Armstrong M.Armstrong's Handbook of Human Resource Man.15ed 2020
Armstrong M.Armstrong's Handbook of Human Resource Man.15ed 2020
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)
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
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
A CIP record for this book is available from the British Library.
To Clarissa
vi
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 I Delivering HRM 91
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
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 I X Performance management 429
PA R T X Reward management 471
PA R T X I Employment relations 525
PA R T X I I Employee wellbeing 565
52 HR policies 589
53 HR procedures 596
54 HR information systems 602
55 Employment law 606
x Contents in brief
CO N T E N T S
List of figures xxix
List of tables xxxi
Preface xxxiii
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
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
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
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
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
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
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
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
32 Managing flexibility 370
Introduction 370
Forms of flexibility 370
Flexible working 372
The role of HR 374
References 375
Training 413
Personal development planning 415
Apprenticeships 416
References 418
PA R T I X Performance management 429
PA R T X Reward management 471
PA R T X I Employment relations 525
48 Employee voice 553
Introduction 553
The need for employee voice 553
Contents xxiii
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
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
57 Business skills 621
Introduction 621
Business skills 621
Financial skills 622
Business models 625
References 628
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
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
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
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
74 Project management 732
Introduction 732
Project planning 732
Setting up the project 733
Controlling the project 733
LIST OF FIGURES
L I S T O F TA B L E S
P R E FA C E TO T H E 15 T H E D I T I O N
PART I
Fundamentals of human
resource management
PA R T I CO N T E N T S
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)
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
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
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;
Pau se for th ou gh t
●● 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
8 Part 1 | Fundamentals of Human Resource Management
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
Chapter 1 | Human Resource Management 9
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).
Pau se for th ou gh t
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 ex- it 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-
10 Part 1 | Fundamentals of Human Resource Management
Thus they took the first steps towards the concept inclusion of employee and societal wellbeing as long-
of strategic HRM. term consequences.
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
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.’
14 Part 1 | Fundamentals of Human Resource Management
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.
HR philosophies
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
Employee
benefits
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’
18 Part 1 | Fundamentals of Human Resource Management
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.
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)
(continued )
Chapter 1 | Human Resource Management 19
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)
Digital Human resource information systems Web-based applications: social media, cloud
technologies, chatbots, smart phones
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)
●● 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;
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;
Chapter 1 | Human Resource Management 21
●● 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.
References
Armstrong, M (1987) Human resource management: performance, Boston, MA, Harvard Business
a case of the emperor's new clothes? Personnel School Press
Management, August, pp 30–35 Beer, M, Boselie, P and Brewster, C (2015) Back to the
Armstrong, M (2000) The name has changed but has future: implications for the field of HRM of the
the game remained the same? Employee Relations, multi-stakeholder perspective proposed 30 years
22 (6), pp 576–89 ago, Human Resource Management, 54 (3),
Barney, J B (1991) Firm resources and sustained pp 427–38
competitive advantage, Journal of Management Beer, M, Spector, B, Lawrence, P, Quinn Mills, D and
Studies, 17 (1), pp 99–120 Walton, R (1984) Managing Human Assets, New
Becker, B E and Gerhart, S (1996) The impact of York, The Free Press
human resource management on organizational Boselie, P, Dietz, G and Boon, C (2005)
performance: progress and prospects, Academy of Commonalities and contradictions in HRM and
Management Journal, 39 (4), 779–801 performance research, Human Resource
Becker, B E and Huselid, M A (1998) High Management Journal, 15 (3), pp 67–94
performance work systems and firm performance: Bowen, D E and Ostroff, C (2004) Understanding
a synthesis of research and managerial HRM–firm performance linkages: the role of the
implications, Research on Personnel and Human ‘strength’ of the HRM system, Academy of
Resource Management, Stamford, Connecticut, Management Review, 29 (2), pp 202–21
JAI Press, 16, pp 53–101 Boxall, P F (2007) The goals of HRM, in (eds) P
Becker, B E and Huselid, M A (2006) Strategic human Boxall, J Purcell and P Wright, Oxford Handbook
resource management: where do we go from here? of Human Resource Management, Oxford,
Journal of Management, 32 (6), pp 898–925 Oxford University Press, pp 48–67
Becker, B E, Huselid, M A and Ulrich, D (2001) The Boxall, P F (2013) Mutuality in the management of
HR Score card: Linking people, strategy, and human resources: assessing the quality of
22 Part 1 | Fundamentals of Human Resource Management
alignment in employment relationships, Human Fowler, A (1987) When chief executives discover
Resource Management Journal, 23 (1) pp 3–17 HRM, Personnel Management, January, p 3
Boxall, P and Macky, K (2009) Research and theory Freeman, R E (1984) Strategic Management: A
on high-performance work systems: progressing stakeholder perspective, Prentice Hall, Englewood
the high involvement stream, Human Resource Cliffs, New Jersey
Management Journal, 19 (1), pp 3–23 Godard, J and Delaney, J (2000) A critical assessment
Boxall, P F and Purcell, J (2003) Strategy and Human of the high performance paradigm, Industrial and
Resource Management, Basingstoke, Palgrave Labor Relations Review, 53 (3), pp 482–502
Macmillan Guest, D E (1987) Human resource management and
Boxall, P F, Purcell, J and Wright, P (2007) Human industrial relations, Journal of Management
resource management: scope, analysis and Studies, 24 (5), pp 503–21
significance, in (eds) P Boxall, J Purcell and P Guest, D E (1991) Personnel management: the end of
Wright, Oxford Handbook of Human Resource orthodoxy, British Journal of Industrial Relations,
Management, Oxford, Oxford University Press, 29 (2), pp 149–76
pp 1–16 Guest, D E (1999) Human resource management: the
Brewster, C (1993) Developing a ‘European’ model of workers’ verdict, Human Resource Management
human resource management, The International Journal, 9 (2), pp 5–25
Journal of Human Resource Management, 4 (4), Guest, D E (2017) Human resource management and
pp 765–84 employee wellbeing: towards a new analytic
Brown, D, Hirsh, W and Reilly, P (2019) Strategic framework, Human Resource Management
human resource management: case studies and Journal, 27 (1), pp 22–38
conclusions: from HR strategy to strategic people Guest, D E, Wright, P M and Paauwe (2013) Progress
management, Institute for Employment Studies and prospects, in (eds) J Paauwe, D E Guest, P M
[online] https://www.employment-studies.co.uk/ Wright, HRM and Performance, Chichester, Wiley,
resource/strategic-human-resource-management- pp 197–205
practice-case-studies-and-conclusions (archived at Hendry, C and Pettigrew, A (1990) Human resource
https://perma.cc/PQ2P-E7EA) [accessed 1 April management: an agenda for the 1990s,
2019] International Journal of Human Resource
Chamorro-Premuzic, T (2017) The Talent Delusion, Management, 1 (1), pp 17–44
London, Piatkus Hird, M , Sparrow, P and Marsh, C (2010) HR
CIPD (2018) HR Standards [online] https://www. structures: are they working? in (eds) P Sparrow, A
cipd.co.uk/knowledge/strategy/hr/standards- Hesketh, M Hird, and C Cooper, Leading HR,
factsheet (archived at https://perma.cc/98G9-DSS6) Basingstoke, Palgrave Macmillan, pp 23–45
[accessed 17 April 2019] Hyman, R (1987) Strategy or structure? Capital,
Delbridge, R and Keenoy, T (2010) Beyond labour and control, Employment and Society, 1
managerialism? The International Journal of (1), pp 25–55
Human Resource Management, 21 (6), Keegan, A and Francis, H (2010) Practitioner talk: the
pp 799–817 changing textscape of HRM and emergence of HR
Dowling, J and Pfeffer, J (1975) Organizational business partnership, The International Journal of
legitimacy: social values and organizational Human Resource Management, 21 (6), pp 873–98
behaviour, The Pacific Sociological Review, 18 (1), Keenoy, T (1990) HRM: a case of the wolf in sheep’s
pp 122–36 clothing, Personnel Review, 19 (2), pp 3–9
Dundon, T, Cullinane, N and Wilkinson, A (2017) A Keenoy, T (1997) HRMism and the images of
Very Short, Fairly Interesting and Reasonably re-presentation, Journal of Management Studies,
Cheap Book About Employment Relations, 34 (5), pp 825–41
London, Sage Kepes, S and Delery, J E (2007) HRM systems and the
Dyer, L and Holder, G W (1988) Strategic human problem of internal fit, in (eds) P Boxall, J Purcell
resource management and planning, in (ed) L Dyer and P Wright, Oxford Handbook of Human
Human Resource Management: Evolving roles and Resource Management, Oxford University Press,
responsibilities, Washington DC, Bureau of Oxford, pp 385–404
National Affairs, pp 1–46 Kochan, T A (2007) Social legitimacy of the HR
Fombrun, C J, Tichy, N M and Devanna, M A (1984) profession, in (eds) P Boxall, J Purcell and P
Strategic Human Resource Management, Wright, Oxford Handbook of Human Resource
New York, Wiley
Chapter 1 | Human Resource Management 23
Management, Oxford University Press, Oxford, People Make the Place, Mahwah, NJ, Lawrence
pp 599–620 Erlbaum Associates, pp 225–48
Kochan, T A and Osterman, P (1994) The Mutual Nyberg, A J, Moliterno, T P, Hale, D and Lepak, D P
Gains Enterprise: Forging a winning partnership (2014) Resource-based perspectives on unit-level
among labor, management and government, human capital: a review and integration, Journal
Boston, MA, Harvard University Business Press of Management, 40 (1), pp 316–46
Legge, K (1989) Human resource management: a Osterby, B and Coster, C (1992) Human resource
critical analysis, in (ed) J Storey New Perspectives development – a sticky label, Training and
in Human Resource Management, Routledge, Development, April, pp 31–32
London, pp 19–40 Paauwe, J (2004) HRM and Performance: Achieving
Legge, K (1998) The morality of HRM, in (eds) C long-term viability, Oxford University Press,
Mabey, D Skinner and T Clark, Experiencing Oxford
Human Resource Management, Sage, London, Peccei, R (2004) Human Resource Management and
pp 14–32 the Search for a Happy Workplace, Rotterdam,
Legge, K (2005) Human Resource Management: Eramus Research Institute of Management (ERIM)
Rhetorics and realities, 2nd edn, Palgrave Purcell, J (1999) Best practice or best fit: chimera or
Macmillan, Basingstoke cul-de-sac, Human Resource Management Journal,
Lengnick-Hall, M L, Lengnick-Hall, C A, Andrade, L 9 (3), pp 26–41
A and Drake, B (2009) Strategic human resource Ramsay, H, Scholarios, D and Harley, B (2000)
management: the evolution of the field, Human Employees and high-performance work systems:
Resource Management Review, 19 (2), pp 64–85 testing inside the black box, British Journal of
Lepak, D, Liao, H, Chung, Y and Harden, E (2006) A Industrial Relations, 38 (4), pp 501–31
conceptual review of human resources management Rawls, J (1973) A Theory of Justice, Oxford, Oxford
systems in strategic human resource management University Press
research, Research in Personnel and Human Richer, J (2017) The Richer Way, London, Business
Resources Management, 25, pp 217–71 Books
Macky, K and Boxall, P (2008) High-involvement Schneider, B (1987) The people make the place,
work processes, work intensification and employee Personnel Psychology, 40 (3), pp 437–53
wellbeing: a study of New Zealand worker Schuler, R S (1992) Strategic HRM: linking people
experiences, Asia Pacific Journal of Human with the needs of the business, Organizational
Resources, 46 (1), pp 38–55 Dynamics, 21, pp 19–32
Marchington, M (2008) Where next for HRM? Schuler, R S and Jackson, S E (2000) Strategic Human
Rediscovering the heart and soul of people Resource Management, Oxford, Blackwell
management, IES Working Paper, 20 [online] Sennett, R (1998) The Corrosion of Character, New
https://www.employment-studies.co.uk/resource/ York, W Norton
where-next-hrm (archived at https://perma.cc/ Storey, J (1989) From personnel management to
RP8B-7L4R) [accessed 17 April 2019] human resource management, in (ed) J Storey,
Marchington, M (2015). Human resource New Perspectives on Human Resource
management (HRM): too busy looking up to see Management, London, Routledge, pp 1–18
where it is going longer term? Human Resource Storey, J (2001) Human resource management today:
Management Review, 25 (2), 176–87 an assessment, in (ed) J Storey, Human Resource
Martin-Alcázar, F, Romero-Fernandez, P M and Management: A critical text, London, Thompson
Sánchez-Gardey, G (2005) Strategic human Learning, pp 3–20
resource management: integrating the Storey, J (2007) What is human resource
universalistic, contingent, configurational and management? in (ed) J Storey, Human Resource
contextual perspectives, International Journal of Management: A critical text, London, Thompson
Human Resource Management, 16 (5), pp 633–59 Learning, pp 3–19
McLean, A (1981) Organization development: a case Thompson, P and Harley, B (2007) HRM and the
of the emperor’s new clothes? Personnel Review, 4 worker: labour process perspectives, in (eds)
(1), pp 3–14 P Boxall, J Purcell and P Wright, Oxford
Nishii, L H and Wright, P M (2008) Variability within Handbook of Human Resource Management,
organizations: implications for strategic human Oxford, Oxford University Press, pp 147–65
resource management, in (ed) D B Smith, The
24 Part 1 | Fundamentals of Human Resource Management
Torrington, D P and Hall, L (1991) Personnel Ulrich, D (1997) Human Resource Champions: The
Management: A new approach, Englewood Cliffs new agenda for adding value and delivering results,
NJ, Prentice Hall Boston, MA, Harvard Business School Press
Truss, C, Gratton, L, Hope-Hailey, V, McGovern, P Willmott. H (1993) Strength is ignorance, slavery is
and Stiles, P (1997) Soft and hard models of freedom: managing culture in modern
human resource management: a re-appraisal, organizations, Journal of Management Studies, 30
Journal of Management Studies, 34 (1), pp 53–73 (4), pp 515–52
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 configura- tion 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.
26 Part 1 | Fundamentals of Human Resource Management
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
Chapter 2 | Strategic HRM 29
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
30 Part 1 | Fundamentals of Human Resource Management
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.
32 Part 1 | Fundamentals of Human Resource Management
Pa us e fo r t houg ht
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
Chapter 2 | Strategic HRM 33
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)
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.
References
Abell, D F (1993) Managing with Dual Strategies: literary review, Brighton, Report 591, Institute for
Mastering the present, pre-empting the future, Employment Studies
New York, Free Press Baird, L and Meshoulam, I (1988) Managing two fits
Armstrong, M and Brown, D (2019) Strategic Human of strategic human resource management, Academy
Resource Management: Back to the future: a of Management Review, 13 (1), pp 116–28
Chapter 2 | Strategic HRM 35
Barney, J B (1991) Firm resources and sustained Delery, J E and Roumpi, D (2017) Strategic human
competitive advantage, Journal of Management resource management, human capital and competitive
Studies, 17 (1), pp 99–120 advantage: is the field going in circles? Human
Barney, J B (1995) Looking inside for competitive Resource Management Journal, 27 (1), pp 1–21
advantage, Academy of Management Executive, 9 Dyer, L and Holder, G W (1988) Strategic human
(4), pp 49–61 resource management and planning, in (ed) L
Beer, M, Boselie, P and Brewster, C (2015) Back to the Dyer, Human Resource Management: Evolving
future: implications for the field of HRM of the roles and responsibilities, Washington, DC, Bureau
multi-stakeholder perspective proposed 30 years ago, of National Affairs
Human Resource Management, 54 (3), pp 427–38 Dyer, L and Reeves, T (1995) Human resource
Beer M, Spector B, Lawrence P, Quinn Mills D and strategies and firm performance: what do we know
Walton, R (1984) Managing Human Assets, New and where do we need to go? The International
York, The Free Press Journal of Human Resource Management, 6 (3),
Boxall, P F (1996) The strategic HRM debate and the pp 656–70
resource-based view of the firm, Human Resource Guest, D E (1997) Human resource management and
Management Journal, 6 (3), pp 59–75 performance; a review of the research agenda, The
Boxall, P F (2007) The goals of HRM, in (eds) P International Journal of Human Resource
Boxall, J Purcell and P Wright, The Oxford Management, 8 (3), pp 263–76
Handbook of Human Resource Management, Hunt, S (1991) The resource-advantage theory of
Oxford, Oxford University Press, pp 48–67 competition, Journal of Management Inquiry, 4
Boxall, P F and Purcell, J (2003) Strategy and Human (4), pp 317–22
Resource Management, Basingstoke, Palgrave Kanter, R M (1984) The Change Masters, London,
Macmillan Allen & Unwin
Boxall, P F and Purcell, J (2016) Strategy and Human Kaufman, B E (2015) The evolution of strategic HRM
Resource Management, 4th edition, Basingstoke, as seen through two founding books: a 30th
Palgrave Macmillan anniversary perspective on development of the
Brown, D, Hirsh, W and Reilly, P (2019) Strategic field, Human Resource Management, 54 (3),
Human Resource Management: Case studies and pp 389–407
conclusions: from HR strategy to strategic people Kaye, L (1999) Strategic human resources
management [online] https://www.employment- management in Australia: the human cost,
studies.co.uk/resource/strategic-human-resource- International Journal of Manpower, 20 (8),
management-practice-case-studies-and-conclusions pp 577−87
(archived at https://perma.cc/99UU-PFL2) Mabey, C, Salaman, G and Storey, J (1998) Human
[accessed 20 April 2019] Resource Management: A strategic introduction,
Cappelli, P and Crocker-Hefter, A (1996) Distinctive 2nd edn, Oxford, Blackwell
human resources are firms’ core competencies, MacDuffie, J P (1995) Human resource bundles and
Organizational Dynamics, Winter, pp 7–22 manufacturing performance, Industrial Relations
Cascio, W F (2015) Strategic HRM: Too important Review, 48 (2), pp 199–221
for an insular approach, Human Resource Michie, J and Sheehan, M (2005) Business strategy,
Management, 54 (3), pp 423–26 human resources, labour market flexibility, and
Chandler, A D (1962) Strategy and Structure, Boston, competitive advantage, International Journal of
MA, MIT Press Human Resource Management, 16 (3), pp 445–64
Chartered Institute of Personnel and Development Miles, R E and Snow, C C (1978) Organizational
(2018) Profession Map [online] https:// Strategy: Structure and process, New York,
peopleprofession.cipd.org/profession-map/ McGraw-Hill
core-behaviours (archived at https://perma.cc/ Mintzberg, H (1987) Crafting strategy, Harvard
FK69-MQAP) [accessed 15 January 2019] Business Review, July–August, pp 66–74
Delery, J E and Doty, H D (1996) Modes of theorizing Paauwe, J (2004) HRM and Performance: Achieving
in strategic human resource management: tests of long-term viability, Oxford, Oxford University Press
universality, contingency and configurational Paauwe, J, Wright, P M and Guest, D E (2013) HRM
performance predictions, Academy of Management and performance: what do we know and where
Journal, 39 (4), pp 802–35 should we go? in (eds) J Paauwe, D E Guest, P M
36 Part 1 | Fundamentals of Human Resource Management
Wright, HRM and Performance, Chichester, Wiley, needs of the business, Organizational Dynamics,
pp 2–13 21 (1), pp 18–32
Penrose, E (1959) The Theory of the Growth of the Schuler, R S and Jackson, S E (2007) Strategic Human
Firm, Oxford, Blackwell Resource Management, 2nd edn, Oxford, Blackwell
Pfeffer, J (1998) The Human Equation, Boston, MA, Stavrou, E T, Brewster, C and Charalambousa,
Harvard Business School Press C (2010) Human resource management and
Pfeffer, J and Davis-Blake, A (1992) Understanding firm performance in Europe through the lens of
organizational wage structures: a resource business systems: best fit, best practice or both?
dependence approach, Academy of Management The International Journal of Human Resource
Journal, 30, pp 437–55 Management, 21 (7), pp 933–62
Porter, M E (1985) Competitive Advantage: Creating Truss, C and Gratton, L (1994) Strategic human
and sustaining superior performance, New York, resource management: a conceptual approach,
The Free Press International Journal of Human Resource
Priem, R L and Butler, J E (2001) Is the resource- Management, 5 (3), pp 663–86
based theory a useful perspective for strategic Truss, C, Deldridge, R, Alfes, K, Shantz, A and Soane,
management research? Academy of Management E (2014) Introduction, Employee Engagement in
Review, 26 (1), pp 22–40 Theory and Practice, London, Routledge
Purcell, J (1999) Best practice or best fit: chimera or Ulrich, D (1998) A new mandate for human
cul-de-sac, Human Resource Management Journal, resources, Harvard Business Review, January–
9 (3), pp 26–41 February, pp 124–34
Richardson, R and Thompson, M (1999) The Impact Wernerfelt, B (1984) A resource-based view of the
of People Management Practices on Business firm, Strategic Management Journal, 5 (2),
Performance: A literature review, London, IPD pp 171–80
Richer, J (2017) The Richer Way, London, Business Wright, P M and McMahan, G C (1992) Theoretical
Books perspectives for SHRM, Journal of Management,
Schuler, R S (1992) Strategic human resource 18 (2), pp 295–320
management: linking people with the strategic
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.
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
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.
Proposal
Line management
Employees
Trade union(s)
Shareholders (owners)
Customers
Suppliers
The public
Chapter 3 | HR Strategy 43
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.
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
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.
C A S E S T U DY
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
Chapter 3 | HR Strategy 45
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.
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.
Pa us e fo r t houg ht
What do you think is likely to be the biggest
barrier to the implementation of a people
strategy?
Chapter 3 | HR Strategy 47
References
Armstrong, M and Baron, A (2002) Strategic HRM: Boxall, P F and Purcell, J (2016) Strategy and Human
The route to improved business performance, Resource Management, Basingstoke, Palgrave
London, CIPD Macmillan
Armstrong, M and Long, P (1994) The Reality of Brown, D, Hirsh, W and Reilly, P (2019) Strategic
Strategic HRM, London, IPD Human Resource Management: Case Studies and
Benson, G S, Young, S M and Lawler, E E (2006) Conclusions: from HR Strategy to Strategic People
High involvement work practices and analysts’ Management [online] https://www.employment-
forecasts of corporate performance, Human studies.co.uk/resource/strategic-human-resource-
Resource Management, 45 (4), pp 519–27 management-practice-case-studies-and-conclusions
Boxall, P F (1996) The strategic HRM debate and the (archived at https://perma.cc/2SEV-W7XN)
resource-based view of the firm, Human Resource [accessed 20 April 2019]
Management Journal, 6 (3), pp 59–75 Camps, J and Luna-Arocas, R (2009) High-
Boxall, P F (2013) Building highly-performing work involvement work practices and firm performance,
systems, in (eds) J Paauwe, D E Guest, P M International Journal of Human Resource
Wright, HRM and Performance, Chichester, Wiley, Management, 20 (5), pp 1056–77
pp 47–59 Cappelli, P (1999) Employment Practices and Business
Strategy, New York, Oxford University Press
48 Part 1 | Fundamentals of Human Resource Management
Dickens, C (1843) Martin Chuzzlewit, London, Pettigrew, A and Whipp, R (1991) Managing Change
Chapman & Hall (Penguin Classics, 2004) for Competitive Success, Oxford, Blackwell
Dyer, L and Reeves, T (1995) Human resource Purcell, J (2001) The meaning of strategy in human
strategies and firm performance: what do we know resource management, in (ed) J Storey, Human
and where do we need to go? The International Resource Management: A critical text, 2nd edn,
Journal of Human Resource Management, 6 (3), London, Thompson Learning, pp 59–77
pp 656–70 Purcell, J, Kinnie, K, Hutchinson, R, Rayton, B and
Fombrun, C J, Tichy, N M and Devanna, M A (1984) Swart, J (2003) People and Performance: How
Strategic Human Resource Management, New people management impacts on organizational
York, Wiley performance, London, CIPD
Gratton, L A (1999) People processes as a source of Walton, R E (1985) From control to commitment in
competitive advantage, in (ed) L A Gratton, V H the workplace, Harvard Business Review, March–
Hailey, P Stiles and C Truss, Strategic Human April, pp 77–84
Resource Management, Oxford, Oxford University Wood, S (1996) High commitment management
Press and organization in the UK, The International
Gratton, L A (2000) Real step change, People Journal of Human Resource Management, 7 (1),
Management, 16 March, pp 27–30 pp 41–58
Guest, D E and Bos-Nehles, A (2013) HRM and Wright, P M and McMahan, G C (1999) Theoretical
performance: the role of effective implementation, perspectives for human resource management, in
in (eds) J Paauwe, D E Guest, P M Wright, HRM (eds) R S Schulker and S E Jackson, Strategic
and Performance, Chichester, Wiley, pp 79–96 Human Resource Management, Blackwell,
Lawler, E E (1986) High Involvement Management, Oxford, pp 49–72
San Francisco, CA, Jossey-Bass
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
50 Part 1 | Fundamentals of Human Resource Management
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
Source review
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.
52 Part 1 | Fundamentals of Human Resource Management
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.
Chapter 4 | Human Capital Management 55
References
Bontis, N, Dragonetti, N C, Jacobsen, K and Roos, G Ployhart, R E and Moliterno, T P (2011) Emergence
(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
[accessed 10 January 2019] Schultz, T W (1961) Investment in human capital,
Delery, J E and Roumpi, D (2017) Strategic human American Economic Review, 51, March, pp 1–17
resource management, human capital and Schultz, T W (1981) Investing in People: The
competitive advantage: is the field going in circles? economics of population quality, Los Angeles, CA,
Human Resource Management Journal, 27 (1), University of California Press
pp 1–21 Skaggs, B C and Youndt, M A (2004) Strategic
Hitt, M A, Bierman, L, Shimizu, K and Kochhar, R positioning, human capital and performance in
(2001) Direct and indirect effects of human capital service organizations: a customer interaction
on strategy and performance in professional approach, Strategic Management Journal, 25 (1),
service firms: a resource-based perspective, pp 85−99
Academy of Management Journal, 44 (1), Wong, W (2017) Foreword, in E Houghton, Human
pp 13–28 capital analytics and reporting: exploring theory
McMahan, G C and Harris, C M (2013) Measuring and evidence, London, CIPD
human capital, in (eds) J Paauwe, D E Guest, P M Wright, P M and McMahan, G C (2011) Exploring
Wright, HRM and Performance, Chichester, Wiley, human capital: putting ‘human’ back into strategic
pp 111–28 human resource management, Human Resource
Nyberg, A J, Moliterno, T P, Hale, D and Lepak, D P Management Journal, 21 (2), pp 93–104
(2014) Resource-based perspectives on unit-level Wright, P M, McMahan, G C and McWilliams, A
human capital: a review and integration, Journal (1994) Human resources and sustained
of Management, 40 (1), pp 316–46 competitive advantage: a resource-based
Ployhart, R E (2006) Staffing in the 21st century: perspective, International Journal of Human
new challenges and strategic opportunities, Journal Resource Management, 5 (2), pp 301–26
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)
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
Chapter 5 | The Context of HRM 59
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:
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)
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
References
Cardiff University (2012) Work intensification in work/technology/people-machines-report (archived
Britain [online] https://orca-mwe.cf.ac.uk/67987/ at https://perma.cc/DK69-HHSE) [accessed 6 May
1/5.%20Work%20Intensification%20in%20 2019]
Britain%20-%20mini-report.pdf (archived at Deloitte (2015) From brawns to brain [online] https://
https://perma.cc/Q9SP-C7DH) [accessed 22 www2.deloitte.com/content/dam/Deloitte/uk/
August 2018] Documents/Growth/deloitte-uk-insights-from-
CIPD (2015) Employer/employee views of zero-hours brawns-to-brain.pdf (archived at https://perma.cc/
contracts in the UK [online] http://www.cipd. T7JT-ULTQ) [accessed 22 August 2018]
co.uk/binaries/zero-hours-and-short-hours- Dundon, T and Rafferty, A (2018) The (potential)
contracts-in-the-uk_2015-employer-employee- demise of HRM? Human Resource Management
perspectives.pdf (archived at https://perma.cc/ Journal, 28, (3), pp 377–91
D27Y-G5Z2) [accessed 30 July 2018] Galbraith, J K (2004) Les Mensonges de L’économie:
CIPD (2017a) The impact of emerging technologies Vérité pour notre temps, Paris: Grasset
on work [online] https://www.cipd.co.uk/ Guest, D E (2017) Human resource management and
knowledge/work/technology/artificial-intelligence- employee wellbeing: towards a new analytic
workplace-impact (archived at https://perma. framework, Human Resource Management Journal,
cc/5KQT-78BT) [accessed 30 July 2018] 27, (1), pp 22–38
CIPD (2017b) Understanding and measuring job Legge, K (1978) Power, Innovation and Problem
quality [online] https://www.understanding-and- Solving in Personnel Management, Maidenhead,
measuring-job-quality-1_tcm18-33193.pdf McGraw-Hill
[accessed 7 February 2019] Macky, K and Boxall, P (2008) High-involvement
CIPD (2017c) Survey of resourcing and talent work processes, work intensification and employee
planning [online] https://www.cipd.co.uk/ wellbeing: a study of New Zealand worker
knowledge/strategy/resourcing/surveysresourcing- experiences, Asia Pacific Journal of Human
talent-planning_2017_tcm18-23747.pdf [accessed Resources, 46 (1), pp 38–55
22 August 2018] Royal Society of Arts (2017) Why we need to talk
CIPD (2017d) Employee Outlook [online] https:// about good work [online] https://medium.com/@
www.cipd.co.uk/Images/employee-outlook_ thersa/why- we-need-to-talk-about-good-work-
2017-spring_tcm18-21163.pdf (archived at https:// 728d7d82877c (archived at https://perma.cc/LK2M-
perma.cc/77MH-4FCT) [accessed 22 August 2018] 9B28) [accessed 22 August 2018]
CIPD (2017e) To gig or not to gig [online] https:// Rubery, J, Keizer, A and Grimshaw, D (2016)
www.cipd.co.uk/Images/to-gig-or-not-to-gig_ Flexibility bites back: the multiple and hidden costs
2017-stories-from-the-modern- economy_tcm18- of flexible employment policies, Human Resource
18955.pdf [accessed 22 August 2018] Management Journal, 26 (3), pp 235–51
CIPD (2018a) Brexit workforce planning guide [online] Standing, G (2011) The Precariat: The new dangerous
https://www brexit-workforce-planning-guide_tcm18- class, London: Bloomsbury
38797 [accessed 22 August 2018] The Taylor Review of Modern Working Practices
CIPD (2018b) Fact sheet zero-hours contracts [online] (2017) [online] https://assets.publishing.service.gov.
http://www.cipd.co.uk/hr-resources/factsheets/zero- uk/government/uploads/system/uploads/attachment_
hours-contracts.aspx (archived at https://perma.cc/ data/file/627671/good-work-taylor-review-modern-
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.
64 Part 1 | Fundamentals of Human Resource Management
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.
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
66 Part 1 | Fundamentals of Human Resource Management
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)
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)
Chapter 6 | HRM and Performance 67
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.’
Observable ? Measurable
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
Contingency variables: Internal context – size, sector, technology, employees, culture external context – competition, economic, social
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
70 Part 1 | Fundamentals of Human Resource Management
Pau se for th ou gh t
The development of If you were an HR director and your chief
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.
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
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.
References
Alvesson, M (2009) Critical perspectives on strategic CIPD (2017) Understanding and measuring job
HRM, in (eds) J Storey, P M Wright and D Ulrich, quality [online] https://www.understanding-and-
The Routledge Companion to Strategic Human measuring-job-quality-1_tcm18-33193.pdf
Resource Management, Abingdon, Routledge, [accessed 7 February 2019]
pp 53–68 Combs, J, Liu, Y, Hall, A and Ketchen, D (2006) How
Appelbaum, E, Bailey, T, Berg, P and Kalleberg, A L much do high performance work practices matter?
(2000) Manufacturing Advantage: Why high A meta-analysis of their effects on organizational
performance work systems pay off, Ithaca, NY, performance, Personnel Psychology, 59 (3),
ILR Press pp 501–28
Becker, B E and Huselid, M A (1998) High Delery, J E and Roumpi, D (2017) Strategic human
performance work systems and firm performance: resource management, human capital and competitive
a synthesis of research and managerial advantage: is the field going in circles? Human
implications, Research on Personnel and Human Resource Management Journal, 27 (1), pp 1–21
Resource Management, 16, pp 53–101 De Menezes, L, Wood, S and Gelade, G (2010) The
Becker, B E, Huselid, M A, Pickus, P S and Spratt, M integration of human resource and operational
F (1997) HR as a source of shareholder value: management practices and its link with
research and recommendations, Human Resource performance: a longitudinal study, Journal of
Management, Spring, 36 (1), pp 39–47 Operations Management, 28 (6), pp 455–71
Birdi, K, Clegg, C, Patterson, M, Robinson, A, Stride, Den Hartog, D N, Boslie, P and Paauwe, J (2004)
C B, Wall, T D and Wood, S J (2008) The impact Performance management: a model and research
of human resource and operational management agenda, Applied Psychology, 53 (4), pp 556–69
practices on company productivity: a longitudinal Ericksen, J (2007) High performance work systems:
study, Personnel Psychology, 61 (3), pp 467–501 dynamic workforce alignment and firm performance,
Boselie, P, Dietz, G and Boon, C (2005) Academy of Management Proceedings, pp 1–6
Commonalities and contradictions in HRM and Gephart, M A (1995) The road to high performance:
performance research, Human Resource steps to create a high performance workplace,
Management Journal, 15 (3), pp 67–94 Training and Development, June, p 29
Bowen, D and Ostroff, C (2004) Understanding Godard, J (2004) A critical assessment of the high
HRM – firm performance linkages: the role of the performance paradigm, British Journal of
‘strength’ of the HRM system, Academy of Industrial Relations, 42 (2), pp 349–78
Management Review, 29 (2), pp 203–21 Guest, D E (1997) Human resource management and
Boxall, P F (2013) Building highly-performing work performance: a review of the research agenda, The
systems, in (eds) J Paauwe, D E Guest, P M International Journal of Human Resource
Wright, HRM and Performance, Chichester, Wiley, Management, 8 (3), 263–76
pp 47–59 Guest, D E (2011) Human resource management and
Boxall, P F and Purcell, J (2003) Strategy and Human performance: still searching for some answers,
Resource Management, Basingstoke, Palgrave Human Resource Management Journal, 21 (1),
Macmillan pp 3–13
74 Part 1 | Fundamentals of Human Resource Management
Guest, D E and Bos-Nehles, A (2013) HRM and Orlitzky, P M and Frenkel, S (2005) Alternative
performance: the role of effective implementation, pathways to high-performance workplaces, The
in (eds) J Paauwe, D E Guest, P M Wright, HRM International Journal of Human Resource
and Performance, Chichester, Wiley, pp 80–96 Management, 14 (4), pp 1325– 48
Guest, D E and Conway, N (2011) The impact of HR Paauwe, J (2004) HRM and Performance: Achieving
practices, HR effectiveness and a ‘strong HR long-term viability, Oxford, Oxford University
system’ on organizational outcomes: a stakeholder Press
perspective, The International Journal of Human Paauwe, J (2009) HRM and performance:
Resource Management, 22 (8), pp 1686–702 achievements, methodological issues and
Guest, D E, Michie, J, Sheehan, M and Conway, N prospects, Journal of Management Studies, 46 (1),
(2000a) Employee Relations, HRM and Business pp 129–42
Performance: An analysis of the 1998 Workplace Patterson, M G, West, M A, Lawthom, R and Nickell,
Employee Relations Survey, London, CIPD S (1997) Impact of People Management Practices
Guest, D E, Michie, J, Sheehan, M, Conway, N and on Performance, London, IPD
Metochi, M (2000b) Effective People Peccei, R (2004) Human Resource Management and
Management: Initial findings of Future of Work the Search for a Happy Workplace, Rotterdam,
survey, London, CIPD Eramus Research Institute of Management (ERIM)
Guthrie, J P (2001) High-involvement work practices, Peccei, R, Van De Voorde, K and Van Veldhoven, M
turnover and productivity: evidence from New (2013) HRM, wellbeing and performance: a
Zealand, Academy of Management Journal, 44 (1), theoretical and empirical review, in (eds) J Paauwe,
pp 180–92 D E Guest, P M Wright, HRM and Performance,
Guzzo, R A and Noonan, K A (1994) Human Chichester, Wiley, pp 16–45
resource practices as communications and the Pink, D H (2009) Drive: The surprising truth about
psychological contract, Human Resource what motivates us, New York, Riverhead Books
Management, 33 (2), pp 447–62 Purcell, J, Kinnie, K, Hutchinson, R, Rayton, B and
Herzberg, F (1966) Work and the Nature of Man, Swart, J (2003) Understanding the People and
New York, Staple Press Performance Link: Unlocking the black box,
Huselid, M A (1995) The impact of human resource London, CIPD
management practices on turnover, productivity Richer, J (2017) The Richer Way, London, Business
and corporate financial performance, Academy of Books
Management Journal, 38 (3), pp 635–72 Rousseau, D M (1995) Psychological Contracts in
Jiang, K, Lepak, D, Hu, J and Baer, J (2012) How Organizations: Understanding written and
does human resource management influence unwritten agreements, Thousand Oaks, CA, Sage
organizational outcomes? A meta-analytic Shih, H-A, Chiang, Y-H and Hsu, C-C (2005) Can
investigation of mediating mechanisms, Academy high performance work systems really lead to
of Management Journal, 55 (6), pp 1264–94 better performance? Academy of Management
Khatri, N (2000) Managing human resource for Conference Paper, pp 1–6
competitive advantage: a study of companies in Storey, J, Wright, P M and Ulrich, D (2009)
Singapore, International Journal of Human Introduction, in (eds) J Storey, P M Wright and D
Resource Management, 11 (2), pp 336–66 Ulrich, The Routledge Companion to Strategic
Khilji, E and Wang, X (2006) ‘Intended’ and Human Resource Management, Abingdon,
‘implemented’ HRM: the missing linchpin in Routledge, pp 3–13
strategic human resource management research, Sung, J and Ashton, D (2005) High Performance Work
International Journal of Human Resource Practices: Linking strategy and skills to performance
Management, 17 (7), pp 1171–89 outcomes, DTI in association with CIPD, available
Kohn, A (1993) Why incentive plans cannot work, at http://www.cipd.co.uk/subjects/corpstrtgy/
Harvard Business Review, September–October, Thompson, M (2002) High Performance Work
pp 54–63 Organization in UK Aerospace, London, The
Nishii, L, Lepak, D and Schneider, B (2008) Employee Society of British Aerospace Companies
attributions of the ‘why’ of HR practices: their Thompson, M and Heron, P (2005) Management
effects on employee attitudes and behaviours, and capability and high performance work
customer satisfaction, Personnel Psychology, 61 organization, International Journal of Human
(3), pp 503–45 Resource Management, 16 (6), pp 1029–48
Chapter 6 | HRM and Performance 75
Torrington, D P and Hall, L (1991) Personnel and patient mortality in acute hospitals,
Management: A new approach, Englwood Ciffs International Journal of Human Resource
NJ, Prentice Hall Management, 13 (8), pp 1299–310
Ulrich, D (1997) Human Resource Champions, Woodrow, C and Guest, D E (2014) When ‘good’ HR
Boston, MA, Harvard Business School Press gets bad results: a case of failure to implement
UKCES (2014) UK Commission’s Employer Skills policies to prevent bullying and harassment, Human
Survey 2013: UK results, Wath-upon-Dearne: UKCE Resource Management Journal, 24 (1), pp 38–56
US Department of Labor (1993) High Performance Wright P M, Gardner, T M, and Moynihan, I M (2005)
Work Practices and Work Performance, The relationship between HR practices and firm
Washington, DC, US Government Printing Office performance: Examining the causal order, Human
Vanhala S and Tuomi, K (2006) HRM, company Resource Management Journal, 58 (2), pp 409–46
performance and employee wellbeing, Wright, P M and Nishii, L H (2007) Strategic HRM
Management Review, 17 (3), pp 241–55 and organizational behaviour: Integrating multiple
West, M A, Borrill, C S, Dawson, C, Scully, J, Carter, levels of analysis, Working Paper 06-05, Ithica NY,
M, Anclay, S, Patterson, M and Waring, J (2002) Cornell University
The link between the management of employees
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
78 Part 1 | Fundamentals of Human Resource Management
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).
Chapter 7 | International HRM 79
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
Chapter 7 | International HRM 81
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
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
Chapter 7 | International HRM 83
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
●● 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.
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.
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.
88 Part 1 | Fundamentals of Human Resource Management
References
Bartlett, C A and Ghoshal, S (2002) Managing Across International Journal of Human Resource
Borders: The transnational solution, Boston, MA, Management, 22 (10), pp 2167–84
Harvard Business School Press Leblanc B (2001) European competitiveness – some
Brewster, C, Sparrow, P and Harris, H (2005) Towards guidelines for companies, in International HRM,
a new model of globalizing HRM, The International ed M H Albrecht, Blackwell, Oxford
Journal of Human Resource Management, 16 (6), Lee, L and Donohue, R (2012) The construction and
pp 949–70 validation of a measure of expatriate job
Brewster, C and Suutari, V (2005) Global HRM: performance, International Journal of Human
Aspects of a research agenda, Personnel Review, Resource Management, 23 (6), pp 1197–215
34, pp 5–21 Mellahi, K and Collings, D G (2010) The barriers to
Briscoe, D, Schuler, R and Tarique (2012) International effective global talent management: the example of
Human Resource Management, 4th edn, New York, corporate elites in MNEs, Journal of World
Routledge Business, 45, pp 143–44
Dowling, P J, Festing, M and Engle, A D (2008) Paik, Y and Ando, N (2011) MNC’s competitive
International Human Resource Management, strategies, experiences, and staffing policies for
5th edn, Andover, Cengage Learning EMEA foreign affiliates, International Journal of Human
Festing, M and Eidems, J (2011) A process Resource Management, 22 (15), pp 3003–19
perspective on transnational HRM systems – a Perkins, S (2006) Guide to International Reward and
dynamic capability-based analysis, Human Recognition, London, CIPD
Resource Management Review, 21, pp 162–73 Ready, D A and Conger, J A (2007) Make your
Frenkel, S and Peetz, D (1998) Globalization and company a talent factory, Harvard Business Review,
industrial relations in East Asia: A three-country June, pp 69–77
comparison, Industrial Relations, 3, pp 282–310 Reilly, P and Williams, T (2012) The challenges of
Haas, H and Nüesch, S (2012) Are multinational teams global HR: one way to go? People Management,
more successful? International Journal of Human September, pp 28–31
Resource Management, 23 (15), pp 3105–13 Sparrow, P, Brewster, C and Harris, H (2004)
Isidor, R, Scwens, C and Kabst, R (2011) Human Globalizing Human Resource Management,
resource management and early internationalization: London, Routledge
is there a leapfrogging in international staffing?
Chapter 7 | International HRM 89
Sparrow, P, Schuler, R S and Jackson, S E (1994) Tarique, I and Caligiri, P (1995) Training and
Convergence or divergence: human resource development of international staff, in (eds) A W
practices and policies for competitive advantage Herzorg and J V Ruyssevelde, International Human
worldwide, International Journal of Human Resource Management, London, Sage Publications
Resource Management, 5 (2), pp 267–99 Ulrich, D (1998) A new mandate for human
Sparrow, P, Scullion, H and Farndale, E (2011) Global resources, Harvard Business Review, January–
talent management: new roles for the corporate February, pp 124–34
HR function?, in H Scullion and D G Collings White, R (2005) A strategic approach to building a
(eds) Global Talent Management, London, consistent global rewards program, Compensation &
Routledge, pp 40–55 Benefits Review, July–August, pp 23–40
90
PART II
Delivering HRM
PA R T I I CO N T E N T S
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
96 Part 2 | Delivering HRM
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
Chapter 8 | The Role of the HR Function 97
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:
Chapter 8 | The Role of the HR Function 99
CASE STUDIES
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 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
Chapter 8 | The Role of the HR Function 101
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
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.
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.
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.
References
Arrowsmith, J and Parker, J (2013) The meaning of in (eds) J Paauwe, D E Guest, P M Wright, HRM
employee engagement for the values and roles of and Performance, Chichester, Wiley, pp 80–96
the HRM function, The International Journal of Guest, D E and Clinton, M (2007) Human Resource
Human Resource Management, 24 (14), Management and University Performance,
pp 2692–712 London, Leadership Foundation for Higher
Barney, J B and Wright, P M (1998) On becoming a Education
strategic partner: the role of human resources in Guthrie, J P, Flood, P C, Liu, W, MacCurtain, S and
gaining competitive advantage, Human Resource Armstrong, C (2011) Big hat no cattle? The
Management, 37 (1), pp 31−46. relationship between use of high performance
Becker, B E and Huselid, M A (1998) High work systems and managerial perceptions of HR
performance work systems and firm performance: departments, The International Journal of Human
a synthesis of research and managerial Resource Management, 22 (8), pp 1672–85
implications, Research on Personnel and Human Hammonds, K H (2005) Why we hate HR,
Resource Management, 16, pp 53–101 Leadership Excellence, 23 (2), pp 40–47
Boroughs, A (2015) Centres of Expertise, in CIPD Hesketh, A and Hird, M (2010) Using relationships
(2015) Changing HR Operating Models [online] between leaders to leverage more value from
https://www.cipd.co.uk/knowledge/strategy/hr/ people: building a golden triangle, in (eds) P
operating-models(archived at https://perma. Sparrow, A Hesketh, M Hird and C Cooper,
cc/8WDX-9JM9) [accessed 14 January 2019] Leading HR, Basingstoke, Palgrave Macmillan,
Chartered Institute of Personnel and Development pp 103–21
(2007) The Changing HR Function, London, CIPD Hird, M, Sparrow, P and Marsh, C (2010) HR
Chartered Institute of Personnel and Development structures: are they working?, in (eds) P Sparrow,
(2010) Next Generation HR, London, CIPD A Hesketh, M Hird, and C Cooper, Leading HR,
Francis, H and Keegan, A (2006) The changing face Basingstoke, Palgrave Macmillan, pp 23–45
of HRM: in search of balance, Human Resource Hirsh, W (2008) What do people want from you?
Management Journal, 16 (3), pp 231–49 People Management, 18 September, pp 23–26
Graham M E and Tarbell L M (2006) The importance Holley, N (2009) HR Models: Lessons from best
of the employee perspective in the competency practice, Henley, Henley Business School [online]
development of HR professionals, Human http://www.dphu.org/uploads/attachements/books/
Resource Management, 45 (3), pp 337–55 books_5085_0.pdf (archived at https://perma.
Gratton, L (2003) The Humpty Dumpty effect: a view cc/3VYU-TC9W) [accessed 26 February 2013]
of a fragmented HR function, People Management, Hope-Hailey, V, Gratton, L, McGovern, P, Stiles, P and
5 January, p 18 Truss, C (1997) A chameleon function? HRM in the
Guest, D E and Bos-Nehles, A (2013) HRM and ’90s, Human Resource Management Journal, 7 (3),
performance: the role of effective implementation, pp 5–18
104 Part 2 | Delivering HRM
IDS (2010) HR Function Survey, HR Study 928, Sisson, K (1990) Introducing the Human Resource
October, London, IDS Management Journal, Human Resource
Johnson, C (1999) Changing shapes: trends in human Management Journal, 1 (1), pp 1–11
resource reorganizations, HR Magazine, 44 (3), Tyson, S (1987) The management of the personnel
pp 40–48 function, Journal of Management Studies, 24 (5),
Lawler, E E and Mohrman, S A (2003) What does it pp 523–32
take to make it happen? Human Resource Ulrich, D (1997) Human Resource Champions,
Planning, 26 (3), pp 15–29 Boston, MA, Harvard Business School Press
Marlow, S, Taylor, S and Thompson, A (2010) Ulrich, D (1998) A new mandate for human
Informality and formality in medium sized resources, Harvard Business Review, January–
companies: contestation and synchronization, February, pp 124–34
British Journal of Management, 21, pp 954–66 Ulrich, D and Brockbank, W (2005) The HR Value
Miller, J (2015) What does the future of HR in an Proposition, Cambridge, MA, Harvard Press
SME look like? London, CIPD Wright, P M, Dunford, B B and Snell, S A (2001)
Porter, M E (1985) Competitive Advantage: Creating Human resources and the resource-based view of
and Sustaining Superior Performance, New York, the firm, Journal of Management, 27 (6),
The Free Press pp 701–21
Reilly, P (2007) Facing up to the facts, People XpertHR(2018) Survey of HR roles and
Management, 20 September, pp 43–45 responsibilities [online] https://www.xperthr.co.uk/
Sheehan, C, De Cieri, H and Cooper, C (2014) hr-benchmarking/survey/879/hr-roles-and-
Exploring the power dimensions of the human responsibilities-2018.aspx (archived at https://
resource function, Human Resource Management perma.cc/CF44-FQAA) [accessed 12 June 2018]
Journal, 24 (2), pp 193–210
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
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.
108 Part 2 | Delivering HRM
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.
110 Part 2 | Delivering HRM
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
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;
Chapter 9 | The Role of HR Professionals 111
●● 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.
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.
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)
Chapter 9 | The Role of HR Professionals 117
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.
118 Part 2 | Delivering HRM
References
Boroughs, A (2015) The future is ‘centres of expertise’ Brockbank, W, Ulrich, D and Beatty, D (1999) HR
in CIPD, Changing Operating Models, pp 8–11 professional development: creating the future
[online] http://www.cipd.co.uk/binaries/changing- creators at the University of Michigan Business
operating-models.pdf (archived at https://perma. School, Human Resource Management, 38,
cc/3RHG-EHXJ) [accessed 17 October 2015] Summer, pp 111–17
Chapter 9 | The Role of HR Professionals 119
Brown, D, Hirsh, W and Reilly, P (2019) Strategic relationship between the use of high performance
Human Resource Management: case studies and work systems and managerial perceptions of HR
conclusions: from HR strategy to strategic people departments, The International Journal of Human
management [online] https://www.employment- Resource Management, 22 (8), pp 1672–85
studies.co.uk/resource/strategic-human-resource- Hardman, P and Mookherjee, D (2015) How to make
management-practice-case-studies-and-conclusions a restructuring go smoothly, People Management,
(archived at https://perma.cc/DMN2-VEE4) November, p 58
[accessed 20 April 2019] Hirsh, W (2008) What do people want from you?
Caldwell, R (2001) Champions, adapters, consultants People Management, 18 September, pp 23–26
and synergists: the new change agents in HRM, Holley, N (2015) ‘You can’t put in what God left out’
Human Resource Management Journal, 11 (3), Not everyone can be a strategic HR business
pp 39–52 partner, in CIPD, Changing HR Operating Models,
Caldwell, R (2004) Rhetoric, facts and self-fulfilling pp 12–14 [online] http://www.cipd.co.uk/binaries/
prophesies: exploring practitioners’ perceptions of changing-operating-models.pdf (archived at
progress in implementing HRM, Industrial https://perma.cc/3RHG-EHXJ) [accessed 16
Relations Journal, 35 (3), pp 196–215 October 2015]
Chartered Institute of Personnel and Development Hope-Hailey, V, Farndale, E and Truss, C (2005) The
(2002) Employment Law: Survey report, London, HR department’s role in organizational
CIPD performance, Human Resource Management
Chartered Institute of Personnel and Development Journal, 15 (3), pp 49–66
(2013) HR Profession Map [online] http://www. Keegan, A and Francis, H (2010) Practitioner talk:
cipd.co.uk/hr-profession-map-download.aspx the changing textscape of HRM and emergence of
(archived at https://perma.cc/EVH7-GGUD) HR business partnership, The International
[accessed 25 January 2013] Journal of Human Resource Management, 21 (6),
Chartered Institute of Personnel and Development pp 873–98
(2015a) Business Partnering [online] http:// Marchington, M (1995) Fairy tales and magic wands:
www.cipd.co.uk/hr-resources/factsheets/ new employment practices in perspective,
hr-business-partnering.aspx (archived at https:// Employee Relations, Spring, pp 51–66
perma.cc/TT8B-PL8V) [accessed 17 October Parkes, C and Davis, A J (2013) Ethics and social
2015] responsibility – do HR professionals have ‘the
Chartered Institute of Personnel and Development courage to challenge’ or are they set to be permanent
(2015b) From Best to Good Practice HR: ‘bystanders’? International Journal of Human
Developing principles for the profession [online] Resource Management, 23 (12), pp 2411–34
http://www.cipd.co.uk/hr-resources/research/ People Management (2018) HR Professionals, June,
best-good-practice-hr-developing-principles- pp 28–33
profession.aspx [accessed 28 December 2015] Pritchard, K (2010) Becoming an HR strategic
Chartered Institute of Personnel and Development partner: tales of transition, Human Resource
(2018) Profession Map [online] https:// Management Journal, 20 (2), pp 175–88
peopleprofession.cipd.org/profession-map/ Reilly, P (2015) HR business partners: yes please or
core-behaviours (archived at https://perma.cc/ no thanks? http://www.employment-studies.co.uk/
QH7W-242P) [accessed 15 January 2019] system/files/resources/files/mp110.pdf (archived at
Drucker, P (1955) The Practice of Management, https://perma.cc/HA6C-T7DK) [accessed 28
London, Heinemann December 2015]
Farndale, E and Brewster, C (2005) In search of Skinner, W (1981) Big hat no cattle: managing human
legitimacy: personnel management associations resources, Harvard Business Review, September–
worldwide, Human Resource Management October, pp 106–14
Journal, 15 (3), pp 33–48 Sparrow, P, Hesketh, A, Hird, M, Marsh, C and Balain, S
Guest, D E and King, Z (2004) Power, innovation and (2010) Using business model change to tie HR into
problem-solving: the personnel managers’ three strategy: reversing the arrow, in (eds) P Sparrow, A
steps to heaven? Journal of Management Studies, Hesketh, M Hird, and C Cooper, Leading HR,
41 (3), pp 401–23 Basingstoke, Palgrave Macmillan, pp 68–89
Guthrie, J P, Flood, P C, Liu, W, MacCurtain, S and Sparrow, P, Hird, M and Cooper, C (2015) Do we
Armstrong, C (2011) Big hat no cattle? The need HR? Basingstoke, Palgrave Macmillan
120 Part 2 | Delivering HRM
Syrett, M (2006) Four Reflections on Developing a Ulrich, D and Beatty, D (2001) From partners to
Human Capital Measurement Capability: What’s players: extending the HR playing field, Human
the future for human capital? London, CIPD Resource Management, 40 (4), pp 293–307
Thurley, K (1981) Personnel management: a case for Ulrich, D and Brockbank, W (2005) The HR Value
urgent treatment, Personnel Management, August, Proposition, Cambridge, MA, Harvard Press
pp 24–29 Watson, T (1996) Management, Organisation and
Tyson, S and Fell, A (1986) Evaluating the Personnel Employment Strategy, London, Routledge
Function, London, Hutchinson Wright, P M, Snell, S A and Jacobsen, H H (2004)
Ulrich, D (1998) A new mandate for human Current approaches to HR strategies: inside-out
resources, Harvard Business Review, January– versus outside-in, Human Resource Planning, 27
February, pp 124–34 (4), pp 36–46
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,
122 Part 2 | Delivering HRM
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):
124 Part 2 | Delivering HRM
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)
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.
126 Part 2 | Delivering HRM
●● 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
wellbeing [online] https://www.cipd.co.uk/Images/ on the line? Human Resource Management
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
perma.cc/3V5N-3P36)[accessed 12 July 2019] causal chain: analysis and evidence, Human
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
Guest, D E and Bos-Nehles, A (2013) HRM and situations [online] http://www.employment-
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]
Guest, D E and King, Z (2004) Power, innovation and Truss, K (2001) Complexities and controversies in
problem-solving: the personnel managers’ three linking HRM with organisational outcomes,
steps to heaven? Journal of Management Studies, Journal of Management Studies, 38 (8),
41 (3), pp 401–23 pp 1121–49
Harris, L (2001) Rewarding employee performance: Vermeeren, B (2010) Diversity in HRM
line managers’ values, beliefs and perspectives, implementation and its effect on performance,
International Journal of Human Resource Paper presented at the EGPA conference,
Management, 12 (7), pp 1182–92 September 8–10, Toulouse
Hope-Hailey, V, Gratton, L, McGovern, P, Stiles, P Woodrow, C and Guest, D E (2011) When ‘good’ HR
and Truss, C (1997) A chameleon function? HRM gets bad results: a case of failure to implement
in the ’90s, Human Resource Management policies to prevent bullying and harassment, Human
Journal, 7 (3), pp 5–18 Resource Management Journal, 24 (1), pp 38–56
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
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)
Sources of information
Pau se for th ou gh t
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
132 Part 3 | Human Resource Management Processes
F I G U R E 11.1 A
model of the inter-relationships between the components of
evidence-based HRM
Review
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
Chapter 11 | Evidence-based HRM 133
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/
Management [online] https://www.cebma.org/ where-is-evidence-in-the-future-hr-profession
wp-content/uploads/Evidence-Based-Practice-The- (archived at https://perma.cc/AK3V-DVXB)
Basic-Principles.pdf (archived at https://perma.cc/ [accessed 12 July 2019]
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
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
Level
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.
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
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 )
Chapter 12 | HR Analytics 141
TA B L E 12.2 (Continued)
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-
142 Part 3 | Human Resource Management Processes
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.
Engagement
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
144 Part 3 | Human Resource Management Processes
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:
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
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
Chapter 13 | e-HRM 149
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).
150 Part 3 | Human Resource Management Processes
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.
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.
Chapter 13 | e-HRM 151
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)
154 Part 3 | Human Resource Management Processes
●● 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
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.
Chapter 14 | Artificial Intelligence and HRM 155
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.
156 Part 3 | Human Resource Management Processes
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.
Chapter 14 | Artificial Intelligence and HRM 157
●● 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),
160 Part 3 | Human Resource Management Processes
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.
162 Part 3 | Human Resource Management Processes
●● 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
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.
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 )
166 Part 3 | Human Resource Management Processes
TA B L E 16.1 (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.
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.
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.
Chapter 16 | Competency-based HRM 167
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-
Pau se for th ou gh t
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
168 Part 3 | Human Resource Management Processes
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.
●● 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
172 Part 3 | Human Resource Management Processes
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
Pa us e for t houg ht
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
174 Part 3 | Human Resource Management Processes
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.
Chapter 17 | The Ethical Dimension of HRM 175
●● 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.
Chapter 17 | The Ethical Dimension of HRM 177
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?
178 Part 3 | Human Resource Management Processes
●● 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’.
Chapter 17 | The Ethical Dimension of HRM 179
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
References
Adams, J S (1965) Injustice in social exchange, in (ed) Purcell and P Wright, The Oxford Handbook of
L Berkowitz, Advances in Experimental Human Resource Management, Oxford, Oxford
Psychology, New York, Academic Press University Press, pp 599–619
Bauman, Z and Tester, K (2001) Conversations with Lee, W G (1994) A conversation with Herb Kelleher,
Zygmunt Bauman, Cambridge, Polity Press Organizational Dynamics, 23 (2), pp 64–74
Beauchamp, T L and Bowie, N E (1983) Ethical Legge, K (1998) The morality of HRM, in (eds) C
Theory and Business, 2nd edn, Englewood Cliffs, Mabey, D Skinner and T Clark, Experiencing
NJ, Prentice Hall Human Resource Management, London, Sage,
Boxall, P F, Purcell, J and Wright, P (2007) Human pp 14–32
resource management: scope, analysis and Leventhal, G S (1980) What should be done with
significance, in (eds) P Boxall, J Purcell and P equity theory?, in (eds) G K Gergen, M S
Wright, The Oxford Handbook of Human Greenberg and R H Willis, Social Exchange:
Resource Management, Oxford, Oxford University Advances in theory and research, New York,
Press, pp 1–18 Plenum
Clegg, S, Kornberger, M and Rhodes, C (2007) Parkes, C and Davis, A J (2013) Ethics and social
Business ethics as practice, British Journal of responsibility – do HR professionals have ‘the
Management, 18 (2), pp 107–22 courage to challenge’ or are they set to be
Derrida, J (1992) Forces of law: the mystical permanent ‘bystanders’? International Journal of
foundation of authority, in (eds) D Cornell, M Human Resource Management, 23 (12),
Rosenfeld and D G Carlson, Deconstruction and pp 2411–34
the Possibility of Justice, London, Routledge, Petrick, J A and Quinn, J F (1997) Management
pp 3–68 Ethics: Integrity at work, London, Sage
Foucault, M (1972) The Archaeology of Knowledge Rawls, J (1973) A Theory of Justice, Oxford, Oxford
and the Discourse on Language, New York, University Press
Pantheon Books Sandel, M J (2010) Justice: What’s the right thing to
Foucault, M (1997) Ethics, Subjectivity and Truth: do? London, Penguin Books
Essential works of Foucault, 1954–1984, ed P Schein, E (1993) How can organizations learn faster?
Rabinow, New York, The New Press The challenge of entering the green room, Sloan
Freeman, R E (1984) Strategic Management: A Management Review, 34 (2), pp 85–92
stakeholder perspective, Englewood Cliffs, NJ, Tyler, T R and Bies, R J (1990) Beyond formal
Prentice Hall procedures: the interpersonal context of
Freeman, R E (1994) The politics of stakeholder procedural justice, in (ed) J S Carrol, Applied
theory: some future directions, Business Ethics Social Psychology and Organizational Settings,
Quarterly, 4 (4), pp 409–21 Hillsdale, NJ, Lawrence Erlbaum
Hamlin, B, Keep, J and Ash, K (2001) Organizational Winstanley, D and Stuart-Smith, K (1996) Policing
Change and Development: A reflective guide for performance: the ethics of performance
managers, London, FT Pitman management, Personnel Review, 25 (6), pp 66–84
Harrison, R (2009) Learning and Development, 5th Winstanley, D and Woodall, J (2000a) Introduction,
edn, London, CIPD in (eds) D Winstanley and J Woodall, Ethical
HR Magazine (2010) Interview with Neil Roden, Issues in Contemporary Human Resource
former HR Director of RBS [online] http://www. Management, Basingstoke, Macmillan, pp 3–22
hrmagazine.co.uk/hr/opinion/105196/interview- Winstanley, D and Woodall, J (2000b) The ethical
neil-roden-hr-director-royal-bank-scotland dimension of human resource management,
(archived at https://perma.cc/SSL9-L4C9) Human Resource Management Journal, 10 (2),
[accessed 6 July 2013] pp 5–20
Jones, T M (1991) Ethical decision making by Woodall, J and Winstanley, D (2000) Concluding
individuals in organizations: an issue-contingent comments: ethical frameworks for action, in (eds)
model, Academy of Management Review, 16 (2), D Winstanley and J Woodall, Ethical Issues in
pp 366–95 Contemporary Human Resource Management,
Kochan, T A (2007) Social legitimacy of the HRM Basingstoke, Macmillan, pp 3–22
profession: a US perspective, in (eds) P Boxall, J
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)
182 Part 3 | Human Resource Management Processes
C A S E S T U DY
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
‘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.
References
Baron, D (2001) Private policies, corporate policies CIPD (2003) Corporate Social Responsibility and
and integrated strategy, Journal of Economics and HR’s Role, London, CIPD
Management Strategy, 10 (1), pp 7–45 CIPD (2009) Corporate Social Responsibility,
Business for Social Responsibility (2007) Annual London, CIPD
Report [online] https://www.bsr.org/en/ (archived CSR Academy (2006) The CSR Competency
at https://perma.cc/4MZF-ZES4) [accessed 5 Framework, Norwich, Stationery Office
October 2008] Freeman, R E (1984) Strategic Management: A
Business in the Community (2007) Benchmarking stakeholder perspective, Englewood Cliffs, NJ,
Responsible Business Practice [online] bitc.org.uk Prentice Hall
(archived at https://perma.cc/MBG4-PRDC) Friedman, M (1962) Capitalism and Freedom,
[accessed 5 October 2008] Chicago, IL, University of Chicago Press
186 Part 3 | Human Resource Management Processes
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
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
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
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 )
192 Part 4 | Organization
TA B L E 19.1 (Continued)
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’.
Chapter 19 | Organizational Behaviour 193
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
Chapter 19 | Organizational Behaviour 195
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
196 Part 4 | Organization
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.
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
Chapter 19 | Organizational Behaviour 197
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
Pa us e for t houg ht
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,
198 Part 4 | Organization
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
Chapter 19 | Organizational Behaviour 199
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
200 Part 4 | Organization
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.
Chapter 19 | Organizational Behaviour 201
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
202 Part 4 | Organization
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.
Chapter 19 | Organizational Behaviour 203
References
Argyle, M (1989) The Social Psychology of Work, Burt, C (1954) The differentiation of intellectual
Harmondsworth, Penguin ability, British Journal of Educational Psychology,
Argyris, C (1957) Personality and Organization, New 24, pp 45–67
York, Harper & Row Clarke, N (2007) Be selective when choosing
Barnard, C (1938) The Functions of an Executive, emotional intelligence training, People
Boston, MA, Harvard University Press Management, 3 May, p 47
Bertalanffy, L Von (1968) General System Theory, Costa, P and McRae, R R (1992) NEO PI-R:
New York, Braziller George Professional manual, Odessa, FL, Psychological
Bowen, D E and Ostroff, C (2004) Understanding Assessment Resources
HRM-firm performance linkages: the role of the Deal, T and Kennedy, A (2000) Corporate Cultures,
‘strength’ of the HRM system, Academy of New York, Perseus Books
Management Review, 29 (2), pp 202–21 Denison, D R (1996) What is the difference between
Burns, T and Stalker, G (1961) The Management of organizational culture and organizational climate?
Innovation, London, Tavistock A native’s point of view on a decade of paradigm
206 Part 4 | Organization
wars, Academy of Management Review, 21 (3), Kelley, H H (1973) The process of causal attribution,
pp 619–54 American Psychologist, 28 (2), pp 107–28
Digman, J M (1990) Personality structure: emergence Lawrence, P R and Lorsch, J W (1969) Developing
of the five-factor model, Annual Review of Organizations, Reading, MA, Addison-Wesley
Psychology, 41, pp 417–40 Lewin, K (1947) Frontiers in group dynamics, Human
Drucker, P (1955) The Practice of Management, Relations, 1 (1), pp 5–42
London, Heinemann Likert, R (1961) New Patterns of Management, New
Dulewicz, V and Higgs, M (1999) The seven York, Harper & Row
dimensions of emotional intelligence, People Locke, E A (2005) Why emotional intelligence is an
Management, 28 October, p 53 invalid concept, Journal of Organizational
Eldridge, J and Crombie, A (1974) The Sociology of Behavior, 26 (4), pp 425–31
Organizations, London, Allen & Unwin Mayer, J D, Salovey, P and Caruso, D R (2008)
Emery, F E (1959) Characteristics of Socio-technical Emotional intelligence: new ability or eclectic
Systems, London, Tavistock Publications traits? American Psychologist, 63 (6),
Fayol, H (1916) Administration Industrielle et pp 503–17
General, translated by C Storrs (1949) as General McGregor, D (1960) The Human Side of Enterprise,
and Industrial Management, London, Pitman New York, McGraw-Hill
French, W L, Kast, F E and Rosenzweig, J E (1985) Miller, E and Rice, A (1967) Systems of Organization,
Understanding Human Behaviour in London, Tavistock
Organizations, Harper & Row, New York Mischel, W (1968) Personality and Assessment, New
Furnham, A and Gunter, B (1993) Corporate York, Wiley
Assessment, London, Routledge Nadler, D A and Tushman, M L (1980) A congruence
Ghoshal, S and Bartlett, C A (1995) Changing the model for diagnosing organizational behaviour, in
role of top management: beyond structure to (ed) R H Miles, Resource Book in Macro-
process, Harvard Business Review, January– organizational Behaviour, Santa Monica, CA,
February, pp 86–96 Goodyear Publishing, pp 30–49
Goleman, D (1995) Emotional Intelligence, New Northouse, P G (2006) Leadership: Theory and
York, Bantam practice, 4th edn, Thousand Oaks, CA, Sage
Goleman, D (2000) Leadership that gets results, Pascale, R (1990) Managing on the Edge, London,
Harvard Business Review, March–April, pp 78–90 Viking
Handy, C (1981) Understanding Organizations, Roethlisberger, F and Dickson, W (1939)
Harmondsworth, Penguin Books Management and the Worker, Cambridge, MA,
Harrison, M and Shirom, A (1999) Organizational Harvard University Press
Diagnosis and Assessment, Thousand Oaks, CA, Rousseau, D M (1988) The construction of climate in
Sage organizational research, in (eds) L C Cooper and I
Harrison, R (1972) Understanding your Robertson, International Review of Industrial and
organization’s character, Harvard Business Review, Organizational Psychology, Chichester, Wiley
September–October, pp 119–28 Salovey, P and Mayer, J D (1990) Emotional
Herzberg, F W, Mausner, B and Snyderman, B (1957) intelligence, Imagination, Cognition and
The Motivation to Work, New York, Wiley Personality, 9, pp 185–211
Higgs, M (2006) Change and its Leadership, New Schein, E H (1965) Organizational Psychology,
York, Rowland, Fisher, Lennox Consulting Englewood Cliffs, NJ, Prentice-Hall
Huczynski, A A and Buchanan, D A (2007) Schein, E H (1984) Coming to a new awareness of
Organizational Behaviour, 6th edn, Harlow, FT culture, Sloan Management Review, 25 (2), pp 1–15
Pitman Schein, E H (1990) Organizational culture, American
Ivancevich, J M, Konopaske, R and Matteson, M T Psychologist, 45, pp 109–19
(2008) Organizational Behaviour and Schmidt, F L and Hunter, J E (1998) The validity and
Management, 8th edn, New York, McGraw-Hill/ utility of selection methods in personnel
Irwin psychology: practical and theoretical implications
Jung, C (1923) Psychological Types, London, of 85 years of research findings, Psychological
Routledge Kegan Paul Bulletin, 124 (2), pp 262–74
Katz, D and Kahn, R (1966) The Social Psychology of Sloan, A P (1972) My Years with General Motors,
Organizations, New York, John Wiley New York, Anchor Books
Chapter 19 | Organizational Behaviour 207
Taylor, F W (1911) Principles of Scientific Vernon, P E (1961) The Structure of Human Abilities,
Management, New York, Harper London, Methuen
Toplis, J, Dulewicz, V and Fletcher, C (2004) Weber, M (1908) The Theory of Social and
Psychological Testing, London, Institute of Economic Organization, translated by A M
Personnel Management Henderson and T Parsons, 1947, Oxford, Oxford
Trist, E L, Higgin, G W, Murray, H and Pollock, A B University Press
(1963) Organizational Choice, London, Tavistock Woodward, J (1965) Industrial Organization,
Publications Oxford, Oxford University Press
Tuckman, B (1965) Development sequences in small Wright, D S and Taylor, A (1970) Introducing
groups, Psychological Bulletin, 63, pp 123–56 Psychology, Harmondsworth, Penguin
Urwick, L F (1947) Dynamic Administration,
London, Pitman
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
210 Part 4 | Organization
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
Pau se for th ou gh t
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 organiza- tions... 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
Chapter 20 | Organization Design 211
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:
212 Part 4 | Organization
–– 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)
Pa us e fo r t houg ht
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.
Pau se for th ou gh t
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,
Chapter 20 | Organization Design 213
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?
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
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
Chapter 21 | Work Design 219
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’
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.
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)
220 Part 4 | Organization
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 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.’
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)
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.’
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.
224 Part 4 | Organization
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.
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
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
226 Part 4 | Organization
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.
Chapter 22 | Job Design 227
Pa us e for t houg ht
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)
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.
Chapter 22 | Job Design 229
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.
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;
230 Part 4 | Organization
●● 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.
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
CIPD (2018) Understanding and Measuring Job Herzberg, Management Review, 60, pp 2–15
Quality [online] https://www.cipd.co.uk/ Eurofound (2013) Quality of Employment
knowledge/work/job-quality-value-creation/ Conditions and Employment Relations in Europe,
measuring-job-quality-report (archived at https:// Dublin, European Foundation for the
perma.cc/X8UJ-FHS3) [accessed 7 February 2019] Improvement of Living and Working Conditions
Clark, A E (2015) What makes a good job? Job Fairlie, P (2011) Meaningful work, employee
quality and job satisfaction [online] https://wol.iza. engagement and other key employee outcomes:
org/articles/what-makes-good-job-job-quality-and- implications for human resource development,
job-satisfaction/long (archived at https://perma.cc/ Advances in Developing Human Resources, 13 (4),
NJ45-YEU4) [accessed 15 May 2019] pp 508–25
Crawford, E R, LePine, J A and Rich, B L (2010) Findlay, P, Kalleberg, A L and Warhurst, C (2013) The
Linking job demands and resources to employee challenge of job quality, Human Relations, 66 (4),
engagement and burnout: a theoretical extension pp 441–51
and meta-analytic test, Journal of Applied Gallie, D (2007) Production regimes, employment
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
determination of behavior, Psychological Enquiry, Hackman, J R and Oldham, G R (1974) Motivation
11 (4), pp 227–68 through the design of work: test of a theory,
Chapter 22 | Job Design 231
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
motivate employees? Harvard Business Review, Wrzesniewski, A and Dutton, J E (2001) Crafting a
January–February, pp 109–20 job: revisioning employees as active crafters of
Wall, T D and Clegg, C (1998) Job design, in (ed) N their work, Academy of Management Review, 26
Nicholson, Blackwell’s Encyclopaedic Dictionary (2), pp 179–201
of Organizational Behaviour, Oxford, Blackwell, Wilson, N A (1973) On the Quality of Working Life,
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.
234 Part 4 | Organization
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
236 Part 4 | Organization
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
Chapter 23 | Organization Development 237
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)
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:
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.
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.
(continued)
242 Part 4 | Organization
TA B L E 23.1 (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.
References
Anthony, P D (1990) The paradox of managing Legge, K (1995) Human Resource Management:
culture or ‘he who leads is lost’, Personnel Review, Rhetorics and realities, London, Macmillan
19 (4), pp 3–8 Lewin, K (1947) Frontiers in group dynamics, Human
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
Management Practice, 2nd edn, London, Kogan Likert, R (1961) New Patterns of Management,
Page New York, Harper & Row
Beckhard, R (1969) Organization Development: Manzini, A O (1988) Organizational Diagnosis,
Strategy and models, Reading, MA, Addison- New York, AMACOM
Wesley Marsh, C, Sparrow, P and Hird, M (2010) Improving
Beer, M (1980) Organization Change and organization design: the new priority for HR
Development: A systems view, Santa Monica, CA, directors, in (eds) P Sparrow, A Hesketh, M Hird
Goodyear and C Cooper, Leading HR, Basingstoke, Palgrave
Bennis, W G (1969) Organization Development: Its Macmillan, pp 136–61
nature, origin and prospects, Reading, MA, Maslow, A (1954) Motivation and Personality,
Addison-Wesley New York, Harper & Row
Buchanan, D and Huczynski, A (2007) Mayo, E (1933) The Human Problems of an
Organizational Behaviour, Harlow, FT Prentice- Industrial Civilisation, London, Macmillan
Hall McGregor, D (1960) The Human Side of Enterprise,
Burke, W W (1995) Organization development: then, New York, McGraw-Hill
now and tomorrow, Organization Development McLean, A (1981) Organization development: a case
Journal, 13 (4), pp 7–17 of the emperor’s new clothes? Personnel Review, 4
Caldwell, R (2003) Models of change agency: a (1), pp 3–14
fourfold classification, British Journal of Roethlisberger, F and Dickson, W (1939)
Management, 14 (2), pp 131–42 Management and the Worker, Cambridge, MA,
CIPD (2011) Developing Organization Culture: Six Harvard University Press
case studies, London, CIPD Rowlandson, P (1984) The oddity of OD,
CIPD (2018) Organization Development Fact Sheet Management Today, November, pp 91–93
London, CIPD Ruona, W E A and Gibson, S K (2004) The making of
Cooke, R and Lafferty, J (1989) Organizational twenty-first century HR: the convergence of HRM,
Culture Inventory, Plymouth, MI, Human HRD and OD, Human Resource Management, 43
Synergistic (1), pp 49–66
Cummings, T G and Worley, C G (2005) Strauss, G (1976) Organization development, in (ed)
Organization Development and Change, Mason, R Dubin, Handbook of Work, Organization and
OH, South Western Society, Chicago, IL, Rand MacNally
Harrison, R (1972) Understanding your Ulrich, D and Lake, D (1990) Organizational
organization’s character, Harvard Business Review, Capability: Competing from the inside out,
5, pp 119–28 New York, Wiley
Herzberg, F, Mausner, B and Snyderman, B (1957) Weidner, C K (2004) A brand in dire straits:
The Motivation to Work, New York, Wiley organization development at sixty, Organization
HR Magazine (2007) Organization development: a Development Journal, 22 (2), pp 37–47
strategic HR tool, 52 (9), pp 1–10 Worley, C, Hitchin, D and Ross, W (1996) Integrated
Koys, D and De Cotiis, T (1991) Inductive measures Strategic Change: How organization development
of organizational climate, Human Relations, 44, builds competitive advantage, Reading, MA,
pp 265–85 Addison-Wesley
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
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.
248 Part 5 | Factors Affecting the Behaviour of People at Work
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.
Establish
goal
Take
Need
action
Attain
goal
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.’
252 Part 5 | Factors Affecting the Behaviour of People at Work
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)
Effort Performance
Probability that
Role
rewards depend
expectations
upon effort
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.
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.
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 )
Chapter 24 | Motivation 257
TA B L E 24.1 (Continued)
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
Chapter 24 | Motivation 259
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.
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 )
260 Part 5 | Factors Affecting the Behaviour of People at Work
TA B L E 24.2 (Continued)
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.
References
Adams, J S (1965) Injustice in social exchange, Alderfer, C (1972) Existence, Relatedness and
in (ed) L Berkowitz, Advances in Growth, New York, The Free Press
Experimental Psychology, New York, Allport, G (1954) The historical background of
Academic Press modern social psychology, in (ed) G Lindzey,
Chapter 24 | Motivation 261
Theoretical Models and Personality, Cambridge, theory: necessary and illuminating, Journal of
MA, Addison-Wesley Educational Psychology, 94 (3), pp 638–45
Arnold, J, Robertson, I T and Cooper, C L (1991) Herzberg, F (1966) Work and the Nature of Man,
Work Psychology, London, Pitman New York, Staple Press
Bandura, A (1977) Social Learning Theory, Herzberg, F (1968) One more time: how do you
Englewood Cliffs, NJ, Prentice-Hall motivate employees? Harvard Business Review,
Bandura, A and Cervone, D (1983) Self-evaluation January–February, pp 109–20
and self-efficacy mechanisms governing the Herzberg, F (1991) One more time, in (ed) John
motivational effects of goal systems, Journal of Gabarro, Managing People and Organizations,
personality and Social Psychology, 45 (5), Boston, MA, Harvard Business School
pp 1017–28 Publications
Behling, O and Starke, F A (1973) The postulates of Herzberg, F W, Mausner, B and Snyderman, B (1957)
expectancy theory, Academy of Management The Motivation to Work, New York, Wiley
Journal, 16 (3), pp 375–88 House, R J, Shapiro, H J and Wahba, M A (1974)
Boxall, P F and Purcell, J (2003) Strategy and Human Expectancy theory as a predictor of work
Resource Management, Basingstoke, Palgrave behaviour and attitude: a re-evaluation of
Macmillan empirical evidence, Decision Sciences, 5 (3),
Boxall, P F and Purcell, J (2016) Strategy and Human pp 481–506
Resource Management, 4th edn, Basingstoke, Huczynski A A and Buchanan D A (2007)
Palgrave Macmillan Organizational Behaviour, Basingstoke, FT
Brayfield, A H and Crockett, W H (1955) Employee Prentice Hall
attitudes and employee performance, Hull, C L (1943) Principles of Behavior, New York,
Psychological Bulletin, 52, pp 346–424 Appleton-Century-Crofts
Cameron, J, Banko, K M and Pierce, W D (2001) Hull, C (1951) Essentials of Behaviour, New Haven
Pervasive negative effects of rewards on intrinsic CT, Yale University Press
motivation: the myth continues, The Behavior Hunter, J E, Schmidt, F L and Judiesch, M K (1990)
Analyst, 24 (1), pp 1–44 Individual differences in output variability as a
Christen, M, Iyler, G and Soberman, D (2006) Job function of job complexity, Journal of Applied
satisfaction, job performance, and effort: a Psychology, 75 (1), pp 28–42
re-examination using agency theory, Journal of Jaques, E (1961) Equitable Payment, London,
Marketing, 70, pp 137–50 Heinemann
Csikszentmihályi, M (1990) Flow: The psychology of Katz, D, Maccoby, N and Morse, N C (1950)
optimal experience, New York, Harper & Row Productivity, Supervision and Morale among
Deci, E L, Koestner, R and Ryan, R M (1999) A Railway Workers, Ann Arbor, MI, University of
meta-analytic review of experiments examining the Michigan
effects of extrinsic rewards on intrinsic motivation, Katz, D, Maccoby, N, Gurin, G and Floor, L G (1951)
Psychological Bulletin, 25, pp 627–68 Productivity, Supervision and Morale in an Office
Deci, E L and Ryan, R M (1985) Intrinsic Motivation Situation, Ann Arbor, MI, University of Michigan
and Self-determination in Human Behaviour, Katz, D (1964) The motivational basis of
New York, Plenum organizational behaviour, Behavioural Science, 9,
Deci, E and Ryan, R (2000) The ‘what’ and ‘why’ of pp 131–36
goal pursuits: human needs and the self- Latham, G and Locke, E A (1979) Goal setting – a
determination of behavior, Psychological Enquiry, motivational technique that works, Organizational
11 (4), pp 227–68 Dynamics, Autumn, pp 68–80
Gerhart, B and Rynes, S L (2003) Compensation: Locke, E A and Latham, G (2004) What should
Theory, evidence and strategic implications, we do about motivation theory? Six
Thousand Oaks, CA, Sage recommendations for the twenty-first century,
Hackman, J R and Oldham, G R (1974) Motivation Academy of Management Review, 29 (3),
through the design of work: test of a theory, pp 398–403
Organizational Behaviour and Human Maslow, A (1954) Motivation and Personality,
Performance, 16 (2), pp 250–79 New York, Harper & Row
Harackiewicz, J M, Barron, P R, Pintrich, P R, Elliot, Mayo, E (1933) The Human Problems of an
A J and Thrash, T M (2002) Revision of goal Industrial Civilisation, London, Macmillan
262 Part 5 | Factors Affecting the Behaviour of People at Work
McClelland, D C (1961) The Achieving Society, Sandel, M (2012) The Moral Limits of Markets: What
New York, Van Nostrand money cannot buy, London, Allen Lane
Nadler, D A and Lawler, E E (1979: 217) Motivation Shields, J (2007) Managing Employee Performance
a diagnostic approach, in (eds) R M Steers and L and Reward, Port Melbourne, Cambridge
W Porter, Research in Organizational Behaviour, University Press
New York, McGraw-Hill Skinner, B F (1953) Science and Human Behavior,
Opsahl, R C and Dunnette, M D (1966) The role of New York, The Free Press
financial compensation in individual motivation, Spector, P E (1997) Job Satisfaction: Application,
Psychological Bulletin, 56, pp 94–118 assessment, causes and consequences (Vol 3),
Pink, D H (2009) Drive: The surprising truth about London, Sage
workplace motivation, New York, Riverhead Steers, R M, Mowday R T and Shapiro, D L (2004)
Books Call for papers: the future of work motivation
Pintrich, P R (2000) An achievement goal perspective theory, Academy of Management Review, 29 (3),
on issues in motivation technology, theory and pp 379–87
research, Contemporary Educational Psychology, Taylor, F W (1911) Principles of Scientific
25, pp 92–104 Management, New York, Harper (republished
Porter, L W and Lawler, E E (1968) Managerial Norton, 1967)
Attitudes and Performance, Homewood IL, Thorndike, E L (1911) Animal Intelligence, New
Irwin-Dorsey York, Macmillan
Roethlisberger, F and Dickson, W (1939) Vroom, V (1964) Work and Motivation, New York,
Management and the Worker, Cambridge, MA, Wiley
Harvard University Press Wahba, M A and Bridwell, L G (1979) Maslow
Rousseau, D M (2006) Is there such a thing as reconsidered: a review of research on the need
evidence-based management? Academy of hierarchy theory, in (eds) R M Sters and L W
Management Review, 31 (2), pp 256–69 Porter, Motivation and Work Behaviour,
New York, McGraw-Hill
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:
264 Part 5 | Factors Affecting the Behaviour of People at Work
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.
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.
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.
References
Appelbaum, E, Bailey, T, Berg, P and Kalleberg, A L Images/CLC/PDF/CLC12KADBP.pdf (archived at
(2000) Manufacturing Advantage: Why high https://perma.cc/7JJZ-LUJL) [accessed 13
performance work systems pay off, Ithaca, NY, September 2005]
ILR Press Cyert, R M and March, J G (1963) A Behavioural
Beer, M, Spector, B, Lawrence, P, Quinn Mills, D and Theory of the Firm, Englewood Cliffs, NJ,
Walton, R (1984) Managing Human Assets, Prentice-Hall
New York, The Free Press Guest, D E (1987) Human resource management and
Buchanan, L (2004) The things they do for love, industrial relations, Journal of Management
Harvard Business Review, December, pp 19–20 Studies, 24 (5), pp 503–21
Coopey, J and Hartley, J (1991) Reconsidering the Guest, D E (1990) HRM and the American dream,
case for organizational commitment, Human Journal of Management Studies, 27 (4),
Resource Management Journal, 1 (3), pp 18–31 pp 377–97
Corporate Executive Board (2004) Driving Performance Guest, D E (1991) Personnel management: the end of
and Retention through Employee Engagement orthodoxy, British Journal of Industrial Relations,
[online] www.corporateleadershipcouncil.com/ 29 (2), pp 149–76
270 Part 5 | Factors Affecting the Behaviour of People at Work
Kochan, T A and Dyer, L (1993) Managing Robinson, D, Perryman, S and Hayday, S (2004) The
transformational change: the role of human Drivers of Employee Engagement, Brighton,
resource professionals, International Journal of Institute for Employment Studies
Human Resource Management, 4 (3), pp 569–90 Salancik, G R (1977) Commitment and the control of
Kochan, T A and Osterman, P (1994) The Mutual organizational behaviour and belief, in (eds) B M
Gains Enterprise: Forging a winning partnership Straw and G R Salancik, New Directions in
among labour, management and government, Organizational Behaviour, Chicago, IL, St Clair
Boston, MA: Harvard University Press Press
Legge, K (1989) Human resource management: a Salanova, M, Agut, S and Peiro, J M (2005) Linking
critical analysis, in (ed) J Storey, New Perspectives organizational resources and work engagement to
in Human Resource Management, London, employee performance and customer loyalty: the
Routledge, pp 19–40 mediation of service climate, Journal of Applied
Macey, W H and Schneider, B (2008) The meaning of Psychology, 90, pp 1217–27
employee engagement, Industrial and Sisson, K (1994) Personnel management: paradigms,
Organizational Psychology, 1, pp 3–30 practice and prospects, in (ed) K Sisson, Personnel
Mangham, L L (1979) The Politics of Organizational Management, 2nd edn, Oxford, Blackwell,
Change, London, Associated Business Press pp 3–50
Mintzberg, H (1983) Power in and around Swailes, S (2002) Organizational commitment; a
Organizations, Englewood Cliffs, NJ, critique of the construct and measures,
Prentice-Hall International Journal of Management Reviews, 4
Mowday R (1998) Reflections on the study and (2), pp 155–78
relevance of organizational commitment, Human Walton, R E (1985a) Towards a strategy of eliciting
Resource Management Review, 8, pp 387–401 employee commitment based on principles of
Mowday, R, Porter, L and Steers, R (1982) Employee- mutuality, in (eds) R E Walton and P R Lawrence,
organization Linkages: The psychology of HRM Trends and Challenges, Boston, MA,
commitment, absenteeism and turnover, London, Harvard Business School Press, pp 35–65
Academic Press Walton, R E (1985b) From control to commitment in
Peccei, R, Vande Voorde, K and Van Veldhoven, M the workplace, Harvard Business Review,
(2013) HRM, well-being and performance, in (eds) March–April, pp 77–84
J Paauwe, D E Guest, P M Wright, HRM and Wellins, R and Concelman, J (2005) Personal
Performance, Chichester, Wiley, pp 15–45 Engagement: Driving growth at the see-level,
Purcell, J, Kinnie, K, Hutchinson, R, Rayton, B and www.ddiworld.com/pdf/ddipersonalengagement.
Swart, J (2003) Understanding the People and ar.pdf (archived at https://perma.cc/JG5R-SZYM)
Performance Link: Unlocking the black box, [accessed 29 April 2005]
London, CIPD
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.
272 Part 5 | Factors Affecting the Behaviour of People at Work
Pa us e fo r t houg ht
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
Engagement
Motivation
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-
Competency Description
Feedback, praise and recognition Gives positive feedback and praise and rewards good work
Managing time and resources Ensures resources are available to meet workload
Following processes and procedures Understands and explains processes and procedures
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
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.’
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;
Chamorro-Premuzic (2017: 85)
●● 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
280 Part 5 | Factors Affecting the Behaviour of People at Work
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
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.
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
Chapter 26 | Employee Engagement 283
References
Alfes, K, Truss, C, Soane, E C, Rees, C and Gatenby, Brighton, Institute for Employment Studies,
M (2010) Creating an Engaged Workforce, pp 51–71
London, CIPD Chamorro-Premuzic, T (2017) The Talent Delusion,
Armstrong, M, Brown, D and Reilly, P (2010) London, Piatkus
Evidence-based Reward Management, London, CIPD (2012) Where Has All the Trust Gone?
Kogan Page London, CIPD
Bakker, A (2009) Building engagement in the CIPD (2017) Human capital metrics and analytics:
workplace, in R Burke and C Cooper (eds), The assessing the evidence of the value and impact of
Peak Performing Organization, Abingdon, people data [online] https://www.cipd.co.uk/
Routledge Images/human-capital-metrics-and-analytics-
Balain, S and Sparrow, P (2009) Engaged to Perform: assessing-the-evidence_tcm18-22291.pdf (archived
A new perspective on employee engagement, at https://perma.cc/3QCE-FF2D) [accessed 24
Lancaster, Lancaster University Management February 2019]
School CIPD (2018) Employee engagement and motivation
Briner, R B (2014) What is employee engagement and factsheet, London, CIPD
does it matter? An evidence-based approach, in Coffman, C and Gonzalez-Molina, G (2002) Follow
(eds) D Robinson and J Gifford, Engage for This Path, New York, Warner Business Books
Success: Thought leadership paper No 2014-01,
284 Part 5 | Factors Affecting the Behaviour of People at Work
Conference Board (2006) Employee Engagement: A Locke, E A (1976) The nature and causes of job
review of current research and its implications, satisfaction, in (ed) M D Dunnette, Handbook of
New York, Conference Board Industrial and Organizational Psychology,
Crawford, E R, Rich, B L, Buckman, B and Bergeron, J Chicago, Rand McNally, pp 1297–343
(2014) The antecedents and drivers of employee Macey, W H and Schneider, B (2008) The meaning of
engagement in (eds) C Truss, R Deldridge, K Afles, employee engagement, Industrial and
A Shantz and E Soane, Employee Engagement in Organizational Psychology: Perspectives on
Theory and Practice, London, Routledge, pp 57–81 Science and Practice, 1, pp 3–30
Fletcher, L and Robinson, D (2014) Measuring and Macey, W H, Schneider, B, Barbera, K M and
understanding engagement in (eds) C Truss, R Young, S A (2009) Employee Engagement,
Deldridge, K Afles, A Shantz and E Soane, Malden, MA, Wiley-Blackwell
Employee Engagement in Theory and Practice, MacLeod, D and Clarke, N (2009) Engaging for
London, Routledge, pp 273–90 Success: Enhancing performance through
Guest, D (2009) Review of Employee Engagement: employee engagement, London, Department for
Notes for a discussion (unpublished), prepared Business Innovation and Skills
specifically for the MacLeod and Clarke 2009 Maslach, C and Jackson, S E (1981) The
review of employee engagement measurement of experienced burnout, Journal of
Guest, D E (2014) Employee engagement: fashionable Organizational Behaviour, 2 (2) pp 99–113
fad or long-term fixture? in (eds) C Truss, Organ, D W (1988) Organizational Citizenship
R Deldridge, K Afles, A Shantz and E Soane, Behaviour: The good soldier syndrome, Lexington,
Employee Engagement in Theory and Practice, MA, Lexington Books
London, Routledge, pp 221–35 Purcell, J (2014) Employee voice and engagement, in
Hakanen, J J, Bakker, A B and Schaufeli, W B (2006) (eds) C Truss, R Deldridge, K Alfes, A Shantz and
Burnout and work engagement among teachers, E Soane, Employee Engagement in Theory and
Journal of School Psychology, 43, pp 495–513 Practice, London, Routledge, pp 236–49
Harter, J K, Schmidt, F L and Hayes, T L (2002) Purcell, J, Kinnie, K, Hutchinson, N, Rayton, B and
Business-unit level relationship between employee Swart, J (2003) People and Performance: How
satisfaction, employee engagement, and business people management impacts on organizational
outcomes: a meta-analysis, Journal of Applied performance, London, CIPD
Psychology, 87, pp 268–79 Rees, C, Alfes, K and Gatenby, M (2013) Employee
Jenkins, S and Delbridge, R (2013) Context matters: voice and engagement: connections and
examining ‘soft’ and ‘hard’ approaches to consequences, International Journal of Human
employee engagement in two workplaces, Resource Management, 24 (14), pp 2780–98
International Journal of Human Resource Reilly, P and Brown, D (2008) Employee engagement:
Management, 24 (14), pp 2670–91 future focus or fashionable fad for reward
Kahn, W A (1990) Psychological conditions of management? WorldatWork Journal, 17 (4),
personal engagement and disengagement at work, pp 37–49
Academy of Management Journal, 33 (4), Rich, B, Lepine, J and Crawford, E (2010) Job
pp 692–724 engagement: antecedents and effects on job
Keenoy, T (2014) Engagement: a murmuration of performance, Academy of Management Journal,
objects? in (eds) C Truss, R Deldridge, K Alfes, 53 (2), pp 617–35
A Shantz and E Soane, Employee Engagement in Robertson-Smith, G and Markwick, C (2009)
Theory and Practice, London, Routledge, Employee Engagement: A review of current
pp 198–220 thinking, Brighton, Institute for Employment
Lawler, E E (1986) High Involvement Management, Studies
San Francisco, CA, Jossey-Bass Robinson, D, Perryman, S and Hayday, S (2004) The
Lewis, R, Donaldson-Fielder, E and Tharani, T (2012) Drivers of Employee Engagement, Brighton,
Management Competencies for Enhancing Institute for Employment Studies
Employee Engagement, London, CIPD Saks, A M (2006) Antecedents and consequences of
Little, B and Little, P (2006) Employee engagement: employee engagement, Journal of Managerial
conceptual issues, Journal of Organizational Psychology, 21 (6), pp 600–19
Culture, Communications and Conflict, 10 (1), Soane, E, Truss, C, Alfes, K, Shantz, A, Rees, C and
pp 111–20 Gatenby, M (2012) Development and application
Chapter 26 | Employee Engagement 285
of a new measure of employee engagement : the Truss, C, Deldridge, R, Alfes, K, Shantz, A and Soane,
ISA Engagement Scale, Human Resource E (2013) Introduction, Employee Engagement in
Development International, 15 (5), pp 529–47 Theory and Practice, London, Routledge
Sparrow, P (2014) Strategic HRM and employee Truss, C, Schantz, A, Soane, E, Alfes, K and Delbridge,
engagement, in (eds) C Truss, R Deldridge, K Alfes, R, (2013) Employee engagement, organizational
A Shantz and E Soane, Employee Engagement in performance and individual well-being: exploring
Theory and Practice, London, Routledge, the evidence, developing the theory, International
pp 99–115 Journal of Human Resource Management, 24 (14),
Stairs, M and Galpin, M (2010) Positive engagement: pp 2657–69
from employee engagement to workplace Truss, C, Soane, E, Edwards, C, Wisdom, K, Croll, A
happiness, in (eds) P A Linley, S Harrington and and Burnett, J (2006) Working Life: Employee
N Garcea, The Oxford Handbook of Positive attitudes and engagement, London, CIPD
Psychology and Work, New York, Oxford Vance, R J (2006) Employee Engagement and
University Press Commitment: A guide to understanding,
Storey, J (1989) From personnel management to measuring and increasing engagement in
human resource management, in (ed) J Storey, your organization, Alexandria, VA, SHRM
New Perspectives on Human Resource Foundation
Management, London, Routledge, pp 1–18 Yalabik, Z Y, Popaitoon, P, Chowne, J A and Rayton,
Storey, J (2007) What is human resource B A (2013) Work engagement as mediator between
management? in (ed) J Storey, Human Resource employee attitudes and outcomes, International
Management: A critical text, London, Thompson Journal of Human Resource Management, 24 (14),
Learning, pp 3–19 pp 2799–823
286
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
●● 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
290 Part 6 | People Resourcing
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
292 Part 6 | People Resourcing
Business plan
Forecast of activity
levels
Forecast of future
requirements
Action planning
• Recruitment
• Retention
• Succession
• Talent
• Flexible working
• Learning and development
• Downsizing
Implement
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.
CASE STUDIES
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.
296 Part 6 | People Resourcing
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.
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.
Chapter 27 | Workforce Planning 297
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/
298 Part 6 | People Resourcing
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
300 Part 6 | People Resourcing
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
Chamorro-Premuzic (2017: 85)
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.
302 Part 6 | People Resourcing
C A S E S T U DY
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.
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
Chapter 28 | Recruitment and Selection 303
Recruitment consultants 52
Local newspaper 21
Search consultants 20
Jobcentre Plus 15
National newspapers 12
Previous employees 10
Chapter 28 | Recruitment and Selection 305
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
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
306 Part 6 | People Resourcing
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;
Chapter 28 | Recruitment and Selection 307
●● 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.
308 Part 6 | People Resourcing
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.
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 )
310 Part 6 | People Resourcing
TA B L E 28.2 (Continued)
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.
APPLICATION FORM
Surname First name
Address
Education
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)
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
Competency-based interviews 78
Assessment centres 39
Personality/aptitude questionnaire 35
Group exercises 24
●● 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.
316 Part 6 | People Resourcing
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
Chapter 28 | Recruitment and Selection 317
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
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;
●● 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.
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.
Chapter 28 | Recruitment and Selection 321
Method Coefficient
C A S E S T U DY
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
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
Chapter 28 | Recruitment and Selection 323
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
324 Part 6 | People Resourcing
●● 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
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’
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’.
Chapter 28 | Recruitment and Selection 325
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.
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
https://www.bbc.co.uk/news/uk-england- at https://perma.cc/4D3A-SK2D) [accessed 25
london-38751307 (archived at https://perma.cc/ October 2015]
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,
22 January 2019] London, CIPD
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
The behavioural science of recruitment and Spearman, C (1927) The Abilities of Man, New York,
selection, CIPD [online] http://www.cipd.co.uk/ Macmillan
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
policy
TALENT MANAGEMENT PIPELINE
Talent
management
strategy
Chapter 29 | Talent Management 331
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
Chapter 29 | Talent Management 333
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
334 Part 6 | People Resourcing
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
Aiming point
Aiming point
Basic training and experience Continuation training and experience Advanced training and experience
Chapter 29 | Talent Management 335
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).
programmes
(continued )
336 Part 6 | People Resourcing
TA B L E 29.1 (Continued)
●● 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
analysis
●● use IT systems, software and spread
sheets
●● conduct role analyses
employees
CASE STUDIES
BUSINESS STRATEGY
Recruitment and
Succession management Development
selection
TALENT POOL
338 Part 6 | People Resourcing
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.
Chapter 29 | Talent Management 339
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:
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://
www.employment-studies.co.uk/system/files/ marble-arch-online-courses.s3.amazonaws.com/
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_
Chapter 29 | Talent Management 341
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
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
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.
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:
Chapter 30 | Managing Employment 349
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
350 Part 7 | Employment Practices
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;
Chapter 30 | Managing Employment 351
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.
Leavers as a
percentage
of total
entrants
Time
352 Part 7 | Employment Practices
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
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.
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
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.
Chapter 30 | Managing Employment 355
C A S E S T U DY
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.
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:
●● 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
Chapter 30 | Managing Employment 359
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
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
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.
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.
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.
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.
362 Part 7 | Employment Practices
●● 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
Chapter 30 | Managing Employment 363
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.
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 main- ing 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
366 Part 7 | Employment Practices
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.
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.
368 Part 7 | Employment Practices
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)
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.
●● 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
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
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)
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://
flexible organization, Personnel Management, perma.cc/LFZ8-WNFC) [accessed 19 May 2019]
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/
14105.pdf (archived at https://perma.cc/JQC5- flexible-working/factsheet (archived at https://perma.
BEEA) [accessed 1 March 2019] cc/manage/create?folder=63748-63938) [accessed 18
CIPD (2015) Zero-hours and Short-hours Contracts May 2019]
in the UK [online] http://www.cipd.co.uk/binaries/ Hunter, L and MacInnes J (1991) Employers’ Labour
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
PART VIII
Learning and development
PA R T V I I I CO N T E N T S
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
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
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
Take action
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
Chapter 33 | The Basis of Learning and Development 383
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.
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:
Chapter 33 | The Basis of Learning and Development 385
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.
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
Pau se for th ou gh t
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.
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 )
388 Part 8 | Learning and Development
TA B L E 33 .1 (Continued)
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.
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.
provides useful insights into ●● Stimulating environments, both online and physically.
approaches to learning and ●● Creating opportunities for social engagement and interaction
C A S E S T U DY
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
References
Argyris, C (1992) On Organizational Learning, Easterby-Smith, M and Araujo, J (1999)
Cambridge, MA, Blackwell Organizational learning: current debates and
Argyris, C and Schon, D A (1996) Organizational opportunities, in (eds) M Easterby-Smith, J
Learning: A theory of action perspective, Reading, Burgoyne and L Araujo, Organizational Learning
MA, Addison Wesley and the Learning Organization, London, Sage
Bandura, A (1977) Social Learning Theory, Hendel-Giller, R (2010) The neuroscience of
Englewood Cliffs, NJ, Prentice Hall learning: new paradigms for corporate education,
Burgoyne, J (1999) Design of the times, People People Science [online] http://www.
Management, 3 June, pp 39–44 themaritzinstitute.com/Perspectives/-media/Files/
CIPD (Howard-Jones) (2014) Fresh thinking in MaritzInstitute/White-Papers/The-Neuroscience-
learning and development Part 1: neuroscience and of-learning-The-Maritz- Institute.pdf (archived at
learning [online] https://www.cipd.co.uk/ https://perma.cc/GM4A-KY4X) [accessed 15
knowledge/culture/behaviour/fresh-thinking- June 2018]
learning-development (archived at https://perma. Honey, P and Mumford, A (1996) The Manual of
cc/SDQ2-AQXD)[accessed 15 June 2018] Learning Styles, 3rd edn, Maidenhead, Honey
Clardy, A (2018) 70-20-10 and the dominance of Publications
informal learning: a fact in search of evidence, Kolb, D A, Rubin, I M and McIntyre, J M (1974)
HRD Review, 17 (2), pp 153–78 Organizational Psychology: An experimental
Davachi, L, Kiefer, T, Rock, D and Rock, L (2010) approach, Englewood Cliffs, NJ, Prentice Hall
Learning that lasts through AGES: maximizing the Lombardo, M M and Eichinger, R W (1996) The
effectiveness of learning initiatives, Course Architect Development Planner,
NeuroLeadership Journal, 3, pp 53–63 Minneapolis, Lominger
Chapter 33 | The Basis of Learning and Development 391
Pedler, M, Burgoyne, J and Boydell, T (1997) The Senge, P (1990) The Fifth Discipline: The art and
Learning Company: A strategy for sustainable practice of the learning organization, London,
development, 2nd edn, Maidenhead, Doubleday
McGraw-Hill Skinner, B F (1974) About Behaviourism, London,
Reynolds, J (2004) Helping People Learn, London, Cape
CIPD Welcome, S E, Paivio A, McRae K and Joanisse M
Reynolds, J, Caley, L and Mason, R (2002) How Do (2011) An electrophysiological study of task
People Learn? London, CIPD demands on concreteness effects: evidence for dual
Royal Society (2011) Brain Waves 2: neuroscience: coding theory, Experimental Brain Research, 2 (3),
implications for education and lifelong learning pp 347–58
[online] https://royalsociety.org/topics-policy/ Wenger, E (1998) Communities of Practice: Learning,
projects/brain-waves/education-lifelong-learning/ meaning and identity, Cambridge, Cambridge
(archived at https://perma.cc/97Z5-Z6AJ) University Press
[accessed 3 November 2015] Wick, C W and Leon, L S (1995) Creating a learning
Scarborough, H, Swan, J and Preston, J (1999) organization: from ideas to action, Human
Knowledge Management: A literature review, Resource Management, 34 (2), pp 299–311
London, IPM
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
Analysis of Performance
Analysis of
human and Role Learning
business Surveys
resource development analysis specification
plans
plans reviews
• 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
394 Part 8 | Learning and Development
LEARNING SPECIFICATION
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.
Learner directed
Performance Learning through
support work
Formal Informal
Organization directed
Courses
Guided discovery
and programmes
C A S E S T U DY
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.
Chapter 34 | The Process of Learning and Development 397
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.
●● 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?
Chapter 34 | The Process of Learning and Development 399
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.
400 Part 8 | Learning and Development
C A S E S T U DY
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.
Chapter 34 | The Process of Learning and Development 401
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;
402 Part 8 | Learning and Development
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.
406 Part 8 | Learning and Development
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
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.
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
Chapter 35 | Learning and Development Practices 409
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
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.
C A S E S T U DY
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.
410 Part 8 | Learning and Development
C A S E S T U DY
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
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).
412 Part 8 | Learning and Development
3 Implement training
4 Evaluate training
414 Part 8 | Learning and Development
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.
CASE STUDIES
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.
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.
Pa us e fo r t houg ht
Personal development planning sounds like
a good idea but how do you get people to
do it?
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.
418 Part 8 | Learning and Development
References
Bandura, A (1977) Social Learning Theory, Employment, London, Economic and Social
Englewood Cliffs, NJ, Prentice-Hall Research Council
Burke-Smalley, L A and Hutchins, H M (2007) Eubanks, B (2019) Artificial Intelligence for HR,
Training transfer: an integrative literature review, London, Kogan Page
Human Resource Development Review, 6 (3), Hart, J (2014) The Social Learning Handbook
pp 3263–96 [online] http://www.c4lpt.co.uk/blog/2014/01/27/
CIPD (2011) Focus on E-learning [online] http:// social-learning-handbook-pdf-now-available/
www.cipd.co.uk/hr-resources/survey-reports/ (archived at https://perma.cc/VW56-33SX)
focus-e-learning.aspx (archived at https://perma.cc/ [accessed 22 June 2018]
AB9M-Q83D) [accessed 22 June 2018] Hird, M and Sparrow, P (2012) Learning &
CIPD (2013) Social Technology – Social Business Development: Seeking a renewed focus? White
[online] www.cipd.co.uk/binaries/social- Paper 12/01 October 2012 Centre for
technology-social-business_2013.pdf [accessed 22 Performance-Led HR, Lancaster University
June 2018] [online] http://www.lancaster.ac.uk/media/
CIPD (2014) Putting Social Media to Work: Lessons lancaster-university/content-assets/documents/
for employers [online] http://www.cipd.co.uk/ lums/cphr/LDWP.pdf (archived at https://perma.cc/
binaries/6545%20Social%20media%20 K4KJ-G5LE) [accessed 22 June 2018]
research%20report%20(WEB).pdf [accessed 6 Paine, M (2015) The Learning Challenge, London,
November 2015] Kogan Page
CIPD (2015) Survey of Learning and Development Reynolds, J (2004) Helping People Learn, London,
[online] http://www.cipd.co.uk/binaries/learning- CIPD
development_2015.pdf (archived at https://perma. Stern, E and Sommerlad, E (1999) Workplace
cc/EKX2-UZWT) [accessed 22 June 2018] Learning, Culture and Performance, London, IPD
CIPD (2017) The Apprenticeship Levy: A Guide for Tamkin, P, Barber, L and Hirsh, W (1995) Personal
HR and L&D professionals [online] https://www. Development Plans: Case studies of practice,
cipd.co.uk/knowledge/fundamentals/people/ Brighton, Institute for Employment Studies
routes-work/apprenticeship-levy-guide (archived at Wenger, E (1998) Communities of Practice: Learning,
https://perma.cc/7U8M-TU6F) [accessed 22 June meaning and identity, Cambridge, Cambridge
2018] University Press
Eraut, M J, Alderton, G, Cole, G and Senker, P (1998) Zuboff, S (1988) In the Age of the Smart Machine,
Development of Knowledge and Skills in New York, Basic Books
419
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.
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
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.
Chapter 36 | Learning and Management Development 423
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)
Source review
Checklist for planning and delivering management training events:
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.
CIPD (2017)
Chapter 36 | Learning and Management Development 425
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.
428 Part 8 | Learning and Development
References
Bennis, W G (1989) On Becoming a Leader, New Fiedler, F E (1967) A Theory of Leadership
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
being_2017_tcm18-18364.pdf (archived at developments in leadership and management
https://perma.cc/X9SV-HM6H) [accessed 3 development, in (eds) J Gold, R Thorpe and A
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
Post [online] https://www.washingtonpost.com/ Pfeffer and Sutton (2006) Hard Facts, Dangerous
news/on-leadership/wp/2015/07/23/accenture-ceo- Half-Truths & Total Nonsense, Boston, Harvard
explains-the-reasons-why-hes-overhauling- Business School Press
performance-reviews/ (archived at https://perma. Revans, R W (1989) Action Learning, London, Blond
cc/624G-V84G) [accessed 20 July 2019] and Briggs
Dixon, N F (1994) On the Psychology of Military Yukl, G (2006) Leadership in Organizations, 6th edn,
Incompetence, London, Pimlico Upper Saddle River, NJ, Prentice-Hall
Drucker, P (1955) The Practice of Management,
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
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;
●● 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
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.
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 com- ment 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
436 Part 9 | Performance Management
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.
Pa us e for t houg ht
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
438 Part 9 | Performance Management
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.
References
Aguinis, H (2005) Performance Management, Upper e-reward (2014) Survey of Performance Management,
Saddle River NJ, Pearson Education Stockport, e-reward
Bandura, A (1977) Social Learning Theory, Fletcher, C (2001) Performance appraisal and
Englewood Cliffs NJ, Prentice-Hall management: the developing research agenda,
Bandura, A (1982) Self-efficacy mechanism in human Journal of Occupational and Organizational
agency, American Psychologist, 37, pp 122–47 Psychology, 74 (4), pp 473–87
Bates, R A and Holton, E F (1995) Computerized Harrison, R (1997) Employee Development, London,
performance monitoring: a review of human IPM
resource issues, Human Resource Management Hull, C (1951) Essentials of Behaviour, New Haven
Review, Winter, pp 267–88 CT, Yale University Press
Bernadin, H K, Kane, J S, Ross, S, Spina, J D and Jones, T W (1995) Performance management in a
Johnson, D L (1995) Performance appraisal changing context, Human Resource Management,
design, development and implementation, in G R 34 (3) pp 425–42
Ferris, S D Rosen, and D J Barnum (eds), Kane, J S (1996) The conceptualization and
Handbook of Human Resource Management, representation of total performance effectiveness,
Cambridge MA, Blackwell Human Resource Management Review, Summer,
Borman, W C and Motowidlo, S J (1993) Expanding pp 123–45
the criterion domain to include elements of Kluger, A N and DeNisi, A (1996) The effects of
contextual performance, in N Schmitt and W C feedback interventions on performance: a
Borman, eds, Personnel Selection in Organizations, historical review, a meta-analysis, and a
San Francisco, Jossey-Bass preliminary feedback intervention theory,
Boxall, P F and Purcell, J (2003) Strategy and Human Psychological Bulletin, 119 (2) pp 254–84
Resource Management, Palgrave Macmillan, Latham, G P and Locke, E A (1979) Goal Setting – a
Basingstoke motivational technique that works, Organizational
Brumbach, G B (1988) Some ideas, issues and Dynamics, Autumn, pp 442–47
predictions about performance management, Latham, G, Sulsky, L M and Macdonald, H (2007)
Public Personnel Management, 17 (4), pp 387–402 Performance management, in (eds) P Boxall, J
Campbell, J P (1990) Modelling the performance Purcell and P Wright, Oxford Handbook of
prediction problem in industrial and Human Resource Management, Oxford, Oxford
organizational psychology, in (eds), M P Dunnette University Press
and L M Hugh, Handbook of Industrial and Lee, C D (2005) Rethinking the goals of your
Organizational Psychology, Cambridge MA, performance management system, Employment
Blackwell Relations Today, 32 (3), pp 53–60
Campbell, J P, McCloy, R A, Oppler, S H and Sager, C Miller, E and Rice, A (1967) Systems of Organization,
E (1993) A theory of performance, in (eds) N London, Tavistock
Schmitt and W Borman, Personnel Selection in Shields, J (2007) Managing Employee Performance
Organizations, San Francisco, Jossey-Bass and Reward, Port Melbourne, Cambridge
Cardy, R L and Dobbins, G H (1994) Performance University Press
Appraisal: Alternative perspectives, Cincinnati Strebler, M T, Bevan, S and Robertson D (2001)
Ohio, South-Western Publishing Performance Review: Balancing objectives and
Deming, W E (1986) Out of the Crisis, Cambridge content, Brighton, Institute for Employment
MA, Massachusetts Institute of Technology Centre Studies
for Advanced Engineering Studies VerWeire, K and Van Den Berghe, L (2004)
Earley, D C (1986) Computer-generated performance Integrated performance management: new
feedback in the magazine industry, Organisation hype or new paradigm? in (eds) K VerWeire and
Behaviour and Human Decision Processes, 41, L Van Den Bergh, Integrated performance
pp 50–64 Management, Thousand Oaks, CA, Sage,
Egan, G (1995) A clear path to peak performance, pp 1–14
People Management, 18 May, pp 34–37 Vroom, V (1964) Work and Motivation, New York,
e-reward (2005) Survey of Performance Management, Wiley
Stockport, e-reward
443
38
Performance
management systems
Introduction
Pau se for th ou gh t
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
444 Part 9 | Performance Management
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
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
• 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
Ongoing
Total compensation coaching and Development planning
feedback
Performance review
446 Part 9 | Performance Management
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?
Chapter 38 | Performance Management Systems 447
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?
Pau se for th ou gh t
● 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
450 Part 9 | Performance Management
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.
Chapter 38 | Performance Management Systems 451
Name: Forename(s):
Job title: Department:
Reviewer’s name Job title:
PERFORMANCE AND DEVELOPMENT AGREEMENT
Objectives Performance measures
Comments by reviewer:
Signed: Date:
Comments by person reviewed:
Signed: Date:
●● 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
454 Part 9 | Performance Management
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.
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]
management effectiveness: practices or context? Yearta, S K, Maitlis, S and Briner, R B (1993)
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
Lawler, E E and McDermott, M (2003) Current works? Journal of Applied Psychology, 68,
performance management practices; examining the pp 237–52
impacts, WorldatWork Journal, 12 (2), pp 49–60
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.
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
Chapter 39 | Reinventing Performance Management 459
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
460 Part 9 | Performance Management
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.
Chapter 39 | Reinventing Performance Management 461
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
●● 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.
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
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
Chapter 39 | Reinventing Performance Management 463
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)
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.
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 )
466 Part 9 | Performance Management
TA B L E 39.1 (Continued)
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.
References
Brown, D (2010) Practice what we preach? Posted by e-reward (2014) Survey of Performance Management,
Reward Blogger, 6 December, London, CIPD Stockport, e-reward
Brown, D (2011) Performance management – can it e-reward (2017) Performance Management Case
ever work? Manager, Summer, p 16 Studies, Stockport, e-reward
Buckingham, M and Goodall, A (2015) Reinventing Grint, K (1993) What’s wrong with performance
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
edn, Boston, MA, McGraw Hill Management: The Implementation Challenge
Chamorro-Premuzic, T (2017) The Talent Delusion, [online] http://www.employment-studies.co.uk/
London, Piatkus system/files/resources/files/mp89.pdf (archived at
CIPD (2014) Employee Outlook [online] http://www. https://perma.cc/LAF2-5RNJ) [accessed 20
cipd.co.uk/hr-resources/survey-reports/employee- July 2019]
outlook-autumn-2014.aspx (archived at https:// Pfeffer, J and Sutton, R I (2006) A matter of fact,
perma.cc/AMT8-BKCJ) [accessed 16 November People Management, 28 September, p 28
2015] Postuma, R A and Campion, M A (2008) Twenty best
CIPD (2016) Could Do Better: What Works in practices for just performance reviews,
performance management [online] https://www. Compensation & Benefits Review, January–
cipd.co.uk/knowledge/fundamentals/people/ February, pp 47–55
performance/what-works-in-performance- Pulakos, E D (2009) Performance Management: A
management-report (archived at https://perma.cc/ new approach for driving business results, Malden,
TS7D-WJ4Q) [accessed 3 March 2017] MA, Wiley-Blackwell
Coens, T and Jenkins, M (2002) Abolishing Pulakos, E D, Mueller-Hanson, R A and O’Leary, R S
Performance Appraisals: Why they backfire and (2008) Performance management in the US, in A
what to do instead, San Francisco, Berrett-Koehler Varma, P S Budhwar and A DeNisi (eds)
Chapter 39 | Reinventing Performance Management 469
PART X
Reward management
PA R T X CO N T E N T S
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 prac- tices 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;
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
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
Chapter 40 | The Basis of Reward Management 477
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.
478 Part 10 | Reward Management
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
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
Chapter 40 | The Basis of Reward Management 479
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
480 Part 10 | Reward Management
Source review
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.
Chapter 40 | The Basis of Reward Management 481
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.
482 Part 10 | Reward Management
C A S E S T U DY
Non-financial rewards
Market rate
analysis
Job evaluation
Variable pay
eg bonuses
Pension and
benefits
Allowances
Performance
management
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
CASE STUDIES
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 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
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
488 Part 10 | Reward Management
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).
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
Pa us e fo r t houg ht
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.
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
Pau se for th ou gh t
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
492 Part 10 | Reward Management
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);
Chapter 41 | The Practice of Reward Management 493
Type of
structure Features Advantages Disadvantages
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
(continued )
494 Part 10 | Reward Management
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
CASE STUDIES
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:
Chapter 41 | The Practice of Reward Management 495
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.
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.
496 Part 10 | Reward Management
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
498 Part 10 | Reward Management
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
Chapter 41 | The Practice of Reward Management 499
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
500 Part 10 | Reward Management
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.
B 4
C 3
D 2
E 0
502 Part 10 | Reward Management
Effective 6% 4% 3% 0
Developing 4% 3% 0 0
Ineligible 0 0 0 0
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
506 Part 10 | Reward Management
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
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.
When
Method Features Advantages Disadvantages appropriate
(continued )
Chapter 42 | Managing Reward for Special Groups 509
TA B L E 42.1 (Continued)
When
Method Features Advantages Disadvantages appropriate
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.
(continued )
510 Part 10 | Reward Management
TA B L E 42.1 (Continued)
When
Method Features Advantages Disadvantages appropriate
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
Pau se for th ou gh t
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
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
TA B L E 42.2 (Continued)
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.
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
516 Part 10 | Reward Management
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
d2f4f48069a2/2018-UK-Corporate-Governance-
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.
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 re- place 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.
520 Part 10 | Reward Management
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.
TA B L E 43.1 Actions that can be taken by organizations to reduce a gender pay gap
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.
Flexible working Educate all employees on the right to request flexible working
arrangements and ensure that it is available whenever possible.
C A S E S TU D IE S
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.
Learning and development
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)
Chapter 43 | The Gender Pay Gap 523
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.
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;
524 Part 10 | Reward Management
References
Brown, D (2016) The Power of Parity: A study of Hensvik, L (2014), Manager impartiality: Worker –
how Lewisham Council achieved gender equality firm matching and the gender wage gap, Industrial
at senior levels, the learning and implications, and Labor Relations Review, 67 (2)
Institute for Employment Studies, Research Kirton, H (2017) Men more likely than women to be
Report 110 sent on training courses, People Management
Brown, D (2017) Gender pay: How do you achieve [online] https://www.peoplemanagement.co.uk/
and report parity? The Institute for Employment news/articles/men-more-likely-sent-on-training-
Studies [online] http://www.employment-studies. courses (archived at https://perma.cc/N2M8-
co.uk/resource/gender-pay-how-do-you-achieve- DXVT) [accessed 20 November 2017]
and-report-parity (archived at https://perma.cc/ London Economics (2015) The earnings and
D6YW-9LC4) [accessed 15 March 2019] employment returns to A levels: a report to the
Brown, D and Rickard, C (2018) Gender pay gaps Department for Education [online] https://
and solutions, in (ed), S J Perkins, The Routledge londoneconomics.co.uk/wp-content/
Companion to Reward Management, Abingdon, uploads/2015/03/London-Economics-Report-
Routledge Returns-to-GCE-A-Levels-Final-12-02-2015.pdf
Chartered Institute of Personnel and Development (archived at https://perma.cc/2AV3-YKEE)
(2017) Reward Management Survey, London, [accessed 16 November 2017]
CIPD Office of National Statistics (2018) Gender Pay Gap
Codd, E (2017) Gender Pay Gap Reporting: What we Bulletin [online] https://www.ons.gov.uk/
learned, London, Government Equalities Office employmentandlabourmarket/peopleinwork/
[online] https://equalities.blog.gov.uk/2017/12/15/ earningsandworkinghours/bulletins/
guest-post-gender-pay-gap-reporting-what-we- genderpaygapintheuk/2018 (archived at https://
learned/Equal pay [accessed 11 June 2109] perma.cc/ZY99-8FN7) [accessed 15 March 2019]
Department for Business, Innovation and Skills Olsen, W, Heuvelman, H, Gash, V, Vandecasteele, L
(2015), Women on Boards [online] https://www. (2010) The Gender Pay Gap in the UK 1995–
gov.uk/government/uploads/system/uploads/ 2007: Part 2 – Policy-related factors offsetting
attachment_data/file/415454/bis-15-134-women- women’s low pay in the UK, 2004–07,
on-boards-2015-report.pdf (archived at Government Equalities Office
https://perma.cc/5QWA-4FQJ) [accessed 18 O’Reilly, J, Smith, M, Deakin, S and Burchell, B
January 2018] (2015) Equal pay as a moving target: international
Equality and Human Rights Commission (2016) The perspectives on forty years of addressing the
Business Case for Equal Pay, Equality and gender pay gap, Cambridge Journal of Economics,
Human Rights Commission [online] www. 39 (2), pp 299–317
equalityhumanrights.com/en/advice-and-guidance/ Parken, A, Pocher, E and Davies, R (2014) Working
business-case-equal-pay (archived at https://perma. Patterns in Wales: Gender, occupations and pay,
cc/49K4-PPP4) [accessed 16 November 2017] Wave Wales
525
PART XI
Employment relations
PA R T X I CO N T E N T S
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
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
Pau se for th ou gh t
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.
Chapter 44 | The Basis of Employment Relations 531
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
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
534 Part 11 | Employment Relations
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.
536 Part 11 | Employment Relations
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
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
540 Part 11 | Employment Relations
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 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.
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
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
Pau se for th ou gh t
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.
Chapter 47 | The Practice of Industrial Relations 549
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
Chapter 47 | The Practice of Industrial Relations 551
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.
References
Boxall, P F (2013) Mutuality in the management of Guest, D and Peccei, R (2001) Partnership at work:
human resources: assessing the quality of mutuality and the balance of advantage, British
alignment in employment relationships, Human Journal of Industrial Relations, 39 (2), pp 207–36
Resource Management Journal, 23 (1) pp 3–17 Kochan, T A and Osterman, P (1994) The Mutual
Chamberlain, N W and Kuhn, J (1965) Collective Gains Enterprise: Forging a winning partnership
Bargaining, New York, McGraw-Hill among labor, management and government,
Cullinane, N, Donaghey, J, Dundon, T, Hickland, E Boston, MA, Harvard University Business Press
and Dobbins, T (2014) Regulating for mutual Labour Force Survey (2010) London, BIS
gains? Non-union employee representation and the Roche, W K (2009) Who gains from workforce
Information and Consultation Directive, The partnership? International Journal of Human
International Journal of Human Resource Resource Management, 20 (1), pp 1–33
Management, 25 (6), pp 810–28 Van Wanrooy, B, Bewley, H, Bryson, A, Forth, J,
Department for Business, Energy and Industrial Stokes, I and Wood, S (2013) Employment
Strategy (2018) Trade Union Membership 2017 Relations in the Shadow of Recession: Findings
[online] https://assets.publishing.service.gov.uk/ from the 2011 Workplace Employment Relations
government/uploads/system/uploads/attachment_ Study, Basingstoke, Palgrave
data/file/712543/TU_membership_bulletin.pdf Walton, R E (1985) Towards a strategy of eliciting
(archived at https://perma.cc/8FXN-MSYN) employee commitment based on principles of
[accessed 16 March 2019] mutuality, in (eds) R E Walton and P R Lawrence,
Dundon, T, Cullinane, N and Wilkinson, A (2017) A HRM Trends and Challenges, Boston, MA,
Very Short, Fairly Interesting and Reasonably Harvard Business School Press, pp 35–65
Cheap Book About Employment Relations, Walton, R E and McKersie, R B (1965) Behavioural
London, Sage Theory of Labour Negotiations, New York,
Flanders, A (1970) Management and Unions: The McGraw-Hill
theory and reform of industrial relations, London, Wilkinson, A, Dundon, T, Donaghey, T and
Faber and Faber Townsend, K (2014) Partnership, collaboration
Freeman, R and Medoff, J (1984) What Do Unions and mutual gains: evaluating context, interests and
Do? New York, Basic Books legitimacy, The International Journal of Human
Glover, L, Tregaskis, O and Butler, P (2014) Mutual Resource Management, 25 (6), pp 737–47
gains? The workers’ verdict: a longitudinal study, Workshop Employee Relations Survey (2004)
The International Journal of Human Resource London, DTI
Management, 25 (6), pp 895–914 Workplace Employee Relations Survey (2011)
Guest, D E, Brown, W, Peccei, R and Huxley, K [online] https://www.gov.uk/government/
(2008) Does partnership at work increase trust? publications/the-2011-workplace-employment-
An analysis based on the 2004 Workplace relations-study-wers (archived at https://perma.
Employment Relations Survey, Industrial Relations cc/866V-Y2NF) [accessed 21 March 2019]
Journal, 39 (2), pp 124–52
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
554 Part 11 | Employment Relations
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
556 Part 11 | Employment Relations
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.
C A S E S T U DY
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)
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
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.
Pa us e fo r t houg ht
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
Pa us e fo r t houg ht
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.
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
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
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.
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 )
570 Part 12 | Employee Wellbeing
TA B L E 50.1 (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.
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.
Chapter 50 | The Principles and Practice of Employee Wellbeing 571
CASE STUDIES
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.
Chapter 50 | The Principles and Practice of Employee Wellbeing 573
●● 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.
References
Alfes, K, Shantz, A and Truss, C (2012) The link well-being: is there causal evidence? Australian
between perceived HRM practices, performance Psychologist, 51 (1), pp 18–31
and wellbeing: the moderating effect of trust in the Donald, I, Taylor, P, Johnson, S, Cooper, C,
employer, Human Resource Management Journal, Cartwright, S and Robertson, S (2005) Work
22 (4), pp 409–27 environments, stress and productivity: an
Bakker, A and Demerouti, E (2007) The job demands- examination using ASSET, International Journal of
resources model: state of the art, Journal of Stress Management, 12, pp 409–23
Managerial Psychology, 22 (3), pp 309–28 Eurofound (2013) Monitoring Quality of Life in
Brown, D, Hirsh, W and Reilly, P (2019) Strategic Europe: Subjective wellbeing, Luxembourg,
Human Resource Management: Case studies and Publications Office of the European Union
conclusions from HR strategy to strategic people Felstead, A, Gallie, D and Green, F (2015)
management [online] https://www.employment- Unequal Britain at Work, Oxford, Oxford
studies.co.uk/resource/strategic-human-resource- University Press
management-practice-case-studies-and-conclusions Ford, M T, Cerasoli, C P, Higgins, J A and DeCesare,
(archived at https://perma.cc/77HN-MWK6) A L (2011) Relationships between psychological,
[accessed 20 April 2019] physical, and behavioural health and work
Bryson, A and Forth, J (2015) The UK’s productivity performance: a review and meta-analysis, Work
puzzle, London, NIESR Discussion Paper No. 448 and Stress, 25, pp 185–204
CIPD (2017a) Developing Managers to Manage Grant, A, Christianson, M and Price, R (2007)
Sustainable Employee Engagement, Health and Happiness, health, or relationships? Managerial
Wellbeing [online] https://www.cipd.co.uk/ practices and employee wellbeing tradeoffs,
Images/developing-managers-to-manage- Academy of Management Executive, 21 (1), pp
sustainable-employee-engagement-health-and- 51–63
well-being_2017_tcm18-18364.pdf (archived at Guest, D (2017) Human resource management and
https://perma.cc/2F53-PBMV) [accessed 24 employee well-being: towards a new analytic
March 2019] framework, Human Resource Management
CIPD (2017b) Financial Wellbeing [online] https:// Journal, 27 (1), pp 22–38
www.cipd.co.uk/knowledge/culture/well-being/ Martin, A O (1967) Welfare at Work, London,
employee-financial-well-being (archived at https:// Batsford
perma.cc/MTB7-9U4B) [accessed 14 January National Institute for Healthcare Excellence (2009)
2018] Mental Wellbeing at Work [online] https://www.
CIPD (2019) Health and Wellbeing at Work [online] nice.org.uk/guidance/ph22 (archived at https://
https://www.cipd.co.uk/Images/health-and- perma.cc/JQ3V-ZXTG) [accessed 27
wellbeing-at-work-2019_tcm18-55881.pdf March 2019]
[accessed 24 May 2019] New Economics Foundation (2014) Employee
Cooper, C and Hesketh, I (2019) Wellbeing at Work, Wellbeing: A review of the literature [online]
London, Kogan Page https://b.3cdn.net/nefoundation/71c1bb59a2ce1
Derks, D and Bakker, A (2010) The impact of e-mail 51df7_8am6bqr2q.pdf (archived at https://
communication on organizational life, perma.cc/VX5S-QGQQ) [accessed 24 March
Cyberpsychology, 4 (1), pp 1–14 2019]
Derks, D, ten Brummelhuis, L, Zecic, D and Bakker, A Peccei, R (2004) Human Resource Management and
(2014) Switching on and off...: does smart phone the Search for a Happy Workplace, Rotterdam,
use obstruct the possibility to engage in recovery Eramus Research Institute of Management
activities? European Journal of Work and (ERIM)
Organizational Psychology, 23 (1), pp 80–90 Peccei, R, Vande Voorde, K and Van Veldhoven, M
De Witte, H, Pienaar, J and De Cuyper, N (2016) (2013) HRM, wellbeing and performance, in (eds)
Review of 30 years of longitudinal studies on the J Paauwe, D E Guest, P M Wright, HRM and
association between job insecurity and health and Performance, Chichester, Wiley, pp 15–45
Chapter 50 | The Principles and Practice of Employee Wellbeing 575
Pfeffer, J and Sutton, R (2006) Hard Facts, Dangerous Walton, R E (1974) Improving the quality of working
Half-Truths & Total Nonsense, Boston, Harvard life, Harvard Business Review, May/June,
Business School Press pp 12–16
PricewaterhouseCoopers (2008) The Business case for Warr, P (1987) Work, Unemployment, and Mental
Wellness Programmes, London, PWC Health, Oxford, Clarendon Press
Standing, G (2011) The Precariat: The new dangerous
class, London, Bloomsbury
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.
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.
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’.
Chapter 51 | Health and Safety 579
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?
580 Part 12 | Employee Wellbeing
●● 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
Chapter 51 | Health and Safety 581
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.
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.
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
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.’
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.
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.
598 Part 13 | HRM Policies and Practices and Employment Law
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 ●●
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.
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:
●● HR analytics;
●● 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
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
Top five uses of an HRIS (CIPD, 2007): ●● the use of cloud computing;
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 employ- ability 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
608 Part 13 | HRM Policies and Practices and Employment Law
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.
Chapter 55 | Employment Law 609
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
610 Part 13 | HRM Policies and Practices and Employment Law
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
Chapter 55 | Employment Law 611
●● 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
612 Part 13 | HRM Policies and Practices and Employment Law
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
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
614 Part 13 | HRM Policies and Practices and Employment Law
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
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.
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
Chapter 55 | Employment Law 615
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.
616 Part 13 | HRM Policies and Practices and Employment Law
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.
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
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
620 Part 14 | People Management Skills
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);
622 Part 14 | People Management Skills
●● 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.
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)
624 Part 14 | People Management Skills
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.
Chapter 57 | Business Skills 625
●● 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.
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.
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.
Chapter 57 | Business Skills 627
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.
630 Part 14 | People Management Skills
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):
632 Part 14 | People Management Skills
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.
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
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.
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 re- search, 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.
640 Part 14 | People Management Skills
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.
Chapter 60 | Research Skills 641
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;
644 Part 14 | People Management Skills
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)
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.
Chapter 60 | Research Skills 647
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
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
650 Part 14 | People Management Skills
Number Number *
Number
of cases of cases
of cases
*
*
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
..
…
….
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
652 Part 14 | People Management Skills
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,
656 Part 14 | People Management Skills
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?
Chapter 62 | Selection Interviewing Skills 657
●● 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?
658 Part 14 | People Management Skills
Assessment
Very Marginally
Area acceptable Acceptable acceptable Unacceptable Comments
Experience
Competencies
Training
Overall suitability
Do Don’t
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.
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, per- formed 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
●● 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?
Chapter 63 | Job, Role, Competency and Skills Analysis 665
●● 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
666 Part 14 | People Management Skills
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
Chapter 63 | Job, Role, Competency and Skills Analysis 667
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.
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.
Chapter 63 | Job, Role, Competency and Skills Analysis 669
Overall purpose of role: To lead teams in order to attain team goals and further
the achievement of the organisation's objectives.
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.
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.
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
674 Part 14 | People Management Skills
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.
Chapter 63 | Job, Role, Competency and Skills Analysis 675
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.
676 Part 14 | People Management Skills
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
678 Part 14 | People Management Skills
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
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
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
Chapter 65 | Negotiating Skills 685
Claim 5
Negotiating
Target 3 3 Maximum
range
Settlement
zone
2 2 Target
Minimum
1.5 Offer
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.
686 Part 14 | People Management Skills
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.
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
690 Part 14 | People Management Skills
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.
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.
Chapter 66 | Change Management 695
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.
696 Part 14 | People Management Skills
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.
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.
References
Alfes, K, Truss, C and Gill, J (2010) The HR manager time-paced evolution in relentlessly shifting
as change agent: evidence from the public sector, organizations, Administrative Science Quarterly,
Journal of Change Management, 10 (1), 42 (1), pp 1–24
pp 109–27 Caldwell, R (2001) Champions, adapters, consultants
Balugon, J and Hope-Hailey, V (2004) Exploring and synergists: the new change agents in HRM,
Strategic Change, 2nd edn, London, Prentice Hall Human Resource Management Journal, 11 (3),
Beckhard, R (1969) Organization Development: pp 39–52
Strategy and models, Reading, MA, Addison- Caldwell, R (2003) Models of change agency: a
Wesley fourfold classification, British Journal of
Beer, M, Eisenstat, R and Spector, B (1990) Why Management, 14 (2), pp 131–42
change programs don’t produce change, Harvard Carnall, C (1991) Managing Change, London,
Business Review, November–December, Routledge
pp 158–66 Hamlin, B and Davies, G (2001) Managers, trainers
Brown, S L and Eisenhardt, K M (1997) The art of and developers as change agents, in (eds) B
continuous change: linking complexity theory and Hamlin, J Keep and K Ash, Organizational
Chapter 66 | Change Management 699
Change and Development: A reflective guide for Thaler, R and Sunstein, C (2009) Nudge, London,
managers, trainers and developers, Harlow, Penguin
Pearson Education, pp 39–60 Thornhill, A, Lewis, P, Saunders, M and Millmore, M
Keep, J (2001) The change practitioner: perspectives (2000) Managing Change: A human resource
on role, effectiveness, dilemmas and challenges, in strategy approach, Harlow, FT Prentice Hall
(eds) B Hamlin, J Keep and K Ash, Organizational Thurley, K (1979) Supervision: A reappraisal,
Change and Development: A reflective guide for London, Heinemann
managers, trainers and developers, Harlow, Unilever (2019) Inspiring Sustainable Living [online]
Pearson Education, pp 13–38 https://www.unilever.com/Images/slp_5-levers-for-
Lawler, E E and Mohrman, S A (2003) HR as a change_tcm244-414399_en.pdf (archived at
strategic partner: what does it take to make it https://perma.cc/UEA5-TYLV) [accessed 13 April
happen? Human Resource Planning, 26 (3), 2019]
pp 15–29 Ulrich, D (1997) Human Resource Champions,
Lewin, K (1951) Field Theory in Social Science, New Boston, MA, Harvard Business School Press
York, Harper & Row Ulrich, D (1998) A new mandate for human
Nadler, D A and Tushman, M L (1980) A congruence resources, Harvard Business Review, January–
model for diagnosing organizational behaviour, in February, pp 124–34
(ed) R H Miles, Resource Book in Macro- Vere, D and Butler, L (2007) Fit for Business:
organizational Behaviour, Santa Monica, CA, Transforming HR in the public service, London,
Goodyear Publishing CIPD
Pettigrew, A and Whipp, R (1991) Managing Change Woodward, J (1968) Resistance to change,
for Competitive Success, Oxford, Blackwell Management International Review, 8, pp 78–93
Quinn, J B (1980) Managing strategic change, Sloane Worley, C, Hitchin, D and Ross, W (1996) Integrated
Management Review, 11 (4/5), pp 3–30 Strategic Change: How organization development
Surowiecki, J (2013) The turnaround trap, The New builds competitive advantage, Reading MA,
Yorker, 25 March, p 44 Addison-Wesley
700
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.
●● 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.
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.
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).
706 Part 14 | People Management Skills
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
Chapter 68 | Leadership Skills 707
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:
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;
Chapter 68 | Leadership Skills 709
References
Adair, J (1973) The Action-centred Leader, London, Bass, B M (1985) Leadership and Performance, New
McGraw-Hill York, Free Press
Avolio, B J, Gardner, W L, Walumbwa, F O, Luthans, Bennis, W (2010) We need leaders, Leadership
F and May, D R (2004) Unlocking the mask: a Excellence, 27 (12), p 4
look at the process by which authentic leaders Bennis, W and Nanus, B (1985) Leadership: The
impact follower attitudes and behaviours, strategies for taking charge, New York, Harper &
Leadership Quarterly, 15, pp 801–23 Row
Chapter 68 | Leadership Skills 711
Brindle, D (2016), Leadership in social work: can Kouzes, J and Posner, B (2003) The Leadership
Firstline be a force for change? Guardian, 16 Challenge, San Francisco, CA, Jossey-Bass
March, pp 8–9 May, D R, Chan, A, Hodges, T and Avolio, B J (2003)
Burns, J M (1978) Leadership, New York, Harper & Developing the moral component of authentic
Row leadership, Organizational Dynamics, 32 (3),
Carey, M R (1992) Transformational leadership and pp 247–60
the fundamental option for self-transcendence, Meindl, J R, Ehrlich, S B and Dukerich, J M (1985)
Leadership Quarterly, 3, pp 217–36 The romance of leadership, Administrative Science
Conger, J A and Kanungo, R N (1998) Charismatic Quarterly, 30 (1), pp 78–102
Leadership in Organizations, Thousand Oaks, CA, Stogdill, R M (1950) Leaders, membership and
Sage organization, Psychological Bulletin, 25, pp 1–14
Fiedler, F E (1967) A Theory of Leadership Tamkin, P, Pearson, G, Hirsh, W and Constable, S
Effectiveness, New York, McGraw-Hill (2010) Exceeding Expectation: The principles of
George, B (2003) Authentic Leadership, San outstanding leadership, London, The Work
Francisco, CA, Jossey-Bass Foundation
George, B, Sims, P, McLean, A N and Mayer, D Tavanti, M (2008) Transactional leadership, in (eds)
(2007) Discovering your authentic leadership, A Marturano and J Gosling, Leadership: The key
Harvard Business Review, February, pp 129–38 concepts, London, Routledge, pp 166–70
Gold, J, Thorpe, R and Mumford, A (2010) Gower Tichy, N M and Devanna, M A (1986) The
Handbook of Leadership and Management Transformational Leader, New York, Wiley
Development, Farnham, Gower Ulrich, D and Smallwood, N (2007) Leadership
Goleman, D (2000) Leadership that gets results, Brand: Developing customer-focused leaders to
Harvard Business Review, March–April, pp 78–90 drive performance and build lasting value, Boston,
Goleman, D (2001) What Makes a Leader, Boston, MA, Harvard Business School Press
MA, Harvard Business School Press Walumbwa, F O, Avolio, B J, Gardner, W L, Wernsing,
Harter, S (2002) Authenticity, in (eds) C R Snyder and T S and Peterson, S J (2008) Authentic leadership:
S J Lopez, Handbook of Positive Psychology, development and validation of a theory-based
Oxford, Oxford University Press, pp 382–94 measure, Journal of Management, 34 (1), pp 89–126
Huczynski, A A and Buchanan, D A (2007) Yukl, G (1999) An evaluation of conceptual weaknesses
Organizational Behaviour, 6th edn, Harlow, FT in transformational and charismatic leadership
Prentice Hall theories, Leadership Quarterly, 10, pp 285–305
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
714 Part 14 | People Management Skills
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.
716 Part 14 | People Management Skills
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.
Chapter 69 | Handling People Problems 717
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.
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
718 Part 14 | People Management Skills
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.
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.
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
722 Part 14 | People Management Skills
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
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
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.
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
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 recruit- ment, 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.
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
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
(continued )
736 Appendix
(continued )
Appendix 737
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
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
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
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
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
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
764