positive as well as
●● Does the proposition conflict with other negative.
propositions for which there are equally
good grounds?
●● If there are any conflicting beliefs or Developing and justifying
contradictory items of evidence, have they
been put to the test against the original
arguments
proposition?
An argument as an aspect of critical thinking con-
●● Could the evidence lead to other equally sists of a presentation of reasons that support a con-
valid conclusions? tention. It consists of:
●● Are there any other factors that have not been
●● a proposition or statement that expresses a
taken into account that may have influenced
point of view or belief;
the evidence and, therefore, the conclusion?
●● the reasoning that makes a case for the
proposition or point of view;
Critically evaluating research ●● a discussion, the aim of which is to get the
reader or listener to agree with the case that
Putting the outcomes of research, for example ma-
has been made;
terial published in academic journals, to the test re-
quires critical evaluation and the following checklist ●● a conclusion that sums up the argument and
can be used: its significance.
1 Is the research methodology sufficiently

rigorous and appropriate? Developing an argument
2 Are the results and conclusions consistent An argument is based (predicated) on a premise (the
with the methodology used and its outcomes? proposition) that sets out the underpinning assump-
3 Is the perspective adopted by the researchers tion. There may be more than one proposition or as-
stated clearly? sumption. It could be phrased something like this:
4 Have hypotheses been stated clearly and ‘The argument is that A is the case. It is predicated on
tested thoroughly? the assumption that B and C apply.’ In a sense this sug-
gests what conclusion the argument is intended to
5 Do there appear to be any misleading errors
reach but it also indicates that this conclusion depends
of omission or bias?
on the validity of the assumptions, which will have to
6 Are any of the arguments tendentious? be proved (there are such things as false premises).
Chapter 59 | Analytical and Critical Skills 637
Justifying an argument A final word

The argument continues by supplying reasons to ac-
cept the proposition or point of view. These reasons In these Brexit times (this is being written in May
have to be supported by evidence, which should be 2019) it is interesting to recall what L Susan
based on valid research, rigorous observation, or Stebbing wrote 80 years ago:
relevant and verifiable experience, not on hearsay. It
involves logical reasoning, which avoids the falla-
cies referred to earlier and requires critical thinking,
which means coming to well-reasoned conclusions Word s of w isd om
and solutions and testing them against relevant cri- I am convinced of the urgent need for a
teria and standards. It also demands critical evalua-
tion, which means reflecting on and interpreting
democratic people to think clearly without
data, drawing warranted conclusions and identify- the distortions due to unconscious bias and
ing faulty reasoning, assumptions and biases. unrecognized ignorance.
Assumptions have to be tested rigorously and re-
Stebbing (1939: 6)
search evidence has to be evaluated. The checklists
set out above can be used for this purpose.
Key learning points
Basis of the processes of problem solving Logical reasoning

and decision making Logical reasoning involves clear thinking to establish
The processes of problem solving and decision making the validity of a proposition, concept or idea.
depend largely on effective analysis, critical thinking
and evaluation. Critical thinking
Critical thinking clarifies goals, examines assumptions,
Evidence-based management discerns hidden values, evaluates evidence,
Evidence-based management is a method of informing accomplishes actions and assesses conclusions.
decision making by making use of appropriate
information derived from the analysis of HR policy and Critical evaluation
practices and surveys of employee opinion within the
Critical evaluation involves making informed
organization, systematic benchmarking, and the
judgements about the value of ideas and arguments.
messages delivered by relevant research.
Analytical skills Developing and justifying original

arguments
Analysis is the process of gaining a better
understanding of a complex situation or problem by An argument as an aspect of critical thinking consists
breaking it down into its constituent parts and of a presentation of reasons that support a
establishing the relationships between them. contention.
Reference
Stebbing, L S (1939) Thinking to Some Purpose,
Harmondsworth, Penguin Books
638
60
Research skills
within the framework of existing theory and knowl-
Introduction edge. Logic and rational argument are methods of
testing ideas after they have been created.
HRM specialists and those studying for HR profes- What emerges from research is a theory – a well-
sional qualifications may be involved in conducting established explanatory principle that has been
or taking part in research projects. Postgraduate tested and can be used to make predictions of future
students frequently do so. Qualified HR specialists developments. Kurt Lewin (1945: 129) wrote that
should keep up to date as part of their continuous ‘Nothing is as practical as a good theory’. A ‘good’
professional development by studying publications theory is produced by clear, logical and linear devel-
that present research findings, such as those pro- opment of argument with a close relationship be-
duced by the CIPD or the IES, or by reading articles tween information, hypothesis and conclusion.
in academic journals. Students must extend their Quality of information is a criterion for good re-
understanding of HRM through reading about research, as is the use of critical evaluation techniques.
search findings. The production of narratives that depict events
The purpose of this chapter is to describe the (case studies) or the collection of data through sur-
skills and techniques used in research and explain veys are elements in research programmes, but they
what is involved in planning and conducting r esearch can stand alone as useful pieces of information that
projects. This will be done against the background illustrate practice. Research can be based on a phi-
of a brief review of the nature and philosophy of losophy of positivism or phenomenology.
research.
Positivism
The nature of research Positivism is the belief that researchers should focus
on facts (observable reality), look for causality and
The conduct of science has been described as
fundamental laws, reduce phenomena to their sim-
follows:
plest elements (reductionism), formulate hypotheses
Researchers collect and analyse data, develop and then test them. Researchers are objective ana-
hypotheses, replicate and extend earlier work, lysts. The emphasis in positivism is on quantifiable
communicate their results with others, [and] observations that lend themselves to statistical anal-
review and critique the results of their peers. ysis. It tends to be deductive.
(Committee on Science, Engineering and Public
Policy, 1995)
Research is concerned with establishing what is and Phenomenology
from this predicting what will be. It does not decide Phenomenology focuses more on the meaning of
what ought to be; that is for people interpreting the phenomena than on the facts associated with them.
lessons from research in their own context. Research Researchers adopting this philosophy try to under-
is about the conception and testing of ideas and hy- stand what is happening. Their approach is holistic,
potheses. This is a creative and imaginative process, covering the complete picture, rather than reduc-
although new information is normally obtained tionist. Researchers collect and analyse evidence,
Chapter 60 | Research Skills 639
but their purpose is to use this data to develop ideas 4 Develop theoretical framework. It is
that explain the meaning of things. They believe necessary to conduct the research within a
that reality is socially constructed rather than objec- clear theoretical framework. This will set out
tively determined. Using a phenomenological ap- the models, concepts and theories that can be
proach means that the research unfolds as it drawn on and developed to provide an
proceeds – early evidence is used to indicate how to answer to the research question. If an
move on to the next stage of evidence collection and appropriate framework does not exist, a
analysis, and so on. It tends to be inductive. grounded theory approach may be required
in which the researcher uses empirical
evidence directly to establish the concepts
Planning and conducting and relationships that will be contained in
the theory adopted as the research
research programmes framework. It is important to be clear about
the assumptions, conditions and limitations
Against this background, the steps required to plan that impinge on the investigation.
and conduct a research programme are:
5 Finalize the research question. The initial
1 Define research area. This should be one research question needs to be finalized in the
that interests the researcher and has a clear light of the outcome of the earlier steps. The
link to an accepted theory or an important final research question will identify the issues
issue worth exploring. The research should to be explored and the problems to be
generate fresh insights into the topic. It is investigated. It will include a statement of
necessary to undertake background reading intent, which will set out what the research is
at this stage by means of a preliminary to achieve. This statement leads to the
review of the literature (particularly formulation of the hypotheses or
academic journals but also books, propositions that will be tested by survey or
especially those based on research) to experiment during the research programme.
identify what has already been achieved in 6 Formulate hypotheses or propositions. A
this area and any gaps (academic articles hypothesis provisionally states a relationship
often include proposals on further between two concepts in such a way that the
research). The context within which the consequences of the statement being true can
research is to be carried out needs to be be tested. Hypotheses (there may be more
explained and justified. than one) indicate the form the research
2 Formulate initial research question. This project will take in the shape of obtaining and
provides a rationale for the research. It is in analysing the evidence required to test them.
effect a statement that answers the questions: Hypotheses may be attached to the statement
‘What is this research project intended to of the research question. A proposition is a
address and what is its potential contribution proposal put forward as an explanation of an
to increasing knowledge?’ At this stage it is event, a possible situation or a form of
based on the outcome of the initial work behaviour that will be tested by the research.
carried out in step 1, but it will be refined 7 Design the research. This means considering
and reformulated at a later stage when more initially what research philosophy will be
information about the research has been adopted. Is it to be positivist,
made available. phenomenological, or both? It is then
3 Review literature. A literature review will necessary to establish the methodology. A
focus mainly on academic journals. The aim decision will need to be made as to the
is to establish what is already known about extent to which the research will be
the topic, identify existing theoretical quantitative, qualitative or, again, a
frameworks and find out what other relevant combination of the two and on the methods
research has been carried out. to be used as described below.
8 Draw up research programme. This will and field work. The methodology can include the
cover how the research will be conducted, use of triangulation, integrative synthesis and quan-
the timetable and the resources (funding, titative or qualitative research.
people, software, etc) required. Careful
project planning is essential.
9 Prepare and submit proposal. This will
Triangulation
justify the research by setting out the Triangulation takes place when information is ob-
research question, the proposed tained from more than two sources, for example, sur-
methodology, and how the research is veys, case studies and literature reviews. Greater
intended to increase knowledge and confidence can be attached to a result if different
understanding. It will also describe the methods lead to the same answer. If a researcher uses
programme and the resources required. only one source this may be misleading or random. If
10 Conduct the research project. This includes two sources are used the results may clash. If three
obtaining and analysing the evidence from sources are used, the hope is that two of the three will
the various sources needed to answer the produce similar answers, or if three clashing answers
research question and prove or disprove are produced, the researcher knows that the question
hypotheses. The significance of the findings needs to be reframed, methods reconsidered, or both.
in relation to the research question and the
hypotheses will be discussed and reference
will be made to relevant information
Integrative synthesis
provided in the literature. This involves an Integrative synthesis involves the collection and com-
extended literature review, data collection, parison of evidence involving two or more data col-
the use of logical, analytical and critical lection methods. It investigates patterns across
thinking processes and the use of statistical published research studies, compensating for single-
analysis where relevant. study weaknesses in research design to improve the
11 Develop conclusions. These draw together all internal and external validity of the various research
the evidence. They provide the answer to the findings. It relies on the judgement of researchers, but
research question and explain why around a structured framework and set of q uestions.
hypotheses have been accepted or rejected.
The significance of the findings will also be
assessed in terms of how they contribute to Cross-lagged models
the development of existing knowledge and Cross-lagged models are longitudinal statistical
understanding. Any limitations to the study panel studies in which two or more variables are
should also be mentioned. measured for a large number of subjects at each of
12 Make recommendations. These set out any several waves or points in time. The variables divide
guidelines emerging from the research. They naturally into two sets and the primary purpose of
may also indicate any follow-up actions the analysis is to estimate and test the cross-effects
required if the research has been conducted between these two sets.
within an organization.
Quantitative research
Research methodology Quantitative research is empirical – based on the
collection of factual data, which is measured and
Research methodology involves the collection and quantified. It answers research questions from the
analysis of evidence and testing hypotheses or prop- viewpoint of the researcher. It may involve a consid-
ositions. The sources of evidence and how they will erable amount of statistical analysis, using methods
be accessed will be identified. This will include the for collecting the data through questionnaires, sur-
analysis of primary and secondary source docu- veys, observation and experiment. The collection of
ments, further literature reviews, interviews, surveys data is distinct from its analysis.
Qualitative research their order to suit the special characteristics

of each interviewee. It may avoid the
Qualitative research aims to generate insights into problems of the completely structured or
situations and behaviour so that the meaning of unstructured interview but it does require a
what is happening can be understood. It emphasizes considerable degree of skill on the part of the
the interpretation of behaviour from the viewpoint interviewer.
of the participants. It is based on evidence that may
not be easily reduced to numbers. It makes use of Interviews are basically qualitative but they can be-
interviews, case studies and observation but it may come more quantitative by the use of content analy-
also draw on the information obtained from sur- sis. This records the number of times references are
veys. It may produce narratives or ‘stories’ describ- made in an interview to the key issues or areas of
ing situations, events or processes. interest it was intended to cover.
The advantages of interviews are that they ob-
tain information directly from people involved in
Methods of collecting data the area being researched and can provide insights
into attitudes and perspectives that questionnaires
and surveys will not reveal, thus promoting in-
The main methods of collecting data are interviews,
depth understanding. They enable the interviewer
questionnaires, surveys, case studies, observation,
to probe answers and check that questions had been
diaries and experimental designs.
understood. But the disadvantages are that:
●● the construction of the interview questions may
Interviews result in leading questions or bland answers;
Interviews are an important research method. They ●● interviewers may influence the interviewees’
obtain factual data and insights into attitudes and reactions by imposing their own reference
feelings and can take three forms: frame;
●● respondents may tell interviewers what they
1 Structured, which means that they obtain
want to hear;
answers to a pre-prepared set of questions.
This ensures that every topic is covered and ●● they are time-consuming – to set up, to
minimizes variations between respondents. conduct and to analyse;
But they may be too rigid and inhibit ●● they require considerable interviewing skills,
spontaneous and revealing reactions. including the abilities to recognize what is
2 Unstructured, which means that no questions important and relevant, to probe when
have been prepared in advance and the person necessary, to listen and to control the
being interviewed is left free to talk about the interview so that it covers the ground it was
subject without interruption or intervention. intended to cover.
Such ‘non-directive’ interviews are intended to
provide greater insight into the interviewee’s
perspective, avoid fitting respondents into Questionnaires
pre-determined categories and enable Questionnaires collect data systematically by ob-
interviewers to explore issues as they arise. taining answers on the key issues and opinions that
But they can be inconsequential and lead to need to be explored in a research project. They are
poor data that is difficult to analyse. frequently used as a means of gathering informa-
3 Semi-structured, which means that the areas tion on matters of fact or opinion. They use a vari-
of interest have been pre-determined and the ety of methods, namely: closed questions that
key questions to be asked or information to require a yes or no answer, ranking in order of im-
be obtained have been identified. The portance or value, or Likert scales. The latter, named
interviewer may have a checklist but does after Rensis Likert, the American sociologist who
not follow this rigidly. This approach enables invented them, ask respondents to indicate the ex-
the interviewer to phrase questions and vary tent to which they agree or disagree with a statement.
For example, in response to a statement such as, ‘I Surveys

like my job’ the choice may be 1 strongly agree, 2
agree, 3 disagree, 4 strongly disagree. Alternatively, Surveys obtain information from a defined popula-
an extended scale may be used and respondents tion of people. Typically, they are based on ques-
asked to ring round the number that reflects their tionnaires but they can provide more powerful data
view about the statement (the higher the number than other methods by using a combination of
the greater the agreement), for example: My contri- questionnaires and interviews and, possibly, focus
bution is fully recognized 1 2 3 4 5 6 7. Extended groups (groups of people gathered together to an-
scales facilitate the quantitative analysis of re- swer and discuss specific questions). When develop-
sponses to questionnaires. ing and administering surveys the issues are:
To construct and use a questionnaire effectively
●● The definition of the purpose of the survey
it is necessary to:
and the outcomes hoped for – these must be
1 Identify the key issues and potential as precise as possible.
questions. ●● The population to be covered – this may
2 Ensure questions are clear. involve a census of the whole population.
3 Avoid asking two questions in one item. Alternatively, if the population is large,
sampling will be necessary (see below).
4 Avoid leading questions that supply their
own answers. ●● The choice of methods – relying entirely on
questionnaires may limit the validity of the
5 Decide on the structure of the questionnaire findings. It is better, if time and the
including its length (not too many items) availability of finance permit, to complement
and the type of scale to be used. them with interviews and, possibly, focus
6 Code questions for ease of analysis. groups. Consideration has to be given to the
7 Start with simple factual questions, moving extent to which triangulation (comparing the
on later to items of opinion or values. information obtained from more than two
8 Add variety and the opportunity to check sources) is appropriate.
consistency by interspersing positive ●● The questions to which answers are required,
statements such as, ‘I like working for my whichever method is used.
boss’ with occasional associated negative ●● The design of questionnaires and the ways in
ones such as, ‘I do not get adequate support which interview or focus groups, if used,
from my boss’. should be structured.
9 Pilot test the questionnaire. ●● How the outcome of the survey will be
10 Code results and analyse. Where rating analysed and presented, including the use of
scales have been used the analysis can be case studies.
quantified for comparison purposes.
Content analysis can be used to analyse Sampling
narrative answers to open-ended questions.
In using surveys, and possibly other methods, it may
Questionnaires can effectively gather factual evi- not be feasible to cover the whole population (the
dence but are not so useful for researchers who sampling frame) and sampling will therefore be nec-
are investigating how or why things are happen- essary. Sampling means that a proportion of the
ing. It is also impossible to assess the degree of total population is selected for study and the aim is
subjectivity that has crept in when expressing to see that this proportion represents the character-
opinions. For example, HR managers may give an istics of the whole population. The sample must not
opinion of the extent to which a performance- be biased and that is why in large-scale surveys use
related pay scheme has in fact improved perfor- is made of random sampling, ie the individuals cov-
mance but the evidence to support that opinion ered by a survey are not selected in accordance with
will be lacking. This is where interviews can be any criteria except that they exist in the population
more informative. and can be reached by the survey. It is the equivalent
of drawing numbers out of a hat. However, if the ●● how the case study should be set up,
sample frame is considered to be already arranged including informing those involved of what
randomly, as in the electoral roll, then structured is taking place and enlisting their support;
sampling, that is sampling at regular intervals, can ●● the schedule of interviews and other evidence
be employed. collection activities;
Sampling can produce varying degrees of error
●● how the case study database recording the
depending on the size of the sample. Statistical tech-
evidence will be set up and maintained;
niques can be used to establish sample errors and
confidence limits. For example, they might establish ●● how the case study will be presented –
that a sampling error is 3 per cent and the confidence including the chain of evidence so that the
limit is 95 per cent. This could be reasonably satisfac- reader can follow the argument and trace the
tory, depending on the nature of the research (medi- development of events, the headings and
cal research aims to achieve 100 per cent confidence). report guidelines (these may be finalized
during the course of the exercise) and whether
or not the name of the organization will be
Case studies revealed on publication (named cases studies
are more convincing than anonymous ones);
A research case study is a description of a situation
●● how approval will be sought for the
or a history of an event or sequence of events in a
publication of the case study, especially if it
real-life setting that illustrates a particular area of in-
reveals the name of the organization.
terest, for example, how a performance management
system has been developed and works. In learning Case studies are useful ways of collecting informa-
and development, case studies are analysed by those tion on the reality of organizational life and pro-
involved to learn something by diagnosing the causes cesses. But there is a danger of them being no more
of a problem and working out how to solve it. than a story or an anecdote that does not contribute
Case studies are used extensively in HRM re- to greater knowledge or understanding. Much skill
search as a means of collecting empirical evidence in and persistence are required from the researcher in
a real-life context. Information is obtained about a gaining support, ensuring that relevant and reveal-
situation, an event or a set of events that establishes ing information is obtained, and presenting the case
what has happened, how it happened and why. Case study as a convincing narrative from which valid
studies provide information that contributes to the and interesting conclusions can be derived. All this
creation of a theory as part of a grounded theory ap- must be done without taking a biased view, which
proach or the validation of an established theory. In can be difficult.
addition, they can take the form of stories or narra-
tives that illuminate a decision or a set of decisions,
why they were taken, how they were implemented Observation
and with what result. They can illustrate a total situ-
Observation of individuals or groups at work is a
ation and describe the processes involved and how
method of getting a direct and realistic impression of
individuals and groups behave in a social setting.
what is happening. It can be done by a detached or
Case study protocol sets out the objectives of the
an involved observer, or by participant observation.
research, how the case study will support the achieve-
Detached observers who simply study what is
ment of those objectives, including the evidence re-
going on without getting involved with the people
quired, and how the work of producing the case
concerned may only get a superficial impression of
study will be conducted. The methodology covers:
what is happening and may be resented by the peo-
●● sources of evidence – interviews, observation, ple under observation as ‘eavesdropping’. Involved
documents and records; observers work closely with employees and can
●● the need to use multiple sources of evidence move around, observe and participate as appropri-
(triangulation) so far as possible; ate. This means that they can get closer to events and
are more likely to be accepted, especially if the ob-
●● the questions to which answers need to be
jectives and methods have been agreed in advance.
obtained;
Participant observation in the fullest sense means necessarily follows from general or universal prem-
that the researcher becomes an employee and expe- ises. If the premises are correct, so is the deduction.
riences the work and the social processes that take The conclusion is therefore contained within the
place at first hand. This can provide powerful in- evidence. It is not a creative or imaginative argu-
sights but is time-consuming and requires consider- ment that produces new ideas.
able skill and persistence.
The issues with any form of observation are getting
close enough to events to understand their significance Induction
and then analysing the mass of information that might
Research can also be based on induction, which is
be produced in order to come up with findings that
the process of reaching generalized conclusions
contribute to answering the research question.
from the observation of particular instances. In con-
trast to deduction, inductive conclusions may be
tentative but they contain new ideas. In research,
Diaries both deductive and inductive reasoning can be used
Getting people to complete diaries of what they do in hypothesis testing.
is a method of building a realistic picture of how
people, especially managers, spend their time.
Hypothesis testing
Formulating a hypothesis is an important element
Experimental designs in a research project in that it provides a basis for
Experimental designs involve setting up an experi- the development of theory and the collection and
mental group and a control group and then placing analysis of data. A hypothesis is a supposition – a
subjects at random in one or other group. The con- tentative explanation of something. It is a provi-
ditions under which the experimental group func- sional statement that is taken to be true for the pur-
tions are then manipulated and the outcomes pose of argument or a study and usually relates to
compared with the control group, whose conditions an existing wider body of knowledge. A hypothesis
remain unchanged. The classic case of an experi- has to be tested and should be distinguished from a
mental design was the Hawthorne study, the results theory which is an explanation of something that
of which had a major impact on thinking about has been tested. A working hypothesis is a general
how groups function and on the human relations hypothesis that has been operationalized so that it
movement. But this was exceptional. It is much eas- can be tested.
ier to use experiments in a laboratory setting which Hypothesis formulation and testing uses the
has been done many times with students. But there strengths of both deductive and inductive processes;
is always the feeling that such experiments do not the former entirely conclusive but unimaginative,
reflect real-life conditions. the latter tentative but creative. Induction produces
ideas and deduction tests them.
To test a hypothesis, data has to be obtained that
Processes involved will demonstrate that its predicted consequences are
true or false. Simply leaping to the conclusion that a
in research hypothesis is true because a single cause of the con-
sequence has been observed falls into the trap of
This section describes the logical, analytical and what logicians call the ‘fallacy of affirming the con-
critical thinking processes that are used in research: sequent’. There may be alternative and more valid
deduction, induction, hypothesis testing, grounded causes. The preferred method of testing is that of
theory, paradigms and critical evaluation. denying the consequent. This is ‘falsification’ as ad-
vocated by Popper (1959). His view was that how-
ever much data may be assembled to support a
Deduction hypothesis, it is not possible to reach a conclusive
Research involves deduction, which is the process proof of the truth of that hypothesis. Popper there-
of using logical reasoning to reach a conclusion that fore proposed that it was insufficient simply to
TA B L E 60.1 Analysis of basic data collection methods
Data collection Relevance in
technique Methodology Advantages Disadvantages different situations
Interviews Interviews are an important Interviews obtain information ●● The construction of the interview Can be used to obtain a
research method. They obtain directly from people involved in questions may result in leading range of views about a
factual data and insights into the area being researched and questions or bland answers. topic as long as when
attitudes and feelings. Direct can provide insights into ●● Interviewers may influence the this is required a
quotations from individuals attitudes and perspectives that interviewees’ reactions by imposing balanced sample of
can be used to give life and questionnaires will not reveal, their own reference frame. people are interviewed.
reality to the research. thus promoting in-depth ●● Respondents may tell interviewers
understanding. They enable the what they want to hear.
interviewer to probe answers ●● They are time-consuming – to set up,
and check that questions had to conduct and to analyse.
been understood. ●● They require considerable
interviewing skills, including the
abilities to recognize what is
important and relevant, to probe
when necessary, to listen and to
control the interview so that it covers
the ground it was intended to cover.
●● They are essentially qualitative but
can become more quantitative by the
use of content analysis techniques.
Questionnaires Questionnaires collect data A relatively simple way of ●● Do not reveal how or why things are Useful for collecting
systematically by obtaining assembling data. happening. basic factual data.
answers, which provide ●● It is impossible to assess the degree
factual information or indicate of subjectivity that has crept in when
opinions. expressing opinions.
Surveys Surveys obtain information Can provide more powerful data ●● If not coupled with interviews, They can be used to
from a defined population of than other methods by using a surveys may give only a superficial provide evidence
people. They are usually combination of questionnaires picture. covering facts and/or
based on questionnaires but and interviews and, possibly, ●● It is impossible to assess the degree opinions. In the latter
these are best reinforced by focus groups. of subjectivity that has crept in when case triangulation is
interviews and focus groups, expressing opinions. desirable.
a process known as
triangulation.
645
(Continued)
646
TA B L E 60 .1 (Continued)
Data collection Relevance in

technique Methodology Advantages Disadvantages different situations
Case studies A research case study is a Case studies are useful ways of There is a danger of them being no more When it is useful to
description of a situation or a collecting information on the than a story or an anecdote that does obtain an illustration of
history of an event or reality of organizational life and not contribute to greater knowledge or what is actually
sequence of events in a processes. understanding. Much skill and happening from which
real-life setting, which persistence are required from the conclusions can be
illustrates a particular area of researcher in gaining support, ensuring drawn on what sort of
interest. that relevant and revealing information is action can take place.
obtained and presenting the case study They can reinforce other
as a convincing narrative from which methods as part of a
valid and interesting conclusions can be triangulation process.
derived. All this must be done without
taking a biased view, which can be
difficult.
a ssemble confirmatory evidence; what must also be theoretical framework of a scientific school or disci-
obtained is evidence that refutes the hypothesis. pline within which theories, laws and generaliza-
Only one instance of refutation is needed to falsify a tions and the experiments performed in support of
theory, whereas however many confirmations of the them are formulated. In other words, it is a com-
theory exist it will still not be proved conclusively. mon perspective that underpins the work of theo-
rists so that they use the same approach to
conducting research.
Grounded theory
Grounded theory is an inductive method of devel-
oping the general features of a theory by grounding
Critical evaluation
the account in empirical observations or evidence. Critical evaluation involves making informed judge-
The researcher uses empirical evidence directly to ments about the value of ideas and arguments. It
establish the concepts and relationships that will be uses critical thinking, which is the process of analys-
contained in the theory. Evidence is collected from ing and evaluating the quality of ideas, theories and
both primary sources (ie obtained directly by the concepts to establish the degree to which they are
researcher from the originator of the evidence) and valid and supported by the evidence (evidence-
secondary sources (ie information that is already based) and the extent to which they are biased. It
available in the literature or on the internet). Use is means reflecting on and interpreting data, drawing
made of triangulation. warranted conclusions and identifying faulty rea-
soning, assumptions and biases. A creative leap may
be required to reach a judgement.
Paradigm A summary of the most used techniques for col-
lecting data, their advantages and disadvantages
The term ‘paradigm’ has become popularized as
and their relevance in different situations is set out
meaning a way of looking at things. It is often used
in Table 60.1. These techniques are often combined.
loosely, but properly it means the philosophical and
Key learning points
The nature of research 3 Review literature.

4 Assess existing theoretical frameworks.
Research is concerned with establishing what is and
from this predicting what will be. It is about the 5 Formalize the research question.
conception and testing of ideas. 6 Formulate hypotheses.
7 Establish the methodology.
Research philosophy 8 Draw up research programme.
Research design can be based on a philosophy of 9 Prepare and submit proposal.
positivism or phenomenology. Positivism is the belief
10 Collect and analyse evidence.
that researchers should focus on facts (observable
reality), and look for causality and fundamental laws. 11 Develop conclusions.
Phenomenology is concerned more with the meaning
of phenomena than the facts associated with them. Approaches to research
●● Research can be quantitative or qualitative.
Planning and conducting research
●● It can use inductive or deductive methods.
programmes
●● It involves the testing of hypotheses and may adopt
1 Define research area. a grounded theory approach, ie an inductive
2 Formulate initial research question. method of developing the general features of a
theory by grounding the account in empirical Methods of collecting data

observations or evidence.
●● Interviews obtain factual data and insights into
●● Use may be made of paradigms – common
attitudes and feelings and can be structured,
perspectives that underpin the work of theorists so
unstructured or semi-structured.
that they use the same approach to conducting
research. ●● Questionnaires collect data systematically by
obtaining answers on the key issues and
●● Informed judgements about the value of ideas and
opinions that need to be explored in a research
arguments are made through critical evaluation.
project.
●● It makes use of critical thinking, which is the
●● Surveys obtain information from a defined
process of analysing and evaluating the quality of
population of people.
ideas, theories and concepts to establish the
degree to which they are valid and supported by ●● Case studies collect empirical evidence in a
the evidence. real-life context.
References
Committee on Science, Engineering and Public Policy Marler, J H and Fisher, S L (2013) An evidence-based
(1995) On Being a Scientist: Responsible conduct review of e-HRM and strategic human resource
in research, Washington DC, National Academy of management, Human Resource Management
Sciences, National Academy of Engineering, Review, 23 (1), pp 18–36
Institute of Medicine Popper, K (1959) The Logic of Scientific Discovery,
Lewin, K (1945) The research centre for group London, Hutchinson
dynamics at Massachusetts Institute of Technology,
Sociometry, 8, pp 126–36
649
61
Statistical skills
Introduction Frequency
HR professionals need skills in using statistics in Frequency is the number of times individual items
order to analyse and present quantitative informa- in a population or set occur. It is represented in fre-
tion (HR analytics) that can be used to guide deci- quency distributions. Commonly used graphs (data
sions and monitor outcomes. They are an essential visualizations) are illustrated in Figure 61.1.
element in human capital management and are
also important in such fields as performance man-
agement (the analysis of appraisal results and lev- Measures of central
els of performance) and reward management (the
analysis of market rates, pay reviews, the distribu- tendency
tion of pay, and equal pay). Statistics play a major
part in the analysis of surveys and research Measures of central tendency identify the middle or
evidence. centre of a set of data. There are three types:
Statistics describe and summarize data relating ●● Arithmetic average or mean – the total of
to a ‘population’, ie a homogeneous set of items items or scores in a set divided by the
with variable individual values. This involves meas- number of individual items in the set. It may
uring frequencies, central tendencies and dispersion. give a distorted picture because of large
Statistics can also measure the relationships between items at either end of the scale.
variables (correlation and regression), establish the
relation between cause and effect (causality), assess ●● Median – the middle item in a range of items
the degree of confidence that can be attached to (often used in pay surveys when the
conclusions (tests of significance) and test hypothe- arithmetic mean is likely to be distorted).
ses (the chi-squared test and null-hypothesis test- ●● Mode – the most commonly occurring item
ing). Statistics can be expressed in tabular form or in a set of data.
graphically using data visualization techniques. A
wide variety of software is available to conduct the
more sophisticated analyses. HR professionals do Measures of dispersion
not need advanced statistical skills unless they are
conducting or taking part in detailed research pro- It is often useful to measure the extent to which the
jects. This chapter describes the statistics or statisti- items in a set are dispersed or spread over a range of
cal concepts that they are most likely to use or data. This can be done in five ways:
should be familiar with, namely, those concerned
1 By identifying the upper quartile or lower
with frequency, measures of central tendency, dis-
quartile of a range of data. The strict
persion, correlation, regression, causality, tests of
definition of an upper quartile is that it is the
significance and testing hypotheses.
value which 25 per cent of the values in the
F I G U R E 61.1 Examples of charts
Number Number *
Number
of cases of cases
of cases
*
*
Number Number of Number of

of items items items
Histogram Frequency polygon Scattergram Pie chart
distribution exceed, and the lower quartile is affected by changes in an ‘independent variable’
the value below which 25 per cent of the (sometimes called the ‘predictor variable’). If they
values in a distribution occur. More loosely, are highly correlated they are strongly connected to
especially when looking at pay distributions, one another, and vice versa. In statistics, correlation
the upper and lower quartiles are treated as is measured by the coefficient of correlation, which
ranges rather than points in a scale and varies between -1 and +1 to indicate totally negative
represent the top and the bottom 25 per cent and totally positive correlations respectively. A cor-
of the distribution respectively. relation of zero means that there is no relationship
2 By presenting the total range of values from between the variables. Establishing the extent to
top to bottom; this may be misleading if which variables are correlated is an important fea-
there are exceptional items at either end. ture of HRM research in, for example, assessing the
degree to which a performance management system
3 By calculating the inter-quartile range, which
improves organizational performance. But correla-
is the range between the value of the upper
tions do not indicate causal relationships. Multiple
quartile and that of the lower quartile. This
correlation looks at the relationship between more
can present more revealing information of
than two variables.
the distribution than the total range.
4 By calculating the standard deviation, which
is used to indicate the extent to which the Regression
items or values in a distribution are grouped
together or dispersed in a normal Regression is another way of looking at the rela-
distribution, ie one that is reasonably tionship between independent and dependent vari-
symmetrical around its average. As a rule of ables. It expresses how changes in levels of one item
thumb, two-thirds of the distribution will be relate to changes in levels of another. The levels may
less than one standard deviation from the be expressed in the form of correlations. A regres-
mean, 95 per cent of the distribution will be sion line (a trend line or line of best fit) can be traced
less than two standard deviations from the on a scattergram expressing values of one variable
mean, and less than 1 per cent of the on one axis and values of the other variable on
distribution will be more than three standard another axis, as shown in Figure 61.2.
deviations from the mean. A trend line like this can be drawn by hand as a
5 By calculating variance, which is the square line of best fit, but it can be calculated mathemati-
of a standard deviation. cally with greater accuracy. The distances of points
from the trend line (the residuals) can be calculated
as a check on the reliability of the line.
Correlation Where there are two or more independent vari-
ables that might affect the dependent variable, mul-
Correlation represents the relationship between tiple regression analysis is used. If there are two or
two variables. A ‘dependent variable’ (sometimes more dependent variables as well as two or more
called the ‘outcome variable’) is one that may be independent variables, multivariate analysis is used.
Chapter 61 | Statistical Skills 651
F I G U R E 61.2 A scattergram with regression (trend) line
..
…
….
Number of cases
…..
….
…
Trend line
..
Number of items
Confusingly, the term multivariate analysis is some- whatever that is. Statistical techniques can be
times used instead of multiple regression analysis, used to ‘control’ some variables, ie eliminate them
for example by the CIPD (2018). However, Edwards from the analysis, but it is difficult if not impos-
and Edwards (2016) only use the term multiple sible to ensure that HRM practices have been
regression analysis. completely isolated and that their direct impact
Multiple regression analysis involves complex on the organization’s performance has been meas-
calculations and is best conducted with the aid of ured. Multivariate analysis is used where there is
software such as SPSS as recommended by Edwards more than one dependent variable and where the
and Edwards. dependent variables cannot be combined.
Second, there is the phenomenon of reverse cau-
sation, when a cause may be pre-dated by an effect –
Causality A might have caused B but alternatively, B might
have come first and be responsible for A. For exam-
Causality is the representation of cause and effect, ple, it is possible to demonstrate that organizations
ie the link between independent and dependent var- with effective performance management schemes
iables. To establish causality is to explain how one do better than those without. But it might equally
thing leads to another. Causality is a major issue in be the case that it is high-performing organizations
research, especially in the HRM field. It may be that introduce effective performance management.
relatively easy to establish correlations in the shape It can be hard to be certain.
of a demonstration that X is associated with Y; it is
much more difficult and sometimes impossible to
prove that X causes Y. There are a number of rea- Tests of significance
sons for this, of which the two set out below are the
most important. Significance as a statistical concept refers to the
First, complications arise because of the phe- degree to which an event could have occurred by
nomenon of multiple causation. There may be chance. At the heart of statistical science lies a sim-
a num ber of factors contributing to a result. ple idea, which is that the chance or probability of
Researchers pursuing the holy grail of trying to various patterns of events can be predicted. When a
establish what HRM contributes to an organiza- particular pattern is observed it is possible to work
tion’s performance are usually confronted with a out what the chances of its occurrence may be,
number of reasons why an organization has done given our existing state of knowledge or by making
well in addition to adopting ‘best practice’ HRM, certain assumptions. If something has been observed
that is unlikely to have occurred by chance, this

occurrence can be accepted as significant. The prob-
Testing hypotheses
lem is that any attempt to reach general conclusions
may have to rely on fragmentary data. It is usually The chi-squared test uses a statistical formula to
necessary to rely on samples of the population being assess the degree of agreement between the data
studied and all sampling is subject to experimental actually obtained and that expected under a par-
error – the result can only be expressed in terms of ticular hypothesis.
probability and confidence limits will have to be A null hypothesis is a method of testing a hypoth-
placed on it. These can be calculated in terms of the esis frequently used by researchers in which it is
standard error that might be expected from a sam- assumed that there is no relationship between two
ple. A standard error is the estimated standard devi- or more variables. It asks the question: ‘Could the
ation of a sample mean from a true mean. This hypothetical relationship have been caused by
implies that on approximately 95 per cent of occa- chance?’ If the answer is ‘no’, then the hypothesis is
sions the estimate of the mean provided by the sam- worth pursuing. However, it does not prove that the
ple will be within two standard errors of the true hypothesis is correct; it only indicates that some-
mean. thing is worth further investigation. It can be associ-
ated with the chi-squared test.
Key learning points
Use of statistics Correlation

Statistics are used to describe and summarize data Correlation represents the relationship between two
relating to a ‘population’, ie a homogeneous set of variables. If they are highly correlated they are
items with variable individual values. This involves strongly connected to one another, and vice versa.
measuring frequencies, central tendencies and
dispersion. Regression
They are also used to measure the relationships
between variables (correlation and regression), to Regression is another way of looking at the
establish the relation between cause and effect relationship between variables. It expresses how
(causality), to assess the degree of confidence that changes in levels of one item relate to changes in
can be attached to conclusions (tests of significance) levels of another.
and to test hypotheses (the chi-squared test and
null-hypothesis testing). Causality
Statistics are used extensively in HRM to analyse
Determining the link between independent and
and present quantitative information that can be used
dependent variables (cause and effect) – is a major
to guide decisions and monitor outcomes.
issue in research, especially in the HRM field. It may
be relatively easy to establish correlations in the
Measures of central tendency shape of a demonstration that X is associated with Y; it
Measures of central tendency identify the middle or is much more difficult and sometimes impossible to
centre of a set of data. There are three types: prove that X causes Y.
arithmetic average or mean, median, and mode.
Tests of significance
Measures of dispersion Significance as a statistical concept refers to the
It is useful to measure the extent to which the items in degree to which an event could have occurred by
a set are dispersed or spread over a range of data. chance.
Chapter 61 | Statistical Skills 653
References
Chartered Institute of Personnel and Development Edwards, M R and Edwards, K (2016) Predictive HR
(2018) New Profession Map [online] https:// Analytics: Mastering the HR metric, London,
peopleprofession.cipd.org/profession-map Kogan Page
(archived at https://perma.cc/5US2-QBSD)
[accessed 15 April 2019]
654
62
Selection
interviewing skills
5 Decide on the questions to be asked in a
Introduction structured interview. These can be
behavioural event, situation-based or
The purpose of a selection interview is to establish strength-based, or a combination of these as
the extent to which candidates have the types and also described below.
levels of skill, knowledge and abilities required to
carry out a job. In this chapter the process of pre- 6 Decide how candidates will be assessed – in a
paring for an interview is examined initially and the structured interview this can mean rating the
skills required to conduct an interview are then re- answers and producing an overall score.
viewed. Next, what is generally regarded as the best 7 Plan the interview, which will consist of three
method of selection interviewing – the structured parts: (a) the opening where the candidate is
interview – and the approaches that can be adopted welcomed and put at ease; (b) the middle in
to structuring it are examined. The chapter ends which a pre-planned sequence of questions is
with suggestions on how a conclusion following an put to the candidate; and (c) the end in
interview should be reached. which the candidate can ask questions and is
informed about the next steps, eg that if a
provisional offer is accepted, references will
Preparing for the interview be taken up with the candidate’s existing
employer.
The steps required to prepare for an interview are:
1 Read the job description and then the person
specification setting out the knowledge, skills
Selection interviewing skills
and abilities (KSAs), qualifications and An interview is a conversation with a purpose. It is a
experience required to carry out the work conversation because candidates should be given the
description. opportunity to talk freely about their careers and
2 Ensure that candidates have information experience. But the conversation has to be planned,
about the job in advance (you don’t want to directed and controlled to achieve your aims in the
waste time going through this during an time available. Overall, an effective approach to in-
interview). terviewing can be summed up as the three Cs:
3 Read the candidates’ CVs and, if available, ●● Content – the information you want and the
their application forms or letters and refer to questions you ask to get it.
any other information about them obtained
from social media. ●● Contact – your ability to make and maintain
good contact with candidates; to establish
4 Decide on the type of interview you will use. the sort of rapport that will encourage them
The best approach is a structured interview to talk freely, thus revealing their strengths
as described later. and their weaknesses.
Chapter 62 | Selection Interviewing Skills 655
●● Control – your ability to control the combination of these can also be used as described
interview so that you get the information later in this chapter. Biased questions referring to
you want. gender, race, sexual orientation, disability or age
should be avoided.
This involves using the following interviewing
skills: establishing rapport, questioning, listening,
maintaining continuity, keeping control and note Listening
taking.
If an interview is a conversation with a purpose, lis-
tening skills are important. You need not only to
Establishing rapport hear but also to understand what candidates are
saying. When interviewing you must concentrate on
Establishing rapport means establishing a good re- what candidates are telling you. Summarizing at
lationship with candidates – getting on their wave- regular intervals forces you to listen because you
length, putting them at ease, encouraging them to have to pay attention to what they have been saying
respond and generally being friendly. This is not just in order to get the gist of their replies. If you play
a question of being ‘nice’ to them. If you achieve back to candidates your understanding of what
rapport you are more likely to get them to talk they have told you for them to confirm or amend, it
freely about both their strengths and weaknesses. will ensure that you have fully comprehended the
Good rapport is created by the way in which you messages they are delivering.
greet candidates, how you start the interview and
how you put your questions and respond to replies.
Questions should not be posed aggressively or Maintaining continuity
imply that you are criticizing some aspect of the
candidate’s career. Some people like the idea of So far as possible link your questions to a candi-
‘stress’ interviews but they are counterproductive. date’s last reply so that the interview progresses
Candidates clam up and gain a negative impression logically and a cumulative set of data is built up.
of you and the organization. You can put bridging questions to candidates such
When responding to answers you should be ap- as: ‘Thank you, that was an interesting summary of
preciative, not critical: ‘Thank you, that was very what you have been doing in this aspect of your
helpful; now can we go on to?’ not, ‘Well, it seems work. Now, could you tell me something about
to me that things did not go according to plan.’ your other key responsibilities?’
Body language can also be important. If you
maintain natural eye contact, avoid slumping in
your seat, nod and make encouraging comments Keeping control
when appropriate, you will establish better rapport You want candidates to talk, but not too much.
and get more out of the interview. When preparing for the interview you should have
drawn up an agenda and you must try to stick to it.
Don’t cut candidates short too brutally but say
Questioning something like: ‘Thank you, I’ve got a good picture
Questioning is the key skill interviewers need to of that, now what about…?’
possess. Their purpose is to draw candidates out Focus on specifics as much as you can. If candi-
and elicit the information the interviewer has de- dates ramble on a bit, ask a pointed question (a
cided must be obtained to reach a conclusion. To ‘probe’ question) that asks for an example illustrat-
this end it is desirable to ask open-ended ques- ing the particular aspect of their work that you are
tions – questions that cannot be answered by ‘yes’ considering.
or ‘no’ and which promote a full response.
In a structured interview – the most effective
type of interview – questions are determined in ad- Note taking
vance. These can cover the capability of candidates You won’t remember everything that candidates tell
as revealed by their experience. Behavioural event, you. It is useful to take notes of the key points they
situation-based or strength-based questions or a make, discreetly, but not surreptitiously. However,
don’t put candidates off by frowning or tut-tutting The questions in structured interviews should be
when you are making a negative note. It may be planned in advance. The most useful types as de-
helpful to ask candidates if they would mind if you scribed below are capability questions, behavioural
take notes. They can’t really object, but will appre- event questions, situation-based questions and
ciate the fact that they have been asked. strength-based questions. Select a number of key
questions (no more than 10 or so) as the basis for
assessment but it may be helpful to identify addi-
Structured interviews tional supplementary questions that can be used if
required.
Structured interviews are based on a set of predeter-
mined questions. They are sometimes called
competency-based interviews because they focus on Capability questions
the competencies (knowledge, skills and abilities) Capability questions establish what candidates are
required to do the job. All candidates are asked the capable of doing, what they know and the skills
same questions and the answers may be scored they possess. Their purpose is to obtain evidence
through a rating system. Research quoted in from candidates that shows the extent to which
Chapter 28 has shown that such interviews are the they meet the specification in each of its key areas.
most effective predictors of performance. Because time is always limited it is best to concen-
trate on the most important aspects of the work,
and it is always best to prepare the questions in ad-
vance. Here are some examples:
Wo rd s o f w isdom
●● Tell me about the most important things you
Each interview question should have a are doing in your present job?
point. It ought to be able to assess some ●● What do you think has been your greatest
achievement in your career to date?
work-relevant ability or behaviour. As such,
●● What experience have you had in…?
it should be easy for interviewers to specify
●● You’ve informed me that you have had
beforehand what a good answer might look experience in... Could you tell me more
like. Actual responses should be scored about what you did?
against these criteria. These scores should ●● What sort of targets have you been expected
to achieve?
then be averaged to establish some
●● How successful have you been in achieving
numerical assessment of interview those targets or standards? Please give
performance. If you are concerned that the examples.
scored questions seem to omit an intuitive ●● In what ways do you think your experience
fits you to do this job?
holistic assessment of the candidate, then
●● What have been the most challenging aspects
you can consider adding a final holistic of your job?
assessment, and this can be averaged in ●● Could you give an example of any project
with the scores for the specific interview you have undertaken?
●● What was your role in this project?
questions.
●● What was the contribution you made to its
Moore (2017: 16)
success?
●● What knowledge and skills were you able to ●● Could you describe a situation in which you
apply to the project? had to convince others to do something they
●● Were you responsible for monitoring weren’t particularly keen on?
progress? ●● Could you tell me about a difficult situation
●● Did you prepare the final recommendations with a member of your staff which you have
in full or in part? handled particularly well?
●● Could you describe in more detail the
equipment you used?
Situation-based questions
●● How would you improve the quality of
teamwork in a group? Situation-based questions are hypothetical ques-
tions that describe a situation to candidates who are
●● What do you think is the best way to
asked how they would deal with it. Questions can
motivate people?
test how candidates would approach a typical prob-
●● What is your approach to reviewing the lem or issue they might meet in the job for which
performance of members of your team? they are being considered and are critical to success-
●● What part have you played in coaching ful job performance. The assumption upon which
members of your team? such questions are based is that the ways in which
people describe how they would behave in dealing
with or reacting to events is a good predictor of fu-
Behavioural event questions ture behaviour. Situational questions typically take
the form: ‘What would you do if…?’ Examples of
Behavioural event questions ask candidates to de-
situational questions are:
scribe how they behaved in a situation or an experi-
ence they had in their present or a previous job. ●● What would you do if you were asked to
Questions present a situation, inquire about what ac- perform a task you’ve never done before?
tion the candidate has taken to deal with something ●● What would you do if you were told by your
similar and ask what the result was. For example: boss to do something which you thought was
●● Could you tell me about a recent unethical?
achievement of which you are particularly ●● What would you do if you made a mistake
proud? that no one else noticed?
●● Could you give me an example of when you ●● What would you do if an angry and
had to deal with a difficult situation with a dissatisfied customer or colleague confronted
colleague? you? How would you resolve their concern?
●● Could you give an instance of when you ●● What would you do if someone rudely
persuaded others to take an unusual course disagreed with you during a meeting?
of action? ●● What approach would you adopt to
●● Could you describe an occasion when you persuading someone to take a course of
completed a project or task in the face of action which they are not very keen to do?
great difficulties? ●● What do you do at a meeting when you are
●● Could you describe any contribution you asked a question that you are unable to
have made as a member of a team in answer?
achieving a highly successful result? ●● What do you think the qualities of a good
●● Could you give an instance of when you leader are?
took the lead in a difficult situation in getting ●● What would you do if a member of your
something worthwhile done? team refused to carry out what you
●● Could you give an example of when you considered to be a reasonable request?
successfully introduced an innovation at ●● How would you deal with a subordinate
work? whose performance is good but is
persistently late coming to work?
What would you do about your team if its

●●
members were not working well together?
Coming to a conclusion
●● How would you motivate someone who It is essential not to be beguiled by a pleasant, ar-
wasn’t pulling their weight? ticulate and confident interviewee who is all surface
Situation-based questions can be illuminating. But and no substance. Beware of the ‘halo’ effect, which
what candidates say they would do and what they occurs when one or two good points are seized
actually do could be quite different. Hypothetical upon, leading to the neglect of negative indicators.
questions can produce hypothetical answers. The The opposite ‘horns’ effect of focusing on the nega-
best data upon which judgements about candidates tives should also be avoided.
can be made is what they have actually done or Individual candidates can be assessed on the
achieved. You need to find out if they have success- basis of the answers they have given to the struc-
fully dealt with the sorts of issues and problems tured questions. The answers could be scored on a
they may be faced with if they join your organiza- scale of, say, 1 to 10, These assessments can inform
tion. This is the function of capability and behav- an overall assessment of knowledge and skills and
ioural event questions. abilities. Any clearly unsuitable candidate could be
rejected at this stage.
Next, compare the assessment of each of the re-
Strength-based interview questions maining potentially successful candidates against
one another to reach a conclusion on the preferred
Strength-based questions focus on what people are candidate. You can then make a conclusion on those
good at. They are particularly suitable when inter- preferred by reference to their assessments under
viewing graduates, school leavers or students who each heading.
have had little relevant work experience. In the end, the decision between qualified candi-
●● What are you good at doing? dates could well be judgemental. There may be one
suitable candidate but there could be two or three
●● What comes easily to you?
(although sometimes there may be none at all).
●● What do you learn quickly? Where there is a choice, a balanced view has to be
●● What did you find easiest to learn at school reached by reference to interview notes and ratings.
or university? Don’t, however, settle for second best in despera-
●● What subjects did you most enjoy studying? tion. It is better to try again.
A record of the reasons for the choice and why
●● What things give you energy?
candidates have been rejected should be kept for at
●● Describe a successful day you have had. least six months in case the decision is challenged as
●● When did you achieve something you were being discriminatory. An example of an interview
really proud of? rating form is given in Figure 62.1.
F I G U R E 62.1 Example of an interview rating form
Assessment
Very Marginally
Area acceptable Acceptable acceptable Unacceptable Comments
Experience
Knowledge and skills
Competencies
Education and qualifications
Training
Overall suitability
Dos and don’ts of selection interviewing

TA B L E 62 .1 Dos and don’ts of selection interviewing
Do Don’t
●● Plan the interview. ●● Start the interview unprepared.

●● Give yourself sufficient time. ●● Plunge too quickly into demanding
●● Use a structured interview approach. questions.
●● Create the right atmosphere. ●● Ask multiple or leading questions.
●● Establish an easy and informal relationship – start ●● Pay too much attention to isolated
with an undemanding question. strengths or weaknesses.
●● Encourage the candidate to talk. ●● Allow candidates to gloss over important
●● Cover the ground as planned, ensuring that you facts.
complete a prepared agenda and maintain continuity. ●● Talk too much or allow candidates to
●● Analyse the candidate’s career to reveal strengths, ramble on.
weaknesses and patterns of interest. ●● Allow your prejudices to get the better of
●● Make use of open questions which invite people to your capacity to make objective
talk. judgements.
●● Ensure that questions are clear and unambiguous. ●● Fall into the halo effect trap, ie drawing
●● Get examples and instances of the successful conclusions about a person on the basis
application of knowledge, skills and the effective of one or two good points, leading to the
use of capabilities. neglect of negative indicators. Or into the
●● Make judgements on the basis of the factual horns trap – focusing too much on one or
information you have obtained about candidates’ two weak points.
experience and attributes in relation to the person ●● Ask questions or make remarks that could
specification. be construed as in any way discriminatory.
●● Keep control over the content and timing of the ●● Attempt too many interviews in a row.
interview.
Key learning points
Purpose of an interview ●● Questioning is the key skill interviewers need to

possess. Their purpose is to draw candidates
The purpose of a selection interview is to establish the out and elicit the information the interviewer has
extent to which a candidate will be able to do the job. decided must be obtained to reach a conclusion.
This means finding out how well a candidate’s levels of
skill, knowledge, abilities and competency fit a person ●● If an interview is a conversation with a purpose,
specification for the job that sets out these requirements. listening skills are important. You need not only to
hear but also to understand what candidates are
saying. When interviewing you must concentrate
Preparing for the interview on what candidates are telling you.
The steps required to prepare for an interview are:
●● So far as possible link your questions to a candidate’s
1 Read the job description and person specification. last reply so that the interview progresses logically
and a cumulative set of data is built up.
2 Ensure that candidates have information about the
job in advance. ●● You want candidates to talk, but not too much.
3 Read the candidates’ CVs and any other ●● It is useful to take notes of the key points they
information about them. make, discreetly, but not surreptitiously.
4 Decide on the type of interview you will use. The

best approach is a structured interview. Structuring the interview
5 Decide on the questions to be asked in a structured A structured interview is one based on a defined
interview. framework within which there is a set of
predetermined questions. All candidates are asked the
6 Decide how candidates will be assessed. same questions and the answers may be scored
7 Plan the interview. through a rating system. The types of questions asked
in a structured interview are:
Nature of an interview ●● capability;
An interview is a conversation with a purpose. It is a ●● behavioural event;

conversation because candidates should be given the
●● situation-based;
opportunity to talk freely about themselves and their
careers. But the conversation has to be planned, ●● strength-based.
directed and controlled to achieve your aims in the time
available. Coming to a conclusion
Candidates can be assessed on the basis of
Interviewing skills the answers they have given to the structured
●● Establishing rapport – creating a good relationship questions.
with candidates – getting on their wavelength,
putting them at ease, encouraging them to respond
and generally being friendly.
Reference
Moore, D A (2017) How to improve the accuracy
and reduce the cost of personnel selection,
California Management Review, 60 (1), pp 8–17
662
63
Job, role, competency
and skills analysis
Introduction Job description
A job description defines what job holders are
The analysis of jobs, roles, and skills and compe- required to do in terms of activities, duties or tasks.
tency modelling are some of the key techniques in It is prescriptive and inflexible, giving people the
human resource management. They provide the opportunity to say: ‘It’s not in my job description’,
information required to produce job descriptions, meaning that they only need to do the tasks listed
role profiles, and person and learning specifications. there. A job description is more concerned with
They are of fundamental importance in organiza- tasks than outcomes, and with the duties to be per-
tion and job design, recruitment and selection, performed than the competencies required to perform
formance management, learning and development, them (technical competencies covering knowledge
management development, career management, job and skills, and behavioural competencies).
evaluation and the design of grade and pay struc-
tures. These constitute most of the key HRM
activities. Job analysis
This chapter starts with definitions of the terms
used in job and role analysis and then deals with the Job analysis is the process of collecting, analysing
skills required to analyse jobs, roles and skills in and setting out information about jobs in order to
order to produce job descriptions and role profiles, provide the basis for a job description and data for
and to model competencies to produce competency recruitment, training, job evaluation and perfor-
frameworks. mance management. Job analysis concentrates on
what job holders do and achieve. It identifies the
tasks job holders undertake and the outcomes and
Definitions outputs they are expected to produce. Outcomes
are the results of performance expressed as some-
thing that has been attained, such as a task or a
Jobs and roles project. Outputs are the results of performance
The terms ‘job’ and ‘role’ are often used inter- expressed in quantified terms such as sales volume,
changeably, but they are different. A job is an income generated or units of production.
organizational unit consisting of a group of defined
tasks or activities to be carried out or duties to be
performed. A role is the part people play in their Role profile
work – the emphasis is on the expected patterns of A role profile defines key result areas, accounta
behaviour to achieve agreed outcomes. Roles are bilities and competencies for an individual role. It
about people. Jobs are about tasks and duties. concentrates on outcomes rather than duties and
Chapter 63 | Job, Role, Competency and Skills Analysis 663
therefore provides better guidance than a job Person specification

description on expectations. It does not constrain
people by prescribing their tasks. Outcomes may be A person specification, also known as a job or role
expressed as ‘key result areas’ – elements of the role specification, defines the knowledge, skills and abili-
for which clear outputs and standards can be ties (KSAs) required to carry out a role and the edu-
defined, each of which makes a significant contribu- cation, training, qualifications and experience needed
tion to achieving its overall purpose. Alternatively, to acquire the necessary KSAs. It may also refer spe-
they may be termed ‘accountabilities’ – areas of the cifically to the competencies required for effective
role for which role holders are responsible in the job performance
form of being held to account for what they do and
what they achieve.
A role profile does not prescribe in detail what Role analysis
has to be done to achieve the required outcomes. It Role analysis finds out what people are expected to
therefore allows for greater flexibility than a job achieve when carrying out their work and the com-
description and is more easily updated to reflect petencies and skills required to meet those expecta-
changing demands. tions. Role analysis uses similar techniques to job
Role profiles are person-oriented. A role can be analysis, although the objective of the analysis will
described in behavioural terms – given certain be different.
expectations, this is how the person needs to behave
to meet them. Because it identifies knowledge, skill
and competency requirements it also provides a Skills analysis
better basis for recruitment and selection, perfor-
mance management and learning and development Skills analysis determines the skills required to
purposes. achieve an acceptable level of performance.
Accountability profile Competency modelling

An accountability profile is a type of role profile Competency modelling is concerned with behav-
that focuses on what role holders will be held to ioural analysis to establish the behavioural dimen-
account for in terms of what they do and what sions that affect job performance, and functional
they achieve. It may be set out as a list of main analysis to determine technical or work-based com-
accountabilities. petencies. Behavioural or personal competencies are
the personal characteristics individuals bring to
their work roles. Technical or work-based compe-
Generic role tencies refer to expectations of workplace perfor-
mance and the standards and outputs that people
A generic role is a role in which essentially similar carrying out specified roles are expected to attain.
activities are carried out by a number of people, for They are also described as competences.
example a team leader or a call centre agent. In
effect, it covers an occupation rather than a single
role. It is described in a generic role profile.
Job analysis
Job analysis produces the following information
Learning specification about a job:
A learning specification defines the knowledge and
●● Overall purpose – why the job exists and, in
skills needed to achieve an acceptable level of
essence, what the job holder is expected to
performance. It is used as the basis for devising

contribute.
learning and development programmes. Learning
specifications may be drawn up on the basis of com- ●● Organization – to whom the job holder
petency and skills analysis. reports and who reports to the job holder.
●● Content – the nature and scope of the job in 1 Work to a logical sequence of questions that
terms of the tasks and operations to be help interviewees to order their thoughts
performed and duties to be carried out. about the job.
If the outcome of the job analysis is to be used for 2 Probe as necessary to establish what people
job evaluation purposes, the job will also be ana- really do in terms of outputs and outcomes –
lysed in terms of the factors or criteria used in the answers to questions are often vague and
job evaluation scheme. information may be given by means of
untypical instances.
3 Ensure that job holders are not allowed to
Job analysis methodology get away with vague or inflated descriptions
of their work – if, for example, the interview
The essence of job analysis is the application of sys-
is part of a job evaluation exercise, they
tematic methods to the collection of information
would not be human if they did not present
about job content. It is essentially about data collec-
the job in the best possible light.
tion and the basic steps are:
4 Sort out the wheat from the chaff; answers
1 Obtain documents such as existing to questions may produce a lot of irrelevant
organization, procedure or training manuals data that must be sifted before preparing the
that give information about the job. job description.
2 Obtain from managers fundamental 5 Obtain a clear statement from job holders
information concerning the job. about their authority to make decisions and
3 Obtain from job holders similar information the amount of guidance they receive from
about their jobs. their manager or team leader. This is not
easy: if asked what decisions they are
There are a number of job analysis techniques used
authorized to make, most people look blank
for data collection as described below.
because they think about their job in terms
of duties and tasks rather than abstract
Interviews decisions.
The full flavour of a job is best obtained by inter- 6 Avoid asking leading questions that make the
viewing job holders and checking findings with expected answer obvious.
their managers or team leaders. The aim of the 7 Allow the job holder ample opportunity to
interview should be to obtain the relevant facts talk by creating an atmosphere of trust.
about the job, namely the job title, organizational
details (reporting relationships as described in an It is helpful to use a checklist when conducting the
organization chart) and a list of the tasks or duties interview. Elaborate checklists are not necessary;
performed by the job holder. The interview should they only confuse people. The basic questions to be
also establish outcomes and outputs. answered are as follows:
For recruitment, training or job evaluation pur- ●● What is the title of your job?
poses these basic details can be supplemented by
questions designed to elicit from the job holders ●● To whom are you responsible?
more information about the level of their responsi- ●● Who is responsible to you? An organization
bilities and the demands made upon them by the chart is helpful.
job. These can cover the amount of supervision ●● What is the main purpose of your job in
received, the degree of discretion allowed in making overall terms, ie what are you expected to do?
decisions, the typical problems to be solved, the
●● What are the key activities you have to carry
amount of guidance available when solving the
out in your role? Try to group them under no
problems, the relative difficulty of the tasks to be
more than 10 headings.
performed and the qualifications and skills required
to carry out the work. The following are the steps ●● What are the results you are expected to
required to conduct a job analysis interview: achieve in each of those key activities?
●● What are you expected to know to be able to routine administrative or manual roles but it is sel-
carry out your job? dom used because of the time it takes.
●● What skills should you have to carry out
your job?
Job descriptions
The answers to these questions may need to be
sorted out – they can often result in a mass of jum- Job descriptions should be based on the job analysis
bled information that has to be analysed so that the and should be as brief and factual as possible. The
various activities can be distinguished and refined headings under which the job description should be
to seven or eight key areas. written and notes for guidance on completing each
The advantages of the interviewing method are section are set out below.
that it is flexible, can provide in-depth information
and is easy to organize and prepare. It is therefore
the most common approach. But interviewing can Job title
be time-consuming, which is why in large job analy-
sis exercises, questionnaires may be used to provide The existing or proposed job title should indicate as
advance information about the job. This speeds up clearly as possible the function in which the job is
the interviewing process or even replaces the inter- carried out and the level of the job within that func-
view altogether, although this means that much of tion. The use of terms such as ‘manager’, ‘assistant
the ‘flavour’ of the job – ie what it is really like – manager’ or ‘senior’ to describe job levels should be
may be lost. reasonably consistent between functions with
regard to grading of the jobs.
Questionnaires
Questionnaires about their roles can be completed Reporting to
by role holders and approved by the role holder’s
manager or team leader. They are helpful when a The job title of the manager or team leader to whom
large number of roles have to be covered. They can the job holder is directly responsible should be
also save interviewing time by recording purely fac- given under this heading. No attempt should be
tual information and by enabling the analyst to made to indicate here any functional relationships
structure questions in advance to cover areas that the job holder might have to other people.
need to be explored in greater depth. The simpler
the questionnaire the better: it need only cover the
eight questions listed above.
Reporting to job holder
The advantage of questionnaires is that they can The job titles of all the posts directly reporting to
produce information quickly and cheaply for a the job holder should be given under this heading.
large number of jobs. But a substantial sample is Again, no attempt should be made here to indicate
needed and the construction of a questionnaire is a any functional relationships that might exist
skilled job, which should only be carried out on the between the job holder and other employees.
basis of some preliminary fieldwork. It is highly
advisable to pilot test questionnaires before launch-
ing into a full-scale exercise. The accuracy of the Overall purpose
results also depends on the willingness and ability
This section should describe as concisely as possible
of job holders to complete questionnaires. Many
the overall purpose of the job. The aim should be to
people find it difficult to express themselves in writ-
convey in one sentence a broad picture of the job
ing about their work.
that will clearly distinguish it from other jobs and
establish the role of job holders and the contribu-
Observation tion they should make towards achieving the objec-
Observation means studying role holders at work, tives of the company and their own function or
noting what they do, how they do it, and how much unit. No attempt should be made to describe the
time it takes. This method is most appropriate for activities carried out under this heading, but the
overall summary should lead naturally to the analy- managers on financial performance against
sis of activities in the next section. When preparing budget and on any variances; prepare
the job description, it is often best to defer writing marketing plans that support the
down the definition of overall responsibilities until achievement of the marketing strategies of
the activities have been analysed and described. the enterprise, are realistic, and provide clear
guidance on the actions to be taken by the
development, production, marketing and
Main activities, tasks or duties sales departments; plan and implement sales
campaigns to meet sales targets.
The following method of describing activities, tasks
or duties should be adopted: An example of a job description is given in Figure 63.1.
1 Group the various activities identified by the
job analysis together so that no more than
seven or eight areas remain. If the number is
Role analysis and role
extended much beyond that, the job
description will become over-complex and it
profiles
will be difficult to be specific about tasks or Role analysis uses the same techniques as job analy-
duties. sis but the focus is on identifying inputs – KSAs
2 Define each activity in one sentence, starting (knowledge, skill and abilities) and competency
with a verb in the active voice, to provide a requirements – and outcomes – key result areas or
positive indication of what has to be done accountabilities – rather than simply listing the
and eliminate unnecessary wording. tasks to be carried out. A role profile is initially set
Examples are: plan, prepare, produce, out under the same headings as a job description, ie
implement, process, provide, schedule, role title, responsible to, responsible to role holder
complete, dispatch, maintain, liaise with, and and the purpose of the role, but it then focuses on
collaborate with. the following aspects of the role.
3 Describe what is done as succinctly as
possible, for example: test new systems, post
cash to the nominal and sales ledgers, Key result areas
dispatch packed output to the warehouse, A key result area is an element of a role for which
schedule production, ensure that clear outputs and outcomes can be defined, each of
management accounts are produced, prepare which makes a significant contribution to achiev-
marketing plans. ing the overall purpose of the role. It may be
4 State briefly the purpose of the activity in described as an ‘accountability’ – an aspect of the
terms of outcomes, outputs or standards to role for which the role holder is responsible (held
be achieved. For example: test new systems to account for).
to ensure they meet agreed systems The number of key result areas is unlikely to be
specifications; post cash to the nominal and more than seven or eight, certainly not more than
sales ledgers in order to provide up-to-date 10. The basic structure of a key result area defini-
and accurate financial information; dispatch tion should resemble that of a job description task
to the warehouse planned output so that all definition, ie it should be expressed in one sentence
items are removed by carriers on the same starting with an active verb. However, the content
day they are packed; schedule production to of the definition should focus more on the specific
meet laid-down output and delivery targets; purpose of the activity in terms of outputs or stand-
ensure that management accounts are ards to be achieved than on describing in detail the
produced that provide the required level of duties involved.
information to management and individual
F I G U R E 63.1 Example of a job description
Job title: HR Adviser; Recruitment
Reports to: HR Service Centre Manager

Reports to job holder: None
Overall purpose: To provide recruitment services to line managers for jobs

below management level
Main activities
1. Respond promptly to requests from line managers to assist in recruiting
staff.
2. Produce person specifications which clearly indicate requirements for
recruitment purposes.
3. Agree on the use of sources of applicants such as web-based recruitment,
agencies or media advertisements which will generate high calibre
candidates at a reasonable cost.
4. Brief and liaise with agencies and/or draft advertisements for jobs for
approval by line managers and place advertisements or information on
vacancies using the media and/or the internet.
5. Process replies and draw up short lists which enable a choice to be made
between well-qualified candidates.
6. Conduct preliminary interviews independently or conduct short-list interviews
with line managers which identify candidates who meet the specification.
7. Agree offer terms with line manager, take up references and confirm the
offer.
8. Review and evaluate sources of candidates and analyse recruitment costs.
Knowledge, skills and abilities Generic role profiles

required Generic role profiles cover occupations rather than
individual roles. They tend to be more generalized
Knowledge, skills and abilities should be expressed and may be somewhat simpler than individual role
in terms of ‘need to know’ – the required knowledge profiles, for example by restricting the profile to
of techniques, processes, procedures, systems and lists of key result areas and competency dimensions.
the business generally (its products or services and An example of a generic role profile is given in
its competitors and customers), and ‘need to be able Figure 63.3.
to do’ – the skills required in each area of activity.
These are the technical competencies required by
the job.
Skills analysis
Skills analysis determines the skills required to
Behavioural competencies achieve an acceptable standard of performance. It is
Behavioural competencies describe how the role mainly used for technical, craft, manual and office
holder is expected to behave when carrying out the jobs to provide the basis for devising learning and
role. They may be linked to the organization’s com- training programmes. Skills analysis starts from a
petency framework and cover such areas as team- broad job analysis but goes into details of not only
working, communication, people management and what job holders have to do but also the particular
development, and customer relations. An example abilities and skills they need to do it. Skills analysis
of a role profile is given in Figure 63.2. techniques are described below.
F I G U R E 63.2 Example of a role profile
Job title: Database administrator
Department: Information systems
Purpose of role: Responsible for the development and support of databases

and their underlying environment.
Key results area

• Identify database requirements for all projects that require data
management in order to meet the needs of internal customers.
• Develop project plans collaboratively with colleagues to deliver against
their database needs.
• Support underlying database infrastructure.
• Liaise with system and software providers to obtain product information
and support.
• Manage project resources (people and equipment) within predefined
budget and criteria, as agreed with line manager and originating
department.
• Allocate work to and supervise contractors on day-to-day basis.
• Ensure security of the underlying database infrastructure through
adherence to established protocols and to develop additional security
protocols where needed.
Need to know
• Oracle database administration.
• Operation of Designer 2000 and oracle forms SQL/PLSQL, Unix
administration, shell programming.
Able to
• Analyse and choose between options where the solution is not always
obvious.
• Develop project plans and organize own workload on a timescale of 1-2
months.
• Adapt to rapidly changing needs and priorities without losing sight of
overall plans and priorities.
• Interpret budgets in order to manage resources effectively within them.
• Negotiate with suppliers.
• Keep abreast of technical developments and trends, bring these into
day-to-day work when feasible and build them into new project
developments.
Behavioural competencies
• Aim to get things done well and set and meet challenging goals, create
own measures of excellence and constantly seek ways of improving
performance.
• Analyse information from a range of sources and develop effective
solutions/recommendations.
• Communicate clearly and persuasively, orally or in writing, dealing with
technical issues in a non-technical manner
• Work participatively on projects with technical and non-technical
colleagues.
• Develop positive relationships with colleagues as the supplier of an
internal service.
F I G U R E 63.3 Example of a generic role profile
Generic role title: Team leader
Overall purpose of role: To lead teams in order to attain team goals and further
the achievement of the organisation's objectives.
Key result areas

• Agree targets and standards with team members which support
the attainment of the organization’s objectives.
• Plan with team members work schedules and resource
requirements which will ensure that team targets will be reached,
indeed exceeded.
• Agree performance measures and quality assurance processes
with team members which will clarify output and quality
expectations.
• Agree with team members the allocation of tasks, rotating
responsibilities as appropriate to achieve flexibility and the best
use of the skills and capabilities of team members.
• Co-ordinate the work of the team to ensure that team goals are
achieved.
• Ensure that the team members collectively monitor the team's
performance in terms of achieving output, speed of response and
quality targets and standards and agree with team members any
corrective action required to ensure that team goals are achieved.
• Conduct team reviews of performance to agree areas for
improvement and actions required.
Competencies
• Build effective team relationships, ensuring that team members are
committed to the common purpose.
• Encourage self-direction amongst team members but provide
guidance and clear direction as required.
• Share information with team members.
• Trust team members to get on with things – not continually
checking.
• Treat team members fairly and consistently.
• Support and guide team members to make the best use of their
capabilities.
• Encourage self-development by example.
• Actively offer constructive feedback to team members and
positively seek and be open to constructive feedback from them.
• Contribute to the development of team members, encouraging the
acquisition of additional skills and providing opportunities for them
to be used effectively.
Job breakdown 1 The stage column, in which the different

The job breakdown technique analyses a job into steps in the job are described – most
separate operations, processes, or tasks that can be semiskilled jobs can easily be broken down
used as the elements of an instruction sequence. A into their constituent parts.
job breakdown analysis is recorded in a standard 2 The instruction column, in which a note is
format of three columns: made against each step of how the task
should be done. This, in effect, describes 4 Training method – the instructional

what has to be learnt by the trainee. techniques, practice and experience required.
3 The key points column, in which any special
points such as quality standards or safety
instructions are noted against each step so Faults analysis
that they can be emphasized to a trainee Faults analysis is the process of analysing the typi-
learning the job. cal faults that occur when performing a task, espe-
cially the more costly faults. It is carried out when
the incidence of faults is high. A study is made of the
Manual skills analysis job and, by questioning workers and team leaders,
Manual skills analysis is a technique developed the most commonly occurring faults are identified.
from work study. It isolates for instructional pur- A faults specification is then produced, which pro-
poses the skills and knowledge employed by experi- vides trainees with information on what faults can
enced workers in performing tasks that require occur, how they can be recognized, what causes
manual dexterity. It is used to analyse short-cycle, them, what effect they have, who is responsible for
repetitive operations such as assembly tasks and them, what action the trainees should take when a
other similar factory work. particular fault occurs, and how a fault can be pre-
The hand, finger and other body movements of vented from recurring.
experienced operatives are observed and recorded
in detail as they carry out their work. The analysis
concentrates on the tricky parts of the job which, Job learning analysis
while presenting no difficulty to the experienced Job learning analysis, as described by Pearn and
operative, have to be analysed in depth before they Kandola (1993), concentrates on the inputs and
can be taught to trainees. Not only are the hand process rather than the content of the job. It analy-
movements recorded, but particulars are also noted ses nine learning skills that contribute to satisfac-
of the cues (visual and other senses) that the opera- tory performance. A learning skill is one used to
tive absorbs when performing the tasks. Explanatory increase other skills or knowledge and represents
comments are added when necessary. broad categories of job behaviour which need to be
learnt. The learning skills are the following:
Task analysis ●● physical skills requiring practice and

repetition to get right;
Task analysis is a systematic analysis of the behav-
●● complex procedures or sequences of activity
iour required to carry out a task with a view to iden-
that are memorized or followed with the aid
tifying areas of difficulty and the appropriate training
of written material such as manuals;
techniques and learning aids necessary for successful
instruction. It can be used for all types of jobs but is ●● non-verbal information such as sight, sound,
specifically relevant to administrative tasks. smell, taste and touch, used to check, assess
The analytical approach used in task analysis is or discriminate, and which usually takes
similar to those adopted in the job breakdown and practice to get right;
manual skills analysis techniques. The results of the ●● memorizing facts or information;
analysis are usually recorded in a standard format ●● ordering, prioritizing and planning, which
of four columns, as follows: refer to the degree to which a role holder has
1 Task – a brief description of each element. any responsibility for and flexibility in
determining the way a particular activity is
2 Level of importance – the relative
performed;
significance of each task to the successful
performance of the role. ●● looking ahead and anticipating;
3 Degree of difficulty – the level of skill or ●● diagnosing, analysing and problem solving,
knowledge required to perform each task. with or without help;
●● interpreting or using written manuals and 3 workshops;

other sources of information such as 4 critical-incident technique;
diagrams or charts;
5 repertory grid analysis.
●● adapting to new ideas and systems.
In conducting a job learning analysis interview, the Expert opinion
interviewer obtains information on the main aims The basic, crudest and least satisfactory method is
and principal activities of the job and then, using for an ‘expert’ member of the HR department, pos-
question cards for each of the nine learning skills, sibly in discussion with other ‘experts’ from the
analyses each activity in more depth, recording same department to draw up a list from their own
responses and obtaining as many examples as pos- understanding of ‘what counts’, coupled with an
sible under each heading. analysis of other published lists. This is unsatisfac-
tory because the likelihood of the competencies
being appropriate, realistic and measurable in the
Competency modelling absence of detailed analysis is fairly remote. The list
tends to be bland and, because line managers and
As defined by Shippmann et al (2000: 727): job holders have not been involved, unacceptable.
‘Competency modelling approaches typically pro-
vide descriptions of the individual-level competen-
cies that are core, or common, for an occupational Structured interview
group, entire level of jobs (eg executive, manage- This method begins with a list of competencies
ment, supervisory, hourly), or for the organization drawn up by ‘experts’ and proceeds by subjecting a
as a whole. The focus is on broad applicability and number of role holders to a structured interview.
leveraging what is in common or universal. Even The interviewer starts by identifying the key result
when the modelling effort targets a narrowly areas of the role and goes on to analyse the behav-
defined job group (eg sales managers), the resulting ioural characteristics that distinguish performers at
descriptions are typically at a fairly high level and different levels of competence. The basic question
general in nature.’ Competency modelling is the is: ‘What are the positive or negative indicators of
basis for defining behavioural and technical compe- behaviour conducive or non-conducive to achieving
tencies (see Chapter 16). high levels of performance?’ These may be analysed
under headings such as those set out below. Under
each heading instances will be sought that illustrate
Behavioural competency modelling effective or less effective behaviour:
Behavioural competency modelling is the method ●● personal drive (achievement motivation);
used to identify, analyse and describe behavioural ●● impact on results;
competencies. These define the behaviours that
●● analytical power;
organizations expect their employees to practise in
their work in order to reach an acceptable level of ●● strategic thinking;
performance. They have an important part to play ●● creative thinking (ability to innovate);
in providing information that contributes to a num- ●● decisiveness;
ber of HRM activities, for example, recruitment,
●● commercial judgement;
learning and development, and performance man-
agement. Table 63.1 shows guidance on the criteria ●● team management and leadership;
for a fully rigorous competency definition produced ●● interpersonal relationships;
by Shippmann et al (2000). ●● ability to communicate;
These are exacting criteria. The emphasis is on
the systematic collection and analysis of data. There ●● ability to adapt and cope with change and
are five approaches to behavioural competency pressure;
analysis; in ascending order of complexity these are: ●● ability to plan and control projects.
1 expert opinion; One of the problems with this approach is that it

2 structured interview; relies too much on the ability of the expert to draw
TA B L E 63.1 Criteria for a fully rigorous competency definition
Variable Conditions required to meet high rigorous criteria
Method of investigation A logically selected mix of multiple methods is used to obtain

information, eg interviews, focus groups, questionnaires.
Type of descriptor content Variable combinations of multiple types of information are collected,
collected eg work activities, KSAs (knowledge, skills and abilities statements)
and performance standards.
Procedures for developing Information collected from content experts using a structured
descriptors protocol and a representative sample.
Detail of descriptor content Use of a number of labels representing discrete categories of content
which operationally define each category and leave no room for
misinterpretation.
Link to business goals and Steps taken to ensure that results are aligned with the broader goals
strategies and longer-term strategies of the organization.
Content review Formal review takes place to ensure that:

●● item-level descriptions are clear;
●● content categories do not overlap, content categories are internally consistent;
●● items represent measurable content appropriate for the intended application.
Ranking descriptor content The set of descriptors are prioritized and ranked.
Assessment of reliability Content category labels are matched with item-level descriptors and
rated according to their relative importance for successful job
performance.
Item retention criteria Multiple, clear, logical criteria are consistently applied to items to
determine whether content is retained or deleted.
Documentation Clear definitions are made of the procedures to be employed in

applying the competency framework.
Source Shippmann et al (2000)
out information from interviewees. It is also unde- Workshops

sirable to use a deductive approach that pre-empts
Workshops bring a group of people together who
the analysis with a prepared list of competency
have ‘expert’ knowledge or experience of the role –
headings. It is better to do this by means of an
managers and role holders as appropriate – with a
inductive approach, which starts from specific types
facilitator, usually but not necessarily a member of
of behaviour and then groups them under compe-
the HR department or an outside consultant.
tency headings. This can be done in a workshop by
The members of the workshop begin by getting
analysing positive and negative indicators to gain
agreement to the overall purpose of the role and its
an understanding of the competence dimensions of
key result areas. They then develop examples of
an occupation or job, as described below.
effective and less effective behaviour for each area,
which are recorded on flipcharts. For example, one These dimensions might also be reflected in the
of the key result areas for a divisional HR director analysis of other areas of competency so that, pro-
might be workforce planning, defined as: gressively, a picture of the competencies is built
up, which is linked to actual behaviour in the
Prepares forecasts of human resource requirements
workplace.
and plans for the acquisition, retention and
effective utilization of employees, which ensure The facilitator’s job is to prompt, help the group
that the company’s needs for people are met. to analyse its findings and assist generally in the
production of a set of competence dimensions that
The positive indicators for this competency area can be illustrated by behaviour-based examples.
could include: The facilitator may have some ideas about the sort
●● seeks involvement in business strategy of headings that may emerge from this process but
formulation; should not try to influence the group to come to a
conclusion it has not worked out for itself, albeit
●● contributes to business planning by taking a with some assistance from the facilitator.
strategic view of longer-term human resource Workshops can use the critical-incident or reper-
issues that are likely to affect business tory grid techniques, as described below.
strategy;
●● networks with senior management colleagues
to understand and respond to the human
Critical-incident technique
resource planning issues they raise; The critical-incident technique is a means of elicit-
ing data about effective or less effective behaviour
●● suggests practical ways to improve the use of
related to examples of actual events – critical inci-
human resources, for example, the
dents. The technique is used with groups of job
introduction of annual hours.
holders and/or their managers or other ‘experts’
Negative indicators could include: (sometimes, less effectively, with individuals) as

follows:
●● takes a narrow view of HR planning – does
not seem to be interested in or understand 1 Explain what the technique is and what it is
the wider business context; used for, ie ‘to assess what constitutes good
●● lacks the determination to overcome or poor performance by analysing events
problems and deliver forecasts; that have been observed to have a noticeably
successful or unsuccessful outcome, thus
●● fails to anticipate skills shortages; for
providing more factual and “real”
example, unable to meet the multi-skilling
information than by simply listing tasks and
requirements implicit in the new computer-
guessing performance requirements’.
integrated manufacturing system;
2 Agree and list the key results in the role to be
●● does not seem to talk the same language as
analysed. To save time, the analyst can
line management colleagues – fails to
establish these prior to the meeting but it is
understand their requirements;
necessary to ensure that they are agreed
●● slow in responding to requests for help. provisionally by the group, which can be told
When the positive and negative indicators have that the list may well be amended in the light
been agreed, the next step is to distil the compe- of the forthcoming analysis.
tency dimensions that can be inferred from the lists. 3 Take each area of the role in turn and ask the
In this example they could be: group for examples of critical incidents. If,
for instance, one of the job responsibilities is
●● strategic capability; dealing with customers, the following request
●● business understanding; could be made: ‘I want you to tell me about
●● achievement motivation; a particular occasion at work which involved
●● interpersonal skills; you – or that you observed – in dealing with
a customer. Think about what the
●● communication skills; circumstances were, eg who took part, what
●● consultancy skills. the customer asked for, what you or the
other member of staff did and what the 1 Identify the tasks or elements of the role to
outcome was.’ be subjected to repertory grid analysis. This
4 Collect information about the critical is done by one of the other forms of job
incident under the following headings: analysis, eg interviewing.
–– what the circumstances were; 2 List the tasks on cards.
–– what the individual did; 3 Draw three cards at random from the pack
and ask the members of the group to
–– the outcome of what the individual did. nominate which of these tasks is the odd one
5 Record this information on a flipchart. out from the point of view of the qualities
6 Continue this process for each key result and characteristics needed to perform it.
area. 4 Probe to obtain more specific definitions of
7 Refer to the flipchart and analyse each these qualities or characteristics in the form
incident by obtaining ratings of the recorded of expected behaviour. If, for example, a
behaviour on a scale such as 1 for least characteristic has been described as the
effective to 5 for most effective. ‘ability to plan and organize’, ask questions
such as: ‘What sort of behaviour or actions
8 Discuss these ratings to get initial definitions
indicate that someone is planning
of effective and ineffective performance for
effectively?’ or, ‘How can we tell if someone
each of the key result areas.
is not organizing his or her work particularly
9 Refine these definitions as necessary after the well?’
meeting – it can be difficult to get a group to
5 Draw three more cards from the pack and
produce finished definitions.
repeat steps 3 and 4.
10 Produce the final analysis, which can list the
6 Repeat this process until all the cards have
competencies required and include
been analysed and there are no more
performance indicators or standards of
constructs to be identified.
performance for each key result area.
7 List the constructs and ask the group
This is a thorough, indeed exhaustive approach, but members to rate each task on every quality,
it is time-consuming and requires skill to manage. using a six- or seven-point scale.
8 Collect and analyse the scores to assess their
Repertory grid relative importance.
Like the critical-incident technique, the repertory
Like the critical-incident technique, repertory grid
grid can be used to identify the dimensions that dis-
analysis helps people to articulate their views by
tinguish good from poor standards of performance.
reference to specific examples. An additional advan-
The technique is based on Kelly’s (1955) personal
tage is that the repertory grid makes it easier for
construct theory. Personal constructs are the ways in
them to identify the behavioural characteristics or
which we view the world. They are personal because
competencies required in a job by limiting the area
they are highly individual and they influence the
of comparison through the triadic technique.
way we behave or view other people’s behaviour.
Although a full statistical analysis of the outcome of
The aspects of the role to which these ‘constructs’ or
a repertory grid exercise is helpful, the most impor-
judgements apply are called ‘elements’.
tant results that can be obtained are the descrip-
To elicit judgements, a group of people are asked
tions of what constitute good or poor performance
to concentrate on certain elements, which are the
in each element of the job.
tasks carried out by role holders, and develop con-
Like the critical-incident technique, the repertory
structs about these elements. This enables them to
grid requires a skilled analyst who can probe and
define the qualities that indicate the essential
draw out the descriptions of job characteristics. It is
requirements for successful performance.
quite detailed and time-consuming, but even if the
The procedure followed by the analyst is known
full process is not followed, much of the methodol-
as the ‘triadic method of elicitation’ (a sort of three-
ogy is of use in a less elaborate approach to compe-
card trick) and involves the following steps:
tency modelling.
Choice of approach outputs in the form of quantifiable results but deals

with the broader results that have to be achieved by
Workshops are probably the best approach. They
role holders. An outcome could be a satisfied cus-
get people involved and do not rely on ‘expert’
tomer, a more highly motivated subordinate or a
opinion. Critical-incident or repertory grid tech-
better-functioning team.
niques are more sophisticated and can be associated
Functional analysis deals with processes such as
with workshops but they are time-consuming and
developing staff, providing feedback and monitor-
considerable expertise is required to run them.
ing performance as well as tasks. It starts with an
analysis of the roles fulfilled by an individual in
order to arrive at a description of the separate
Technical competency modelling components or ‘units’ of performance that make
Technical competencies or competences can be up that role. The resulting units consist of perfor-
modelled through the process of functional analy- mance criteria, described in terms of outcomes,
sis, which is used to produce definitions of the com- and a description of the knowledge and skill
petences contained in NVQ (National Vocational requirements that underpin successful perfor-
Qualification) frameworks. Functional analysis mance. The techniques used in functional analysis
focuses on the outcomes of work performance. are similar to those used in job analysis, described
Note that the analysis is not simply concerned with earlier in this chapter.
Key learning points
Job analysis methodology and techniques (knowledge, skill and competency requirements) and
required outcomes (key result areas) rather than
The essence of job analysis is the application of simply listing the tasks to be carried out.
systematic methods to the collection of information
about job content. It is essentially about data
Behavioural competency modelling
collection and the basic steps are:
Behavioural competency modelling is used for
●● obtain documents such as existing organization,
identifying, analysing and describing behavioural
procedure or training manuals that give information
competencies that define the behaviours that
about the job;
organizations expect their staff to practise in their
●● obtain from managers fundamental information work in order to reach an acceptable level of
concerning the job; performance. The emphasis is on the systematic
collection and analysis of data. There are five
●● obtain from job holders similar information about
approaches to behavioural competency analysis. In
their jobs.
ascending order of complexity these are: expert
opinion, structured interview, workshops, critical-
Job descriptions incident technique, and repertory grid analysis.
Job descriptions should be based on the job analysis and
should be as brief and factual as possible. The headings Analysing technical competencies
should be: job title, reporting to, reporting to job holder,
Functional analysis starts with an analysis of the roles
main purpose of job, main activities, tasks or duties.
fulfilled by an individual in order to arrive at a
description of the separate components or ‘units’ of
Role analysis methodology performance that make up that role. The resulting units
Role analysis uses the same techniques as job consist of performance criteria, described in terms of
analysis but the focus is on identifying inputs outcomes, and a description of the knowledge and skill
requirements that underpin successful performance.
Skills analysis programmes. Skills analysis starts from a broad job

analysis but goes into detail of what job holders have
Skills analysis determines the skills required to to do and the particular abilities and skills they need to
achieve an acceptable standard of performance. It is do it. Skills analysis techniques include job breakdown,
mainly used for technical, craft, manual and office jobs manual skills analysis, faults analysis and job learning
to provide the basis for devising learning and training analysis.
References
Kelly, G (1955) The Psychology of Personal Shippmann, J S, Ash, R A and Battista, M (2000) The
Constructs, New York, Norton practice of competency modelling, Personnel
Pearn, K and Kandola, R (1993) Job Analysis: Psychology, 53 (3), pp 703–40
A manager’s guide, London, IPM
677
64
Learning and
development skills
they are motivated to learn. They should be aware
Introduction of the advantages to them as well as the organiza-
tion of developing their present level of knowledge
HR professionals need to know about coaching, or skill or modifying their behaviour. Individuals
mentoring, facilitation and job instruction skills as should be given guidance on what they should be
described in this chapter to fulfil their important re- learning and feedback on how they are doing and,
sponsibilities for enhancing the knowledge and because learning is an active not a passive process,
skills of employees and for providing guidance to they should be actively involved with their coach.
line managers on conducting their learning and de- Coaching is sometimes informal but it has to be
velopment activities. planned. It is not simply checking from time to time
on what people are doing and then advising them
on how to do it better. Nor is it occasionally telling
Coaching people where they have gone wrong and throwing
in a lecture for good measure. As far as possible,
Coaching is a personal (usually one-to-one) ap- coaching should take place within the framework
proach that enables people to develop their skills of a general plan of the areas and direction in which
and knowledge and improve their performance. As individuals will benefit from further development.
Whitmore (2002: 8) suggested: ‘Coaching is unlock- Coaching plans should be incorporated into the
ing a person’s potential to maximize their own per- personal development plans set out in a perfor-
formance. It is helping them to learn rather than mance agreement.
teaching them.’ Clutterbuck (2004: 23) noted that: Coaching should provide motivation, structure
‘Coaching is primarily focused on performance and effective feedback. As a coach, you should be-
within the current job and emphasizes the develop- lieve that people can succeed and that they can con-
ment of skills.’ tribute to their own success.
Coaching is often provided by specialists from
inside or outside the organization who concentrate
on specific areas of skills or behaviour, for example Coaching styles
leadership. But it is also something that HR profes-
sionals have to be prepared to do as part of their Clutterbuck and Megginson (2005: 52) identified
normal learning and development duties, and this four coaching styles:
means deploying the skills described below. 1 Assessor – this is akin to instruction and
involves telling people the way to do
something.
The approach to coaching 2 Demonstrator – this is less directive than the
To succeed in coaching you need to understand that assessor style. It involves showing learners
your role is to help people to learn and ensure that how to do something and then getting them
to do it with guidance and comments from are often appointed and trained by learning and de-
the coach as required. velopment specialists who therefore need to be
3 Tutor – this involves encouraging learners to aware of the skills required. L&D professionals
find out how to do things for themselves. It is may act as mentors themselves, although experi-
still relatively directive as it is the coach who enced managers are best if they have the skills and
suggests what learners should look for. enthusiasm required.
Mentors provide people with:
4 Stimulator – this helps learners to teach
themselves by guiding their thinking through ●● advice in drawing up self-development
the use of insight-provoking questions. programmes or learning contracts;
●● general help with learning programmes;
guidance on how to acquire the necessary
Criteria for effectiveness ●●
knowledge and skills to do a new job;
The following criteria for evaluating the perfor- ●● advice on dealing with any administrative,
mance of a coach were listed by Gray (2010: 379): technical or people problems individuals
●● establishes rapport; meet, especially in the early stages of their
careers;
●● creates trust and respect;
●● information on ‘the way things are done
●● demonstrates effective communication skills;
around here’ – the corporate culture in terms
●● promotes self-awareness and self-knowledge; of expected behaviour;
●● uses active listening and questioning ●● coaching in specific skills;
techniques;
●● help in tackling projects – not by doing it for
●● assists goal development and setting; them but by pointing them in the right
●● motivates; direction, helping people to help themselves;
●● encourages alternative perspectives; ●● a parental figure with whom individuals can
●● assists in making sense of a situation; discuss their aspirations and concerns and
who will lend a sympathetic ear to their
●● identifies significant patterns of thinking and
problems.
behaving;
●● provides an appropriate mix of challenge Mentors need to adopt a non-directive but support-
and support; ive approach to helping the person or persons they
are dealing with.
●● facilitates depth of understanding;
●● shows compassion;
●● acts ethically; Facilitating
●● inspires curiosity;
The facilitation of learning is the process of help-
●● acts as a role model;
ing people to learn mainly for themselves rather
●● values diversity and difference; than force-feeding them. The aim of the facilitator
●● promotes action and reflection. is to guide thinking rather than simply imparting
new knowledge. The facilitator of a learning group
has unobtrusively to stimulate group members to
Mentoring talk, move the discussion along predetermined
lines (there must be a plan and an ultimate objec-
Mentors offer guidance, pragmatic advice and con- tive), and provide interim summaries and a final
tinuing support to help those allocated to them to summary.
learn and develop. It is a method of helping people Help in reaching conclusions is provided by ask-
to learn as distinct from coaching, which can be a ing questions that encourage people to think for
relatively directive means of increasing people’s themselves. These can be challenging and probing
competence. Mentors may be line managers. They questions but the facilitator does not provide the
Chapter 64 | Learning and Development Skills 679
answers – that is the role of the people involved. Demonstration

Neither do facilitators allow their own opinions to
intrude – they are there to help people to learn, not Demonstration is an essential stage in instruction,
to enforce their own ideas. especially when the skill to be learnt is mainly a
‘doing’ skill. Demonstration can take place in three
stages:
Job instruction 1 The complete operation is shown at normal
speed to show the trainee how the task
When people learn specific tasks, especially those should be carried out eventually.
involving basic administrative or manual skills, the
learning will be more effective if job instruction 2 The operation is demonstrated slowly and in
techniques are used. HR professionals may possibly correct sequence, element by element, to
be involved in providing direct instruction but their indicate clearly what is done and the order in
most typical role is that of promoting effective in- which each task is carried out.
struction techniques for use by line managers and 3 The operation is demonstrated again slowly,
others involved in workplace learning or running at least two or three times, to stress the how,
formal training programmes. They should therefore when and why of successive movements.
be aware of the sequence of instruction, as described The learner then practises by imitating the instruc-
below. tor and constantly repeating the operation under
guidance. The aim is to reach the target level of per-
formance for each element of the total task, but the
Preparation instructor must constantly strive to develop coordi-
Preparation for each instruction period means that nated and integrated performance – that is, the
the trainer must have a plan for presenting the smooth combination of the separate elements of the
subject matter and using appropriate teaching task into a whole job pattern.
methods, visual aids and demonstration aids. It
also means preparing trainees for the instruction
that is to follow. They should want to learn. They Follow-up
must perceive that the learning will be relevant Follow-up continues during the training period for
and useful to them personally. They should be all the time required by the learner to reach a level
encouraged to take pride in their job and to
of performance equal to that of the normal experi-
appreciate the satisfaction that comes from skilled enced worker in terms of quality, speed and atten-
performance. tion to safety. During the follow-up stage, the learner
will continue to need help with particularly difficult
tasks or to overcome temporary setbacks that result
Presentation in a deterioration of performance. The instructor
Presentation should consist of a combination of may have to repeat the presentation for the elements
telling and showing – explanation and demonstra- and supervise practice more closely until the trainee
tion. Explanation should be as simple and direct as regains confidence or masters the task.
possible: the trainer explains briefly the ground to
be covered and what to look for. He or she makes
the maximum use of charts, diagrams and other Instructional design
visual aids. The aim should be to teach first things The following are the nine conditions for effective
first and then proceed from the known to the un- instructional design set out by Gagne (1977):
known, the simple to the complex, the concrete to
the abstract, the general to the particular, the obser- 1 gain attention of learners;
vation to reasoning, and the whole to the parts and 2 inform learners of learning objectives;
back to the whole again.
3 stimulate recall of prior learning; 6 elicit performance;

4 present the content and break it down into 7 provide feedback to learners;
components so as to avoid information 8 assess the performance of learners;
overload;
9 enhance knowledge retention and transfer to
5 provide learning guidance; real life in the workplace.
Key learning points
The requirement ●● general help with learning programmes;
HR professionals need skills in coaching and ●● guidance on how to acquire the necessary
mentoring to fulfil their important responsibilities for knowledge and skills to do a new job;
enhancing the knowledge and skills of employees and ●● advice on dealing with any administrative,
for providing guidance to line managers on conducting technical or people problems individuals meet,
their learning and development activities. especially in the early stages of their careers;
●● information on ‘the way things are done around
Coaching here’ – the corporate culture in terms of expected
Coaching is a personal (usually one-to-one) approach behaviour;
that enables people to develop their skills and
●● coaching in specific skills;
knowledge and improve their performance.
●● help in tackling projects – not by doing it for them
The approach to coaching but by pointing them in the right direction, helping
people to help themselves;
To succeed in coaching you need to understand that
your role is to help people to learn and to see that they ●● a parental figure with whom individuals can
are motivated to learn. discuss their aspirations and concerns and who
Coaching is sometimes informal but it has to be will lend a sympathetic ear to their problems.
planned. It is not simply checking from time to time on
what people are doing and then advising them on how Facilitating
to do it better, or occasionally telling people where
The facilitation of learning is the process of helping
they have gone wrong and throwing in a lecture.
people to learn mainly for themselves rather than
Coaching should provide motivation, structure and
force-feeding them.
effective feedback. As a coach, you should believe
that people can succeed and that they can contribute
to their own success. Job instruction
When people learn specific tasks, especially those
Mentoring involving basic administrative or manual skills, the
learning will be more effective if job instruction
Mentors offer guidance, pragmatic advice and
techniques are used. The sequence of instruction is:
continuing support to help those allocated to them to
learn and develop. It is a method of helping people to ●● Preparation for each instruction period means that
learn as distinct from coaching, which can be a the trainer must have a plan for presenting the
relatively directive means of increasing people’s subject matter and using appropriate teaching
competence. Mentors provide people with: methods, visual aids and demonstration aids. It also
means preparing trainees for the instruction that is
●● advice in drawing up self-development
to follow.
programmes or learning contracts;
Chapter 64 | Learning and Development Skills 681
●● Presentation should consist of a combination of ●● Follow-up continues during the training period for
telling and showing – explanation and all the time required by the learner to reach a level
demonstration. of performance equal to that of the normal
experienced worker in terms of quality, speed and
●● Demonstration is an essential stage in instruction,
attention to safety.
especially when the skill to be learnt is mainly a
‘doing’ skill.
References
Clutterbuck, D (2004) Everyone Needs a Mentor: Gray, D A (2010) Building quality into executive
Fostering talent in your organization, 4th edn, coaching, in (eds) J Gold, R Thorpe and A
London, CIPD Mumford, Gower Handbook of Leadership and
Clutterbuck, D and Megginson, D (2005) Making Management Development, Farnham, Gower,
Coaching Work: Creating a coaching culture, pp 367–85
London, CIPD Whitmore, J (2002) Coaching for Performance, 3rd
Gagne, R M (1984) Learning outcomes and their edn, London, Nicholas Brealey
effects, American Psychologist, 39 (4), pp 377–85
682
65
Negotiating skills
Introduction The process of negotiation
HR practitioners who are involved in industrial Negotiating takes place when two parties meet to
relations may conduct or take part in negotiations reach an agreement concerning a proposition, such
with trade union representatives or officials. as a pay claim, one party has put to the other.
Negotiating is a process that requires considerable Negotiation can be convergent when both parties
skill. are equally keen to reach a win-win agreement (in
Negotiation involves bargaining, which is reach- commercial terms, a willing buyer/willing seller
ing the most advantageous position in discussion arrangement). It can be divergent when one or both
with another party through a process of offer and of the parties aim to win as much as they can from
counter-offer. It is a process in which two parties – the other while giving away as little as possible.
management and the trade union – get together Negotiations in an industrial relations setting differ
with the aim of getting the best deal possible for from commercial negotiations in the respects shown
their business or their members. in Table 65.1.
Negotiations usually involve a conflict of inter- In negotiations on pay or other terms and con-
est. In pay negotiations unions want the highest set- ditions of service, management represents the em-
tlement they can get; management wants the lowest. ployer’s interests and employee representatives
In negotiations about other terms and conditions, represent the interests of employees. Both sides
unions will want the best result for their members are of equal status. Negotiations take place in an
while management will want to avoid agreeing to atmosphere of uncertainty. Neither side knows
anything other than what they think is reasonable how strong the other side’s bargaining position is
from their viewpoint. It can be a zero-sum game – or what it really wants and will be prepared to
what one side gains, the other loses. No one likes to accept.
lose, so there is scope for conflict, which has to be
managed if an amicable agreement is to be achieved.
And negotiators do, or should, try to end up on Stages of negotiation
friendly terms, whatever differences of opinion have
occurred on the way. After all, they may well meet Negotiations are conducted in four stages: initial
again. steps, opening, bargaining and closing.
A ‘mutual gains’ approach is desirable but not
always achievable. This involves recognizing that
while the interests of the two parties will probably Initial steps
differ in some if not many respects, it may be pos-
sible to find common ground. A problem-solving In a pay negotiation, unions making the claim will
approach is best. Both sides exchange information define for themselves three things: (a) the target
to advance interests that they think will benefit both they would like to achieve, (b) the minimum they
of them. This results in the generation of options will accept, and (c) the opening claim they believe
and a choice of those that are considered to provide will be most likely to achieve the target. Employers
mutual gains (Cullinane et al, 2014: 819). define three related things: (1) the target settlement
Chapter 65 | Negotiating Skills 683
TA B L E 65.1 Commercial and industrial relations negotiations compared
Industrial relations negotiations Commercial negotiations
●● Assume an ongoing relationship – negotiators ●● Negotiators can walk away.

cannot walk away. ●● The contract is legally binding.
●● The agreement is not legally binding. ●● May be conducted at a distance.
●● Conducted on a face-to-face basis. ●● Carried out directly with the parties being
●● Carried out by representatives responsible to responsible to a line manager.
constituents. ●● Usually conducted on a continuing basis.
●● Make frequent use of adjournments. ●● Usually conducted on a ‘willing buyer/willing
●● May be conducted in an atmosphere of seller’ basis.
distrust, even hostility.
they would like to achieve, (2) the maximum they Opening

would be prepared to concede, and (3) the opening
Tactics in the opening phase of a negotiation are as
offer that will provide them with sufficient room to
follows:
manoeuvre in reaching their target. The difference
between a union’s claim and an employer’s offer is ●● open realistically and move moderately;
the negotiating range. If the maximum the employer ●● challenge the other side’s position as it
will offer exceeds the minimum the union will stands; do not destroy their ability to
accept the difference will be the settlement range, in move;
which case a settlement will be easily reached. If,
however, the maximum the employer will offer is ●● observe behaviour, ask questions and listen
less than the minimum the union will accept, nego- attentively in order to assess the other side’s
tiations will be more difficult and a settlement will strengths and weaknesses, their tactics and
only be reached if the expectations of either side are the extent to which they may be bluffing;
adjusted during the bargaining stage. The extent to ●● make no concessions at this stage;
which this will happen depends on the relative ●● be non-committal about proposals and
power of the two parties. The strength of the argu- explanations – do not talk too much.
ments put forward by either party will also be a
factor, but the major consideration is usually power.
Similarly, in a negation on another employment Bargaining
issue such as working arrangements, the union sets
out a request (or demand) but usually has a fall- After the opening moves, the main bargaining phase
back position, while the employer decides on an takes place in which the gap is narrowed between
initial response but again has a fall-back position. the initial positions. The attempt is made to per-
Preparation for negotiation by either party suade each other that their case is strong enough to
involves: force the other side to close at a less advantageous
point than they had planned. Bargaining is often as
●● deciding on the strategy and tactics to be used; much about concealing as revealing – keeping argu-
●● listing the arguments to be used in ments in reserve to deploy when they will make the
supporting their case; greatest impact.
The following tactics are used:
●● listing the arguments or counter-arguments
the other party is likely to use; ●● Always make conditional proposals: ‘If you
●● obtaining supporting data; will do this, then I will consider doing that’ –
the words to remember are: ‘if… then…’.
●● selecting the negotiating team, briefing them
on the strategy and tactics and rehearsing ●● Never make one-sided concessions: always
them in their roles. trade off against a concession from the other
party: ‘If I concede x, then I expect you to ●● Concessions, once made, cannot be
concede y’. withdrawn.
●● Negotiate on the whole package: negotiations ●● If negotiators want to avoid committing
should not allow the other side to pick off themselves to ‘a final offer’ with the risk of
item by item (salami negotiation). devaluing the term if they are forced to make
●● Keep the issues open to extract the maximum concessions, they should state as positively as
benefit from potential trade-offs. they can that this is as far as they can go. But
bargaining conventions allow further moves
There are certain bargaining conventions that expe- from this position on a quid pro quo basis.
rienced negotiators follow because they appreciate
●● Firm offers must not be withdrawn.
that by so doing they create the atmosphere of trust
and understanding that is essential to the sort of ●● The final agreement should mean exactly
stable bargaining relationship which benefits both what it says. There should be no trickery and
sides. Some of the more generally accepted conven- the agreed terms should be implemented
tions are as follows: without amendment.
●● So far as possible, the final settlement should
●● Whatever happens during the bargaining,
be framed and communicated in such a way
both parties are hoping to reach a settlement.
as to reduce the extent to which the other
●● Negotiators should show that they respect party loses face or credibility.
the views of the other side and take them
seriously even if they disagree with them. When bargaining, the parties have to identify the
basis for a possible agreement; that is, the common
●● While it is preferable to conduct negotiations
ground. In a typical pay negotiation the trade union
in a civilized and friendly manner, attacks,
making the claim will come to the table with a pre-
hard words, threats and controlled losses of
determined target settlement, minimum acceptable
temper may be used by negotiators to
offer and opening claim. Similarly, the employer,
underline determination to get their way and
will have their own target, maximum offer and
to shake their opponent’s confidence and
opening offer. The difference between the union’s
self-possession. But these should be treated
claim and the employer’s offer is the negotiating
by both sides as legitimate tactics and should
range. If the employer’s maximum exceeds the
not be allowed to shake the basic belief in
union’s minimum this will indicate the settlement
each other’s integrity or desire to settle
zone as illustrated in Figure 65.1. In this example
without taking drastic action.
the chance of settlement without too much trouble
●● Off-the-record discussions (‘corridor is fairly high. It is when the employer’s maximum is
negotiations’) can be mutually beneficial as a less than the union’s minimum, as shown in Figure
means of probing attitudes and intentions 65.2, that the trouble starts.
and smoothing the way to a settlement, but
they should not be referred to specifically in
formal bargaining sessions unless both sides Closing
agree in advance.
There are various closing techniques:
●● Each side should be prepared to move from
its original position. ●● Make a concession from the package,
●● It is normal, although not inevitable, for the preferably a minor one, which is traded off
negotiation to proceed by alternate offers against an agreement to settle. The
and counter-offers from each side, leading concession can be offered more positively
steadily towards a settlement. than in the bargaining stage: ‘If you will
agree to settle at x then I will concede y’.
●● Third parties should not be brought in until
both sides agree that no further progress can ●● Do a deal, split the difference or bring in
be made without them. something new, such as extending the
F I G U R E 65.1 Negotiating range with a settlement zone

Union Management
% %
Claim 5
Negotiating
Target 3 3 Maximum
range
Settlement
zone
2 2 Target
Minimum
1.5 Offer
F I G U R E 65.2 Negotiating range without a settlement zone
Claim 5
Negotiating
Target 4
range
Minimum 3
Negotiating
gap
2 Maximum
1.5 Target
1 Offer
settlement timescale, agreeing to back Employers should not make a final offer unless they
payments, phasing increases, or making a mean it. If it is not really their final offer and the
joint declaration of intent to do something in union calls their bluff, they may have to make fur-
the future. ther concessions and their credibility will be under-
●● Summarize what has happened so far, mined. Each party will attempt to force the other
emphasize the concessions that have been side into revealing the extent to which they have
made and the extent of movement from the reached their final position. But negotiators should
original position, and indicate that the limit not allow themselves to be pressurized. They have
has been reached. to use their judgement on when to say, ‘this is as far
as we can go’. That judgement will be based on their
●● Apply pressure through a threat of the dire
understanding that the stage when a settlement is
consequences that will follow if a ‘final’
possible has been reached.
claim is not agreed or a ‘final offer’ is not
accepted.
Keeping cards close to the chest – not giving

Negotiating and bargaining ●●
away what you really want or are prepared
skills to concede until you are ready to do so (in
the marketplace it is always easier for sellers
The skills required to be effective in negotiations to drive a hard bargain with buyers who
and bargaining are: have revealed somehow that they covet the
article).
●● Analytical ability – the capacity to assess the ●● Flexible realism – the capacity to make
factors that affect the negotiating stance and realistic moves during the bargaining process
tactics of both parties. to reduce the claim or increase the offer,
●● Empathy – the ability to put oneself in the which will demonstrate that the bargainer is
other party’s shoes. seeking a reasonable settlement and is
●● Interactive skills – the ability to relate well prepared to respond appropriately to
with other people. movements from the other side.
●● Communicating skills – the ability to convey
information and arguments clearly, positively
and logically.
Key learning points
The process of negotiation ●● Empathy – the ability to put oneself in the other
party’s shoes.
Negotiation is the process of coming to terms and, in
so doing, getting the best deal possible. Negotiation ●● Interactive skills – the ability to relate well with
involves bargaining, which is reaching the most other people.
advantageous position in discussion with another ●● Communicating skills – the ability to convey
party through a process of offer and counter-offer. information and arguments clearly, positively and
Negotiating takes place when two parties meet to logically.
reach an agreement on a proposition, such as a pay
claim, one party has put to the other. Negotiation can ●● Keeping cards close to the chest – not giving away
be convergent when both parties are equally keen to what you really want or are prepared to concede
reach a win-win agreement (in commercial terms, a until you are ready to do so.
willing buyer/willing seller arrangement). It can be ●● Flexible realism – the capacity to make realistic
divergent when one or both of the parties aim to win moves during the bargaining process to reduce
as much as they can from the other while giving away the claim or increase the offer, which will
as little as possible. demonstrate that the bargainer is seeking a
reasonable settlement and is prepared to
Stages of negotiation respond appropriately to movements from the
other side.
Negotiations are conducted in four stages: initial
steps, opening, bargaining and closing.
Negotiating and bargaining skills

●● Analytical ability – the capacity to assess the
factors that affect the negotiating stance and
tactics of both parties.
Reference
Cullinane, N, Donaghey, J, Dundon, T, Hickland, E Information and Consultation Directive, The
and Dobbins, T (2014) Regulating for mutual International Journal of Human Resource
gains? Non-union employee representation and the Management, 25 (6), pp 810–28
688
66
Change management
Introduction Levers for change
Change management is the process of leading and Change management makes use of levers for change
facilitating change – initiating and achieving the in order, as described by Unilever (2019), to make it
smooth implementation of new developments and understood, make it easy, make it rewarding and
initiatives by planning and introducing them sys- make it a habit. Levers for change are any methods
tematically and allowing for the possibility of their or approaches that can be used to achieve a desired
being resisted or at least misunderstood. Change result. They include such activities as consulting
management processes can play a key part in an or- people on the need for change and what should be
ganization development programme, especially done about it, involving them in planning and im-
where this involves culture change as discussed in plementing the change, communicating the details
Chapter 23. of the change, spelling out how it will work, why it
In this chapter the first section deals with the is necessary and how people will be affected by it,
psychology of change management and the follow- the use of ‘nudge theory’ approaches (see later in
ing sections cover in turn the levers for change, the this chapter), the use of designated change agents,
process of change, models of change, resistance to and ensuring that the people, mechanisms and in-
change, implementing change, the role of change frastructure needed to make change possible are
agents and the role of HR in leading and facilitating available. The choice of a lever for change should be
change. The chapter concludes with a list of guide- based on an assessment of which approach or ap-
lines for managing change. proaches are likely to be most effective in the cir-
cumstances. These circumstances will include the
nature of the change, how radical or complex it is,
The psychology of change the impact it will have on employees, and the con-
text in which the change will take place.
management
To persuade and enable a person to start, conduct The change process
and complete a behaviour change it is necessary to
ensure that: Conceptually, the change process starts with an
●● the individual can see the purpose of the awareness of the need for change. An analysis of the
change and agrees with it; situation and the factors that have created it leads
to a diagnosis of their distinctive characteristics and
●● the rewards and recognition system supports
an indication of what change is required and an
the new behaviour;
analysis of its impact on the organization and its
●● the individual has the skills for the new employees, its benefits and its costs. It is necessary
behaviour; at this stage to assess the capability for change –
●● the people who are role models are seen to whether or not the organization is ready for change
model the new behaviour. and the extent to which employees are likely to wel-
come or at least accept it.
Chapter 66 | Change Management 689
A business case can then be made for the pre- affected to attain the natural state of
ferred change which will spell out the way(s) in equilibrium by accepting change.
which it will generate added value and stimulate ●● Changing – developing new responses based
improved performance (see also Chapter 73). on new information.
Possible methods of managing the change in the
●● Refreezing – stabilizing, supporting and
shape of levers for change are next identified and
reinforcing the new changed conditions.
evaluated. It is then necessary to decide how to get
from here to there. Managing change during this Lewin also suggested the following methodology
transition state is a critical phase in the change pro- for analysing change, which he called ‘field force
cess. It is here that the problems of introducing analysis’:
change emerge and have to be managed. These
●● Analyse the restraining or driving forces that
problems can include resistance to change, instabil-
will affect the transition to the future
ity, high levels of stress, misdirected energy, conflict,
state – these restraining forces will include
and loss of momentum. Hence the need to do every-
the reactions of those who see change as
thing possible to anticipate reactions and likely im-
unnecessary or as constituting a threat.
pediments to the introduction of change.
The final stage, in which the new structure, sys- ●● Assess which of the driving or restraining
tem or process is installed, can also be demanding, forces are critical.
indeed painful. As described by Pettigrew and ●● Take steps both to increase the critical
Whipp (1991: 27), the implementation of change is driving forces and to decrease the critical
an ‘iterative, cumulative and reformulation-in-use restraining forces.
process’.
The next issue is how to ‘hold the gains’, ie how
to ensure that the change is embedded and main- Beckhard
tained. This means continuously monitoring the ef-
Beckhard (1969) proposed that a change pro-
fects and impact of the change and taking corrective
gramme should incorporate the following processes:
action where necessary to ensure that it continues
to work well. The change process has been de- ●● Set goals and define the future state or
scribed in the various change models set out below. organizational conditions desired after the
change.
Diagnose the present condition in relation to
Change models ●●
these goals.
●● Define the transition state activities and
Change models explain the mechanisms for change
commitments required to meet the future
and the factors that affect its success. The best-
state.
known change models are those developed by
Lewin (1951) and Beckhard (1969), but other im- ●● Develop strategies and action plans for
portant contributions to an understanding of the managing this transition in the light of an
mechanisms for change have been made by Thurley analysis of the factors likely to affect the
(1979) and Beer et al (1990). introduction of change.
Lewin Thurley
The basic mechanisms for managing change as set Thurley (1979) described the following five ap-
out by Lewin (1951) are: proaches to managing change:
●● Unfreezing – altering the present stable ●● Directive – the imposition of change in crisis
equilibrium that supports existing behaviours situations or when other methods have
and attitudes. This process must take account failed. This is done by the exercise of
of the inherent threats change presents to managerial power without consultation.
people and the need to motivate those
●● Bargained – this approach recognizes that Beer, Eisenstat and Spector

power is shared between the employer and
the employed and change requires Beer et al (1990) suggested in a seminal Harvard
negotiation, compromise and agreement Business Review article, ‘Why change programs
before being implemented. don’t produce change’, that most such programmes
●● ‘Hearts and minds’ – an all-embracing thrust are guided by a theory of change that is fundamen-
to change the attitudes, values and beliefs of tally flawed. This theory states that changes in atti-
the whole workforce. This ‘normative’ tudes lead to changes in behaviour: ‘According to
approach (ie one that starts from a definition this model, change is like a conversion experience.
of what management thinks is right or Once people get religion, changes in their behaviour
‘normal’) seeks ‘commitment’ and ‘shared will surely follow’ (ibid: 159). They thought that
vision’ but does not necessarily include this theory gets the change process exactly back-
involvement or participation. wards and made the following comment on it:
●● Analytical – a theoretical approach to the
change process using models of change such
as those described above. It proceeds
sequentially from the analysis and diagnosis Word s of w isd om
of the situation, through the setting of
objectives, the design of the change process, Individual behaviour is powerfully shaped
the evaluation of the results and, finally, the by the organizational roles people play. The
determination of the objectives for the next
most effective way to change behaviour,
stage in the change process. This is the
rational and logical approach much therefore, is to put people into a new
favoured by consultants – external and organizational context which imposes new
internal. But change seldom proceeds as
smoothly as this model would suggest. roles, responsibilities and relationships on
Emotions, power politics and external them. This creates a situation that in a sense
pressures mean that the rational approach, ‘forces’ new attitudes and behaviour on
although it might be the right way to start, is
difficult to sustain. people.
●● Action-based – this recognizes that the way Beer et al (1990: 159)
managers behave in practice bears little
resemblance to the analytical, theoretical
model. The distinction between managerial
thought and managerial action blurs in They prescribe six steps to effective change that
practice to the point of invisibility. What concentrate on what they call ‘task alignment’ – re-
managers think is what they do. Real life organizing employees’ roles, responsibilities and re-
therefore often results in a ‘ready, aim, fire’ lationships to solve specific business problems in
approach to change management. This small units where goals and tasks can be clearly de-
typical approach to change starts with a fined. The aim of following the overlapping steps is
broad belief that some sort of problem exists, to build a self-reinforcing cycle of commitment, co-
although it may not be well defined. The ordination and competence:
identification of possible solutions, often on 1 Mobilize commitment to change through the
a trial or error basis, leads to a clarification joint analysis of problems.
of the nature of the problem and a shared
2 Develop a shared vision of how to organize
understanding of a possible optimal solution,
and manage to achieve goals such as
or at least a framework within which
competitiveness.
solutions can be discovered.
3 Foster consensus for the new vision, people need to be identified and, where feasible,
competence to enact it, and cohesion to they can help in the introduction of change as
move it along. change agents.
4 Spread revitalization to all departments
without pushing it from the top – don’t force
the issue; let each department find its own Reasons for resisting change
way to the new organization. Specifically, the reasons for resisting change are:
5 Institutionalize revitalization through formal
●● The shock of the new – people are suspicious
policies, systems and structures.
of anything they perceive will upset their
6 Monitor and adjust strategies in response to established routines, methods of working or
problems in the revitalization process. conditions of employment. They do not want
to lose the security of what is familiar to
them. They may not believe statements by
Resistance to change management that the change is for their
benefit as well as that of the organization,
People resist change because it is seen as a threat to sometimes with good reason. They may feel
familiar patterns of behaviour as well as to status that management has ulterior motives and,
and financial rewards. Joan Woodward made this sometimes, the louder the protestations of
point clearly: management, the less they will be believed.
●● Economic fears – loss of money, threats to
job security.
●● Inconvenience – the change will make life
more difficult.
Wo rd s of wi sdom
●● Uncertainty – change can be worrying
When we talk about resistance to change we because of uncertainty about its likely
tend to imply that management is always impact.
rational in changing its direction, and that ●● Symbolic fears – a small change that may
affect some treasured symbol, such as a
employees are stupid, emotional or separate office or a reserved parking space,
irrational in not responding in the way they may symbolize big ones, especially when
should. But if an individual is going to be employees are uncertain about how extensive
the programme of change will be.
worse off, explicitly or implicitly, when the
●● Threat to interpersonal relationships –
proposed changes have been made, any anything that disrupts the customary social
resistance is entirely rational in terms of his relationships and standards of the group will
be resisted.
own best interest. The interests of the
●● Threat to status or skill – the change is
organization and the individual do not perceived as reducing the status of
always coincide. individuals or as de-skilling them.
Woodward (1968: 80) ●● Competence fears – concern about the ability
to cope with new demands or to acquire new
skills.
Hamlin and Davies (2001: 58) commented that

‘Any change creates stress and anxiety; this is be-
Overcoming resistance to change
cause as human beings we deal individually with Resistance to change can be difficult to overcome,
uncertainty in different ways.’ However, some peo- even when the change is not detrimental to those con-
ple will welcome change as an opportunity. These cerned. But the attempt must be made. The starting
point is an analysis of the potential impact of change

by considering how it will affect people in their jobs.
acknowledge and build the needed skills
The reasons for resisting change set out above can be
used as a checklist to establish where there might be and organizational capabilities, to gain
problems with groups or with individuals. support of the workforce, and to support
The analysis should indicate which aspects of the
proposed change may be supported generally or by the organizational changes and learning
specified individuals and which aspects may be re- required to behave in new ways. In short,
sisted. So far as possible, the potentially hostile or execution failures are often the result of
negative reactions of people and the reasons for
them should be identified. It is necessary to try to poor human capital management. This
understand the likely feelings and fears of those af- opens the door for HR to add important
fected so that worries can be relieved and, as far as
possible, ambiguities can be resolved. In making this
value if it can deliver change strategies,
analysis, the individual introducing the change – the plans and thinking that aid in the
change agent – should recognize that new ideas are development and execution of business
likely to be suspect and should make ample provi-
sion for the discussion of reactions to proposals to strategy.
ensure complete understanding of them. Lawler and Mohrman (2003: 24)
Involvement in the change process gives people
the chance to raise and resolve their concerns and
make suggestions about the form of the change and
how it should be introduced. The aim is to get
‘owner ship’ – a feeling amongst people that the Implementing change can indeed be difficult.
change is something that they are happy to live with Research by Carnall (1991) in 93 organizations
because they have been involved in its planning and identified the following explanations for failures to
introduction – it has become their change. implement change effectively:
A communication strategy to explain the pro- ●● implementation took more time than
posed change should be prepared and implemented originally allowed;
so that unnecessary fears are allayed. All the avail-
able channels should be used, but face-to-face com- ●● major problems that had not been identified
munications direct from managers to individuals or beforehand emerged during implementation;
through a team briefing system are best. ●● coordination of implementation activities
was not effective enough;
●● competing activities and other crises
Implementing change distracted management from implementing
the change decision;
The problems of implementing strategic change were ●● the capabilities of the employees involved
summed up by Lawler and Mohrman as f ollows: were not sufficient;
●● training and instruction to lower-level
employees was inadequate;
●● uncontrollable factors in the external
Wo rd s o f w isdom environment had an adverse effect on
implementation.
Most strategies, like most mergers, fail not
because of poor thinking, but because of The following suggestions on how to minimize such
problems were put forward by Nadler and Tushman
poor implementation. Implementation (1980):
failures usually involve the failure to ●● Motivate in order to achieve changes in
behaviour by individuals.
●● Manage the transition by making ●● Analysis and diagnosis – data collection,

organizational arrangements designed to problem solving, systems thinking.
ensure that control is maintained during and ●● Data utilization – qualitative or quantitative
after the transition and by developing and data, paper-based review, survey techniques.
communicating a clear image of the future.
●● Interpersonal skills – dealing with people,
●● Shape the political dynamics of change so leadership.
that power centres develop that support the
●● Communication skills – speaking, written
change rather than block it.
presentations/reports, listening.
●● Build in stability of structures and processes
●● Political awareness – sensitivity, influencing.
to serve as anchors for people to hold on
to – organizations and individuals can only ●● Intervention implementation – participation,
stand so much uncertainty and turbulence, involvement.
hence the emphasis by Quinn (1980) on the ●● Monitoring and evaluation – criteria setting
need for an incremental approach. and reviewing, measuring effectiveness.
As reported by Surowiecki (2013: 44), Professor ●● Technical skills – financial interpretation,
Michael Roberto of Bryant University suggested psychometrics.
that: ‘Anytime you’re trying to change the ways you ●● Process skills – facilitation.
do things, small wins are important. Small wins ●● Insight – reflection, awareness of key issues,
help you build support both internally and exter- critical thinking, intuition.
nally, and they make it easier for people to buy in.’
Nudge theory as described later in this chapter pro- It is often assumed that only people from outside
vides support for this approach. the organization can take on the change agent role
because they are independent and do not ‘carry any
baggage’. They can be useful, but people from
The role of change agents within the firm who are respected and credible can
do the job well. This is often the role of HR special-
The change process will take place more smoothly ists, but the use of line managers adds extra value.
with the help of credible internal or external change
agents – people who help to manage change by pro-
viding advice and support on its introduction and The role of HR in leading
management. A change agent was defined by Caldwell
(2003: 139–40) as ‘an internal or external individual
and facilitating change
or team responsible for initiating, sponsoring, man-
Leading and facilitating change is probably the
aging and implementing a specific change initiative or
most demanding of all HR activities. If HR is
complete change programme.’ As described by
concerned – as it should be – in playing a major
Balugon and Hope-Hailey (2004), the role of the
strategic role in the achievement of continuous im-
change agent is to lead change. Alfes et al (2010)
provement and in the HR processes that support
noted that change agents establish what is required,
that improvement, then it will need to be involved
involve people in planning and managing change, ad-
in leading and facilitating change. Caldwell (2001)
vise on how change should be implemented and com-
stated that the change agent roles that can be car-
municate to people the implications of change.
ried out by HR professionals are those of change
Keep (2001: 89) listed the following change
champions, change adapters, change consultants
agent competencies:
and change synergists.
●● Project management – planning and resource
allocation.
●● Contracting with clients – defining the task, HR’s role in leading change
establishing relationships. Leading change involves initiating and managing
●● Team building – defining roles, maintaining culture change (the process of changing the organi-
good working relationships. zation’s culture in the shape of its values, norms and
beliefs) and the introduction of new structures, sys- HR’s role in facilitating change
tems, working practices and people management
processes. The aim is to increase organizational ca- Facilitating change is about making it happen. As
pability (the potential ability of the organization to Hamlin and Davies (2001: 13) observed, one of the
perform well) and organizational effectiveness (how major challenges facing HR ‘is how to help people
well the organization actually performs). through the transitions of change, and how to sur-
Ulrich (1997: 7) observed that HR professionals vive in working conditions that are in a constant
should be ‘as explicit about culture change as they state of flux.’ Brown and Eisenhardt (1997: 21)
are today about the requirements for a successful noted that managers who were successful in the art
training program or hiring strategy’. He later em- of continuous change ‘carefully managed the transi-
phasized that, ‘HR should become an agent of con- tion between the past and the future. Much like the
tinuous transformation, shaping processes and a pit stop in a car race or the baton pass in track, this
culture that together improve an organization’s ca- transition appeared critical.’
pacity for change’ Ulrich (1998: 125). The role of HR in facilitating change was
Change leadership means: described by Vere and Butler (2007: 34) as follows:
●● identifying where change is required; ●● The issue needs to be on the strategic
●● specifying what changes should take place; business agenda and managers must see how
action will improve business results: that is,
●● assessing the benefits of the change and what there needs to be a sound business case for
it will cost; the initiative. HR managers need to be able
●● establishing the consequences of the change; to demonstrate the return on the planned
●● assessing the capability for change – investment.
availability of people resources to manage ●● The change needs to have the active backing
the change, including change agents, of those at the top of the organization, so it is
availability of the financial and other for the HR director to gain the commitment
resources required, readiness for change of the top team and engage them in a
amongst the various stakeholders who will practical way in taking the work forward.
be affected by it; ●● HR needs to engage managers in the design
●● assessing any problems the change may of change from the outset (or, if this is a
create, eg resistance to the change, and any business-driven change, HR needs to be
risks involved; involved at the outset).
●● persuading management and anyone else ●● The programme needs to be framed in the
affected by the change that it is necessary, language of the business to have real meaning
spelling out the benefits and indicating what and achieve ‘buy-in’ for all parties; if there is
will be done to deal with potential problems; too much HR jargon, this will be a turn off.
●● identifying and selecting the levers for ●● Project management skills as described in
change; Chapter 74 are crucial to ensure the
●● planning how the change should be programme is well planned and resourced
implemented, including assessing the choice and risks are assessed and managed.
of levers for change, nominating and briefing ●● The importance of communication to
change agents (people responsible for explain, engage and commit people to the
achieving change), minimizing potential programme is paramount.
resistance through communication and ●● In this respect the crucial role that HR can
involvement, and managing risks; play is to ensure that employees are fully
●● facilitating the introduction and management engaged in the design and implementation of
of the change; the change.
●● ensuring that the change is embedded ●● HR needs to draw on others’ experience and
successfully – ‘holding the gains’. learning.
To do all this, Ulrich (1997: 8) pointed out that ‘HR The steps required are:
professionals need a model of change and the abil-
1 Strategic analysis, a review of the
ity to apply the model to a specific situation.’ The
organization’s strategic orientation (its
models described later in this chapter need to be
strategic intentions within its competitive
understood and applied as appropriate. The other
environment) and a diagnosis of the
qualities required are insight – to understand the
organization’s readiness for change.
need for change, courage – to pursue change, and
determination – to achieve change. 2 Develop strategic capability – the ability to
Leading and facilitating change is hard work. As implement the strategic plan quickly and
Alfes et al (2010: 111) observed on the basis of their effectively.
research: ‘The role [of HR] is generally constrained 3 Integrate individuals and groups throughout
and reactive.’ They also noted that: ‘HR profession- the organization into the processes of
als may find their roles circumscribed by expecta- analysis, planning and implementation to
tions of their role, the nature of the change process, maintain the firm’s strategic focus, direct
capability and capacity’ (ibid: 125). attention and resources to the organization’s
Ulrich (1997) emphasized that one of the key key competencies, improve coordination and
roles of HR professionals is to act as change agents, integration within the organization and
but it is a difficult role to play. Perhaps, as Thornhill create higher levels of shared ownership and
et al (2000) noted, the main contribution HR can commitment.
make is to generate and support change where a 4 Create the strategy, gain commitment and
core feature is the development and alignment of support for it and plan its implementation.
HRM practices such as culture management, per-
5 Implement the strategic change plan,
formance management, learning and development,
drawing on knowledge of motivation, group
reward management and employment relations.
dynamics and change processes, dealing with
To lead change it is necessary to understand how
issues such as alignment, adaptability,
the process works. It is important to bear in mind
teamwork and organizational and individual
that while those leading change need to be constant
learning.
about ends, they have to be flexible about means.
This requires them to come to an understanding of 6 Decide on the levers for change to be
the various models of change that have been devel- adopted, taking account of which are
oped and of the factors that create resistance to most likely to be appropriate in the
change and how to minimize such resistance. In the circumstances.
light of an understanding of these models and 7 Allocate resources, provide feedback and
the phenomenon of resistance to change they will solve problems as they arise.
be better equipped to make use of the levers for
change available and the guidelines for change set
out at the end of this chapter. Nudge theory
Nudge theory provides guidance on a potentially
Change management useful approach to persuading people to welcome
or at least accept change. It is based on the proposi-
programmes tion that it is easier for people to take a series of
small steps than one large one. ‘Nudging’ means
Change management programmes come in all sorts that they are not forced to accept huge changes or
of shapes and sizes depending on the nature and scale make big decisions all at once. They can more easily
of the change. But they can be organization-wide as absorb what is happening. It is about steering peo-
in a major organization development programme ple in particular directions but also allowing them
and an integrated strategic change approach as con- to go their own way. This is what Thaler and
ceived by Worley et al (1996) may be appropriate. Sunstein who originated the concept have to say
They can also make use of nudge theory. about it.
Guidelines for change

Wo rd s o f w isdom
management
A nudge, as we will use the term, is any
aspect of the choice architecture that alters ●● The achievement of sustainable change
people’s behaviour in a predictable way requires strong commitment and visionary
leadership from the top.
without forbidding any options or changing
●● Those concerned with managing change at
their economic perspective. To count as a all levels should have the temperament and
mere nudge, the intervention must be leadership skills appropriate to the
cheap and easy to avoid. Nudges are not circumstances of the organization and its
change strategies.
mandatory. Putting fruit out at eye level
●● People can see the purpose of the change and
(hoping that people will choose fruit over agree with it.
unhealthy alternatives) counts as a nudge. ●● People have the skills required for the new
behaviour.
Banning junk food does not.
Thaler and Sunstein (2009: 6)
●● Key people act as role models for the new
behaviour.
●● Understanding is necessary of the culture of
the organization and the levers for change
that are most likely to be effective in that
Nudge theory recognizes that the majority of our
culture.
decisions are made instinctively and unconsciously –
people don’t always think and decide logically and ●● Change is more likely to be successful if
consciously, weighing up all the costs and benefits. there is a ‘burning platform’ to justify it, ie a
In order to achieve a positive change of behaviour, powerful and convincing reason for change.
‘nudging’ taps into this way of thinking. It uses pos- ●● Every effort must be made to explain the
itive reinforcement and indirect suggestions as ways reasons for the change and any benefits it
of convincing people to accept something – it does provides for people.
not attempt to force compliance. ●● People support what they help to create.
Commitment to change is improved if those
affected by change are allowed to participate
Evidencing the value of as fully as possible in planning and
implementing it. The aim should be to get
change them to ‘own’ the change as something they
want and will be glad to live with.
It is necessary to evaluate the impact of the change
programme to assess its effectiveness and identify ●● The ‘big bang’ approach to change is not
any further things that need to be done. A business always the best one. Nudge theory states that
case should have been made for the change and this a series of small actions make a greater
should have indicated what added value was ex- impact on how people behave than one large
pected and from where. Evidence is needed on what one. ‘Nudging’ means that people can more
has actually happened as a result of the change pro- easily absorb what is happening. They are
gramme and the extent to which its objectives and not forced to accept huge changes or make
therefore the expected added value have been big decisions all at once.
achieved. The reasons for any shortcomings should ●● Change may involve new skills and may be
be established so that corrective action can be taken resisted because people are nervous about
where necessary. acquiring and using them. It is essential
therefore to include training in new skills as ●● There are always people in organizations
part of the change programme. who can act as champions of change. They
●● It is important to build a working will welcome the challenges and
environment that is conducive to change. opportunities that change can provide. They
Learning and development programmes can are the ones to be chosen as change agents.
help to do this. They can act as role models for the change.
●● It is easier to change behaviour by changing ●● Influencing skills (see Chapter 67) are
processes, structure and systems than to required to manage change.
change attitudes or the organizational ●● Resistance to change is inevitable if the
culture. individuals concerned feel that they are going
●● The reward system should encourage to be worse off – implicitly or explicitly. The
innovation and recognize success in inept management of change will produce
achieving change. that reaction.
●● Change will always involve failure as well as ●● In an age of global competition,
success. The failures must be expected and technological innovation, turbulence,
learnt from. discontinuity, even chaos, change is inevitable
and necessary. The organization must do all
●● Hard evidence and data on the need for
it can to explain why change is essential and
change are the most powerful tools for its
how it will affect everyone. Moreover, every
achievement, but establishing the need for
effort must be made to protect the interests
change is easier than deciding how to
of those affected by change.
satisfy it.
Key learning points
Levers for change The role of HR in leading and facilitating

Change management makes use of levers for change in change
order, as described by Unilever, to make it understood, Leading and facilitating change are two of the key
make it easy, make it rewarding and make it a habit. roles of HR professionals. In practice, they are
Levers for change are any methods or approaches that probably the most demanding of all HR roles.
can be used to achieve a desired result.
Leading change
The psychology of change management
Leading change involves initiating and managing
To persuade and enable a person to start, conduct culture change (the process of changing the
and complete a behaviour change it is necessary to organization’s culture in the shape of its values, norms
ensure that: and beliefs) and the introduction of new structures,
●● the individual can see the purpose of the change systems, working practices and people management
and agrees with it; processes.
●● the rewards and recognition system supports the

new behaviour;
Facilitating change
Change management is largely about facilitation.
●● the individual has the skills for the new behaviour;
●● the people who are role models are seen to model
the new behaviour.
The change process ●● Make ample provision for the discussion of

reactions to proposals to ensure complete
The change process starts with an awareness of the understanding of them.
need for change. An analysis of this situation and the
factors that have created it leads to a diagnosis of ●● Get ‘ownership’ – a feeling amongst people that the
their distinctive characteristics and an indication of change is something they are happy to live with
the direction in which action needs to be taken. because they have been involved in its planning
Possible courses of action can then be identified and and introduction.
evaluated and a choice made of the preferred action. ●● Prepare and implement a communication strategy
to explain the proposed change.
Change models
The main change models are those produced by Implementing change
Lewin, Beckhard, Thurley and Beer et al. Implementation failures usually involve the failure to
acknowledge and build the needed skills and
Reasons for resistance to change organizational capabilities, to gain support of the
workforce, and to support the organizational changes
The shock of the new, economic fears, inconvenience,
and learning required to behave in new ways.
uncertainty, symbolic fears, threat to interpersonal
relationships, threat to status or skills, competence
fears. Change management programmes
Change management programmes come in all sorts of
Overcoming resistance to change shapes and sizes depending on the nature and scale of
the change. But they can be organization-wide as in a
●● Analyse the potential impact of change by
major organization development programme and an
considering how it will affect people in their jobs.
integrated strategic change approach as conceived by
●● Identify the potentially hostile or negative reactions Worley et al (1996) may be appropriate.
of people.
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67
Influencing skills
disagreement by understanding each other
Introduction better. People generally believe that an
argument is a battle to understand who is
HR professionals are in the business of influencing correct. More often, it is a battle to decide
people. They have to persuade senior management, who is more stubborn.
line managers and employees generally to accept
their advice or proposals. Influencing involves case 3 Find out what the other party wants. The key
presentation and submitting business cases. HR to all persuasion is to see your proposition
professionals can often be concerned with more from the other person’s point of view. Find
subtle forms of influencing people by acting as fa- out how they look at things. Establish what
cilitators and leading discussions in focus groups or they need and want.
meetings. 4 Accentuate the benefits. Present your case in
a way that highlights the benefits to the other
party or at least reduces any objections or
Persuading people fears.
5 Predict the other person’s response.
HR specialists spend a lot of time persuading other Everything we say should be focused on that
people to accept their ideas and suggestions. likely response. Anticipate objections by
Persuasion is akin to selling; you may feel that good asking yourself how the other party might
ideas should sell themselves, but life is not like that. react negatively to your proposition and
People resist change and anything new is usually thinking up ways of responding to them.
treated with suspicion. Here are 10 rules for effec- 6 Create the other person’s next move. It is not
tive persuasion: a question of deciding what we want to do
1 Define your objective and get the facts. If you but what we want the other person to do.
are persuading someone to agree to a 7 Convince people by reference to their own
proposal, first decide what you want to perceptions. People decide on what to do
achieve and why. Assemble all the facts you on the basis of their own perceptions,
need to support your case. Eliminate not yours.
emotional arguments so that you and others 8 Prepare a simple and attractive proposition.
can judge the proposition on the facts alone. Make it as straightforward as possible.
2 Define the problem. If there is a problem to Present the case ‘sunny side up’, emphasizing
resolve and you are trying to persuade its benefits. Break the problem into
someone to accept your views on what manageable pieces and deal with them one
should be done about it, first decide whether step at a time.
the problem is a misunderstanding (a failure 9 Make the other person a party to your ideas.
to understand each other accurately) or a Get them to contribute. Find some common
true disagreement (a failure to agree even ground so that you can start with agreement.
when both parties understand one another). Don’t try to defeat them in an argument –
It is not necessarily possible to resolve a true you will only antagonize them.
Chapter 67 | Influencing Skills 701
10 Clinch and take action. Choose the right can be difficult to make a case for
moment to clinch the proposal – don’t experiments or pilot schemes unless the
prolong the discussion and risk losing it. decision maker can see what the benefits and
But follow up promptly. the ultimate bill will be.
Case presentation Making a business case

Persuasion frequently means making a case for You may be asked specifically to produce a busi-
what you think should be done. You have to con- ness case. This will set out the reasons why a pro-
vince people to believe in your views and accept posed course of action will benefit the business,
your recommendations. To do this, you must have a how it will provide that benefit and how much it
clear idea of what you want, and you have to show will cost. A business case is a particular form of
that you believe in it yourself. Above all, the effec- persuasion and all the points made above apply to
tiveness of your presentation will depend upon the its preparation and presentation. But there are
care with which you have prepared it. some special features about business cases, as de-
Thorough preparation is vital. You must think scribed below.
through not only what should be done and why, but A business case is typically made either in added-
also how people will react. Only then can you de- value terms (ie the income generated by the proposal
cide how to make your case: stressing the benefits will significantly exceed the cost of implementing it),
without underestimating the costs, and anticipating or on the basis of the return on investment or ROI
objections. The four steps you should take are: (ie the cost of the investment, say in training, is justi-
fied by the financial returns in such areas as in-
1 Show that your proposal is based on a
creased productivity). Clearly, a business case is
thorough analysis of the facts and that the
more convincing when it is accompanied by realistic
alternatives were properly evaluated before
projections of added value or ROI. When people
the conclusion was reached. If you have
make out a case for capital expenditure they analyse
made assumptions, you must demonstrate
the cash flows associated with the investment and
that these are reasonable on the basis of
calculate the benefits – in financial terms as far as
relevant experience and justifiable
possible – that are likely to arise from them. The
projections, which allow for the unexpected.
objective is to demonstrate that in return for paying
Bear in mind that a proposal is only as
out a given amount of cash today, a larger amount
strong as its weakest assumption.
will be received over a period of time.
2 Spell out the benefits – to the company and/ It can be more difficult to make out a business
or the individuals to whom the case is being case for an HRM innovation in financial terms. The
made. Wherever possible, express benefits in costs can and should be calculated but the benefits
financial terms. Abstract benefits, such as may have to be expressed in qualitative terms. A
customer satisfaction or workers’ morale, are business case will be enhanced if:
difficult to sell. But don’t produce ‘funny
numbers’ – financial justification that will ●● Data is available on the impact the proposal
not stand up to examination. is likely to make on key areas of the
organization’s operations, eg customer
3 Reveal costs. Don’t try to disguise them in
service levels, quality, shareholder value,
any way. And be realistic. Your proposition
productivity, income generation, innovation,
will be destroyed if anyone can show that
skills development, talent management.
you have underestimated the costs.
●● It can be shown that the proposal will
4 Remember, senior management decision
increase the business’s competitive edge, for
makers want to know in precise terms what
example enlarging the skill base or multi-
they will get for their money. Most are likely
skilling to ensure that it can achieve
to be cautious, being unwilling and often
competitive advantage through innovation
unable to take much risk. For this reason, it
and/or reducing time to market.
●● There is proof that the innovation has learning, training and development programmes
already worked well within the organization will meet business needs. The following points
(perhaps as a pilot scheme) or represents could be made to support an L&D initiative:
‘good practice’ that is likely to be
●● Improve individual, team and corporate
transferable to the organization.
performance in terms of output, quality,
●● It can be implemented without too much speed and overall productivity.
trouble, for example not taking up a lot of
●● Attract high-quality employees by offering
managers’ time, or not meeting with strong
them learning and development
opposition from line managers, employees or
opportunities, increasing their levels of
trade unions (it is as well to check the likely
competence and enhancing their skills, thus
reaction before launching a proposal).
enabling them to obtain more job
●● It will add to the reputation of the company satisfaction, gain higher rewards and
by showing that it is a ‘world class’ progress within the organization.
organization, ie what it does is as good as, if
●● Provide additional non-financial rewards
not better than, the world leaders in the sector
(growth and career opportunities) as part of
in which the business operates (a promise that
a total reward policy in order to enhance
publicity will be achieved through articles in
engagement.
professional journals, press releases and
conference presentations will help). ●● Improve operational flexibility by extending
the range of skills possessed by employees
●● It will enhance the ‘employer brand’ of the
(multi-skilling).
company by making it a ‘best place to work’.
●● Increase the commitment of employees by
●● The proposal is brief, to the point and well
encouraging them to identify with the
argued – it should take no more than five
mission and objectives of the organization.
minutes to present orally and should be
summarized in writing on the proverbial one ●● Help to manage change by increasing
side of one sheet of paper (supplementary understanding of the reasons for change and
details can be included in appendices). providing people with the knowledge and
skills they need to adjust to new situations.
Making the business case is obviously easier where
●● Provide line managers with the skills
management is preconditioned to agree to the propo-
required to manage and develop their people.
sition. For example, it is not hard to convince top
managers that performance-related pay is a good ●● Help to develop a positive culture in the
thing – they may well be receiving bonus payments organization, one, for example, that is
themselves and believe, rightly or wrongly, that be- oriented towards performance improvement.
cause it motivates them it will motivate everyone else. ●● Provide higher levels of service to customers.
Talent management is another process where top ●● Minimize learning costs (reduce the length of
management needs little persuasion that things need learning curves).
to be done to enhance and preserve the talent flow,
although they will have to be convinced that, in prac-
tice, innovations will achieve that aim. Performance
management may be slightly more difficult because it
Facilitating
is hard to demonstrate that it can produce measura- Facilitating is the process of helping a group reach
ble improvements in performance, but senior manag- conclusions in the shape of ideas and solutions.
ers are predisposed towards an approach that at least Facilitators do not ‘chair’ a meeting in the sense of
promises to improve the level of performance. controlling the discussion and pressurizing the
The toughest area for justification in added- group to agree to a course of action. The group is
value terms can be expenditure on learning and de- there to make up its own mind and the facilitator
velopment (L&D) programmes. This is where an helps it to do so. The facilitator is exerting influence,
ROI approach is desirable. The business case for but indirectly. Facilitation is also used in learning
learning and development should demonstrate how and development as described in Chapter 64.
Chapter 67 | Influencing Skills 703
Facilitators ensure that everyone has their say The following techniques can be used to get ac-
and that they are listened to. They step in quickly to tive participation and to coordinate the process:
defuse unproductive arguments. They see that the
●● Ask for contributions by direct questions.
group defines and understands its objectives and
any methodology they might use. They summarize ●● Use open-ended questions that will stimulate
from time to time the progress made in achieving thought.
the objectives, without bringing their own views to ●● Check understanding; make sure that
bear. Facilitators are there to ensure that the group everyone is following the argument.
makes progress and does not get stuck in fruitless or ●● Encourage participation by providing
disruptive argument. They encourage the group support rather than criticism.
rather than drive it forward.
●● Prevent domination by individual members
of the group by bringing in other people and
Coordinating discussions asking cross-reference questions.
●● Avoid dominating the group yourself. The
Coordinating discussions is a matter of getting ac- leader’s job is to guide the discussion,
tive participation and then ensuring that the discus- maintain control and summarize from time to
sion informs people of the issues related to the time. If necessary, ‘reflect’ opinions expressed
subject and leads to a conclusion that satisfies the by individuals back to the group to make
participants. HR practitioners lead discussions sure they find the answer for themselves. The
when they are taking part in L&D activities. leader is there to help the group reach a
Importantly, discussion is also a means of persuad- conclusion, not to do it for them.
ing people to do or accept something by getting ●● Maintain control – ensure that the discussion
them to participate in analysing the issues and is progressing along the right lines towards a
reaching a joint and acceptable conclusion. firm conclusion.
Key learning points
Influencing people idea of what you want, and you have to show that you
believe in it yourself.
HR professionals are often involved in influencing
others’ thinking and decision making. They must know
Making a business case
about persuading people and case presentation.
A business case sets out the reasons why a proposed
Persuading people course of action will benefit the business, how it will
provide that benefit and how much it will cost.
HR specialists spend a lot of time persuading other
people to accept their ideas and suggestions.
Facilitating
Persuasion is akin to selling; you may feel that good
ideas should sell themselves, but life is not like that. Facilitating is the process of helping a group reach
People resist change and anything new is usually conclusions in the shape of ideas and solutions.
treated with suspicion.
Coordinating discussions
Case presentation
Coordinating discussions is a matter of getting active
Persuasion frequently means making a case for what participation and then ensuring that the discussion
you think should be done. You have to convince people informs people of the issues related to the subject and
to believe in your views and accept your leads to a conclusion that satisfies the participants.
recommendations. To do this, you must have a clear How should discussions be conducted?
704
68
Leadership skills
limitations, and pragmatic research was carried out
Introduction to identify what types of behaviour characterized
leadership rather than focusing on the personalities
HR professionals need to know about leadership of leaders. The key leadership behaviour studies
for four reasons: (1) they have to exercise leadership conducted by the Universities of Michigan and Ohio
in persuading others to do things; (2) they are con- State led to the identification of two dimensions of
cerned with the development of leaders in the or- leadership behaviour, respectively: employee as dis-
ganization; (3) at a more senior level they have to tinct from job-centred behaviour, and the processes
lead teams; and (4) they are involved in leading of consideration and initiating structure.
change. The purpose of this chapter is to meet this The next step in the development of leadership
need by analysing the process of leadership and the theory was the recognition by researchers that what
skills involved. leaders did and how they did it was dependent or
contingent on the situation they were in (Fiedler,
1967). Different traits became important; different
The meaning of leadership behaviours or styles of leadership had to be used to
achieve effectiveness in different situations. These
To lead people is to influence, guide and inspire. studies resulted in the theories of contingent and
Leadership can be described as the ability to per- situational leadership.
suade others willingly to behave differently. It is the Next, traits theory was in effect revived by
process of getting people to do their best to achieve Goleman (2001) in the notion of emotional intelli-
a desired result. It involves developing and commu- gence as a necessary attribute of leaders. Most re-
nicating a vision for the future, motivating people cently Ulrich put his oar in alongside his colleague
and securing their engagement. As Stogdill (1950: Smallwood (2007) with the notion of the leadership
3) explained, leadership is an ‘influencing process brand as a comprehensive approach to leadership
aimed at goal achievement’. by organizations.
Leadership theories The problem with leadership

Leadership is a complicated notion and a number of
theories
theories have been produced to explain it. These Despite all the research and theorizing, the concept
theories, as summarized below, have developed over of leadership is still problematic. As Meindl et al
the years and explore a number of different facets of (1985: 78) commented: ‘It has become apparent that,
leadership and leadership behaviour. In many ways after years of trying, we have been unable to generate
they complement one another and together they an understanding of leadership that is both intellec-
help to gain a comprehensive understanding of tually compelling and emotionally satisfying. The
what the process of leadership is about. concept of leadership remains elusive and enigmatic.’
Trait theory, which explains leadership by refer- These problems may arise because, as a notion,
ence to the qualities leaders have, is the basic and to leadership is difficult to pin down. There are many
many people the most familiar theory. But it has its different types of situations in which leaders
Chapter 68 | Leadership Skills 705
perate, many different types of leaders and many

o FIGURE 68.1 John Adair’s model of
different leadership styles. Producing one theory
that covers all these variables is difficult if not im-
leadership
possible. All that can be done is to draw on the
various theories that exist to explain different facets
of leadership without necessarily relying on any one
of them for a comprehensive explanation of what is Task
involved. needs
Perhaps leadership is best defined by considering
what leaders do and how they do it (the different
styles they adopt), examining what sort of leaders
carry out these activities and practise these styles,
and looking at any empirical evidence available on
what makes them good leaders. These are all cov-
Individual Group
ered in the next four sections of this chapter. maintenance
needs
needs
What leaders do
The most convincing analysis of what leaders do
was produced some time ago by Adair (1973). He
explained that the three essential roles of leaders This model indicates that the task, individual and
are to: group needs are interdependent. Satisfying task needs
●● Define the task – they make it quite clear will also satisfy group and individual needs. Task
what the group is expected to do. needs, however, cannot be met unless attention is paid
to individual and group needs, and looking after indi-
●● Achieve the task – that is why the group
vidual needs will also contribute to satisfying group
exists. Leaders ensure that the group’s
needs, and vice versa. There is a risk of becoming so
purpose is fulfilled. If it is not, the result is
task-oriented that leaders ignore individual and group
frustration, disharmony, criticism and,
or team needs. It is just as dangerous to be too people-
eventually perhaps, disintegration of the
oriented, focusing on meeting individual or group
group.
needs at the expense of the task. The best leaders are
●● Maintain effective relationships – between those who keep these three needs satisfied and in bal-
themselves and the members of the group, ance, according to the demands of the situation.
and between the people within the group.
These relationships are effective if they
contribute to achieving the task. They can be
divided into those concerned with the team
Leadership styles
and its morale and sense of common Leadership style is the approach managers use in
purpose, and those concerned with exercising leadership when they are relating to their
individuals and how they are motivated. team members. It is sometimes called ‘management
He suggested that demands on leaders are best ex- style’. There are many styles of leadership and no
pressed as three areas of need which they must sat- one style is necessarily better than the other in any
isfy. These are: (1) task needs: to get the job done; situation. To greater or lesser degrees, leaders can be
(2) individual needs: to harmonize the needs of the autocratic or democratic, controlling or enabling,
individual with the needs of the task and the group; task-oriented or people-centred. Goleman (2000)
and (3) group maintenance needs: to build and identified the following six styles and indicated
maintain team spirit. As can be seen in Figure 68.1, when they might be used:
he modelled these demands as three interlocking 1 Coercive – demands compliance (use in a
circles. crisis or with problem people).
2 Authoritative – mobilizes people (use when Leadership may be exercised by a few selected
new vision and direction is needed). authoritative individuals and many studies focus on
3 Affiliative – creates harmony (use to heal top managers as ‘charismatic’ or ‘visionary’ leaders.
wounds and to motivate people under stress). But it may and indeed should take the form of dis-
tributed leadership, which is spread through the or-
4 Democratic – forges consensus (use to build
ganization amongst people working together by
agreement and get contributions).
processes of influence and interdependencies. As
5 Pacesetting – sets high standards (use to get Huczynski and Buchanan (2007: 720) commented:
fast results from a motivated team). ‘Leadership is a widely distributed phenomenon.
6 Coaching – develops people (to improve Leadership functions are best carried out by those
performance and develop strengths). who have the interest, knowledge, skills and moti-
vation to perform them effectively.’ The possibility
In line with contingency and situational theories it
that people who become managers may not have
should not be assumed that any one style is right in
these qualities to a desirable extent creates a need
any circumstances. There is no such thing as an
for systematic leadership development programmes.
ideal leadership style. The factors affecting the de-
gree to which a style is appropriate will be the type
of organization, the nature of the task, the charac- Charismatic leaders
teristics of the individuals in the leader’s team (the
followers) and of the group as a whole and, impor- Charismatic leaders rely on their personality, their
tantly, the personality of the leader. inspirational qualities and their ‘aura’ to get people
Effective leaders are capable of flexing their style to to follow them. Burns (1978), who coined the term,
meet the demands of the situation. Normally demo- suggested that charismatic leaders were set apart
cratic leaders may have to shift into more of a directive from ordinary people and treated as being endowed
mode when faced with a crisis, but they make clear with exceptional powers or qualities that inspire
what they are doing and why. Poor leaders change followers.
their style arbitrarily so that their team members are Conger and Kanungo (1998) described charis-
confused and do not know what to expect next. matic leadership as a process of formulating an in-
Good leaders may also flex their style when deal- spiring vision of the future and then demonstrating
ing with individual team members according to the importance of the articulated vision. This may
their characteristics. Some people need more posi- involve unconventional behaviour that conveys im-
tive directions than others. Others respond best if portant goals that are part of the vision and demon-
they are involved in decision making with their strates means to achieve these goals. Charismatic
boss. But there is a limit to the degree of flexibility leaders also take risks and motivate followers by
that should be used. It is unwise to differentiate too setting a personal example. In this sense, charis-
much between the ways in which individuals are matic leaders operate as visionary and transforma-
treated or to be inconsistent in one’s approach. tional leaders, as described below.
But Carey (1992: 232) charged that ‘when the
gifts of charisma, inspiration, consideration and in-
Types of leaders tellectual strength are abused for the self-interest of
the leader, the effect on followers ceases to be liber-
To understand the process of leadership (and, inci- ating and moral and becomes instead oppressive
dentally, provide a basis for leadership development and ideological.’ And Bennis (2010: 4) commented
programmes) it is useful not only to analyse the styles that ‘the ability to inspire trust, not charisma, is
that leaders can adopt but also to classify the different what enables leaders to recruit others to a cause.’
types of leaders that apply those styles. As described
below, leaders can be charismatic, visionary, transfor-
mational, transactional or ‘authentic’. However, typi- Visionary leaders
cal leaders may exhibit any or even all of these Visionary leaders are inspired by a clear vision of an
characteristics either consistently or in response to the exciting future and inspire their followers by suc-
situation in which they find themselves. cessfully conveying that vision to them. Bennis and
Nanus (1985) defined a vision as ‘a target that beck- their followers in terms of the degree to which they
ons’. Their notion of visionary leadership was ex- feel trust, admiration, loyalty and respect for the
plained as follows: leader and are willing to work harder than origi-
nally expected. According to Bass, this occurs be-
cause the leader transforms and motivates through
an inspiring mission and vision and gives them an
Wo rd s of wi sdom identity. Tichy and Devanna (1986) concluded that
To choose a direction, a leader must first the transformational leader has three main roles:
recognizing the need for revitalization, creating a
have developed a mental image of a new vision and institutionalizing change.
possible and desirable future state of the Yukl (1999) advised that transformational lead-
organization. This image, which we call a ers should:
vision, may be as vague as a dream or as ●● develop a challenging and attractive vision

together with employees;
precise as a goal or mission statement. The
●● tie the vision to a strategy for its
critical point is that a vision articulates a achievement;
view of a realistic, credible and attractive ●● develop the vision, specify and translate it to
future for the organization, a condition that actions;
is different in some important ways from ●● express confidence, decisiveness and

optimism about the vision and its
one that now exists. implementation;
Bennis and Nanus (1985: 89) ●● realize the vision through small planned
steps and small successes on the path to its
full implementation.
Kouzes and Posner (2003: 112) claimed that: ‘One
of the most important practices of leadership is giv-
ing life and work a sense of meaning and purpose Transactional leaders
by offering an exciting vision.’ Transactional leaders trade money, jobs and security
for compliance. As Burns (1978: 19) noted: ‘Such
leadership occurs when a person takes the initiative in
Transformational leaders making contact with others for the purpose of an ex-
Transformational leaders are able, by force of their change of valued things.’ Tavanti (2008: 169) stated
personality, to make significant changes in the be- that: ‘Transactional leaders exhibit specific leadership
haviour of their followers in order to achieve the skills usually associated with the ability to obtain re-
leader’s vision or goals. As described by Burns sults, to control through structures and processes, to
(1978), what he called ‘transforming leadership’ in- solve problems, to plan and organize, and work
volves motivating people to strive for higher goals. within the structures and boundaries of the organiza-
He believed that good leadership implies a moral tion.’ Put like this, a transactional leader conforms to
responsibility to respond to the values and needs of the stereotype of the manager rather than the leader.
people in a way that is conducive to the highest Bass (1985) argued that leaders can display both
form of human relations. As he put it: ‘The ultimate transformational and transactional characteristics.
test of moral leadership is its capacity to transcend Tavanti (2008) also observed that transactional lead-
the claims of the multiplicity of everyday needs, ership behaviour is used to one degree or another by
wants and expectations’ (ibid: 46). most leaders, but that: ‘Particular instances of trans-
Another researcher, Bass (1985), extended the actional leadership are motivated simply by people’s
work of Burns by explaining the psychological wants and preferences. This form of leadership un-
mechanisms that underlie transforming leadership. critically responds to our preferences, that is, even
He pointed out that the extent to which leaders are when they are grounded in base motivations or an
transformational is measured by their influence on undeveloped moral sense’ (ibid: 171).
Authentic leaders as leaders… No one can be authentic by trying to

The concept of the authentic leader was originally imitate someone else. You can learn from others’
defined by George as follows: experiences, but there is no way you can be
successful when you are trying to be like them.
People trust you when you are genuine and
authentic, not a replica of someone else.
Wo rd s o f w isdom
Authentic leaders genuinely desire to serve
Authentic leadership is, in essence, ethical leader-
others through their leadership. They are
ship. Walumbwa et al (2008) claimed that it can
more interested in empowering the people lead to enhanced trust, job satisfaction and
they lead to make a difference than they are performance.
in power, money or prestige for themselves.

They lead with purpose, meaning and The reality of leadership
values. They build enduring relationships
The reality of leadership is that many first-line man-
with them. Others follow them because they agers and team leaders are appointed or promoted
know where they stand. They are consistent to their posts with some idea, possibly, of what their
managerial or supervisory duties are, but with no
and self-disciplined. appreciation of the leadership skills they need. They
George (2003: 12) see their role as being to tell people what to do and
then see that they do it. They may tend to adopt a
transactional approach, focusing on getting the job
done and neglecting everything else. They may not
Authenticity was described by Harter (2002: 382) as
be charismatic, visionary or transformational lead-
‘owning one’s personal experiences, be they thoughts,
ers because even if they have the latent qualities re-
emotions, needs, preferences, or beliefs, processes
quired, their situation does not seem to require or
captured by the injunction to know oneself and be-
encourage any of these approaches.
having in accordance with the true self.’ Authentic
However, the better ones will rely on their know-
leadership is based on a positive moral perspective
how (authority goes to the person who knows),
characterized by high ethical standards that guide
their quiet confidence and their cool, analytical ap-
decision making and behaviour (May et al, 2003).
proach to dealing with problems. Any newly ap-
As Avolio et al (2004) explained, authentic leaders
pointed leader or individual who is progressing to a
act in accordance with deep personal values and
higher level of leadership will benefit from a leader-
convictions to build credibility and win the respect
ship development programme (see Chapter 36),
and trust of followers. By encouraging diverse view-
which will help them to understand and apply the
points and building networks of collaborative rela-
skills they need.
tionships with followers, they lead in a manner that
followers perceive and describe as authentic.
George et al (2007: 129) set out the basis of au-
thentic leadership as follows: The qualities of a good leader
Research into the qualities associated with effective
leadership in organizations has focused on three
Source review distinct sets of requirements:
We all have the capacity to inspire and empower ●● cognitive requirements – the ability to make
others. But we must first be willing to devote sound decisions and exercise judgement;
ourselves to our personal growth and development ●● social requirements – the capacity to inspire,
persuade and engage others;
●● self-motivational requirements – the desire to (2016) reported research commissioned by Firstline,

take on leadership responsibilities. the social work training organization. The finding of
the study, which obtained evidence from 169 key fig-
As mentioned earlier, the trait theory of leadership
ures in the social work sector, was that outstanding
has its limitations but there is still some value in
leaders create a climate that energizes teams to im-
studying the qualities required by good leaders. It is
prove the impact they make, giving them stability,
generally accepted that one of the key skills a leader
clear direction and definition of role, plus the space
or manager needs is an ability to analyse and read
and time to reflect on practice and develop their own
situations and to establish order and clarity in situ-
leadership skills.
ations of ambiguity. Gold et al (2010: 6) stated that:
Effective leaders endeavour to answer the fol-
‘Leadership demands a sense of purpose, and an
lowing questions about the individuals in the group
ability to influence others, interpret situations, ne-
and the team.
gotiate and express their views, often in the face of
opposition.’
Research conducted by Tamkin et al (2010) in-
volving 260 in-depth interviews conducted with 77
Individuals
business leaders from six high-profile organizations, The questions leaders need to answer about their
found that outstanding leaders: team members are:
●● view things as a whole rather than ●● What are their strengths and weaknesses?
compartmentalizing them; ●● What are their needs, attitudes, perspectives
●● connect the parts through a guiding sense of and preferences?
purpose; ●● What are likely to be the best ways of
●● are highly motivated to achieve excellence motivating them?
and are focused on organizational outcomes, ●● What tasks are they best at doing?
vision and purpose;
●● Is there scope to increase flexibility by
●● understand they cannot create performance developing new skills?
themselves but are conduits for performance
●● How well do they perform in achieving
through their influence on others;
targets and performance standards?
●● watch themselves carefully and act
●● To what extent can they manage their own
consistently to achieve excellence through
performance and development?
their interactions and their embodiment of
the leadership role. ●● Are there any areas where there is a need to
develop skill or competence?
●● How can I provide them with the sort of
Effective leadership support and guidance that will improve their
performance?
Effective leaders are confident and know where they ●● What can be done to improve the
want to go and what they want to do. They have the performance of any individuals in the group
ability to take charge, convey their vision to their by coaching or mentoring?
team, get their team members into action and ensure
that they achieve their agreed goals. They know how
to build well-functioning teams. They are trustwor- The team
thy, good at influencing people and earn the respect
of their team. They are aware of their own strengths The questions leaders need to answer about their
and weaknesses and are skilled at understanding team members are:
what will motivate their team members. They ●● How well is the team organized?
appreciate the advantages of consulting and involv-
●● Is the team clear about what is expected of it?
ing people in decision making. They can switch flex-
ibly from one leadership style to another to meet the ●● Do the members of the team work well
demands of different situations and people. Brindle together?
●● If there is any conflict between team standards, monitoring performance and

members, how can I resolve it? taking corrective action?
●● How can the commitment and motivation of ●● Can the team be encouraged to work
the team be achieved? together to produce ideas for improving
●● Are team members flexible – capable of performance?
carrying out different tasks? ●● What is the team good and not so good at
●● To what extent can the team manage its own doing?
performance? ●● What can I do to improve the performance
●● Is there scope to empower the team so that it of the team through coaching and
can take on greater responsibility for setting mentoring?
Key learning points
Leadership defined The qualities of a good leader

Leadership is the process of influencing the behaviour Leaders need the ability to analyse and read situations
of others to achieve results. and to establish order and clarity in situations of
ambiguity. Leadership demands a sense of purpose
Leadership theories and an ability to influence others, interpret situations,
negotiate and express their views, often in the face of
The main leadership theories are trait theory, opposition (Gold et al, 2010: 6).
leadership behaviour theory, contingent and The reality of leadership is that many first-line
situational theories, emotional intelligence theory and managers and supervisors are appointed or promoted
the leadership brand. to their posts with some idea, possibly, of what their
managerial or supervisory duties are, but with no
What leaders do appreciation of the leadership skills they need to get
the results they want with the help of their team.
Adair (1973) explained that the three essential roles of
leaders are to define the task, achieve the task, and
maintain effective relationships. Leaders have to satisfy Team building
interdependent task, individual and group needs. Team building involves clarifying the team’s purpose and
goals, ensuring that its members work well together,
Types of leaders strengthening the team’s collective skills, enhancing
commitment and confidence, removing externally
Leaders can be charismatic, visionary,
imposed obstacles and creating opportunities for team
transformational, transactional or ‘authentic’.
members to develop their skills and competencies.
References
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Firstline be a force for change? Guardian, 16 Challenge, San Francisco, CA, Jossey-Bass
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712
69
Handling people problems
‘reasonable’ behaviour are in line with the princi-
Introduction ples of natural justice and are as follows:
An important part of the transactional role of HR ●● the employee should be informed of the
professionals is handling people problems directly nature of the complaint;
or by providing advice and guidance to line manag- ●● the employee should be given the chance to
ers. Problem-solving skills, described in Chapter 58, explain;
are required but it is also necessary to advise overall
●● the employee should be given the
on how to handle disciplinary problems and how to
opportunity to improve, except in cases of
deal with absenteeism, poor timekeeping, negative
particularly gross incapability or misconduct;
behaviour and under-performance. Dealing with
people problems may involve handling challenging ●● the employee should be warned of the
conversations and this is covered in Chapter 70. consequences in the shape of dismissal if
specified improvements do not take place;
●● the employer’s decision to dismiss should be
Disciplinary issues based on sufficient evidence;
●● the employer should take any mitigating
Employees can be dismissed because they are not circumstances into account;
capable of doing the work, or for misconduct. It is
●● dismissal should only take place if the
normal to go through a formal disciplinary proce-
offence or misbehaviour deserves it rather
dure containing staged warnings, but instant dis-
than some lesser penalty.
missal can be justified for gross misconduct (eg
serious theft), which should be defined in the com- The organization should have a statutory discipli-
pany’s disciplinary procedure or employee hand- nary procedure (see Chapter 53). Managers need to
book. Anyone who has completed more than two know what that procedure is and the part they are
years’ service can claim unfair dismissal if their em- expected to play in implementing it. Whether or not
ployer cannot show that one of these reasons ap- there is a formal procedure, if it is believed that dis-
plied, if the dismissal was not reasonable in the ciplinary action is necessary the following steps
circumstances, if a constructive dismissal has taken should be taken by the manager, as guided by HR,
place, or if there has been a breach of a customary in planning and conducting a disciplinary interview.
or agreed redundancy procedure and there are no If all the stages in the disciplinary procedure
valid reasons for departing from that procedure. have been completed and the employee has to be
Even if the employer can show to an employ- dismissed, or where immediate dismissal can be jus-
ment tribunal that there was good reason to dismiss tified on the grounds of gross misconduct, a man-
the employee, the tribunal will still have to decide ager may have to carry out the unpleasant duty of
whether or not the employer acted in a reasonable dismissing the employee. This should be as guided
way at the time of dismissal. The principles defining by HR and it is advisable that an HR specialist is
Chapter 69 | Handling People Problems 713
involved in the dismissal meeting. This is best con- ●● See the employee off the premises – some
ducted as follows: companies use security guards as escorts; this
might be rather heavy-handed, although it
●● Get all the facts in advance, including
could be useful to have someone on call in
statements from the people involved.
case of difficulties.
●● Invite the employee to the meeting in writing,
explaining why it is being held and that he or
she has the right to have someone present at Absenteeism
the meeting on his or her behalf.
●● Ensure that the employee has reasonable A frequent people problem managers and HR pro-
notice (ideally at least two days). fessionals have to face is absenteeism. It may be nec-
●● Plan how to conduct the meeting. essary to deal with recurrent short-term (one or two
days) absence or longer-term sickness absence.
●● Line up another member of management to
attend the meeting to take notes (they can be
important if there is an appeal), generally
provide support and witness the proceedings.
Recurrent short-term absence
●● Start the interview by stating the complaint Dealing with people who are repeatedly absent for
to the employee and referring to the short periods can be difficult. This is because it may
evidence. be hard to determine when occasional absence be-
comes a problem or whether it is justifiable, perhaps
●● Give the employee plenty of time to respond
on medical grounds.
and state his or her case.
So what can be done about it? Many organiza-
●● Take a break as required to consider the tions provide guidelines to managers on the ‘trigger
points raised and to relieve any pressure in points’ for action (the amount of absence that needs
the meeting. to be investigated), perhaps based on analyses of the
●● Consider what action is appropriate, if any. incidence of short-term absence and the level at
Actions should be staged, starting with a which it is regarded as acceptable (there may be
recorded warning followed, if the problem software to generate analyses and data that can be
continues, by a first written warning, then a made available direct to managers through a self-
final written warning and lastly, if the earlier service system). If guidelines do not exist, HR spe-
stages have been exhausted, disciplinary cialists should be available to provide advice.
action, which would be dismissal in serious It is necessary to decide when something needs to
cases. be done and then what to do about it. A day off
●● Deliver the decision, explaining why it has every other month may not be too serious, although
been taken and confirm it in writing. if it happens regularly on a Monday (after week-
ends in Prague, Barcelona, etc?) or a Friday (before
●● If possible, meet when everything is quiet,
such weekends?) you may feel like having a word
preferably on a Friday.
with the individual, not as a warning but just to let
●● Keep the meeting formal and organized. him or her know that you are aware of what is
●● Write down what is going to be said in going on. There may be a medical or other accept-
advance, giving the reason and getting your able explanation. Return-to-work interviews can
facts, dates and figures right. provide valuable information and an opportunity
●● Be polite but firm – read out what has been to discuss any problems. The individual is seen and
written down and make it clear that it is not given the chance to explain the absence.
open for discussion. In persistent cases of absenteeism an absence re-
view meeting can be held. Although this would be
●● Ensure that the employee clears his or her more comprehensive than a return-to-work inter-
desk and has no opportunity to take away view it should not at this stage be presented as part
confidential material or use his or her of a disciplinary process. The meeting should be
computer. positive and constructive. If absence results from a
health problem it can be established what is being

done about it, and if necessary suggest that his or
Handling poor timekeeping
her doctor should be consulted. Or absences may be
caused by problems facing a parent or a carer. In A poor timekeeping record may initially be dealt
such cases it is right to be sympathetic but it would with by an informal warning. But if in spite of the
be reasonable to discuss with the individual what warning lateness persists it may be necessary to in-
steps can be taken to reduce the problem or whether voke the disciplinary procedure. This would go
flexible working could be arranged. The aim is to through the successive stages of a recorded oral
get the employee to discuss as openly as possible warning, a written warning and a final written
any factors affecting his or her attendance and to warning which would indicate that timekeeping
agree any constructive steps. must improve by a certain date (the improvement
If after holding an attendance review meeting and, period) otherwise disciplinary action would take
it is to be hoped, agreeing the steps necessary to replace. If the final warning does not work, such ac-
duce absenteeism, short-term absence persists with- tion would be taken; in serious cases this would
out a satisfactory explanation, then another meeting mean dismissal.
can be held that emphasizes the employee’s responsi- Note that this raises the difficult question of time
bility for attending work. Depending on the circum- limits which may be given when a final warning is
stances (each case should be dealt with on its merits), given. If timekeeping does improve by that date,
at this meeting it can be indicated that absence levels and the slate is wiped clean, it might be assumed
should improve over a defined timescale (an im- that the disciplinary procedure starts again from
provement period). If this does not happen, the indi- scratch if timekeeping deteriorates again. But it is in
vidual can expect more formal disciplinary action. the nature of things that some people cannot sus-
tain efforts to get to work on time for long, and
deterioration often occurs. In these circumstances,
Dealing with long-term absence is it necessary to keep on going through the warning
cycles time after time? The answer is no, and the
Dealing with long-term absence can also be diffi- best way to deal with this is to avoid stating a finite
cult. The aim should be to facilitate the employee’s end date to a final warning period that implies a
return to work at the earliest reasonable point while ‘wipe the slate clean’ approach. Instead, the warn-
recognizing that in extreme cases the person may ing should simply say that timekeeping performance
not be able to come back. In that case he or she can will be reviewed on a stated date. If it has not im-
fairly be dismissed for lack of capability as long as: proved, disciplinary action can be taken. If it has,
●● the employee has been consulted at all stages; no action will be taken, but the employee is warned
that further deterioration will make him or her lia-
●● contact has been maintained with the
ble to disciplinary action, which may well speed up
employee – this is something you can usefully
the normal procedure, perhaps by only using the
do as long as you do not appear to be
final warning stage and by reducing the elapsed
pressing him or her to return to work before
time between the warning and the review date.
he or she is ready;
There will come a time, if poor timekeeping persists,
●● appropriate medical advice has been sought when you can say ‘enough is enough’ and initiate
from the employee’s own doctor, but the disciplinary action.
employee’s consent is needed and employees
have the right to see the report – it may be
desirable to obtain a second opinion; Handling negative behaviour
●● all reasonable options for alternative
employment have been reviewed as well as any Negative behaviour may take the form of lack of
other means of facilitating a return to work. interest in the work, unwillingness to cooperate
with team leaders or other members of the team,
The decision to dismiss should only be taken if these
making unjustified complaints about the work or
conditions are satisfied. It is a tricky one and it may
working conditions, grumbling at being asked to
be advisable to seek advice from an employment
carry out a perfectly reasonable task, objecting
law expert.
strongly to being asked to do something extra (or managers and HR people have to undertake. If the
even refusing to do it) – ‘It’s not in my job descrip- action taken is crude or insensitive the negative be-
tion’ – or, in extreme cases, insolence. People exhib- haviour will only be intensified. This might mean
iting negative behaviour may be quietly resentful having to invoke the disciplinary procedure, which
rather than openly disruptive. They mutter away in should be a last resort.
the background at meetings and lack enthusiasm. In one sense, it is easier to deal with an actual ex-
Managers have to tolerate a certain amount of ample of negative behaviour, as this can be handled
negative behaviour as long as the individual works on the spot. If the problem is one of general attitude
reasonably well and does not upset other team mem- rather than specific actions it is more difficult to cope
bers. They have simply to say to themselves, ‘It takes with. Hard evidence may not be available. When in-
all sorts…’ and put up with it, although they might dividuals are accused of being, for example, generally
calmly say during a review meeting, ‘You’re doing a unenthusiastic or uncooperative, they can simply go
good job but…’. If, however, they take this line they into denial and accuse you of being prejudiced. Their
have to be specific. They must cite actual instances. negative behaviour may be reinforced.
It is no good making generalized accusations that It is best to deal with this sort of problem infor-
will either be openly refuted or internalized by the mally, either when it arises or at any point during
receiver, making him or her even more resentful. the year when it is felt that something has to be
If the negative behaviour means that the indi- done about it. An annual formal performance re-
vidual’s contribution is not acceptable and is dis- view or appraisal meeting is not the right time, espe-
ruptive, action has to be taken. Negative people can cially if it produces ratings that are linked to a pay
be quiet but they are usually angry about some- increase. Raising the issue then will only put indi-
thing; their negative behaviour is an easy way of viduals on the defensive and a productive discus-
expressing their anger. To deal with the problem it is sion will be impossible.
necessary to find out what has made them angry. The discussion may be informal but it should
have three clear objectives:
1 To review the situation with individuals, the
Causes of negative behaviour aim being if possible to get them to recognize
There are many possible causes of negative behaviour, for themselves that they are behaving
which could include one or more of the following: negatively. If this cannot be achieved, then
the objective is to bring to the attention of
●● a real or imagined slight from their manager
individuals your belief that their behaviour is
or a colleague;
unacceptable in certain ways.
●● a feeling of being put upon;
2 To establish the reasons for the individuals’
●● a belief that the contribution they make is negative behaviour so far as this is feasible.
neither appreciated nor rewarded properly in
3 To agree any actions individuals could take
terms of pay or promotion;
to behave more positively, or what you or
●● resentment at what was perceived to be the organization could do to remove the
unfair criticism; causes of the behaviour.
●● anger directed at the company or their
manager because what was considered to be
a reasonable request (such as for leave or a Discussing the problem
transfer) was turned down, or because of an
The starting point should be general questions
unfair accusation.
about how individuals feel about their work. Do
they have any problems in carrying it out? Are they
happy with the support they get from you or their
Dealing with the problem colleagues? Are they satisfied that they are pulling
It is because there can be such a variety of real or their weight to the best of their ability?
imagined causes of negative behaviour that dealing This generalized start provides the basis for the
with it becomes one of the most difficult tasks line next two stages – identifying causes and any remedies.
It is best if individuals are encouraged to decide for the organization, try to get chapter and verse on
themselves that there is a problem, but in many, if not what it is so that remedial action can be taken.
the majority of cases, this is unlikely to happen.
Individuals may not recognize that they are behaving
negatively or will not be prepared to admit it. Taking remedial action
It is then necessary to discuss the problem. They
If the problem rests with the individual, the objec-
should be given time to say their piece. The response
tive is, of course, to get them to recognize for them-
should spell out how justifiable grievances will be
selves that corrective action is necessary and what
dealt with or why no action is necessary. In the lat-
they need to do about it – with help as necessary. In
ter case, an explanation should be given as to why
some situations you might suggest counselling or a
the individual’s behaviour gives the impression of
source of advice might be recommended. But care
being negative. This should be specific, bringing up
needs to be taken; there should be no implication
actual instances. For example, a discussion could be
that there is something wrong with them. It is best
based on the following questions: ‘Do you recall
to go no further than suggesting that individuals
yesterday’s team meeting?’, ‘How did you think it
may find this helpful – they don’t need it but they
went?’, ‘How helpful do you think you were in deal-
could benefit from it. Managers or HR specialists
ing with the problem?’, ‘Do you remember say-
should not offer counselling themselves; this is bet-
ing… ?’, ‘How helpful do you think that remark
ter done by professional counsellors.
was?’, ‘Would it surprise you to learn that I felt you
If there is anything specific that the parties in-
had not been particularly helpful in the following
volved in the situation can do, then the line to take
ways… ?’
is that the problem can be tackled together: ‘This is
Of course, even if this careful approach is
what I will do’, ‘This is what the company will do’,
adopted, individuals may still refuse to admit that
‘What do you think you should do?’ If there is no
there is anything wrong with their behaviour. If this
response to the last question, this is the point where
impasse is reached, then there is no alternative but
it is necessary to spell out the necessary action. This
to spell out where it is believed they have gone
should be as specific as possible and expressed as
wrong. But this should be done in a positive way:
suggestions, not commands. A joint problem-solving
‘Then I think that it is only fair for me to point out
approach is always best.
to you that your contribution (to the meeting)
would have been more helpful if you had…’.
Ten approaches to handling
Establishing causes negative behaviour
If the negative behaviour is because of a real or im-
agined grievance about what the manager, col- 1 Define the type of negative behaviour which
leagues or the organization have done, then the is being exhibited. Make notes of examples.
individual has to be persuaded to spell this out as 2 Discuss the behaviour with the individual as
precisely as possible. At this point, the job of the soon as possible, aiming to get agreement
manager or HR practitioner is to listen, not to about what it is and the impact it makes.
judge. People can be just as angry about imaginary 3 If agreement is not obtained, give actual
as real slights. You have to find out how they per- examples of behaviour and explain why you
ceive the problem before you can deal with it. believe them to be negative.
It may emerge during the discussion that the
4 Discuss and so far as possible agree reasons
problem has nothing to do with the manager or the
for the negative behaviour, including those
company. It may be family troubles or worries about
attributed to the individual, yourself and the
health or finance. If this is the case a sympathetic
organization.
approach is appropriate, which may involve sug-
gesting remedies in the form of counselling or practi- 5 Discuss and agree possible remedies – actions
cal advice from within or outside the organization. If on the part of the individual, yourself or the
the perceived problem is the manager, colleagues or organization.
6 Monitor the actions taken and the results ●● would not do it – attitude; or
obtained. ●● did not fully understand what was expected
7 If improvement is not achieved and the of him or her.
negative behaviour is significantly affecting
Inadequate leadership from managers can be cause
the performance of the individual and the
of poor performance from individuals. It is the man-
team, then invoke the disciplinary procedure.
ager’s responsibility to specify the results expected
8 Start with a verbal warning, indicating the and the levels of skill and competence required. As
ways in which behaviour must improve and likely as not, when people do not understand what
give a time scale and offers of further they have to do it is their manager who is to blame.
support and help as required. Performance can also be affected by the system of
9 If there is no improvement, issue a formal work. If this is badly planned and organized or does
warning, setting out as specifically as not function well, individuals cannot be blamed for
possible what must be achieved over a the poor performance that results. This is the fault of
defined period of time, indicating the management and they must put it right.
disciplinary action that could be taken. If inadequate individual performance cannot be
10 If the negative behaviour persists and attributed to poor leadership or the system of work,
continues seriously to affect performance, there are seven steps that can be taken to deal with it:
take the disciplinary action. 1 Identify the areas of under-performance – be
specific.
2 Establish the causes of poor performance.
Dealing with 3 Agree on the action required.
under-performance 4 Ensure that the necessary support (coaching,
training, extra resources etc) is provided to
Poor performance can be the fault of the individual ensure the action is successful.
but it could arise because of poor leadership or
5 Monitor progress and provide feedback.
problems in the system of work. In the case of an
individual, the reason may be that he or she: 6 Provide additional guidance as required.
7 As a last resort, invoke the capability or
●● could not do it – ability;
disciplinary procedure (see Chapter 53),
●● did not know how to do it – skill; starting with an informal warning.
Key learning points
The HR role in handling people problems The organization should have a statutory
disciplinary procedure. Managers need to know what
An important part of the transactional role of HR that procedure is and the part they are expected to
professionals is handling people problems by providing play in implementing it.
advice and guidance to line managers or directly.
Absenteeism
Disciplinary issues A frequent people problem managers and HR
Employees can be dismissed because they are not professionals have to face is that of dealing with
capable of doing the work or for misconduct. It is absenteeism. It may be necessary to deal with
normal to go through a formal disciplinary procedure recurrent short-term (one or two days) absence or
containing staged warnings, but instant dismissal can longer-term sickness absence.
be justified for gross misconduct (eg serious theft), Many organizations provide guidelines to
which should be defined in the company’s disciplinary managers on the ‘trigger points’ for action (the amount
procedure or employee handbook. of absence which needs to be investigated), perhaps
based on analyses of the incidence of short-term action taken is crude or insensitive the negative
absence and the level at which it is regarded as behaviour will only be intensified. This might mean
acceptable. If guidelines do not exist, HR specialists having to invoke the disciplinary procedure, which
should be available to provide advice. should be a last resort.
In one sense, it is easier to deal with an actual
Handling poor timekeeping example of negative behaviour, as this can be handled
on the spot. If the problem is one of general attitude
Faced with persistent lateness and when informal rather than specific actions it is more difficult to cope
warnings to the individual concerned seem to have with. It is best to deal with this sort of problem
little effect, it may be necessary to invoke the informally, either when it arises or at any point during
disciplinary procedure. If timekeeping does not the year when it is felt that something has to be done
improve, this could go through the successive stages about it.
of a recorded oral warning, a written warning and a
final written warning. If the final warning does not
Dealing with under-performance
work, disciplinary action would have to be taken; in
serious cases this would mean dismissal. Poor performance can be the fault of the individual,
but it could arise because of poor leadership or
Handling negative behaviour problems in the system of work. To deal with it:
Negative behaviour may take the form of lack of 1 Identify the areas of under-performance – be specific.
interest in the work, unwillingness to cooperate with 2 Establish the causes of poor performance.
team leaders or other members of the team, making 3 Agree on the action required.
unjustified complaints about the work or working
4 Ensure that the necessary support (coaching,
conditions, grumbling at being asked to carry out a
training, extra resources, etc) is provided to ensure
perfectly reasonable task, objecting strongly to being
the action is successful.
asked to do something extra (or even refusing to do it),
or, in extreme cases, insolence. 5 Monitor progress and provide feedback.
It is because there can be such a variety of real or 6 Provide additional guidance as required.
imagined causes of negative behaviour that dealing 7 As a last resort, invoke the capability or disciplinary
with it becomes one of the most difficult tasks line procedure (see Chapter 53), starting with an
managers and HR people have to undertake. If the informal warning.
719
70
Handling challenging
conversations
Many line managers and indeed HR specialists find it They can be even more challenging in prospect if it is
difficult to have conversations or hold meetings with feared that unpleasantness can occur in the shape of
individuals about performance or discipline issues. In lack of cooperation or outright hostility, or in prac-
advance these can look difficult and in practice they tice when this happens in spite of efforts to prevent
can be challenging if the manager wants to achieve it. The following is a 12-point guide to handling
desired changes or improvements in performance. challenging conversations.
Handling challenging conversations

1 Don’t wait too long or until a formal meeting. 6 Focus on the issue and not the person.
Have a quiet word at the first sign that 7 Ask for an explanation. Ask unloaded questions to
something is going wrong. clarify the issues and explore them together.
2 Get the facts in advance – what happened, 8 Allow people to have their say and listen to them.
when and why?
9 Keep an open mind and don’t jump to conclusions.
3 Plan the meeting on the basis of the facts and
10 Acknowledge the individual’s position and any
what is known about the individual. Define what
mitigating circumstances.
is to be achieved.
11 Ask the employee for proposals to resolve the
4 Set the right tone from the start of the meeting –
situation, discuss the options and if possible
adopt a calm, measured, deliberate but friendly
agree on action by the individual, the manager or
approach.
jointly.
5 Begin the conversation by explaining the
12 If agreement cannot be reached, the way forward
purpose of the meeting, indicating to the
will have to be defined, with reasons and
individual what the issue is and giving specific
explanations of any actions proposed.
examples.
720
71
Managing conflict
Introduction Peaceful coexistence
The aim here is to smooth out differences and
Conflict is inevitable in organizations because they emphasize the common ground. People are encour-
function by means of adjustments and compromises aged to learn to live together, there is a good deal of
among competitive elements in their structure and information, contact and exchange of views, and
membership. Conflict also arises when there is change, individuals move freely between groups (for exam-
because it may be seen as a threat to be challenged or ple, between headquarters and the field, or between
resisted, or when there is frustration – this may pro- sales and marketing).
duce an aggressive reaction: fight rather than flight. This is a pleasant ideal, but it may not be practi-
Conflict is not to be deplored. It results from pro- cable in many situations. There is much evidence
gress and change and it can and should be used con- that conflict is not necessarily resolved by bringing
structively. Bland agreement on everything would be people together. Improved communications and
unnatural and enervating. There should be clashes of techniques such as briefing groups may appear to be
ideas about tasks and projects, and disagreements good ideas but are useless if management has noth-
should not be suppressed. They should come out into ing to say that people want to hear. There is also the
the open because that is the only way to ensure that danger that the real issues, submerged for the mo-
the issues are explored and conflicts are resolved. ment in an atmosphere of superficial bonhomie, will
There is such a thing as creative conflict – new or surface again later.
modified ideas, insights, approaches and solutions can
be generated by a joint re-examination of different
points of view, as long as this is based on an objective Compromise
and rational exchange of information and opinions.
But conflict becomes counterproductive when it is The issue is resolved by negotiation or bargaining
based on personality clashes, or when it is treated as and neither party wins or loses. This concept of
an unseemly mess to be hurriedly cleared away, rather splitting the difference is essentially pessimistic.
than as a problem to be worked through. Conflict The hallmark of this approach is that there is no
resolution deals with ways of settling differences be- ‘right’ or ‘best’ answer. Agreements only accom-
tween groups, individuals and team members. modate differences. Real issues are not likely to be
solved.
Handling inter-group conflict Problem solving

There are three principal ways of resolving inter- An attempt is made to find a genuine solution to the
group conflict: peaceful coexistence, compromise problem rather than just accommodating different
and problem solving. points of view. This is where the apparent paradox
Chapter 71 | Managing Conflict 721
of ‘creative conflict’ comes in. Conflict situations root causes. Again, this is an unsatisfactory solu-
can be used to advantage to create better solutions. tion. The issue is likely to re-emerge and the battle
If solutions are to be developed by problem solv- will recommence.
ing, they have to be generated by those who share
the responsibility for seeing that the solutions work.
The sequence of actions is: first, those concerned Reaching a compromise
work to define the problem and agree on the objec-
Yet another approach is bargaining to reach a com-
tives to be attained in reaching a solution; second,
promise. This means that both sides are prepared to
the group develops alternative solutions and de-
lose as well as win some points and the aim is to
bates their merits; and third, agreement is reached
reach a solution acceptable to both sides. Bargaining,
on the preferred course of action and how it should
however, involves all sorts of tactical and often
be implemented.
counterproductive games, and the parties are often
more anxious to seek acceptable compromises than
to achieve sound solutions.
Handling interpersonal
conflict Counselling
Handling conflict between individuals can be even Personal counselling is an approach that does not
more difficult than resolving conflicts between address the conflict itself but focuses on how the
groups. Whether the conflict is openly hostile or sub- two people are reacting. It gives people a chance
tly covert, strong personal feelings may be involved. to release pent-up tensions and may encourage
However, interpersonal conflict, like inter-group con- them to think about new ways of resolving the
flict, is an organizational reality that is not necessar- conflict. But it does not address the essential na-
ily good or bad. It can be destructive, but it can also ture of the conflict, which is the relationship be-
play a productive role. The approaches to dealing tween two people. That is why constructive
with it are withdrawal, smoothing over differences, confrontation offers the best hope of a long-term
reaching a compromise, counselling and constructive solution.
confrontation.
Constructive confrontation
Withdrawal
Constructive confrontation is a method of bring-
The reaction to interpersonal conflict may be the ing the individuals in conflict together with a
withdrawal of either party, leaving the other one to third party whose function is to help build an ex-
hold the field. This is the classic win/lose situation. ploratory and cooperative climate. Constructive
The problem has been resolved by force, but this may confrontation aims to get the contending parties
not be the best solution if it represents one person’s to understand and explore the other’s perceptions
point of view that has ignored counter-arguments, and feelings. It is a process of developing mutual
and has, in fact, steamrollered over them. The winner understanding to produce a win/win situation.
may be triumphant but the loser will be aggrieved The issues will be confronted but on the basis of
and either demotivated or resolved to fight again an- a joint analysis, with the help of the third party,
other day. There will have been a lull in, but not an of facts relating to the situation and the actual
end to, the conflict. behaviour of those involved. Feelings will be ex-
pressed but they will be analysed by reference to
specific events and behaviours rather than infer-
Smoothing over differences ences or speculations about motives. Third par-
Another approach is to smooth over differences ties have a key role in this process, and it is not an
and pretend that the conflict does not exist, al- easy one. They have to get agreement to the
though no attempt has been made to tackle the ground rules for discussions aimed at bringing
out the facts and minimizing hostile behaviour. 2 Find out who is involved.
They must monitor the ways in which negative 3 Talk to each of the parties to the conflict to
feelings are expressed and encourage the parties obtain their side of the story.
to produce new definitions of the problem and its
4 Talk to other members of the group to get
cause or causes and new motives to reach a com-
their views, being careful to be dispassionate
mon solution. Third parties must avoid the temp-
and strictly neutral.
tation to support or appear to support either of
those in contention. They should adopt a counsel- 5 Evaluate what you hear from both parties
ling approach, as follows: and other people against your knowledge of
what has been happening, any history of
●● listen actively; conflict and the dispositions and previous
●● observe as well as listen; behaviour of the people involved.
●● help people to understand and define the 6 Reach preliminary conclusions on the facts,
problem by asking pertinent, open-ended the reasons for the dispute and the extent to
questions; which either of the parties or both of them
●● recognize feelings and allow them to be are to blame (but keep these to yourself at
expressed; this stage).
●● help people to define problems for 7 Bring the parties together to discuss the
themselves; situation. The initial aim of this meeting
would be to bring the problem out into the
●● encourage people to explore alternative
open, get the facts and defuse any emotions
solutions;
that may prejudice a solution to the problem.
●● get people to develop their own Both parties should be allowed to have their
implementation plans but provide advice and say but, as the facilitator of this meeting, you
help if asked. should do your best to ensure that they stick
To conclude, conflict, as has been said, is in itself to the facts and explain their point of view
not to be deplored; it is an inevitable concomitant dispassionately. You should not even
of progress and change. What is regrettable is the remotely give the impression that you are
failure to use conflict constructively. Effective prob- taking sides.
lem solving and constructive confrontation both 8 Try to defuse the situation so that a solution
resolve conflicts and open up channels of discussion can be reached that on the whole will be
and cooperative action. acceptable to all concerned. Ideally, this
Many years ago, one of the pioneering and most should be an integrated solution reached by
influential writers on management, Follett (1924), agreement on the basis of collaboration
wrote something on managing conflict that is as along the lines of, ‘Let’s get together to find
valid today as it was then. She said that differences the best solution on the basis of the facts.’ It
can be made to contribute to the common cause if may be necessary to reach a compromise or
they are resolved by integration rather than domi- accommodation – something everyone can
nation or compromise. live with.
9 Only if all else fails or the parties are so
recalcitrant in holding an untenable position
Resolving conflict between that no integrated compromise or
accommodating solution can be reached,
team members should you resort to direct action –
instructing one or both of the parties to bury
To resolve conflict between team members the fol- their differences and get on with their work.
lowing actions can be taken: If the worst comes to the worst this may
1 Obtain an overview of the situation from involve disciplinary action, beginning with a
your own observations. formal warning.
Chapter 71 | Managing Conflict 723
Key learning points
The manifestation of conflict Resolving conflict between team

Conflict is inevitable in organizations because they members
function by means of adjustments and compromises 1 Obtain an overview of the situation.
among competitive elements in their structure and
2 Find out who is involved.
membership. Conflict also arises when there is change,
because it may be seen as a threat to be challenged or 3 Talk to each of the parties to the conflict to obtain
resisted, or when there is frustration – this may their side of the story.
produce an aggressive reaction: fight rather than flight. 4 Talk to other members of the group.
5 Evaluate what you hear.
Handling inter-group conflict 6 Reach preliminary conclusions on the facts and the
There are three principal ways of resolving inter-group reasons for the dispute.
conflict: peaceful coexistence, compromise and 7 Bring the parties together to discuss the
problem solving. situation.
8 Try to defuse the situation so that a solution can be
Handling interpersonal conflict reached that on the whole will be acceptable to all
concerned.
The approaches to dealing with interpersonal conflict are
withdrawal, smoothing over differences, reaching a 9 Only resort to direct action if all else fails.
compromise, counselling, and constructive confrontation.
Reference
Follett, M P (1924) Creative Experience, New York,
Longmans Green
724
72
Political skills
a pproach can be legitimate as long as the ends are justi-
Introduction fiable from the viewpoint of the organization. Whether
or not that is the case, political skills and political sensi-
To be politic, according to the Oxford English tivity, as described in this chapter, are required to thrive
Dictionary, you can be sagacious, prudent, judicious, and sometimes even survive in organizations. This ap-
expedient, scheming or crafty. So political behaviour plies particularly to HR specialists who may lack the
in an organization could be desirable or undesirable. power base others possess and may feel they have to
Organizations consist of individuals who, while pursue the achievement of their ends and exert influ-
they are ostensibly there to achieve a common pur- ence through political as well as more open means. But
pose, will, at the same time, be driven by their own it is also essential for them to gain insight into the po-
needs to achieve their own goals. Effective manage- litical situation in their organization in order to under-
ment is the process of harmonizing individual en- stand what is happening, why it is happening and what
deavour and ambition to the common good. Some they need to do about it.
individuals will genuinely believe that using politi-
cal means to achieve their aims will benefit the
organization as well as themselves. Others will ra-
tionalize this belief. Yet others will unashamedly
Typical political approaches
pursue their own ends. They may use all their pow-
Kakabadse (1983) identified seven approaches that
ers of persuasion to legitimize these ends to their
organizational politicians adopt, some of which are
colleagues, but self-interest remains the primary
more legitimate than others:
drive. These are the corporate politicians the Oxford
English Dictionary describes as ‘shrewd schemers, 1 Identify the stakeholders, those who have
crafty plotters or intriguers’. Politicians within or- commitment to act in a particular way.
ganizations can be like this. They manoeuvre behind 2 Keep the stakeholders comfortable,
people’s backs, blocking proposals they do not like. concentrating on behaviour, values, attitudes,
They advance their own reputation and career at fears and drives that the individuals will
the expense of other people’s. They can be envious accept, tolerate and manage (comfort zones).
and jealous and act accordingly. They are bad news.
3 Fit the image – work on the comfort zones
But it can also be argued that a political ap-
and align their image to that of the people
proach to management is inevitable and even desir-
with power.
able in any organization where the clarity of goals is
not absolute, where the decision-making process is 4 Use the network – identify the interest
not clear cut and where the authority to make deci- groups and people of influence.
sions is not evenly or appropriately distributed. And 5 Enter the network – identify the gatekeepers,
there can be few organizations where one or more adhere to the norms.
of these conditions do not apply. 6 Make deals – agree to support other people
It was suggested by Kakabadse (1983) that politics where this is of mutual benefit.
in an organization is a process of influencing individuals
7 Withhold and withdraw – withhold
and groups of people to your point of view, where you
information as appropriate and withdraw
cannot rely on authority. In this sense, a political
judiciously when the going gets rough.
Chapter 72 | Political Skills 725
running, who are the people who count

Using political means to get when decisions are taken;
things done ●● be aware of what is going on behind the scenes;
●● know who is a rising star and whose
People acting politically get things done by lobby- reputation is fading;
ing decision makers and doing deals. This may not
●● identify any ‘hidden agendas’ – try to
always be desirable, but it does happen, and some
understand what people are really getting at
people rationalize it on the basis that the end justi-
beneath the surface by getting answers to the
fies the means (always a dubious stance). Other
question: ‘Where are they coming from?’;
ploys include withholding information, which is not
legitimate but which recognizes the fact that knowl- ●● find out what other people are thinking and
edge is power. Organizational politicians can go be- seeking;
hind people’s backs, hatch up plots in dark corners, ●● network – identify the interest groups and
‘sew things up’ before meetings (lobbying) and keep in contact with them.
exert undue influence on weaker brethren. You may
not deign to practise these political black arts but it
is useful to be aware of the possibility that others Dangers of politics
will so that you are prepared for that eventuality.
The reality of politics in organizational life means Much of this behaviour is legitimate, but there are
that HR specialists who are proposing new initia- dangers. Politicking can be carried out to excess,
tives to managers need to identify the key decision and it can then seriously harm the effectiveness of
makers before coming to a final conclusion and an organization. The signs of excessive indulgence
launching a fully fledged proposal at a meeting or in in political behaviour include:
a memorandum. It makes good sense to test opinion ●● back-biting;
and find out how other people may react, especially
when it is possible that there will be some opposition ●● buck-passing;
or indifference. This testing process enables the an- ●● secret meetings and hidden decisions;
ticipation of counter-arguments and the m odification ●● feuds between people and departments;
of proposals, either to meet legitimate objections or,
●● e-mail or paper wars between armed camps –
when there is no alternative, to accommodate other
arguing by e-mail or memoranda rather than
people’s requirements.
meeting people face to face is a sign of distrust;
●● a multiplicity of snide comments and
Political sensitivity criticisms;
●● excessive and counterproductive lobbying;
Organizational politicians exert hidden influence to ●● the formation of cabals – cliques that spend
get their way, and ‘politicking’ in some form takes their time intriguing.
place in most organizations. A degree of political
sensitivity is desirable – knowing what is going on
so that influence can be exerted properly. This is a Dealing with organizational
skill that HR specialists need to have and it means
that it is necessary to: politics
●● know how ‘things are done around here’; One way to deal with this sort of behaviour is to
●● know how key decisions are made and who find out who is going in for it and openly confront
makes them; them with the damage they are doing. They will, of
●● understand the factors that are likely to course, deny that they are behaving politically (they
affect decisions; wouldn’t be politicians if they didn’t), but the fact
that they have been identified might lead them to
●● know where the power base is in the
modify their approach. It could, of course, only
organization (sometimes called the
serve to drive them further underground, in which
‘dominant coalition’) – who makes the
case their behaviour would have to be observed and that disagreements are de-personalized, so far as
even more closely and action taken to restrain it. this is possible. Political processes can then be seen as
A more positive approach to keeping politics op- a way of helping to maintain the momentum of the
erating at an acceptable level is for the organization organization as a complex d ecision-making and
to manage its operations as transparently as possible. problem-solving entity. In their organization
The aim should be to ensure that issues are debated development role, HR professionals can exert influ-
fully, that differences of opinion are dealt with frankly ence in achieving these aims.
Key learning points
Organizational politics recognition of the fact that knowledge is power.

Organizational politicians can go behind people’s backs,
Politics in an organization is a process of influencing hatch up plots in dark corners, ‘sew things up’ before
individuals and groups of people to your point of view, meetings and exert undue influence on weaker brethren.
where you cannot rely on authority (Kakabadse, 1983).
In this sense, a political approach can be legitimate as
Political sensitivity
long as the ends are justifiable from the viewpoint of
the organization. To be politically sensitive it is necessary to:
●● know how ‘things are done around here’;
Approaches adopted by organizational ●● know how key decisions are made and who makes
politicians them;
1 Identify the stakeholders. ●● understand the factors that are likely to affect
decisions;
2 Keep the stakeholders comfortable, concentrating
on their comfort zones. ●● know where the power base is in the organization;
●● be aware of what is going on behind the scenes;
3 Work on the comfort zones and align their image to
that of the people with power. ●● know who is a rising star and whose reputation is
fading;
4 Use the network – identify the interest groups and
●● identify any ‘hidden agendas’ – try to understand what
people of influence.
people are really getting at beneath the surface;
5 Enter the network – identify the gatekeepers, ●● find out what other people are thinking and seeking;
adhere to the norms.
●● network – identify the interest groups and keep in
6 Make deals – agree to support other people where contact with them.
this is of mutual benefit.
7 Withhold information as appropriate and withdraw Dealing with organizational politicians

judiciously when the going gets rough. To keep politics operating at an acceptable level the
organization should manage its operations as
Using political means to get things done transparently as possible. The aim should be to ensure
People acting politically get things done by lobbying that issues are debated fully, that differences of
decision makers and doing deals. Other ploys include opinion are dealt with frankly and that disagreements
withholding information, which is not legitimate, in are de-personalized.
Reference
Kakabadse, A (1983) The Politics of Management,
Aldershot, Gower
727
73
Dealing with business
issues from an HR
perspective
Introduction
Source review
Effective HR professionals not only have to under-
stand the business they are working in but must also [Organizational insight is] the juxtaposition of a
be able to identify the business issues that influence deep understanding of what will help make your
how the organization operates and how the people organization successful – or stop it from being
in the business are treated. In this chapter the pro- so – in the market within which it operates at this
cesses involved in doing this are examined under the stage in its evolution, together with a deep
following headings: appreciation of what goes on around here and
what really make things happen here (given
●● Identify business issues
people, politics and culture). The former derives
●● Establish people factors from understanding the key drivers of the business,
●● Critically analyse relevant HR policy and the wider market and the context in which it sits.
practice The latter comes from the ‘intelligence’ generated
●● Conduct or participate in research both systematically through data gathering and
●● Analyse quantitative and qualitative analysis, as well as from the discrete activities and
information interactions HR engages in across the
●● Draw conclusions organization.
CIPD (2010: 13)
●● Prepare and make the business case
Identify business issues At corporate level it is necessary to understand

what the organization exists to do and how it does
A business issue will be anything occurring in the it. In a commercial business this means knowing
organization or affecting it that will influence its how it makes money with particular reference to
performance in terms of the achievement of its its development, marketing and operational ac-
goals. To identify issues it is necessary to develop tivities. In a national or local government estab-
qualities of organizational insight defined by the lishment or a not-for-profit organization it means
CIPD as: understanding its key functions – service delivery,
administration, research and development. This the particular factors in these areas that will affect
means finding out: how the unit operates and performs.
Getting this information cannot be left to chance.
●● the business imperatives of the
To obtain it the first thing to do is to get hold of as
organization – its mission and its strategic
much written or published information as you can:
goals;
annual reports (see Chapter 57 for guidance on
●● the organization’s business model – the basis how to read a balance sheet), company websites,
upon which its business is done (how its sales brochures, articles in the financial pages of
mission and strategic goals will be achieved); newspapers, reports from management consultants.
●● the organization’s business drivers – the The next thing to do is to talk to people: senior
characteristics of the business that move it managers (if you can get at them), line managers,
forward; team leaders and supervisors and, when the occa-
●● the organization’s core competencies – what sion presents itself, people in offices, sales, delivery
the organization is good at doing; and on the shop floor. It is necessary to make a de-
liberate effort to walk about, ask questions and, im-
●● the factors that will affect performance and
portantly, listen. Business partners should spend far
ensure the effectiveness of its activities,
more time doing this than sitting in their office. So
including specific issues concerning
should more senior HR professionals and L&D
profitability, productivity, operational
specialists. Even those who are likely to be office-
performance, quality, financial budgeting and
based for much of the time (eg recruiters and re-
control, costs and benefits and customer
ward specialists) should get out as much as they
service;
can. In the experience of the writer (25 years as an
●● the key performance indicators (KPIs) of the HR professional, 12 of them as HR director), un-
business (the results or outcomes identified derstanding takes time and sometimes occurs by a
as being crucial to the achievement of high process of osmosis. But it is worth it. HR people
performance, eg financial, productivity and earn respect by the quality of their service delivery
quality measures) that can be used to efforts but, importantly, also by demonstrating that
measure progress towards attaining goals; they know what is going on and understand the is-
●● the factors that will ensure that the firm’s sues that concern managers and staff generally and
resources, especially its human resources, base their strategy proposals on them.
create sustained competitive advantage
because they are valuable, imperfectly
imitable and non-substitutable (the resource- Establish people factors
based view);
●● the factors and issues that can affect the An HR executive reported by the CIPD (2010: 13)
organization’s performance, especially those commented that: ‘We need deep employee insights –
concerned with people. not just employee engagement surveys which just
scratch the surface. As an HR function we need a
It is particularly important that the head of the HR deep and segmented understanding of employees’
function and the heads of the key departments such aspirations, motivations and needs in some ways
as talent management, learning and development akin to how a customer-facing company thinks
and reward management should understand these about its customers.’
characteristics of their organization. This will pro- Inevitably, many of the identified business issues
vide the basis for making the strategic contribution will involve people, especially issues concerned gen-
required from those at this level to the achievement erally with performance and particularly with pro-
of organizational effectiveness and competitive ad- ductivity, quality, sales and customer service. People
vantage. But any HR practitioner acting as a busi- factors can include levels of motivation and engage-
ness partner or delivering a service such as recruitment, inadequate leadership, poor teamwork, lack
ment and selection should also be knowledgeable in of trust, management succession problems, skills
each of these areas. And those embedded in divi- (talent) shortages, employee turnover, absenteeism
sions or departments need to acquire knowledge of and long-term illness. Sometimes, however, people
Chapter 73 | Dealing With Business Issues from an HR Perspective 729
factors are not so evident. For example, is a fall in critical thinking by analysing and evaluating the
productivity due to people not working hard quality of theories and concepts to establish the de-
enough or is it because the system of work is failing gree to which they are valid and supported by the
to deliver? (Although systems of work are designed evidence (evidence-based) and the extent to which
and operated by people, so a people factor might they are biased. The arguments for and against are
still be present.) It may be necessary to drill down to weighed and the strength of the evidence on both
find out what lies behind the people factor, for ex- sides is assessed. On the basis of this assessment, a
ample, the causes of employee turnover. conclusion is reached on which proposition or ar-
gument is to be preferred. Critical evaluation is re-
quired when testing propositions and evaluating the
Critically analyse relevant outcomes of research.
HR policy and practice

Conduct or participate
To address any issues the first step is to critically
analyse any evidence, which illustrates good HR in research
practice. There are a number of sources; one of
them is the literature. People Management contains As noted in Chapter 60, research is concerned with
the most practical and relevant information. establishing what is and from this predicting what
Academic journals, particularly The Human will be. It does not decide what ought to be; that is
Resource Management Journal, The International for people interpreting the lessons from research in
Journal of Human Resource Management and their own context. Research is about the conception
Employee Relations should also be consulted. and testing of ideas and hypotheses. This is a crea-
Although many of the articles in these publications tive and imaginative process, although new infor-
are somewhat esoteric – academics writing for aca- mation is normally obtained within the framework
demics – some contributions based on rigorous re- of existing theory and knowledge. Logic and ra-
search are relevant for practitioners. tional argument are methods of testing ideas after
Articles in academic journals are usually based they have been created.
on research but a considerable amount of practical It may be useful for HR professionals to conduct
research data is provided by the CIPD, which pro- formal research within their organization in order
duces a large number of research reports and sur- to assemble evidence upon which they can base pro-
veys every year that are full of relevant information posals on how to deal with business or HR issues.
and illustrated by illuminating case studies. The They may also be involved in research projects out-
Institute for Employment Studies (IES) also does a side the organization with fellow HR professionals
lot of relevant research. or academics where these seem likely to produce
Other sources of information include confer- results of interest to their organization. In either
ences, networking, eg at CIPD branch meetings, and case they need to know what research methods are
contacts with organizations that are known to be available and their relevance in different situations.
successfully using a relevant HR practice. Research A full discussion of research methodology and a
methods are considered in the next section of this summary of data collection techniques are con-
chapter. tained in Chapter 60.
An evidence-based management approach is nec-
essary, as described in Chapter 11. Any information
obtained should be subject to critical evaluation. As Analyse quantitative and
mentioned in Chapter 59, this is the process of mak-
ing informed judgements about the validity, rele- qualitative information
vance and usefulness of ideas and arguments.
Critical evaluation means not taking anything for Quantitative business information will be available
granted and, where necessary, challenging proposi- in the form of financial and operational reports.
tions. It involves making informed judgements Quantitative HR data will by generated through
about the value of ideas and arguments. It uses HR analytics (see Chapter 11) and by research.
Qualitative HR information may be obtained by ●● deciding on the preferred course of action;

research but it will also emerge from day-to-day ●● establishing the costs and benefits of the
contacts between HR specialists and managers and action.
employees.
Quantitative information
Prepare and make the
Company annual financial reports (see Chapter 57)
business case
containing the balance sheet, profit and loss ac-
count and other financial data provide an overall A business case should set out the costs and benefits
source of information on how well the business is of the proposal. It can be made either in added-
doing. Internal periodical reports will show perfor- value terms (ie the income generated by the pro-
mance against financial budgets and targets and posal will exceed the cost of implementing it), or on
there are likely to be other reports, depending on the basis of the return on investment or ROI (ie the
the nature of the business, on such matters as sales, cost of the investment, say in training, is justified by
output, service levels and quality. They can be ana- the financial returns in such areas as increased
lysed to reveal business performance (profitability productivity).
and productivity) issues expressed in terms of trends It can be more difficult to make out a business
and ratios. HR professionals can pursue this analy- case for an HRM innovation in financial terms. The
sis in discussions with management to establish the costs can and should be calculated but the benefits
extent and nature of any people problems and con- may have to be expressed qualitatively. A business
sider remedies. case will be enhanced if:
Statistical techniques such as frequency analy- ●● data is available on the impact the proposal
sis, measures of central tendency, correlation and is likely to make on key areas of the
regression analysis as described in Chapter 61 can organization’s operations, eg shareholder
be used when establishing the significance of the value, profitability, income generation,
data. customer service levels, quality, productivity,
innovation, skills development, talent
management;
Qualitative information ●● it can be shown that the proposal will help
The analysis of qualitative information is inevitably to achieve competitive advantage through
more subjective, but the technique of content analy- the strategic development for the
sis can be used to provide a form of measurement. organization of rare, hard-to-imitate and
This involves selecting a number of key phrases or hard-to-substitute human resources (the
words, counting the number of times they are men- resource-based view);
tioned in interviews or focus groups and then ana- ●● the way(s) in which the proposed policy or
lysing these frequencies. practice will generate added value and
stimulate improved performance are spelt
out;
Draw conclusions ●● there is proof that the innovation has already
worked well within the organization
Drawing conclusions from the analysis of the data (perhaps as a pilot scheme) or represents
involves: ‘good practice’ that is likely to be
●● assessing the nature of the issue and its transferable to the organization;
causes; ●● it can be implemented without too much
●● considering the HR strategic and operational trouble;
implications; ●● the proposal is brief, to the point, laid out
●● examining and evaluating alternative courses clearly and well argued.
of action;
Chapter 73 | Dealing With Business Issues from an HR Perspective 731
Key learning points

When investigating a business issue from an HR cause and affect the issues and what remedies
perspective it is necessary to: have proved to be successful;
●● identify business issues that are of strategic ●● systematically analyse quantitative and qualitative
importance to the organization; information using HR analytics and statistical
methods and present the results in clear and
●● establish the extent and nature of any people
consistent formats;
factors that affect these issues;
●● draw realistic and appropriate conclusions from
●● critically analyse and discuss relevant HR policy
analyses and research;
and practice by reference to the literature,
published research and any other sources of ●● make recommendations based on costed options
information; and develop and present a persuasive business
case for proposals.
●● conduct or participate in research within and
outside the organization to find out what factors
Reference
CIPD (2010) Next Generation HR [online] http:// https://perma.cc/7SKT-XRYD) [accessed 2 April
www.cipd.co.uk/hr-resources/research/next- 2018]
generation-hr-time-for-change.aspx (archived at
732
74
Project management
Introduction Assessment
Projects involve investing resources – money and
Project management is the planning, supervision people. Investment appraisal techniques are used to
and control of any activity or set of activities that ensure that the company’s criteria on return on in-
leads to a defined outcome at a predetermined time vestment are satisfied. Cost-benefit analysis may be
and in accordance with specified performance or used to assess the degree to which the benefits jus-
quality standards at a budgeted cost. It is con- tify the costs, time and number of people required
cerned with deliverables – getting things done as by the project. This may mean identifying opportu-
required or promised. While delivering results on nity costs that establish whether a greater benefit
time is important, it is equally important to deliver would be obtained by investing the money or de-
them to meet the specification and within the pro- ploying the people on other projects or activities.
jected cost.
Project management involves action planning –
deciding what work is to be done, why the work Performance specification
needs to be done, who will do the work, how much
it will cost, when it has to be completed (totally or This sets out what the project is expected to do –
stage by stage) and where it will be carried out. how it should perform – and describes the details of
HR professionals are often called upon to man- the project’s configuration or method of operation.
age or take part in such projects as developing a
new performance management system or job evalu-
ation scheme, setting up a new learning centre or Project plan
revising a pay structure. They therefore need project The project plan sets out:
management skills.
The three main project management activities ●● the major activities in sequence – the stages
covered in this chapter are project planning, setting of the project;
up the project and project control. ●● a breakdown where appropriate of each
major operation into a sequence of
subsidiary tasks;
Project planning ●● an estimate of the time required to complete
each major operation or stage;
Initiation ●● an assessment of the resources required –
money, people, equipment and time;
Project planning starts with a definition of the ob-
jectives of the project. A business case has to be ●● how many people will be allocated to the
made. This means answering two basic questions: project with different skills at each stage, and
who is to be responsible for controlling the
1 Why is this project needed? project as a whole and at each of the major
2 What benefits are expected from the project? stages or operations.
Chapter 74 | Project Management 733
Setting up the project Controlling the project

Setting up the project involves: The three most important things to control are:
●● selecting and briefing the project 1 Time – achievement of project plan as
management team; programmed.
●● obtaining and allocating resources; 2 Quality – achievement of project
●● finalizing the programme – defining each specifications.
stage; 3 Cost – containment of costs within budget.
●● defining and establishing control systems and Project control is based on progress reports show-
reporting procedures (format and timing of ing what is being achieved against the plan. The
progress reports); planned completion date, actual achievement and
●● identifying key dates, stage by stage, for the forecast completion date for each stage or opera-
project (milestones) and providing for tion are provided. The likelihood of delays, over-
milestone meetings to review progress and runs or bottlenecks is thus established so that
decide on any actions required. corrective action can be taken in good time.
Progress meetings should be held at predeter-
mined intervals. These can be treated as ‘milestone’
meetings when they are timed to coincide with the
key stages of the project.
Key learning points
Project management defined ●● obtaining and allocating resources;
Project management is the planning, supervision and ●● finalizing the programme;

control of any activity or set of activities that leads to a ●● defining and establishing control systems and
defined outcome at a predetermined time and in reporting procedures;
accordance with specified performance or quality
standards at a budgeted cost. ●● identifying key dates, stage by stage.
Project planning steps Controlling the project

1 Initiation. The three most important things to control are:
2 Assessment. 1 Time – achievement of project plan as

programmed.
3 Performance specification.
2 Quality – achievement of project specifications.
4 Project plan.
3 Cost – containment of costs within budget.
Setting up the project

Setting up the project involves:
●● selecting and briefing the project management
team;
734

735
CIPD New Profession Map 2018

Cross references to core and specialist
knowledge requirements
Core and specialist knowledge Chapter

People practice Development of integrated people practices 2
Employment law 55
Workforce planning and how it is used 27
Performance management 37–39
Employee wellbeing 50
Diversity and inclusion management 31
Creating effective teams 68
Stakeholder management and analysis 3
Facilitation, coaching and mentoring 64
Employer brand 28
Culture and behaviour Culture 19
Different models of organization behaviour 19
Different theories about human behaviour (eg decision- 58, 66, 24
making theory, nudge theory, self-determination theory)
Impact of people practices on behaviour, culture, systems 1
and structures
Ethics 17
Ways of learning and emerging learning trends 33, 34
Employee engagement and motivation 26, 24
Employee voice 48
(continued )
736 Appendix

Business acumen Link between HR and business strategy 2
Establish the cause of organizational/business issues 73
Financial and non-financial measures of performance 37
Make calculations (eg percentages, averages) and interpret 61, 57
financial information
External and internal factors that shape short- and long- 6
term business performance
What good people practice looks like 1
How to test new people practices 3
Drivers of competitive advantage and the people opportuni- 2, 8
ties they present.
Representing the value of people in different ways (eg 4
skills, profit, capability, cost)
HR strategy development 3
The role and purpose of governance 19
Select and manage suppliers and partnership organizations 8
How organizations can create opportunities to improve 18
society
Analytics and creating value Evidence-based management 11
Data management 54
Critical thinking 59
People analytics 12
How people practices create value 6
Digital working The use of technologies 13
Using technology to improve collaboration 13
Use of social media 13
The benefits of technology 13
Change Making a business case 67
Evidencing the value of change 66
Impact of change on culture 19
Applying principles of psychology of change 66
Assessing capability for change 66
Assessing choice of levers for change 66
Project planning for change 74
(continued )
Appendix 737

Employee experience Approaches to enhance engagement 26
Employee voice 48
Management practices and employee experience 30
Onboarding programmes 30
Wellbeing practice 50, 51
Trust 45
Employer brand 28
People policies 52
Communication channels 49
Employee relations Employment law 55
Dispute resolution 47
Development of people policies 52
Diversity and inclusion Difference between diversity and inclusion 31
Managing diversity and inclusion 31
Diversity and inclusion legislation 55
Creating an inclusive environment 31
Learning and development Learning cultures 33
Defining capability needs 34
Adult learning theories 34
Face-to-face learning techniques 64
Digital learning 35
Learning content creation 35
Learning facilitation 64
Learning engagement 33
Learning transfer 35
Organization development Consulting cycle and processes 23
and design
Organization development theory 23
Organization diagnostic tools 23
Organization development interventions 23
Macro trends that impact on organization design 20
Organization design theory 20
Organization structures 20
Work design 21
(continued )
738 Appendix

People analytics Analytic consulting 12
People data modelling 12
Research techniques 60
Multivariate analysis 61
Data visualization techniques 61
Resourcing Workforce planning 27
Sourcing 28
Assessment approaches 28
Tailoring advertising to different candidates 28
Use of social media 28
Global mobility policies 7
Different types of workers 27
Insight to organizations competing for talent 28
Reward Reward strategy 40
Salary surveys 41
Executive remuneration 42
International reward 42
Employee benefits 41
Link between reward and performance 6, 24
Reward legislation 40
Reward reports 41
Remuneration committees 42
Talent management Retaining talent 29
Identifying and reviewing talent 29
Creating diverse talent pools 29
Using talent pools in partner organizations 29
Global approaches to talent management 7
Self-managed talent approaches 29, 32
Career development pathways 29
AU T H O R I N D E X
Abell, D F 27 Bennis, W G 233, 420, 538. Buchanan, D 189, 201, 211,

Adair, J 705 Benson, G S 40 233, 235
Adams, J S 173, 174, 254 Bernadin, H K 432 Buchanan, L 265
Aguinis, H 432 Bersin, J 345–46 Buckingham, M 453
Alderfer, C 250 Bertalanaffy, L Von 192, Budd, J 553
Alfes, K 271–72, 275, 538, 572, 208, 209 Burgoyne, J 382, 420, 421
693 Bevan, S 581 Burke, W W 235
Allport, G 252 Bies, R J 174 Burns, J M 192
Alvesson, M 67 Birdi, K 64, 65 Burroughs, A 97, 108–09
Anderson, V 401 Birkinshaw, J 420 Burt, C 200, 315
Ando, N 78, 80 Blackler, F 158–59, 162 Burt, E 315–16
Anthony, P D 236 Blake, P 159 Butler, L 694
Applebaum, E 71, 263, 265 Blanchard, K H 420
Araujo, J 381 Bolden, R 333 Caldwell, R 110, 112, 114, 116,
Argyle, M 202 Bond, S 12 236, 693
Argyris, C 192, 381, 382 Bontis, N 51 Caligiri, P 85–86
Armstrong, M 5, 12, 32, 33, 38, Borman, W C 432 Cameron, J 254
235 Bos-Nehles, A 66, 99, 122 Campbell, J P 432
Arnold, J 247 Boselie, P 14, 17, 67 Campbell V 332
Arrowsmith, J 98 Boudreau, J W 136, 137 Campion, M A 457, 460–61
Ashton, D 71, 218 Bowen, D 14, 123, 197 Camps, J 40
Atkinson, J 370, 371 Bowie, N E 171–72 Canibano, A 536
Avolio, B J 708 Boxall, P 4, 6, 8, 16, 17, 25, 27, Cappelli, P 29, 43–44, 161, 291,
30, 31, 37, 38, 40, 63, 69, 353
Baird, L 28 159, 171, 371, 432, 548, 553, Cardy, R L 433
Bakker, A 282, 571 554, 557 Carnall, C 692
Balain, S 272, 281 Boyatzis, R 163 Carter, C 159
Bandura, A 254, 384, 436 Braverman, H 536 Cascio, W F 25, 32, 457
Barends, E G 128–29 Brayfield, A H 257 Cervone, D 254
Barnard, C 191 Brewster, C 9, 17, 77, 78, 116, Chamberlain, N W 549
Barney, J 9, 31, 98 123, 557 Chamorro-Premuzic, T 4, 277,
Baron, A 38 Bridwell, L G 249 301, 316, 327
Baron, D 181 Brindle, D 709 Chandler, A D 26
Bartlett, C A 77, 192, 209 Briner, R B 130, 281, 447 Charney, D 581
Bates, R A 431, 435 Brinjolfsson, E 136 Child, J 210
Baumann, Z 177 Briscoe, D 78, 81, 83 Christen M 258
Beardwell, J 291 Brockbank, W 95, 106, 113 Clardy, A 383
Beauchamp, T L 171–72 Brown, D 7, 32, 33, 38, 44, 107, Clark, A E 22, 274, 281
Becker, B E 6, 13, 14, 70, 71, 95 112, 271, 277, 457, 517, 519, Clarke, N 202
Beckhard, R 233, 689 568 Clegg, S 172, 177
Beer, M 5, 10, 17, 32–33, 232, Brown, S I 694 Clinton, M 99
263, 689 Brumbach, G B 432 Clutterbuck, D 677
Behling, O 253 Bryson, A 569 Codd, E 519
740 Author Index
Coens, T 456 Dulewicz, V 202 George, B 708

Coffman, C 276 Dundon, T 13, 16. 56, 527, 548, Gephart, M A 71
Collings, D G 80, 328 553, 554 Gerhart, S 6, 254, 258
Combs, J 218 Dunnette,M D 251 Ghoshal, S 77, 161, 183, 192,
Concelman, J 265 Dutton, J E 229 209
Conger, J A 80, 81 Dyer, L 16, 28, 30, 31, 37, 266 Gibson, S K 233
Conway, N 542 Glover, L 530, 550
Cooper, C 568, 571, 581, 582 Early, D C 435 Godard, J 6, 72
Coopey, J 267 Easterby-Smith, M 381 Gold, J 709
Costa, P 200 Edwards, K 141, 142, 651 Goleman, D 199, 201, 704,
Coster, C 6 Edwards, M R 141, 142, 651 705–06
Crawford, E R 228, 274 Edwards, P K 527 Gonzalis-Molina, G 276
Crocker-Hefter, A 29, 161 Egan, J 439 Goodhall, A 453
Crockett, W H 257 Eidems, J 78, 83 Graham, M E 98
Crombie, A 194 Eichinger, R W 383 Grant, A 567
Csikszentmihályi, M 255 Eisenhardt, K M 694 Grant, R M 158
Cullinane, N 548, 683 Eldridge, J 194 Gratton, L 26, 96
Cunningham, L 423 Elias, J 50 Gray, D A 678
Cyert, R M 213, 267 Emery, F F 192 Grint, K 453, 456
Eraut, M J 404 Grove, D A 401
Davachi, L 384–85 Eubanks, B 152, 412 Guest, D E 7, 8, 12, 13, 29, 57,
Davenport, T H 161 Evans, S 123 63, 64, 65, 66, 67, 68, 99,
Davies, G 672 115, 123, 263, 264, 267, 276,
Davis, A J 114, 178, 694 Farndale, E 116 278, 280–81, 529, 541, 542,
Davis-Blake, A 31 Fayol, H 191 543, 548, 550, 568–69,
Deal, T 192, 193 Fell, A 105, 115 571–72
Deci, E L 254 Felstead, A 568 Gunter, B 194
DeCotiis, T 240 Fernadez-Areoz, C 331 Gupta, N 447
Deery, S 568 Festing, M 78, 83 Guthrie, J P 64, 98, 115
Delaney, J 6 Fiedler, F E 704 Guzzo, R A and Noonan, K A 68
Deldridge, R 12, 275 Findlay, P 223
Delery, J E 6, 25, 27, 29, 31, Fitz-Enz, J Haas, H 83
49, 69 Fitzpatrick, M J 357 Hackenen, J J 274
De Menezes, L 72 Fletcher, L 432 Hackman, J R 216, 227–28, 257
Demerouti, E 228, 571 Follett, M P 211 Haenlein, M 148
Deming, W E 434 Fombrun, C J 5, 9 Hall, L 5
Den Hartog, D N 68 Ford, Henry 215 Hall, M 555
DeNisi, A N 436 Ford, M T 568 Hamlin, B 171, 694
Derks, D 568 Forthm J 569 Hammonds, K H 99
De Witte, H, 569 Foucault, M 172 Handy, C 196, 208
Dickson, W 191, 234 Fouts, P A 184 Hansen, M T 158, 159, 160–61
Digman, J M 200 Fowler, A 5, 12 Harackiewicz, J M 254
Dixon, N F 420 Francis, H 4, 108, 115–16 Hardman, P 107
Dixon, W 257 Freeman, R. E 9, 173, 183, 550 Harley, B 17, 536–37
Dobbins, G H 433 Frenkel S 78 Harris, C M 52
Donahue, R 84 Friedman, M 183 Harris, L 123
Donald, I 568 Furnham, A 194 Harrison, R 196, 197
Doty, H D 25, 27, 29 Harrison, Rosemary 177, 433
Dowling, J Gagne, R M 679–80 Hart, J 407, 408
Dowling, P J 80 Galbraith, K Harter, J K 271
Dowling, W E 223 Gallie, D 227 Harter, S 708
Drucker, P 115, 138, 161, 193, Galpin, M 275 Hartley, J 267
420, 428, 631 Gennard, J 123 Hendry, C 5, 506
Author Index 741
Hensvik, L 518 Kaye, L 32 Macey, W H 265, 271, 274,

Heron, P 71 Kearns, P 399 277, 281
Hersey, P 420 Keegan, A 4, 108, 115–16 MacInnes J 371
Herzberg, F 66, 192, 216, 227, Keenoy, T 11, 12, 281, 282 Macky, K 6
233, 250–51, 258 Keim, G 183, 184 MacLeod, D 274, 281
Hesketh, A 95, 98, 99, 581, 582 Kelley, H H 200 Magretta, J 625
Hesketh, I 571 Kelly, G 674 Mangham, L L 267
Higgs, M 199, 202 Kelly, J 123 Manzini, A O 238
Hillman, A 183, 184 Kennedy, A 193, 194 March, J G 213, 267
Hiltrop, J M 531 Kepes, S 6 Marchington, M 16, 111
Hird, M 13, 95, 97, 98, 99 Kessler, S 535, 536 Markwick, g 275
Hirsh, W 108, 332 Keynes, J M 182 Marler, J H 136
Hitt, M A49 Khatri, N 64–65 Marlow, S 102
Holder, G W 16, 30, 31 Khilji, E 70 Marr, B 142
Holley, N 97, 110 King, Z 115 Marsden, D 536
Holton, E F 431, 435 Kirkpatrick, D L 399 Marsh, C 236, 237
Honey, P 386 Kirton, H 517 Martin, A O 567
Hope-Hailey, V 95, 114, 123, 693 Kochan, T A 6, 178, 266, 548 Martin-Alcazar, F 11
Houghton, E 129 Kohn, A 66 Maslow, A 233, 249
House, R J 253 Kolb, D A 385 Mayer, J D 201, 202
Hoyle, R 395 Kotter, J P 420 Mayo, E 234, 257
Hucyznski, A 189, 201, 211, 233, Koys, D 240 McAfee, A 136
235, 357 Kramer, M R 182 McClelland, D C 194–95, 200
Hull, C 251 Krekel, C McDermott, M 453
Hunt, S 31 Kuhn, J 549 McDonnell, A 328
Hunter, J E 200, 247, 320–21 McGovern, F
Hunter, L 371 Lafferty, J 236 McGregor, D 192, 233, 428
Huselid, M A 14, 64, 70, 95, Lake, D 237 McKersie, R B 548
136, 328 Latham, G 247, 253, 431, 435 McLean, A 14, 235
Husted, B W 182 Lawler, E E 40, 93, 252, 277, McMahan, G C 25, 28, 37,
Hutchinson, S 123 453, 481, 692 50, 52
Hyman, R 553 Lawrence, P R 192, 209 McRae, R R 200
Leblanc, B 85 McWilliams, A 182
Isidor, R 76 Lee, L 84, 178 Mecklenburg, S 159
Ivancevich, J M 190 Legge, K 5, 6, 12, 56, 178, 235, Medoff, J 550
267, 629 Megginson, D 677
Jackson, S E 25 Lengnick-Hall. M L 6 Meindl, J R 704
Jaques, E 258 Lepak, D 6 Mellahi, K 80
Jenkins, M 456 Leventhal, G S 174 Meshoulam, I 28
Jenkins, S 275 Lewin, K 199, 233, 234, 638, 689 Michie, J 29
Jesuthasan, R 137 Lewis, R 276 Miles, R E 28
Jiang, K Likert, R 192, 233 Miller, E 192, 433
Johnson, C 96 Linos, E 316 Miller, J 101, 102
Johnson, M 625 Locke, R 202, 247, 253, 274, 435 Miller, T 208, 399
Jones, T M 172 Lombardo, M M 383 Mintzberg, H 27, 212, 267, 420
Jung, C 201 Long, P 38 Mischel, W 199
Lopez-Cotarelo, J 123 Mohrman, S A 93, 692
Kahn, W A 198, 246, 271 Lorsch, J 192, 209 Moliterno, T P 51
Kandola, R 670 Luna-Arocas, R 40 Molloy, E 213
Kane, J S 432 Lupton, T 211 Mookerjee, D 107
Kaplan, A M 148 Moore, D A 315, 656
Katz, D 198, 257 Mabey, C 27 Mor Barak, M E 366
Kaufman, B E 25 MacDuffie, J P 28 Moran, P 183
742 Author Index
Motor widlo, S J 432 Pritchard, K 108, 109, 113 Schein E H 192, 194, 196, 334
Mowday, R 263 Pulakos, E D 374, 447, 459 Schmidt, F L 202, 320–21
Mueller-Hanson, R A 447 Purcell, J 4, 8, 27, 30, 31, 37, 38, Schmitt, M 314
Mumford, A 386 64, 65, 68, 69, 121,122, 124, Schneider, B 4, 17, 265, 274
159, 266, 278, 281, 282, Schon, D A 382
Nadler, D A 189, 252 302–03, 371, 432, 530, 531, Schuler, R S 6, 26
Nahpiet, J 161 532, 553, 554, 557 Schulz, T W 50
Nishii, L H 15, 68, 366–67 Putman, R 51 Schuster, J R 481
Nonaka, I 159 Senett, R 5
Northouse, P G 199 Quinn, J F 171 Senge, P 381
Nuesch, S 83 Quinn Mills, D 288, 289 Sheehan, C 29, 98
Nyberg, A J 9, 51 Shields, J 251, 253, 457
Rafferty, A 56 Shih, H-A 71
Oldham, G R 216, 227–28, 257 Rawls, J 17, 173, 174 Shippmann, J S 671
Olsen, W 518 Ready, D A 80, 81 Simon, H 631
Opsahl, R C 251 Reay, T 129 Sisson, K 95, 267, 530, 532
O’Reilly, C A 366 Rees, C 278 Skaggs, B C 50
O’Reilly, J 518 Reeves, T 28, 37 Skinner, B F 115, 384
Orlitzky, P M 65 Reilly, P 78, 96, 109, 155, 156, Skinner, W 251
Osterby, B 3 271, 277, 295 Sloan, A P 190
Osterman, P 265, 548 Reinhard, J 316 Smith, Adam 50, 177, 215
Ostroff, C 14, 124, 197, 401 Reynolds, J 379, 380, 384, Snow, C C 28
O’Toole, J 538 404, 414 Snyder, W M 159
Rice, A 192, 208, 433 Sommerlad, E 405
Paauwe, J 8, 27, 30, 67, 68 Rich, B 282 Southwick, S 581
Paik, Y 78, 80 Richardson, R 27 Sparrow, P 77, 79–80, 84, 106,
Paine, M 400–01, 404 Richer, J 19, 26, 64, 556 109, 272, 281, 626
Parken, A 518 Rickard, C 517, 519 Spearman, C 318
Parker, J 98 Robertson-Smith, G 275 Spector, P E 257
Parker, S K 210 Robinson, D 265–66, 272, 281, Spindler, G S 543
Parkes, C 114, 178 467 Stairs, M 275
Parry, E 149 Roche, W K 551 Stalker,G 192
Pascale, R 192 Rock, D 459 Standing, G 569
Patterson, M G 64, 65 Roethlisberger, F 191, 234, 257 Starke, F A 253
Pearn, K 670 Rollinson, D 553 Stavrou, E T 30
Peccei, R 12, 65, 265, 548, 550, Rothwell, S 291 Stebbing, L S 637
567, 568 Roumpi, D 31, 49, 69 Steers, R M 259
Peetz, D 78 Rousseau, D M 68, 128, 251, Stern, E 405
Penrose, E 31 537, 541 Stogdill, R M 704
Perkins, S 82, 85, 506 Rowlandson, P 232 Storey, J 6, 7, 11, 16, 66
Peters, K 423 Rubery, J 57, 59, 372, 535, Strebler, M T 440, 463
Petrick, J A 171 Ruona, W F 233 Sung, J 71, 218
Pettigrew, A 5, 41 Russo, M V 184 Sunstein, C
Pfeffer, J 29, 31, 130, 132–33, Ryan, R M 254 Sutton, R 130, 132–33, 420, 459
420, 459, 498 Ryle, G 158 Suutari, V 78
Pink, D H 66, 248, 498 Rynes, S L 254, 258 Swailes, S 264
Pintrich, P R 254 Syrett, M 110
Ployhart, R E 51 Saks, A M 271, 272, 281
Popper, K 644–45 Salancik, G R 263 Takeuchi, H 159
Porter, L W 252 Salazar, J 182 Tamkin, P 709
Porter, M E 28, 182 Sandel, M J 173 Tan, J 158
Posner, B 684 Scarborough, H 50, 159, 161, Tansley, C 328
Posthuma, R A 457, 460–61 382 Tarbell, L M 98
Author Index 743
Tarique, I 85–86 Vanhala, S 64 Whitehouse, E 149

Taylor, F W 191, 215 Vere, D 694 Whitmore, J 677
Tester, K 177 Verneeren, B Whittington, R 213
Thite, M 145 Vernon, P E 202 Wick, C W 323
Thompson, M 27, 64, 65, 71, Viswasvaran, C 333 Wilkinson, A 549
481, 496 Vroom, V 252, 257, 432, 541 Williams, T 78
Thompson, P 17, 536–37 Willmott, H 12
Thorndike, E L 251 Wade-Benzoni, K A 537, Wilson, N A 223
Thurley, K 114, 689–90 541 Winstanley, D 172, 177
Tietze, S 328 Wahba, M A 249 Wise, S 123
Toplis, J 200 Wall, T D 169 Wong, W49
Torrington, D 5 Walton, J 320 Wood, D J 181
Trevor, J 479, 481 Walton, R E 227, 246, 264, 267, Woodall, J 172, 177
Trist, E L 192 527, 548, 571 Woodrow, C
Truss, C 11, 26, 271, 272, 281 Walumbwa, F O 708 Woodward, J 192, 691
Tsui, A 366 Wang, X 70 Worley, C 211, 236
Tuckman, B 198 Warr, P 567, 571 Wright, D S 200
Tuomi, K 66 Watson, T J 115 Wright, P M 15, 25, 28, 37, 50,
Tushman, M L 189 Weber, M 192 52, 64, 68, 98
Tyler, T R 174 Weidner, C K 235, 237 Wrzesniewski, A 229
Tyson, S 95, 105, 115, 149 Welcome, S E 384
Wellins, R 265 Yalabik, Z Y 274
Ulrich, D 8, 31, 77, 93, 94, 95, Wenger, E 159, 384, 407 Youndt, M A 50
105, 106, 108, 110, 114, 158, Wernerfelt, B 31 Younger, J 327
237, 619, 694 West, M A 64, 65, 510
Undy, R 535, 536 Whipp, R 41 Zingheim, P K 481
Urwick, L 191 White, R 82–83 Zuboff, S 405
744

SUBJECT INDEX
ability 199–200 appreciative enquiry 234 benchmarking

ability tests 318–19 apprenticeships 398, 416 approach to 133
absence management aptitude tests 319 defined 132
the Bradford factor 358 arbitration 550 and HR innovation 111
causes of absence 357–58 arguments, development and best fit
defined 357 justification of 636–37 and best practice 30
incidence of absence 357 artefacts 195 competitive strategies model 28
long-term absence 359 artificial intelligence (AI) defined 30
policies 358 applications in HR 153–54 life cycle model 28
recording and measuring components of 152–53 limitations to concept 30
absence 358 defined 152 strategic configuration
short-term absence 358–59 ethical considerations 156 model 28
absenteeism, handling of 713–14 extent used in HR 155–56 strategic fit 27
ACAS 550 introduction of 156 best practice
accident prevention 580 risks 155 and benchmarking 111
accountabilities 666 use in learning and and best fit 30
achievement motivation 250 development 412 criticism of concept 29
action research 234 use in recruiting 306 defined 29
adaptive learning 381 assessment centres 320 and HRM 14
added value 63, 64, 137, attendance management, see bias
advertising (recruitment) 307 absence management and diversity 366
affective commitment 265–66 attitude surveys, see employee in selection interviews 315–17
agency theory 477 surveys big data 136, 147, 400
AGES model of learning 384–85 attitudes 201 big idea, the 38, 278
agile working 219, 242 attribution theory 200 bite-sized training 414
algorithms 151, 155, 306, 310 attrition, employee turnover 350 black box phenomenon 67
American dream, the 264 automation 220 blended learning 397
AMO theory autonomy 227–28, 248 blind CVs 316
defined 8, 69 blockchain 149
and the HR function 94 balance sheets 622–23 bonuses 498
and motivation 255 bargaining 548–49 Boolean search 305
and performance 69 base pay 491 bounded rationality 631
analytic consultants 138 base pay management 491–92, the Bradford factor 358
analytical job evaluation 500 Brexit 60, 209
schemes 490–91 behaviour modelling 234 broad-banded grade and pay
analytical job matching 491 behavioural competencies 164, structures 494
analytical skills 634 667 broad-graded grade and pay
analytics, see HR analytics behavioural competency structures 494
anchoring bias 316 modelling 671–72 budgetary control 624
annual hours 373 behavioural expectations 164, 541 bullying 591
application 603 behavioural science 190, 233 bundling 28–29, 72
appraisal 435, 447, see also behavioural science school of bureaucratic model of
performance management organization theory 192 organization theory 192
746 Subject Index
burnout 246, 279 defined 688 command and control 216

business case for HRM 172 described 241 commercial job boards 306–07
business issues, investigating from evidencing the value of commitment
an HR perspective change 696 affective commitment 265–66
analyse information 729–30 facilitating change, role of characteristics of 263
business model innovation 241, HR 694–95 critical evaluation of
625 guidelines for change concept 267–68
business models 625–26 management 696–97 defined 246, 263
business partner role of HR implementing change 692–93 developing a commitment
professionals leading change, role of strategy 266
critical evaluation of HR 693–94 and employee
concept 109–10 levers for change 688 engagement 265–66, 273
defined 108 nudge theory, use of 695–96 factors affecting 266
problems of 109 and organization and flexibility 267–68
role 109 development 234 high commitment management
business performance, factors programmes 695 importance of 208–09
affecting 63 psychology of 688 meaning of 263
business planning and workforce resistance to change 691–92 and mutual gains 265
planning 290 role of HR 694–95 and mutuality 263–64
business skills 6621–22 change models strategy 266–67
business strategy Beckhard 689 communications 197–98, see also
contribution of HR 93 Beer et al 690 employee communications
and knowledge Lewin 689 communities of practice 159,
management 160 Thurley 689–90 161, 381, 407, 408
and strategic HRM 25 characteristics of people 199–202 compa-ratio analysis 500
Chartered Institute of Personnel competence 165
candidate relationship and Development (CIPD) 8, competence analysis, see
management systems 303 32, 51, 52, 58, 59, 60, 72, 93, competency modelling
capability procedure 596–97 96, 105, 108, 109, 112, 113, competencies
career anchors 334 132, 133, 136–37, 156, 181, behavioural 164
career development 333–37 217, 218, 219. 220, 233, 271, and emotional intelligence 201
career family grade and pay 275, 276, 278, 290, 290, 299, graded 167
structures 337 305, 357, 359, 370, 372, 373, headings 165
case studies 643 374, 385, 410, 411, 416, 424, NVQ/SNVQ 165
cash budgeting 624 457, 494, 498, 499, 505, 506, role-specific 162, 166
cash management 624 553, 557, 568, 603, 621, 727 technical 164
causal ambiguity 67 Chartered Institute of Personnel technical competencies and
causality 651 and Development New competences 162
causation Profession Map 113 types of competencies 162–65
the black box phenomenon 67 chatbots 147 using competencies 169
causal ambiguity 67 chi-squared test 652 competency 163, see also
effect of contextual factors 67 chief executive officers (CEOs), competencies
multiple causation 67 pay levels 505 competency-based HRM
central tendency, measures of 649 cloud computing 147, 603 applications 167
challenging conversations, coaching 677–78 defined 164
handling of 719 cognitive ability 200 in performance
change agent role of HR 93 cognitive dissonance 201 management 167
change agents 693 cognitive evaluation theory of in recruitment and
change, impact on culture 194 motivation 254 selection 167
change management cognitive learning theory 384, in reward management 167
change agents 693 collaborative learning 407 using competencies 166
change models 689–91 collective agreements549 competency-based
the change process 688–89 collective bargaining 528, 547–49 interviews 314
Subject Index 747
competency frameworks contingency school of of the concept of reward

defined 162, 165 organization theory 192 strategy 481
development of 167–69 contingency theory 8–9, 29, 55 of the concept of strategic
for employee engagement contingent determinism 30 HRM 32–33
management 276 contingent pay of the concept of strategy 27
headings 165 criteria for 496 of emotional intelligence
competency modelling 671–75 defined 496 concept 202
competency-related pay 167, 497 individual contingent pay 497 of the learning organization
competitive advantage continuous improvement concept 382
contribution of the HR function 218, 236 of the resource-based view 32
to 94 contract of employment 535–36 the total reward concept 485
defined 28 contribution-related pay 167, 497 of the three-legged stool
and human capital 9 control theory 436 model 96–97
and the resource-based view 31 convergence 78 critical incident technique 673–74
and vertical fit 28 co-operative bargaining 549 critical thinking 131, 635, 647
competitive edge 5 coordinating discussions 703 cross-lagged research models 640
competitive strategies best fit core-periphery model 295, 371 culture
model 28 corporate culture, see analysis of 236
compressed hours 272 organizational culture and change 194
computerized performance corporate social responsibility components of 194–95
monitoring (CPM) 435 (CSR) defined 193
conciliation 549–50 benefits 184 diversity of 194
Conference Board 272 contribution of HR 181 culture management 236
configurational perspective on CSR activities 182–83 see also organizational culture
strategic HRM 29 defined 181–82
confirmation bias 315 developing a CSR strategy dashboards 142–43
conflict 199, 720 184–85 data 138, 293
conflict management 720–23 and firm performance 184 data management 138, 604
conjunctive bargaining 549 and HR professionals 182 data mining 136, 306
connected learning 397 and HR strategy182 data modelling 138
construct 246 the opposing view 183–84 data visualization 647
consultative committees 562 policy 182 decision making
consulting cycle, the 238 rationale for 183 approaches to decision
content (needs) theory of strategic CSR 182 making 632
motivation 249–51 corporate strategy 93 the decision-making
context of HRM corporate web sites 306 process 631–32
Brexit 60 correlation 650 decision making theory 631
contextual factors 54 cost effectiveness 63 LAMP decision making
environmental factors 55 cost per unit of output 64 model 137
the external environment 56 costing 624 decoupling 460
the gig economy 60 criterion measure of test deduction 644
impact of emerging validity 319 deep learning (AI) 153
technologies 58 criterion scores in selection demand forecasting 293–94
the internal environment 55 tests 319 deontological theory 172
the labour market 59 critical evaluation 131, 635–36, dependent variable 140–41
what’s happening to 647, descriptive analytics 139–40
work 57 critical evaluations in text development 379
work intensification 58–59 of business partner concept diagnostic cycle 239
contextual factors and 109–10 diagnostics 239–40
causation 67 of the concept of different types of workers 295
contextual model of HRM 11 commitment 267–68 digital HRM 145, see also
contingency perspective on of the concept of e-HRM
strategic HRM 29 engagement 280–82 digital learning 398, 409
748 Subject Index
digital technology 145 e-HRM and high involvement

digitalisation 146 achievements 149 management 277–78
digitisation 146 applications 146 and job design 277
directors, reward of, see defined 145 job engagement 272, 275–76
rewarding directors and features 147–49 and job satisfaction 274
senior executives purpose 146 and learning and
disciplinary issues, handling see also HR information development 277
of 712–13 systems meaning of 272
disciplinary procedure 597–98 e-learning 410 measuring 279
discourse ethics 173 emerging technologies, impact and motivation 246, 273
discovery learning 396 of 58 and organizational citizenship
discretionary behaviour/ emotional intelligence behaviour 273–74
effort 248, 263 and behavioural organizational
discretionary learning 383 competencies 202 engagement 272, 277–79
discussions, coordination of 703 components of 201–02 outcomes of 275
dismissal 356–57 criticism of concept 202 strategy 246, 275
dispersion measures 647–48 defined 201 surveys 279
dispute resolution emotions 201 theory of engagement 272
aim 549 employee advocate role of and the work
arbitration 550 HR 106 environment 274–75,
conciliation 549–50 employee assistance programmes 278–79
mediation 550 (EAPs) 570 employee experience, the
pendulum arbitration 550 employee benefits 499–500 and brand management 346
distributive bargaining 548 employee communications defined 274, 345
distributive justice 174 approach to 561 and the employer brand 346
divergence 78 defined 560 and the employment
diversity defined 365 face-to-face 561 relationship
diversity management importance of 560 and engagement 274
case for 366 intranet 561 and HRM 5
defined 365–66 methods 561–63 improvement of 346–47
management of 365–66 social media 561–62 management of 274
and inclusion 366 strategy 562–63 and people management 345
diversity and inclusion team briefing 562 Employee Relations 133
aim of diversity and inclusion what should be employee retention 349–50,
programme 366 communicated 561 353–54
basis for 365 employee engagement employee sentiment analysis 154
defined 365 affective engagement 272 employee surveys
management of 366–68 and the ‘big idea’ 278 defined 555
policy 367 and burnout 279 drawbacks 555
rationale for management and commitment 265–66, 273 engagement surveys 279
of 366 components of 272–74 pulse surveys 18, 240, 555
strategy 366–67 critical evaluation of the employee turnover
values 367 concept 280–82 cost of 350
diversity networks 368 defined 246, 271, 279 choice of measurement 353
divisionalized organization drivers of 274–75 defined 350
structure 193 and the employee employee turnover index 350–51
dominant coalition 210 experience 274 half-life index 351–52
double-loop learning 381 and employee voice 278 length of service analysis 352
enhancing job stability index 351
earnings per share 64 engagement 275–76 survival rate 351
education 379 enhancing organizational employee value proposition
efficiency wage theory 477 engagement 277–79 defined 302
effort-reward bargain 357, 674–77 facets of 271 development of 303
Subject Index 749
employee voice employment relations ethical approaches to

defined 553 climate 529–30 employment practices 176
degrees of 554–55 defined 526 employment relations 176
direct voice 555–56 ethical approach 531 learning and development 175
and employee engagement 278 ethical guidelines 176 organization development 175
employee surveys 555 managing with trade performance management
employees’ experience of 557 unions 531–32 175–76
importance of 553 managing without trade reward management 176
indirect voice 556–57 unions 532 ethics
involvement 556–57 meaning of 527–28 defined 171
joint consultation 556, 557 policies 528–29 and fairness 173
need for 553–54 strategies 529 and morality 171–72
participation 556–57 employment relationship concerns of 172
quality circles 556 basis of 535–36 eudaimonic wellbeing 567
suggestion schemes 556 contracts 535 European model of HRM 11
role of trade unions 557 defined 535 evaluation of learning
team briefing 556 and HR 537 approach to 399
use of employee surveys 555 and labour process theory importance of 399
use of social media 556 536–37 learning analytics 400–01
employee wellbeing managing the employment problem with 401
the case for 567, 568–69 relationship 537–38 return on expectations 399
defined 565, 567 multiple-stakeholder approach return on investment 399
dimensions of 567 to management of 18 evaluative well-being 567
factors affecting 569–71 nature of 535 evidence-based HRM
financial wellbeing 570 policy 528 approach to 131–32
impact on firm and the psychological defined 129
performance 65–66 contract 542 and evidence-based
principles of 567 engagement, see employee management 129
strategy 571–72 engagement and research 133
employer brand enterprise resource planning evidence-based management
defined 301 systems (ERS) 603–04 approach to 130
development of 301 enterprise social network 148, 411 critical evaluation 131
and the employee environment, the 56–57 defined 129–30
experience 301 environmental factors 56 evidence-based questions
and recruitment content equal pay and the gender pay 130–31
marketing 301 gap 519 reaching a decision 131
employer of choice 301 equal pay law 607–60 evidencing the value of
employment law Equality Act (2010) 608 change 696
dismissal law 608–09 equity theory 173 executive remuneration
and the employment equity theory of motivation 254 elements of remuneration
relationship ERG theory of motivation 506–07
enforcement 611–12 (Alderfer) 250 level of pay 505
equal pay law 607–08 e-reward 438, 453, 460, 464, expatriates
family friendly employment 491, 501 management of 84–86
law 610–11 ethical remuneration 510–11
General Data Protection decisions and judgements 172 expectancy theory of motivation
Regulation (GDPR) 615 dilemmas 177–78 defined 252
health and safety law 609–10 dimension to HRM 172 and goal directed behaviour 9
and HRM 612–13 frameworks 172–73 and learning 384
hours and wages law 610 guidelines for HRM 174–76 and performance 68
purpose 606–07 role of ethicists 173 and performance
employment practices, ethical role of HR 178–79 management 436
guidelines 176 role of HR professionals 178 problems with 253
750 Subject Index
experienced worker’s standard flexible labour markets 372 grievance procedure 598–99
(ESW) 386 flexible management systems 217 grounded theory 647
experiential learning 383, 395 flexible working 217–18, 372–73 group behaviour 198
external fit 27 flextime 372 group dynamics 198, 234
extreme market pricing 489 flow theory of motivation 254 group think 316
extrinsic motivation 248 forced ranking 459 guiding principles of HRM 6
formal learning 379, 395
face-to-face (F2F) learning 395 frequency 649 half-life index 351–52
facilitating 678–79, 702–03 functional structure 216 halo effect 315
factor plan 491 handling people problems
factors, job evaluation 491 game-based learning 412 713–17
factors shaping business gamification 148–49, 412 harassment, see sexual harassment
performance 63 gender pay gap, the hard model of HRM 11
fair process 174 actions to reduce a gender pay harmonization 529
fairness 173 gap 518–21 Harvard Business Review 133
false antithesis 635 defined 517 Harvard framework of HRM 10
false choice 635 and equal pay 519 Hawthorne studies 234, 257
family friendly policies 218 reasons for 517 health and safety
feedback reporting 519 accident prevention 580
and goal theory 254 General Data Protection aim 576
and job design 228 Regulation (GDPR) 94, 156, audits 579–80
and performance management, 310, 615 communicating on 583
436, 447 general intelligence 200, 319 hazards 577
360-degree feedback 453 general mental ability (GMA) 319 healthy and safe system of
felt-fair principle 258 generative learning 381 work 217
financial budgeting 623–24 generic role 663, inspections 580
financial incentives and generic role profiles 667 management of 576
instrumentality theory gig workers 295 measuring performance
248–49 Glassdoor 300–01 582–83
financial rewards 483–84 goal theory of motivation occupational health
financial skills 622 defined 253 programmes 576, 580–81
financial wellbeing 570 and goal directed behaviour 9 organizing 584
5P model of HRM 11 influence of 254 policies 576–77
FiveS 218 and performance risk assessments 577–79
flexibility management 435–36 safety programmes 576
and commitment 267–68 questions about 254 training 583–84
flexible (core-periphery) good job, a 223 hedonic wellbeing 567
firms 295, 371 grade and pay structures hedonism 248
flexible hours 372–73 broad-banded structure 494 hierarchical learning (AI) 153
forms of 370–72 broad-graded structure 494 hierarchy of needs (Maslow) 249
functional 370–71 described 492 high-commitment
hot desking 372 guiding principles 492 management 39–40
job sharing 372 incidence of 494 high day rates 511
management of 370 individual job grades 494 high-involvement
multi-skilling 218, 371 job family structure 494 management 40, 277–78
numerical 371 narrow graded 493 high-performance culture 70
role of HR 374 pay progression 492, 495 high-performance
structural 371 pay spine 494 management 39
work 372 spot rates 492 high performance work
zero-hours contracts 373 types of 493–94 design 218
flexible firm, the 295, 371 grade structures 492 high performance work systems
flexible hours arrangements graphology 320, 321 and bundling 28–29, 72
372–73 grievance policy 592 defined 70–71
Subject Index 751
features of 71 HR heads of function, strategic e-mails and use of the

impact on firm performance 64 role of 108 internet 591
high-performance working 39, HR information system (HRIS) employee development 591
40, 70, 218, 241 B2E portal 604 employee voice 592
home-based pay 510–11 cloud computing 603 employment relations 528–29
horizontal fit 27 data management 604 equal opportunity 592
host-based pay 511 defined 602 grievances 592
hot-desking 372 enterprise resource planning health and safety 576–78, 592
how people learn 383–88 (ERS) systems 603–04 industrial relations 592
HR analytics enterprise social networks 604 international HRM 84–86
and big data 136, 400 features 603–04 new technology 592
defined 136 functions of 602–03 promotion 592
descriptive analytics 139–40 internal social networks 604 redundancy 593
and evidence-based HRM 132 intranet 604 reward 475–76, 593
HR data 140–41 reasons for introduction 602 sexual harassment 593
keeping people informed SaaS 603 substance abuse 593
142–43 self-service 604 talent management 328
learning analytics 400 software 603 whistle-blowing 594
levels of 139 uses 602–03 work–life balance 594
multi-dimensional vanilla system 603 HR metrics 136
analytics 140–42 HRM and performance HR operating model 95
predictive analytics 142 and the AMO model 69 HR practices
purpose of 137 and high performance work defined 14
HR architecture 13–14, 91 systems 64 impact on firm performance 65,
HR business partner role 108–10 how HRM makes an 68
HR database 604 impact 64–65, 66, 68–69 HR practitioners, see HR
HR directors, strategic role the impact of HRM on professionals
of 107 performance 64 HR procedures (general
HR function and motivation 70 considerations)
as a business discipline 105 and the resource-based view 63 defined 596
business orientation 94 and rewards 66 and HR policies 596
career development uncertainties about the introduction of 596
pathway 335–36 link 66–67 HR procedures (specific)
centres of expertise 96 and wellbeing 65 capability 596–97
contribution to achieving see also human resource disciplinary 597–98
competitive advantage 94 management grievance 598–99
ethical dimension of 95 HR operating model 95 redundancy 599–601
evaluation of 99–100 HR policies (general HR Profession Map (CIPD) 113
HR activities 95 considerations) HR professionals
HR agenda 95 defined 14, 589 ambiguities in the role 114–15
HR operating model 95 developing 594–55 behaviours 117–18
organization of 95, 96 and HR procedures, 596 business partner role 108–10
overall contribution of 93 implementing 595 and business strategy 107
power of 98 reason for 589 carrying out the role 114–17
reputation of 98–99 HR policies (overall) 589–90 change agent role 112,
role of 93–94 HR policies (specific) competencies required 113
shared service centres 96 absence management 358 criteria for success 117
in SMEs (small and medium age and employment 590 as employee advocates 106
sized organizations) 101–02 AIDS 590–91 ethical values 114
strategic business partners 96 bullying 591 innovation role 111–12
three-legged stool model 95–97 corporate social responsibility insight-focussed 114, 619
transactional activities 93 (CSR) 182 key competencies 335–36
transformational activities 93 diversity and inclusion 367 key responsibilities 335–36
752 Subject Index
HR professionals (continued) high commitment features 603–04

overall role 105 management 39–40 functions 602–03
partnership role 111 high involvement reason for introduction 602
professional behaviours management 40 software 603
of 113–14 high performance human resource management
professionalism in HRM 116 management 39 (HRM)
role requirements 112–14 individual learning 383 architecture 13–14
service delivery role 112 international HRM 77 as a business issue 4
skills required 618 knowledge management 160 context, see context of HRM
status of HR 115–16 learning and development contextual model 11
as strategic business 379–80 defined 1, 3
partner 108, 110 motivation 259–60 development of 5–6
as strategic partner 106 resourcing 287–88 emergence of 5
strategic role 106–07 reward 479–81 ethical guidelines for
strategic role of heads of HR talent management 329–30 HRM 174–76
functions 108 HR system ethical role of HR 178–79
strategic role of HR components of 14, 15 European model 11
directors 107 defined 13 5-P model 11
transactional role 110 features of 14 future of HRM 16–17
transformational role 106, 110 a strong system 14–15 goals of 7–8
the Ulrich model 105–06 human behaviour 190 guiding principles 6
values of 114 human capital hard model 11
what HR professionals do 116 absolute measures of52 Harvard framework 10
HR shared service centres 96 concept of 50 HRM today 16
HR specialists, see HR constituents of 51 impact of HRM 15–16
professionals defined 50 issues 4–5
HR strategy intellectual capital 51 matching model of HRM 9–10
approaches to 38 measurement of 51–53 meaning of 3
complementary practices 39–40 organizational capital 51 models of 9–11
criteria for 43 and people management 53–54 and people management 16–19
defined 14, 37 representing the value of and performance 63–72
developing HR strategy 41–45, people 52–53 perspectives on 12–13
107 social capital 51 philosophy 6–7
examples of 41 specific measures 52 radical critique of 13
formulation of 38 human capital advantage 31 reservations about 12
and HR policy 38 human capital management (HCM) soft model 11
implementation of 44, 45–46 approach to 49 standards 8
key issues (big ideas) 39 defined 49–50 and strategic HRM 26
and line managers 48 measuring human capital 51–52 strong system 14–15
linking to business strategy 25, and people management 53–54 system 13–15
27, 38 human capital theory 9, 477 theoretical base of 8
nature of 37–38 human process advantage 31 today 16
overarching purpose 38 human relations school of Human Resource Management
specific HR strategies 40–41 organization theory 191 Journal 133
and strategic HRM 37 human resource advantage 31 human resource planning, see
HR strategies (specific) human resource development workforce planning
corporate social responsibility (HRD), see learning and human resource practitioners/
(CSR) 182 development professionals/specialists see
diversity and inclusion 366–67 human resource function, see HR HR practitioners
employee function human resources 3, 4
communications 562–63 human resource information humanistic 190
employee wellbeing 571–72 systems (HRIS) humanistic values 233
employment relations 529 defined 602 hypothesis testing 644–45
Subject Index 753
identifying learning needs, see integrated strategic change 238 job

learning needs, identification of integrating people management characteristics of 226
impact of people management practices 28 definition of 225
practices 64 integrative bargaining 548 a ‘good’ job 223
incentive effect 476 integrative synthesis 640 and roles 225
inclusion intellectual capital 51 job analysis
defined 365 intelligence 200 defined 662
management of 366–68 intelligence quotient (IQ) 318 information provided 663–64
and diversity 365 intelligence tests 318 methodology 664–65
Incomes Data Services (IDS) 494 internal fit 27 job-based pay 491–92
Independent Commissioner’s internal social network 148, 604 job boards 306–07
Office (ICO) 156 international HRM job characteristics model
independent variable 140–41 contextual factors 77–78 227–28
individual job grades 494 convergence 78 job crafting 229
individual learning 383 defined 76 job demands-resources
induction (onboarding) differences between international model 228
defined 347–48 and domestic HRM 76 job depth 226
formal induction courses 349 divergence 79 job descriptions
information for new staff 348 expatriates, management basis 665
introduction to the of 84–86 example 667
workplace 348–49 global approaches to talent headings 665–66
on-the-job induction management 80–81 job design
training 349, 405 HRM policies 84–86 approaches to 225
reception 348 multi-cultural working 83 characteristics of jobs 226
induction (research) 644 performance management defined 225
industrial relations 81–82 formal and informal job
collective agreements 549–51 practice of 79 design 225
collective bargaining 547–49 resourcing 79–80 and intrinsic motivation 226
defined 546 reward management 82–83 job characteristics model
informal processes 551 role of the international HRM 227–28
managing with trade function 83–84 job design practice 228
unions 531–32 strategies 77 jobs and roles 224
managing without trade talent management 80–81 method of working 226
unions 532 workforce planning 79 principles of 227
partnership agreements 550–51 internationalization 76–77 responsibility for 228
union recognition 547 International Journal of Human task structure 226
see also employment relations Resource Management 133 and wellbeing 569
influencing skills interventions 234 job engagement 272
case presentation 701 interviews, research 641 job enlargement 227
coordinating discussions 703 interviews, selection, see selection job enrichment 216–16, 227
making a business case 701–02 interviews job evaluation
facilitating 702–03 intranet 561, 604 analytical job matching 491
persuading people 700–01 intrinsic motivation analytical schemes 490–91
informal learning 395, 405 defined 226 benchmark jobs 491
information 138 and engagement 273 defined 490
insight-focused HR 114 and extrinsic motivation 248 explicit weighting 491
Institute for Employment Studies and job design 225, 226, 248 factor plan 491
(IES) 99, 457, 463–64, 465, introduction to the factors 491
467 organization 347–49 implicit weighting 491
instruction 679–80 involvement 556–57 internal benchmarking 491
instructional design 679–80 investigating a business market pricing 489–90
instrumentality theory of issue 727–30 non-analytical schemes 491
motivation 248–49 point-factor rating 490–91
754 Subject Index
job family grade and pay labour turnover see employee game-based learning 412
structures 494 turnover generative 381
job instruction 679–80 labour wastage, see employee and goal theory 384
job range 226 turnover how people learn 383
job relationships 226 LAMP decision making identification of learning
job rotation 227, 371, 406 model 137 needs 392–95
job quality lattice organization 193, 216 implications of learning
defined 223 law of effect 251 theory 387–88
dimensions of 224 law of the situation 211 individual learning
enhancement of 225 law of supply and demand 477 strategies 383
job satisfaction leadership informal learning 395, 405
defined 246 defined 420, 704 Kolb’s learning cycle 385
and engagement 274 described 198–99 the learning curve 386–87
factors affecting 257 effective leadership 709 learning design and
and performance 257–58 and management 420 neuroscience 384–85
job sharing 372 meaning of 704 learning needs analysis 392–95
joint consultation 557 qualities of a good leader learning organization 381–83
justice 708–09 learning styles 385–86
defined 173 reality of leadership 708 learning theory 384
distributive justice 174 styles 705–06 motivation to learn 384
justice as fairness 173 theories 704–05 and neuroscience 384–85
natural justice 174 types of leaders 706–07 on the job 405
procedural justice 174 what leaders do 705 organizational 381
social justice 174 leadership development 333, 421 planning and delivering
just-in-time training 414 leadership and management learning events 398
development process of 383
Kaizen 218, 236 compared 421 and reinforcement theory 384
key performance indicators (KPIs) criteria for 427 self-directed 380
446 defined 419 self-managed 380
key result areas 444, 666 management development 70/20/10 model 383
knowledge 423–26 single-loop 381
concept of 158–59 nature of 419–20 social learning 383
defined 138 leadership style 195–96 social media, use of 411
explicit knowledge 159 lean manufacturing (‘lean’) 218, 241 strategic learning and
tacit knowledge 159 learning development 379–80
knowledge management adaptive 381 styles 385–86
and business strategy 160 analytics 400–01 and training 379
codification strategy 160 artificial intelligence, use of 412 workplace learning 404–07
contribution of HR to 161–62 blended learning 397. learning communities 381, 388,
defined 158, 159 cognitive learning 384 408–09
described 241 communities 381, 388, 408–09 learning culture 380–81
issues 160–61 connected learning 397 learning curve 386–87
personalization strategy 160 culture 380–81 learning and development
process, significance of 161 curve 386–87 approaches to 395–97
significance of 158 defined 379 artificial intelligence, use of 412
strategies 160 discovery learning 396 components of 380
knowledge workers 161, 408 discretionary learning 383 defined 379
Kolb’s learning cycle 385 double loop 381 ethical guidelines 175
KSAs (knowledge, skills and e-learning 410 game-based 412
abilities) 303, 444, 667 evaluation of learning 399–400 implementing L&D
and expectancy theory 384 activities 398
labour market 59 experiential learning 383 planning L&D activities
labour process theory 536–37 formal learning 379, 395 397–98
Subject Index 755
process of 392 machine learning 152, 310 Michigan framework of

the 70/20/10 model 383 macro trends affecting HRM 9–10
learning and development organization design 208 mindfulness 582
skills 677 management 420 minimum wage 610
learning evaluation, see evaluation management and leadership 420 money and motivation 258
of learning management development MOOCS 410
learning events, see training events aim 423 motivation
learning management system criteria for 427 achievement motivation 250
(LMS) 410 defined 423 AMO model 255
learning needs, identification formal approaches to 423–24 cognitive evaluation theory 254
of 392–95 informal approaches to 425 components of 247
learning networks 381 leadership and management conclusions on motivation
learning organization development compared 421 theory 258–59
critical evaluation of 382 role of HR and learning and content (needs) theory 249–51
definition of 382 development specialists 426 defined 245, 248
notion of 381 role of the individual 426 and engagement 273
and organizational role of the organization equity theory 254
learning 382–83 425–26 ERG theory (Alderfer) 250
learning specification 394 and talent management 333–37 expectancy theory 252–53
learning styles 386–87 management by objectives (MBO) extrinsic motivation 248
learning theory 436 flow 255
cognitive learning 384 management style 195–96, goal theory 254
cooperative learning 383 530–31 hierarchy of needs (Maslow)
dual coding 384 managers 420 249
experiential learning 383, 384 managing change see leading and instrumentality theory 248–49
how people learn 383 facilitating change intrinsic motivation 248
Kolb 385 managing expatriates, see and job satisfaction 257–58
learning styles 386–87 expatriates, management of and learning 384
motivation 384 manpower planning, see meaning of 247–48
neuroscience384–85 workforce planning and money 258
reinforcement 384 manual workers pay 511, 513 needs (content theory) 249–51
social learning 383, 384 market driven 489 process (cognitive) theory
life cycle best fit model 26 market pricing 251–55
line managers acceptability of 489 reinforcement theory 251
crucial role 91, 121 defined 489 self-determination theory 254
dealing with issues 124–25 market rate 489–90 self-efficacy theory 436
devolution of HR market rate analysis 432 social learning theory 254
responsibilities to121–23 use of 489 strategies 259–60
and employee engagement 274, market stance, see pay stance summary of theories 256–57
276 Maslow’s hierarchy of needs 249 theory 96
and employee voice 557 matching model of HRM 9–10 two-factor model (Herzberg)
and employment relations matching technology 305–06 250–51
551 matrix organization 193, 216 types of 248
and implementation of HR McKinsey & Company 327 multidimensional analytics
policy 123 meaningful work 223 140–41
people management role 121 measures 138 multiple causation 67, 651
and performance measures of central tendency 649 multiple-stakeholder approach to
management 460–61, 466 measures of dispersion 649–50 HRM 18, 33
and wellbeing 570 mechanistic organization 193 multiple regression 650
line and staff organization 193 mediation 550 multi-skilling 218, 371
living wage 610 mentoring 678 multi-source feedback 453
logical reasoning 634–35 merit pay 496 multivariate analysis 650–51
lower quartile 650 metrics 136, 138 mutual commitment 264
756 Subject Index
mutual gains numerical flexibility 371 nature of 232–33

defined 264–65 numerical reasoning 318 new approaches to 238–39
and employment relations 548 NVQ/SNVQ competences 165 organization development
and HRM 12, 17, 265 programmes 240–42
and mutuality 265 objectives 444, 460 original version of OD 233
and negotiating 682 Occam’s razor 630 programmes 240 242
and partnership 550, 551 occupational health purpose 232
mutuality programmes 590–91 story of 233–37
defined 263, 548 occupational pension schemes, see strategy 237–38
and HRM 12 pensions theory 208–09
importance of 264 OD, see organization development values of 234
and mutual gains 548 onboarding, see induction organization structure
and performance 264 online recruitment 304 defined 208
and the unitarist viewpoint 527 on-the-job training 405 organization structures, types
Myers Briggs Types Indicator 201 open systems 208 of 193, 208
operant conditioning 251 organization theory 208–09
narrow graded pay structure 493 operating model, HR 95 organizational behaviour
National Living Wage 520 operational effectiveness 218 characteristic of 190
National Minimum Wage 520 opinion surveys, see employee defined 189
natural justice 174 surveys implications for HR
natural language processing organic organization 193 specialists 203–04
152–53 organization climate, see sources and applications of
needs theory of motivation organizational climate theory 191–92
249–51 organization culture, see organizational capital 51
negative behaviour, handling organizational culture organizational citizenship
of 714–17 organization design behaviour 273–74
negotiating approach to 211–12 organizational climate 197
approach 682 defined 208 organizational climate
bargaining 683–84 described 241 questionnaire 240
process of 682 guidelines 209–10 organizational core values 182
skills 686 macro trends affecting organizational culture
stages 682–85 organization design 209 appropriate cultures 196–97
network organization 193 mechanistic design 211 artefacts 195
networking 197 organic design 201 and change 194
neural networks 153 organization structure 208 classification of 196–97
neuro-linguistic organizational choice 210 components of 194–96
programming 234 successful organization defined 193–94
neuroscience design 212–13 development of 194
AGES learning model 384–85 organization development (OD) diversity of 194
defined 384 activities 241–42 management style 195–96
and learning 384–85 aims 233 norms 195
and performance approaches to 233–34 organizational climate 197
management 459 assumptions of 234 and performance
new style agreements 549 and change management 234 management 434
new technology policy 592 conclusions on 242–43 values 194–95
non-analytical job evaluation the consulting cycle 238 Organizational Culture
schemes 491 criticisms of 235–36 Inventory 239–40
non-financial rewards 484 and culture management 236 organizational development, see
normal curve (test results) 319 defined 232 organization development
norms (cultural) 195 diagnostics 238–40 organizational diagnosis
norms (test) 319 ethical guidelines 175 238–40
nudge theory 695–96 and HR 176 organizational effectiveness 93
null hypothesis 652 interventions 234, 241–42 organizational engagement 272
Subject Index 757
Organizational Ideology pay matrix 501, 502 uncertainties about the link
Questionnaire 239 pay for organizational between HRM and
organizational learning performance 499 performance 66–67
defined 381 pay progression 492, 495 performance agreement 443
described 241 pay range 492 performance appraisal 435, 447,
and the learning pay reviews 500–01 see also performance
organization 382–83 pay spine 494 management
process of 381 pay stance 489 performance assessment 448–50
strategies 381 pay structures 492, 511–12 performance assessment grid 322
organizational performance pay-work bargain 527 performance and development
measurement of 63–64 payment-by-results schemes 512 conversations (PDCs) 465
and strategy 64–65 pendulum arbitration 550 performance management
and wellbeing 65–66 pensions 499–500 activities 446
organizational processes people analytics, see HR aims 436–37
communications 197–98 analytics approaches to 439
conflict 199 people data modelling 138 criticisms of 456
group behaviour 198 People Management 133 cycle 443
interaction 197 people management defined 431
leadership 198–99 concept of 17 described 241
networking 197 defined 18, 343 and the identification of
politics 199 and the employee learning needs 394–95
power 191 experience 345 impact on performance 439–40
role behaviour 198 and human capital theory in international firms 81–82
organizational 53–54 introduction of 451–52
transformation 236 and human resource issues 458, 460
organizational values 37, 38 management 13, 16, 17, knowledge, skills and abilities
organizations 18–19 (KSAs) 444
changes in the nature of 208 and human resources managing performance
defined 190 philosophy of 17–18 throughout the year 447
how organizations see also human resource models of performance
function 190 management management 444, 445
macro trends 208 people management practices objective setting 444
as open systems 208 testing of 46 performance agreement
schools of organization people problems, handling 443–44
theory 191–92 of 713–17 performance assessment
types of 193 people resourcing 287 grid 322
outcome-based contracts 373 people, representing the value performance and development
outplacement 356–57 of 52–53 planning 443–44, 446
‘outside-in’ basis of developing people strategy 37, 38 performance management
HR strategy 107 see also HR strategy cycle 444
outsourcing HR work 97–98 performance performance management
and the AMO model 433 cycle 444
PaaS (Platform-as-a-Service) 147 the contribution of HRM 63 performance management
paradigm 647 and employee wellbeing systems 443, 444
participation 556–57 65–66 performance ratings 448–49,
partnership agreements 550–51 factors affecting 433–35 458–59
partnership organizations, 97 how HRM makes an impact on performance reviews 447–51,
partnership policy 528 performance 66 458
pay determination 483 meaning of performance principles 438–39
pay information, reporting of 502 421–22 purpose 438
pay level theories 477 measuring organizational rating performance 448–49
pay levels, chief executive officers performance 63–64 recording the assessment and
(CEOs), 505 and a ‘strong’ HRM system 66 review 450–51
758 Subject Index
reinventing performance predictive analytics 142 radical critique of HRM 13

management 463–67, 401 predictive validity 142 rating performance 448–49
requirements for success 440 presenteeism 360 Raven’s Progressive Matrices 317
reviewing performance 447–50 PricewaterhouseCoopers 568 realistic job previews 543
role of line mangers 460–61 principle agency theory 477 reciprocal determinism 254
SMART objectives 444, 446 problem solving recognition schemes 499
360-degree feedback 453 contingent approach to recruitment 299, see also
underpinning theories 435–36 problem solving 629 recruitment and selection
visual assessment 449–50 problems and recruitment agencies 307
web-enabled 451 opportunities 629–30 recruitment consultants 307
performance assessment 448–50 skills 630 recruitment content
performance and development steps 630–31 marketing 301
agreement 443–44 problems 496 recruitment process outsourcing
performance pay 459–60 procedural agreements 549 (RPO) 308
performance ratings 448–49, procedural justice recruitment and selection
458–59 defined 174 administering the selection
performance-related pay and fairness 173 programme 312–13
advantages and and fair process 174 advertising 309
disadvantages 497 process 106, 139 AI use of in recruiting 306
defined 497 process-centred organizations 216 analysis of recruitment
and performance process (cognitive) theories of strengths and
management 459–60 motivation 251–55 weaknesses 300–01
performance reviews 447–51 process consultancy 234 analysis of requirements 303
person-based pay 492 process planning 216, 217 application forms 310, 311
person specifications 299–300 process school of organization 192 applications, dealing with 308
personal development plan, productivity 64 assessment centres 320
performance professionalism in HR 112–13 attracting candidates 300–03
management 446 profit 63, 623 bias in interviewing 315–17
personal development profit and loss accounts 623 blind CVs 316
planning 415–16 profitability analysis ratios 623 candidate relationship
personality 200–01 profit-sharing 450 systems 303
personality tests 318 promotion policy 85 checking applications 322–33
personnel function, see HR Protestant Ethic 251 choice of selection
function psychological contract methods 320
personnel management 5, 6 defined 541–42 commercial job boards 306–07
PESTLE analysis 239 developing a positive comparison of sources of
phenomenology 638–39 psychological contract 543 candidates 308–10
piecework 513 and the employment competency-based
planned experience 405–06, relationship 542 interviews 314
423–24 how psychological contracts corporate web sites 306
pluralism 267, 527 develop 542 dealing with applications 254,
point-factor rating job problem with 543 256–58
evaluation 490–91 significance of 542 dealing with recruitment
policies, see HR policies and trust 542 problems 323
political skills 723–24 psychological tests 317 defining requirements 299–300
politics in organizations 191 psychology 191 e-recruitment 304
poor timekeeping, handling psychology of change executive search
of 714 management 688 consultants 308
positivism 638 psychometric tests 317–18 following up 323
potential assessment 322 pulse surveys 18, 240, 346 graphology 320–21
potential assessment grid 322 interviewing 313–17
power 199 quality circles 556 interviewing programme 312
precariat, the 57, 569 quality of working life 223, 571 job boards 306–07
Subject Index 759
making the decision to relational contracts 537 resourcing

select 321 relativities, pay 476 defined 288
managing the recruitment release from the in international firms 85
process 308–13 organization 355–57 strategic approach to 288–89
matching technology, use remuneration committees talent 331
of 305 505–06 resourcing strategy 288`
name-blind applications 316 repertory grid 674 retention planning 353–54
offers 322, 323 reporting pay information 502 return on capital employed 64
online recruitment 304 representing the value of return on expectations –
person specifications 299–300 people 52–53 learning 399
predictive validity of selection research, data collection methods return on investment –
methods 320 case studies 643 training 399
processing applications 310 diaries 644 reversed causality 67, 68
provisional offers 322 experimental designs 644 reward management
realistic job previews 543 interviews 640 administration of 500–02
recruitment agencies 307 observation 643–44 aims 473–74
recruitment consultants 307 questionnaires 641–42 defined 471, 473
recruitment content summary 645–46 drivers 474
marketing 301 research methodology and employee benefits 499–500
recruitment problems 323–24 processes and engagement 277
recruitment process outsourcing critical evaluation 647 ethical approach to 176
(RPO) 309 critical thinking 647 external competitiveness of
recruitment specification 303 cross-lagged models 640 pay 478–79
references 322 data collection 640–46 financial rewards 483–84
role profiles, use of 299 deduction 644 general pay reviews 500
role specification 299–300, grounded theory 647 guiding principles 447
303, 331 hypothesis testing 644–55 individual pay reviews 501
screening candidates 310–12 induction 644 internally equitable pay
selection interviews 313–17 integrative synthesis 640 478–79
selection methods 313 paradigm 647 in international firms 82–83
selection programme 312–13 qualitative research 641 job evaluation 490–91
selection testing 317–20 quantitative research 640 managing reward systems
social media, use in triangulation 640 500–01
recruiting 304–05 research, nature of market pricing 489
sourcing candidates 304–09 phenomenology 638–39 non-financial rewards 484
strength-based interviews 314 positivism 638 philosophy 474
structured interviews 313–14 science, conduct of 638 recognition schemes 499
unstructured interviews 314 what research is about 638 reward policy 475–76
use of AI 310 research programmes 639–40 reward strategy 479–81
use of tests 317, 319–20 resilience 581–82 reward system 482–83
use of video or skype 313 resource-based view segmentation 479
reductionism 638 critical evaluation of 32 total reward 484–85
redundancy 356–57 defined 9, 30–31 value of the job 476
redundancy policy 593 and knowledge management value of the person 476
redundancy procedure 599–601 31 values and beliefs 474–75
reference group 173 message of 64 reward philosophy 474–75
references 322 rationale for 32 reward policy 475–76
regression 650–51 and resourcing 287 reward segmentation 479
regression analysis 141 and SHRM 30 reward strategy 479–81
reinforcement theory of of strategic HRM 31–32 reward system 482–83
learning 384 resource capability 287 rewarding directors and senior
reinforcement theory of resource dependence theory 31 executives, see executive
motivation 251–52 resources 31 remuneration
760 Subject Index
rewarding special groups predictive validity of selection self-managed learning 383, 396
directors and senior methods 320 self-managed teams 218
executives 505–08 see also recruitment and self-service (HRIS) 604
expatriates 510–11 selection senior executives, reward of, see
manual workers 511–15 selection interviews 313–17 rewarding directors and
sales and customer service selection interviews senior executives
staff 508–10 advantages and sentiment analysis 154
rewards disadvantages 314–15 service-related pay 497
impact on performance 66 behavioural event questions 657 70/20/10 model of learning 383
level of 476–78 bias in 315–17 sexual harassment 593
risk assessments (health and capability questions 656–57 shareholder value 64
safety) 577–79 coming to a conclusion 658 SHRM, see strategic human
role competency-based resource management
analysis 663 interviews 314 significance, tests of 651–52
defined 225 dos and don’ts 659 single-loop learning 381
development 225 establishing rapport 655 skills analysis 667, 669–71
distinction between roles and keeping control 655 skills-based pay 497
jobs 225–26 listening 655 smart phones 148, 412
generic roles 663 maintaining continuity 655 ‘SMART’ objectives 444–45, 460
generic role profile 667, 669 planning the interview 654 smart working 217–19, 241
profiles 299, 299, 371 preparing for the interview 654 SMEs (small and medium sized
role analysis questioning techniques 655 organizations), role of
to identify learning needs situation-based questions HR 101–02
393–94 657–58 social capital 51
techniques 666–67 skills 654–56 social contract 178
role behaviour 198 strength-based interviews 314 social exchange theory 9, 265
role profiles strength-based questions 659 social justice 174
contents 666 structured interviews 313–14, social learning
defined 299 656 collaborative learning 407, 408
example of 668 unstructured interviews 314 communities of practice 407
and flexibility 371 selection testing connected learning 408
preparation of 666 ability tests 318–19 defined 407
and role analysis 666 aptitude tests 319 forms of 408–09
use in performance characteristics of a good learning communities 408–09
management 434 test 319 nature and significance of 408
use in recruitment 299 criterion-related measurement online 409
role set 198 of test validity 319 social learning theory 254, 407
role specification 299–300, 303, criterion scores 319 social legitimacy 6, 8, 18, 171,
331 intelligence tests 318 178
role theory 198 interpreting test results 319 social media
roles and jobs 225 norms 319 defined 148
Royal Society 385 personality tests 318 and employee
Royal Society of Arts 60 psychological tests 317 communications 561
psychometric tests 317–18 and employee voice 556
safety, see health and safety reliability of 319 features 148
sales and customer service staff use of 317, 319–20 for learning 411
pay 508–09 validity of 319 for recruitment 304–05
sales turnover 63 self-determination motivation social psychology 191
selection theory 227 social responsibility, see corporate
choice of selection methods 320 self-determination theory 254 social responsibility
defined 299 self-directed learning, see self- socio-technical model of
making the decision to managed learning organization 192
select 321–22 self-efficacy theory 436 soft model of HRM 11
Subject Index 761
software 603 strategic choice 210 structural antagonism 527

sorting effect 476 strategic configuration best fit structured interviews 313–14
span of control 209 model 28 substantive agreements 549
speak-up programmes 555 strategic fit 27, 31 successive contrasting bias 319
spot rates 492 strategic human resource suggestion schemes 556
SPSS 651 management (strategic HRM, suppliers, selection and
stability index 351 SHRM) management of 98
stakeholder analysis 42–43 best fit approach 30 supply chain manufacturing 217
stakeholders best practice approach 29–30 supply forecasting 294
and corporate social and bundling 28–29 supported autonomy 228
responsibility (CSR) 184 competitive strategies 28 survey feedback 234
defined 42 critical evaluation of 32–33 surveys, research 642–43
and employment relations 529 defined 25 survival rate 351
and HR strategy 42 and HRM 26 sustainable competitive
multiple-stakeholder approach and HR strategy 25 advantage 9, 31
to HRM 18 life cycle model 28 SWOT analysis 239
and mutual gains 548 nature of 25 systematic training 413
stakeholder theory 9, 173, 183 and organizational systems
stakeholder value model 43 perform5ance 32–33 defined 13
standard deviation 652 perspectives on achieving HRM 13–15
statistics strategic fit 28 and performance 433–34
arithmetic average 649 rationale for 25 reward 482–83
causality 651 resource-based view of 30–32 systems school of organization
chi-squared test 652 strategic configuration 28 theory 192
correlation 649 strategic fit 27–29
frequency 649 and strategic management 26 tailoring advertising to different
frequency polygon 650 strategic HRM skills 591–93 candidates 304
histogram 650 strategic management 26 talent 327
and HR professionals 649 strategic resourcing 287–88 talent management
interquartile range 650 strategic role of HR business career development 333–37
lower quartile 647 partners 628 defined 327
mean 647 strategic role of HR directors 107 identifying talent 332–33
measures of central strategic role of the HR in international firms 80–81
tendency 647 professional 628 leadership development 333
measures of dispersion 647–48 strategies, HR see HR strategies management development 333
median 647 strategy policy 328
mode 647 and business model potential assessment 322
multiple regression 651 innovation 625 process of 320
multivariate analysis 650–51 characteristics of 26–27 resourcing 331
null-hypothesis 652 critical evaluation of strategy 329–30
pie chart 650 concept 27 talent on demand 328
regression 650–51 defined 26 talent development 333–37
standard deviation 652 strength-based selection talent identification 332–33
testing hypotheses 652 interviews 314 talent pipeline 330
tests of significance 651–52 stress talent planning 331
upper quartile 647–48 causes of 581 talent pool 329, 331
use of 649 defined 581 talent resourcing 331
variance 650 incidence of 357 war for talent 327
STEM subjects 518 management of 581–82 workforce planning 331
strategic business partner role of reasons for concern 582 task discretion 224
HR professionals 108, 110 and resilience 581–82 task structure 226
strategic capability 3 and wellbeing 570 Taylor Review of Modern
strategic change 238 strong system of HRM 14–15 Working Practices 57, 59, 60
762 Subject Index
Taylorism 200 traits 200–01 visual performance

team briefing 556, 562 transactional activities in assessment 449–50
team building 242 HRM 95, 97 voluntary redundancy 356
team pay 498 transactional analysis 234
technical competencies 164 transactional contracts 537 war for talent 327
technical competency transfer of learning 413–14 web-based platform 147
modelling 675 transformational activities in Webex 146
technology, impact of 58 HRM 95, 97 webinars 411
terminal behaviour (learning) 399 transformational change 112 wellbeing, see employee wellbeing
testing hypotheses 652 triangulation 640 whistle-blowing 594
testing people management trust wikis 410
practices 46 building trust 538–39 work 215
testing propositions 636 climate of trust 538 work design
tests, selection, see selection tests defined 538 approach to 216–17
tests of significance 651–52 developing trust 538 defined 215
theory 638 and partnership 550 history of 215–16
Theory Y 233 and the psychological and job design 215
three-legged stool model of HR contract 542 job enrichment 163
function two-factor model of motivation work system design 216, 217
critical evaluation of 96–97 (Herzberg) 250–51 work environment 274, 278–79,
dealing with the issues 97 types of personality 201 569
described 95–96 workforce planning
360-degree feedback 453 unconscious bias training 316 action planning 294–95
time rates 511 under-performance, dealing approach to 295
timekeeping problems 714 with 717 and business planning 290
total quality management (TQM) unfair dismissal 608–09 data collection 293–94
236 union, see trade union defined 288–89
total reward 242, 484–85 unitarist view 527 demand forecasting 293–94
tournament theory 477 unitary frame of reference 267 for different types of
trade unions unitary organization workers 295
de-recognition 547 structure 193 flowchart 292
and employee voice 557 upper quartile 649–50 forecasting activity levels
managing with trade utilitarianism 172–73 291–92
unions 531–32 universalistic perspective on forecasting requirements 294
managing without trade strategic HRM 29 incidence of 290–91
unions 532 Utrecht Work Engagement Scale’ issues 291
membership 546 (UWES) 279 ratio-trend analysis 294
recognition 528, 547 reasons for 290–91
trading statements 623 valency 252 scenario planning 293
training value of the job 476 supply forecasting 294
bite-sized training 414 value of people, representation systematic approach to 291–95
defined 379, 413 of 52–53 for talent management 331
effective training value of the person 476 work–life balance 594
requirements 413 values 37, 38, 194–95, 268 workplace learning
evaluation of 413 vanilla system 603 buddy system 406
instructional design 679–80 verbal reasoning 318 characteristics of 405
justification for 413 vertical fit 27, 28–29 coaching 406
just-in-time training 414 vertical job loading 216 and connected learning 397
and learning 379 virtual classroom 411 defined 398, 404
planning and delivering training virtual learning environment 411 enhancement of 405–07
events 398 virtual learning system 411 induction 405
systematic training 413 virtual organization 193 learning by doing 404
transfer of learning 413–14 virtual team 217 learning on-the-job 405
Subject Index 763
making workplace learning role of learning and work intensification 12, 58–59
effective 407 development specialists work system design 216, 217
mentoring 406 407 wrongful dismissal 609
nature of 404 role of line managers 407
on-the-job training 405 shadowing 406 zero-hours contracts 60–61,
planned experience 405 sitting next to Nellie 405 373
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The gold standard when it comes to HRM texts.

Topical, comprehensive, well-informed and student-friendly.

Armstrong on Reinventing Performance Management

Armstrong’s Essential Human Resource Management Practice

Armstrong’s Handbook of Management and Leadership for HR

Armstrong’s Handbook of Performance Management

Armstrong’s Handbook of Reward Management Practice

Armstrong’s Handbook of Strategic Human Resource Management

Armstrong’s Job Evaluation Handbook

Evidence-Based Reward Management (with Duncan Brown and Peter Reilly)

How to Be an Even Better Manager

How to Manage People

Human Capital Management (with Angela Baron)

The Reward Management Toolkit (with Ann Cummins)

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PA R T I Fundamentals of human resource management 1

01 Human resource management 3

08 The role of the HR function 93

PA R T I I I Human resource management processes 127

PA R T V Factors affecting the behaviour of people at work 245

PA R T V I I I Learning and development 377

33 The basis of learning and development 379

37 The concept of performance management 431

40 The basis of reward management 473

44 The basis of employment relations 527

50 The principles and practice of employee wellbeing 567

PA R T X I I I HRM policies and practices and employment law 587

PA R T X I V People management skills 617

56 Strategic people management skills 619

CIPD New Profession Map 2018 735

PA R T I Fundamentals of human resource management 1

01 Human resource management 3

04 Human capital management 49

05 The context of HRM 56

06 HRM and performance 63

08 The role of the HR function 93

The role and organization of the HR function 94

09 The role of HR professionals 105

10 The HRM role of line managers 121

PA R T I I I Human resource management processes 127

14 Artificial intelligence and HRM 152

17 The ethical dimension of HRM 171

The nature of ethical decisions and judgements 172

18 Corporate social responsibility 181

PA R T V Factors affecting the behaviour of people at work 245

Motivation and job satisfaction 257

28 Recruitment and selection 299

31 Managing diversity and inclusion 365

PA R T V I I I Learning and development 377

33 The basis of learning and development 379

34 The process of learning and development 392

35 Learning and development practices 404

36 Leadership and management development 419

37 The concept of performance management 431

38 Performance management systems 443

39 Reinventing performance management 456

Performance management system issues 458

40 The basis of reward management 473

41 The practice of reward management 489